Exhibit 10.6

 

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AMENDED AND RESTATED SECURITIES SALE AND CONTRIBUTION AGREEMENT

 

dated as of December 28, 2005

 

between

 

THORNBURG MORTGAGE DEPOSITOR, L.L.C.

 

and

 

THORNBURG MORTGAGE, INC.

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TABLE OF CONTENTS

 

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ARTICLE I       DEFINITIONS and OTHER MATTERS

   1

SECTION 1.1

   Eligible Securities    1

SECTION 1.2

   Terms Defined in Schedule 1.01    2

SECTION 1.3

   Accounting and UCC Terms    2

SECTION 1.4

   Computation of Time Periods    2

SECTION 1.5

   Reference to this Agreement    2

ARTICLE II      SALE OF SECURITIES; DELIVERY OF SECURITIES; PAYMENT OF DEPOSITOR
PURCHASE PRICE

   3

SECTION 2.1

   Sale of Securities    3

SECTION 2.2

   Delivery of Eligible Securities    4

SECTION 2.3

   Determination of Depositor Purchase Price    4

SECTION 2.4

   Purchase Commitment Term    4

SECTION 2.5

   Capital Contribution    4

SECTION 2.6

   Distributions by the Depositor    5

ARTICLE III      REPRESENTATIONS AND WARRANTIES; REMEDIES AND BREACH

   5

SECTION 3.1

   Representations and Warranties of the Seller    5

SECTION 3.2

   Representations and Warranties and Other Rights Regarding Individual
Securities    7

SECTION 3.3

   Remedies for Breach of Representations and Warranties    8

SECTION 3.4

   Conditions to Initial Closing; Conditions to Each Closing    9

SECTION 3.5

   Covenants of the Seller    9

SECTION 3.6

   Representations and Warranties of the Depositor    9

ARTICLE IV      MISCELLANEOUS PROVISIONS

   11

SECTION 4.1

   Amendment    11

SECTION 4.2

   Governing Law    11

SECTION 4.3

   Duration of Agreement    11

SECTION 4.4

   Notices    12

SECTION 4.5

   Severability of Provisions    12

SECTION 4.6

   Relationship of Parties    12

SECTION 4.7

   Execution in Counterparts    12

 

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TABLE OF CONTENTS

(continued)

 

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SECTION 4.8

   Non-Petition Agreement    12

SECTION 4.9

   No Recourse    13

SECTION 4.10

   Survival    13

SECTION 4.11

   Perfection Representations    13

ARTICLE V      ASSIGNMENT

   13

SECTION 5.1

   Successors and Assigns; Assignment of Securities Sale and Contribution
Agreement    13

EXHIBIT A     FORM OF TRANSFER SUPPLEMENT

    

EXHIBIT B     PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

    

 

-ii-

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AMENDED AND RESTATED SECURITIES SALE AND CONTRIBUTION AGREEMENT

 

AMENDED AND RESTATED SECURITIES SALE AND CONTRIBUTION AGREEMENT, dated as of
December 28, 2005 but effective as of the Effective Date (as further amended,
supplemented or otherwise modified and in effect from time to time, the
“Securities Sale and Contribution Agreement”), between THORNBURG MORTGAGE
DEPOSITOR, L.L.C., a Delaware limited liability company, as purchaser (the
“Depositor”), and THORNBURG MORTGAGE, INC., a Maryland corporation
(“Thornburg”), as seller (in such capacity, the “Seller”).

 

W I T N E S S E T H

 

WHEREAS, the Seller owns 100% of the Depositor’s outstanding membership
interest;

 

WHEREAS, the Seller owns Eligible Securities;

 

WHEREAS, the Depositor and the Seller entered into the Securities Sale and
Contribution Agreement dated as of June 30, 2004 (the “Original Agreement”)
pursuant to which the Depositor agreed to purchase from the Seller and the
Seller agreed to sell to the Depositor from time to time Eligible Securities;

 

WHEREAS, the Depositor and the Seller wish to amend and restate the Original
Agreement in its entirety effective upon the Effective Date and to read as set
forth in this Agreement;

 

WHEREAS, it being the intention of the parties hereto that the Securities Sale
and Contribution Agreement not effect a novation of the obligations of the
parties under the Original Agreement, but merely a restatement, and where
applicable, a substitution of the terms governing and evidencing such
obligations hereafter.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the Original Agreement is amended and restated in
its entirety, and the Depositor and the Seller hereby agree, effective as of the
Effective Date, as follows:

 

ARTICLE I

DEFINITIONS AND OTHER MATTERS

 

SECTION 1.1 Eligible Securities. As used in herein, “Eligible Securities” means
securities that (A) with respect to Agency Securities, (i) are direct
obligations of, or that are fully guaranteed as to principal and interest by,
any Agency, (ii) are either ARM 1-1 (fully indexed), ARM 1-1 (non-fully
indexed), ARM 3-1, or ARM 5-1, Securities, (iii) on the date of sale thereof by
the Depositor to the Issuer pursuant to any related Eligible Repo Agreement,
satisfy each of the eligibility requirements therefor set forth in the Issuer’s
Investment Policy on such date, and (iv) on the date of acquisition thereof by
the Depositor pursuant to the Securities Sale and Contribution Agreement,
conform to all representations and warranties made by the Seller or Depositor
with respect thereto in the Securities Sale and Contribution Agreement or the
related Repo Agreement, as applicable, and (B) with respect to Private Label
Securities, (i) are rated “AAA” (or “Aaa” in case of Moody’s) by at least one of
Fitch, Moody’s or S&P, and not rated

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below “AAA” (or “Aaa” in the case of Moody’s) by any of Fitch, Moody’s or S&P
(ii) are either 1-Month LIBOR Floater, Private Label ARM 1-1 (fully indexed),
Private Label ARM 1-1 (non-fully indexed), Private Label ARM 3-1, or Private
Label ARM 5-1 Securities, (iii) on the date of sale thereof by the Depositor to
the Issuer pursuant to any related Eligible Repo Agreement, satisfy each of the
eligibility requirements therefor set forth in the Issuer’s Investment Policy on
such date, (iv) are backed by a Prime Residential Mortgage Loan Pool with a
weighted average FICO Score (weighted on the initial unpaid principal balance of
each mortgage loan on the date each such security is issued and the FICO Score
of each mortgagor at the origination of the related mortgage loan) greater than
640, and (v) on the date of acquisition thereof by the Depositor pursuant to the
Securities Sale and Contribution Agreement, conform to all representations and
warranties made by the Seller or the Depositor with respect thereto in the
Securities Sale and Contribution Agreement or the related Repo Agreement, as
applicable.

 

SECTION 1.2 Terms Defined in Schedule 1.01. As used herein, unless otherwise
defined herein, capitalized terms defined in Schedule 1.01 attached to the
Amended and Restated Administration Agreement, dated as of December 28, 2005 but
effective as of the Effective Date, between the Issuer and Thornburg, as
Administrator (and any successors and permitted assigns of Thornburg), as
further amended, supplemented or otherwise modified from time to time (the
“Administration Agreement”), shall have the respective meanings specified
therein.

 

SECTION 1.3 Accounting and UCC Terms. As used herein, unless otherwise
specifically defined, and unless the context requires a different meaning:

 

(a) all accounting terms shall be construed in accordance with United States
generally accepted accounting principles; and

 

(b) all terms defined in Article 9 of the UCC as in effect in the State of New
York on the date hereof are used herein as so defined.

 

SECTION 1.4 Computation of Time Periods. Unless otherwise stated in this
Securities Sale and Contribution Agreement, in the computation of a period of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each means “to but
excluding”.

 

SECTION 1.5 Reference to this Agreement. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Securities Sale and
Contribution Agreement shall refer to this Securities Sale and Contribution
Agreement as a whole and not to any particular provision of this Securities Sale
and Contribution Agreement. Unless otherwise specified, references in this
Securities Sale and Contribution Agreement to any Section are references to such
Section of this Securities Sale and Contribution Agreement, and references in
any Section or definition to any subsection or clause are references to such
subsection or clause of such Section or definition.

 

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ARTICLE II

SALE OF SECURITIES; DELIVERY OF SECURITIES; PAYMENT

OF DEPOSITOR PURCHASE PRICE

 

SECTION 2.1 Sale of Securities.

 

(a) From time to time, pursuant to any Transfer Supplement, the Seller may sell,
transfer, assign, set over and convey to the Depositor and the Depositor shall
purchase, without recourse, but subject to the terms hereof and except as
otherwise provided herein, all the right, title and interest of the Seller in
and to each Eligible Security identified on the Transfer Supplement; provided,
however, that the Depositor shall not be required to purchase Eligible
Securities on any Closing Date having an aggregate Depositor Purchase Price
greater than the amount of cash which is received on the applicable Closing Date
under one or more related Repo Agreements pursuant to which the Depositor
transfers such Eligible Securities to the Issuer, unless the Seller shall agree
to contribute to the Depositor as a capital contribution any such excess of the
aggregate Depositor Purchase Price of such Portfolio of Eligible Securities over
the amount of cash paid to the Depositor by the Issuer under one or related Repo
Agreements on such Closing Date; provided, further, that each Security
transferred on each Closing Date must be an Eligible Security; provided,
further, that the Depositor shall not be required or permitted to purchase any
Eligible Securities if the Single Issuer Cap Excess Amount, the Non-S&P Rated
Private Label Cap Excess Amount or the Servicer Strength Cap Excess Amount would
exist if such Eligible Securities were purchased by the Issuer. The Seller shall
provide a notice to the Depositor, the Issuing and Paying Agent, the
Administrator, the Collateral Agent and the Issuer not later than 9:50 a.m. New
York City time on any Closing Date of its intention to sell a Portfolio to the
Depositor pursuant to a Transfer Supplement; provided, however, that the Seller
may deliver such notice to the Depositor, the Issuing and Paying Agent, the
Administrator, the Collateral Agent and the Issuer at any time prior to 2:00
p.m. Eastern Time on any Closing Date if the Issuer will not issue additional
Short Term Notes to fund its purchase of the applicable Portfolio from the
Depositor on such Closing Date. In such notice, the Seller shall inform the
Depositor of the aggregate PAR Value, the Group, and the Depositor Purchase
Price of the Eligible Securities that it intends to sell on such date. Each
Transfer Supplement shall be executed by the Seller and the Depositor at the
time of the sale of the subject Portfolio.

 

(b) Upon execution of any Transfer Supplement by the Seller and the Depositor
and receipt by the Seller of the Depositor Purchase Price for each of the
Eligible Securities identified on such Transfer Supplement, the Seller hereby
sells, assigns, transfers, sets over and conveys to the Depositor all of the
Seller’s right, title and interest in, to and under each such Eligible Security.
It is intended that each transfer, assignment and conveyance herein contemplated
constitutes a sale of the applicable Eligible Securities, conveying good title
thereto free and clear of any liens, by the Seller to the Depositor and not a
loan secured by such Eligible Securities and that the Eligible Securities not be
part of the Seller’s estate in the event of insolvency. In the event that any
Eligible Securities are held to be property of the Seller or if for any other
reason any Transfer Supplement is held or deemed to create a security interest
in (and not a sale of) the related Eligible Securities, the parties intend that
the Seller shall be deemed to have granted, and does hereby grant, to the
Depositor a first priority perfected security interest in such Eligible
Securities and all collateral related thereto now existing or hereafter arising
for the purpose of securing the rights of the Depositor under this Securities
Sale and Contribution

 

3

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Agreement, and that this Securities Sale and Contribution Agreement and each
Transfer Supplement shall each constitute a security agreement under applicable
law.

 

(c) It is expressly understood and agreed that the Seller shall not have any
obligation to transfer any Securities to the Depositor, and any such transfer by
the Seller shall be made in its sole and absolute discretion.

 

SECTION 2.2 Delivery of Eligible Securities. All Eligible Securities sold by the
Seller to the Depositor hereunder shall be transferred to the Depositor by
causing such Eligible Securities to be credited to the Issuer Account,
maintained with and under the control of the Collateral Agent, in the name of
the Issuer in accordance with the Security Agreement, the Administration
Agreement and the Securities Account Control Agreement on the related Closing
Date.

 

SECTION 2.3 Determination of Depositor Purchase Price. On each Closing Date, the
Seller shall deliver to the Depositor a Transfer Supplement, in accordance with
Section 2.1, and shall notify the Depositor of its calculation of the Depositor
Purchase Price for each Eligible Security in the Portfolio. The Depositor and
the Seller shall use commercially reasonable efforts to close the sale of any
Portfolio on any such Closing Date. The Depositor shall pay to the Seller the
Depositor Purchase Price of each Eligible Security purchased by it hereunder (to
the extent the Depositor Purchase Price is not paid in cash, such unpaid portion
of the Depositor Purchase Price shall be deemed a capital contribution in
accordance with the terms and conditions as set forth in Section 2.5 herein) not
later than 6:00 p.m. New York City time on the applicable Closing Date.

 

SECTION 2.4 Purchase Commitment Term. Subject to the terms and conditions of the
Program Documents, the commitment of the Depositor under this Securities Sale
and Contribution Agreement shall expire upon the Collateral Agent’s delivery of
Notice of Program Default to the Seller in accordance with Section 5.1 of the
Security Agreement.

 

SECTION 2.5 Capital Contribution.

 

(a) Payment of Depositor Purchase Price. On the terms and subject to the
conditions set forth in this Securities Sale and Contribution Agreement and the
other Program Documents, on each Closing Date, the Depositor agrees to pay to
the Seller the aggregate Depositor Purchase Price in respect of the sale of the
Portfolio of Eligible Securities by the Seller to the Depositor to occur on such
Closing Date. Such Depositor Purchase Price shall be paid by the Depositor to
the Seller in the form of cash and/or a capital contribution by the Seller to
the Depositor as follows:

 

(i) First, the Depositor Purchase Price for such Eligible Securities shall be
paid in cash to the extent that the Depositor has received cash from the Issuer
on such Closing Date under one or more related Repo Agreements pursuant to which
the Depositor has transferred such Eligible Securities to the Issuer; and

 

(ii) Second, the Seller shall be deemed to have made a contribution to the
capital of the Depositor in an amount equal to such remaining unpaid portion of
the Depositor Purchase Price.

 

4

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SECTION 2.6 Distributions by the Depositor. The Depositor (I) shall from time to
time make distributions to the Seller, as return on equity, from P&I Proceeds
received and held by the Depositor, to the extent such P&I Proceeds (a) exceed
10% of the Face Amount of the earliest maturing Class of Short Term Notes then
outstanding, or (b) together with the amount of any P&I Proceeds which have been
previously applied to the repayment of Short Term Notes in the preceding twelve
months, exceed 10% of the average outstanding Face Amount of Short Term Notes on
each Business Day during such twelve month period, and (II) may from time to
time make further distributions to the Seller from amounts received by the
Depositor under the Program Documents; provided that, in either case, the
Depositor shall not make any distributions to the Seller on any day to the
extent the Depositor shall have failed to pay the Issuer any amounts due and
owing to the Issuer on or prior to such date under any Repo Agreement.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES;

REMEDIES AND BREACH

 

SECTION 3.1 Representations and Warranties of the Seller.

 

The Seller represents and warrants to the Depositor that as of each applicable
Closing Date the following will be true and correct in all material respects.

 

(a) Due Organization and Authority. The Seller (i) is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Maryland, and (ii) has all requisite power and authority to carry on its
business as now conducted in all material respects and to perform its
obligations under this Securities Sale and Contribution Agreement.

 

(b) No Conflicts. The execution and delivery of this Securities Sale and
Contribution Agreement by the Seller, and the performance and compliance with
the terms of this Securities Sale and Contribution Agreement by the Seller, will
not violate the Seller’s organizational documents or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of its assets, in each
case which, in the Seller’s good faith and reasonable judgment, materially and
adversely affects the ability of the Seller to carry out the transactions
contemplated by this Securities Sale and Contribution Agreement.

 

(c) Due Execution. The Seller has the full power and authority to enter into and
consummate all transactions contemplated by this Securities Sale and
Contribution Agreement, has duly authorized the execution, delivery and
performance of this Securities Sale and Contribution Agreement, and has duly
executed and delivered this Securities Sale and Contribution Agreement.

 

(d) Enforceability. This Securities Sale and Contribution Agreement, assuming
due authorization, execution and delivery by the Depositor, constitutes a valid,
legal and binding obligation of the Seller, enforceable against the Seller in
accordance with the terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, moratorium and other

 

5

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laws affecting the enforcement of creditors’ rights generally, and (B) general
principles of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.

 

(e) No Violation. The Seller is not in violation of (and its execution and
delivery of this Securities Sale and Contribution Agreement and its performance
and compliance with the terms of this Securities Sale and Contribution Agreement
will not constitute a violation of) any law, any order or decree of any court or
arbiter, or any order, regulation or demand of any federal, state or local
governmental or regulatory authority, which violation, in the Seller’s good
faith and reasonable judgment, is likely to affect materially and adversely
either the ability of the Seller to perform its obligations under this
Securities Sale and Contribution Agreement or the financial condition of the
Seller.

 

(f) No Litigation. No litigation is pending or, to the Seller’s knowledge,
threatened against the Seller the outcome of which, in the Seller’s good faith
and reasonable judgment, would reasonably be expected to prohibit the Seller
from entering into this Securities Sale and Contribution Agreement or materially
and adversely affect the ability of the Seller to perform its obligations under
this Securities Sale and Contribution Agreement.

 

(g) No Broker’s Fees. The Seller has not dealt with any broker, investment
banker, agent or other person, other than the Issuer, the Depositor, and each
Short Term Note Dealer, and their respective Affiliates that may be entitled to
any commission or compensation in connection with the sale of Eligible
Securities or the consummation of any of the other transactions contemplated
hereby.

 

(h) No Consents Necessary. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required, under federal or state law (including, with respect to any bulk
sale laws), for the execution, delivery and performance of or compliance by the
Seller with this Securities Sale and Contribution Agreement, or the consummation
by the Seller of any transaction contemplated hereby, other than (1) the filing
or recording of financing statements, instruments of assignment and other
similar documents necessary in connection with the Seller’s sale of Eligible
Securities to the Depositor, (2) such consents, approvals, authorizations,
qualifications, registrations, filings or notices as have been obtained or made
and (3) where the lack of such consent, approval, authorization, qualification,
registration, filing or notice would not, in the Seller’s good faith and
reasonable judgment, have a material adverse effect on the performance by the
Seller under this Securities Sale and Contribution Agreement.

 

(i) Ordinary Course of Business. The performance of the transactions
contemplated by this Securities Sale and Contribution Agreement are in the
ordinary course of business of the Seller.

 

(j) No Untrue Information. Neither this Securities Sale and Contribution
Agreement, any Transfer Supplement nor any written statement, written report or
other document prepared by the Seller pursuant to this Securities Sale and
Contribution Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact relating to the Seller
or the Securities transferred by the Seller to the Depositor hereunder.

 

6

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(k) Financial Statements. The Seller has delivered to the Depositor consolidated
financial statements as of December 31, 2004 as to its last three complete
fiscal years and any later quarter ended more than sixty (60) days prior to the
execution of this Securities Sale and Contribution Agreement. All such financial
statements fairly present the pertinent results of operations and changes in
financial position at the end of each such period of the Seller and its
subsidiaries and have been prepared pursuant to generally accepted accounting
principles consistently applied throughout the periods involved, except as set
forth in the notes thereto. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller’s most recently provided financial statements that would have
a material adverse effect on its ability to perform its obligations under this
Securities Sale and Contribution Agreement.

 

(l) Solvency. The Seller is solvent and its sale of the applicable Eligible
Securities to the Depositor on such date is not undertaken to hinder, delay or
defraud any of the Seller’s creditors.

 

(m) Qualified Purchaser. The Seller is a Qualified Purchaser.

 

It is understood and agreed that the representations and warranties set forth in
this Section 3.1 shall survive delivery of the respective Eligible Securities to
the Depositor and any successor thereof and the termination of this Securities
Sale and Contribution Agreement. Upon discovery by any of the parties hereto of
a breach of any of the representations and warranties made pursuant to and set
forth in this Section 3.1 which adversely affects the interests of the Depositor
and which adversely affects the value of the Eligible Securities or the
interests of the Depositor or any of its successors and assigns, the party
discovering such breach shall give prompt written notice to the other, the
Issuing and Paying Agent, the Collateral Agent, the Administrator and the
Issuer.

 

SECTION 3.2 Representations and Warranties and Other Rights Regarding Individual
Securities. With respect to each Security sold by the Seller to the Depositor,
the Seller hereby represents and warrants to the Depositor (and for the benefit
of the Issuer and the Collateral Agent) that as of the applicable Closing Date:

 

(a) the Seller owns and has good and marketable title to such Security free and
clear of any lien, claim or encumbrance (including any tax lien or judgment
lien) of any entity or person, other than liens which will be released upon
application of such sale;

 

(b) information set forth in the related Transfer Supplement relating to the
sale of such Security is true and correct in all material respects;

 

(c) no payment under such Security is past its contractual due date;

 

(d) such Security sold by the Seller pursuant to a Transfer Supplement was not
selected from Securities owned by the Seller in a manner so as to materially
adversely affect the interests of the Depositor and the Issuer, as applicable;

 

(e) the Seller has received all consents and approvals required by the terms of
such Security to the transfer to the Depositor of its interest and rights in
such Security;

 

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(f) the Market Price for such Security is available or obtainable on such
Closing Date in accordance with the Administration Agreement, and the Stress
Case Security Price has been calculated by the Administrator pursuant to the
Administration Agreement;

 

(g) the Depositor’s purchase of such Security, and subsequent transfer of such
Security to the Issuer under any Repo Agreement, shall not cause a Single Issuer
Cap Excess Amount, Servicer Strength Cap Excess Amount, or Non-S&P Rated Cap
Excess Amount to exist on such date;

 

(h) the Depositor’s purchase of such Security, and subsequent transfer of such
Security to the Issuer under any Repo Agreement, shall not constitute a
violation of any restriction on transfer applicable to such Security pursuant to
its terms, or a breach of Section 5 of the Securities Act;

 

(i) such Security is an Eligible Security; and

 

(j) the aggregate Market Value of the Specified Securities owned by the Issuer
on such Closing Date shall not be less than the Required Specified Securities
Amount on such Closing Date after giving effect to the purchase of such Security
by the Depositor and its subsequent transfer to the Issuer under the Repo
Agreement, repurchase or substitution of Securities by Depositor on such date
and payments to Noteholders on such date.

 

It is understood and agreed that the representations and warranties set forth in
this Section 3.2 shall survive the sale of each Security to the Depositor and
the termination of this Securities Sale and Contribution Agreement and shall
inure to the benefit of the Issuer and the Collateral Agent notwithstanding any
restrictive or qualified endorsement on any Security. The Seller hereby consents
to and acknowledges the assignment by the Depositor to the Issuer of the
representations and warranties and other rights set forth in this Section 3.2
and in Section 3.1 hereof and agrees that the Issuer may enforce any remedies
for such breaches directly against the Seller.

 

SECTION 3.3 Remedies for Breach of Representations and Warranties. Upon
discovery by the Seller or the Depositor of a breach of any of the
representations and warranties or agreements set forth in Sections 3.1 and 3.2
which adversely affects the value of any Security or the interests of the
Depositor or any of its successors and assigns, the party discovering such
breach shall give prompt written notice to the other, the Issuing and Paying
Agent, the Collateral Agent, the Administrator and the Issuer.

 

Within one (1) Business Day of the earlier of either discovery by or notice to
the Seller of any breach of a representation or warranty or agreement set forth
in Sections 3.1 and 3.2 hereof which adversely affects the value of any Security
or the interests of the Depositor or any of its successors and assigns, the
Seller shall repurchase such Security at the Repurchase Price or substitute such
Security with one or more Eligible Securities with an aggregate Market Value
equal to the Market Value of such Security, provided the Overcollateralization
Test and the Required Specified Securities Amount shall be satisfied after the
substitution of each such Security. Upon receipt of the Repurchase Price or the
replacement Security or Securities by the

 

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Collateral Agent, the Depositor and the Seller shall arrange for the
reassignment of the repurchased or substituted Security or Securities to the
Seller.

 

If any Security with respect to which the Seller has breached a representation
and warranty set forth in Sections 3.1 and 3.2 herein has been sold by the
Issuer for less than the related Repurchase Price, the Seller shall satisfy its
obligations under this Section 3.3 by paying the Depositor the excess of (x) the
Repurchase Price for such Security, over (y) the proceeds realized by the Issuer
in connection with such sale.

 

SECTION 3.4 Conditions to Initial Closing; Conditions to Each Closing.

 

(a) Schedule 5.05 to the Administration Agreement is hereby incorporated by
reference herein as if the text thereof were set forth in full herein. Further,
the obligation of the Depositor to purchase the Eligible Securities that are the
subject of any Transfer Supplement shall be subject to satisfaction of the
condition that all of the representations and warranties of the Seller contained
in Section 3.1 herein shall be true and correct in all material respects as of
such Closing Date and the representations and warranties of the Seller in
Section 3.2 herein shall be true and correct in all material respects with
respect to the Securities subject to such Transfer Supplement as of such Closing
Date.

 

(b) Schedule 5.06 of the Administration Agreement is hereby incorporated by
reference herein as if the text thereof were set forth in full herein.

 

SECTION 3.5 Covenants of the Seller.

 

(a) The Seller shall maintain its qualifications to do business and all licenses
necessary to perform its obligations hereunder except where the failure to
maintain such qualification or license would not have a material adverse effect
on its ability to perform its obligations under this Securities Sale and
Contribution Agreement or on the Securities purchased hereunder.

 

(b) The Seller shall give notice to the Depositor of any amounts paid or
contributed to the Depositor by the Seller which constitute P&I Proceeds.

 

SECTION 3.6 Representations and Warranties of the Depositor. The Depositor
represents and warrants to the Seller that as of each applicable Closing Date:

 

(a) Due Organization. The Depositor is a limited liability company duly formed
and validly existing under the laws of the State of Delaware;

 

(b) Due Authorization; Enforceability. The Program Documents to which the
Depositor is a party have been duly authorized, executed and delivered by the
Depositor and constitute valid and legally binding obligations of the Depositor,
enforceable against the Depositor in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles, regardless of whether such enforcement is considered in a
proceeding in equity or at law;

 

9

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(c) No Conflicts. The execution and delivery of the Program Documents to which
the Depositor is a party by the Depositor and its performance of and compliance
with the terms of the Program Documents to which the Depositor is a party will
not violate the Depositor LLC Agreement or certificate of formation, and will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Depositor is a
party or by which the Depositor or to which any property or assets of the
Depositor is subject;

 

(d) No Violation. The Depositor is not in violation of (and its execution and
delivery of this Securities Sale and Contribution Agreement and its performance
and compliance with the terms of this Securities Sale and Contribution Agreement
will not constitute a violation of) any law, any order or decree of any court or
arbiter, or any order, regulation or demand of any federal, state or local
governmental or regulatory authority, which violation is likely to affect
materially and adversely either the ability of the Depositor to perform its
obligations under this Securities Sale and Contribution Agreement or the
financial condition of the Depositor.

 

(e) No Consents Necessary. No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required, under federal or state law, for the execution, delivery and
performance of or compliance by the Depositor with this Securities Sale and
Contribution Agreement, or the consummation by the Depositor of any transaction
contemplated hereby, other than (1) the filing or recording of financing
statements, instruments of assignment and other similar documents necessary in
connection with Seller’s sale of the Eligible Securities to the Depositor,
(2) such consents, approvals, authorizations, qualifications, registrations,
filings or notices as have been obtained or made and (3) where the lack of such
consent, approval, authorization, qualification, registration, filing or notice
would not have a material adverse effect on the performance by the Depositor
under this Securities Sale and Contribution Agreement.

 

(f) No Defaults. The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Depositor or its properties or might have consequences that
would affect its performance hereunder; and

 

(g) No Litigation. No litigation is pending or, to the Depositor’s knowledge,
threatened against the Depositor which would prohibit its entering into this
Securities Sale and Contribution Agreement or performing its obligations under
this Securities Sale and Contribution Agreement;

 

(h) Ordinary Course of Business. The performance of the transactions
contemplated by this Securities Sale and Contribution Agreement are in the
ordinary course of business of the Depositor; and

 

(i) Solvency. The Depositor is solvent and its purchase of the applicable
Eligible Securities on such date is not undertaken to hinder, delay or defraud
any of the Depositor’s creditors.

 

10

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ARTICLE IV

MISCELLANEOUS PROVISIONS

 

SECTION 4.1 Amendment. Any amendment, modification or supplement to this
Securities Sale and Contribution Agreement shall be in writing signed by the
parties hereto. Except to the extent set forth in the following sentence,
amendments, modifications, or supplements to the Program Documents (including
without limitation this Securities Sale and Contribution Agreement) may be
executed by the parties thereto from time to time without notice to or the
consent of the holders of any Notes for any purpose deemed necessary or
appropriate by the Administrator, including without limitation to provide for
the Issuer to enter into certain Hedge Contracts, to issue callable commercial
paper notes, to modify an OC Percentage, and to add to the categories or Groups
of Eligible Securities that the Issuer may purchase and fund through the
issuance of Notes; provided, however, that each amendment, modification or
supplement that may adversely affect the interests of the Noteholders or the
ratings of the Notes will be subject to the satisfaction of the Rating Agency
Condition. Any amendment, modification or supplement shall be deemed to
adversely affect the interests of the Noteholders in any material respect and
the ratings of the Notes unless an authorized officer of the Administrator shall
have delivered to the Collateral Agent a certificate certifying that any such
amendment, modification or supplement will not adversely affect the interests of
the Noteholders or the ratings of the Notes. Notwithstanding the foregoing, any
amendment, modification or supplement that would extend the due date for, or
reduce the amount of any scheduled repayment or prepayment of principal of or
interest on any Note (or reduce the principal amount of or rate of interest on
any Note) requires the consent of each affected Noteholder. The effectiveness of
any amendment, modification or supplement to any Program Document shall be
conditioned upon the delivery of a Tax Opinion to the Collateral Agent and each
Short Term Note Dealer. The Issuer shall give each Rating Agency and each Short
Term Note Dealer ten Business Days’ prior written notice of any amendment,
waiver, supplement or modification to this Agreement. The cost and expenses
associated with any such amendment, waiver, supplement or modification shall be
borne by the party requesting such amendment, waiver, supplement or
modification.

 

SECTION 4.2 Governing Law. THIS SECURITIES SALE AND CONTRIBUTION AGREEMENT AND
THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL
BE GOVERNED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES EXCEPT THAT THE PARTIES
HERETO INTEND THAT THE PROVISIONS OF SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.

 

SECTION 4.3 Duration of Agreement. This Securities Sale and Contribution
Agreement shall continue in existence and effect until the termination of the
Depositor’s purchase commitment in accordance with Section 2.4. Notwithstanding
the termination of this Securities Sale and Contribution Agreement, the Seller
shall remain liable to the Depositor, the Issuer and the Collateral Agent
pursuant to Article III with respect to any Securities previously sold by the
Seller hereunder.

 

11

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SECTION 4.4 Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered
at, mailed by registered mail, postage prepaid, emailed, or sent by telecopier,
addressed as follows (or at such other address as shall be specified in a notice
furnished hereunder):

 

  (i) if to the Seller:

 

Thornburg Mortgage, Inc.

150 Washington Avenue

Suite 302

Santa Fe, New Mexico 87501

Attn: John Clarke

Telephone No.: (505) 954-5372

Facsimile No.: (505) 954-5300

E-mail Address: jclarke@thornburgmortgage.com

 

and

 

  (ii) if to the Depositor:

 

Thornburg Mortgage Depositor, L.L.C.

c/o Thornburg Mortgage, Inc.

150 Washington Avenue

Suite 302

Santa Fe, New Mexico 87501

Attn: John Clarke

Telephone No.: (505) 954-5372

Facsimile No.: (505) 954-5300

E-mail Address: jclarke@thornburgmortgage.com.

 

SECTION 4.5 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Securities Sale and Contribution
Agreement shall be held invalid for any reason whatsoever, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Securities Sale and
Contribution Agreement and shall in no way affect the validity or enforceability
of the other provisions of this Securities Sale and Contribution Agreement.

 

SECTION 4.6 Relationship of Parties. Nothing herein contained shall be deemed or
construed to create a partnership or joint venture between the parties hereto.

 

SECTION 4.7 Execution in Counterparts. This Securities Sale and Contribution
Agreement may be executed in one (1) or more counterparts and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed to be an original; such counterparts, together, shall constitute one
(1) agreement.

 

SECTION 4.8 Non-Petition Agreement. Notwithstanding any prior termination of
this Securities Sale and Contribution Agreement, the Seller agrees that it shall
not, prior to the date which is one year and one day (or if longer, the
applicable preference period then in effect) after

 

12

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the payment in full of the Notes or any other rated obligations of the Issuer,
acquiesce, petition or otherwise, directly or indirectly, invoke or cause the
Depositor or the Issuer to invoke the process of any governmental authority for
the purpose of commencing or sustaining a case against the Depositor or the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Depositor or the Issuer or any substantial part of
the property of the Depositor or the Issuer, as applicable or ordering the
winding up or liquidation of the affairs of the Depositor or the Issuer.

 

SECTION 4.9 No Recourse.

 

(a) As to the Seller. The obligations of the Seller under this Securities and
Contribution Agreement are solely the obligations of the Seller. No recourse
shall be had for any obligation or claim arising out of or based on this
Securities and Contribution Agreement against the directors, officers, employees
or agents of the Seller. The Seller and any director, officer, employee or agent
of the Seller may rely in good faith on any Program Document or any other
document prima facie properly prepared, executed and/or delivered in connection
therewith by any party to such Program Document.

 

(b) As to the Depositor. The obligations of the Depositor under this Securities
Sale and Contribution Agreement are solely the obligations of the Depositor. No
recourse shall be had for any obligation or claim arising out of or based upon
this Securities Sale and Contribution Agreement against any member, manager,
holder of any beneficial interest, officer or employee or agent of the
Depositor. The Depositor and any director, officer, employee or agent of the
Depositor may rely in good faith on any Program Document or any other document
prima facie properly prepared, executed and/or delivered in connection therewith
by any party to such Program Document.

 

SECTION 4.10 Survival. The provisions set forth in Article III and Sections 4.8
and 4.9 shall survive the termination of this Securities Sale and Contribution
Agreement.

 

SECTION 4.11 Perfection Representations. The representations, warranties and
covenants set forth in Exhibit B hereto shall be a part of this Securities Sale
and Contribution Agreement for all purposes, and the Seller shall preserve and
maintain such representations following the Closing Date.

 

ARTICLE V

ASSIGNMENT

 

SECTION 5.1 Successors and Assigns; Assignment of Securities Sale and
Contribution Agreement. This Securities Sale and Contribution Agreement shall
bind and inure to the benefit of and be enforceable by the Seller, the Depositor
and their respective successors and assigns. The obligations of the Seller under
this Securities Sale and Contribution Agreement cannot be assigned or delegated
to a third party (x) without the consent of the Depositor, which consent shall
be at the Depositor’s sole discretion and (y) without satisfaction of the Rating
Agency Condition, and any attempted assignment in violation of this Section 5.1
shall be null and void. The parties hereto acknowledge that the Depositor is
acquiring the Securities for the purpose of

 

13

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selling them to the Issuer who will in turn pledge the Securities to the
Collateral Agent for the benefit of the Secured Parties. As an inducement to the
Depositor to purchase the Securities, the Seller acknowledges and consents to
(i) the assignment by the Depositor to the Issuer of any or all of the
Depositor’s rights against the Seller pursuant to this Securities Sale and
Contribution Agreement and to the enforcement or exercise of any right or remedy
against the Seller pursuant to this Agreement as assigned by the Depositor and
(ii) the assignment by the Issuer to the Collateral Agent of such rights and to
the enforcement or exercise of any right or remedy by the Collateral Agent,
against the Seller pursuant to this Securities Sale and Contribution Agreement
as assigned by the Issuer. Such enforcement of a right or remedy by the Issuer,
the Collateral Agent shall have the same force and effect as if the right or
remedy had been enforced or exercised by the Depositor directly.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

14

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IN WITNESS WHEREOF, the Seller and the Depositor have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.

 

THORNBURG MORTGAGE, INC.,

as Seller

By:   /s/    JOHN D. CLARKE        

Name:

  John D. Clarke

Title:

  Vice President – Portfolio Manager THORNBURG MORTGAGE DEPOSITOR, L.L.C., as
Depositor

By:

 

Thornburg Mortgage, Inc., as Manager

By:   /s/    JOHN D. CLARKE        

Name:

  John D. Clarke

Title:

  Vice President – Portfolio Manager

 

S-1

   

Amended and Restated Securities

Sale and Contribution Agreement

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF TRANSFER SUPPLEMENT

 

                        [Date]

 

Thornburg Mortgage Depositor, L.L.C.

c/o Thornburg Mortgage, Inc.

150 Washington Avenue

Suite 302

Santa Fe, New Mexico 87501

Attn: John Clarke

 

Purchase Terms Letter

 

Ladies and Gentlemen:

 

Thornburg Mortgage, Inc. (the “Seller”) and Thornburg Mortgage Depositor, L.L.C.
(the “Depositor”) herewith confirm the terms and provisions of the Amended and
Restated Securities Sale and Contribution Agreement (as further amended,
modified or supplemented, the “Securities Sale and Contribution Agreement”)
entered into on December 28, 2005 and effective on the Effective Date (as
defined therein), pursuant to which the Seller and the Depositor agreed upon the
terms under which the Seller would from time to time sell certain assets to the
Depositor.

 

Upon execution of this Transfer Supplement by the Seller and the Depositor and
receipt of the Depositor Purchase Price therefor, the Seller hereby sells,
assigns, transfers, sets over and conveys to the Depositor all right, title and
interest of the Seller in, to and under each Eligible Security identified on the
attached Eligible Security Schedule (collectively, the “Eligible Securities”).

 

  (i) Closing Date: [    ,    ] The aggregate Depositor Purchase Price for the
Eligible Securities shall be paid by the Depositor to the Seller in immediately
available funds on such Closing Date.

 

  (ii) Depositor Purchase Price: The aggregate Depositor Purchase Price for the
Eligible Securities shall be [].

 

  (iii) Eligible Security Characteristics: The Eligible Securities have the
characteristics set forth on the Eligible Security Schedule, set forth as
Exhibit I attached hereto as of the date hereof. The Stress Case Price Discount
and the Market Value set forth in Exhibit I has been determined on the date
hereof in accordance with Sections 3.01(c) and 3.02, respectively, of the
Administration Agreement.

 

A-1

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  (iv) Representations and Warranties: Each representation and warranty of the
Seller set forth in Section 3.1 and Section 3.2 of the Securities Sale and
Contribution Agreement will be true and correct in all material respects on the
Closing Date.

 

  (v) Terms: All references herein to the Eligible Securities shall be deemed to
refer only to the Eligible Securities described in the Eligible Security
Schedules attached hereto.

 

  (vi) Definitions: Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to such terms in the Securities Sale and
Contribution Agreement.

 

A-2

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Kindly acknowledge your agreement and consent to the terms of this letter by
signing and returning to us the enclosed duplicate copy hereof.

 

Very truly yours,

THORNBURG MORTGAGE, INC.

By:

   

Name:

Title:

   

 

Date:                                                         

 

Consented and Agreed to:

 

THORNBURG MORTGAGE DEPOSITOR, L.L.C., as Depositor

By: Thornburg Mortgage, Inc., as Manager

By:    

Name:

Title:

   

 

A-3

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Exhibit I to Transfer Supplement

 

Eligible Security Schedule

 

(1) Name of Issuer/Agency;

 

(2) Group;

 

(3) Depositor Purchase price;

 

(4) Market Value;

 

(5) Stress Case Security Price;

 

(6) PAR Value; and

 

(7) Maturity Date.

 

A-4

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EXHIBIT B

 

PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to the representations, warranties and covenants contained in the
Securities Sale and Contribution Agreement, the Issuer hereby represents,
warrants, and covenants to Collateral Agent as to itself as follows, the
Administrator hereby represents, warrants and covenants to the Collateral Agent
as to itself and the Issuer, and the Seller hereby represents, warrants and
covenants to Collateral Agent as to itself, in each case as of the Effective
Date and on each Closing Date thereafter, as follows:

 

General

 

1. The Securities Sale and Contribution Agreement creates a valid and continuing
security interest (as defined in the applicable UCC) in the Collateral in favor
of the Collateral Agent, which security interest is prior to all other Liens,
and is enforceable as such as against creditors of and purchasers from Issuer.

 

2. The Securities constitute “accounts,” “general intangibles,” “instruments,”
“certificated securities,” “uncertificated securities,” “securities accounts,”
or “securities entitlements” within the meaning of the UCC as in effect in the
State of New York.

 

3. The Collateral Account, the Issuer Account and the Note Account
(collectively, the “Accounts”) and all subaccounts thereof, constitute either a
deposit account or a securities account.

 

4. All of the Securities that constitute security entitlements have been and
will be credited to the Issuer Account. The securities intermediary for each
Account has agreed to treat each item of property (whether investment property,
financial asset, security or instrument) other than cash, credited to the
Accounts as a “financial asset” within the meaning of the applicable UCC.

 

Creation

 

5. Issuer owns and has good and marketable title to the Collateral free and
clear of any Lien, claim or encumbrance of any Person, excepting only liens for
taxes, assessments or similar governmental charges or levies incurred in the
ordinary course of business that are not yet due and payable or as to which any
applicable grace period shall not have expired, or that are being contested in
good faith by proper proceedings and for which adequate reserves have been
established, but only so long as foreclosure with respect to such a lien is not
imminent and the use and value of the property to which the Lien attaches is not
impaired during the pendency of such proceeding.

 

6. Issuer has received all consents and approvals required by the terms of the
Securities that constitute security entitlements, certificated securities or
uncertificated securities to the transfer to the Collateral Agent of its
interest and rights in the Securities hereunder.

 

B-1

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Perfection:

 

7. Administrator has caused or will have caused, within ten days after the date
of the Original Agreement and the Securities Sale and Contribution Agreement,
the filing of all appropriate financing statements in the proper filing office
in the appropriate jurisdictions under applicable law in order to perfect the
security interest in the Collateral granted to the Collateral Agent hereunder.

 

8. With respect to Securities that constitute an instrument:

 

(i) All original executed copies of each such instrument have been delivered to
a custodian or the Collateral Agent;

 

(ii) If such instruments are in the possession of a custodian, then

 

(a) the Collateral Agent has received a written acknowledgment from custodian
that custodian is holding such instruments solely on behalf and for the benefit
of the Collateral Agent; or

 

(b) the custodian received possession of such instruments after the Collateral
Agent received a written acknowledgment from such custodian that such custodian
is acting solely as agent of the Collateral Agent.

 

9. With respect to Securities or the Accounts and all subaccounts that
constitute deposit accounts, the Issuer has delivered to Collateral Agent a
fully executed agreement pursuant to which the bank maintaining the Accounts has
agreed to comply with all instructions originated by the Collateral Agent
directing disposition of the funds in the Accounts without further consent by
the Issuer.

 

10. With respect to Securities or the Accounts or subaccounts thereof that
constitute securities accounts or security entitlements, the Issuer has caused
or will have caused, within ten days after the date of the Original Agreement
and the Securities Sale and Contribution Agreement, the filing of all
appropriate financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest
granted in the Securities to the Collateral Agent; and Issuer has delivered to
Collateral Agent a fully executed agreement pursuant to which the securities
intermediary has agreed to comply with all instructions originated by the
Collateral Agent relating to the Accounts without further consent by the Issuer.

 

11. With respect to Securities that constitute certificated securities (other
than security entitlements), all original executed copies of each Securities
Sale and Contribution certificate that constitutes or evidences the Securities
have been delivered to the Collateral Agent, and each such Securities Sale and
Contribution certificate either (i) is in bearer form, (ii) has been indorsed by
an effective endorsement to the Collateral Agent or in blank, or (iii) has been
registered in the name of the Collateral Agent.

 

B-2

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Priority

 

12. Other than the transfer of the Securities to Issuer under the Master
Repurchase Agreement and the security interest granted to the Collateral Agent
pursuant to the Security Agreement, neither Issuer nor Seller has pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of the
Collateral or the Accounts or any subaccount thereof. Neither Issuer nor Seller
has authorized the filing of, or is aware of any financing statements against
Issuer or Seller that include a description of collateral covering the
Collateral or the Accounts or any subaccount thereof other than any financing
statement relating to the security interest granted to the Collateral Agent
hereunder or that has been terminated.

 

13. Neither Issuer nor Seller is aware of any judgment, ERISA or tax lien
filings against either Issuer or Seller.

 

14. The Issuer has or shall at the time of acquisition have in its possession
all original copies of the security certificates that constitute or evidence the
Securities that are certificated securities. The security certificates that
constitute or evidence the Securities that are certificated securities do not
and will not have any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the Collateral Agent.
All financing statements filed or to be filed against the Issuer in favor of the
Collateral Agent in connection herewith describing the Securities that are
certificated securities contain a statement to the following effect: “A purchase
of or security interest in any collateral described in this financing statement
will violate the rights of the Collateral Agent, unless any such purchase is
made as provided under the terms of the Program Documents.”

 

15. Survival of Perfection Representations. Notwithstanding any other provision
of the Securities Sale and Contribution Agreement or any other Program Document,
the representations, warrants and covenants contained in this Exhibit B shall be
continuing, and remain in full force and effect until such time as all
obligations under the Securities Sale and Contribution Agreement have been
finally and fully paid and performed.

 

B-3