EXHIBIT 1.2
FIRST HORIZON ASSET SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-AA5
TERMS AGREEMENT
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(to Underwriting Agreement,
dated October 25, 2004
between the Company and the Underwriter)
First Horizon Asset Securities Inc. New York, New York
0000 Xxxxxxx Xxx October 25, 2004
Irving, Texas 75063
Credit Suisse First Boston LLC (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-AA5
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-AA5 Certificates are registered with the Securities and Exchange Commission
by means of an effective Registration Statement (No. 333-110100). Capitalized
terms used and not defined herein have the meanings given them in the
Underwriting Agreement.
Section 1. The Mortgage Pool: The Series 2004-AA5 Certificates shall
evidence the entire beneficial ownership interest in two pools (each, a
"Mortgage Pool") of conventional, adjustable rate, fully amortizing, one- to
four-family residential mortgage loans (the "Mortgage Loans") having the
following characteristics as of October 1, 2004 (the "Cut-off Date"):
(a) Aggregate Principal Amount of the Mortgage Pools:
$290,013,158 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 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):
Principal Interest Class Purchase
Class Balance Rate Price Percentage
----- --------- -------- ----------------
I-A-1 $185,031,000.00 Variable(1) 101.942580000%
I-A-R $ 100.00 Variable(1) 101.942580000%
II-A-1 $ 87,581,000.00 Variable(1) 102.473856000%
II-A-2 $ 87,581,000.00(2) Variable(1) 0.973856000%
B-1 $ 8,120,000.00 Variable(1) 101.255046000%
B-2 $ 3,190,000.00 Variable(1) 100.098738000%
B-3 $ 1,885,000.00 Variable(1) 97.301724000%
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(1) The interest rates for the Offered Certificates are variable and will
be calculated as described in the Prospectus Supplement.
(2) Indicates the notional amount of such interest only class.
(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 Certificates 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,
October 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 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-2, (ii) at least "AAA" from S&P in the case of the Class
I-A-R Certificates, (iii) at least "AA" from S&P, in the case of the Class B-1
Certificates, (iv) 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.
2
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,
CREDIT SUISSE FIRST BOSTON LLC
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:
FIRST HORIZON HOME LOAN CORPORATION
By:
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Name:
Title:
