EXECUTION
FIRST HORIZON ASSET SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2005-AA1
TERMS AGREEMENT
(to Underwriting Agreement,
dated July 24, 2002
between the Company and the Underwriter)
First Horizon Asset Securities Inc. New York, New York
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ January 25, 2005
Irving, Texas 75063
Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the "Underwriter") agrees, subject to the terms
and provisions herein and of the captioned Underwriting Agreement (the
"Underwriting Agreement"), to purchase such Classes of Series 2005-AA1
Certificates specified in Section 2(a) hereof (the "Offered Certificates"). This
letter supplements and modifies the Underwriting Agreement solely as it relates
to the purchase and sale of the Offered Certificates described below. The Series
2005-AA1 Certificates are registered with the Securities and Exchange Commission
by means of an effective Registration Statement (No. 333-119657). Capitalized
terms used and not defined herein have the meanings given them in the
Underwriting Agreement.
Section 1. The Mortgage Pools: The Series 2005-AA1 Certificates shall
evidence the entire beneficial ownership interest in two pools (the "Mortgage
Pools") of primarily 30-year adjustable rate, first lien, fully amortizing, one-
to four-family residential mortgage loans (the "Mortgage Loans") having the
following characteristics as of January 1, 2005 (the "Cut-off Date"):
(a) Aggregate Principal Amount of the Mortgage Pools: Approximately
$315,064,918 aggregate principal balance as of the Cut-off Date, subject
to an upward or downward variance of up to 5%, the precise aggregate
principal balance to be determined by the Company.
(b) Original Term to Maturity: The original term to maturity of each
Mortgage Loan included in Pool I and Pool II shall be 360 months.
Section 2. The Certificates: The Offered Certificates shall be issued as
follows:
(a) Classes: The Offered Certificates shall be issued with the
following Class designations, interest rates and principal balances,
subject in the aggregate to the variance referred to in Section 1(a) and,
as to any particular Class, to an upward or downward variance of up to 5%:
Principal Interest Class Purchase
Class Balance Rate Price Percentage
----- --------------- ----------- ----------------
I-A-1 $ 93,729,000.00 Variable(1) 101.980468750%
I-A-IO (2) Variable(1) --
II-A-1 $188,799,000.00 Variable(1) 101.902343750%
II-A-2 $ 12,687,000.00 Variable(1) 101.902343750%
II-A-IO (2) Variable(1) --
II-A-R $ 100.00 Variable(1) 101.902343750%
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(1) The pass-through rates on each class of Certificates listed above
for each distribution date will be variable and will be calculated
as described in the prospectus supplement.
(2) The Class I-A-IO and Class II-A-IO Certificates are notional amount
certificates and will accrue interest during each interest accrual
period on a notional amount. The initial notional amount of the
Class I-A-IO and Class II-A-IO Certificates will be approximately
$93,729,000 and $201,486,000, respectively.
(b) The Offered Certificates shall have such other characteristics
as described in the related Prospectus.
Section 3. Purchase Price: The Purchase Price for each Class of the
Offered Certificates shall be the Class Purchase Price Percentage therefor (as
set forth in Section 2(a) above) of the initial Class Certificate Principal
Balance thereof plus accrued interest at the per annum initial interest rate
applicable thereto from and including the Cut-off Date up to, but not including,
January 28, 2005 (the "Closing Date").
Section 4. Required Ratings: The Offered Certificates (other than the
Class II-A-2 Certificates) shall have received Required Ratings of at least
"AAA" from Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. ("S&P") and "Aaa" from ▇▇▇▇▇'▇ Investors Service, Inc
("Moody's"). The Class II-A-2 Certificates shall have received Required Ratings
of at least "AAA" from S&P and "Aa1" from Moody's.
Section 5. Tax Treatment: One or more elections will be made to treat the
assets of the Trust Fund as a REMIC.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Underwriter and the Company.
Very truly yours,
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
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Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
FIRST HORIZON ASSET SECURITIES INC.
By:
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
FIRST HORIZON HOME LOAN CORPORATION
By:
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Name:
Title:
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