EXECUTION
FIRST HORIZON ASSET SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-AR7
TERMS AGREEMENT
(to Underwriting Agreement,
dated September 25, 2003
between the Company and the Underwriter)
First Horizon Asset Securities Inc. New York, New York
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ December 22, 2004
Irving, Texas 75063
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. (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 2004-AR7 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 2004-AR7
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 Pool: The Series 2004-AR7 Certificates shall
evidence the entire beneficial ownership interest in four pools (the "Mortgage
Pools") of conventional, adjustable rate, fully amortizing, one- to four-family
residential mortgage loans (the "Mortgage Loans") having the following
characteristics as of December 1, 2004 (the "Cut-off Date"):
(a) Aggregate Principal Amount of the Mortgage Pools: Approximately
$278,119,037 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 Terms to Maturity: The original term to maturity of
each Mortgage Loan included in Pool I, Pool II, Pool III and Pool IV 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 $ 67,521,000.00 Variable(1) 100.98%
I-A-R $ 100.00 Variable(1) 100.98%
II-A-1 $ 98,276,000.00 Variable(1) 101.08%
II-A-2 $ 28,081,000.00 Variable(1) 101.08%
II-A-3 $ 4,307,000.00 Variable(1) 101.08%
II-A-4 $ 4,307,000.00 Variable(1) 101.08%
III-A-1 $ 17,389,000.00 Variable(1) 100.96%
IV-A-1 $ 48,225,000.00 Variable(1) 101.58%
B-1 $ 4,728,000.00 Variable(1) 99.84%
B-2 $ 1,947,000.00 Variable(1) 99.10%
B-3 $ 1,112,000.00 Variable(1) 97.29%
(1) The interest rates for these classes of Certificates are variable
and will be calculated as described in the Prospectus Supplement.
(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,
December 29, 2004 (the "Closing Date").
Section 4. Required Ratings: The Offered Certificates shall have received
Required Ratings of (i) at least "AAA" from Standard and Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P") and Fitch
Ratings, (ii) at least "AA" from S&P, in the case of the Class B-1 Certificates,
(iii) at least "A" from S&P, in the case of the Class B-2 Certificates and (iv)
at least "BBB" from S&P, in the case of the Class B-3 Certificates.
Section 5. Tax Treatment: One or more elections will be made to treat the
assets of the Trust Fund as a ------------- REMIC.
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,
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
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: