Document:

MORTGAGE LOAN PURCHASE AGREEMENT

         THIS MORTGAGE LOAN PURCHASE AGREEMENT dated as of March 30, 2005 by and
between FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation (the
"Seller"), and FIRST HORIZON ASSET SECURITIES INC. (the "Purchaser").

         WHEREAS, the Seller owns certain Mortgage Loans (as hereinafter
defined) which Mortgage Loans are more particularly listed and described in
Schedule A attached hereto and made a part hereof.

         WHEREAS, the Seller and the Purchaser wish to set forth the terms
pursuant to which the Mortgage Loans, excluding the servicing rights thereto,
are to be sold by the Seller to the Purchaser.

         WHEREAS, the Seller will simultaneously transfer the servicing rights
for the Mortgage Loans to First Tennessee Mortgage Services, Inc. ("FTMSI")
pursuant to the Servicing Rights Transfer and Subservicing Agreement (as
hereinafter defined).

         WHEREAS, the Purchaser will engage FTMSI to service the Mortgage Loans
pursuant to the Servicing Agreement (as hereinafter defined).

         NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:

ARTICLE I
                                   Definitions

         Agreement: This Mortgage Loan Purchase Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.

         Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the City of Dallas, or the State of Texas
or New York City is located are authorized or obligated by law or executive
order to be closed.

         Closing Date:  March 30, 2005

         Code:  The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

         Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.

         Coop Shares:  Shares issued by a Cooperative Corporation.

         Cooperative Loan:  Any Mortgage Loan secured by Coop Shares and a
Proprietary Lease.
<PAGE>

         Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Coop Shares of the Cooperative Corporation.

         Cooperative Unit:  A single family dwelling located in a Cooperative
Property.

         Custodian: First Tennessee Bank National Association, and its
successors and assigns, as custodian under the Custodial Agreement dated as of
March 30, 2005 by and among The Bank of New York, as trustee, First Horizon Home
Loan Corporation, as master servicer, and the Custodian.

         Cut-Off Date:  March 1, 2005.

         Cut-off Date Principal  Balance:  As to any Mortgage Loan, the Stated P
rincipal Balance thereof as of the close of business on the Cut-off Date.

         Debt Service Reduction: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan which became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any reduction that results in a permanent forgiveness of principal.

         Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then-outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any Scheduled Payment
that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court which is final and non-appealable
in a proceeding under the United States Bankruptcy Reform Act of 1978, as
amended.

         Delay Delivery Mortgage Loans: The Mortgage Loans for which all or a
portion of a related Mortgage File is not delivered to the Trustee or to the
Custodian on its behalf on the Closing Date. The number of Delay Delivery
Mortgage Loans shall not exceed 25% of the aggregate number of Mortgage Loans as
of the Closing Date.

         Deleted Mortgage Loan:  As defined in Section 4.1(c) hereof.

         Determination Date: The earlier of (i) the third Business Day after the
15th day of each month, and (ii) the second Business Day prior to the 25th day
of each month, or if such 25th day is not a Business Day, the next succeeding
Business Day.

         GAAP: Generally accepted accounting principles as in effect from time
to time in the United States of America.

         Insurance Proceeds: Proceeds paid by an insurer pursuant to any
insurance policy, including all riders and endorsements thereto in effect,
including any replacement policy or policies, in each case other than any amount
included in such Insurance Proceeds in respect of expenses covered by such
insurance policy.

                                      -2-
<PAGE>

         Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property.

         MERS: Mortgage Electronic  Registration Systems,  Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

         MERS Mortgage Loan:  Any Mortgage Loan registered with MERS on the MERS
System.

         MERS (R) System:  The system of recording transfers of mortgages
electronically maintained by MERS.

         MIN:  The Mortgage Identification Number for any MERS Mortgage Loan.

         MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.

         Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on the property securing a Mortgage Note.

         Mortgage File: The mortgage documents listed in Section 3.1 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.

         Mortgage Loans: The mortgage loans transferred, sold and conveyed by
the Seller to the Purchaser, pursuant to this Agreement.

         Mortgage Loan Purchase Price: With respect to any Mortgage Loan
required to be purchased by the Seller pursuant to Section 4.1(c) hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan on the date of such purchase, and (ii) accrued interest thereon at
the applicable Mortgage Rate from the date through which interest was last paid
by the Mortgagor to the first day in the month in which the Mortgage Loan
Purchase Price is to be distributed to the Purchaser or its designees.

         Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

         Mortgaged Property: The underlying property securing a Mortgage Loan,
which, with respect to a Cooperative Loan, is the related Coop Shares and
Proprietary Lease.

         Mortgagor:  The obligor(s) on a Mortgage Note.

         Principal Prepayment: Any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment.

                                      -3-
<PAGE>

         Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Coop Shares.

         Purchase Price:  $283,746,975.68

         Purchaser:  First  Horizon  Asset  Securities  Inc.,  in its capacity
as purchaser of the Mortgage  Loans from the Seller pursuant to this Agreement.

         Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan which establishes the rights of such originator in the Cooperative
Property.

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on the first day of the month allocable to principal and/or interest on such
Mortgage Loan which, unless otherwise specified herein, shall give effect to any
related Debt Service Reduction and any Deficient Valuation that affects the
amount of the monthly payment due on such Mortgage Loan.

         Security Agreement:  The security agreement with respect to a
Cooperative Loan.

         Seller:  First  Horizon Home Loan  Corporation,  a Kansas  corporation,
and its  successors  and assigns,  in its capacity as seller of the Mortgage
Loans.

         Servicing Agreement: The servicing agreement, dated as of November 26,
2002 by and between First Horizon Asset Securities Inc. and its assigns, as
owner, and First Tennessee Mortgage Services, Inc., as servicer.

         Servicing Rights Transfer and Subservicing Agreement: The servicing
rights transfer and subservicing agreement, dated as of November 26, 2002 by and
between First Horizon Home Loan Corporation, as transferor and subservicer, and
First Tennessee Mortgage Services, Inc., as transferee and servicer.

         Stated Principal Balance: As to any Mortgage Loan, the unpaid principal
balance of such Mortgage Loan as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any moratorium or similar waiver or grace period) after giving effect
to any previous partial Principal Prepayments and Liquidation Proceeds allocable
to principal (other than with respect to any Liquidated Mortgage Loan) and to
the payment of principal due on such date and irrespective of any delinquency in
payment by the related Mortgagor.

         Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for
a Deleted Mortgage Loan which must, on the date of such substitution, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) have a Mortgage Rate not lower than the Mortgage Rate of the Deleted
Mortgage Loan; (iii) have a maximum mortgage rate not more than 1% per annum
higher or lower than the maximum mortgage rate of the Deleted Mortgage Loan;
(iv) have a minimum mortgage rate specified in its related Mortgage Note not
more than 1% per annum higher or lower than the minimum mortgage rate of the
Deleted Mortgage Loan; (v) have the same mortgage index, reset period and
periodic rate as the Deleted Mortgage Loan and a gross margin not more than 1%
per annum higher or lower than that of the Deleted Mortgage Loan (vi) be
accruing interest at a rate no lower than and not more than 1% per annum higher
than, that of the Deleted Mortgage Loan; (iv) have a loan-to-value ratio no
higher than that of the Deleted Mortgage Loan; (vii) have a remaining term to
maturity no greater than (and not more than one year less than that of) the
Deleted Mortgage Loan; (viii) not be a Cooperative Loan unless the Deleted
Mortgage Loan was a Cooperative Loan and (ix) comply with each representation
and warranty set forth in Schedule B hereto.

                                      -4-
<PAGE>

         Trustee: The Bank of New York and its successors and, if a successor
trustee is appointed hereunder, such successor.

                                   ARTICLE II
                                Purchase and Sale

         Section 2.1 Purchase Price. In consideration for the payment to it of
the Purchase Price on the Closing Date, pursuant to written instructions
delivered by the Seller to the Purchaser on the Closing Date, the Seller does
hereby transfer, sell and convey to the Purchaser on the Closing Date, but with
effect from the Cut-off Date, (i) all right, title and interest of the Seller in
the Mortgage Loans, excluding the servicing rights thereto, and all property
securing such Mortgage Loans, including all interest and principal received or
receivable by the Seller with respect to the Mortgage Loans on or after the
Cut-off Date and all interest and principal payments on the Mortgage Loans
received on or prior to the Cut-off Date in respect of installments of interest
and principal due thereafter, but not including payments of principal and
interest due and payable on the Mortgage Loans on or before the Cut-off Date,
and (ii) all proceeds from the foregoing. Items (i) and (ii) in the preceding
sentence are herein referred to collectively as "Mortgage Assets."

         Section 2.2 Timing. The sale of the Mortgage Assets hereunder shall
take place on the Closing Date.

                                  ARTICLE III
                             Conveyance and Delivery

         Section 3.1 Delivery of Mortgage Files. In connection with the transfer
and assignment set forth in Section 2.1 above, the Seller has delivered or
caused to be delivered to the Trustee or to the Custodian on its behalf (or, in
the case of the Delay Delivery Mortgage Loans, will deliver or cause to be
delivered to the Trustee or to the Custodian on its behalf within thirty (30)
days following the Closing Date) the following documents or instruments with
respect to each Mortgage Loan so assigned (collectively, the "Mortgage Files"):

         (a)  (1) the original Mortgage Note endorsed by manual or facsimile
              signature in blank in the following form: "Pay to the order of
              ________________, without recourse," with all intervening
              endorsements showing a complete chain of endorsement from the
              originator to the Person endorsing the Mortgage Note (each such
              endorsement being sufficient to transfer all right, title and
              interest of the party so endorsing, as noteholder or assignee
              thereof, in and to that Mortgage Note); or

                                      -5-
<PAGE>

              (2)  with respect to any Lost Mortgage Note, a lost note affidavit
              from the Seller stating that the original Mortgage Note was lost
              or destroyed, together with a copy of such Mortgage Note;

         (b)  except as provided below and for each Mortgage Loan that is not a
              MERS Mortgage Loan, the original recorded Mortgage or a copy of
              such Mortgage certified by the Seller as being a true and complete
              copy of the Mortgage, and in the case of each MERS Mortgage Loan,
              the original Mortgage, noting the presence of the MIN of the
              Mortgage Loans and either language indicating that the Mortgage
              Loan is a MOM Loan if the Mortgage Loan is a MOM Loan or if the
              Mortgage Loan was not a MOM Loan at origination, the original
              Mortgage and the assignment thereof to MERS, with evidence of
              recording indicated thereon, or a copy of the Mortgage certified
              by the public recording office in which such Mortgage has been
              recorded;

         (c)  a duly executed assignment of the Mortgage in blank (which may be
              included in a blanket assignment or assignments), together with,
              except as provided below, all interim recorded assignments of such
              mortgage (each such assignment, when duly and validly completed,
              to be in recordable form and sufficient to effect the assignment
              of and transfer to the assignee thereof, under the Mortgage to
              which the assignment relates); provided that, if the related
              Mortgage has not been returned from the applicable public
              recording office, such assignment of the Mortgage may exclude the
              information to be provided by the recording office;

         (d)  the original or copies of each assumption, modification, written
              assurance or substitution agreement, if any;

         (e)  either the original or duplicate original title policy (including
              all riders thereto) with respect to the related Mortgaged
              Property, if available, provided that the title policy (including
              all riders thereto) will be delivered as soon as it becomes
              available, and if the title policy is not available, and to the
              extent required pursuant to the second paragraph below or
              otherwise in connection with the rating of the Certificates, a
              written commitment or interim binder or preliminary report of the
              title issued by the title insurance or escrow company with respect
              to the Mortgaged Property, and

         (f)  in the case of a Cooperative Loan, the originals of the following
              documents or instruments:

              (1)  The Coop Shares, together with a stock power in blank;

              (2)  The executed Security Agreement;

              (3)  The executed Proprietary Lease;

                                      -6-
<PAGE>

              (4) The executed Recognition Agreement;

              (5) The executed UCC-1 financing statement with evidence of
         recording thereon which have been filed in all places required to
         perfect the Seller's interest in the Coop Shares and the Proprietary
         Lease; and

              (6) Executed UCC-3 financing statements or other appropriate UCC
         financing statements required by state law, evidencing a complete and
         unbroken line from the mortgagee to the Trustee with evidence of
         recording thereon (or in a form suitable for recordation).

         In the event that in connection with any Mortgage Loan that is not a
MERS Mortgage Loan the Seller cannot deliver (i) the original recorded Mortgage
or (ii) all interim recorded assignments satisfying the requirements of clause
(b) or (c) above, respectively, concurrently with the execution and delivery
hereof because such document or documents have not been returned from the
applicable public recording office, the Seller shall promptly deliver or cause
to be delivered to the Trustee or the Custodian on its behalf such original
Mortgage or such interim assignment, as the case may be, with evidence of
recording indicated thereon upon receipt thereof from the public recording
office, or a copy thereof, certified, if appropriate, by the relevant recording
office, but in no event shall any such delivery of the original Mortgage and
each such interim assignment or a copy thereof, certified, if appropriate, by
the relevant recording office, be made later than one year following the Closing
Date; provided, however, in the event the Seller is unable to deliver or cause
to be delivered by such date each Mortgage and each such interim assignment by
reason of the fact that any such documents have not been returned by the
appropriate recording office, or, in the case of each such interim assignment,
because the related Mortgage has not been returned by the appropriate recording
office, the Seller shall deliver or cause to be delivered such documents to the
Trustee or the Custodian on its behalf as promptly as possible upon receipt
thereof and, in any event, within 720 days following the Closing Date. The
Seller shall forward or cause to be forwarded to the Trustee or the Custodian on
its behalf (i) from time to time additional original documents evidencing an
assumption or modification of a Mortgage Loan and (ii) any other documents
required to be delivered by the Seller to the Trustee. In the event that the
original Mortgage is not delivered and in connection with the payment in full of
the related Mortgage Loan and the public recording office requires the
presentation of a "lost instruments affidavit and indemnity" or any equivalent
document, because only a copy of the Mortgage can be delivered with the
instrument of satisfaction or reconveyance, the Seller shall execute and deliver
or cause to be executed and delivered such a document to the public recording
office. In the case where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after recordation in a
public recording office, the Seller shall deliver or cause to be delivered to
the Trustee or the Custodian on its behalf a copy of such Mortgage certified by
such public recording office to be a true and complete copy of the original
recorded Mortgage.

         In addition, in the event that in connection with any Mortgage Loan the
Seller cannot deliver or cause to be delivered the original or duplicate
original lender's title policy (together with all riders thereto), satisfying
the requirements of clause (v) above, concurrently with the execution and
delivery hereof because the related Mortgage has not been returned from the
applicable public recording office, the Seller shall promptly deliver or cause
to be delivered to the Trustee or the Custodian on its behalf such original or
duplicate original lender's title policy (together with all riders thereto) upon
receipt thereof from the applicable title insurer, but in no event shall any
such delivery of the original or duplicate original lender's title policy be
made later than one year following the Closing Date; provided, however, in the
event the Seller is unable to deliver or cause to be delivered by such date the
original or duplicate original lender's title policy (together with all riders
thereto) because the related Mortgage has not been returned by the appropriate
recording office, the Seller shall deliver or cause to be delivered such
documents to the Trustee or the Custodian on its behalf as promptly as possible
upon receipt thereof and, in any event, within 720 days following the Closing
Date.

                                      -7-
<PAGE>

         Notwithstanding anything to the contrary in this Agreement, within
thirty days after the Closing Date, the Seller shall either (i) deliver or cause
to be delivered to the Trustee or the Custodian on its behalf the Mortgage File
as required pursuant to this Section 3.1 for each Delay Delivery Mortgage Loan
or (ii) (A) substitute or cause to be substituted a Substitute Mortgage Loan for
the Delay Delivery Mortgage Loan or (B) repurchase or cause to be repurchased
the Delay Delivery Mortgage Loan, which substitution or repurchase shall be
accomplished in the manner and subject to the conditions set forth in Section
4.1 (treating each Delay Delivery Mortgage Loan as a Deleted Mortgage Loan for
purposes of such Section 4.1), provided, however, that if the Seller fails to
deliver a Mortgage File for any Delay Delivery Mortgage Loan within the
thirty-day period provided in the prior sentence, the Seller shall use its best
reasonable efforts to effect or cause to be effected a substitution, rather than
a repurchase of, such Deleted Mortgage Loan and provided further that the cure
period provided for in Section 4.1 hereof shall not apply to the initial
delivery of the Mortgage File for such Delay Delivery Mortgage Loan, but rather
the Seller shall have five (5) Business Days to cure or cause to be cured such
failure to deliver.

                                   ARTICLE IV
                         Representations and Warranties

         Section 4.1 Representations and Warranties of the Seller.

         (a)  The Seller hereby represents and warrants to the Purchaser, as of
              the date of execution and delivery hereof, that:

              (1) The Seller is duly organized as a Kansas corporation and is
         validly existing and in good standing under the laws of the State of
         Kansas and is duly authorized and qualified to transact any and all
         business contemplated by this Agreement to be conducted by the Seller
         in any state in which a Mortgaged Property is located or is otherwise
         not required under applicable law to effect such qualification and, in
         any event, is in compliance with the doing business laws of any such
         state, to the extent necessary to ensure its ability to enforce each
         Mortgage Loan and to perform any of its other obligations under this
         Agreement in accordance with the terms thereof.

              (2) The Seller has the full corporate power and authority to sell
         each Mortgage Loan, and to execute, deliver and perform, and to enter
         into and consummate the transactions contemplated by this Agreement and
         has duly authorized by all necessary corporate action on the part of
         the Seller the execution, delivery and performance of this Agreement;
         and this Agreement, assuming the due authorization, execution and
         delivery thereof by the other parties thereto, constitutes a legal,
         valid and binding obligation of the Seller, enforceable against the
         Seller in accordance with its terms, except that (a) the enforceability
         thereof may be limited by bankruptcy, insolvency, moratorium,
         receivership and other similar laws relating to creditors' rights
         generally and (b) the remedy of specific performance and injunctive and
         other forms of equitable relief may be subject to equitable defenses
         and to the discretion of the court before which any proceeding therefor
         may be brought.

                                      -8-
<PAGE>

              (3) The execution and delivery of this Agreement by the Seller,
         the sale of the Mortgage Loans by the Seller under this Agreement, the
         consummation of any other of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms thereof
         are in the ordinary course of business of the Seller and will not (a)
         result in a material breach of any term or provision of the charter or
         by-laws of the Seller or (b) materially conflict with, result in a
         material breach, violation or acceleration of, or result in a material
         default under, the terms of any other material agreement or instrument
         to which the Seller is a party or by which it may be bound, or (c)
         constitute a material violation of any statute, order or regulation
         applicable to the Seller of any court, regulatory body, administrative
         agency or governmental body having jurisdiction over the Seller; and
         the Seller is not in breach or violation of any material indenture or
         other material agreement or instrument, or in violation of any statute,
         order or regulation of any court, regulatory body, administrative
         agency or governmental body having jurisdiction over it which breach or
         violation may materially impair the Seller's ability to perform or meet
         any of its obligations under this Agreement.

              (4) No litigation is pending or, to the best of the Seller's
         knowledge, threatened against the Seller that would prohibit the
         execution or delivery of, or performance under, this Agreement by the
         Seller.

              (5) The Seller is a member of MERS in good standing, and will
         comply in all material respects with the rules and procedures of MERS
         in connection with the servicing of the MERS Mortgage Loans for as long
         as such Mortgage Loans are registered with MERS.

         (b)  The Seller hereby makes the representations and warranties set
              forth in Schedule B hereto to the Purchaser, as of the Closing
              Date, or if so specified therein, as of the Cut-off Date.

         (c)  Upon discovery by either of the parties hereto of a breach of a
              representation or warranty made pursuant to Schedule B hereto that
              materially and adversely affects the interests of the Purchaser in
              any Mortgage Loan, the party discovering such breach shall give
              prompt notice thereof to the other party. The Seller hereby
              covenants that within 90 days of the earlier of its discovery or
              its receipt of written notice from the Purchaser of a breach of
              any representation or warranty made pursuant to Schedule B hereto
              which materially and adversely affects the interests of the
              Purchaser in any Mortgage Loan, it shall cure such breach in all
              material respects, and if such breach is not so cured, shall, (i)
              if such 90-day period expires prior to the second anniversary of
              the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage
              Loan") from the pools of mortgages listed on Schedule B hereto and
              substitute in its place a Substitute Mortgage Loan, in the manner
              and subject to the conditions set forth in this Section; or (ii)
              repurchase the affected Mortgage Loan or Mortgage Loans from the
              Purchaser at the Mortgage Loan Purchase Price in the manner set
              forth below. With respect to the representations and warranties
              described in this Section which are made to the best of the
              Seller's knowledge, if it is discovered by either the Seller or
              the Purchaser that the substance of such representation and
              warranty is inaccurate and such inaccuracy materially and
              adversely affects the value of the related Mortgage Loan or the
              interests of the Purchaser therein, notwithstanding the Seller's
              lack of knowledge with respect to the substance of such
              representation or warranty, such inaccuracy shall be deemed a
              breach of the applicable representation or warranty.

              With respect to any Substitute Mortgage Loan or Loans, the Seller
         shall deliver to the Trustee or to the Custodian on its behalf the
         Mortgage Note, the Mortgage, the related assignment of the Mortgage,
         and such other documents and agreements as are required by Section 3.1,
         with the Mortgage Note endorsed and the Mortgage assigned as required
         by Section 3.1. No substitution is permitted to be made in any calendar
         month after the Determination Date for such month. Scheduled Payments
         due with respect to Substitute Mortgage Loans in the month of
         substitution will be retained by the Seller. Upon such substitution,
         the Substitute Mortgage Loan or Loans shall be subject to the terms of
         this Agreement in all respects, and the Seller shall be deemed to have
         made with respect to such Substitute Mortgage Loan or Loans, as of the
         date of substitution, the representations and warranties made pursuant
         to Schedule B hereto with respect to such Mortgage Loan.

              It is understood and agreed that the obligation under this
         Agreement of the Seller to cure, repurchase or replace any Mortgage
         Loan as to which a breach has occurred and is continuing shall
         constitute the sole remedy against the Seller respecting such breach
         available to the Purchaser on its behalf.

         The representations and warranties contained in this Agreement shall
not be construed as a warranty or guaranty by the Seller as to the future
payments by any Mortgagor.

         It is understood and agreed that the representations and warranties set
forth in this Section 4.1 shall survive the sale of the Mortgage Loans to the
Purchaser hereunder.

                                   ARTICLE V
                                  Miscellaneous

         Section 5.1 Transfer Intended as Sale. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans by the Seller to the
Purchaser be, and be construed as, an absolute sale thereof in accordance with
GAAP and for regulatory purposes. It is, further, not the intention of the
parties that such conveyances be deemed a pledge thereof by the Seller to the
Purchaser. However, in the event that, notwithstanding the intent of the
parties, the Mortgage Loans are held to be the property of the Seller or the
Purchaser, respectively, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of Texas and (ii) the conveyance of the Mortgage
Loans provided for in this Agreement shall be deemed to be an assignment and a
grant by the Seller to the Purchaser of a security interest in all of the
Mortgage Loans, whether now owned or hereafter acquired.

                                      -10-
<PAGE>

         The Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement. The Seller and the Purchaser shall arrange for filing any
Uniform Commercial Code continuation statements in connection with any security
interest granted hereby.

         Section 5.2 Seller's Consent to Assignment. The Seller hereby
acknowledges the Purchaser's right to assign, transfer and convey all of the
Purchaser's rights under this Agreement to a third party and that the
representations and warranties made by the Seller to the Purchaser pursuant to
this Agreement will, in the case of such assignment, transfer and conveyance, be
for the benefit of such third party. The Seller hereby consents to such
assignment, transfer and conveyance.

         Section 5.3 Specific Performance. Either party or its assignees may
enforce specific performance of this Agreement.

         Section 5.4 Notices. All notices, demands and requests that may be
given or that are required to be given hereunder shall be sent by United States
certified mail, postage prepaid, return receipt requested, to the parties at
their respective addresses as follows:

                      If to
                      the Purchaser:      4000 Horizon Way
                                          Irving, Texas 75063
                                          Attn: Larry P. Cole

                      If to the Seller:   4000 Horizon Way
                                          Irving, Texas 75063
                                          Attn: Larry P. Cole

         Section 5.5 Choice of Law. This Agreement shall be construed in
accordance with and governed by the substantive laws of the State of Texas
applicable to agreements made and to be performed in the State of Texas and the
obligations, rights and remedies of the parties hereto shall be determined in
accordance with such laws.

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                                      -11-
<PAGE>

         IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the 30th day of March, 2005.

                                FIRST HORIZON HOME LOAN CORPORATION,
                                as Seller

                                By:
                                   ---------------------------------------------
                                       Terry McCoy
                                       Senior Vice President

                                FIRST HORIZON ASSET SECURITIES INC.,
                                as Purchaser

                                By:
                                   ---------------------------------------------
                                       Alfred Chang
                                       Vice President

<PAGE>

                                   SCHEDULE A

                              [BEGINS ON NEXT PAGE]

                      [Available Upon Request From Trustee]

<PAGE>

                                   SCHEDULE B

             Representations and Warranties as to the Mortgage Loans

         First Horizon Home Loan Corporation (the "Seller") hereby makes the
representations and warranties set forth in this Schedule B on which First
Horizon Asset Securities Inc. (the "Purchaser") relies in accepting the Mortgage
Loans. Such representations and warranties speak as of the execution and
delivery of the Mortgage Loan Purchase Agreement, dated as of March 30, 2005
(the "MLPA"), between First Horizon Home Loan Corporation, as seller, and the
Purchaser and as of the Closing Date, or if so specified herein, as of the
Cut-off Date or date of origination of the Mortgage Loans, but shall survive the
sale, transfer, and assignment of the Mortgage Loans to the Purchaser and any
subsequent sale, transfer and assignment by the Purchaser to a third party.
Capitalized terms used but not otherwise defined in this Schedule B shall have
the meanings ascribed thereto in the MLPA or the Pooling and Servicing
Agreement, dated as of March 1, 2005, between First Horizon Asset Securities
Inc., as depositor, First Horizon Home Loan Corporation, as master servicer, and
The Bank of New York, as trustee.

         (1)  The information set forth on Schedule A to the MLPA, with respect
              to each Mortgage Loan is true and correct in all material respects
              as of the Closing Date.

         (2)  Each Mortgage is a valid and enforceable first lien on the
              Mortgaged Property subject only to (a) the lien of nondelinquent
              current real property taxes and assessments and liens or interests
              arising under or as a result of any federal, state or local law,
              regulation or ordinance relating to hazardous wastes or hazardous
              substances and, if the related Mortgaged Property is a unit in a
              condominium project or Planned Unit Development, any lien for
              common charges permitted by statute or homeowner association fees,
              (b) covenants, conditions and restrictions, rights of way,
              easements and other matters of public record as of the date of
              recording of such Mortgage, such exceptions appearing of record
              being generally acceptable to mortgage lending institutions in the
              area wherein the related Mortgaged Property is located or
              specifically reflected in the appraisal made in connection with
              the origination of the related Mortgage Loan, and (c) other
              matters to which like properties are commonly subject which do not
              materially interfere with the benefits of the security intended to
              be provided by such Mortgage.

         (3)  Immediately prior to the assignment of the Mortgage Loans to the
              Purchaser, the Seller had good title to, and was the sole owner
              of, each Mortgage Loan free and clear of any pledge, lien,
              encumbrance or security interest and had full right and authority,
              subject to no interest or participation of, or agreement with, any
              other party, to sell and assign the same pursuant to this
              Agreement.

         (4)  As of the date of origination of each Mortgage Loan, there was no
              delinquent tax or assessment lien against the related Mortgaged
              Property.

                                      B-1
<PAGE>

         (5)  There is no valid offset, defense or counterclaim to any Mortgage
              Note or Mortgage, including the obligation of the Mortgagor to pay
              the unpaid principal of or interest on such Mortgage Note.

         (6)  There are no mechanics' liens or claims for work, labor or
              material affecting any Mortgaged Property which are or may be a
              lien prior to, or equal with, the lien of such Mortgage, except
              those which are insured against by the title insurance policy
              referred to in item (11) below.

         (7)  To the best of the Seller's knowledge, no Mortgaged Property has
              been materially damaged by water, fire, earthquake, windstorm,
              flood, tornado or similar casualty (excluding casualty from the
              presence of hazardous wastes or hazardous substances, as to which
              the Seller makes no representation) so as to affect adversely the
              value of the related Mortgaged Property as security for such
              Mortgage Loan. With respect to the representations and warranties
              contained within this item (7) that are made to the knowledge or
              the best knowledge of the Seller or as to which the Seller has no
              knowledge, if it is discovered that the substance of any such
              representation and warranty is inaccurate and the inaccuracy
              materially and adversely affects the value of the related Mortgage
              Loan, or the interest therein of the Purchaser, then
              notwithstanding the Seller's lack of knowledge with respect to the
              substance of such representation and warranty being inaccurate at
              the time the representation and warranty was made, such inaccuracy
              shall be deemed a breach of the applicable representation and
              warranty and the Seller shall take such action described in
              Section 4.1(c) of this Agreement in respect of such Mortgage Loan.

         (8)  Each Mortgage Loan at origination complied in all material
              respects with applicable local, state and federal laws, including,
              without limitation, usury, equal credit opportunity, real estate
              settlement procedures, truth-in-lending and disclosure laws and
              specifically applicable predatory and abusive lending laws, or any
              noncompliance does not have a material adverse effect on the value
              of the related Mortgage Loan.

         (9)  No Mortgage Loan is a "high cost loan" as defined by the specific
              applicable predatory and abusive lending laws.

         (10) Except as reflected in a written document contained in the related
              Mortgage File, the Seller has not modified the Mortgage in any
              material respect; satisfied, cancelled or subordinated such
              Mortgage in whole or in part; released the related Mortgaged
              Property in whole or in part from the lien of such Mortgage; or
              executed any instrument of release, cancellation, modification or
              satisfaction with respect thereto.

         (11) A lender's policy of title insurance together with a condominium
              endorsement and extended coverage endorsement, if applicable, in
              an amount at least equal to the Cut-off Date Principal Balance of
              each such Mortgage Loan or a commitment (binder) to issue the same
              was effective on the date of the origination of each Mortgage
              Loan, each such policy is valid and remains in full force and
              effect.

                                      B-2
<PAGE>

         (12) To the best of the Seller's knowledge, all of the improvements
              which were included for the purpose of determining the appraised
              value of the Mortgaged Property lie wholly within the boundaries
              and building restriction lines of such property, and no
              improvements on adjoining properties encroach upon the Mortgaged
              Property, unless such failure to be wholly within such boundaries
              and restriction lines or such encroachment, as the case may be,
              does not have a material effect on the value of such Mortgaged
              Property.

         (13) To the best of the Seller's knowledge, as of the date of
              origination of each Mortgage Loan, no improvement located on or
              being part of the Mortgaged Property is in violation of any
              applicable zoning law or regulation unless such violation would
              not have a material adverse effect on the value of the related
              Mortgaged Property. To the best of the Seller's knowledge, all
              inspections, licenses and certificates required to be made or
              issued with respect to all occupied portions of the Mortgaged
              Property and, with respect to the use and occupancy of the same,
              including but not limited to certificates of occupancy and fire
              underwriting certificates, have been made or obtained from the
              appropriate authorities, unless the lack thereof would not have a
              material adverse effect on the value of such Mortgaged Property.

         (14) The Mortgage Note and the related Mortgage are genuine, and each
              is the legal, valid and binding obligation of the maker thereof,
              enforceable in accordance with its terms and under applicable law.

         (15) The proceeds of the Mortgage Loan have been fully disbursed and
              there is no requirement for future advances thereunder.

         (16) The related Mortgage contains customary and enforceable provisions
              which render the rights and remedies of the holder thereof
              adequate for the realization against the Mortgaged Property of the
              benefits of the security, including, (i) in the case of a Mortgage
              designated as a deed of trust, by trustee's sale, and (ii)
              otherwise by judicial foreclosure.

         (17) With respect to each Mortgage constituting a deed of trust, a
              trustee, duly qualified under applicable law to serve as such, has
              been properly designated and currently so serves and is named in
              such Mortgage, and no fees or expenses are or will become payable
              by the holder of the Mortgage to the trustee under the deed of
              trust, except in connection with a trustee's sale after default by
              the Mortgagor.

         (18) As of the Closing Date, the improvements upon each Mortgaged
              Property are covered by a valid and existing hazard insurance
              policy with a generally acceptable carrier that provides for fire
              and extended coverage and coverage for such other hazards as are
              customarily required by institutional single family mortgage
              lenders in the area where the Mortgaged Property is located, and
              the Seller has received no notice that any premiums due and
              payable thereon have not been paid; the Mortgage obligates the
              Mortgagor thereunder to maintain all such insurance including
              flood insurance at the Mortgagor's cost and expense. Anything to
              the contrary in this item (18) notwithstanding, no breach of this
              item (18) shall be deemed to give rise to any obligation of the
              Seller to repurchase or substitute for such affected Mortgage Loan
              or Loans so long as the Seller maintains a blanket policy.

                                      B-3
<PAGE>

         (19) If at the time of origination of each Mortgage Loan, related the
              Mortgaged Property was in an area then identified in the Federal
              Register by the Federal Emergency Management Agency as having
              special flood hazards, a flood insurance policy in a form meeting
              the then-current requirements of the Flood Insurance
              Administration is in effect with respect to such Mortgaged
              Property with a generally acceptable carrier.

         (20) To the best of the Seller's knowledge, there is no proceeding
              pending or threatened for the total or partial condemnation of any
              Mortgaged Property, nor is such a proceeding currently occurring.

         (21) To best of the Seller's knowledge, there is no material event
              which, with the passage of time or with notice and the expiration
              of any grace or cure period, would constitute a material
              non-monetary default, breach, violation or event of acceleration
              under the Mortgage or the related Mortgage Note; and the Seller
              has not waived any material non-monetary default, breach,
              violation or event of acceleration.

         (22) Any leasehold estate securing a Mortgage Loan has a stated term at
              least as long as the term of the related Mortgage Loan.

         (23) Each Mortgage Loan was selected from among the outstanding
              fixed-rate one- to four-family mortgage loans in the Seller's
              portfolio at the Closing Date as to which the representations and
              warranties made with respect to the Mortgage Loans set forth in
              this Schedule B can be made. No such selection was made in a
              manner intended to adversely affect the interests of the
              Certificateholders.

         (24) The Mortgage Loans provide for the full amortization of the amount
              financed over a series of monthly payments.

         (25) At origination, substantially all of the Mortgage Loans in Pool I,
              Pool II and Pool III had stated terms to maturity of 30 years, 15
              years and 30 years, respectively.

         (26) Scheduled monthly payments made by the Mortgagors on the Mortgage
              Loans either earlier or later than their Due Dates will not affect
              the amortization schedule or the relative application of the
              payments to principal and interest.

         (27) The Mortgage Loans may be prepaid at any time by the related
              Mortgagors without penalty.

                                      B-4
<PAGE>

         (28) Substantially all of the Mortgage Loans are jumbo Mortgage Loans
              that have Stated Principal Balances at origination that exceed the
              then applicable limitations for purchase by Fannie Mae and Freddie
              Mac.

         (29) Each Mortgage Loan in Pool I, Pool II and Pool III was originated
              on or after August 20, 2004, October 14, 2004 and August 27, 2001,
              respectively.

         (30) The latest stated maturity date of any Mortgage Loan in Pool I is
              April 1, 2035, and the earliest stated maturity date of any
              Mortgage Loan in Pool I is August 1, 2029. The latest stated
              maturity date of any Mortgage Loan in Pool II is April 1, 2020,
              and the earliest stated maturity date of any Mortgage Loan in Pool
              II is November 1, 2019. The latest stated maturity date of any
              Mortgage Loan in Pool III is September 1, 2032, and the earliest
              stated maturity date of any Mortgage Loan in Pool III is September
              1, 2031.

         (31) No Mortgage Loan was delinquent more than 30 days as of the
              Cut-off Date.

         (32) No Mortgage Loan had a Loan-to-Value Ratio at origination of more
              than 95%. Generally, each Mortgage Loan with a Loan-to-Value Ratio
              at origination of greater than 80% is covered by a Primary
              Insurance Policy issued by a mortgage insurance company that is
              acceptable to Fannie Mae or Freddie Mac.

         (33) Other than the Residual Certificates, each Mortgage Loan
              constitutes a "qualified mortgage" within the meaning of Section
              860G(a)(3) of the Code.

         (34) No Mortgage Loan is a "high cost loan" as defined by the specific
              applicable predatory and abusive lending laws. In addition, no
              Mortgage Loan is a "High Cost Loan" or a "Covered Loan", as
              applicable (as such terms are defined in the then current Standard
              & Poor's LEVELS(R) Glossary which is now Version 5.6 Revised,
              Appendix E) and no Mortgage Loan originated on or after October 1,
              2002 through March 6, 2003 is governed by the Georgia Fair Lending
              Act.

         (35) Appraisal form 1004 or form 2055 with an interior inspection for
              first lien mortgage loans has been obtained for all related
              mortgaged properties, other than condominiums, investment
              properties, two to four unit properties and exempt properties, for
              which appraisal form 1004 or form 2055 has not been obtained.

              Appraisal form 704, 2065 or 2055 with an exterior only inspection
              for junior lien mortgages combined with first lien mortgages
              (including home equity lines of credit) has been obtained for all
              related mortgaged properties, other than condominiums, investment
              properties, two to four unit properties and exempt properties, for
              which appraisal form 1004 or form 2055 has not been obtained.
              Appraisal form 704, 2065 or 2055 with an exterior only inspection
              for all other junior lien mortgages has been obtained for all
              related mortgaged properties, other than those related mortgaged
              properties that qualify for an Automated Valuation Model.

                                      B-5EMPLOYMENT AGREEMENT WITH

                                  JOHN HAMERSKI

      This Employment Agreement  ("Agreement") is entered into as of the 1st day
of April,  2005 (the  "Effective  Date"),  by and  between  JOHN  HAMERSKI  (the
"EXECUTIVE") and INYX, INC. (the "COMPANY" or the  "EMPLOYER"),  or together the
Parties.

RECITALS:

Whereas,  the  Company  desires to employ  the  Executive  to  provide  personal
services to the Company,  and also wishes to provide the Executive  with certain
compensation and benefits in return for such services; and

Whereas, the Executive wishes to be employed by the Company and provide personal
services to the Company in return for certain compensation and benefits.

Now, therefore,  in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the Parties hereto as follows:

1.    EMPLOYMENT

      1.1.  GENERAL.  The Company  hereby employs the Executive in the corporate
position of Vice President and Chief Financial Officer,  whose  responsibilities
includes  supervising the entire financial  reporting and controls functions and
corporate governance  compliance for the Company and its subsidiary  operations,
as well as  supervising  the over all  operations  of Inyx  USA,  Ltd.,  and the
Company may assign other reasonable  corporate duties to the Executive from time
to time.  The  Executive  agrees to perform and  discharge  such duties well and
faithfully,  and to be subject to the supervision and direction of Jack Kachkar,
Chairman and Chief Executive  Officer of the Company ("CEO"),  and Jay M. Green,
Executive  Vice  President,  or  their  designee  or  successor.  The  Executive
acknowledges  that this appointment  involves the affairs of the Company and its
affiliates in Puerto Rico, Toronto and in the United Kingdom.  Accordingly,  the
duties of the  employment  will require the Executive to spend a majority of his
time at the Company's new operations in Puerto Rico and the Company's operations
in the United Kingdom. In addition,  the Executive will be required to travel to
and conduct duties across the United States and in other  countries on behalf of
the Company and its affiliates.

      1.2. TIME DEVOTED TO POSITION. The Executive,  during the Employment Term,
shall devote his full  business  time,  attention and skills to the business and
affairs of the Employer.

      1.3.  CERTIFICATIONS.  Whenever the  Executive is required by law, rule or
regulation or requested by any  governmental  authority or by the Company or the
Company's  auditors  to  provide   certifications   with  respect  to  financial
statements or filings with the Securities  and Exchange  Commission or any other
governmental  authority,  the Executive shall sign such certifications as may be
reasonably  requested by such  officers,  with such  exceptions as the Executive
deems necessary to make such certifications accurate and not misleading.

<PAGE>

2.    COMPENSATION AND BENEFITS

      2.1. SALARY.  At all times the Executive is employed  hereunder,  Employer
shall pay to Executive, and Executive shall accept, as full compensation for any
and all  services  rendered  and to be  rendered  by him during  such  period to
Employer in all capacities, including, but not limited to, all services that may
be rendered by him to any of  Employer's  existing  subsidiaries,  entities  and
organizations hereafter formed,  organized or acquired by Employer,  directly or
indirectly  (each, a "Subsidiary" and  collectively,  the  "Subsidiaries"),  the
following: (i) a base salary at the annual rate of $200,000 or at such increased
rate as the Board (through its Compensation Committee),  in its sole discretion,
may hereafter  from time to time grant to Executive,  subject to  adjustments in
accordance with Section 2.2 hereof (as so adjusted, the "Base Salary"); and (ii)
any  additional  bonus and the benefits  set forth in Sections  2.3, 2.4 and 2.5
hereof.  The Base Salary shall be payable in accordance with the regular payroll
practices of Employer  applicable to senior executives,  less such deductions as
shall be required to be withheld by applicable law and regulations or otherwise.

      2.2. CASH BONUS.  Subject to Section 3.3 hereof,  the  Executive  shall be
entitled to an annual cash bonus of up to fifty percent (50%) of the Executive's
annual  based  salary,  with the bonus amount  based upon  performance  criteria
achieved by the Company and the Executive during a twelve (12) month period that
are mutually  agreed upon by the Company and the  Executive at the outset of the
12-month period.

      2.3.  STOCK  OPTIONS.  The Executive  shall be entitled to  participate in
stock option and similar equity plans of Employer.  In connection herewith,  the
Executive will be granted  300,000 options to purchase shares of common stock of
the Company with an exercise  price equal to the closing  price of the Company's
common  stock on April 1, 2005 on the  following  basis:  100,000  options to be
vested on March 31, 2006,;  100,000  options to be vested on March 31, 2007; and
100,000 options to be vested on March 31, 2008; with all options issued on terms
and  conditions  set forth in the Stock  Option  Plan of the Company and a Stock
Option Agreement with the Executive  containing these terms. The Executive shall
be  entitled  to any  additional  annual  stock  option  grants  provided at the
discretion of the Board.

2.4.  EXECUTIVE BENEFITS

            2.4.1.EXPENSES. Employer shall promptly reimburse the Executive for
      properly  documented  expenses that he may reasonably  incur in connection
      with the performance of his duties  including but not limited to, expenses
      for such items as business entertainment, business travel, hotel and meals
      that are in accordance with Company policy and approved by the Chairman of
      the Board and Chief Executive Officer of the Company.  Employer shall also
      reimburse  Executive  for  reasonable  home-office  expenses  incurred  by
      Executive during  performance of his duties and  responsibilities  for the
      Company, providing such expenses are approved by the CEO of the Company.

                                      -2-
<PAGE>

            2.4.2.EMPLOYER PLANS. Executive shall be entitled to participate in
      such employee benefit plans and programs as Employer may from time to time
      generally  offer or provide  to  executive  officers  of  Employer  or its
      Subsidiaries,  including,  but not limited to, participation in health and
      accident,  medical  and dental  plans  including  any such  benefit  plans
      offered by the  Subsidiaries  where  applicable,  and profit  sharing  and
      retirement plans.

            2.4.3.VACATION. The Executive shall be entitled to one (1) week paid
      vacation  that can be taken  between  July 1, 2005 and  December 31, 2005.
      Starting in calendar  year 2006,  Executive  shall be entitled to four (4)
      weeks paid vacation per calendar  year.  Unused  vacation days in any year
      will have to be taken by March 31st of the following year or will continue
      to accrue for the benefit of the Executive and payable on  termination  of
      employment.

3.    EMPLOYMENT TERM; TERMINATION

      3.1. EMPLOYMENT TERM. The Executive's  employment hereunder shall commence
on April 1, 2005 and, except as otherwise provided in Section 3.2 hereof,  shall
continue until March 31, 2006 (the "Initial Term").  Thereafter,  this Agreement
shall automatically be renewed for successive one-year periods commencing on the
1st day of April of 2006 and of each subsequent year, unless either (i) Employer
and Executive agree to a new Employment Agreement, or (ii) Executive or Employer
shall have provided a Notice of Termination (as defined in Section 3.4.2 hereof)
in  respect  of  its or his  election  not to  renew  the  Employment  Term  (in
accordance  with  Sections  3.3.2 and 3.3.3  hereof).  Upon  non-renewal  of the
Employment Term pursuant to this Section 3.1 or termination pursuant to Sections
3.2.1  through  3.2.5 hereof,  inclusive,  Executive  shall be released from any
duties  hereunder  (except as set forth in Section 4 hereof) and the obligations
of Employer to Executive shall be as set forth in Section 3.3 hereof only.

      3.2. EVENTS OF  TERMINATION.  The Employment Term shall terminate upon the
occurrence of any one or more of the following events:

            3.2.1.DEATH.  In the event of Executive's death, the Employment Term
      shall terminate on the date of his death.

            3.2.2.WITHOUT  CAUSE  BY  EXECUTIVE.  Executive  may  terminate  the
      Employment Term at any time during such Term for any reason  whatsoever by
      giving  a Notice  of  Termination  to  Employer.  The Date of  Termination
      pursuant  to  this  Section   3.2.2  shall  be  effective  the  Notice  of
      Termination  is  given,  unless  an  extended  period  is agreed to by the
      parties.

            3.2.3.  DISABILITY.  In the  event  of  Executive's  Disability  (as
      hereinafter  defined),   Employer  may,  at  its  option,   terminate  the
      Employment Term by giving a Notice of Termination to Executive. The Notice
      of Termination shall specify the Date of Termination, which date shall not
      be earlier than thirty (30) days after the Notice of Termination is given.
      For  purposes  of this  Agreement,  "Disability"  means the  inability  of
      Executive  for  ninety  (90)  days in any  twelve  (12)  month  period  to
      substantially  perform his duties  hereunder  as a result of a physical or
      mental illness, all as determined in good faith by the Board.

                                      -3-
<PAGE>

            3.2.4. CAUSE. Employer may, at its option,  terminate the Employment
      Term for "Cause"  based on objective  factors  determined in good faith by
      the  Board  of  Directors  as set  forth  in a Notice  of  Termination  to
      Executive  specifying the reasons for  termination  and the failure of the
      Executive to cure the same within  thirty (30) days after  Employer  shall
      have given the Notice of Termination; PROVIDED, HOWEVER, that in the event
      the Board in good faith determines that the underlying reasons giving rise
      to such  determination  cannot be cured,  then the thirty  (30) day period
      shall not apply and the  Employment  Term shall  terminate on the date the
      Notice of Termination is given.  For purposes of this  Agreement,  "Cause"
      shall mean (i)  Executive's  conviction of, guilty or no contest plea to a
      felony  (ii) an act or  omission  by  Executive  in  connection  with  his
      employment  that  constitutes  fraud,   criminal  misconduct,   breach  of
      fiduciary  duty,  dishonesty,  gross  negligence,   malfeasance,   willful
      misconduct or other conduct that is materially  harmful or  detrimental to
      Employer;  (iii) a material  breach by Executive of this Agreement and the
      failure of the  Executive to cure the same within  thirty (30) days;  (iv)
      continuing  failure to  perform  such  proper  duties as are  assigned  to
      Executive in accordance with this Agreement and with law and good business
      practice,  other  than  a  failure  resulting  from a  Disability;  or (v)
      Executive  is  found  to have  been  involved  in  regulatory  violations,
      criminal   misconduct,   dishonesty  or  other  willful  misconduct  while
      previously employed by other employers.

            3.2.5.  EMPLOYER  RIGHT TO TERMINATE.  Employer may  terminate  this
      agreement at the end of its Initial Term, provided that Employer shall pay
      Executive in accordance with payment described in Section 3.3.2 hereof. In
      addition, Employer may terminate Executive for any reason, with or without
      cause,  prior to end of the Initial Term, by paying  Executive the payment
      described in Section 3.3.2 hereof.  In consideration of such payment,  and
      assuming  all other  payments  required  hereby have been paid,  Executive
      agrees to provide  Employer a general  release of any claims  relating  to
      such termination or otherwise.

      3.3.  CERTAIN  OBLIGATIONS  OF  EMPLOYER  FOLLOWING   TERMINATION  OF  THE
EMPLOYMENT  TERM.  Following  termination  of  the  Employment  Term  under  the
circumstances described below, Employer shall pay to Executive or his estate, as
the case may be, the following  compensation and provide the following  benefits
in full satisfaction and final settlement of any and all claims and demands that
Executive  now  has  or  hereafter  may  have  hereunder  against  Employer.  In
connection  with  Executive's  receipt of any or all monies and  benefits  to be
received  pursuant to this Section 3.3,  Executive shall not have a duty to seek
subsequent  employment  during  the  period in which he is  receiving  severance
payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall not
be reduced solely as a result of Executive's  subsequent employment by an entity
other than Employer.

                                      -4-
<PAGE>

            3.3.1.FOR CAUSE. In the event that the Employment Term is terminated
      by  Employer  for  Cause,  Employer  shall pay to  Executive,  in a single
      lump-sum, an amount equal to any unpaid but earned Base Salary through the
      Date of  Termination.  Any payment  made in  accordance  with this Section
      3.3.1 shall be made at a convenient  date no later than fourteen (14) days
      after the termination date.

            3.3.2.  WITHOUT  CAUSE  BY  EMPLOYER;   ELECTION  NOT  TO  RENEW  BY
      EXECUTIVE. In the event that the Employment Term is terminated by Employer
      or Employer  elects not to renew this Agreement  pursuant to Section 3.2.5
      hereof,  it shall  pay to  Executive,  subject  to  Executive's  continued
      compliance with the terms of Section 4 hereof,  any unpaid but earned Base
      Salary through the effective Date of Termination  PLUS, an amount equal to
      three (3)  months  Base  Salary in  effect  at such  applicable  time (the
      "Severance  Amount")  increased  by 1 month  for each  additional  year of
      service up to a maximum of six (6) months.. Additionally, any Bonuses that
      are due to the Executive  shall be paid by Employer to  Executive.  In the
      event that the  Employment  Term is terminated  by Employer  without cause
      prior to the termination date of this Agreement  pursuant to Section 3.2.5
      hereof,  it  shall  pay  to the  Executive,  subject  to  the  Executive's
      continued  compliance with the terms of Section 4 hereof, , any unpaid but
      earned Base Salary  through the  effective  Date of  Termination  PLUS, an
      amount equal to six (6) months of Base Salary in effect at such applicable
      time (the  "Severance  Amount"),  increased by 1 month for each additional
      year of service up to a maximum of twelve (12) months.  Additionally,  any
      Bonuses  that  are due to the  Executive  shall  be paid  by  Employer  to
      Executive.  HOWEVER,  if  termination  of  Executive  is due to or after a
      Change of Control (as defined in Section  3.4.3  hereof) of the  Employer,
      the Severance  Amount is increased to twenty-four  (24) months Base Salary
      in  effect at such  applicable  time,  and any  non-vested  stock  options
      granted to Executive shall become fully vested at time of such termination
      date.  Any payments  made in  accordance  with this Section 3.3.2 shall be
      made in a lump-sum  payment at a  convenient  date no later than  fourteen
      (14) days after the effective  termination  date. In consideration of such
      payment,  and assuming all other payments  required hereby have been paid,
      Executive  agrees to  provide  Employer  a general  release  of any claims
      relating to such termination or otherwise.

            3.3.3.  WITHOUT  CAUSE  BY  EXECUTIVE;  ELECTION  NOT  TO  RENEW  BY
      EXECUTIVE.  In the  event  that  the  Employment  Term  is  terminated  by
      Executive  pursuant to Section  3.2.2  hereof or  Executive  elects not to
      renew this Agreement at any time pursuant to Section 3.1 hereof,  Employer
      shall  pay  to  Executive  Base  Salary  through  the  effective  Date  of
      Termination.  In  addition,  Employer  shall  pay  Executive,  in a single
      lump-sum,  an amount  equal to any unpaid but earned  Bonuses  through the
      effective  Date of  Termination,  PROVIDED  that  the  Executive  provides
      Employer  with ninety  (90) days  advance  notification  in writing of the
      intent to terminate or not to renew this Agreement.

            3.3.4.DEATH OR DISABILITY.  In the event that the Employment Term is
      terminated by reason of Executive's  Disability  pursuant to Section 3.2.3
      or death pursuant to Section 3.2.1 hereof, Employer shall pay to Executive
      or his estate,  in a single  lump sum,  an amount  equal to any unpaid but
      earned Bonuses and Base Salary through the effective Date of Termination.

                                      -5-
<PAGE>

            3.3.5.  POST-EMPLOYMENT  TERM BENEFITS.  In the event of termination
      for any reason, Employer shall reimburse Executive for any unpaid expenses
      pursuant  to Section  2.5.1  hereof.  If  Executive  is  terminated  after
      December 31, 2005,  pursuant to Sections  3.2.3 or 3.2.5 hereof,  Employer
      shall pay, on behalf of Executive,  for a period equal to three (3) months
      from the effective Date of Termination (the "Benefits Period"), subject to
      Executive's  continued  compliance with the terms of Section 4 hereof, all
      medical,  dental,  health and accident,  and disability plans and programs
      other than stock options in which  Executive  was entitled to  participate
      immediately  prior to the  effective  date of  termination,  PROVIDED that
      Executive's continued  participation is legally possible under the general
      terms and  provisions  of such  plans  and  programs.  In the  event  that
      Executive's participation in any such plan or program is barred, Employer,
      at its sole cost and expense shall use its commercially reasonable efforts
      to provide  Executive  with benefits  substantially  similar to those that
      Executive  was  entitled to receive  under such plans and programs for the
      remainder of the Benefits  Period.  If Executive is  terminated  for CAUSE
      pursuant to Section  3.2.4  hereof,  Employer  shall pay for no additional
      benefits after effective date of termination.

            3.3.6.STOCK  OPTIONS.  Executive  shall be  entitled  to receive the
      Employer stock options set forth in Section 2.4 hereof and detailed in the
      attached Stock Option Agreement.

3.4.  DEFINITIONS.

            3.4.1."NOTICE OF TERMINATION" DEFINED. "Notice of Termination" means
      a written notice that indicates the specific termination  provision relied
      upon by  Employer  or  Executive  and,  except in the case of  termination
      pursuant to Sections 3.2.1 or 3.2.2 hereof,  that sets forth in reasonable
      detail  the  facts  and  circumstances  claimed  to  provide  a basis  for
      termination  of the  Employment  Term under the  termination  provision so
      indicated.

            3.4.2."DATE OF TERMINATION"  DEFINED.  "Date of  Termination"  means
      such date as the  Employment  Term is expired if not renewed or terminated
      in accordance with Sections 3.1 or 3.2 hereof.

            3.4.3.  "CHANGE  OF  CONTROL"  DEFINED.  A "Change  of  Control"  of
      Employer means (i) the approval by the  stockholders of the Company of the
      sale,  lease,  exchange or other transfer (other than pursuant to internal
      reorganization)  by  the  Company  of  all  or  substantially  all  of its
      respective  assets  to a  single  purchaser  or to a group  of  associated
      purchasers;  (ii) the first purchase of shares of equity securities of the
      Company  pursuant to a tender offer or exchange offer (other than an offer
      by the Company) for at least fifty (50%) percent of the equity  securities
      of the Company;  (iii) the approval by the  stockholders of the Company of
      an agreement for a merger or  consolidation in which the Company shall not
      survive  as  an   independent,   publicly-owned   corporation;   (iv)  the
      acquisition  (including  by means of a merger) by a single  purchaser or a
      group of  associated  purchasers  of  securities  of the Company  from the
      Company or any third party representing fifty (50%) percent or more of the
      combined voting power of the Company's then outstanding  equity securities
      in one or a related  series of  transactions  (other  than  pursuant to an
      internal reorganization or transfers of the Executive's interests).

                                      -6-
<PAGE>

4.    CONFIDENTIALITY AND NONSOLICITATION; PROPERTY RIGHTS

      4.1. "CONFIDENTIAL INFORMATION" DEFINED.  "Confidential Information" means
any and all information (oral or written) relating to Employer or any Subsidiary
or any entity controlling,  controlled by, or under common control with Employer
or any Subsidiary or any of their respective activities,  including, information
not  previously  disclosed  to the  public  or to  the  trade  by the  Company's
management,  or otherwise in the public  domain,  with respect to the  Company's
products,  facilities,   applications  and  methods,  trade  secrets  and  other
intellectual  property,  systems,  procedures,  manuals,  confidential  reports,
product  price  lists,   customer  lists,   technical   information,   financial
information,  business plans, prospects or opportunities,  but shall exclude any
information  which (i) is or becomes  available  to the  public or is  generally
known in the industry or industries in which the Company  operates other than as
a result of  disclosure by the  Executive in violation of his  agreements  under
this Section or (ii) the Executive is required to disclose  under any applicable
laws, regulations or directives of any government agency,  tribunal or authority
having jurisdiction in the matter or under subpoena or other process of law. The
Executive  confirms that all  restrictions  in this Section are  reasonable  and
valid and waives all defenses to the strict enforcement thereof.

      4.2. NON-DISCLOSURE OF CONFIDENTIAL  INFORMATION.  The Executive shall not
at any time (other than as may be required or appropriate in connection with the
performance  by him of his  duties  hereunder),  directly  or  indirectly,  use,
communicate,  disclose or disseminate any Confidential Information in any manner
whatsoever  (except as may be required  under legal process by subpoena or other
court order).

      4.3.  CERTAIN  ACTIVITIES.  The Executive shall not, while employed by the
Company  and for a period  of one (1) year  following  the Date of  Termination,
directly or indirectly,  hire, offer to hire, entice away or in any other manner
persuade or attempt to persuade any officer,  employee,  agent, lessor,  lessee,
licensor,  licensee  or  supplier  of  Employer  or any of its  Subsidiaries  to
discontinue  or  alter  his  or its  relationship  with  Employer  or any of its
Subsidiaries.

      4.4.  NON-COMPETITION.  The  Executive  shall not,  while  employed by the
Company  and for a period  of one (1) year  following  the Date of  Termination,
engage or participate,  directly or indirectly (whether as an officer, director,
employee,  partner,  consultant,  shareholder,  lender  or  otherwise),  in  any
business that  manufactures,  markets or sells  products that directly  competes
with any product of the Employer that is significant to the Employer's  business
based on  sales  and/or  profitability  of any  such  product  as of the Date of
Termination.  Nothing herein shall prohibit Executive from being a passive owner
of less than 1% of any  publicly-traded  class of  capital  stock of any  entity
directly engaged in a competing business.

                                      -7-
<PAGE>

      4.5.   PROPERTY  RIGHTS;   ASSIGNMENT  OF  INVENTIONS.   With  respect  to
information,  inventions and discoveries or any interest in any copyright and/or
other property right developed, made or conceived of by Executive,  either alone
or with others, at any time during his employment by Employer and whether or not
within working hours,  arising out of such  employment or pertinent to any field
of business or research in which, during such employment, Employer is engaged or
(if such is known to or  ascertainable  by Executive) is  considering  engaging,
Executive hereby agrees:

             (a) that all such  information,  inventions and  discoveries or any
interest in any copyright  and/or other property right,  whether or not patented
or patentable, shall be and remain the exclusive property of the Employer;

             (b)  to  disclose  promptly  to  an  authorized  representative  of
Employer all such  information,  inventions  and  discoveries  or any  copyright
and/or other property right and all information in Executive's  possession as to
possible applications and uses thereof;

             (c)  not to  file  any  patent  application  relating  to any  such
invention or discovery  except with the prior  written  consent of an authorized
officer of Employer (other than Executive);

             (d) that  Executive  hereby  waives and releases any and all rights
Executive may have in and to such information,  inventions and discoveries,  and
hereby assigns to Executive and/or its nominees all of Executive's  right, title
and  interest in them,  and all  Executive's  right,  title and  interest in any
patent,  patent  application,  copyright or other  property right based thereon.
Executive hereby  irrevocably  designates and appoints  Employer and each of its
duly authorized officers and agents as his agent and attorney-in-fact to act for
him and on his behalf and in his stead to execute and file any  document  and to
do all other lawfully  permitted acts to further the  prosecution,  issuance and
enforcement of any such patent, patent application,  copyright or other property
right with the same force and effect as if executed and  delivered by Executive;
and

             (e) at the request of Employer,  and without  expense to Executive,
to  execute  such  documents  and  perform  such other  acts as  Employer  deems
necessary or appropriate, for Employer to obtain patents on such inventions in a
jurisdiction or jurisdictions  designated by Employer, and to assign to Employer
or its designee such inventions and any and all patent  applications and patents
relating thereto.

      4.6.  INJUNCTIVE RELIEF. The parties hereby acknowledge and agree that (a)
Employer  will be  irreparably  injured in the event of a breach by Executive of
any of his obligations under this Section 4; (b) monetary damages will not be an
adequate remedy for any such breach; (c) Employer will be entitled to injunctive
relief,  in addition to any other remedy which it may have,  in the event of any
such breach; and (d) the existence of any claims that Executive may have against
Employer,  whether under this  Agreement or otherwise,  will not be a defense to
the enforcement by Employer of any of its rights under this Section 4.

                                      -8-
<PAGE>

      4.7.   NON-EXCLUSIVITY  AND  SURVIVAL.  The  covenants  of  the  Executive
contained  in this  Section  4 are in  addition  to,  and not in  lieu  of,  any
obligations  that  Executive may have with respect to the subject matter hereof,
whether by contract,  as a matter of law or  otherwise,  and such  covenants and
their  enforceability  shall survive any  termination of the Employment  Term by
either party and any  investigation  made with respect to the breach  thereof by
Employer at any time.

5.    MISCELLANEOUS PROVISIONS.

      5.1. SEVERABILITY.  If, in any jurisdiction,  any term or provision hereof
is  determined  to be  invalid or  unenforceable,  (a) the  remaining  terms and
provisions   hereof   shall  be   unimpaired;   (b)  any  such   invalidity   or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other  jurisdiction;  and (c) the invalid or
unenforceable  term or provision  shall, for purposes of such  jurisdiction,  be
deemed  replaced by a term or provision that is valid and  enforceable  and that
comes closest to expressing the intention of the invalid or  unenforceable  term
or provision.

      5.2.  EXECUTION IN COUNTERPARTS.  This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken  together
shall  constitute one and the same agreement (and all signatures need not appear
on any one  counterpart),  and this Agreement shall become effective when one or
more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto.

      5.3.  NOTICES.  All notices,  requests,  demands and other  communications
hereunder  shall be in writing and shall be deemed duly given upon  receipt when
delivered by hand, overnight delivery or telecopy (with confirmed delivery),  or
three (3) business days after posting, when delivered by registered or certified
mail or private courier service,  postage prepaid,  return receipt requested, as
follows:

If to Employer, to:

Inyx, Inc.
825 Third Avenue, 40th Floor
New York, NY 10022
Attention:  Chairman and Chief Executive Officer
Facsimile No.: 212-838-0060

If to Executive, to:

John Hamerski
3101 South Ocean Blvd.
Highland Beach, FL 33487
Facsimile No.: 561-266-5997

                                      -9-
<PAGE>

Or to such other  address(es) as a party hereto shall have  designated by notice
in writing to the other parties hereto.

      5.4. AMENDMENT.  No provision of this Agreement may be modified,  amended,
waived, or discharged in any manner except by a written  instrument  executed by
both the Employer and the Executive.

      5.5. ENTIRE  AGREEMENT.  This Agreement and, with respect to Section 3.3.6
hereof,  Executive's  Stock Option  Agreements  and the  governing  stock option
plans, constitute the entire agreement of the parties hereto with respect to the
subject matter hereof,  and supersede all prior agreements and understandings of
the parties hereto, oral or written.

      5.6.  APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance  with the laws of the State of New York  applicable to contracts made
and to be wholly performed therein, without regard to principles of conflicts of
laws.

      5.7.  HEADINGS.  The headings contained herein are for the sole purpose of
convenience  of reference,  and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.

      5.8.  BINDING  EFFECT;  SUCCESSORS  AND  ASSIGNS.  The  Executive  may not
delegate any of his duties or assign his rights hereunder.  This Agreement shall
inure to the  benefit  of, and be binding  upon,  the  parties  hereto and their
respective  heirs,  legal  representatives,  successors  and permitted  assigns.
Employer shall require any successor  (whether direct or indirect and whether by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business  and/or  assets of  Employer,  by an  agreement  in form and  substance
reasonably  satisfactory to Executive,  to expressly assume and agree to perform
this  Agreement in the same manner and to the same extent that Employer would be
required to perform if no such succession had taken place.

      5.9.  WAIVER,  ETC. The failure of either of the parties hereto to, at any
time,  enforce any of the  provisions of this  Agreement  shall not be deemed or
construed  to be a waiver of any such  provision,  nor to in any way  affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto thereafter to enforce each and every provision of this Agreement.
No waiver of any  breach of any of the  provisions  of this  Agreement  shall be
effective unless set forth in a written instrument executed by the party against
whom or which  enforcement  of such waiver is sought,  and no waiver of any such
breach shall be  construed  or deemed to be a waiver of any other or  subsequent
breach.

                                      -10-
<PAGE>

      5.10.  CAPACITY,  ETC. Executive and Employer hereby represent and warrant
to the other that,  as the case may be: (a) he or it has full  power,  authority
and  capacity to execute and deliver this  Agreement,  and to perform his or its
obligations  hereunder;  (b) such execution,  delivery and performance shall not
(and with the giving of notice or lapse of time or both would not) result in the
breach of any agreements or other obligations to which he or it is a party or he
or it is otherwise bound; and (c) this Agreement is his or its valid and binding
obligation in accordance with its terms.

      5.11.  ARBITRATION.  Any  dispute  or  controversy  arising  under  or  in
connection  with this  Agreement  shall be settled  exclusively  in  arbitration
conducted  in New York,  New York in  accordance  with the rules of the American
Arbitration  Association  then  in  effect.  Judgment  may  be  entered  on  the
arbitrator's award in any court having jurisdiction.  Punitive damages shall not
be  awarded.  In any  arbitration  proceeding,  the party  determined  to be the
prevailing  party shall be entitled to receive,  in addition to any other award,
its attorneys' fees and expenses of the proceeding.

      IN WITNESS WHEREOF,  this Agreement has been executed and delivered by the
parties hereto as of the date first above written.

INYX, INC.
By:

/s/ Jay M. Green
-----------------------------

Jay M. Green
Executive Vice President

JOHN HAMERSKI

/s/ John Hamerski
-----------------------------

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