Document:

FHASI
        2006-AR4

       

    

    
      MORTGAGE
        LOAN PURCHASE AGREEMENT

       

      THIS
        MORTGAGE LOAN PURCHASE AGREEMENT dated as of December 28, 2006 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.

       

      Alternative
        Title Product:
        Any one
        of the following: (i) Lien Protection Insurance issued by Integrated Loan
        Services or ATM Corporation of America, (ii) a Mortgage Lien Report issued
        by
        EPN Solutions/ACRAnet, (iii) a Property Plus Report issued by Rapid Refinance
        Service through SharperLending.com, or (iv) such other alternative title
        insurance product that the Seller utilizes in connection with its then current
        underwriting criteria.

      

      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, the State of Texas or New York City is
        located are authorized or obligated by law or executive order to be
        closed.

       

      Closing
        Date:
        December 28, 2006

       

      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.

       

      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 December 28, 2006 by
        and
        among The Bank of New York, as trustee, First Horizon Home Loan Corporation,
        as
        master servicer, and the Custodian.

       

      Cut-Off
        Date:
        December 1, 2006.

       

      Cut-off
        Date Principal Balance:
        As to
        any Mortgage Loan, the Stated Principal 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.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      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.

       

      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®
        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.

       

      Mortgage
        Rate:
        The
        annual rate of interest borne by a Mortgage Note from time to time, net of
        any
        insurance premium charged by the mortgagee to obtain or maintain any primary
        insurance policy.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      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.

       

      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:
        $352,689,804.81

       

      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.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      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; (vii)
        have a loan-to-value ratio no higher than that of the Deleted Mortgage Loan;
        (viii) have a remaining term to maturity no greater than (and not more than
        one
        year less than that of) the Deleted Mortgage Loan; (ix) not be a Cooperative
        Loan unless the Deleted Mortgage Loan was a Cooperative Loan and (x) comply
        with
        each representation and warranty set forth in Schedule
        B
        hereto.

       

      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-

          
            

          

        

        
          
          

        

      

       

      (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, or, in lieu thereof, an Alternative Title Product;
                  and

              

      

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (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;

       

      (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; provided, further,
        however, that the Seller shall not be required to provide an original or
        duplicate lender’s title policy (together with all riders thereto) if the Seller
        delivers an Alternative Title Product in lieu thereof. 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.

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      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. 

       

      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.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      (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.

       

      (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.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

         

      

      
        	 	
                (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.

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      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.

       

      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

                

        

      

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      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. 

       

      [remainder
        of page intentionally left blank]

      
        
          
          

        

        
          -12-

          
            

          

        

         

      

      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
        28th
        day of
        December, 2006.

       

      
        	 	 	 
	 	FIRST
                HORIZON HOME
                LOAN CORPORATION, as Seller
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Terry
                  L. McCoy

                Executive
                  Vice President

              
	 	 

      

      
        	 	 	 
	 	FIRST
                HORIZON
                ASSET SECURITIES INC., as Purchaser
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Alfred
                  Chang

                Vice
                  President

              
	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        A

       

      [Available
        Upon Request From Trustee]

       

      
        
          
          

        

        
          
          

          
            

          

        

         

      

      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 December
        28,
        2006 (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 December 1, 2006, 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

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (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.

              

      

       

      
        	 	
                (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, or, in lieu thereof, an Alternative Title
                  Product.

              

      

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

         

      

      
        	 	
                (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 Loans 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

          
            

          

        

        
          
          

        

         

      

      
        	 	
                (19)

              	
                If
                  at the time of origination of each Mortgage Loan, the related 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 adjustable-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.

              

      

       

      
        	 	
                (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
                  Mortgagors may prepay all of the Mortgage Loans at any time without
                  penalty.

              

      

       

      
        	 	
                (28)

              	
                All
                  of the Mortgage Loans in Pool I and Pool III, and approximately
                  98.64% of
                  the Mortgage Loans in Pool II 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.

              

      

       

      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

         

      

      
        	 	
                (29)

              	
                Each
                  Mortgage Loan in Pool I was originated on or after May 8, 2006.
                  Each
                  Mortgage Loan in Pool II was originated on or after July 24, 2006.
                  Each
                  Mortgage Loan in Pool III was originated on or after August 19,
                  2006.
                  

              

      

       

      
        	 	
                (30)

              	
                The
                  latest stated maturity date of any Mortgage Loan in Pool I is December 1,
                  2036, and the earliest is June 1, 2036. The latest stated maturity
                  date of
                  any Mortgage Loan in Pool II is December 1, 2036, and the earliest
                  is
                  August 1, 2036. The latest stated maturity date of any Mortgage
                  Loan in
                  Pool III is December 1, 2036, and the earliest is September 1,
                  2036.

              

      

       

      
        	 	
                (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)

              	
                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
                  local, state or federal 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
                  LEVELSâ
                  Glossary which is now Version 5.7 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-5To: SMART ENERGY SOLUTIONS, INC.

                          SMART ENERGY SOLUTIONS, INC.
        REGULATION S SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION

                                   SECTION 1.

1.1 Subscription.

(a) The undersigned, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase ____________ shares (the "Shares") of the
common stock (the "Common Stock") of Smart Energy Solutions, Inc., a Nevada
corporation (the "Company").

1.2 Purchase of Shares.

            The undersigned understands and acknowledges that the purchase price
to be remitted to the Company in exchange for the Shares shall be ____________
dollars ($_________) or thirty cents ($0.30) per Share. The Company shall
deliver the Shares to the undersigned promptly after the acceptance of this
Subscription Agreement by the Company.

1.3 Acceptance or Rejection.

      (a) The undersigned understands and agrees that the Company reserves the
right to reject this subscription for the Shares if, in its reasonable judgment,
it deems such action in the best interest of the Company, at any time prior to
the Closing, notwithstanding prior receipt by the undersigned of notice of
acceptance of the undersigned's subscription.

      (b) The undersigned understands and agrees that its subscription for the
Shares is irrevocable.

      (c) In the event the sale of the Shares subscribed for by the undersigned
is not consummated by the Company for any reason (in which event this
Subscription Agreement shall be deemed to be rejected), this Subscription
Agreement and any other agreement entered into between the undersigned and the
Company relating to this subscription shall thereafter have no force or effect
and the Company shall promptly return or cause to be returned to the undersigned
the purchase price remitted to the Company by the undersigned, without interest
thereon or deduction therefrom, in exchange for the Shares.

                                   SECTION 2.

2.1 Closing. The closing (the "Closing") of the purchase and sale of the Shares,
shall occur simultaneously with the acceptance by the Company of the
undersigned's subscription, as evidenced by the Company's execution of this
Subscription Agreement.

<PAGE>

                                   SECTION 3.

3.1 Investor Representations and Warranties. The undersigned hereby
acknowledges, represents and warrants to, and agrees with, the Company and its
affiliates as follows:

      (a) Investment Purposes. The undersigned is acquiring the Shares for his
own account as principal, not as a nominee or agent, for investment purposes
only, and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part and no other person has a direct or indirect
beneficial interest in such Shares or any portion thereof. Further, the
undersigned does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to the Shares for which the undersigned is
subscribing or any part of the Shares.

      (b) Authority. The undersigned has full power and authority to enter into
this Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the undersigned.

      (c) No General Solicitation. The undersigned is not subscribing for the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by person previously not known to the
undersigned in connection with investment securities generally.

      (d) No Obligation to Register Shares. The undersigned understands that the
Company is under no obligation to register the Shares under the Securities Act,
or to assist the undersigned in complying with the Securities Act or the
securities laws of any state of the United States or of any foreign
jurisdiction.

      (e) Investment Experience. The undersigned is (i) experienced in making
investments of the kind described in this Agreement, (ii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
(iii) able to afford the entire loss of its investment in the Shares.

      (f) Exemption from Registration. The undersigned acknowledges his
understanding that the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act. In furtherance thereof, in addition
to the other representations and warranties of the undersigned made herein, the
undersigned further represents and warrants to and agrees with the Company and
its affiliates as follows:

            (1) The undersigned realizes that the basis for the exemption may
not be present if, notwithstanding such representations, the undersigned has in
mind merely acquiring the Shares for a fixed or determinable period in the
future, or for a market rise, or for sale if the market does not rise. The
undersigned does not have any such intention;

<PAGE>

            (2) The undersigned has the financial ability to bear the economic
risk of his investment, has adequate means for providing for his current needs
and personal contingencies and has no need for liquidity with respect to his
investment in the Company; and

            (3) The undersigned has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of the
prospective investment in the Shares. The undersigned also represents it has not
been organized for the purpose of acquiring the Shares; and

            (4) The undersigned has been provided an opportunity for a
reasonable period of time prior to the date hereof to obtain additional
information concerning the offering of the Shares, the Company and all other
information to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense.

      (g) Economic Considerations. The undersigned is not relying on the
Company, or its affiliates or agents with respect to economic considerations
involved in this investment. The undersigned has relied solely on its own
advisors.

      (h) No Other Company Representations. No representations or warranties
have been made to the undersigned by the Company, or any officer, employee,
agent, affiliate or subsidiary of the Company, other than the representations of
the Company contained herein, and in subscribing for Shares the undersigned is
not relying upon any representations other than those contained herein.

      (i) Compliance with Laws. Any resale of the Shares during the
`distribution compliance period' as defined in Rule 902(f) to Regulation S shall
only be made in compliance with exemptions from registration afforded by
Regulation S. Further, any such sale of the Shares in any jurisdiction outside
of the United States will be made in compliance with the securities laws of such
jurisdiction. The Investor will not offer to sell or sell the Shares in any
jurisdiction unless the Investor obtains all required consents, if any.

      (j) Regulation S Exemption. The undersigned understands that the Shares
are being offered and sold to him in reliance on an exemption from the
registration requirements of United States federal and state securities laws
under Regulation S promulgated under the Securities Act and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth herein
in order to determine the applicability of such exemptions and the suitability
of the Investor to acquire the Shares. In this regard, the undersigned
represents, warrants and agrees that:

            (1) The undersigned is not a U.S. Person (as defined below) and is
not an affiliate (as defined in Rule 501(b) under the Securities Act) of the
Company and is not acquiring the Shares for the account or benefit of a U.S.
Person. A U.S. Person means any one of the following:

<PAGE>

                  (A) any natural person resident in the United States of
America;

                  (B) any partnership or corporation organized or incorporated
under the laws of the United States of America;

                  (C) any estate of which any executor or administrator is a
U.S. person;

                  (D) any trust of which any trustee is a U.S. person;

                  (E) any agency or branch of a foreign entity located in the
United States of America;

                  (F) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;

                  (G) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized, incorporated
or (if an individual) resident in the United States of America; and

                  (H) any partnership or corporation if:

                      (i) organized or incorporated under the laws of any
foreign jurisdiction; and

                      (ii) formed by a U.S. person principally for the purpose
of investing in securities not registered under the Securities Act, unless it is
organized or incorporated, and owned, by accredited investors (as defined in
Rule 501(a) under the Securities Act) who are not natural persons, estates or
trusts.

            (2) At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement, the
undersigned was outside of the United States.

            (3) The undersigned will not, during the period commencing on the
date of issuance of the Shares and ending on the first anniversary of such date,
or such shorter period as may be permitted by Regulation S or other applicable
securities law (the "Restricted Period"), offer, sell, pledge or otherwise
transfer the Shares in the United States, or to a U.S. Person for the account or
for the benefit of a U.S. Person, or otherwise in a manner that is not in
compliance with Regulation S.

            (4) The undersigned will, after expiration of the Restricted Period,
offer, sell, pledge or otherwise transfer the Shares only pursuant to
registration under the Securities Act or an available exemption therefrom and,
in accordance with all applicable state and foreign securities laws.

<PAGE>

            (5) The undersigned was not in the United States, engaged in, and
prior to the expiration of the Restricted Period will not engage in, any short
selling of or any hedging transaction with respect to the Shares, including
without limitation, any put, call or other option transaction, option writing or
equity swap.

            (6) Neither the undersigned nor or any person acting on his behalf
has engaged, nor will engage, in any directed selling efforts to a U.S. Person
with respect to the Shares and the Investor and any person acting on his behalf
have complied and will comply with the "offering restrictions" requirements of
Regulation S under the Securities Act.

            (7) The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with a U.S. Person,
and are not part of a plan or scheme to evade the registration requirements of
the Securities Act.

            (8) Neither the undersigned nor any person acting on his behalf has
undertaken or carried out any activity for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States, its territories or possessions, for any of the Shares. The
undersigned agrees not to cause any advertisement of the Shares to be published
in any newspaper or periodical or posted in any public place and not to issue
any circular relating to the Shares, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its territories, and only in compliance with any local
applicable securities laws.

            (9) Each certificate representing the Shares shall be endorsed with
the following legends, in addition to any other legend required to be placed
thereon by applicable federal or state securities laws:

                  (A) "THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("THE SECURITIES ACT")) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT."

                  (B) "TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER
THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.
HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT."

<PAGE>

            (10) The undersigned consents to the Company making a notation on
its records or giving instructions to any transfer agent of the Company in order
to implement the restrictions on transfer of the Shares set forth in this
Section 2.

      (k) Accredited Investor. The undersigned is an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations under the
Securities Act by reason of Rule 501(a)(3).

      (l) Potential Loss of Investment; Risk Factors. The undersigned
understands that an investment in the Shares is a speculative investment which
involves a high degree of risk and the potential loss of his entire investment.
The undersigned understands that the following factors, among others, could
cause the loss of any or all of his investment.

            (1) The Company is a development stage company with no operating
history for the undersigned to evaluate its business. The Company was
incorporated in the State of Nevada in June 2006, and as a result is only in the
very early stages of development. Because the Company has no operating history,
it is difficult to evaluate its business and future prospects. The undersigned
has also considered the uncertainties and difficulties frequently encountered by
companies, such as the Company, in their early stages of development. The
Company's revenue and income potential is unproven and its business model is
still emerging. If its business model does not prove to be profitable, the
undersigned may lose all of his investment.

            (2) The Company currently does not have enough working capital to
satisfy its capital needs. The Company is dependent upon its management team to
fund its ongoing operations, and cannot be certain that future financing will be
available to it on acceptable terms when it needs it. The Company can give no
assurances that it will be able to sell any portion of this offering or that
management will continue to fund its ongoing operations. This, along with the
possibility of other factors and circumstances the Company cannot predict, may
require it to seek additional financing faster than anticipated. If the Company
is unable to obtain financing to meet its needs, the undersigned may lose of his
investment.

            (3) The Company's officers and directors will only devote a limited
amount of time to the Company. Their divided interests may hinder the Company's
ability to generate revenue. This could result in missed business opportunities
and worse-than-expected operating results. The undersigned may lose his entire
investment.

            (4) Management has never operated in the industry in which it
intends to operate. This lack of experience may result in the Company's needing
to employ outside experts that have such experience. The additional cost could
result in a net operating loss and, ultimately, could result in the Company's
failure. Management's inexperience may limit the Company's ability to generate
revenues. The Company may never achieve successful operations, and the
undersigned may lose his entire investment.

      (m) Investment Commitment. The undersigned's overall commitment to
investments which are not readily marketable is not disproportionate to the
undersigned's net worth, and an investment in the Shares will not cause such
overall commitment to become excessive.

<PAGE>

      (n) Receipt of Information. The undersigned has received all documents,
records, books and other information pertaining to the undersigned's investment
in the Company that has been requested by the undersigned.

      (o) Investor Questionnaire. The undersigned represents and warrants to the
Company that all information that the undersigned has provided to the Company,
including, without limitation, the information in the Investor Questionnaire
attached hereto or previously provided to the Company (the "Investor
Questionnaire"), is correct and complete as of the date hereof.

      (p) No Reliance. Other than as set forth herein, the undersigned is not
relying upon any other information, representation or warranty by the Company or
any officer, director, stockholder, agent or representative of the Company in
determining to invest in the Shares. The undersigned has consulted, to the
extent deemed appropriate by the undersigned, with the undersigned's own
advisers as to the financial, tax, legal and related matters concerning an
investment in the Shares and on that basis believes that his or its investment
in the Shares is suitable and appropriate for the undersigned.

      (q) No Governmental Review. The undersigned is aware that no federal or
state agency has (i) made any finding or determination as to the fairness of
this investment, (ii) made any recommendation or endorsement of the Shares or
the Company, or (iii) guaranteed or insured any investment in the Shares or any
investment made by the Company.

      (r) Price of Shares. The undersigned understands that the price of the
Shares offered hereby bear no relation to the assets, book value or net worth of
the Company and were determined arbitrarily by the Company. The undersigned
further understands that there is a substantial risk of further dilution on his
or its investment in the Company.

                                   SECTION 4.

4.1 Company's Representations and Warranties. The Company represents and
warrants to the undersigned as follows:

      (a) Organization of the Company. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Nevada.

      (b) Authority. (a) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the Shares; (b) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required; and (c) this Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.

<PAGE>

      (c) Exemption from Registration; Valid Issuances. The sale and issuance of
the Shares, in accordance with the terms and on the bases of the representations
and warranties of the undersigned set forth herein, may and shall be properly
issued by the Company to the undersigned pursuant to any applicable federal or
state law. When issued and paid for as herein provided, the Shares shall be duly
and validly issued, fully paid, and nonassessable. Neither the sales of the
Shares pursuant to, nor the Company's performance of its obligations under, this
Agreement shall (a) result in the creation or imposition of any liens, charges,
claims or other encumbrances upon the Shares or any of the assets of the
Company, or (b) entitle the other holders of the Common Stock of the Company to
preemptive or other rights to subscribe to or acquire the Common Stock or other
securities of the Company. The Shares shall not subject the undersigned to
personal liability by reason of the ownership thereof.

      (d) No General Solicitation or Advertising in Regard to this Transaction.
Neither the Company nor any of its affiliates nor any person acting on its or
their behalf (a) has conducted or will conduct any general solicitation (as that
term is used in Rule 502(c) of Regulation D) or general advertising with respect
to any of the Shares, or (b) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Common Stock under the Securities Act.

                                   SECTION 5.

5.1 Indemnity. The undersigned agrees to indemnify and hold harmless the
Company, its officers and directors, employees and its affiliates and their
respective successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the undersigned to
comply with any covenant or agreement made by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.

5.2 Modification. Neither this Agreement nor any provisions hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.

5.3 Notices. Any notice, demand or other communication which any party hereto
may be required, or may elect, to give to anyone interested hereunder shall be
sufficiently given if (a) deposited, postage prepaid, in a United States mail
letter box, registered or certified mail, return receipt requested, addressed to
such address as may be given herein, or (b) delivered personally at such
address.

<PAGE>

5.4 Counterparts. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts and by facsimile, and each of
such counterparts shall, for all purposes, constitute one agreement binding on
all parties, notwithstanding that all parties are not signatories to the same
counterpart. Signatures may be facsimiles.

5.5 Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligation of the undersigned shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.

5.6 Entire Agreement. This Agreement and the documents referenced herein contain
the entire agreement of the parties and there are no representations, covenants
or other agreements except as stated or referred to herein and therein.

5.7 Assignability. This Agreement is not transferable or assignable by the
undersigned.

5.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of law principles.

5.9 Pronouns. The use herein of the masculine pronouns "him" or "his" or similar
terms shall be deemed to include the feminine and neuter genders as well and the
use herein of the singular pronoun shall be deemed to include the plural as
well.

5.10 Further Assurances. Upon request from time to time, the undersigned shall
execute and deliver all documents, take all rightful oaths and do all other acts
that may be necessary or desirable, in the reasonable opinion of the Company or
its counsel, to effect the subscription for the Shares in accordance herewith.

<PAGE>

      IN WITNESS WHEREOF, the undersigned has executed this Agreement on the
_____ day of ________________, 2006.

Amount of Investment:

$
 ---------------------

INDIVIDUAL INVESTOR:

----------------------
Name:

PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER INVESTOR

------------------------------
 (Name of Entity)

By:
   -------------------
Name:
Title:
Address:

Taxpayer Identification Number:_____________

<PAGE>

                           ACCEPTANCE OF SUBSCRIPTION

                      (to be filed out only by the Company)

The Company hereby accepts the above application for subscription for Shares on
behalf of the Company.

Dated: ____________ ___, 2006

                                       SMART ENERGY SOLUTIONS, INC.

                                       By:______________________________
                                       Name:    Pete Mateja
                                       Title:   Chief Executive Officer

<PAGE>

SMART ENERGY SOLUTIONS, INC.

                             INVESTOR QUESTIONNAIRE

A. General Information.

    1. Print Full Name of Investor:             Individual:

                                                --------------------------------
                                                First, Middle, Last

                                                Partnership, Corporation, Trust,
                                                Custodial Account, Other:

                                                --------------------------------

                                                --------------------------------
                                                       Name of Entity

    2. Address for Notices:                     --------------------------------

                                                --------------------------------

                                                --------------------------------

                                                --------------------------------

                                                --------------------------------

    3. Name of Primary Contact Person:
                                                --------------------------------
       Title:
                                                --------------------------------

    4. Telephone Number:
                                                --------------------------------
    5.  E-Mail Address:
                                                --------------------------------

                                                --------------------------------

    6.  Facsimile Number:
                                                --------------------------------

    7. Permanent Address:
                                                --------------------------------
       (if different from Address for
       Notices above)                           --------------------------------

<PAGE>

    8. Authorized Signatory:
                                                --------------------------------
       Title:
                                                --------------------------------
       Telephone Number:
                                                --------------------------------
       Facsimile Number:
                                                --------------------------------

B. Accredited Investor Status

The Investor represents and warrants that the Investor is an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act"), and has checked the box or boxes
below which are next to the categories under which the Investor qualifies as an
accredited investor:

      FOR INDIVIDUALS:

      |_|   A natural person with individual net worth (or joint net worth with
            spouse) in excess of $1 million. For purposes of this item, "net
            worth" means the excess of total assets at fair market value,
            including home, home furnishings and automobiles (and including
            property owned by a spouse), over total liabilities.

      |_|   A natural person with individual income (without including any
            income of the Investor's spouse) in excess of $200,000, or joint
            income with spouse of $300,000, in each of the two most recent years
            and who reasonably expects to reach the same income level in the
            current year.

      FOR ENTITIES:

      |_|   A bank as defined in Section 3(a)(2) of the Securities Act or any
            savings and loan association or other institution as defined in
            Section 3(a)(5)(A) of the Securities Act, whether acting in its
            individual or fiduciary capacity.

      |_|   An insurance company as defined in Section 2(13) of the Securities
            Act.

      |_|   A broker-dealer registered pursuant to Section 15 of the Securities
            Exchange Act of 1934.

      |_|   An investment company registered under the Investment Company Act of
            1940, as amended (the "Investment Company Act"). If an Investor has
            checked this box, please contact David Lubin, Esq. at (516) 569-9629
            for additional information that will be required.

<PAGE>

      |_|   A business development company as defined in Section 2(a)(48) of the
            Investment Company Act.

      |_|   A small business investment company licensed by the Small Business
            Administration under Section 301(c) or (d) of the Small Business
            Investment Act of 1958.

      |_|   A private business development company as defined in Section
            202(a)(22) of the Investment Advisers Act of 1940. If an Investor
            has checked this box, please contact David Lubin, Esq. at (516)
            887-8250 for additional information that will be required.

      |_|   An organization described in Section 501(c)(3) of the Internal
            Revenue Code, a corporation, Massachusetts or similar business
            trust, or partnership, not formed for the specific purpose of
            acquiring the Shares, with total assets in excess of $5 million.

      |_|   A trust with total assets in excess of $5 million not formed for the
            specific purpose of acquiring the Shares, whose purchase is directed
            by a person with such knowledge and experience in financial and
            business matters as to be capable of evaluating the merits and risks
            of an investment in the Company and the purchase of the Shares.

      |_|   An employee benefit plan within the meaning of ERISA if the decision
            to invest in the Shares is made by a plan fiduciary, as defined in
            Section 3(21) of ERISA, which is either a bank, savings and loan
            association, insurance company, or registered investment adviser, or
            if the employee benefit plan has total assets in excess of $5
            million or, if a self-directed plan, with investment decisions made
            solely by persons that are accredited investors.

      |_|   A plan established and maintained by a state, its political
            subdivisions, or any agency or instrumentality of a state or its
            political subdivisions, for the benefit of its employees, if the
            plan has total assets in excess of $5 million.

<PAGE>

      |_|   An entity, including a grantor trust, in which all of the equity
            owners are accredited investors as determined under any of the
            foregoing paragraphs (for this purpose, a beneficiary of a trust is
            not an equity owner, but the grantor of a grantor trust is an equity
            owner).

C. Supplemental Data for Entities

1. If the Investor is not a natural person, furnish the following supplemental
data (natural persons may skip this Section C of the Investor Questionnaire):

Legal form of entity (trust, corporation,partnership, etc.): ___________________

Jurisdiction of organization: __________________________________________________

2. Was the Investor organized for the specific purpose of acquiring the Shares?

           |_| Yes                                |_| No

      If the answer to the above question is "Yes," please contact David Lubin,
Esq. at (516) 569-9629 for additional information that will be required.

3. Are shareholders, partners or other holders of equity or beneficial interest
in the Investor able to decide individually whether to participate, or the
extent of their participation, in the Investor's investment in the Company
(i.e., can shareholders, partners or other holders of equity or beneficial
interest in the Investor determine whether their capital will form part of the
capital invested by the Investor in the Company)?

           |_| Yes                                |_| No

      If the answer to the above question is "Yes," please contact David Lubin,
Esq. at (516) 569-9629 for additional information that will be required.

4(a). Please indicate whether or not the Investor is, or is acting on behalf of,
(i) an employee benefit plan within the meaning of Section 3(3) of ERISA,
whether or not such plan is subject to ERISA, or (ii) an entity which is deemed
to hold the assets of any such employee benefit plan pursuant to 29 C.F.R. Sec.
2510.3-101. For example, a plan which is maintained by a foreign corporation,
governmental entity or church, a Keogh plan covering no common-law employees and
an individual retirement account are employee benefit plans within the meaning
of Section 3(3) of ERISA but generally are not subject to ERISA (collectively,
"Non-ERISA Plans"). In general, a foreign or US entity which is not an operating
company and which is not publicly traded or registered as an investment company
under the Investment Company Act of 1940, as amended, and in which 25% or more
of the value of any class of equity interest is held by employee pension or
welfare plans (including an entity which is deemed to hold the assets of any
such plan), would be deemed to hold the assets of one or more employee benefit
plans pursuant to 29 C.F.R. Sec. 2510.3-101. However, if only Non-ERISA Plans
were invested in such an entity, the entity generally would not be subject to
ERISA. For purposes of determining whether this 25% threshold has been met or
exceeded, the value of any equity interest held by a person (other than such a
plan or entity) who has discretionary authority or control with respect to the
assets of the entity, or any person who provides investment advice for a fee
(direct or indirect) with respect to such assets, or any affiliate of such a
person, is disregarded.

<PAGE>

           |_| Yes                                |_| No

4(b). If the Investor is, or is acting on behalf of, such an employee benefit
plan, or is an entity deemed to hold the assets of any such plan or plans,
please indicate whether or not the Investor is subject to ERISA.

           |_| Yes                                |_| No

4(c.) If the Investor answered "Yes" to question 4.(b) and the Investor is
investing the assets of an insurance company general account, please indicate
what percentage of the Investor's assets the purchase of the Shares is subject
to ERISA. ___________%.

5. Does the amount of the Investor's subscription for the Shares in the Company
exceed 40% of the total assets (on a consolidated basis with its subsidiaries)
of the Investor?

           |_| Yes                                |_| No

      If the question above was answered "Yes," please contact David Lubin, Esq.
at (516) 569-9629 for additional information that will be required.

6(a). Is the Investor a private investment company which is not registered under
the Investment Company Act, in reliance on Section 3(c)(1) or Section 3(c)(7)
thereof?

           |_| Yes                                |_| No

6(b). If the question above was answered "Yes," was the Investor formed prior to
April 30, 1996?

           |_| Yes                                |_| No

      If the questions set forth in (a) and (b) above were both answered "Yes,"
please contact David Lubin, Esq. at (516) 569-9629 for additional information
that will be required.

7(a). Is the Investor a grantor trust, a partnership or an S-Corporation for US
federal income tax purposes?

           |_| Yes                                |_| No

<PAGE>

7(b). If the question above was answered "Yes," please indicate whether or not:

     (i) more than 50 percent of the value of the ownership interest of any
     beneficial owner in the Investor is (or may at any time during the term of
     the Company be) attributable to the Investor's (direct or indirect)
     interest in the Company; or

           |_| Yes                                |_| No

     (ii) it is a principal purpose of the Investor's participation in the
     Company to permit the Partnership to satisfy the 100 partner limitation
     contained in US Treasury Regulation Section 1.7704-1(h)(3).

           |_| Yes                                |_| No

      If either question above was answered "Yes," please contact David Lubin,
Esq. at (516) 569-9629 for additional information that will be required.

8. If the Investor's tax year ends on a date other than December 31, please
indicate such date below:

                                          ------------------------------------
                                                        (Date)

D. Related Parties

1. To the best of the Investor's knowledge, does the Investor control, or is the
Investor controlled by or under common control with, any other investor in the
Company?

           |_| Yes                                |_| No

         If the answer above was answered "Yes", please identify such related
investor(s) below.

         Name(s)    of    related      investor(s):
---------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

2. Will any other person or persons have a beneficial interest in the Shares to
be acquired hereunder (other than as a shareholder, partner, or other beneficial
owner of equity interest in the Investor)?

           |_| Yes                                |_| No

<PAGE>

      If either question above was answered "Yes", please contact David Lubin,
Esq. at (516) 887-8250 for additional information that will be required.

The Investor understands that the foregoing information will be relied upon by
the Company for the purpose of determining the eligibility of the Investor to
purchase the Shares. The Investor agrees to notify the Company immediately if
any representation or warranty contained in this Subscription Agreement,
including this Investor Questionnaire, becomes untrue at any time. The Investor
agrees to provide, if requested, any additional information that may reasonably
be required to substantiate the Investor's status as an accredited investor or
to otherwise determine the eligibility of the Investor to purchase the Shares.
The Investor agrees to indemnify and hold harmless the Company and each officer,
director, shareholder, agent and representative of the Company and their
respective affiliates and successors and assigns from and against any loss,
damage or liability due to or arising out of a breach of any representation,
warranty or agreement of the Investor contained herein.

                                        INDIVIDUAL:

                                        ------------------------------------
                                                   (Signature)

                                        ------------------------------------
                                                   (Print Name)

                                        PARTNERSHIP, CORPORATION,
                                        TRUST, CUSTODIAL ACCOUNT,
                                        OTHER:

                                        -----------------------------------
                                                   (Name of Entity)

                                        By:
                                           ---------------------------------
                                                     (Signature)

                                           ---------------------------------
                                                  (Print Name and Title)

<PAGE>

                                     Annex 1

                           DEFINITION OF "INVESTMENTS"

The term "investments" means:

      (1) Securities, other than securities of an issuer that controls, is
controlled by, or is under common control with, the Investor that owns such
securities, unless the issuer of such securities is:

            (i) An investment company or a company that would be an investment
company but for the exclusions or exemptions provided by the Investment Company
Act, or a commodity pool; or

            (ii) a Public Company (as defined below);

            (iii) A company with shareholders' equity of not less than $50
million (determined in accordance with generally accepted accounting principles)
as reflected on the company's most recent financial statements, provided that
such financial statements present the information as of a date within 16 months
preceding the date on which the Investor acquires Shares;

      (2) Real estate held for investment purposes;

      (3) Commodity Shares (as defined below) held for investment purposes;

      (4) Physical Commodities (as defined below) held for investment purposes;

      (5) To the extent not securities, Financial Contracts (as defined below)
entered into for investment purposes;

      (6) In the case of an Investor that is a company that would be an
investment company but for the exclusions provided by Section 3(c)(1) or 3(c)(7)
of the Investment Company Act, or a commodity pool, any amounts payable to such
Investor pursuant to a firm agreement or similar binding commitment pursuant to
which a person has agreed to acquire an interest in, or make capital
contributions to, the Investor upon the demand of the Investor; and

      (7) Cash and cash equivalents held for investment purposes.

      Real Estate that is used by the owner or a Related Person (as defined
below) of the owner for personal purposes, or as a place of business, or in
connection with the conduct of the trade or business of such owner or a Related
Person of the owner, will NOT be considered Real Estate held for investment
purposes, provided that real estate owned by an Investor who is engaged
primarily in the business of investing, trading or developing real estate in
connection with such business may be deemed to be held for investment purposes.
However, residential real estate will not be deemed to be used for personal
purposes if deductions with respect to such real estate are not disallowed by
section 280A of the Internal Revenue Code of 1986, as amended.

<PAGE>

      A Commodity Interest or Physical Commodity owned, or a Financial Contract
entered into, by the Investor who is engaged primarily in the business of
investing, reinvesting, or trading in Commodity Shares, Physical Commodities or
Financial Contracts in connection with such business may be deemed to be held
for investment purposes.

      "Commodity Shares" means commodity futures contracts, options on commodity
futures contracts, and options on physical commodities traded on or subject to
the rules of:

            (i) Any contract market designated for trading such transactions
under the Commodity Exchange Act and the rules thereunder; or

            (ii) Any board of trade or exchange outside the United States, as
contemplated in Part 30 of the rules under the Commodity Exchange Act.

      "Public Company" means a company that:

            (i) files reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended; or

            (ii) has a class of securities that are listed on a Designated
Offshore Securities Market, as defined by Regulation S of the Securities Act.

      "Financial Contract" means any arrangement that:

            (i) takes the form of an individually negotiated contract,
agreement, or option to buy, sell, lend, swap, or repurchase, or other similar
individually negotiated transaction commonly entered into by participants in the
financial markets;

            (ii) is in respect of securities, commodities, currencies, interest
or other rates, other measures of value, or any other financial or economic
interest similar in purpose or function to any of the foregoing; and

            (iii) is entered into in response to a request from a counter party
for a quotation, or is otherwise entered into and structured to accommodate the
objectives of the counterparty to such arrangement.

      "Physical Commodities" means any physical commodity with respect to which
a Commodity Interest is traded on a market specified in the definition of
Commodity Shares above.

      "Related Person" means a person who is related to the Investor as a
sibling, spouse or former spouse, or is a direct lineal descendant or ancestor
by birth or adoption of the Investor, or is a spouse of such descendant or
ancestor, provided that, in the case of a Family Company, a Related Person
includes any owner of the Family Company and any person who is a Related Person
of such an owner. "Family Company" means a company that is owned directly or
indirectly by or for two or more natural persons who are related as siblings or
spouse (including former spouses), or direct lineal descendants by birth or
adoption, spouses of such persons, the estates of such persons, or foundations,
charitable organizations or trusts established for the benefit of such persons.

<PAGE>

      For purposes of determining the amount of investments owned by a company,
there may be included investments owned by majority-owned subsidiaries of the
company and investments owned by a company ("Parent Company") of which the
company is a majority-owned subsidiary, or by a majority-owned subsidiary of the
company and other majority-owned subsidiaries of the Parent Company.

      In determining whether a natural person is a qualified purchaser, there
may be included in the amount of such person's investments any investment held
jointly with such person's spouse, or investments in which such person shares
with such person's spouse a community property or similar shared ownership
interest. In determining whether spouses who are making a joint investment in
the Partnership are qualified purchasers, there may be included in the amount of
each spouse's investments any investments owned by the other spouse (whether or
not such investments are held jointly). There shall be deducted from the amount
of any such investments any amounts specified by paragraph 2(a) of Annex 2
incurred by such spouse.

      In determining whether a natural person is a qualified purchaser, there
may be included in the amount of such person's investments any investments held
in an individual retirement account or similar account the investments of which
are directed by and held for the benefit of such person.

<PAGE>

                                     Annex 2

                            VALUATIONS OF INVESTMENTS

      The general rule for determining the value of investments in order to
ascertain whether a person is a qualified purchaser is that the value of the
aggregate amount of investments owned and invested on a discretionary basis by
such person shall be their fair market value on the most recent practicable date
or their cost. This general rule is subject to the following provisos:

      (1) In the case of Commodity Shares, the amount of investments shall be
the value of the initial margin or option premium deposited in connection with
such Commodity Shares; and

      (2) In each case, there shall be deducted from the amount of investments
owned by such person the following amounts:

            (i) The amount of any outstanding indebtedness incurred to acquire
the investments owned by such person.

            (ii) A Family Company, in addition to the amounts specified in
paragraph (a) above, shall have deducted from the value of such Family Company's
investments any outstanding indebtedness incurred by an owner of the Family
Company to acquire such investments.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]