Terms Agreement to Underwriting Agreement for First Horizon Asset Securities Inc. Mortgage Pass-Through Certificates Series 2005-AR4

Summary

This agreement is between First Horizon Asset Securities Inc., FTN Financial Capital Markets (a division of First Tennessee Bank), and First Horizon Home Loan Corporation. It sets the terms for the purchase and sale of Series 2005-AR4 Mortgage Pass-Through Certificates, which represent interests in pools of residential mortgage loans. The agreement specifies the classes, principal amounts, interest rates, purchase prices, and required credit ratings for the certificates. The closing date is August 30, 2005, and the certificates will be treated as REMICs for tax purposes.

EX-1.3 3 v025280_ex1-3.txt EXECUTION FIRST HORIZON ASSET SECURITIES INC. MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2005-AR4 TERMS AGREEMENT (to Underwriting Agreement, dated August 23, 2005 between the Company and the Underwriter) First Horizon Asset Securities Inc. Memphis, Tennessee 4000 Horizon Way August 23,2005 Irving, Texas 75063 FTN Financial Capital Markets, a division of First Tennessee Bank National Association (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-AR4 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-AR4 Certificates are registered with the Securities and Exchange Commission by means of an effective Registration Statement (No. 333-125158). Capitalized terms used and not defined herein have the meanings given them in the Underwriting Agreement. Section 1. The Mortgage Pools: The Series 2005-AR4 Certificates shall evidence the entire beneficial ownership interest in four 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 August 1, 2005 (the "Cut-off Date"): (a) Aggregate Principal Amount of the Mortgage Pools: Approximately $425,564,710 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, 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 $ 29,815,000.00 Variable(1) 100.770100000% I-A-2 $ 1,193,000.00 Variable(1) 100.770100000% II-A-1 $ 216,122,000.00 Variable(1) 100 ###-###-####% II-A-R $ 100.00 Variable(1) 100 ###-###-####% III-A-1 $ 54,803,000.00 Variable(1) 100 ###-###-####% IV-A-1 $ 54,608,000.00 Variable(1) 100.605468750% IV-A-2 $ 50,000,000.00 Variable(1) 100.605468750% IV-A-3 $ 2,000,000.00 Variable(1) 100.605468750% (1) The interest rates for the Offered 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, August 30, 2005 (the "Closing Date"). Section 4. Required Ratings: The Offered Certificates shall have received Required Ratings of at least "AAA" from Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and "AAA" from Fitch Ratings, in the case of the Class I-A-1, Class I-A-2, Class II-A-1, Class II-A-R, Class III-A-1, Class IV-A-1, Class IV-A-2 and Class IV-A-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, FTN FINANCIAL CAPITAL MARKETS, a division of First Tennessee Bank National Association By: ----------------------------- Name: Wade Walker Title: Senior Vice President The foregoing Agreement is hereby confirmed and accepted as of the date first above written. FIRST HORIZON ASSET SECURITIES INC. By: ----------------------------------- Name: Alfred Chang Title: Vice President FIRST HORIZON HOME LOAN CORPORATION By: ----------------------------------- Name: Terry McCoy Title: Executive Vice President