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As filed with the Securities and Exchange Commission on September 22, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ANWORTH MORTGAGE ASSET CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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<TABLE>
<CAPTION>
Maryland 52-2059785
<S> <C>
(State or Other Jurisdiction or (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
(310) 394-0115
(Address, Including Zip Code, and Telephone Number,
Including Area Code of Registrant's Principal Executive Offices)
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LLOYD McADAMS
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
(310) 394-0115
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
Mark J. Kelson, Esq.
Allen, Matkins, Leck, Gamble & Mallory LLP
1999 Avenue of the Stars, Suite 1800
Los Angeles, California 90067-6050
Telephone: (310) 788-2400
Facsimile: (310) 788-2410
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [X]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Amount Proposed Maximum Aggregate Amount of
Title of Shares To Be Aggregate Price Offering Registration
To Be Registered Registered Per Unit(1) Price(1) Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value.. 450,000 shares $4.75 $2,137,500 $594.23
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</TABLE>
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(1) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457.
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<PAGE>
PROSPECTUS
ANWORTH MORTGAGE ASSET CORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Dividend Reinvestment and Stock Purchase Plan (the "Plan") of Anworth
Mortgage Asset Corporation (the "Company") provides both existing stockholders
(the "Stockholders") of the Company's common stock ("Common Stock") and
interested new investors with a convenient and cost effective method to
purchase shares of the Common Stock. A participant in the Plan may purchase
additional shares of Common Stock by reinvesting some or all cash dividends
paid on the Company's outstanding Common Stock. Stockholders who elect to
participate in the Plan may also make monthly optional cash purchases
("Optional Cash Purchases") which are subject to a minimum monthly purchase
limit of $100 and a maximum monthly purchase limit of $5,000. Interested
investors not currently stockholders may make initial cash purchases ("Initial
Cash Purchases") which are subject to a minimum monthly purchase limit of $500
and a maximum monthly purchase limit of $5,000. The aggregate number of shares
of Common Stock that may be purchased and issued through the Optional and
Initial Cash Purchases shall not exceed 225,000 shares. The price to be paid
for each share of Common Stock purchased directly from the Company under the
Plan will be a price equal to the market price (as defined herein) of the
Common Stock less a discount ranging from 0% to 5% (the "Discount Rate"). The
price of the shares of Common Stock purchased on the open market will be the
average price of all shares of Common Stock purchased for all Participants in
the Plan without any discount.
The Prospectus relates to the offer and sale of 450,000 authorized but
unissued shares of Common Stock under the Plan, of which not more than 225,000
may be issued through the Optional and Initial Cash Purchases. Participants
should retain this Prospectus for future reference. The Company's Common Stock
is listed on the NASDAQ-AMEX Stock Exchange under the symbol "ANH".
Plan Highlights:
. Any registered stockholder may elect to participate in the Plan.
. Interested investors, not currently stockholders of the Company, may
make their initial investment in the Company through the Plan.
. 0% to 5% discount on shares of Common Stock purchased directly from the
Company.
. No brokerage fees on purchases made in the open market unless such fees
are in excess of 5% of the purchase price.
. Certificate safekeeping in book entry form at Continental Stock Transfer
& Trust Company, at no charge to Participant.
. Full or partial dividend reinvestment options.
. Optional and Initial Cash Purchases.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
No person has been authorized to give any information or to make any
representations not contained in this Prospectus regarding the Company or the
offering made hereby and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the securities to
which it relates, nor does it constitute an offer to or solicitation of any
person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither delivery of this Prospectus nor any sale made hereunder
shall create an implication that information contained herein is correct as of
any time subsequent to the date hereof.
Capitalized terms not otherwise defined are defined in the Glossary at the end
of this Prospectus.
The date of this Prospectus is September 22, 1999.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission at 450 Fifth Street N.W., Washington, D.C. 20549, and at its
Regional Offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York, 10048. The Company files information electronically
with the Commission, and the Commission maintains a Web Site that contains
reports, proxy and information statements and other information regarding
registrants (including the Company) that file electronically with the
Commission. The address of the Commission's web site is (http://www.sec.gov).
This Prospectus constitutes a part of a Registration Statement on Form S-3
together with all exhibits referred to as the Registration Statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain information contained in the Registration Statement, and
reference is hereby made to the Registration Statement for further information
with respect to the Company and the shares offered hereby. Any statement
contained or incorporated by reference herein concerning the provisions of any
document is not necessarily complete, and in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in
its entirety by such statement.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, filed with the Commission pursuant to the 1934
Act, are incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1998, including exhibits thereto;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, including exhibits thereto;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999, including exhibits thereto; and
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A12B under the 1934 Act,
including any amendment or report filed to update the description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act of 1934, prior to filing a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities offered hereby then remaining unsold, shall
be deemed
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to be incorporated by reference herein and shall be deemed to be a part hereof
from the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified, superseded or replaced by a statement or information
contained in any other subsequently filed document incorporated herein by
reference. Any such statement so modified, superseded or replaced shall not be
deemed, except as so modified, superseded or replaced, to constitute a part of
this Prospectus.
Anyone receiving a copy of this Prospectus may obtain, without charge, a
copy of any of the documents incorporated by reference herein, except for any
exhibits to such documents. Written requests should be mailed to Anworth
Mortgage Asset Corporation, 1299 Ocean Avenue, Suite 200, Santa Monica,
California 90401, or call (310) 394-0115.
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<PAGE>
THE COMPANY
The Company was formed in October 1997 in the State of Maryland to invest
in mortgage assets, including mortgage pass-through certificates,
collateralized mortgage obligations, mortgage loans and other securities
representing interests in, or obligations backed by, pools of mortgage loans
which can be readily financed and short-term investments. The Company utilized
the equity capital raised in its initial public offering completed on March
17, 1998 and short term borrowings to generate income based on the difference
between the yield on its mortgage assets and the cost of its borrowings. The
Company will elect to be taxed as a Real Estate Investment Trust ("REIT")
under the Code, and therefore will not generally be subject to federal taxes
on its income to the extent it distributes its net income to its stockholders
and maintains its qualification as a REIT.
The goal of the Company is to generate a competitive yield through its use
of leverage and active management of the asset/liability yield spread.
DIVIDEND AND DISTRIBUTION POLICY
The Company intends to pay dividends and to make such distributions to its
stockholders in amounts such that all or substantially all of its taxable
income in each year (subject to certain adjustments) is distributed so as to
qualify for the tax benefits accorded to a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"). Taxable income, if any, not distributed
through regular dividends will be distributed annually in a special dividend.
Such dividend must be declared prior to the timely filing of the Company's tax
return for such year and paid not later than the next regular dividend payment
date after such declaration. All distributions will be made by the Company at
the discretion of the Board of Directors and will depend on the earnings of
the Company, financial condition of the Company, maintenance of REIT status
and such other factors as the Board of Directors may deem relevant from time
to time.
USE OF PROCEEDS
The net proceeds to the Company from the sale of shares of Common Stock
offered hereby will be used for general corporate purposes.
SUMMARY OF THE PLAN
The Plan provides Stockholders and other investors with a convenient and
economical way to purchase shares of Common Stock through the reinvestment of
all or a portion of their cash dividends paid on Common Stock in additional
shares of Common Stock. There is no minimum or maximum limitation on the
amount of dividends a Participant may reinvest under the Plan. In addition to
the reinvestment of dividends, Stockholders who are Participants in the Plan
may invest additional funds through Optional Cash Purchases of not less than
$100 and not more than $5,000 per month (except in cases covered by an
execution of a request for waiver ("Request for Waiver"), as discussed below).
Persons not currently Stockholders of the Company may become Participants by
making an Initial Cash Purchase of not less than $500 and not more than $5,000
to purchase shares under the Plan (except in cases covered by a
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Request for Waiver). For purposes of these limitations, all Plan accounts
under the common control or management of a Participant may be aggregated at
the Company's sole discretion. Optional Cash Purchases and Initial Cash
Purchases (collectively "Cash Purchases") in excess of $5,000 may be made only
upon acceptance by the Company of a completed Request for Waiver form from a
Participant.
To fulfill Plan requirements, shares of Common Stock may be purchased
directly from the Company or, at the Company's election, in the open market or
in privately negotiated transactions. Shares purchased directly from the
Company under the Plan (whether in connection with Cash Purchases of $5,000 or
less per month or reinvestment of dividends) may be issued at a discount of 0%
to 5% (the "Discount Rate") below the Market Price for Dividend Reinvestments
and the Market Price for Cash Purchases. As of the date of this Prospectus,
the discount is 5%, but is subject to change from time to time at the
Company's discretion for future investment periods, without prior notice to
the Participants, after a review of current market conditions, the level of
participation in the Plan, the Company's current and projected capital needs,
and the Company's need to maintain its status as a REIT for tax purposes. The
Company may establish a different discount ranging from 0% to 5% (the "Waiver
Discount") regarding shares purchased from the Company for Cash Purchases
exceeding $5,000 per month and approved by the Company pursuant to a Request
for Waiver. The Company may also, without prior notice to Participants, change
its determination that shares of Common Stock will be purchased by the Plan's
Agent directly from the Company or on the open market. No discount will be
offered on shares purchased under the Plan in the open market or in privately
negotiated transactions.
Each month, at least three business days prior to the first day of the
relevant Pricing Period, the Company may establish a Waiver Discount and
Threshold Price applicable to Cash Purchases exceeding $5,000. The Waiver
Discount, which may vary each month from 0% to 5%, will be established in the
Company's sole discretion after a review of current market conditions, the
level of participation in the Plan and the Company's current and projected
capital needs. With respect to Cash Purchases that exceed $5,000 only, for
each Trading Day of the related twelve-day Pricing Period on which the
Threshold Price is not satisfied, one-twelfth of a Participant's Cash Purchase
will be returned without interest. Cash Purchases that do not exceed $5,000,
and the reinvestment of dividends in additional shares of Common Stock, will
not be subject to such Threshold Price, if any. If shares are purchased under
the Plan other than directly from the Company, no discount will be offered and
no Threshold Price will be applicable.
In deciding whether to approve a Request for Waiver, the Company will
consider relevant factors including, but not limited to, whether the Plan is
then acquiring newly issued or treasury shares directly from the Company or
acquiring shares from third parties in the open market or in privately
negotiated transactions, the Company's needs for additional funds, the
attractiveness of obtaining such additional funds through the sale of Common
Stock as compared to other sources of funds, the purchase price likely to
apply to any sale of Common Stock under the Plan, the Participant submitting
the request, the extent and nature of such Participant's prior participation
in the Plan, the number of shares of Common Stock held by such Participant and
the aggregate amount of cash investments for which Requests for Waiver have
been submitted by all Participants. If such requests are submitted for any
Cash Purchase Investment Date for an aggregate amount in excess of the amount
the Company is then willing to accept, the Company may honor such requests in
order of receipt, pro rata or by any other method that the Company in its sole
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discretion determines to be appropriate. A broker, bank or other nominee may
reinvest dividends and make Cash Purchases on behalf of Beneficial Owners.
Cash Purchases submitted by brokerage firms or other nominees on behalf of
Participants will be aggregated for purposes of determining whether the $5,000
limit would be exceeded.
From time to time, financial intermediaries, including brokers and dealers,
and other persons may engage in positioning transactions in order to benefit
from the discount from market price of the Common Stock acquired under the
Plan. Such transactions may cause fluctuations in the trading volume of the
Common Stock. Financial intermediaries and such other persons who engage in
positioning transactions may be deemed to be underwriters. The Company has no
arrangements or understandings, formal or informal, with any person relating
to the sale of shares to be received pursuant to the Plan.
Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no total maximum number of shares that can
be issued pursuant to the reinvestment of dividends and no pre-established
maximum limit applicable to cash investments that may be made pursuant to
Requests for Waiver. As of the date hereof, 450,000 shares of Common Stock
have been registered and are available for sale under the Plan; however, the
aggregate number of shares of Common Stock that may be purchased and issued
through the Optional and Initial Cash Purchases shall not exceed 225,000
shares.
Shares purchased directly from the Company through dividend reinvestment
and Cash Purchases under the Plan will be issued without a sales commission.
If the shares of Common Stock to be purchased under the Plan are purchased in
the open market instead of directly from the Company, the Company will pay any
brokerage fees or commissions on such purchases, up to 5% of the purchase
price of the shares of the Common Stock. Any commissions in excess of 5% will
be paid by the Participants on a pro rata basis. The Discount Rate will not
apply to open market purchases or to privately negotiated purchases of Common
Stock.
Participants in the Plan who reinvest dividends will be treated for federal
income tax purposes as having received a dividend, without receiving cash to
pay any tax payment obligation that could arise as a result of such dividend.
Participants will have limited control regarding the specific timing of
optional cash purchases and sales under the Plan. Furthermore, Participants
will generally be unable to depend on the availability of a market discount
regarding shares acquired under the Plan. See "The Plan--Advantages and
Disadvantages."
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THE PLAN
This Dividend Reinvestment Plan was adopted by the Board of Directors on
August 27, 1999.
ADVANTAGES AND DISADVANTAGES
Advantages
. The Plan provides Participants with the opportunity to purchase
additional shares of Common Stock, if desired, by automatically
reinvesting all or a portion of their cash dividends on Common Stock in
the Plan.
. In addition to the reinvestment of dividends, the Plan provides
Stockholders with the opportunity to make monthly investments of Common
Stock through Optional Cash Purchases, subject to a minimum and maximum
amount. Optional Cash Purchases may be made by check, money order, wire
transfer, or electronic funds transfer from a pre-designated bank
account. Optional Cash Purchases may be made occasionally or at regular
intervals, as the Participant desires. Participants may make Optional
Cash Purchases even if dividends on their shares of Common Stock are not
being reinvested.
. Shares purchased under the Plan may be purchased at the market price
which may be less than the book value of Common Stock.
. The Plan also provides non-stockholders of the Company the opportunity
to become Participants by making an Initial Cash Purchase in the
Company's Common Stock, subject to a minimum and maximum amount.
. Shares purchased directly from the Company through dividend reinvestment
under the Plan will be issued without a sales commission and may be
issued at the Discount Rate to the Market Price for Dividend
Reinvestments (as defined herein). If the Company should elect that the
shares of Common Stock to be purchased under the Plan are to be
purchased in the open market instead of directly from the Company, the
Company will pay any brokerage fees or commissions on such purchases, up
to 5% of the purchase price of the shares of the Common Stock. Any
commissions in excess of 5% will be paid by the Participants on a pro
rata basis. The Discount Rate will not apply to open market purchases or
to privately negotiated purchases of Common Stock.
. Shares purchased directly from the Company for investment through Cash
Purchases under the Plan will be issued without a sales commission and
may be issued at the Discount Rate to the Market Price for Cash
Purchases (as defined herein). If the Company elects that the shares of
Common Stock to be purchased under the Plan are to be purchased in the
open market instead of directly from the Company, the Company will pay
any brokerage fees or commissions on such purchases, up to 5% of the
purchase price of the shares of the Common Stock. Any commissions in
excess of 5% will be paid by the Participants on a pro rata basis. The
Discount Rate will not apply to open market purchases or to privately
negotiated purchases of Common Stock.
. Funds invested in the Plan are fully invested through the purchase of
fractions of shares, as well as whole shares, and proportionate cash
dividends on fractions of shares are used to purchase additional shares.
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. Participants may direct the Agent to transfer, at any time and at no
cost to the Participant, all or a portion of the Participant's shares in
the Plan to a Plan account for another person.
. The Plan offers a "share safekeeping" service whereby, at no cost,
Participants may deposit their Common Stock certificates with the Agent
and have their ownership of such Common Stock maintained on the Agent's
records as part of their Plan account.
. Participants will receive statements containing year-to-date information
on all Plan transactions in a Participant's account within a reasonable
time after a transaction occurs, designed to simplify the Participants'
record keeping.
Disadvantages
. Participants in the Plan who reinvest dividends will be treated for
federal income tax purposes as having received a dividend on the
dividend reinvestment date (the "Dividend Reinvestment Date"); such
dividend may give rise to a tax payment obligation without providing the
Participant with immediate cash to pay such tax when it becomes due. See
"Federal Income Tax Consequences."
. Participants will have limited control regarding the specific timing of
purchases and sales under the Plan. Because purchases under the Plan
will be made no earlier than twelve business days following receipt of
an investment instruction, and because sales under the Plan will be
effected by the Agent only as soon as practicable after its receipt of
such instructions, Participants may be unable to achieve the same level
of control over purchase and sale timing that they might have for
investments made outside the Plan.
. The Company may, in its sole discretion, without prior notice to
Participants, change its determination as to whether shares of Common
Stock will be purchased by the Agent directly from the Company or
through open market or privately negotiated purchases. No Discount Rate
will be applied on shares purchased under the Plan in the open market or
in privately negotiated purchases. The Company may also, without prior
notice to Participants, lower or eliminate the Discount Rate on shares
to be purchased directly from the Company for future investment periods.
As a result, Participants will generally be unable to depend on the
availability of a market discount regarding shares acquired under the
Plan. Participants may obtain the applicable Discount Rate by
telephoning the Company at (310) 394-0115 three business days prior to
the first day of the Pricing Period.
. No interest will be paid by the Company or the Agent on dividends or
Cash Purchases held pending reinvestment or investment or to be returned
to the Participant. In addition, Cash Purchases exceeding $5,000 per
month may be subject to return to the Participant (in whole or
proportionate part) without interest in the event that (i) a Threshold
Price has been established with respect to shares to be purchased from
the Company, and (ii) such Threshold Price is not met for any day on
which the NASDAQ-AMEX Stock Exchange (the "Stock Exchange") is open for
trading ("Trading Day") during the twelve Trading Days prior to the date
scheduled for investment of the funds contributed for Cash Purchases for
that month (the "Pricing Period").
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. With respect to Cash Purchases (including Cash Purchases exceeding
$5,000 per month), while the Plan allows the Company to establish a
Discount Rate from the Market Price for Cash Purchases of the shares,
there can be no assurance that such Market Price for Cash Purchases, as
so discounted, will not be equal to or greater than the purchase price
of the shares on the relevant date of investment of the funds
contributed for Cash Purchases (the "Cash Purchase Investment Date").
ADMINISTRATION
The Plan is administered by Continental Stock Transfer & Trust Company (the
"Agent"), the Transfer Agent and Registrar for the Company. As the Agent for
participating stockholders ("Participants"), the Agent will administer the
Plan in accordance with the terms and conditions of the Plan as set forth
herein.
PARTICIPATION
Participation in the Plan is open to any person or entity, whether or not a
Stockholder of the Company, who fulfills the requirements for participation
described below under "Participation Options." A Stockholder who owns shares
of Common Stock in his or her own name is referred to herein as a "Stockholder
of Record." A Stockholder of Record may participate directly in the Plan. A
Stockholder who beneficially owns shares of Common Stock that are registered
in a name other than such Stockholder's name (for example, where shares are
held in the name of a broker, bank or other nominee) is referred to herein as
a "Beneficial Owner." A Beneficial Owner may participate in the Plan by either
(i) becoming a Stockholder of Record by having one or more shares transferred
into its own name, or (ii) coordinating their participation with their broker,
bank or other nominee who is the record holder to participate on their behalf.
A prospective investor who holds no shares of Common Stock may also
participate, at his or her option, either directly or through a broker, bank
or other nominee by following the enrollment procedures described below.
The Plan is intended for the benefit of investors in the Company and not
for persons or entities who accumulate accounts under the Plan over which they
have control for the purpose of exceeding the $5,000 per month maximum without
seeking the advance approval of the Company or who engage in transactions that
cause or are designed to cause aberrations in the price or trading volume of
the Common Stock. Notwithstanding anything in the Plan to the contrary, the
Company reserves the right to exclude from participation in the Plan, at any
time, (i) persons or entities who attempt to circumvent the Plan's standard
$5,000 per month maximum by accumulating accounts over which they have control
or (ii) any other persons or entities, as determined in the sole discretion of
the Company. For the purpose of this limitation, the Company reserves the
right to aggregate all Cash Purchases for Participants with more than one
account using the same name, address or social security or taxpayer
identification number. For Participants unable to supply a social security or
taxpayer identification number, participation may be limited by the Company to
only one Plan account. Also for the purpose of such limitations, all Plan
accounts that the Company believes to be under common control or management or
to have common ultimate beneficial ownership may be aggregated. In the event
the Company exercises its right to aggregate investments and the result would
be an investment in excess of $5,000 without an approved Request for Waiver,
the Company will return, without interest, as promptly as practicable, any
amount in excess of the investment limitations.
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PARTICIPATION OPTIONS
The Authorization Form appoints the Agent as agent for the Participant and
directs the Company to pay to the Agent such Participant's cash dividends on
all or a specified number of shares of Common Stock owned by the Participant
("Participating Shares"), as well as on all whole and fractional shares of
Common Stock credited to a Participant's Plan account ("Plan Shares"). The
Authorization Form directs the Agent to purchase on the Dividend Reinvestment
Date additional shares of Common Stock with such dividends. The Authorization
Form also directs the Agent to purchase on the relevant Cash Purchase
Investment Date additional shares of Common Stock with Cash Purchases of not
more than $5,000, if any, made by Participants. See "Cash Purchases---Waiver
of Maximum Cash Purchase Limitation" below for a discussion of the
requirements for Cash Purchases exceeding $5,000. See "Broker and Nominee
Form" below for a discussion of the requirements for Optional Cash Purchases
of a Beneficial Owner and Initial Cash Purchases of an investor who is not a
Stockholder of the Company, whose broker, bank or other nominee holds or will
hold such investor's shares in the name of a major securities depository. The
Authorization Form also directs the Agent to reinvest automatically all
subsequent dividends on Plan Shares. Dividends will continue to be reinvested
until the Participant specifies otherwise by contacting the Agent, withdraws
from the Plan, or the Plan is terminated.
The Authorization Form provides for the purchase of additional shares of
Common Stock through the following investment options:
. Full Dividend Reinvestment. The Agent will apply any cash dividends on
all shares of the Common Stock registered in the Plan under the
Participant's name, and all cash dividends on Plan Shares, together with
any Optional Cash Purchases or Initial Cash Purchase, toward the
purchase of additional shares of Common Stock.
. Partial Dividend Reinvestment. The Agent will apply cash dividends on
shares of Common Stock registered in the Plan under the Participant's
name and specified on the Authorization Form, and all cash dividends on
Plan Shares, together with any Optional Cash Purchases or Initial Cash
Purchase, toward the purchase of additional shares of Common Stock.
. Cash Purchases. The Agent will only apply voluntary cash contributions
for Cash Purchases received from the Participant toward the purchase of
additional shares of Common Stock. The Participant will continue to
receive cash dividends on shares of Common Stock registered in the Plan
under the Participant's name in the usual manner.
Each Participant may select either one of the dividend reinvestment options
and/or the Cash Purchase option. In each case, dividends will be reinvested on
all Participating Shares and on all Plan Shares held in the Plan account,
including dividends on Common Stock purchased with any Initial Cash Purchases,
until a Participant specifies otherwise by contacting the Agent, or withdraws
from the Plan altogether, or until the Plan is terminated. If a Participant
would prefer to receive cash payments of dividends on Plan Shares rather than
reinvest such dividends, those shares must be withdrawn from the Plan by
written notification to the Agent. See "Termination of Participation" below.
Participants may change their investment options at any time by requesting a
new Authorization Form and returning it to the Agent.
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Participation in the Plan will begin upon receipt of a properly completed
Authorization Form and/or Broker and Nominee Form (and, in cases of cash
investments exceeding $5,000, receipt and approval by the Company of a
properly completed Request for Wavier). The funds for a Cash Purchase may be
submitted with the initial Authorization Form. Thereafter, it will not be
necessary to submit an additional Authorization Form and Cash Purchases may be
made monthly or periodically at the election of the Participant. Once an
Authorization Form has been submitted, it is not necessary to submit one with
subsequent Cash Purchases. See "The Plan---Purchase and Price of Shares" for
more details on Cash Purchases and Dividend Reinvestments.
With respect to the dividend reinvestment portion of the Plan, the
Authorization Form (and the Broker Nominee Form if necessary) must be received
by the Agent at least two (2) calendar days prior to the Record Date
established for a particular dividend in order for a Stockholder to be
eligible for reinvestment of such dividends under the Plan for that related
dividend; otherwise, reinvestment will begin on the Dividend Reinvestment Date
following the next record date. With respect to Cash Purchases, the Agent must
receive the Authorization Form, good funds, and the Broker and Nominee Form if
necessary, at least one business day prior to the commencement of the Pricing
Period in order for a Participant's Cash Purchase to be invested on the
related Cash Purchase Investment Date; otherwise, such authorization will be
effective as of the next Cash Purchase Investment Date and the funds will be
returned to the Participant as provided in "The Plan---Purchase and Price of
Shares."
BROKER AND NOMINEE FORM
The Broker and Nominee Form provides the only means by which a broker, bank
or other nominee holding shares of a Beneficial Owner, or planning to hold
shares of an interested investor who is not currently a Stockholder of the
Company, in the name of a major securities depository may invest Cash
Purchases within the minimum and maximum investment limitation established for
the Plan (see "Cash Purchases" below) on behalf of such Beneficial Owner or
interested investor. A Broker and Nominee Form must be delivered to the Agent
each time such broker, bank or other nominee transmits Cash Purchases. Broker
and Nominee Forms may be obtained at any time by telephoning the Agent at
(212) 509-4000.
The Broker and Nominee Form and appropriate instructions must be received
by the Agent not later than 12:00 Noon New York City time on the business day
immediately preceding the relevant Pricing Period in order to be invested on
the Cash Purchase Investment Date, otherwise the Cash Purchase will be
returned, without interest.
Shares issued pursuant to a properly completed Broker and Nominee Form will
not be deemed Plan Shares. Therefore, subsequent dividends will be paid in
cash unless otherwise instructed by the Beneficial Owner (see "Participation"
above for a discussion of the requirements for Beneficial Owner participation
in the reinvestment of dividends).
ACCOUNTS AND STATEMENTS
The Agent will establish an account under the Plan for each Participant
(the "Participant's Account"), and will credit to the Participant's Account
cash received by the Agent for the Participant from cash dividends paid on the
shares of Common Stock, including those full and fractional shares of Common
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Stock (computed to three decimal places) acquired under the Plan, and all
voluntary cash contributions for Cash Purchases received by the Agent from the
Participant.
As soon as practicable after the purchases of shares of Common Stock have
been completed, the Agent will send each Participant a statement of their
account ("Account Statement"). The Account Statement will confirm the
transaction and itemize any previous investment activity for the calendar
year. ACCOUNT STATEMENTS SHOULD BE RETAINED BY THE PARTICIPANT FOR HIS OR HER
OWN RECORDS.
PURCHASE AND PRICE OF SHARES
Dividend Reinvestment. The Agent will apply cash credited to the
Participant's Account to the purchase of full and/or fractional interests in
shares of Common Stock and will credit the number of shares of Common Stock so
purchased to the Participant's Account. The Agent will apply such funds toward
the purchase of shares of Common Stock in the open market or from authorized
but unissued shares of Common Stock for the Participant's Account.
(1) Discount Rate on Dividend Reinvestments. The price of the authorized
but unissued shares of Common Stock purchased by the Agent directly from the
Company pursuant to the reinvestment of dividends may be issued at the
Discount Rate to the then current Market Price for Dividend Reinvestments as
of the Dividend Reinvestment Date. The Discount Rate is subject to change for
future dividend reinvestments, or complete discontinuance at the Company's
discretion, without prior notice to the Participants after a review of current
market conditions, the level of participation in the Plan and the Company's
current and projected capital needs. Participants may obtain the applicable
Discount Rate by telephoning the Company at (310) 394-0115 three business days
prior to the Dividend Reinvestment Date. The Discount Rate will only be in
effect for purchases of shares of Common Stock directly from the Company; if
the Company elects to purchase the shares in the open market or in privately
negotiated transactions, the Discount Rate will not be applied to such
purchases for the Participant's Account.
(2) Price per Share for Reinvested Dividends. The "Market Price for
Dividend Reinvestments" per share of Common Stock acquired directly from the
Company shall be the average of the daily high and low sales prices, computed
to four decimal places, of the shares of Common Stock as reported on the Stock
Exchange on the Dividend Reinvestment Date, or if no trading occurs in the
Common Stock on the Dividend Reinvestment Date, the average of the high and
low sales prices for the first Trading Day immediately preceding the Dividend
Reinvestment Date for which trades are reported. If the Company elects to
purchase the shares on the open market or in privately negotiated
transactions, the price per share of Common Stock acquired through such open
market or privately negotiated transactions will be the weighted average of
the actual prices paid, computed to four decimal places, for all the Common
Stock purchased by the Agent in connection with such open market purchases,
without application of the Discount Rate. The Agent shall pay brokerage
commissions in an amount determined by the prevailing rates at the time of
purchase. Such commissions will be reimbursed by the Company, but in no event
shall the Company be obligated to pay commissions in excess of five percent
(5%) of the purchase price of the shares of Common Stock. Any commissions in
excess of five percent (5%) will be paid by the Participants on a pro rata
basis. Such open market purchases may be made, at the Agent's option, on any
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securities exchange where the shares of Common Stock are traded, in the over-
the-counter market or in negotiated transactions with third persons, and may
be on such terms as to price, delivery, and otherwise as the Agent may
determine.
(3) Dividend Reinvestment Date. The Dividend Reinvestment Date for the
reinvestment of dividends will be on or within fifteen (15) days after the
Dividend Payment Date except where completion at a later date is necessary or
advisable under applicable securities laws. Under normal market conditions,
the funds are expected to be reinvested on the Dividend Payment Date. For a
schedule of expected Dividend Reinvestment Dates through 2002, see Schedule A.
Cash Purchases. A Stockholder may also make Optional Cash Purchases of
shares of Common Stock, subject to a minimum of $100 and a maximum of $5,000
(except in cases covered by a Request for Waiver as discussed below). New
investors, not currently Stockholders of the Company, may make Initial Cash
Purchases subject to a minimum of $500 and a maximum of $5,000 (except in
cases covered by a Request for Waiver). For purposes of these limitations on
Cash Purchases, all Plan Accounts under the common control or management of a
Participant may be aggregated at the Company's sole discretion. Additionally,
the aggregate number of shares which may be purchased through Optional and
Initial Cash Purchases shall not exceed 225,000 shares.
(1) Discount Rate on Cash Purchases. The price of the authorized but
unissued shares of Common Stock purchased by the Agent directly from the
Company for Cash Purchases not in excess of the $5,000 maximum may be issued
at the Discount Rate to the then current Market Price for Cash Purchases as of
the Cash Purchase Investment Date. The Discount Rate is subject to change for
future investment periods, or complete discontinuance at the Company's
discretion, without prior notice to the Participants after a review of current
market conditions, the level of participation in the Plan and the Company's
current and projected capital needs. Participants may obtain the applicable
Discount Rate by telephoning the Company at (310) 394-0115 three business days
prior to the Dividend Reinvestment Date. The Discount Rate will only be in
effect for purchases of shares of Common Stock directly from the Company; the
Discount Rate will not be applied to purchases for the Participant's Account
in the open market or in privately negotiated transactions.
(2) Price per Share for Cash Purchases. The "Market Price for Cash
Purchases" per share shall be the average of the daily high and low sales
prices, computed to four decimal places, of the shares of Common Stock as
reported on the Stock Exchange during the Pricing Period prior to the related
Cash Purchase Investment Date. No commission shall be paid with respect to
purchases of authorized but unissued shares of Common Stock directly from the
Company. If the Company elects to purchase the shares on the open market or in
privately negotiated transactions, the price per share of Common Stock
acquired through such open market or privately negotiated transactions will be
the weighted average of the actual prices paid, computed to four decimal
places, for all the Common Stock purchased by the Agent in connection with
such open market purchases, without application of the Discount Rate. The
Agent shall pay brokerage commissions in an amount determined by the
prevailing rates at the time of purchase. Such commissions will be reimbursed
by the Company, but in no event shall the Company be obligated to pay
commissions in excess of five percent (5%) of the purchase price of the shares
of Common Stock. Any commissions in excess of five percent (5%) will be paid
by the Participants on a pro rata basis. Such open
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market purchases may be made, at the Agent's option, on any securities
exchange where the shares of Common Stock are traded, in the over-the-counter
market or in negotiated transactions with third persons, and may be on such
terms as to price, delivery, and otherwise as the Agent may determine.
(3) Waiver of Maximum Cash Purchase Limitation. Cash Purchases in excess
of $5,000 may be made only upon acceptance in writing by the Company of a
completed written Request for Waiver form from the Participant. A Request for
Waiver must be received by the Company at its corporate address or via
facsimile at (310) 393-5106 no later than 2:00 p.m. New York City time on the
second business day preceding the relevant Pricing Period. Request for Waiver
forms may be obtained from the Company by telephone at (310) 394-0115 or via
the above facsimile number. The Company may establish a discount rate
different than the Discount Rate, ranging from 0% to 5% (the "Waiver
Discount") regarding shares purchased from the Company for Cash Purchases
exceeding $5,000 per month and approved by the Company pursuant to a Request
for Waiver. Participants may obtain the applicable Waiver Discount by
telephoning the Company at (310) 394-0115 three business days prior to the
first day of the Pricing Period. It is solely within the Company's discretion
as to whether any such approval for cash investments in excess of $5,000 will
be granted. In deciding whether to approve a Request for Waiver, the Company
will consider relevant factors including, but not limited to: whether the Plan
is then acquiring newly issued or treasury shares directly from the Company or
acquiring shares from third parties in the open market or in privately
negotiated transactions; the Company's need for additional funds; the
attractiveness of obtaining such additional funds through the sale of Common
Stock as compared to other sources of funds; the purchase price likely to
apply to any sale of Common Stock under the Plan; the Participant submitting
the request; the extent and nature of such Participant's prior participation
in the Plan; the number of shares of Common Stock held by such Participant and
the aggregate amount of cash investments for which Requests for Waiver have
been submitted by all Participants. If such requests are submitted for any
Cash Purchase Investment Date for an aggregate amount in excess of the amount
the Company is then willing to accept, the Company may honor such requests in
order of receipt, pro rata or by any other method that the Company determines
in its sole discretion to be appropriate. The Company anticipates that it will
respond to each Request for Waiver by the close of business (7:00 p.m. New
York City time) on the second business day preceding the relevant Pricing
Period. Any Request for Waiver accepted by the Company will be subject to all
the terms and conditions otherwise applicable to Cash Purchases, except those
terms and conditions expressly changed by this Section.
(4) Threshold Price. Notwithstanding anything contained herein to the
contrary, the Company may establish for each Pricing Period a threshold price
applicable to Cash Purchases made pursuant to Requests for Waiver approved by
the Company (the "Threshold Price"). The Threshold Price, if any, will be
established by the Company at least three business days prior to the first day
of the Pricing Period, and will be established in the Company's sole
discretion after a review of current market conditions and other relevant
factors. Participants may obtain the applicable Threshold Price and Waiver
Discount by telephoning the Company at (310) 394-0115. The Threshold Price
will be a stated dollar amount that the average of the high and low sale
prices of the Common Stock on the NASDAQ-AMEX Stock Exchange for a Trading Day
of the Pricing Period must equal or exceed. In the event that such Threshold
Price is not satisfied for a Trading Day of the Pricing Period, then such
Trading Day and the trading prices for that day will be excluded from (i) the
Pricing Period and (ii) the determination of the purchase price of the Common
Stock for all cash investments made pursuant to Requests for Waiver approved
by the Company. Thus, for
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example, if the Threshold Price is not satisfied for three of the twelve
Trading Days, then the purchase price of the Common Stock will be based upon
the remaining nine Trading Days for which the Threshold Price was satisfied.
Each Trading Day of a Pricing Period for which the Threshold Price is not
satisfied will cause the return of a portion of any cash investments made
pursuant to Requests for Waiver approved by the Company. The returned amount
will equal one-twelfth of such cash investments for each Trading Day that the
Threshold Price is not satisfied. Thus, for example, if the Threshold Price is
not satisfied for three Trading Days, then 3/12 (i.e., 25%) of such cash
investments will be returned without interest.
The Threshold Price and return procedure discussed above apply only to Cash
Purchases made pursuant to Requests for Waiver approved by the Company and not
to the reinvestment of dividends or Cash Purchases that do not exceed $5,000.
(5) Cash Purchase Investment Date. The Cash Purchase Investment Date for
Cash Purchases will occur on or about the third from the last business day of
each month, or in the case of purchases in the open market, no later than the
last business day of each month. For a schedule of expected Cash Purchase Due
Dates and Cash Purchase Investment Dates through 2002, see Schedule A of the
Prospectus.
(6) Timing and Procedure for Cash Purchases. Each month the Agent will
apply a Cash Purchase for which good funds are timely received to the purchase
of shares of Common Stock for the account of the Participant on the next Cash
Purchase Investment Date. In order for funds to be invested on the next Cash
Purchase Investment Date, the Agent must have received the following in a
timely fashion: (i) the Authorization Form (if person is not yet enrolled as a
Participant) and the Broker and Nominee Form (if necessary) at least one
business day before the commencement of the Pricing Period; (ii) the Request
for Waiver (if applicable) no later than 2:00 p.m. New York City time two
business days before the commencement of the Pricing Period; and (iii) a
check, money order or wire transfer no later than one business day prior to
the commencement of the related Pricing Period (the "Cash Purchase Due Date")
although the Company may, within its sole discretion, accept such funds after
the Cash Purchase Due Date in cases of unanticipated delay or inadvertence by
the Participant. Such check, money order or wire transfer must have cleared
before the related Cash Purchase Investment Date. Wire transfers may be used
only if approved verbally in advance by the Agent. Instructions for Wire
Transfers and Electronic Funds Transfers can be obtained by telephoning the
Agent at (212) 509-4000. Checks and money orders are accepted subject to
timely collection as good funds and verification of compliance with the terms
of the Plan. Checks or money orders should be made payable to "Continental
Stock Transfer & Trust Company--ANH Dividend Reinvestment and Stock Purchase
Plan." Checks returned for any reason will not be resubmitted for collection.
Generally, Cash Purchases received more than ten business days before the
commencement of the Pricing Period or after the Cash Purchase Due Date will be
returned to Participants without interest at the end of the Pricing Period;
such Cash Purchases may be resubmitted by a Participant prior to the
commencement of the next or a later Pricing Period. Upon a Participant's
written request received by the Agent no later than two business days prior to
the Pricing Period, a timely Cash Purchase not already invested under the Plan
will be canceled or returned to the Participant as soon as practical. However,
in the latter event, no refund of a check or money order will be made until
the funds have been actually received by the Agent. Accordingly, such refunds
may be delayed up to three weeks. In making purchases for the Participant's
Account, the Agent may commingle the Participant's funds with those of other
Participants in
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the Plan. NO INTEREST WILL BE PAID ON FUNDS HELD BY THE AGENT PENDING
INVESTMENT OR RETURN TO THE PARTICIPANT. FUNDS FOR CASH PURCHASES DO NOT
CONSTITUTE DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion generally summarizes the material federal income
tax consequences, under current law, that may result from participation in the
Plan. This discussion is not intended to be exhaustive or a substitute for a
careful analysis of all of the tax issues which may affect a person's decision
to participate in the Plan. It does not address all potentially relevant
federal income tax matters, including consequences peculiar to persons subject
to special provisions of the federal income tax law (such as banks, insurance
companies, and foreign persons). THE FOLLOWING DISCUSSION IS GENERAL
INFORMATION ONLY, AND EACH PARTICIPANT IS STRONGLY URGED TO CONSULT WITH, AND
MUST RELY ON THE ADVICE OF, HIS OR HER OWN TAX ADVISORS WITH RESPECT TO THE
TAX IMPLICATIONS OF PARTICIPATING IN THE PLAN AND THE DISPOSITION OF ANY
SHARES OF COMMON STOCK PURCHASED PURSUANT TO THE PLAN.
The tax discussion set forth below is based upon the Internal Revenue Code
of 1986, as in effect on the date hereof ("IRC"), existing and proposed
Treasury Regulations promulgated by the United States Treasury Department as
of the date hereof, and current administrative interpretations and court
decisions in existence as of the date hereof, including, without limitation,
various rulings of the Internal Revenue Service (the "IRS") regarding several
types of dividend reinvestment plans, although no ruling has been issued or
requested regarding the Plan. PRESENT FEDERAL INCOME TAX LAWS AFFECTING THE
COMPANY AND THE PARTICIPANTS COULD BE SUBSEQUENTLY CHANGED BY NEW LEGISLATION,
TREASURY REGULATIONS, ADMINISTRATIVE INTERPRETATIONS AND/OR COURT DECISIONS,
OR DIFFERENCES OF OPINION COULD SUBSEQUENTLY ARISE AS TO THE PRESENT
INTERPRETATION OF THE EXISTING TAX LAWS. THE COMPANY IS UNDER NO OBLIGATION TO
(AND IT WILL NOT) PROVIDE ANY INFORMATION CONCERNING (OR UPDATING) ANY CHANGES
TO THE TAX LAWS DESCRIBED HEREIN. Furthermore, the discussion herein is not
binding upon, nor considered authority by, the IRS or any court, and no
assurance can be provided that the tax treatment claimed by any Participant
will not be successfully challenged by the IRS.
(1) Reinvested Dividends. Participants who participate in the dividend
reinvestment aspect of the Plan will be treated for federal income tax
purposes as receiving, on each Dividend Reinvestment Date, a distribution in
an amount equal to the fair market value of the shares of Common Stock
received (or credited to the Participant's Account) (plus a pro rata portion
of any brokerage cost incurred in the open market purchases of the shares of
Common Stock). That portion of the distribution that is a "dividend" (as
defined in IRC Section 316) shall be included in the Participant's gross
income. The term "dividend" is defined in IRC Section 316 as any distribution
of property made by a corporation to its stockholders out of current or
accumulated earnings and profit. When shares of Common Stock are purchased
directly from the Company (pursuant to the dividend reinvestment aspect of the
Plan), the amount of the distribution will be the full fair market value of
the shares of Common Stock as of the Dividend Reinvestment Date,
notwithstanding that the Participant may have acquired such shares of Common
Stock at the Discount Rate.
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Shares of Common Stock acquired for Participants pursuant to the dividend
reinvestment aspect of the Plan will have an initial tax basis to the
Participant equal to the amount the Participant is treated as having received
as a dividend. The holding period for a share of Common Stock (including a
fractional share) generally will begin on the day after the Dividend
Reinvestment Date upon which the share of Common Stock was acquired.
The reinvestment of dividends does not relieve Participants of (nor change,
except as provided above) any federal income tax consequence that would
otherwise accompany the actual distribution of such dividends. Participants
who are Qualified Plans or IRAs should be able to continue to exclude the
reinvested dividends from unrelated business taxable income (to the same
extent such Participants would have been able to exclude the reinvested
dividends had such dividends been distributed and not reinvested) unless such
Participants have borrowed to acquire their shares of Common Stock. The Agent
will report to each Participant for tax purposes the dividends to be credited
to the account as well as any discounts or costs incurred by the Company. Such
information will also be furnished to the IRS to the extent required by law.
In addition, the IRC imposes certain reporting obligations on brokers and
other intermediaries. As a result, the Agent will be required to report to the
IRS and the Participant any sale of Common Stock by it on behalf of a
Participant.
(2) Cash Purchases. Participants who acquire shares of Common Stock
(pursuant to the Cash Purchase aspect of the Plan) without the benefit of the
Discount Rate, will neither realize gross income upon receipt of such shares
nor be treated as having received a distribution. Any such Participant will
have an initial tax basis in such shares of Common Stock equal to the amount
paid for such shares.
However, Participants who acquire shares of Common Stock (pursuant to the
Cash Purchase aspect of the Plan) with the benefit of the Discount Rate, may
be treated as receiving a distribution equal to the amount of the discount
each time such Participants acquire shares pursuant to the Plan. At present,
it appears the IRS will take the position that Participants who acquire shares
at a discount pursuant to both the dividend reinvestment and optional purchase
aspects of the Plan, will be forced to treat the amount of the discount as a
distribution (whether the shares are acquired pursuant to the optional
purchase aspect or otherwise). In this regard, such Participants will be
treated as receiving distributions of cash, each time such Participants
acquire shares of Common Stock at the Discount Rate, in an amount equal to the
excess, if any, of the fair market value of the shares of Common Stock so
acquired (determined upon the date on which they were acquired) (plus a pro
rata portion of the brokerage cost incurred in open market purchases) over the
amount of the cash payment made to acquire such shares of Common Stock. Any
such acquired shares will have an initial tax basis equal to the amount of the
cash payment made plus the excess, if any, of the fair market value of the
shares of Common Stock purchased over the amount of the cash payment made to
acquire such shares. The fair market value on an acquisition date is likely to
differ from the Market Price for Cash Purchases for the pricing period
immediately preceding the related Cash Purchase (which determines the number
of shares of Common Stock acquired). The amount treated as a distribution will
constitute a dividend for federal income tax purposes to the same extent that
a cash distribution of such amount would be so treated. The holding period for
a share of Common Stock (including fractions thereof) generally begins on the
day after the Cash Purchase Investment Date upon which the share of Common
Stock was acquired.
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Participants who acquire shares at a discount pursuant to only the optional
purchase aspect of the Plan (i.e., Participants who do not participate in the
dividend reinvestment aspect of the Plan) need not treat the amount of any
such discount as a distribution. Such Participants would take an initial tax
basis in the purchased shares of Common Stock equal to the actual purchase
price paid by such Participants.
The foregoing general discussion relates only to federal income taxation.
Participants should consult their tax advisors as to the possible application
of state and local tax laws prior to electing to participate in the Plan.
VOTING OF SHARES HELD UNDER THE PLAN
Each Participant will be able to vote all shares of Common Stock (including
fractional shares) credited to the Participant's Account. The Agent will not
vote shares of Common Stock that it holds for a Participant's account except
as directed by the Participant.
CERTIFICATES
Shares of Common Stock purchased under the Plan are registered in the name
of a nominee and shown on each Participant's Account Statement. However, a
Participant may request a certificate for any of the whole shares of Common
Stock which have accumulated in such Participant's Account by writing a letter
of instruction to the Agent. Each certificate issued will be registered in the
name or names in which the account is maintained, unless otherwise instructed
in writing. If the certificate is to be issued in a name other than the name
on the Participant's Account, the Participant or Participants must have his or
her signature(s) guaranteed by a commercial bank or a broker. Certificates for
fractional shares of Common Stock will not be issued in any case. Dividends
will continue to be paid on the cumulative holdings of both full and
fractional shares of Common Stock remaining in the Participant's Account and
will automatically be reinvested.
Participants who wish to do so may deposit currently held certificates
registered in their names with the Agent for credit under the Plan. There is
no charge for such deposits, and by making such deposit the Participant will
be relieved of the responsibility for loss, theft or destruction of the
certificate. Shares of Common Stock credited to a Participant's Account may
not be pledged or assigned, and any attempted pledge or assignment is void. A
Participant who wishes to pledge or assign shares of Common Stock credited to
the Participant's Account must first withdraw such shares of Common Stock from
the account.
TERMINATION OF PARTICIPATION
A Participant may terminate participation in the Plan at any time by
notifying the Agent in writing. Unless the termination notice is received by
the Agent at least two (2) business days prior to any Dividend Record Date or
Cash Purchase Investment Date, it cannot be processed until after purchases
made from the dividends paid or Cash Purchases submitted have been completed
and credited to the Participant's Account. All dividends with a record date
after timely receipt of notice for termination will be sent directly to the
Participant. The Agent may terminate the Participant's Account by notice in
writing mailed to the Participant. Once termination has been effected, the
Agent will issue to the Participant, without charge,
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certificates for the full shares of Common Stock held in the Participant's
Account or, if so requested, sell the full shares of Common Stock held under
the Plan, deduct brokerage commissions, transfer taxes and a service charge
(if any) and deliver the proceeds to the Participant. The value of the
Participant's interest in any fractional share of Common Stock held in his
account at termination will be paid by check, less the Participant's share of
any related expenses. A Participant will also be entitled to the uninvested
portion of any funds received for Optional Cash Purchases if notice of
termination is received prior to the date when the Agent becomes obligated to
pay for purchased shares of Common Stock.
If a Participant disposes of all shares of Common Stock represented by
certificates registered in his own name on the books of the Company but does
not give notice of termination under the Plan, the Agent may continue to
reinvest the dividends on the shares of Common Stock under the Plan until
otherwise directed.
A Participant who changes his or her address must notify the Agent
immediately. If a Participant changes residences to a state where the shares
of Common Stock offered pursuant to the Plan are not registered or exempt from
registration under applicable securities laws, the Company may deem the
Participant to have terminated participation in the Plan.
STOCK DIVIDENDS, STOCK SPLITS AND STOCKHOLDER RIGHTS OFFERINGS
Any stock dividends or stock splits distributed by the Company on shares of
Common Stock held by the Agent for the Participant will be credited to the
Participant's Account. In the event the Company makes available to its
stockholders rights to purchase additional shares of Common Stock or other
securities, the Participant will receive appropriate instructions in
connection with all such rights directly from the Agent in order to permit a
Participant to determine what action he or she desires to take.
AGENT'S RESPONSIBILITIES
The Agent shall not be liable hereunder for any act done in good faith, or
for any good faith omission to act, including without limitation, any claims
of liability (1) arising out of failure to terminate any Participant's Account
upon such Participant's death prior to receipt of notice in writing of such
death and (2) with respect to the prices at which shares of Common Stock are
purchased or sold for the Participant's Account and the times such purchases
or sales are made. All notices from the Agent to a Participant will be mailed
to the Participant's last address of record, which will satisfy the Agent's
responsibility to give notice.
AMENDMENTS TO THE PLAN
The Plan may be amended or supplemented by the Agent or the Company at any
time or times, including the period between the Dividend Record Date and the
related Dividend Reinvestment Date. Any such amendment may include an
appointment by the Agent of a successor agent under the terms and conditions
contained herein. Notice will be sent to Participants of any amendments as
soon as practicable after such action by the Company.
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INTERPRETATION AND REGULATION OF THE PLAN
THE COMPANY RESERVES THE RIGHT, WITHOUT NOTICE TO PARTICIPANTS, TO
INTERPRET AND REGULATE THE PLAN AS IT DEEMS NECESSARY OR DESIRABLE IN
CONNECTION WITH ITS OPERATION. ANY SUCH INTERPRETATION AND REGULATION SHALL BE
CONCLUSIVE.
INQUIRIES ABOUT THE PLAN
All correspondence and questions regarding the Plan, a Participant's
Account, and the Discount Rate, Waiver Rate, or Threshold Price should be
directed to:
Anworth Mortgage Asset Corporation
Dividend Reinvestment and Stock Purchase Plan
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
Telephone: (310) 394-0115
Facsimile: (310) 434-0100
or
ANH Dividend Reinvestment and Stock Purchase Plan
c/o Continental Stock Transfer & Trust Company
2 Broadway, 19th Floor
New York, NY 10004
Telephone: (212) 509-4000
PLAN OF DISTRIBUTION
Except to the extent the Agent purchases Common Stock in open market
transactions, the Common Stock acquired under the Plan will be sold directly
by the Company through the Plan. The Company may sell Common Stock to
Stockholders (including brokers or dealers) who, in connection with any
resales of such shares, may be deemed to be underwriters. Such shares,
including shares acquired pursuant to Request for Waivers granted with respect
to the Cash Payment feature of the Plan, may be resold in market transactions
(including coverage of short positions) on any national securities exchange on
which shares of Common Stock trade or in privately negotiated transactions.
The Common Stock is currently listed on the NASDAQ-AMEX Stock Exchange under
the symbol "ANH". Under certain circumstances, it is expected that a portion
of the shares of Common Stock available for issuance under the Plan will be
issued pursuant to such waivers. The difference between the price such owners
pay to the Company for Common Stock acquired under the Plan, after deduction
of the applicable discount from the Market Price for Cash Purchases, and the
price at which such shares are resold, may be deemed to constitute
underwriting commissions received by such owners in connection with such
transactions.
Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no total maximum number of shares that can
be issued pursuant to the reinvestment of dividends. From
21
<PAGE>
time to time, financial intermediaries may engage in positioning transactions
in order to benefit from the discount from the Market Price for Dividend
Reinvestments of Common Stock acquired through the reinvestment of dividends
under the Plan.
Except with respect to open market purchases of Common Stock relating to
reinvested dividends or Cash Purchases, the Company will pay any and all
brokerage commissions and related expenses incurred in connection with
purchases of Common Stock under the Plan, up to 5% of the Market Price for
Dividend Reinvestments and the Market Price for Cash Purchases of the Common
Stock. Upon withdrawal by a Participant from the Plan by the sale of Common
Stock held under the Plan, the Participant will receive the proceeds of such
sale less a nominal fee per transaction paid to the Agent (if such resale is
made by the Plan Administrator at the request of a Participant), any related
brokerage commissions and any applicable transfer taxes.
Common Stock may not be available under the Plan in all states. This
Prospectus does not constitute an offer to sell, or a soliciting of an offer
to buy, any Common Stock or other securities in any state or any other
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
INDEMNIFICATION
Maryland General Corporation Law provides that a Maryland corporation may
indemnify any person who is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise or employee benefit plan ("director"), that is made a party to any
proceeding by reason of service in that capacity unless it is established that
the act or omission of the director was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; or the director actually received an improper personal
benefit in money, property or services; or, in the case of any criminal
proceeding, the director had reasonable cause to believe that the act or
omission was unlawful. Indemnification may be against judgments, penalties,
fines, settlements, and reasonable expenses actually incurred by the director
in connection with the proceeding, but if the proceeding was one by or in the
right of the corporation, indemnification may not be made in respect of any
proceeding in which the director shall be adjudged to be liable to the
corporation. Such indemnification may not be made unless authorized for a
specific proceeding after a determination has been made, in a manner
prescribed by law, that indemnification is permissible in the circumstances
because the director has met the applicable standard of conduct. The director
must be indemnified for expenses, however, if he has been successful in the
defense of the proceeding or as otherwise ordered by a court. The law also
prescribes the circumstances under which a corporation may advance expenses
to, or obtain insurance or similar coverage for, directors.
The Company's Amended and Restated Articles of Incorporation provides for
indemnification of the officers and directors of the Company and eliminates
the liability of a director or officer to the Company or its Stockholders for
money damages to the fullest extent permitted by Maryland law.
Insofar as indemnification of directors, officers and controlling persons
of the Registrant for liabilities arising under the Securities Act may be
permitted, pursuant to the foregoing provisions, or otherwise, the
22
<PAGE>
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by the Registrant is against the public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
LEGAL OPINION
The validity of the Common Stock offered hereby will be passed upon for the
Company by Allen, Matkins, Leck, Gamble & Mallory LLP, Los Angeles, California
and Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The financial statements of the Company, included as part of the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 have been
audited by McGladrey & Pullen, LLP, independent certified public accountants,
as set forth in their report included therein and incorporated herein by
reference. Such financial statements, and audited financial statements to be
included in subsequently filed documents, will be incorporated herein in
reliance upon the report of McGladrey & Pullen, LLP and upon their authority
as experts in auditing and accounting.
23
<PAGE>
GLOSSARY
"Agent" means the administrator of the Plan, as of the date of this
Prospectus, Continental Stock Transfer & Trust Company.
"Authorization Form" means the form used to appoint the Agent as agent for
the Participant, to direct the Company to pay to the Agent such Participant's
cash dividends on Participating Shares and Plan Shares, and to direct the
Agent to purchase on the Dividend Reinvestment Date additional shares of
Common Stock with such dividends and to purchase on the relevant Cash Purchase
Investment Date additional shares of Common Stock with Cash Purchases.
"Beneficial Owner" means a Stockholder who beneficially owns shares of
Common Stock that are registered in a name other than such Stockholder's name,
such as in the name of a broker, bank or other nominee.
"Cash Purchase" means a voluntary cash investment in the Common Stock of
the Company through the Plan.
"Cash Purchase Due Date" means the date by which the Agent must receive the
following items in order for funds to be invested on the next Cash Purchase
Investment Date: (i) the Authorization Form (if person is not yet enrolled as
a Participant) and the Broker and Nominee Form (if necessary) at least one
business day before the commencement of the Pricing Period; (ii) the Request
for Waiver (if applicable) no later than 2:00 p.m. New York City time two
business days before the commencement of the Pricing Period; and (iii) a
check, money order or wire transfer no later than one business day prior to
the commencement of the related Pricing Period.
"Cash Purchase Investment Date" means the date of investment of the Cash
Purchases, generally on or about the third from the last business day of each
month, or in the case of purchases on the open market, no later than the last
business day of each month.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, $.01 par value, of the Company.
"Company" means Anworth Mortgage Asset Corporation.
"Discount Rate" means a discount ranging from 0% to 5% from the per share
Market Price for Dividend Reinvestments and the Market Price for Cash
Purchases on shares of newly issued Common Stock purchased by the Agent for
the Plan from the Company with reinvested dividends and funds from Cash
Purchases not in excess of the $5,000 limit.
"Dividend Payment Date" means the dividend payment date announced by the
Company from time to time, as reflected through 2002 in Schedule "A".
24
<PAGE>
"Dividend Reinvestment Date" means the date of the reinvestment of
dividends paid on Plan Shares and Participating Shares of Common Stock,
generally on or within fifteen (15) days after the Dividend Payment Date
except where completion at a later date is necessary or advisable under
applicable securities laws. Under normal market conditions, the Company
expects to reinvest the funds on the Dividend Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Initial Cash Purchase" means a Cash Purchase by a non-stockholder.
"Market Price for Cash Purchases" means the average of the daily high and
low Sales Prices, computed to four decimal places, of the Shares of Common
Stock as reported on the Stock Exchange during the Pricing Period prior to the
related Cash Purchase Investment Date.
"Market Price for Dividend Reinvestments" means the average of the daily
high and low sales prices, computed to four decimal places, of the shares of
Common Stock as reported on the Stock Exchange on the Dividend Reinvestment
Date.
"Optional Cash Purchase" means a Cash Purchase by a Stockholder.
"Participant" means a Record Owner of the Company's Stock, the Beneficial
Owner of the Company's Stock whose bank, broker or other nominee participates
on the Beneficial Owner's behalf, or a current non-stockholder who wishes to
participate in the Plan upon making an initial investment in the Common Stock
offered herein.
"Participating Shares" means all or a specified number of shares of Common
Stock owned by the Participant.
"Plan" means the Anworth Mortgage Asset Corporation Dividend Reinvestment
and Stock Purchase Plan, as amended from time to time.
"Plan Shares" means all whole and fractional shares of Common Stock
credited to a Participant's Plan account.
"Pricing Period" means the twelve Trading Days prior to the Cash Purchase
Investment Date for that month.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Exchange" means the NASDAQ-AMEX Stock Exchange.
"Stockholder of Record" means a Stockholder who owns shares of Common Stock
in his or its own name.
25
<PAGE>
"Stockholders" means record owners of the Common Stock of the Company.
"Threshold Price" means a minimum price applicable to the purchase of newly
issued shares of Common Stock purchased through cash investments made pursuant
to Requests for Waiver approved by the Company.
"Trading Day" means any day other than Saturday, Sunday or a legal holiday
on which the Stock Exchange is closed for trading or a day on which the Agent
is authorized or obligated by law to close.
"Waiver Discount" means a discount ranging from 0% to 5% from the per share
Market Price on shares of newly issued Common Stock purchased by the Plan from
the Company with funds from Cash Purchases in excess of the $5,000 limit.
26
<PAGE>
SCHEDULE A
CALENDAR FOR CASH PURCHASES
<TABLE>
<CAPTION>
Threshold Price and
Waiver Discount Set Date Pricing Period
(Waiver Request Date) Cash Purchase Due Date Commencement Date
- ------------------------ ---------------------- -----------------
<S> <C> <C>
October 5, 1999 October 7, 1999 October 8, 1999
November 4, 1999 November 5, 1999 November 8, 1999
December 7, 1999 December 9, 1999 December 10, 1999
January 5, 2000 January 7, 2000 January 10, 2000
February 4, 2000 February 7, 2000 February 8, 2000
March 8, 2000 March 10, 2000 March 13, 2000
April 4, 2000 April 6, 2000 April 7, 2000
May 5, 2000 May 8, 2000 May 9, 2000
June 6, 2000 June 8, 2000 June 9, 2000
July 5, 2000 July 7, 2000 July 10, 2000
August 8, 2000 August 10, 2000 August 11, 2000
September 5, 2000 September 7, 2000 September 8, 2000
October 6, 2000 October 9, 2000 October 10, 2000
November 7, 2000 November 9, 2000 November 10, 2000
December 5, 2000 December 7, 2000 December 8, 2000
January 5, 2001 January 9, 2001 January 10, 2001
February 2, 2001 February 6, 2001 February 7, 2001
March 6, 2001 March 8, 2001 March 9, 2001
April 4, 2001 April 6, 2001 April 9, 2001
May 4, 2001 May 8, 2001 May 9, 2001
June 5, 2001 June 7, 2001 June 8, 2001
July 6, 2001 July 9, 2001 July 10, 2001
August 7, 2001 August 9, 2001 August 10, 2001
September 4, 2001 September 6, 2001 September 7, 2001
October 5, 2001 October 9, 2001 October 10, 2001
November 6, 2001 November 8, 2001 November 9, 2001
December 5, 2001 December 7, 2001 December 10, 2001
January 8, 2002 January 10, 2002 January 11, 2002
February 5, 2002 February 7, 2002 February 8, 2002
March 5, 2002 March 7, 2002 March 8, 2002
April 5, 2002 April 8, 2002 April 9, 2002
May 7, 2002 May 9, 2002 May 10, 2002
June 4, 2002 June 6, 2002 June 7, 2002
July 5, 2002 July 9, 2002 July 10, 2002
August 6, 2002 August 8, 2002 August 9, 2002
September 4, 2002 September 6, 2002 September 9, 2002
October 8, 2002 October 10, 2002 October 11, 2002
November 5, 2002 November 7, 2002 November 8, 2002
December 6, 2002 December 9, 2002 December 10, 2002
</TABLE>
27
<PAGE>
CALENDAR FOR DIVIDEND REINVESTMENTS
<TABLE>
<CAPTION>
Record
Date Dividend Reinvestment Date
------ --------------------------
<S> <C>
10/01/99 10/11/99
01/04/00 01/14/00
04/03/00 04/13/00
07/03/00 07/13/00
10/02/00 10/12/00
01/02/01 01/12/01
04/02/01 04/12/01
07/02/01 07/12/01
10/01/01 10/11/01
01/02/02 01/14/02
04/01/02 04/11/02
07/01/02 07/11/02
10/01/02 10/11/02
</TABLE>
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale and distribution of the securities
being registered. All of the amounts shown are estimates except the Securities
and Exchange Commission registration fee and the NASDAQ-AMEX listing fee.
<TABLE>
<S> <C>
Registration fee.................................................... $ 594
Listing fee......................................................... $ 9,000
Legal fees and expenses............................................. $10,000
Accounting fees and expenses........................................ $ 1,500
Printing Expenses................................................... $ 3,000
Miscellaneous....................................................... $ 2,000
=======
Total............................................................. $26,094
=======
</TABLE>
Item 15. Indemnification of Directors and Officers
Maryland General Corporation Law provides that a Maryland corporation may
indemnify any person who is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise or employee benefit plan ("director"), that is made a party to any
proceeding by reason of service in that capacity unless it is established that
the act or omission of the director was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; or the director actually received an improper personal
benefit in money, property or services; or, in the case of any criminal
proceeding, the director had reasonable cause to believe that the act or
omission was unlawful. Indemnification may be against judgments, penalties,
fines, settlements, and reasonable expenses actually incurred by the director
in connection with the proceeding, but if the proceeding was one by or in the
right of the corporation, indemnification may not be made in respect of any
proceeding in which the director shall be adjudged to be liable to the
corporation. Such indemnification may not be made unless authorized for a
specific proceeding after a determination has been made, in a manner
prescribed by law, that indemnification is permissible in the circumstances
because the director has met the applicable standard of conduct. The director
must be indemnified for expenses, however, if he has been successful in the
defense of the proceeding or as otherwise ordered by a court. The law also
prescribes the circumstances under which a corporation may advance expenses
to, or obtain insurance or similar coverage for, directors.
The Company's Amended and Restated Articles of Incorporation provides for
indemnification of the officers and directors of the Company and eliminates
the liability of a director or officer to the Company or its Stockholders for
money damages to the fullest extent permitted by Maryland law.
Insofar as indemnification of directors, officers and controlling persons
of the Registrant for liabilities arising under the Securities Act of 1933 may
be permitted, pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission,
II-1
<PAGE>
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by the Registrant is against the public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibits Description
-------- --------------------------------------------------------------------
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 of the Registration
Statement on Form S-11 of the Registrant (Registration No. 333-
38641))
3.2 Bylaws of Registrant (incorporated by reference to Exhibit 3.2 of
Registration Statement on Form S-11 of the Registrant (Registration
No. 333-38641))
3.6 Specimen Common Stock Certificate (incorporated herein by reference
to Exhibit 4.1 to Amendment No. 1 to Registration Statement on Form
S-11 of Registrant (Registration No. 333-38641))
4.1 Dividend Reinvestment and Stock Purchase Plan
5.1 Opinion of Allen, Matkins, Leck, Gamble & Mallory LLP
5.2 Opinion of Piper & Marbury L.L.P.
20.1 Dividend Reinvestment and Stock Purchase Plan Brochure to
Stockholders
20.2 Dividend Reinvestment and Stock Purchase Plan Authorization Form
23.1 Consent of McGladrey & Pullen, LLP
23.2 Consent of Allen, Matkins, Leck, Gamble & Mallory LLP (included in
Exhibit 5.1)
23.3 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)
24.1 Power of Attorney (see page II-4)
</TABLE>
- --------
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the Registrant's Amended and Restated Articles of
Incorporation and Bylaws, and the Maryland General Corporate Law, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Monica, California on September 20, 1999.
ANWORTH MORTGAGE ASSET CORPORATION
/s/ Lloyd McAdams
By: _______________________________
Lloyd McAdams,
President and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Lloyd McAdams and Pamela J. Watson and
each of them, individually and without the other, his attorney-in-fact, each
with the power of substitution, for him in any and all capacities to sign any
and all amendments to this Registration Statement (including post-effective
amendments) and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Lloyd McAdams President and Director September 20, 1999
____________________________________ (Principal Executive
Lloyd McAdams Officer)
/s/ Joe E. Davis Director September 20, 1999
____________________________________
Joe E. Davis
/s/ Charles H. Black Director September 20, 1999
____________________________________
Charles H. Black
/s/ Pamela J. Watson Chief Financial Officer September 20, 1999
____________________________________ (Principal Financial and
Pamela J. Watson Accounting Officer)
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- ----------------------------------------------------------------------
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 of the Registration
Statement on Form S-11 of the Registrant (Registration No. 333-38641))
3.2 Bylaws of Registrant (incorporated by reference to Exhibit 3.2 of
Registration Statement on Form S-11 of the Registrant (Registration
No. 333-38641))
3.6 Specimen Common Stock Certificate (incorporated herein by reference to
Exhibit 4.1 to Amendment No. 1 to Registration Statement on Form S-11
of Registrant (Registration No. 333-38641))
4.1 Dividend Reinvestment and Stock Purchase Plan
5.1 Opinion of Allen, Matkins, Leck, Gamble & Mallory LLP
5.2 Opinion of Piper & Marbury L.L.P.
20.1 Dividend Reinvestment and Stock Purchase Plan Brochure to Stockholders
20.2 Dividend Reinvestment and Stock Purchase Plan Authorization Form
23.1 Consent of McGladrey & Pullen, LLP
23.2 Consent of Allen, Matkins, Leck, Gamble & Mallory LLP (included in
Exhibit 5.1)
23.3 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)
24.1 Power of Attorney (see page II-4)
</TABLE>
II-5
<PAGE>
EXHIBIT 4.1
ANWORTH MORTGAGE ASSET CORPORATION DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
AUGUST 27, 1999
1. PURPOSE OF THE PLAN.
The purpose of the Anworth Mortgage Asset Corporation (the "Company")
Dividend Reinvestment and Stock Purchase Plan (the "Plan") is to provide
existing stockholders (the "Stockholders") of the Company's outstanding common
stock (collectively the "Company Stock") and interested investors who are not
Stockholders with a convenient and economical method to purchase shares of the
Company's common stock (the "Common Stock") and to reinvest all or a portion of
their cash dividends on Company Stock in additional shares of Common Stock. The
Plan provides the Company with a means of raising additional capital for
operations on an economical basis. The aggregate number of shares of Common
Stock that may be purchased and issued under the Plan shall be 450,000,
provided, however, that the aggregate number of shares of Cash Purchases (as
defined herein) that may be purchased and issued under the Plan shall not exceed
225,000.
2. ADMINISTRATION
The Plan will be administered by Continental Stock Transfer & Trust Company
(the "Agent"), the Transfer Agent and Registrar for the Company. As the Agent
for Stockholders participating in the Plan, the Agent will administer the Plan
in accordance with the terms and conditions of the Plan as set forth below.
The Agent will establish an account under the Plan for each Participant
("Participant's Account"), and will credit to the Participant's Account cash
received by the Agent for the Participant from cash dividends paid on the shares
of Company Stock, including those full and fractional shares of Common Stock
(computed to four decimal places) acquired under the Plan, and all voluntary
cash contributions for Cash Purchases (as defined below) received by the Agent
from the Participant.
As soon as practicable after the purchases of shares of Common Stock have
been completed, the Agent will send each Participant a statement of their
account ("Account Statement"). The Account Statement will confirm the
transaction and itemize any previous investment activity for the calendar year.
ACCOUNT STATEMENTS SHOULD BE RETAINED BY THE PARTICIPANT FOR HIS OR HER OWN
RECORDS.
3. ADVANTAGES AND DISADVANTAGES OF THE PLAN
(a) Advantages.
----------
. The Plan provides Participants with the opportunity to purchase
additional shares of Common Stock, if desired, by automatically
reinvesting all or a portion of their cash dividends on Company Stock
in the dividend reinvestment program.
. In addition to the reinvestment of dividends, the Plan provides
Stockholders with the opportunity to make monthly investments of
Common Stock through optional cash purchases ("Optional Cash
Purchases"), subject to a minimum and maximum amount. Optional Cash
Purchases may be made by check, money order, wire transfer, or
electronic funds transfer from a predesignated bank account. Optional
Cash Purchases may be made occasionally or at regular intervals on the
Cash Purchase Investment Dates (as defined below), as the Participant
desires. Participants may make Optional Cash Purchases even if
dividends on their shares of Common Stock are not being reinvested.
EXHIBIT 4.1-Page 1
<PAGE>
. Shares purchased under the Plan may be purchased at the market price
which may be less than the book value of Common Stock.
. The Plan also provides non-Stockholders of the Company the opportunity to
become Participants by making an initial cash investment (referred to
as "Initial Cash Purchases" and, collectively with Optional Cash
Purchases, as "Cash Purchases") in the Company's Common Stock, subject
to a minimum and maximum amount.
. Shares purchased directly from the Company through dividend reinvestment
under the Plan will be issued without a sales commission and may be
issued at a discount, ranging from 0% to 5% (the "Discount Rate") to
the Market Price for Dividend Reinvestments (as defined herein). If
the Company should elect that the shares of Common Stock to be
purchased under the Plan are to be purchased in the open market
instead of directly from the Company, the Company will pay any
brokerage fees or commissions on such purchases, up to 5% of the
purchase price of the shares of the Common Stock. Any commissions in
excess of 5% will be paid by the Participants on a pro rata basis. The
Discount Rate will not apply to open market purchases or to privately
negotiated purchases of Common Stock.
. Shares purchased directly from the Company for investment through Cash
Purchases under the Plan will be issued without a sales commission and
may be issued at the Discount Rate to the Market Price for Cash
Purchases (as defined herein). If the Company elects that the shares
of Common Stock to be purchased under the Plan are to be purchased in
the open market instead of directly from the Company, the Company will
pay any brokerage fees or commissions on such purchases, up to 5% of
the purchase price of the shares of the Common Stock. Any commissions
in excess of 5% will be paid by the Participants on a pro rata basis.
The Discount Rate will not apply to open market purchases or to
privately negotiated purchases of Common Stock.
. Funds invested in the Plan are fully invested through the purchase of
fractions of shares, as well as full shares, and proportionate cash
dividends on fractions of shares are used to purchase additional
shares.
. Participants may direct the Agent to transfer, at any time and at no cost
to the Participant, all or a portion of the Participant's shares in
the Plan to a Plan account for another person.
. The Plan offers a "share safekeeping" service whereby, at no cost,
Participants may deposit their Common Stock certificates with the
Agent and have their ownership of such Common Stock maintained on the
Agent's records as part of their Plan account.
. Participants will receive statements containing year-to-date information
on all Plan transactions in a Participant's account within a
reasonable time after a transaction occurs, designed to simplify the
Participants' record keeping.
(b) Disadvantages.
-------------
. Participants in the Plan who reinvest dividends will be treated for
federal income tax purposes as having received a dividend on the
dividend payment date, as declared from time to time by the Company,
which occurs generally on the 10th day of the first month following
the last month of each calendar quarter (the "Dividend Payment Date");
such dividend may give rise to a tax payment obligation without
providing the Participant with immediate cash to pay such tax when it
becomes due. See "Federal Income Tax Consequences."
. Participants will have limited control regarding the specific timing of
purchases and sales under the Plan. Because Cash Purchases under the
Plan will be made no earlier than twelve business days
EXHIBIT 4.1-Page 2
<PAGE>
following receipt of an investment instruction, and because sales
under the Plan will be effected by the Agent only as soon as
practicable after its receipt of such instructions, a Participant may
be unable to achieve the same level of control over purchase and sale
timing that they might have for investments made outside the Plan.
. The Company may, in its sole discretion without prior notice to
Participants, change its determination as to whether shares of Common
Stock will be purchased by the Agent directly from the Company or
through open market or privately negotiated purchases. No Discount
Rate will be applied on shares purchased under the Plan in the open
market or in privately negotiated purchases, instead of directly from
the Company. The Company may also, without prior notice to
Participants, lower or eliminate the Discount Rate on shares to be
purchased directly from the Company for future investment periods. As
a result, Participants will generally be unable to depend on the
availability of a market discount regarding shares acquired under the
Plan.
. No interest will be paid by the Company or the Agent on dividends or
funds for Cash Purchases held pending reinvestment or investment or to
be returned to the Participant. In addition, Cash Purchases exceeding
$5,000 per month may be subject to return to the Participant (in whole
or proportionate part) without interest in the event that (i) a
threshold price has been established with respect to shares to be
purchased from the Company, and (ii) such threshold price is not met
for any day on which the NASDAQ-AMEX ("Stock Exchange") is open for
trading ("Trading Day") during the twelve Trading Days prior to the
date scheduled for investment of Cash Purchases for that month (the
"Pricing Period").
. With respect to Cash Purchases (including Cash Purchases exceeding $5,000
per month), while the Plan allows the Company to establish a Discount
Rate from the Market Price for Cash Purchases, there can be no
assurance that such Market Price for Cash Purchases, as so discounted,
will not be equal to or greater than the purchase price of the shares
on the relevant date of the date of the investment of the Cash
Purchases (the "Cash Purchase Investment Date").
4. ELIGIBILITY
Participation in the Plan is open to any person or entity, whether or not a
Stockholder of the Company, who fulfills the requirements for participation
described below under "Enrollment Procedures." A Stockholder who owns shares of
Company Stock in his or its own name is referred to herein as a "Stockholder of
Record." A Stockholder of Record may participate directly in the Plan. A
Stockholder who beneficially owns shares of Company Stock that are registered in
a name other than such Stockholder's name (for example, where shares are held in
the name of a broker, bank or other nominee) is referred to herein as a
"Beneficial Owner." A Beneficial Owner may participate in the Plan by either (i)
becoming a Stockholder of Record by having one or more shares transferred into
their own name, or (ii) coordinating their participation with their broker, bank
or other nominee who is the record holder to participate on their behalf. A
prospective investor who holds no shares of Company Stock may also participate,
at their option, either directly or through a broker, bank or other nominee by
following the Enrollment Procedures described below.
The Plan is intended for the benefit of investors in the Company and not
for persons or entities who accumulate accounts under the Plan over which they
have control for the purpose of exceeding the $5,000 per month maximum without
seeking the advance approval of the Company or who engage in transactions that
cause or are designed to cause aberrations in the price or trading volume of the
Common Stock. Notwithstanding anything in the Plan to the contrary, the Company
reserves the right to exclude from participation in the Plan, at any time, (i)
persons or entities who attempt to circumvent the Plan's standard $5,000 per
month maximum by accumulating accounts over which they have control or (ii) any
other persons or entities, as determined in the sole discretion of the Company.
For the purpose of this limitation, the Company reserves the right to aggregate
all Cash Purchases for Participants with more than one account using the same
name, address or social security or taxpayer identification number. For
Participants unable to supply a social security or taxpayer identification
number, participation may be
EXHIBIT 4.1-Page 3
<PAGE>
limited by the Company to only one Plan account. Also for the purpose of such
limitations, all Plan accounts that the Company believes to be under common
control or management or to have common ultimate beneficial ownership may be
aggregated. In the event the Company exercises its right to aggregate
investments and the result would be an investment in excess of $5,000 without an
approved Request for Waiver, the Company will return, without interest, as
promptly as practicable, any amount in excess of the investment limitations.
5. ENROLLMENT PROCEDURES
After being furnished a copy of the Prospectus:
(a) Stockholders of Record. Stockholders of Record may become Participants
----------------------
by delivering a completed authorization form (the "Authorization Form") to the
Agent.
(b) Beneficial Owners. Beneficial Owners are eligible to participate in the
-----------------
Plan, however, such Beneficial Owners must instruct their broker, bank or other
nominee to complete and sign the Authorization Form and forward it to its
securities depository, which will provide the Agent with the information
necessary to allow the Beneficial Owner to participate in the Plan. To
facilitate participation by Beneficial Owners, the Plan is eligible for the
Depository Trust Dividend Reinvestment Services. A broker and nominee form (the
"Broker and Nominee Form") is required to be used for Cash Purchases of a
Beneficial Owner whose broker, bank or other nominee holds the Beneficial
Owner's shares in the name of a major securities depository. See "Broker and
Nominee Form" below.
(c) Non-Stockholders. Non-Stockholders of the Company may become
----------------
Participants by directly delivering a completed Authorization Form to the Agent,
or through coordination with their broker, bank or other nominee as described in
(b) above for Beneficial Owners, along with an Initial Cash Purchase of not less
than $500 and not more than $5,000; provided, that Initial Cash Purchases of
more than $5,000 may be made if a Request for Waiver therefor is approved by the
Company.
Participation in the Plan will begin upon receipt of a properly completed
Authorization Form and/or Broker and Nominee Form (and, in cases of cash
investments exceeding $5,000, receipt and approval by the Company of a properly
completed Request for Wavier). The funds for a Cash Purchase may be submitted
with the initial Authorization Form. Thereafter, it will not be necessary to
submit an additional Authorization Form and Cash Purchases may be made monthly
or, periodically, at the election of the Participant. See Section 8 for more
details on Cash Purchases and Dividend Reinvestments.
With respect to the dividend reinvestment portion of the Plan, the
Authorization Form (and the Broker Nominee Form if necessary) must be received
by the Agent at least two (2) calendar days prior to the Record Date established
for a particular dividend in order for a Stockholder to be eligible for
reinvestment of such dividends under the Plan for that related dividend,
otherwise, reinvestment will begin on the relevant date of the reinvestment of
dividends (the "Dividend Reinvestment Date") following the next record date.
With respect to Cash Purchases, the Agent must receive the Authorization Form,
good funds (as defined in Section 8(b)(vi)), and the Broker Nominee Form if
necessary, at least one business day prior to the commencement of the Pricing
Period in order for a Participant's Cash Purchase to be invested on the related
Cash Purchase Investment Date, otherwise, such authorization will be effective
as of the next Cash Purchase Investment Date and the funds will be returned to
the Participant as provided in Section 8(b)(vi).
6. PARTICIPATION OPTIONS
The Authorization Form provides for the purchase of additional shares of
Common Stock through the following participating options:
(a) Full Dividend Reinvestment. If the "Full Dividend Reinvestment" option
--------------------------
is elected, the Agent will apply all cash dividends on all shares of Company
Stock then or subsequently registered in the Participant's
EXHIBIT 4.1 -Page 4
<PAGE>
name, including all whole and fractional shares of Common Stock, together with
any voluntary cash contributions for Cash Purchases towards the purchase of
additional shares of Common Stock;
(b) Partial Dividend Reinvestment. If the "Partial Dividend Reinvestment"
-----------------------------
option is elected, the Agent will apply all cash dividends on the number of
shares of Company Stock then registered in the Participant's name and designated
in the appropriate space on the Authorization Form and all cash dividends on
shares of Common Stock purchased for the Participant's Account pursuant to the
Plan, together with any voluntary cash contributions for Cash Purchases towards
the purchase of additional shares of Common Stock; and
(c) Cash Purchases Only. If "Cash Purchases Only" is elected, the Agent
-------------------
will only apply the voluntary cash contributions for Cash Purchases received
from the Participant towards the purchase of additional shares of Common Stock.
Under each of the options, any future cash dividends on shares of Company
Stock credited to the Participant's Account will be reinvested, including
dividends on shares of Common Stock purchased with any voluntary cash
contributions for Cash Purchases, until the Participant specifies otherwise or
the Participant's Account is terminated. Participants may change their
participation options at any time by requesting a new Authorization Form and
returning it to the Agent at the address set forth below.
7. BROKER AND NOMINEE FORM
The Broker and Nominee Form provides the only means by which a broker, bank
or other nominee holding shares of a Beneficial Owner, or planning to hold
shares of an interested investor who is not currently a Stockholder of the
Company, in the name of a major securities depository may invest Cash Purchases
within the minimum and maximum investment limitation established for the Plan
(see "Purchase and Price of Shares" below) on behalf of such Beneficial Owner or
interested investor. A Broker and Nominee Form must be delivered to the Agent
each time such broker, bank or other nominee transmits Cash Purchases. Broker
and Nominee Forms will be furnished at any time upon request to the Agent.
The Broker and Nominee Form and appropriate instructions must be received
by the Agent not later than 12:00 Noon New York City time on the business day
immediately preceding the relevant Pricing Period (as defined below under
"Purchase and Price of Shares") in order to be invested on the Cash Purchase
Investment Date; otherwise the Cash Purchase will be returned, without interest.
Shares issued pursuant to a properly completed Broker and Nominee Form will
not be deemed Plan shares, therefore, subsequent dividends will be paid in cash
unless otherwise instructed by the Beneficial Owner (See "Enrollment Procedures"
above for a discussion of the requirements for Beneficial Owner participation in
the reinvestment of dividends).
8. PURCHASE OF AND PRICE OF SHARES.
(a) Dividend Reinvestment. The Agent will apply cash credited to the
---------------------
Participant's Account pursuant to Paragraph 5 above to the purchase of full
and/or fractional interests in shares of Common Stock and will credit the number
of shares of Common Stock so purchased to the Participant's Account. The Agent
will apply such funds toward the purchase of shares of Common Stock in the open
market or from authorized but unissued shares of Common Stock for the
Participant's Account.
(i) Discount Rate on Dividend Reinvestments. The authorized but
---------------------------------------
unissued shares of Common Stock purchased by the Agent directly from the Company
pursuant to the reinvestment of dividends will be issued at the Discount Rate to
the then current Market Price for Dividend Reinvestments (as defined below) as
of the Dividend Reinvestment Date. The Discount Rate may be zero and is subject
to change for future dividend reinvestments, or complete discontinuance at the
Company's discretion, without prior notice to the Participants after a review of
current market conditions, the level of participation in the Plan and the
Company's current and projected
EXHIBIT 4.1-Page 5
<PAGE>
capital needs. The Discount Rate will only be in effect for purchases of shares
of Common Stock directly from the Company; if the Company elects to purchase the
shares in the open market or in privately negotiated transactions, the Discount
Rate will not be applied to such purchases for the Participant's Account.
(ii) Price per Share for Reinvested Dividends. The "Market Price for
----------------------------------------
Dividend Reinvestments" per share of Common Stock acquired directly from the
Company shall be the average of the daily high and low sales prices, computed to
four decimal places, of the shares of Common Stock as reported on the Stock
Exchange on the Dividend Reinvestment Date, or if no trading occurs in the
Common Stock on the Dividend Reinvestment Date, the average of the high and low
sales prices for the first Trading Day immediately preceding the Dividend
Reinvestment Date for which trades are reported. If the Company elects to
purchase the shares on the open market or in privately negotiated transactions,
the price per share of Common Stock acquired through such open market or
privately negotiated transactions will be the weighted average of the actual
prices paid, computed to four decimal places, for all the Common Stock purchased
by the Agent in connection with such open market purchases, without application
of the Discount Rate. The Agent shall pay brokerage commissions in an amount
determined by the prevailing rates at the time of purchase. Such commissions
will be reimbursed by the Company, but in no event shall the Company be
obligated to pay commissions in excess of five percent (5%) of the purchase
price of the shares of Common Stock. Any commissions in excess of five percent
(5%) will be paid by the Participants on a pro rata basis. Such open market
purchases may be made, at the Agent's option, on any securities exchange where
the shares of Common Stock are traded, in the over-the-counter market or in
negotiated transactions with third persons, and may be on such terms as to
price, delivery, and otherwise as the Agent may determine.
(iii) Dividend Reinvestment Date. The Dividend Reinvestment Date will
--------------------------
be on or within fifteen (15) days after the Dividend Payment Date except where
completion at a later date is necessary or advisable under applicable securities
laws. Under normal market conditions, the funds are expected to be reinvested on
the Dividend Payment Date. For a schedule of expected Dividend Reinvestment
Dates through 2002, see Schedule A of the Prospectus.
(b) Cash Purchases. A Stockholder may also make Optional Cash Purchases of
--------------
shares of Common Stock, subject to a minimum of $100 and a maximum of $5,000
(except in cases covered by a Request for Waiver as discussed below). New
investors, not currently Stockholders of the Company, may make Initial Cash
Purchases subject to a minimum of $500 and a maximum of $5,000 (except in cases
covered by a Request for Waiver). For purposes of these limitations on Cash
Purchases, all Plan accounts under the common control or management of a
Participant may be aggregated at the Company's sole discretion.
(i) Discount Rate on Cash Purchases. The authorized but unissued
-------------------------------
shares of Common Stock purchased by the Agent directly from the Company for Cash
Purchases not in excess of the $5,000 maximum will be issued at the Discount
Rate to the then current Market Price for Cash Purchases as of the Cash Purchase
Investment Date. The Discount Rate may be zero and is subject to change for
future investment periods, or complete discontinuance at the Company's
discretion, without prior notice to the Participants after a review of current
market conditions, the level of participation in the Plan and the Company's
current and projected capital needs. The Discount Rate will only be in effect
for purchases of shares of Common Stock directly from the Company; the Discount
Rate will not be applied to purchases for the Participant's Account in the open
market or in privately negotiated transactions.
(ii) Price per Share for Cash Purchases. The "Market Price for Cash
----------------------------------
Purchases" per share shall be the average of the daily high and low sales
prices, computed to four decimal places, of the shares of Common Stock as
reported on the Stock Exchange during the Pricing Period prior to the related
Cash Purchase Investment Date. No commission shall be paid with respect to
purchases of authorized but unissued shares of Common Stock directly from the
Company. If the Company elects to purchase the shares on the open market or in
privately negotiated transactions, the price per share of Common Stock acquired
through such open market or privately negotiated transactions will be the
weighted average of the actual prices paid, computed to four decimal places, for
all the Common Stock purchased by the Agent in connection with such open market
purchases, without application of the Discount Rate. The Agent shall pay
brokerage commissions in an amount determined by the
EXHIBIT 4.1-Page 6
<PAGE>
prevailing rates at the time of purchase. Such commissions will be reimbursed by
the Company, but in no event shall the Company be obligated to pay commissions
in excess of five percent (5%) of the purchase price of the shares of Common
Stock. Any commissions in excess of five percent (5%) will by paid by the
Participants on a pro rata basis. Such open market purchases may be made, at the
Agent's option, on any securities exchange where the shares of Common Stock are
traded, in the over-the-counter market or in negotiated transactions with third
persons, and may be on such terms as to price, delivery, and otherwise as the
Agent may determine.
(iii) Waiver of Maximum Cash Purchase Limitation. Cash Purchases in
------------------------------------------
excess of $5,000 may be made only upon acceptance in writing by the Company of a
completed written Request for Waiver form from the Participant. A Request for
Waiver must be received by the Company at its corporate address or via facsimile
at (310) 434-0100 no later than 2:00 p.m. New York City time on the second
business day preceding the relevant Pricing Period. Request for Waiver forms may
be obtained from the Company. The Company may establish a discount rate
different than the Discount Rate, ranging from 0% to 5% (the "Waiver Discount")
regarding shares purchased from the Company for Cash Purchases exceeding $5,000
per month and approved by the Company pursuant to a Request for Waiver.
Participants may obtain the applicable Waiver Discount by telephoning the
Company three business days prior to the first day of the Pricing Period. It is
solely within the Company's discretion as to whether any such approval for cash
investments in excess of $5,000 will be granted. In deciding whether to approve
a Request for Waiver, the Company will consider relevant factors including, but
not limited to: whether the Plan is then acquiring newly issued or treasury
shares directly from the Company or acquiring shares from third parties in the
open market or in privately negotiated transactions; the Company's need for
additional funds; the attractiveness of obtaining such additional funds through
the sale of Common Stock as compared to other sources of funds; the purchase
price likely to apply to any sale of Common Stock under the Plan; the
Participant submitting the request; the extent and nature of such Participant's
prior participation in the Plan; the number of shares of Common Stock held by
such Participant and the aggregate amount of cash investments for which Requests
for Waiver have been submitted by all Participants. If such requests are
submitted for any Cash Purchase Investment Date for an aggregate amount in
excess of the amount the Company is then willing to accept, the Company may
honor such requests in order of receipt, pro rata or by any other method that
the Company determines in its sole discretion to be appropriate. The Company
anticipates that it will respond to each Request for Waiver by the close of
business (7:00 p.m. New York City time) on the second business day preceding the
relevant Pricing Period. Any Request for Waiver accepted by the Company will be
subject to all the terms and conditions provide in Section 8(b) above, except
those terms and conditions expressly changed by this Section.
(iv) Threshold Price. Notwithstanding anything contained herein to the
---------------
contrary, the Company may establish for each Pricing Period a threshold price
applicable to the purchase of newly issued shares of Common Stock purchased
through cash investments made pursuant to Requests for Waiver approved by the
Company (the "Threshold Price"). The Threshold Price, if any, will be
established by the Company at least three business days prior to the first day
of the Pricing Period, and will be established in the Company's sole discretion
after a review of current market conditions and other relevant factors.
Participants may obtain the applicable Threshold Price and Discount Waiver by
telephoning the Company. The Threshold Price will be a stated dollar amount that
the average of the high and low sale prices of the Common Stock on the Stock
Exchange for a Trading Day of the Pricing Period must equal or exceed. In the
event that such Threshold Price is not satisfied for a Trading Day of the
Pricing Period, then such Trading Day and the trading prices for that day will
be excluded from (i) the Pricing Period and (ii) the determination of the
purchase price of the Common Stock for all cash investments made pursuant to
Requests for Waiver approved by the Company. Thus, for example, if the Threshold
Price is not satisfied for three of the twelve Trading Days, then the purchase
price of the Common Stock will be based upon the remaining nine Trading Days for
which the Threshold Price was satisfied.
Each Trading Day of a Pricing Period for which the Threshold Price is not
satisfied will cause the return of a portion of any cash investments made
pursuant to Requests for Waiver approved by the Company. The returned amount
will equal one-twelfth of such cash investments for each Trading Day that the
Threshold Price is not satisfied. Thus, for example, if the Threshold Price is
not satisfied for three Trading Days, then 3/12 (i.e., 25%) of such cash
investments will be returned without interest.
EXHIBIT 4.1-Page 7
<PAGE>
The Threshold Price and return procedure discussed above apply only to Cash
Purchases made pursuant to Requests for Waiver approved by the Company and not
to the reinvestment of dividends or Cash Purchases that do not exceed $5,000.
(v) Cash Purchase Investment Date. The Cash Purchase Investment Date
-----------------------------
for Cash Purchases will occur on or about the third from the last business day
of each month, or in the case of purchases in the open market, no later than the
last business day of each month. For a schedule of expected Cash Purchase Due
Dates and Cash Purchase Investment Dates through 2002, see Schedule A of the
Prospectus.
(vi) Timing and Procedure for Cash Purchases. Each month the Agent
---------------------------------------
will apply a Cash Purchase for which good funds are timely received to the
purchase of shares of Common Stock for the account of the Participant on the
next Cash Purchase Investment Date. In order for funds to be invested on the
next Cash Purchase Investment Date, the Agent must have received the following
in a timely fashion: (i) the Authorization Form (if purchaser has not yet
enrolled as a Participant) and the Broker and Nominee Form (if necessary) at
least one business day before the commencement of the Pricing Period; (ii) the
Request for Waiver (if applicable) no later than 2:00 p.m. New York City time
two business days before the commencement of the Pricing Period; and (iii) a
check, money order or wire transfer no later than one business day prior to the
commencement of the related Pricing Period (the "Cash Purchase Due Date")
although the Company may, within its sole discretion, accept funds for Cash
Purchases after the Cash Purchase Due Date in the event of unanticipated delays
or inadvertence by the Participant. Such check, money order or wire transfer
must have cleared before the related Cash Purchase Investment Date. Wire
transfers may be used only if approved verbally in advance by the Agent, and
instructions for Wire Transfers can be obtained from the Agent. Checks and money
orders are accepted subject to timely collection as good funds and verification
of compliance with the terms of the Plan. Checks or money orders should be made
payable to "Continental Stock Transfer & Trust Company -- ANH Dividend
Reinvestment and Stock Purchase Plan." Checks returned for any reason will not
be resubmitted for collection. Generally, funds received for Cash Purchases
which are not invested under the Plan will be returned to Participants without
interest at the end of the Pricing Period; such Cash Purchases may be
resubmitted by a Participant prior to the commencement of the next or a later
Pricing Period. Upon a Participant's written request received by the Agent no
later than two business days prior to the Pricing Period, a timely Cash Purchase
not already invested under the Plan will be canceled or returned to the
Participant as soon as practical. However, in the latter event, no refund of a
check or money order will be made until the funds have been actually received by
the Agent. In making purchases for the Participant's Account, the Agent may
commingle the Participant's funds with those of other Participants in the Plan.
NO INTEREST WILL BE PAID ON FUNDS HELD BY THE AGENT PENDING INVESTMENT OR RETURN
TO THE PARTICIPANT. FUNDS FOR CASH PURCHASES DO NOT CONSTITUTE DEPOSITS OR
SAVINGS ACCOUNTS AND ARE NOT INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
9. FEDERAL INCOME TAX CONSEQUENCES.
The following discussion generally summarizes the material federal income
tax consequences, under current law, that may result from participation in the
Plan. This discussion is not intended to be exhaustive or a substitute for a
careful analysis of all of the tax issues which may affect a person's decision
to participate in the Plan. It does not address all potentially relevant
federal income tax matters, including consequences peculiar to persons subject
to special provisions of the federal income tax law (such as banks, insurance
companies, and foreign persons). THE FOLLOWING DISCUSSION IS GENERAL
INFORMATION ONLY, AND EACH PARTICIPANT IS STRONGLY URGED TO CONSULT WITH, AND
MUST RELY ON THE ADVICE OF, HIS OR HER OWN TAX ADVISORS WITH RESPECT TO THE TAX
IMPLICATIONS OF PARTICIPATING IN THE PLAN AND THE DISPOSITION OF ANY SHARES OF
COMMON STOCK PURCHASED PURSUANT TO THE PLAN.
The tax discussion set forth below is based upon the Internal Revenue Code
of 1986, as in effect on the date hereof ("IRC"), existing and proposed Treasury
Regulations promulgated by the United States Treasury Department as of the date
hereof, and current administrative interpretations and court decisions in
existence as of the date hereof, including, without limitation, various rulings
of the Internal Revenue Service (the "IRS") regarding
EXHIBIT 4.1-Page 8
<PAGE>
several types of dividend reinvestment plans, although no ruling has been issued
or requested regarding the Plan. PRESENT FEDERAL INCOME TAX LAWS AFFECTING THE
COMPANY AND THE PARTICIPANTS COULD BE SUBSEQUENTLY CHANGED BY NEW LEGISLATION,
TREASURY REGULATIONS, ADMINISTRATIVE INTERPRETATIONS AND/OR COURT DECISIONS, OR
DIFFERENCES OF OPINION COULD SUBSEQUENTLY ARISE AS TO THE PRESENT INTERPRETATION
OF THE EXISTING TAX LAWS. THE COMPANY IS UNDER NO OBLIGATION TO (AND IT WILL
NOT) PROVIDE ANY INFORMATION CONCERNING (OR UPDATING) ANY CHANGES TO THE TAX
LAWS DESCRIBED HEREIN. Furthermore, the discussion herein is not binding upon,
nor considered authority by, the IRS or any court, and no assurance can be
provided that the tax treatment claimed by any Participant will not be
successfully challenged by the IRS.
(a) Reinvested Dividends. Participants who participate in the
--------------------
dividend reinvestment aspect of the Plan will be treated for federal income tax
purposes as receiving, on each Dividend Reinvestment Date, a distribution in an
amount equal to the fair market value of the shares of Common Stock received (or
credited to the Participant's Account) (plus a pro rata portion of any brokerage
cost incurred in the open market purchases of the shares of Common Stock). That
portion of the distribution that is a "dividend" (as defined in IRC Section 316)
shall be included in the Participant's gross income. The term "dividend" is
defined in IRC Section 316 as any distribution of property made by a corporation
to its shareholders out of current or accumulated earnings and profit. When
shares of Common Stock are purchased directly from the Company (pursuant to the
dividend reinvestment aspect of the Plan), the amount of the distribution will
be the full fair market value of the shares of Common Stock as of the Dividend
Reinvestment Date, notwithstanding that the Participant may have acquired such
shares of Common Stock at the Discount Rate.
Shares of Common Stock acquired for Participants pursuant to the dividend
reinvestment aspect of the Plan will have an initial tax basis to the
Participant equal to the amount the Participant is treated as having received as
a dividend. The holding period for a share of Common Stock (including a
fractional share) generally will begin on the day after the Dividend
Reinvestment Date upon which the share of Common Stock was acquired.
The reinvestment of dividends does not relieve Participants of (nor change,
except as provided above) any federal income tax consequence that would
otherwise accompany the actual distribution of such dividends. Participants who
are Qualified Plans or IRAs should be able to continue to exclude the reinvested
dividends from unrelated business taxable income (to the same extent such
Participants would have been able to exclude the reinvested dividends had such
dividends been distributed and not reinvested) unless such Participants have
borrowed to acquire their shares of Common Stock. The Agent will report to each
Participant for tax purposes the dividends to be credited to the account as well
as any discounts or costs incurred by the Company. Such information will also
be furnished to the IRS to the extent required by law. In addition, the IRC
imposes certain reporting obligations on brokers and other intermediaries. As a
result, the Agent will be required to report to the IRS and the Participant any
sale of Common Stock by it on behalf of a Participant.
(b) Cash Purchases. Participants who acquire shares of Common Stock
--------------
(pursuant to the Cash Purchase aspect of the Plan) without the benefit of the
Discount Rate, will neither realize gross income upon receipt of such shares nor
be treated as having received a distribution. Any such Participant will have an
initial tax basis in such shares of Common Stock equal to the amount paid for
such shares.
However, Participants who acquire shares of Common Stock (pursuant to
the Cash Purchase aspect of the Plan) with the benefit of the Discount Rate, may
be treated as receiving a distribution equal to the amount of the discount each
time such Participants acquire shares pursuant to the Plan. At present, it
appears the IRS will take the position that Participants who acquire shares at a
discount pursuant to both the dividend reinvestment and optional purchase
aspects of the Plan, will be forced to treat the amount of the discount as a
distribution (whether the shares are acquired pursuant to the optional purchase
aspect or otherwise). In this regard, such Participants will be treated as
receiving distributions of cash, each time such Participants acquire shares of
Common Stock at the Discount Rate, in an amount equal to the excess, if any, of
the fair market value of the shares of Common Stock so acquired (determined upon
the date on which they were acquired) (plus a pro rata portion of
EXHIBIT 4.1-Page 9
<PAGE>
the brokerage cost incurred in open market purchases) over the amount of the
cash payment made to acquire such shares of Common Stock. Any such acquired
shares will have an initial tax basis equal to the amount of the cash payment
made plus the excess, if any, of the fair market value of the shares of
---
Common Stock purchased over the amount of the cash payment made to acquire such
shares. The fair market value on an acquisition date is likely to differ from
the Market Price for Cash Purchases for the pricing period immediately preceding
the related Cash Purchase (which determines the number of shares of Common Stock
acquired). The amount treated as a distribution will constitute a dividend for
federal income tax purposes to the same extent that a cash distribution of such
amount would be so treated. The holding period for a share of Common Stock
(including fractions thereof) generally begins on the day after the Cash
Purchase Investment Date upon which the share of Common Stock was acquired.
Participants who acquire shares at a discount pursuant to only the optional
purchase aspect of the Plan (i.e. Participants who do not participate in the
---
dividend reinvestment aspect of the Plan) need not treat the amount of any such
discount as a distribution. Such Participants would take an initial tax basis
in the purchased shares of Common Stock equal to the actual purchase price paid
by such Participants.
The foregoing general discussion relates only to federal income taxation.
Participants should consult their tax advisors as to the possible application of
state and local tax laws prior to electing to participate in the Plan.
10. VOTING.
The Agent will not vote shares of Common Stock that it holds for a
Participant's Account except as directed by the Participant.
11. CERTIFICATES.
Shares of Common Stock purchased under the Plan are registered in the name
of a nominee and shown on each Participant's Account Statement. However, a
Participant may request a certificate for any of the whole shares of Common
Stock which have accumulated in such Participant's Account by writing a letter
of instruction to the Agent. Each certificate issued will be registered in the
name or names in which the account is maintained, unless otherwise instructed in
writing. If the certificate is to be issued in a name other than the name on the
Participant's Account, the Participant or Participants must have his or her
signature(s) guaranteed by a commercial bank or a broker. Certificates for
fractional shares of Common Stock will not be issued in any case. Dividends will
continue to be paid on the cumulative holdings of both full and fractional
shares of Common Stock remaining in the Participant's Account and will
automatically be reinvested.
Participants who wish to do so may deposit Company Stock certificates
registered in their names with the Agent for credit under the Plan. There is no
charge for such deposits and by making such deposit the Participant will be
relieved of the responsibility for loss, theft or destruction of the
certificate.
Shares of Company Stock credited to a Participant's Account may not be
pledged or assigned, and any attempted pledge or assignment is void. A
Participant who wishes to pledge or assign shares of Common Stock credited to
the Participant's Account must first withdraw such shares of Common Stock from
the account.
12. TERMINATION OF PARTICIPATION.
A Participant's Account may be terminated at any time by notifying the
Agent in writing. With respect to the reinvestment of dividends, unless the
termination notice is received by the Agent at least two (2) business days prior
to any Dividend Record Date, it cannot be processed until after purchases made
from the dividends paid have been completed and credited to Participant's
Account. All dividends with a record date after timely receipt of notice for
termination will be sent directly to the Participant. With respect to the
investment of Cash Purchases, unless the termination notice is received by the
Agent at least two (2) business days prior to the commencement of the Pricing
Period, it cannot be processed until after any funds received for Cash Purchases
for that Cash Purchase Investment
EXHIBIT 4.1-Page 10
<PAGE>
Date have been invested. The Agent may terminate the account by notice in
writing mailed to the Participant. Once termination has been effected, the Agent
will issue to the Participant, without charge, certificates for the full shares
of Common Stock held in the account or, if the Participant so requests, sell the
full shares of Common Stock held under the Plan, deduct brokerage commissions,
transfer taxes and a service charge (if any) and deliver the proceeds to the
Participant. The Participant's interest in any fractional share of Common Stock
held in his account at termination will be paid in cash based on the average of
the daily high and low sales price computed to four decimal places, of the
shares of Common Stock as reported on the Stock Exchange on the date of
termination. A Participant will also be entitled to the uninvested portion of
any funds received for Cash Purchases if notice of termination is received prior
to the date when the Agent becomes obligated to pay for purchased shares of
Common Stock.
If a Participant disposes of all shares of Company Stock represented by
certificates registered in his own name on the books of the Company but does not
give notice of termination under the Plan, the Agent may continue to reinvest
the dividends on his shares of Company Stock under the Plan until otherwise
directed.
A Participant who changes his or her address must notify the Agent
immediately. If a Participant changes residences to a state where the shares of
Common Stock offered pursuant to the Plan are not registered or exempt from
registration under applicable securities laws, the Company may deem the
Participant to have terminated participation in the Plan.
13. STOCK DIVIDENDS.
Any stock dividends or stock splits distributed by the Company on shares of
Company Stock held by the Agent for the Participant will be credited to the
Participant's Account. In the event the Company makes available to its
Stockholders rights to purchase additional shares of Common Stock or other
securities, the Participant will receive appropriate instructions in connection
with all such rights directly from the Agent in order to permit a Participant to
determine what action he desires to take.
14. RESPONSIBILITY OF THE AGENT.
The Agent shall not be liable hereunder for any act done in good faith, or
for any good faith omission to act, including without limitation, any claims of
liability (1) arising out of failure to terminate any Participant's Account upon
such Participant's death prior to receipt of notice in writing of such death and
(2) with respect to the prices at which shares of Common Stock are purchased or
sold for the Participant's Account and the times such purchases or sales are
made.
15. AMENDMENT OF PLAN.
The Plan may be amended or supplemented by the Agent or the Company at any
time or times, including the period between Dividend Record Date and the
relisted Dividend Reinvestment Date. Any such amendment may include an
appointment by the Agent in its place and stead a successor Bank or other agent
under these terms and conditions. Notice will be sent to Participants of any
amendments as soon as practicable after such action by the Company.
16. APPLICABLE LAW.
The terms and conditions of this authorization shall be governed by the
laws of the State of Maryland.
17. EFFECTIVE DATE.
The date of the adoption of the Plan is August 27, 1999.
EXHIBIT 4.1-Page 11
<PAGE>
18. PLAN OF DISTRIBUTION.
Except to the extent the Agent purchases Common Stock in open market
transactions, the Common Stock acquired under the Plan will be sold directly by
the Company through the Plan. The Company may sell Common Stock to Stockholders
(including brokers or dealers) who, in connection with any resales of such
shares, may be deemed to be underwriters. Such shares, including shares acquired
pursuant to Request for Waivers granted with respect to the Cash Purchase
feature of the Plan, may be resold in market transactions (including coverage of
short positions) on any national securities exchange on which shares of Common
Stock trade or in privately negotiated transactions. The Common Stock is
currently listed on the New York Stock Exchange. Under certain circumstances, it
is expected that a portion of the shares of Common Stock available for issuance
under the Plan will be issued pursuant to such waivers. The difference between
the price such owners pay to the Company for shares of Common Stock acquired
under the Plan, after deduction of the applicable discount from the Market Price
for Cash Purchases, and the price at which such shares are resold, may be deemed
to constitute underwriting commissions received by such owners in connection
with such transactions.
Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no total maximum number of shares that can be
issued pursuant to the reinvestment of dividends. From time to time, financial
intermediaries may engage in positioning transactions in order to benefit from
the discount from the Market Price for Dividend Reinvestments of Common Stock
acquired through the reinvestment of dividends under the Plan.
Except with respect to open market purchases of Common Stock relating to
reinvested dividends or Cash Purchases, the Company will pay any and all
brokerage commissions and related expenses incurred in connection with purchases
of Common Stock under the Plan, up to 5% of the Market Price for the Dividend
Reinvestments or Market Price for Cash Purchases of the Common Stock. Upon
withdrawal by a Participant from the Plan by the sale of Common Stock held under
the Plan, the Participant will receive the proceeds of such sale less a nominal
fee per transaction paid to the Agent (if such resale is made by the Plan
Administrator at the request of a Participant), any related brokerage
commissions and any applicable transfer taxes.
Common Stock may not be available under the Plan in all states. This
Prospectus does not constitute an offer to sell, or a soliciting of an offer to
buy, any Common Stock or other securities in any state or any other jurisdiction
to any person to whom it is unlawful to make such offer in such jurisdiction.
19. INQUIRIES REGARDING THE PLAN
All correspondence and questions regarding the Plan, a Participant's
Account or the Discount Rate, Waiver Rate, or Threshold Price should be directed
to:
Anworth Mortgage Asset Corporation
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
Telephone: (310) 394-0115
Facsimile: (310) 434-0100
Attn: Pamela J. Watson
or
ANH Dividend Reinvestment and Stock Purchase Plan
Continental Stock Transfer & Trust Company
2 Broadway
19th Floor
New York NY 10004
Telephone: (212) 509-4000
EXHIBIT 4.1-Page 12
<PAGE>
Facsimile: (212) 509-5150
20. EXECUTION.
To record the adoption of the Plan as of August 27, 1999, the Company has
caused this Plan to be executed in the name and on behalf of the Company by a
duly authorized officer.
ANWORTH MORTGAGE ASSET CORPORATION,
a Maryland corporation
By: /s/ Lloyd McAdams
--------------------------------
Lloyd McAdams, President
EXHIBIT 4.1-Page 13
<PAGE>
EXHIBIT 5.1
ALLEN, MATKINS, LECK, GAMBLE & MALLORY LLP
1999 AVENUE OF THE STARS, SUITE 1800
LOS ANGELES, CALIFORNIA 90067
TELEPHONE: (310) 788-2400
FACSIMILE: (310) 788-2410
September 22, 1999
Anworth Mortgage Asset Corporation
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
Re: Sale of Shares Pursuant to the Dividend Reinvestment and Stock
Purchase Plan
Dear Sir/Madam:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement"), of Anworth Mortgage Asset Corporation, a
Maryland corporation (the "Company") filed with the Securities and Exchange
Commission (the "SEC") in connection with the registration by the Company of up
to 450,000 shares (the "Shares") of Common Stock, $.01 par value per share (the
"Common Stock"). The Shares are to be sold pursuant to a Dividend Reinvestment
and Stock Purchase Plan (the "Plan").
For purposes of this opinion, we have examined such matters of law and
originals, or copies, certified or otherwise, identified to our satisfaction, of
such documents, corporate records and other instruments as we have deemed
necessary. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as certified,
photostatic or conformed copies, and the authenticity of the originals of all
such latter documents. We have also assumed the due execution and delivery of
all documents where due execution and delivery are prerequisites to the
effectiveness thereof. We have relied upon certificates of public officials and
certificates of officers of the Company for the accuracy of material, factual
matters contained therein which were not independently established.
Based upon the foregoing and all other instruments, documents and
matters examined for the rendering of this opinion, it is our opinion that
subject to effectiveness of the Registration Statement with the SEC (such
Registration Statement being hereinafter referred to as the "Registration
Statement") and to registration or qualification under the securities laws of
the states in which the securities may be sold, upon the sale and issuance of
the Shares in the manner referred to in the Registration Statement and in
accordance with the terms of the Plan and upon payment therefor, the Shares will
be legally issued, fully paid and nonassessable shares of the Common Stock of
the Company.
With respect to the opinion set forth above, we have relied upon the
opinion of Piper & Marbury L.L.P., dated September 22, 1999, a copy of which has
been delivered to you, as to matters of Maryland law.
We express no opinion as to the applicability or effect of any laws,
orders or judgments of any state or jurisdiction other than federal securities
laws and the substantive laws of the State of California. Furthermore, our
opinion is based solely upon existing laws, rules and regulations, and we
undertake no obligation to advise you of any changes that may be brought to our
attention after the date hereof.
Exhibit 5.1 - Page 1
<PAGE>
We consent to the use of our name under the caption "Legal Matters,"
in the Prospectus, constituting part of the Registration Statement, and to the
filing of this opinion as an exhibit to the Registration Statement.
By giving you this opinion and consent, we do not admit that we are
experts with respect to any part of the Registration Statement within the
meaning of the term "expert" as used in Section 11 of the Securities Act of
1933, as amended, or the rules and regulations promulgated thereunder by the
SEC, nor do we admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Allen, Matkins, Leck, Gamble & Mallory LLP
----------------------------------------------
Allen, Matkins, Leck, Gamble & Mallory LLP
EXHIBIT 5.1 - Page 2
<PAGE>
EXHIBIT 5.2
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
Baltimore, Maryland 21201-3018
410-539-2530
FAX: 410-539-0489
September 22, 1999
Anworth Mortgage Asset Corporation
1299 Ocean Avenue
Santa Monica, California 90401
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special Maryland counsel to Anworth Mortgage Asset
Corporation, a Maryland corporation (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended (the "Act"), of up to
450,000 shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company pursuant to a Registration Statement of the Company on
Form S-3 (the "Registration Statement") to be filed with the Securities and
Exchange Commission (the "Commission") relating to the 450,000 shares (the
"Shares") of Common Stock that may be issued pursuant to the Company's Dividend
Reinvestment and Stock Purchase Plan (the "Plan"). This opinion is being
furnished to you at your request in connection with the filing of the
Registration Statement.
In rendering the opinion expressed herein, we have reviewed originals
or copies, certified or otherwise identified to our satisfaction, of the
Registration Statement, the Plan, the Charter and By-Laws of the Company, the
proceedings of the Board of Directors of the Company relating to the
authorization and issuance of the Shares, a Certificate of the Secretary of the
Company (the "Certificate"), and such other statutes, certificates, instruments,
and documents relating to the Company and matters of law as we have deemed
necessary to the issuance of this opinion.
In our examination of the aforesaid documents, we have assumed,
without independent investigation, the genuineness of all signatures, the legal
capacity of all individuals who have executed any of the aforesaid documents,
the authenticity of all documents submitted to us as originals, the conformity
with originals of all documents submitted to us as copies (and the authenticity
of the originals of such copies), and the accuracy and completeness of all
public records reviewed by us. As to any facts material to this opinion which
we did not independently establish or verify, we have relied solely upon the
Certificate.
Based upon the foregoing, having regard for such legal considerations
as we deem relevant, and limited in all respects to applicable Maryland law, we
are of the opinion and advise you that the issuance of the Shares has been duly
authorized, and, when issued, delivered and paid for in accordance with the
terms and conditions of the Plan, such Shares will be validly issued, fully paid
and non-assessable.
In addition to the qualifications set forth above, this opinion is
subject to the qualification that we express no opinion as to the laws of any
jurisdiction other than the State of Maryland. We assume that the issuance of
the Shares will not cause the Company to issue shares of Common Stock in excess
of
Exhibit 5.2 - Page 1
<PAGE>
the number of such shares authorized by the Company's Charter and will not
violate any of the Common Stock Ownership Limit provisions of the Company's
Charter (as defined in Article IX thereof). This opinion concerns only the
effect of the laws (exclusive of the securities or "blue sky" laws and the
principles of conflict of laws) of the State of Maryland as currently in effect.
We assume no obligation to supplement this opinion if any applicable laws change
after the date hereof or if any facts or circumstances come to our attention
after the date hereof that might change this opinion.
This opinion may be relied upon by Allen, Matkins, Leck, Gamble &
Mallory LLP in giving their legality opinion to be filed as an exhibit to the
Registration Statement. This opinion is limited to the matters set forth
herein, and no other opinion should be inferred beyond the matters expressly
stated.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Opinion" in the Prospectus included in the Registration Statement. In giving
our consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
--------------------------
Exhibit 5.2 - Page 2
<PAGE>
[LOGO]
Anworth Mortgage
Asset Corporation
Dividend Reinvestment and
Stock Purchase Plan
<PAGE>
ANWORTH MORTGAGE
ASSET CORPORATION
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
(310) 394-0115
Administrator of the Plan
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
2 Broadway
New York, NY 10004
Stockholder Relations
ANWORTH MORTGAGE
ASSET CORPORATION
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
(310) 394-0115
<PAGE>
Anworth Mortgage
Asset Corporation
Dear Stockholder:
We appreciate your interest in Anworth Mortgage Asset Corporation ("ANH"), a
real estate investment trust that invests primarily in adjustable-rate and
fixed-rate mortgage assets. At this time we want to provide you with
additional information regarding ANH's Dividend Reinvestment and Stock
Purchase Plan dated as of August 27, 1999 (the "Plan").
The Plan provides a convenient and economical way for Stockholders to
automatically reinvest their dividends and to make common stock purchases, in
amounts ranging between $100 and $5,000 per month, at a discount rate ranging
from 0% to 5% to the then current market price. It also provides interested
non-Stockholders a way to make their initial cash purchases in an amount
ranging from $500 to $5,000 at the same Discount Rate. Please review the
accompanying Prospectus for a detailed explanation of the terms and conditions
of the Plan.
We believe the Plan has some important advantages to both you as an investor
and to the Company as a whole. The following are a few highlights that you
should be aware of:
. When you elect to reinvest your dividends and new shares are issued by ANH,
your
<PAGE>
dividends will be reinvested into new common shares at a discount to the then
current market price. The current Discount Rate is 5%;
. When common shares are purchased in the market, dividends will be reinvested
in such shares without incurring brokerage commissions or other expenses;
. A Stockholder can designate the dividends on a portion of his or her shares
to be reinvested in common shares and continue to receive cash dividends on
the remaining portion;
. If a participant's shares are held in a tax deferred plan, then the tax on
the dividends may also be deferred;
. Shares purchased under the Plan may be purchased at the market price which
may be less than book value of Common Stock;
. Stockholders can also make additional purchases of ANH common stock on a
monthly basis, subject to a minimum purchase limit of $100 and a maximum
purchase limit of $5,000, at up to a 5% discount to the then current market
price (larger purchases are possible subject to the Company's approval);
. Non-Stockholders may become Participants by making their initial cash
investment in the Company, subject to a minimum purchase limit of $500 and a
maximum purchase limit of $5,000, at up to a 5% discount to the then current
market price (larger purchases are possible subject to the Company's
approval);
<PAGE>
. Participation by Stockholders increases the equity capital base of ANH which
contributes to its continued growth.
The following are a few answers to commonly asked questions regarding the
Plan. Please read the accompanying Prospectus carefully before deciding to
participate.
What is the purpose of the Dividend Reinvestment and Stock Purchase Plan?
The purpose of the Plan is to provide Stockholders with a convenient and
economical method to automatically reinvest their cash dividends in shares of
ANH's common stock. It also provides current Stockholders and interested new
investors with a way to purchase common shares directly from the Company at a
discount. The Plan is intended to benefit long term investors who want to
increase their investment in the common stock of the Company.
Who is the Plan's Administrator?
The Plan is being administered by Continental Stock Transfer & Trust Company
(the "Plan Administrator"). The Plan Administrator keeps records, sends
statements of account to each participant in the Plan and performs other
duties related to the Plan, including the safekeeping of the
<PAGE>
shares purchased for each participant. The Plan Administrator also acts as the
dividend disbursing agent, transfer agent and registrar for the common stock
of ANH.
What investment options are available?
The attached Authorization Form provides for the purchase of shares of ANH
common stock through the following investment options:
(1) Full Dividend Reinvestment - The Plan Administrator will apply all cash
dividends paid on all common shares registered in your name(s), together with
any optional cash purchases, toward the purchase of shares of ANH's common
stock.
(2) Partial Dividend Reinvestment - The Plan Administrator will apply all cash
dividends paid on only the number of participating common shares you specify
on the authorization form, together with any optional cash purchases, toward
the purchase of shares of ANH's common stock. Common stock purchased by the
Plan will be automatically enrolled in the Plan such that the dividends paid
on such shares will also be reinvested in shares of ANH's common stock.
(3) Cash Purchases Only - The Plan Administrator will apply voluntary cash
contributions received from you towards the purchase of shares to ANH's common
stock. The optional cash purchases are subject to a minimum purchase limit of
$100 (except
<PAGE>
initial cash purchases by non-Stockholders, which are subject to a minimum
purchase limit of $500) and a maximum purchase limit of $5,000 for each month.
You will continue to receive cash dividends on common shares registered in
your name(s). Dividends paid on common stock purchased by the Plan will be
automatically reinvested in shares of ANH's common stock.
Can I change my investment options?
Yes. Participants may change their investment options at any time by
requesting an authorization form and returning it to the Plan Administrator.
How are the shares purchased for the Plan?
ANH will pay the Plan Administrator all dividends for shares of common stock
owned by participants in the Plan. At the direction of ANH, the Plan
Administrator will then apply such funds, together with any voluntary cash
contributions received from Participants, towards the purchase of ANH's common
stock, either directly from ANH or on the open market. The price of the shares
purchased by the Plan Administrator directly from ANH will be discounted by up
to five percent (5%) from the then current market price.
Is there a cost to participate in the Plan?
ANH pays all costs relating to the administration and maintenance of the
Plan.
<PAGE>
There will be no brokerage commission on shares purchased from ANH. For shares
purchased on the open market, ANH will pay any brokerage commissions or
charges up to five percent (5%) and any excess above five percent (5%) will be
paid by the participants on a pro rata basis.
How do I enroll?
Anyone is eligible. Simply complete the attached Authorization Form and mail
it to the Plan Administrator.
If your common shares are registered in a name other than your own e.g., in
the name of a broker or bank nominee then you must either:
(1) have your shares re-registered in your own name(s) and then
complete the Authorization Form, or
(2) request that your broker or nominee complete and sign the
Authorization Form and a Broker Nominee form and return them to the
Plan Administrator.
Stockholders whose shares are registered in the name of the broker or
nominee must verify for themselves the extent to which their broker or nominee
is able to provide the services and features of the Plan directly to them. All
communications regarding the Plan by these Stockholders must be made directly
to their broker or nominee. See the section entitled "Participation" in the
accompanying Prospectus for further details.
<PAGE>
How do I get more information?
Questions regarding the Dividend Reinvestment and Stock Purchase Plan should
be directed to:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
2 Broadway
New York, NY 10004
(212) 509-4000
If your shares are not held in your name, contact your brokerage firm, bank,
or other nominee for more information. They can contact the Plan Administrator
directly for instructions on how to participate on your behalf.
Questions regarding Anworth Mortgage Asset Corporation should be directed
to:
ANWORTH MORTGAGE ASSET CORPORATION
1299 Ocean Avenue, Suite 200
Los Angeles, California 90401
(310) 394-0115
Thank you for taking a few moments to carefully consider the advantages of
enrolling in this Plan.
Sincerely,
/s/ Lloyd McAdams
Lloyd McAdams, President
<PAGE>
Place
Stamp
Here
[LOGO] Anworth Mortgage Asset Corporation
Continental Stock Transfer & Trust Company
Dividend Reinvestment Department
2 Broadway
New York, NY 10004
<PAGE>
[LOGO]
Anworth Mortgage Asset Corporation
1299 Ocean Avenue, Suite 200
Santa Monica, California 90401
310-394-0115
<PAGE>
ANWORTH MORTGAGE ASSET CORPORATION DIVIDEND REINVESTMENT AND STOCK PURCHASE
PLAN AUTHORIZATION FORM
The undersigned holder(s) of common stock of Anworth Mortgage Asset
Corporation ("ANH") or non-stockholder(s) interested in investing in Common
Stock of ANH elect to participate in the Dividend Reinvestment and Stock
Purchase Plan (the "Plan"). The undersigned hereby authorizes Continental
Stock Transfer & Trust Company ("Plan Agent") to reinvest dividends and
distributions paid by ANH on its common stock now or hereafter registered in
the name(s) of the undersigned, for the number of shares set forth below, and
to make cash purchases in common stock of ANH with funds received from the
undersigned. This authorization shall remain in effect until termination by
the undersigned holder(s) by written notice to the Plan Agent.
The foregoing authorization is subject, in all respects, to the terms and
conditions of participation in the Plan set forth in the Prospectus relating
to the Plan, which the undersigned has received and read.
Please sign exactly as your shares are registered or if an initial cash
purchase by a non-stockholder, as you would like the shares registered. All
persons whose names appear on the stock certificates must sign.
Please indicate your
participation below:
___________________________
Please Print Name(s) as
[_] Full dividend Shown on Stock Certificate
reinvestment on all shares.
___________________________
[_] Partial dividend Stockholder Signature
reinvestment on
common shares only.
___________________________
Joint Stockholder
[_] Cash purchases only. Signature
____________________________ ___________________________
Please Print Your Address Date Social Security
or Tax Identification number
____________________________
Please Print Your Phone
Number
If your shares are held in the name of a broker or nominee, you must make
appropriate arrangements with them to participate in the Plan. Please see
instructions in the Prospectus.
Please detach and tape before mailing.
<PAGE>
EXHIBIT 23.1
[Letterhead of McGladrey & Pullen, LLP]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Anworth Mortgage Asset Corporation (the "Company") on Form S-3 of our
report, dated January 9, 1999 accompanying the financial statements of the
Company appearing in its 1998 Annual Report on Form 10-K.
/s/ Mcgladrey & Pullen, LLP
_____________________________________
McGladrey & Pullen, LLP
New York, New York
September 20, 1999
