Document:

MORTGAGE LOAN PURCHASE AGREEMENT

      THIS MORTGAGE LOAN PURCHASE AGREEMENT dated as of February 28, 2005 by and
between FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation (the
"Seller"), and FIRST HORIZON ASSET SECURITIES INC. (the "Purchaser").

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

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

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

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

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

                                   ARTICLE I
                                   Definitions

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

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

      Closing Date: February 28, 2005

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

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

      Coop Shares: Shares issued by a Cooperative Corporation.

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

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      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 February 28,
2005 by and among The Bank of New York, as trustee, First Horizon Home Loan
Corporation, as master servicer, and the Custodian.

      Cut-Off Date: February 1, 2005.

      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 applied accounting principles as in effect from time to
time in the United States of America.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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      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: $255,893,890.06

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

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

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

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

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

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

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

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

      Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for a
Deleted Mortgage Loan which must, on the date of such substitution, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) have a Mortgage Rate not lower than the Mortgage Rate of the Deleted
Mortgage Loan; (iii) have a maximum mortgage rate not more than 1% per annum
higher or lower than the maximum mortgage rate of the Deleted Mortgage Loan;
(iv) have a minimum mortgage rate specified in its related Mortgage Note not
more than 1% per annum higher or lower than the minimum mortgage rate of the
Deleted Mortgage Loan; (v) have the same mortgage index, reset period and
periodic rate as the Deleted Mortgage Loan and a gross margin not more than 1%

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per annum higher or lower than that of the Deleted Mortgage Loan (vi) be
accruing interest at a rate no lower than and not more than 1% per annum higher
than, that of the Deleted Mortgage Loan; (iv) have a loan-to-value ratio no
higher than that of the Deleted Mortgage Loan; (vii) have a remaining term to
maturity no greater than (and not more than one year less than that of) the
Deleted Mortgage Loan; (viii) not be a Cooperative Loan unless the Deleted
Mortgage Loan was a Cooperative Loan and (ix) comply with each representation
and warranty set forth in Schedule B hereto.

      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

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      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

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

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

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

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

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

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

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

            (2)   The executed Security Agreement;

            (3)   The executed Proprietary Lease;

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            (4)   The executed Recognition Agreement;

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

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

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

      In addition, in the event that in connection with any Mortgage Loan the
Seller cannot deliver or cause to be delivered the original or duplicate
original lender's title policy (together with all riders thereto), satisfying
the requirements of clause (v) above, concurrently with the execution and
delivery hereof because the related Mortgage has not been returned from the

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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.

            (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

                                      -8-
<PAGE>

      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.

      (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

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

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

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

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

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

                                   ARTICLE V
                                 Miscellaneous

      Section 5.1 Transfer Intended as Sale. It is the express intent of the
parties hereto that the conveyance of the Mortgage Loans by the Seller to the
Purchaser be, and be construed as, an absolute sale thereof in accordance with
GAAP and for regulatory purposes. It is, further, not the intention of the
parties that such conveyances be deemed a pledge thereof by the Seller to the

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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

      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]

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      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 February, 2005.

                                     FIRST HORIZON HOME LOAN
                                     CORPORATION, as Seller

                                     By:_______________________________________
                                              Terry McCoy
                                              Senior Vice President

                                     FIRST HORIZON ASSET SECURITIES INC., as
                                     Purchaser

                                     By:_______________________________________
                                              Alfred Chang
                                              Vice President

Mortgage Loan Purchase Agreement - 2005-AR1 Signature Page

<PAGE>

                                   SCHEDULE A

                              [BEGINS ON NEXT PAGE]

                      [Available Upon Request From Trustee]

<PAGE>

                                   SCHEDULE B

             Representations and Warranties as to the Mortgage Loans

         First Horizon Home Loan Corporation (the "Seller") hereby makes the
representations and warranties set forth in this Schedule B on which First
Horizon Asset Securities Inc. (the "Purchaser") relies in accepting the Mortgage
Loans. Such representations and warranties speak as of the execution and
delivery of the Mortgage Loan Purchase Agreement, dated as of February 28, 2005
(the "MLPA"), between First Horizon Home Loan Corporation, as seller, and the
Purchaser and as of the Closing Date, or if so specified herein, as of the
Cut-off Date or date of origination of the Mortgage Loans, but shall survive the
sale, transfer, and assignment of the Mortgage Loans to the Purchaser and any
subsequent sale, transfer and assignment by the Purchaser to a third party.
Capitalized terms used but not otherwise defined in this Schedule B shall have
the meanings ascribed thereto in the MLPA.

      (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.

      (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.

                                      B-1
<PAGE>

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

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

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

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

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

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

      (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

                                      B-2
<PAGE>

            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 Mortgages contain 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

                                      B-3
<PAGE>

            (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.

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

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

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

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

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

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

      (25)  At origination, substantially all of the Mortgage Loans 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 Mortgage Loans may be prepaid at any time by the related
            Mortgagors without penalty.

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

                                      B-4
<PAGE>

      (29)  Each Mortgage Loan in Pool I originated on or after October 18,
            2004. Each Mortgage Loan in Pool II originated on or after May 21,
            2004. Each Mortgage Loan in Pool III originated on or after October
            6, 2004. Each Mortgage Loan in Pool IV originated on or after
            September 30, 2004.

      (30)  The latest stated maturity date of any Mortgage Loan in Pool I is
            March 1, 2035, and the earliest stated maturity date of any Mortgage
            Loan in Pool I is November 1, 2034. The latest stated maturity date
            of any Mortgage Loan in Pool II is March 1, 2035, and the earliest
            stated maturity date of any Mortgage Loan in Pool II is June 1,
            2034. The latest stated maturity date of any Mortgage Loan in Pool
            III is February 1, 2035, and the earliest stated maturity date of
            any Mortgage Loan in Pool III is November 1, 2034. The latest stated
            maturity date of any Mortgage Loan in Pool IV is March 1, 2035, and
            the earliest stated maturity date of any Mortgage Loan in Pool IV is
            October 1, 2034.

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

      (32)  No Mortgage Loan has 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 acceptable to Fannie
            Mae or Freddie Mac.

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

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

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

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

                                      B-5Exhibit 10.8

                                 GENETHERA, INC.
            2004 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN

1. DEFINITIONS

Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this GeneThera, Inc. Employee, Director and
Consultant Stock Option Plan, have the following meanings:

      Administrator means the Board of Directors, unless it has delegated power
      to act on its behalf to a committee. (See Paragraph 4)

      Affiliate means a corporation which, for purposes of Section 424 of the
      Code, is a parent or subsidiary of the Company, direct or indirect.

      Board of Directors means the Supervisory Board of the Company.

      Code means the United States Internal Revenue Code of 1986, as amended.

      Committee means the Committee to which the Board of Directors has
      delegated power to act under or pursuant to the provisions of the Plan.

      Common Stock means ordinary shares of the Company, 0.001 par value.
      Company means GeneThera.Inc. , corporation incorporated under the laws of
      Florida.

      Disability or Disabled means permanent and total disability as defined in
      Section 22(e)(3) of the Code. Fair Market Value of a Share of Common Stock
      means:

      (1)   If the Common Stock is listed on a national securities exchange or
            traded in the over-the-counter market and sales prices are regularly
            reported for the Common Stock, the closing or last price of the
            Common Stock on the Composite Tape or other comparable reporting
            system on the applicable date.

      (2)   If the Common Stock is not traded on a national securities exchange
            but is traded on the over-the-counter market, if sales prices are
            not regularly reported for the Common Stock for the trading days or
            day referred to in clause (1), and if bid and asked prices for the
            Common Stock are regularly reported, either (a) the average of the
            mean between the bid and the asked price for the Common Stock at the
            close of trading in the over-the-counter market for the ten (10)
            trading days on which Common Stock was traded immediately preceding
            the applicable date or (b) the mean between the bid and the asked
            price for the Common Stock at the close of trading in the
            over-the-counter market for the trading day on which Common Stock
            was traded immediately preceding the applicable date, as the
            Administrator shall determine; and

<PAGE>

      (3)   If the Common Stock is neither listed on a national securities
            exchange nor traded in the over-the-counter market, such value as
            the Administrator, in good faith, shall determine.

      Key Employee means an employee of the Company or of an Affiliate
      (including, without limitation, an employee who is also serving as an
      officer or director of the Company or of an Affiliate), designated by the
      Administrator to be eligible to be granted one or more Options under the
      Plan.

      Non-Qualified Option means an option, which is not intended to qualify as
      an ISO.

      Option means a Non-Qualified Option granted under the Plan.

      Option Agreement means an agreement between the Company and a Participant
      delivered pursuant to the Plan.

      Participant means a Key Employee, director, member of the Board of
      Directors or consultant to whom one or more Options are granted under the
      Plan. As used herein, "Participant" shall include "Participant's
      Survivors" where the context requires.

      Participant's Survivors means a deceased Participant's legal
      representatives and/or any person or persons who acquired the
      Participant's rights to an Option by will or by the laws of descent and
      distribution.

      Plan means this GeneThera, Inc. 2004 Employee, Director and Consultant
      Stock Option Plan.

      Shares means shares of the Common Stock as to which Options have been or
      may be granted under the Plan or any shares of capital stock into which
      the Shares are changed or for which they are exchanged within the
      provisions of Paragraph 3 of the Plan. The Shares issued upon exercise of
      Options granted under the Plan may be authorized and unissued shares or
      shares held by the Company in its treasury, or both.

2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Participants in order
to attract such people, to induce them to work for the benefit of the Company or
of an Affiliate and to provide additional incentive for them to promote the
success of the Company or of an Affiliate.

3. SHARES SUBJECT TO THE PLAN.
The number of Shares subject to this Plan as to which Options may be granted
from time to time shall be 2,000,000, or the equivalent of such number of Shares
after the Administrator, in its sole discretion, has interpreted the effect of
any stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 16 of the Plan. If an Option ceases to
be "outstanding", in whole or in part, the Shares which were subject to such

<PAGE>

Option shall be available for the granting of other Options under the Plan. Any
Option shall be treated as "outstanding" until such Option is exercised in full,
or terminates or expires under the provisions of the Plan, or by agreement of
the parties to the pertinent Option Agreement.

4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee. At such
time as Section 16 of the Securities Exchange Act of 1934, as amended (the "1934
Act"), is applicable to any Plan Participants, the Plan is intended to comply in
all respects with Rule 16b-3 or its successors, promulgated pursuant to Section
16 of the 1934 Act with respect to Participants who are subject to Section 16 of
the 1934 Act, and any provision in this Plan with respect to such persons
contrary to Rule 16b-3 shall be deemed null and void to the extent permissible
by law and deemed appropriate by the Administrator. Subject to the provisions of
the Plan, the Administrator is authorized to:

      a.    Interpret the provisions of the Plan or of any Option or Option
            Agreement and to make all rules and determinations which it deems
            necessary or advisable for the administration of the Plan;

      b.    Determine which employees of the Company or of an Affiliate shall be
            designated as Key Employees and which of the Key Employees,
            directors and consultants shall be granted Options;

      c.    Determine the number of Shares for which an Option or Options shall
            be granted;

      d.    Specify the terms and conditions upon which an Option or Options may
            be granted; and

      e.    Adopt any sub-plans applicable to residents of any specified
            jurisdiction as it deems necessary or appropriate in order to comply
            with or take advantage of any tax laws applicable to the Company or
            to Plan Participants or to otherwise facilitate the administration
            of the Plan, which sub-plans may include additional restrictions or
            conditions applicable to Options or Shares acquired upon exercise of
            Options. Subject to the foregoing, the interpretation and
            construction by the Administrator of any provisions of the Plan or
            of any Option granted under it shall be final, unless otherwise
            determined by the Board of Directors, if the Administrator is other
            than the Board of Directors.

5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants in the
Plan, provided, however, that each Participant must be a Key Employee, director
or consultant of the Company or of an Affiliate at the time an Option is
granted. Notwithstanding any of the foregoing provisions, the Administrator may
authorize the grant of an Option to a person not then an employee, director or

<PAGE>

consultant of the Company or of an Affiliate. The actual grant of such Option,
however, shall be conditioned upon such person becoming eligible to become a
Participant at or prior to the time of the execution of the Option Agreement
evidencing such Option. Non-Qualified Options may be granted to any Key
Employee, director or consultant of the Company or an Affiliate. No resident of
the United States shall be granted in any one year Options to purchase more than
500,000 Shares. The granting of any Option to any individual shall neither
entitle that individual to, nor disqualify him or her from, participation in any
other grant of Options.

6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly executed
by the Company and, to the extent required by law or requested by the Company,
by the Participant. The Administrator may provide that Options be granted
subject to such conditions as the Administrator may deem appropriate including,
without limitation, subsequent approval by the shareholders of the Company of
this Plan or any amendments thereto. The Option Agreements shall be subject to
at least the following terms and conditions:

      Non-Qualified Options: Each Option intended to be a Non-Qualified Option
      shall be subject to the terms and conditions which the Administrator
      determines to be appropriate and in the best interest of the Company,
      subject to the following minimum standards for any such Non-Qualified
      Option:

      a.    Option Price: The option price (per share) of the Shares covered by
            each Option shall be determined by the Administrator but shall not
            be less than the par value per share of Common Stock.

      b.    Each Option Agreement shall state the number of Shares to which it
            pertains;

      c.    Each Option Agreement shall state the date or dates on which it
            first is exercisable and the date after which it may no longer be
            exercised, and may provide that the Option rights accrue or become
            exercisable in installments over a period of months or years, or
            upon the occurrence of certain conditions or the attainment of
            stated goals or events; and

      d.    Exercise of any Option may be conditioned upon the Participant's
            execution of a Share purchase agreement in form satisfactory to the
            Administrator providing for certain protections for the Company and
            its other shareholders including requirements that:

            i.    The Participant's or the Participant's Survivors' right to
                  sell or transfer the Shares may be restricted; and

<PAGE>

            ii.   The Participant or the Participant's Survivors may be required
                  to execute letters of investment intent and must also
                  acknowledge that the Shares will bear legends noting any
                  applicable restrictions.

7. EXERCISE OF OPTION AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, or to the
Company's designee, together with provision for payment of the full purchase
price in accordance with this paragraph for the Shares as to which such Option
is being exercised, and upon compliance with any other condition(s) set forth in
the Option Agreement. Such written notice shall be signed by the person
exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement. Payment of the purchase price for the Shares
as to which such Option is being exercised shall be made (a) in United States
dollars or such other currencies as may be determined by the Administrator, in
cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock having a fair market value equal as of the
date of the exercise to the cash exercise price of the Option, determined in
good faith by the Administrator, or (c) at the discretion of the Administrator,
by delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, or (d) at the discretion of the
Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation which requires the Company
to take any action with respect to the Shares prior to their issuance. The
Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid Shares. The Administrator shall have the right to
accelerate the date of exercise of any installment of any Option. The
Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the

<PAGE>

Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, and (iii) with respect to any Option held by any Participant who is
subject to the provisions of Section 16(a) of the 1934 Act, any such amendment
shall be made only after the Administrator, after consulting with counsel for
the Company, determines whether such amendment would constitute the grant of a
new Option.

8. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.

9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be transferable by
the Participant other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules thereunder,
provided, however, that the designation of a beneficiary of an Option by a
Participant shall not be deemed a transfer prohibited by this Paragraph. Except
as provided in the preceding sentence, an Option shall be exercisable, during
the Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.

10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, in the event of
a termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate before the Participant has exercised all Options,
the following rules apply:

      a.    A Participant who ceases to be an employee, director or consultant
            of the Company or of an Affiliate (for any reason other than
            termination "for cause", Disability, or death for which events there
            are special rules in Paragraphs 11, 12, and 13, respectively), may
            exercise any Option granted to him or her to the extent that the
            Option is exercisable on the date of such termination of service,
            but only within such term as the Administrator has designated in the
            pertinent Option Agreement.

      b.    The provisions of this Paragraph, and not the provisions of
            Paragraph 12 or 13, shall apply to a Participant who subsequently

<PAGE>

            becomes disabled or dies after the termination of employment,
            director status or consultancy, provided, however, in the case of a
            Participant's death within three (3) months after the termination of
            employment, director status or consulting, the Participant's
            Survivors may exercise the Option within one (1) year after the date
            of the Participant's death, but in no event after the date of
            expiration of the term of the Option.

      c.    Notwithstanding anything herein to the contrary, if subsequent to a
            Participant's termination of employment, termination of director
            status or termination of consultancy, but prior to the exercise of
            an Option, the Board of Directors determines that, either prior or
            subsequent to the Participant's termination, the Participant engaged
            in conduct which would constitute "cause", then such Participant
            shall forthwith cease to have any right to exercise any Option.

      d.    A Participant to whom an Option has been granted under the Plan who
            is absent from work with the Company or with an Affiliate because of
            temporary disability (any disability other than a permanent and
            total Disability as defined in Paragraph 1 hereof), or who is on
            leave of absence for any purpose, shall not, during the period of
            any such absence, be deemed, by virtue of such absence alone, to
            have terminated such Participant's employment, director status or
            consultancy with the Company or with an Affiliate, except as the
            Administrator may otherwise expressly provide, subject to Paragraph
            24 hereof.

      e.    Options granted under the Plan shall not be affected by any change
            of employment or other service within or among the Company and any
            Affiliates, so long as the Participant continues to be an employee,
            director or consultant of the Company or any Affiliate, provided,
            however, if a Participant's employment by either the Company or an
            Affiliate should cease (other than to become an employee of an
            Affiliate or the Company), such termination shall affect the
            Participant's rights under any Option granted to such Participant in
            accordance with the terms of the Plan and the pertinent Option
            Agreement.

11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, the following
rules apply if the Participant's service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated "for cause" prior to
the time that all of his or her outstanding Options have been exercised:

      a.    All outstanding and unexercised Options as of the date the
            Participant is notified his or her service is terminated "for cause"

<PAGE>

            will immediately be forfeited, unless the Option Agreement provides
            otherwise.

      b.    For purposes of this Paragraph, "cause" shall include (and is not
            limited to) dishonesty with respect to the employer,
            insubordination, substantial malfeasance or non-feasance of duty,
            unauthorized disclosure of confidential information, breach by the
            Participant of any provision of any employment, consulting,
            advisory, nondisclosure, noncompetition or similar agreement between
            the Participant and the Company or any Affiliate, conduct
            substantially prejudicial to the business of the Company or any
            Affiliate and any interpretation under applicable. The determination
            of the Administrator as to the existence of cause will be conclusive
            on the Participant and the Company.

      c.    "Cause" is not limited to events which have occurred prior to a
            Participant's termination of service, nor is it necessary that the
            Administrator's finding of "cause" occur prior to termination. If
            the Administrator determines, subsequent to a Participant's
            termination of service but prior to the exercise of an Option, that
            either prior or subsequent to the Participant's termination the
            Participant engaged in conduct which would constitute "cause", then
            the right to exercise any Option is forfeited.

      d.    Any definition in an agreement between the Participant and the
            Company or an Affiliate, which contains a conflicting definition of
            "cause" for termination and which is in effect at the time of such
            termination, shall supersede the definition in this Plan with
            respect to such Participant.

12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, a Participant
who ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability may exercise any Option granted to such
Participant:

      a.    To the extent exercisable but not exercised on the date of
            Disability; and

      b.    In the event rights to exercise the Option accrue periodically, to
            the extent of a pro rata portion of any additional rights as would
            have accrued had the Participant not become Disabled prior to the
            end of the accrual period which next ends following the date of
            Disability. The proration shall be based upon the number of days of
            such accrual period prior to the date of Disability.

A Disabled Participant may exercise such rights only within a period of not more
than one (1) year after the date that the Participant became Disabled,

<PAGE>

notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.

The Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the event of
the death of a Participant to whom an Option has been granted while the
Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant's Survivors:

      a.    To the extent exercisable but not exercised on the date of death;
            and

      b.    In the event rights to exercise the Option accrue periodically, to
            the extent of a pro rata portion of any additional rights which
            would have accrued had the Participant not died prior to the end of
            the accrual period which next ends following the date of death. The
            proration shall be based upon the number of days of such accrual
            period prior to the Participant's death. If the Participant's
            Survivors wish to exercise the Option, they must take all necessary
            steps to exercise the Option within one (1) year after the date of
            death of such Participant, notwithstanding that the decedent might
            have been able to exercise the Option as to some or all of the
            Shares on a later date if he or she had not died and had continued
            to be an employee, director or consultant or, if earlier, within the
            originally prescribed term of the Option.

14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the particular
exercise of an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

      a.    The person(s) who exercise such Option shall warrant to the Company,
            prior to the receipt of such Shares, that such person(s) are

<PAGE>

            acquiring such Shares for their own respective accounts, for
            investment, and not with a view to, or for sale in connection with,
            the distribution of any such Shares, in which event the person(s)
            acquiring such Shares shall be bound by the provisions of the
            following legend which shall be endorsed upon any certificate(s)
            evidencing their Shares issued pursuant to such exercise or such
            grant:

            "The shares represented by this certificate have been taken for
            investment and they may not be sold or otherwise transferred by any
            person, including a pledgee, unless (1) either (a) a Registration
            Statement with respect to such shares shall be effective under the
            Securities Act of 1933, as amended, or (b) the Company shall have
            received an opinion of counsel satisfactory to it that an exemption
            from registration under such Act is then available, and (2) there
            shall have been compliance with all applicable state securities
            laws.

      b.    The Company shall have received an opinion of its U.S. counsel that
            the Shares may be issued upon such particular exercise in compliance
            with the 1933 Act without registration thereunder. The Company may
            delay issuance of the Shares until completion of any action or
            obtaining of any consent which the Company deems necessary under any
            applicable law (including, without limitation, state securities or
            "blue sky" laws).

15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted under
this Plan which as of such date shall not have been exercised will terminate and
become null and void; provided, however, that if the rights of a Participant or
a Participant's Survivors have not otherwise terminated and expired, the
Participant or the Participant's Survivors will have the right immediately prior
to such dissolution or liquidation to exercise any Option to the extent that the
Option is exercisable as of the date immediately prior to such dissolution or
liquidation.

16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's rights with
respect to any Option granted to him or her hereunder which have not previously
been exercised in full shall be adjusted as hereinafter provided, unless
otherwise specifically provided in the written agreement between the Participant
and the Company relating to such Option:

      A.    Stock Dividends and Stock Splits. If the shares of Common Stock
            shall be subdivided or combined into a greater or smaller number of
            shares or if the Company shall issue any shares of Common Stock as a
            stock dividend on its outstanding Common Stock, the number of shares
            of Common Stock deliverable upon the exercise of such Option shall

<PAGE>

            be appropriately increased or decreased proportionately, and
            appropriate adjustments shall be made in the purchase price per
            share to reflect such subdivision, combination or stock dividend.

      B.    Consolidations or Mergers. If the Company is to be consolidated with
            or acquired by another entity in a merger, sale of all or
            substantially all of the Company's assets or otherwise (an
            "Acquisition"), the Administrator or the board of directors of any
            entity assuming the obligations of the Company hereunder (the
            "Successor Board"), shall, as to outstanding Options, either (i)
            make appropriate provision for the continuation of such Options by
            substituting on an equitable basis for the Shares then subject to
            such Options either the consideration payable with respect to the
            outstanding shares of Common Stock in connection with the
            Acquisition or securities of any successor or acquiring entity; or
            (ii) upon written notice to the Participants, provide that all
            Options must be exercised (either to the extent then exercisable or,
            at the discretion of the Administrator, all Options being made fully
            exercisable for purposes of this subsection), within a specified
            number of days of the date of such notice, at the end of which
            period the Options shall terminate; or (iii) terminate all Options
            in exchange for a cash payment equal to the excess of the Fair
            Market Value of the shares subject to such Options (either to the
            extent then exercisable or, at the discretion of the Administrator,
            all Options being made fully exercisable for purposes of this
            subsection) over the exercise price thereof.

      C.    Recapitalization or Reorganization. In the event of a
            recapitalization or reorganization of the Company (other than a
            transaction described in subparagraph B above) pursuant to which
            securities of the Company or of another corporation are issued with
            respect to the outstanding shares of Common Stock, a Participant
            upon exercising an Option shall be entitled to receive for the
            purchase price paid upon such exercise the securities he or she
            would have received if he or she had exercised such Option prior to
            such recapitalization or reorganization.

17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to Options. Except as expressly provided
herein, no adjustments shall be made for dividends paid in cash or in property
(including without limitation, securities) of the Company.

18. FRACTIONAL SHARES.
No fractional share shall be issued under the Plan and the person exercising
such right shall receive from the Company cash in lieu of such fractional share
equal to the Fair Market Value thereof.

<PAGE>

19. WITHHOLDING.
In the event that any United States federal, other country, state, or local
income taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.")
withholdings or other amounts are required by applicable law or governmental
regulation to be withheld from the Option holder's salary, wages or other
remuneration in connection with the exercise of an Option or a Disqualifying
Disposition (as defined in Paragraph 21), the Option holder shall advance in
cash to the Company, or to any Affiliate of the Company which employs or
employed the Option holder, the amount of such withholdings unless a different
withholding arrangement, including the use of shares of the Company's Common
Stock, is authorized by the Administrator (and permitted by law), provided,
however, that with respect to persons subject to Section 16 of the 1934 Act, any
such withholding arrangement shall be in compliance with any applicable
provisions of Rule 16b-3 promulgated under Section 16 of the 1934 Act. For
purposes hereof, the fair market value of the shares withheld for purposes of
payroll withholding shall be determined in the manner provided in Paragraph 1
above, as of the most recent practicable date prior to the date of exercise. If
the fair market value of the shares withheld is less than the amount of payroll
withholdings required, the Option holder may be required to advance the
difference in cash to the Company or the Affiliate employer. The Administrator
in its discretion may condition the exercise of an Option for less than the then
Fair Market Value on the Participant's payment of such additional withholding.

20. TERMINATION OF THE PLAN.
The Plan will terminate on March 31, 2014, the date which is ten (10) years from
the earlier of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an earlier date by
vote of the shareholders of the Company; provided, however, that any such
earlier termination will not affect any Options granted or Option Agreements
executed prior to the effective date of such termination.

21. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan may also be
amended by the Administrator, including, without limitation, to the extent
necessary to qualify any or all outstanding Options granted under the Plan or
Options to be granted under the Plan for favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code, to the extent necessary to ensure
the qualification of the Plan under Rule 16b-3, at such time, if any, as any
Plan Participants are subject to Section 16 of the 1934 Act, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding

<PAGE>

Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
is of a scope that requires shareholder approval in order to ensure favorable
federal income tax treatment for any incentive stock options or requires
shareholder approval in order to ensure the compliance of the Plan with Rule
16b-3 at such time, if any, as any Plan Participants are subject to Section 16
of the 1934 Act, shall be subject to obtaining such shareholder approval. Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under an Option previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Option Agreements in a manner which may be
adverse to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Option Agreements may be amended by
the Administrator in a manner which is not adverse to the Participant.

22. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.

23. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the Law of
Delaware.

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