EXECUTION
FIRST HORIZON ASSET SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2005-AA2
TERMS AGREEMENT
(to Underwriting Agreement,
dated December 20, 2001
between the Company and the Underwriter)
First Horizon Asset Securities Inc. New York, New York
0000 Xxxxxxx Xxx February 22, 2005
Irving, Texas 75063
Citigroup Global Markets Inc. (formerly known as Xxxxxxx Xxxxx Xxxxxx
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-AA2 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-AA2 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-AA2 Certificates shall
evidence the entire beneficial ownership interest in two pools (the "Mortgage
Pools") of primarily 30-year adjustable rate, fully amortizing, one- to
four-family residential mortgage loans (the "Mortgage Loans") having the
following characteristics as of February 1, 2005 (the "Cut-off Date"):
(a) Aggregate Principal Amount of the Mortgage Pools: Approximately
$345,019,045 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 $ 138,041,000.00 Variable(1) 102.156250000%
I-A-2 $ 2,251,000.00 Variable(1) 102.156250000%
II-A-1 $ 179,375,000.00 Variable(1) 102.148437500%
II-A-2 $ 2,925,000.00 Variable(1) 102.148437500%
II-A-R $ 100.00 Variable(1) 102.148437500%
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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.
(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,
February 28, 2005 (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 XxXxxx-Xxxx Companies, Inc. ("S&P"), and "Aaa" from
Xxxxx'x Investors Service, Inc. ("Moody's) in the case of the Class I-A-1, Class
II-A-1 and Class II-A-R Certificates and (ii) at least "AAA" from S&P and "Aa1"
from Moody's in the case of the Class I-A-2 and Class II-A-2 Certificates.
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,
CITIGROUP GLOBAL MARKETS INC.
By:
-------------------------
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: Xxxxxx Xxxxx
Title: Vice President
FIRST HORIZON HOME LOAN CORPORATION
By:
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Name:
Title:
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