Document:

FHAMS
      2006-FA6

     

    MORTGAGE
      LOAN PURCHASE AGREEMENT

     

    THIS
      MORTGAGE LOAN PURCHASE AGREEMENT dated as of September 29, 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:
      September 29, 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 September 29, 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:
      September 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.

    
      
        
        

      

      
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    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:
      $487,325,581.72

     

    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.

    
      
        
        

      

      
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    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”):

     

    
      
        
        

      

      
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      	(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

            

    

     

    
      	  	
              
                (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

            

    

     

    
      
        
        

      

      
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      	(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.

    
      
        
        

      

      
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    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
      29th
      day of
      September, 2006.

    
      	 	 	 
	 	
              FIRST
                HORIZON HOME LOAN CORPORATION, as Seller

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
                

              

              Terry
                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 September
      29,
      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 September 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 fixed-rate
                one- to
                four-family mortgage loans in the Seller’s portfolio at the Closing Date
                as to which the representations and warranties made with respect
                to the
                Mortgage Loans set forth in this Schedule
                B
                can be made. No such selection was made in a manner intended to adversely
                affect the interests of the
                Certificateholders.

            

    

     

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

            

    

     

    
      	(25)  	
              At
                origination, substantially all of the Mortgage Loans in Pool I, Pool
                II
                and Pool III had stated terms to maturity of 30 years, between 20
                and 30
                years, and between 10 and 15 years,
                respectively.

            

    

     

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

            

    

     

    
      	(27)  	
              Approximately
                2.66%, 1.54% and 2.48% of the mortgage loans in Pool I, Pool II,
                and Pool
                III respectively, contain a prepayment penalty pricing option. The
                Mortgagors may prepay all the other Mortgage Loans at any time without
                penalty.

            

    

     

    
      
        
        

      

      
        B-4

        
          

        

      

       

    

     

    
      	(28)  	
              17.40%
                of the Mortgage Loans in Pool I, 19.13% of the Mortgage Loans in
                Pool II,
                and 17.08% of the Mortgage Loans in Pool III are jumbo mortgage loans
                that
                have Stated Principal Balances at origination that exceed the then
                applicable limitations for purchase by Fannie Mae and Freddie
                Mac.

            

    

     

    
      	(29)  	
              Each
                Mortgage Loan in Pool I was originated on or after February 27, 2006.
                Each
                Mortgage Loan in Pool II was originated on or after July 26, 2004.
                Each
                Mortgage Loan in Pool III was originated on or after March 21,
                2006.

            

    

     

    
      	(30)  	
              The
                latest stated maturity date of any Mortgage Loan in Pool I is October
                1,
                2036, and the earliest is March 1, 2036. The latest stated maturity
                date
                of any Mortgage Loan in Pool II is October 1, 2036, and the earliest
                is
                July 1, 2026. The latest stated maturity date of any Mortgage Loan
                in Pool
                III is October 1, 2021 and the earliest is July 1,
                2016.

            

    

     

    
      	(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-5Unassociated Document

    Exhibit
      4.1

    “HOME
      SYSTEM GROUP”

    2006
      EQUITY INCENTIVE PLAN

    

    1.
      NAME.

    

    The
      name
      of the plan is “HOME
      SYSTEM GROUP
      2006
      EQUITY INCENTIVE PLAN.”

    

    2.
      PURPOSE.

    

    The
      purpose of this Plan is to provide incentives to attract, retain and motivate
      eligible persons whose presence and potential contributions are important to
      the
      success of the Company, and its Parent and Subsidiaries (if any), by offering
      them an opportunity to participate in the Company’s future performance through
      awards of Options, Restricted Stock and Stock Awards. Capitalized terms not
      defined in the text are defined in Section 3.

    

    3.
      DEFINITIONS.

    

    As
      used
      in this Plan, the following terms will have the following meanings:

    

    “Award”
means
      any award under this Plan, including any Option, Restricted Stock or Stock
      Award.

    

    “Award
      Agreement”
means,
      with respect to each Award, the signed written agreement between the Company
      and
      the Participant setting forth the terms and conditions of the
      Award.

    

    “Board”
means
      the Board of Directors of the Company.

    

    “Cause”
means
      any cause, as defined by applicable law, for the termination of a Participant’s
      employment with the Company or a Parent or Subsidiary of the
      Company.

    

    “Code”
means
      the Internal Revenue Code of 1986, as amended.

    

    “Committee”
means
      the Board of Directors.

    

    “Company”
means
      Home System Group, a Nevada corporation, or any successor
      corporation.

    

    “Disability”
means
      a
      disability, whether temporary or permanent, partial or total, as determined
      by
      the Committee.

    

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    

    “Exercise
      Price”
means
      the price at which a holder of an Option may purchase the Shares issuable upon
      exercise of the Option.

    

    “Fair
      Market Value”
means,
      as of any date, the value of a share of the Company’s Common Stock determined as
      follows:

    

    (a)
      if
      such Common Stock is publicly traded and is then listed on a national securities
      exchange, its closing price on the date of determination on the principal
      national securities exchange on which the Common Stock is listed or admitted
      to
      trading as reported in The Wall Street Journal;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    (b)
      if
      such Common Stock is quoted on the NASDAQ National Market, its closing price
      on
      the NASDAQ National Market on the date of determination as reported in The
      Wall
      Street Journal;

    

    (c)
      if
      such Common Stock is publicly traded but is not listed or admitted to trading
      on
      a national securities exchange, the average of the closing bid and asked prices
      on the date of determination as reported in The Wall Street
      Journal;

    

    (d)
      the
      price per share at which shares of the Company’s Common Stock are initially
      offered for sale to the public by the Company’s underwriters in the initial
      public offering of the Company’s Common Stock pursuant to a registration
      statement filed with the SEC under the Securities Act if the Award is made
      on
      the effective date of such registration statement; or

    

    (e)
      if
      none of the foregoing is applicable, by the Committee in good
      faith.

    

    “Insider”
means
      an officer or director of the Company or any other person whose transactions
      in
      the Company’s Common Stock are subject to Section 16 of the Exchange
      Act.

    

    “Option”
means
      an award of an option to purchase Shares pursuant to Section 7.

    

    “Parent”
means
      any corporation (other than the Company) in an unbroken chain of corporations
      ending with the Company if each of such corporations other than the company
      owns
      stock possessing 50% or more of the total combined voting power of all classes
      of stock in one of the other corporations in such chain.

    

    “Participant”
means
      a
      person who receives an Award under this Plan.

    

    “Performance
      Factors”
means
      the factors selected by the Committee, in its sole and absolute discretion,
      from
      among the following measures to determine whether the performance goals
      applicable to Awards have been satisfied:

    

    (a)
      Net
      revenue and/or net revenue growth;

    

    (b)
      Earnings before income taxes and amortization and/or earnings before income
      taxes and amortization growth;

    

    (c)
      Operating income and/or operating income growth;

    

    (d)
      Net
      income and/or net income growth;

    

    (e)
      Earnings per share and/or earnings per share growth;

    

    (f)
      Total
      stockholder return and/or total stockholder return growth;

    

    (g)
      Return on equity;

    

    (h)
      Operating cash flow return on income;

    

    (i)
      Adjusted operating cash flow return on income;

    

    (j)
      Economic value added; and

    

    (k)
      Individual business objectives.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    “Performance
      Period” means the period of service determined by the Committee, not to exceed
      five years, during which years of service or performance is to be measured
      for
      Restricted Stock Awards or Stock Awards.

    

    “Plan”
means
      this Home System Group 2006 Equity Incentive Plan, as amended from time to
      time.

    

    “Restricted
      Stock Award”
means
      an award of Shares pursuant to Section 8.

    

    “SEC”
means
      the U.S. Securities and Exchange Commission.

    

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

    

    “Shares”
means
      shares of the Company’s Common Stock reserved for issuance under this Plan, as
      adjusted pursuant to Sections 4 and 19, and any successor security.

    

    “Stock
      Award”
means
      an award of Shares, or cash in lieu of Shares, pursuant to Section
      9.

    

    “Subsidiary”
means
      any corporation (other than the Company) in an unbroken chain of corporations
      beginning with the Company if each of the corporations other than the last
      corporation in the unbroken chain owns stock possessing 50% or more of the
      total
      combined voting power of all classes of stock in one of the other corporations
      in such chain.

    

    “Termination”
or
      “Terminated”
means,
      for purposes of this Plan with respect to a Participant, that the Participant
      has for any reason ceased to provide services as an employee, officer, director,
      consultant, independent contractor, or advisor to the Company or a Parent or
      Subsidiary of the Company. An employee will not be deemed to have ceased to
      provide services in the case of (i) sick leave, (ii) military leave, or (iii)
      any other leave of absence approved by the Company, provided that such leave
      is
      for a period of not more than 90 days, unless reemployment upon the expiration
      of such leave is guaranteed by contract or statute or unless provided otherwise
      pursuant to a formal policy adopted from time to time by the Company and issued
      and promulgated to employees in writing. In the case of any employee on an
      approved leave of absence, the Committee may make such provisions respecting
      suspension of vesting of the Award while on leave from the employ of the Company
      or a Subsidiary as it may deem appropriate, except that in no event may an
      Option be exercised after the expiration of the term set forth in the Option
      agreement.

    

    The
      Committee will have sole discretion to determine whether a Participant has
      ceased to provide services and the effective date on which the Participant
      ceased to provide services (the “Termination
      Date”).

    

    4.
      SHARES
      SUBJECT TO THE PLAN.

    

    4.1
       Number
      of Shares Available.
      Subject
      to Sections 4.2 and 19, the total aggregate number of Shares initially reserved
      and available for grant and issuance pursuant to this Plan will be 5,000,000
      Shares and will include Shares that are subject to: (a) issuance upon exercise
      of an Option but cease to be subject to such Option for any reason other than
      exercise of such Option; (b) an Award granted hereunder but forfeited or
      repurchased by the Company at the original issue price; and (c) an Award that
      otherwise terminates without Shares being issued. At all times the Company
      shall
      reserve and keep available a sufficient number of Shares as shall be required
      to
      satisfy the requirements of all outstanding Options granted under this Plan
      and
      all other outstanding but unvested Awards granted under this Plan.

    

    4.2
       Adjustment
      of Shares.
      In the
      event that the number of outstanding shares is changed by a stock dividend,
      recapitalization, stock split, reverse stock split, subdivision, combination,
      reclassification or similar change in the capital structure of the Company
      without consideration, then (a) the number of Shares reserved for issuance
      under
      this Plan, (b) the Exercise Prices of and number of Shares subject to
      outstanding Options, and (c) the number of Shares subject to other outstanding
      Awards will be proportionately adjusted, subject to any required action by
      the
      Board or the stockholders of the Company and compliance with applicable
      securities laws; provided, however, that fractions of a Share will not be issued
      but will either be replaced by a cash payment equal to the Fair Market Value
      of
      such fraction of a Share or will be rounded up to the nearest whole Share,
      as
      determined by the Committee.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    5.
      ELIGIBILITY.

     

    ISOs
      (as
      defined in Section 7 below) may be granted only to employees (including officers
      and directors who are also employees) of the Company or of a Parent or
      Subsidiary of the Company. All other Awards may be granted to employees,
      officers, directors, consultants, independent contractors and advisors of the
      Company or any Parent or Subsidiary of the Company, provided such consultants,
      contractors and advisors render bona fide services not in connection with the
      offer and sale of securities in a capital-raising transaction. A person may
      be
      granted more than one Award under this Plan.

    

    6.
      ADMINISTRATION.

    

    6.1
      Committee
      Authority.
      This
      Plan will be administered by the Committee or by the Board acting as the
      Committee. Subject to the general purposes, terms and conditions of this Plan,
      and to the direction of the Board, the Committee will have full power to
      implement and carry out this Plan. Without limitation, the Committee will have
      the authority to:

    

    6.1.1
      construe and interpret this Plan, any Award Agreement and any other agreement
      or
      document executed pursuant to this Plan;

    

    6.1.2
      prescribe, amend and rescind rules and regulations relating to this Plan or
      any
      Award;

    

    6.1.3
      select persons to receive Awards;

    

    6.1.4
      determine the form and terms of Awards;

    

    6.1.5
      determine the number of Shares or other consideration subject to
      Awards;

    

    6.1.6
      determine whether Awards will be granted singly, in combination with, in tandem
      with, in replacement of, or as alternatives to, other Awards under this Plan
      or
      any other incentive or compensation plan of the Company or any Parent or
      Subsidiary of the Company;

    

    6.1.7
      grant waivers of Plan or Award conditions;

    

    6.1.8
      determine the vesting, exercisability and payment of Awards;

    

    6.1.9
      correct any defect, supply any omission or reconcile any inconsistency in this
      Plan, any Award or any Award Agreement;

    

    6.1.10
      determine whether an Award has been earned; and

    

    6.1.11
      make all other determinations necessary or advisable for the administration
      of
      this Plan.

    

    6.2
       Committee
      Discretion.
      Any
      determination made by the Committee with respect to any Award will be made
      at
      the time of grant of the Award or, unless in contravention of any express term
      of this Plan or Award, at any later time, and such determination will be final
      and binding on the Company and on all persons having an interest in any Award
      under this Plan. The Committee may delegate to one or more officers of the
      Company the authority to grant an Award under this Plan to Participants who
      are
      not Insiders of the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    7 OPTIONS.

    

    The
      Committee may grant Options to eligible persons and will determine whether
      such
      Options will be Incentive Stock Options within the meaning of the Code (“ISO”)
      or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the
      Option, the Exercise Price of the Option, the period during which the option
      may
      be exercised, and all other terms and conditions of the Option, subject to
      the
      following:

    

    7.1
       Form
      of Option Grant.
      Each
      Option granted under this Plan will be evidenced by an Award Agreement which
      will expressly identify the Option as an ISO or an NQSO (hereinafter referred
      to
      as the “Stock Option Agreement”), and will be in such form and contain such
      provisions (which need not be the same for each Participant) as the Committee
      may from time to time approve, and which will comply with and be subject to
      the
      terms and conditions of this Plan.

    

    7.2
       Date
      of Grant.
      The
      date of grant of an Option will be the date on which the Committee makes the
      determination to grant such Option, unless otherwise specified by the Committee.
      The Stock Option Agreement and a copy of this Plan will be delivered to the
      Participant within a reasonable time after the granting of the
      Option.

    

    7.3
       Exercise
      Period.
      Options
      may be exercisable within the times or upon the events determined by the
      Committee as set forth in the Stock Option Agreement governing such Option;
      provided, however, that no Option will be exercisable after the expiration
      of
      ten (10) years from the date the Option is granted; and provided further that no
      ISO granted to a person who directly or by attribution owns more than ten
      percent (10%) of the total combined voting power of all classes of stock of
      the
      Company or of any Parent or Subsidiary of the Company (“Ten Percent
      Stockholder”) will be exercisable after the expiration of five (5) years from
      the date the ISO is granted. The Committee also may provide for Options to
      become exercisable at one time or from time to time, periodically or otherwise,
      in such number of Shares or percentage of Shares as the Committee determines,
      provided, however, that in all events a Participant will be entitled to exercise
      an Option at the rate of at least 20% per year over five years from the date
      of
      grant, subject to reasonable conditions such as continued employment; and
      further provided that an Option granted to a Participant who is an officer,
      director or consultant may become fully exercisable, subject to reasonable
      conditions such as continued employment, at any time or during any period
      established by the Company.

    

    7.4
       Exercise
      Price.
      The
      Exercise Price of an Option will be determined by the Committee when the Option
      is granted and may be not less than 85% of the Fair Market Value of the Shares
      on the date of grant; provided that: (a) the Exercise Price of an ISO will
      be
      not less than 100% of the Fair Market Value of the Shares on the date of grant;
      and (b) the Exercise Price of an Option granted to a Ten Percent Stockholder
      will not be less than 110% of the Fair Market Value of the Shares on the date
      of
      grant. Payment for the Shares purchased may be made in accordance with Section
      10 of this Plan.

    

    7.5
       Method
      of Exercise.
      Options
      may be exercised only by delivery to the Company of a written stock option
      exercise agreement (the “Exercise Agreement”) in a form approved by the
      Committee, (which need not be the same for each Participant), stating the number
      of Shares being purchased, the restrictions imposed on the Shares purchased
      under such Exercise Agreement, if any, and such representations and agreements
      regarding the Participant’s investment intent and access to information and
      other matters, if any, as may be required or desirable by the Company to comply
      with applicable securities laws, together with payment in full of the Exercise
      Price for the number of Shares being purchased.

    

    7.6
       Termination.
      Notwithstanding the exercise periods set forth in the Stock Option Agreement,
      exercise of an Option will always be subject to the following:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    7.6.1
      If
      the Participant’s service is Terminated for any reason except death or
      Disability, then the Participant may exercise such Participant’s Options only to
      the extent that such Options would have been exercisable upon the Termination
      Date no later than three (3) months after the Termination Date (or such longer
      time period not exceeding five (5) years as may be determined by the Committee,
      with any exercise beyond three (3) months after the Termination Date deemed
      to
      be an NQSO).

    

    7.6.2
      If
      the Participant’s service is Terminated because of the Participant’s death or
      Disability (or the Participant dies within three (3) months after a Termination
      other than for Cause or because of Participant’s Disability), then the
      Participant’s Options may be exercised only to the extent that such Options
      would have been exercisable by the Participant on the Termination Date and
      must
      be exercised by the Participant (or the Participant’s legal representative) no
      later than twelve (12) months after the Termination Date (or such longer time
      period not exceeding five (5) years as may be determined by the Committee,
      with
      any such exercise beyond (i) three (3) months after the Termination Date when
      the Termination is for any reason other than the Participant’s death or
      Disability, or (ii) twelve (12) months after the Termination Date when the
      Termination is for Participant’s death or Disability, deemed to be an
      NQSO).

    

    7.6.3
      Notwithstanding the provisions in paragraph 7.6(a) above, if the Participant’s
      service is Terminated for Cause, neither the Participant, the Participant’s
      estate nor such other person who may then hold the Option shall be entitled
      to
      exercise any Option with respect to any Shares whatsoever, after Termination,
      whether or not after Termination the Participant may receive payment from the
      Company or a Subsidiary for vacation pay, for services rendered prior to
      Termination, for services rendered for the day on which Termination occurs,
      for
      salary in lieu of notice, or for any other benefits. For the purpose of this
      paragraph, Termination shall be deemed to occur on the date when the Company
      dispatches notice or advice to the Participant that his service is
      Terminated.

    

    7.7
       Limitations
      on Exercise.
      The
      Committee may specify a reasonable minimum number of Shares that may be
      purchased on any exercise of an Option, provided that such minimum number will
      not prevent the Participant from exercising the Option for the full number
      of
      Shares for which it is then exercisable.

     

    7.8
       Limitations
      on ISO.
      The
      aggregate Fair Market Value (determined as of the date of grant) of Shares
      with
      respect to which ISO are exercisable for the first time by a Participant during
      any calendar year (under this Plan or under any other incentive stock option
      plan of the Company, Parent or Subsidiary of the Company) will not exceed
      $100,000. If the Fair Market Value of Shares on the date of grant with respect
      to which ISO are exercisable for the first time by a Participant during any
      calendar year exceeds $100,000, then the Options for the first $100,000 worth
      of
      Shares to become exercisable in such calendar year will be ISO and the Options
      for the amount in excess of $100,000 that become exercisable in that calendar
      year will be NQSOs. In the event that the Code or the regulations promulgated
      thereunder are amended after the Effective Date of this Plan to provide for
      a
      different limit on the Fair Market Value of Shares permitted to be subject
      to
      ISO, such different limit will be automatically incorporated herein and will
      apply to any Options granted after the effective date of such amendment.

    

    7.9
       Modification,
      Extension or Renewal.
      The
      Committee may modify, extend or renew outstanding Options and authorize the
      grant of new Options in substitution therefore, provided that any such action
      may not, without the written consent of a Participant, impair any of such
      Participant’s rights under any Option previously granted. Any outstanding ISO
      that is modified, extended, renewed or otherwise altered will be treated in
      accordance with Section 424(h) of the Code. The Committee may reduce the
      Exercise Price of outstanding Options without the consent of Participants
      affected by a written notice to them; provided, however, that the Exercise
      Price
      may not be reduced below the minimum Exercise Price that would be permitted
      under Section 7.4 of this Plan for Options granted on the date the action is
      taken to reduce the Exercise Price.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    7.10
       No
      Disqualification.
      Notwithstanding any other provision in this Plan, no term of this Plan relating
      to ISO will be interpreted, amended or altered, nor will any discretion or
      authority granted under this Plan be exercised, so as to disqualify this Plan
      under Section 422 of the Code or, without the consent of the Participant
      affected, to disqualify any ISO under Section 422 of the Code.

    

    8. RESTRICTED
      STOCK.

    

    A
      Restricted Stock Award is an offer by the Company to sell to an eligible person
      Shares that are subject to restrictions. The Committee will determine to whom
      an
      offer will be made, the number of Shares the person may purchase, the price
      to
      be paid (the “Purchase
      Price”),
      the
      restrictions to which the Shares will be subject, and all other terms and
      conditions of the Restricted Stock Award, subject to the following:

    

    8.1
       Form
      of Restricted Stock Award.
      All
      purchases under a Restricted Stock Award made pursuant to this Plan will be
      evidenced by an Award Agreement (the “Restricted
      Stock Purchase Agreement”)
      that
      will be in such form (which need not be the same for each Participant) as the
      Committee will from time to time approve, and will comply with and be subject
      to
      the terms and conditions of this Plan. The offer of Restricted Stock will be
      accepted by the Participant’s execution and delivery of the Restricted Stock
      Purchase Agreement and full payment for the Shares to the Company within thirty
      (30) days from the date the Restricted Stock Purchase Agreement is delivered
      to
      the person. If such person does not execute and deliver the Restricted Stock
      Purchase Agreement along with full payment for the Shares to the Company within
      thirty (30) days, then the offer will terminate, unless otherwise extended
      by
      the Committee.

    

    8.2
       Purchase
      Price.
      The
      Purchase Price of Shares sold pursuant to a Restricted Stock Award will be
      determined by the Committee on the date the Restricted Stock Award is granted
      and may not be less than 85% of the Fair Market Value of the Shares on the
      grant
      date, except in the case of a sale to a Ten Percent Stockholder, in which case
      the Purchase Price will be 100% of the Fair Market Value. Payment of the
      Purchase Price must be made in accordance with Section 10 of this
      Plan.

    

    8.3
       Terms
      of Restricted Stock Awards.
      Restricted Stock Awards shall be subject to such restrictions as the Committee
      may impose. These restrictions may be based upon completion of a specified
      number of years of service with the Company or upon completion of the
      performance goals as set out in advance in the Participant’s individual
      Restricted Stock Purchase Agreement. Restricted Stock Awards may vary from
      Participant to Participant and between groups of Participants. Prior to the
      grant of a Restricted Stock Award, the Committee shall: (a) determine the
      nature, length and starting date of any Performance Period for the Restricted
      Stock Award; (b) select from among the Performance Factors to be used to measure
      performance goals, if any; and (c) determine the number of Shares that may
      be
      awarded to the Participant. Prior to the payment of any Restricted Stock Award,
      the Committee shall determine the extent to which such Restricted Stock Award
      has been earned. Performance Periods may overlap and Participants may
      participate simultaneously with respect to Restricted Stock Awards that are
      subject to different Performance Periods and have different performance goals
      and other criteria.

    

    8.4
       Termination
      During Performance Period.
      If a
      Participant is Terminated during a Performance Period for any reason, then
      such
      Participant will be entitled to payment (whether in Shares, cash or otherwise)
      with respect to the Restricted Stock Award only to the extent earned as of
      the
      date of Termination in accordance with the Restricted Stock Purchase Agreement,
      unless the Committee determines otherwise.

    

    9. STOCK
      AWARDS.

    

    9.1
       Awards
      of Stock.
      A Stock
      Award is an award of Shares (which may consist of Restricted Stock) for services
      rendered to the Company or any Parent or Subsidiary of the Company. A Stock
      Award will be awarded pursuant to an Award Agreement (the “Stock
      Award Agreement”)
      that
      will be in such form (which need not be the same for each Participant) as the
      Committee will from time to time approve, and will comply with and be subject
      to
      the terms and conditions of this Plan. A Stock Award may be awarded upon
      satisfaction of such performance goals as are set out in advance in the
      Participant’s individual Stock Award Agreement (the “Performance Stock Award
      Agreement”) that will be in such form (which need not be the same for each
      Participant) as the Committee will from time to time approve, and will comply
      with and be subject to the terms and conditions of this Plan. Stock Awards
      may
      vary from Participant to Participant and between groups of Participants, and
      may
      be based upon the achievement of the Company, Parent or Subsidiary and/or
      individual performance factors or upon such other criteria as the Committee
      may
      determine.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    9.2
       Terms
      of Stock Awards.
      The
      Committee will determine the number of Shares to be awarded to the Participant.
      If the Stock Award is being earned upon the satisfaction of performance goals
      pursuant to a Performance Stock Award Agreement, then the Committee will: (a)
      determine the nature, length and starting date of any Performance Period for
      each Stock Award; (b) select from among the Performance Factors to be used
      to
      measure the performance, if any; and (c) determine the number of Shares that
      may
      be awarded to the Participant. Prior to the payment of any Stock Award, the
      Committee shall determine the extent to which such Stock Award has been earned.
      Performance Periods may overlap and Participants may participate simultaneously
      with respect to Stock Awards that are subject to different Performance Periods
      and different performance goals and other criteria. The number of Shares may
      be
      fixed or may vary in accordance with such performance goals and criteria as
      may
      be determined by the Committee. The Committee may adjust the performance goals
      applicable to the Stock Awards to take into account changes in law and
      accounting or tax rules and to make such adjustments as the Committee deems
      necessary or appropriate to reflect the impact of extraordinary or unusual
      items, events or circumstances to avoid windfalls or hardships.

    

    9.3
       Form
      of Payment.
      The
      earned portion of a Stock Award may be paid to the Participant by the Company
      either currently or on a deferred basis, with such interest or dividend
      equivalent, if any, as the Committee may determine. Payment may be made in
      the
      form of cash or whole Shares or a combination thereof, either in a lump sum
      payment or in installments, all as the Committee will determine.

    

    10. PAYMENT
      FOR SHARE PURCHASES. Payment for Shares purchased pursuant to this Plan may
      be
      made in cash (by check) or, where expressly approved for the Participant by
      the
      Committee and where permitted by law:

    

    10.1
      by
      cancellation of indebtedness of the Company to the Participant;

    

    10.2
      by
      surrender of shares that either: (1) have been owned by the Participant for
      more
      than six (6) months and have been paid for within the meaning of SEC Rule 144
      (and, if such shares were purchased from the Company by use of a promissory
      note, such note has been fully paid with respect to such shares); or (2) were
      obtained by the Participant in the public market;

    

    10.3
      by
      waiver of compensation due or accrued to the Participant for services
      rendered;

    

    10.4
      with
      respect only to purchases upon exercise of an Option, and provided that a public
      market for the Company’s stock exists:

    

    10.4.1
      through a “same day sale” commitment from the Participant and a broker-dealer
      that is a member of the National Association of Securities Dealers (an “NASD
      Dealer”) whereby the Participant irrevocably elects to exercise the Option and
      to sell a portion of the Shares so purchased to pay for the Exercise Price,
      and
      whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
      forward the Exercise Price directly to the Company; or

    

    10.4.2
      through a “margin” commitment from the Participant and a NASD Dealer whereby the
      Participant irrevocably elects to exercise the Option and to pledge the Shares
      so purchased to the NASD Dealer in a margin account as security for a loan
      from
      the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
      irrevocably commits upon receipt of such Shares to forward the Exercise Price
      directly to the Company; or

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    10.4.3
      by
      any combination of the foregoing.

    

    11. WITHHOLDING
      TAXES.

    

    11.1 Withholding
      Generally.
      Whenever Shares are to be issued in satisfaction of Awards granted under this
      Plan, the Company may require the Participant to remit to the Company an amount
      sufficient to satisfy federal, state and local withholding tax requirements
      prior to the delivery of any certificate or certificates for such Shares.
      Whenever, under this Plan, payments in satisfaction of Awards are to be made
      in
      cash, such payment will be net of an amount sufficient to satisfy federal,
      state, and local withholding tax requirements.

    

    11.2
       Stock
      Withholding.
      When,
      under applicable tax laws, a participant incurs tax liability in connection
      with
      the exercise or vesting of any Award that is subject to tax withholding and
      the
      Participant is obligated to pay the Company the amount required to be withheld,
      the Committee may allow the Participant to satisfy the minimum withholding
      tax
      obligation by electing to have the Company withhold from the Shares to be issued
      that number of Shares having a Fair Market Value equal to the minimum amount
      required to be withheld, determined on the date that the amount of tax to be
      withheld is to be determined. All elections by a Participant to have Shares
      withheld for this purpose will be made in accordance with the requirements
      established by the Committee and will be in writing in a form acceptable to
      the
      Committee.

    

    12 PRIVILEGES
      OF STOCK OWNERSHIP.

    

    12.1
       Voting
      and Dividends.
      No
      Participant will have any of the rights of a stockholder with respect to any
      Shares until the Shares are issued to the Participant. After Shares are issued
      to the Participant, the Participant will be a stockholder and will have all
      the
      rights of a stockholder with respect to such Shares, including the right to
      vote
      and receive all dividends or other distributions made or paid with respect
      to
      such Shares; provided, that if such Shares are Restricted Stock, then any new,
      additional or different securities the Participant may become entitled to
      receive with respect to such Shares by virtue of a stock dividend, stock split
      or any other change in the corporate or capital structure of the Company will
      be
      subject to the same restrictions as the Restricted Stock.

    

    12.2
       Financial
      Statements.
      The
      Company will provide financial statements to each Participant prior to such
      Participant’s purchase of Shares under this Plan, and to each Participant
      annually during the period such Participant has Awards outstanding; provided,
      however, the Company will not be required to provide such financial statements
      to Participants whose services in connection with the Company assure them access
      to equivalent information.

    

    13. NON-TRANSFERABILITY
      OF AWARDS.

    

    13.1
      Awards of Stock and Restricted Stock granted under this Plan, and any interest
      therein, will not be transferable or assignable by the Participant, and may
      not
      be made subject to execution, attachment or similar process, other than by
      will
      or by the laws of descent and distribution. Awards of Options granted under
      this
      Plan, and any interest therein, will not be transferable or assignable by the
      Participant, and may not be made subject to execution, attachment or similar
      process, other than by will or by the laws of descent and distribution, by
      instrument to an inter vivos or testamentary trust in which the options are
      to
      be passed to beneficiaries upon the death of the trustor, or by gift to
“immediate family” as that term is defined in 17 C.F.R.
      240.16a-1(e).

    

    During
      the lifetime of the Participant an Award will be exercisable only by the
      Participant. During the lifetime of the Participant, any elections with respect
      to an Award may be made only by the Participant unless otherwise determined
      by
      the Committee and set forth in the Award Agreement with respect to Awards that
      are not ISOs.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    13.2
      This
      restriction shall cease to apply to Shares received as a Stock Award or
      Restricted Stock Award under this Plan at the time ownership of such shares
      vests in the recipient of the Award. Similarly, this restriction shall not
      apply
      to shares of stock received upon the exercise of vested Options.

    

    14. CERTIFICATES.

    

    All
      certificates for Shares or other securities delivered under this Plan will
      be
      subject to such stop transfer orders, legends and other restrictions as the
      Committee may deem necessary or advisable, including restrictions under any
      applicable federal, state or foreign securities law, or any rules, regulations
      and other requirements of the SEC or any stock exchange or automated quotation
      system upon which the Shares may be listed or quoted.

    

    15.
      ESCROW; PLEDGE OF SHARES.

    

    To
      enforce any restrictions on a Participant’s Shares, the Committee may require
      the Participant to deposit all certificates representing Shares, together with
      stock powers or other instruments of transfer approved by the Committee
      appropriately endorsed in blank, with the Company or an agent designated by
      the
      Company to hold in escrow until such restrictions have lapsed or terminated,
      and
      the Committee may cause a legend or legends referencing such restrictions to
      be
      placed on the certificates. Any Participant who is permitted to execute a
      promissory note as partial or full consideration for the purchase of Shares
      under this Plan will be required to pledge and deposit with the Company all
      or
      part of the Shares so purchased as collateral to secure the payment of the
      Participant’s obligation to the Company under the promissory note; provided,
      however, that the Committee may require or accept other or additional forms
      of
      collateral to secure the payment of such obligation and, in any event, the
      Company will have full recourse against the Participant under the promissory
      note notwithstanding any pledge of the Participant’s Shares or other collateral.
      In connection with any pledge of the Shares, the Participant will be required
      to
      execute and deliver a written pledge agreement in such form as the Committee
      will from time to time approve. The Shares purchased with the promissory note
      may be released from the pledge on a pro rata basis as the promissory note
      is
      paid.

    

    

    

    16.
      EXCHANGE OF AWARDS.

    

    The
      Committee may, at any time or from time to time, authorize the Company, with
      the
      consent of the respective Participants, to issue new Awards in exchange for
      the
      surrender and cancellation of any or all outstanding Awards.

    

    17.
      SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.

    

    An
      Award
      will not be effective unless such Award is in compliance with all applicable
      federal and state securities laws, rules and regulations of any governmental
      body, and the requirements of any stock exchange or automated quotation system
      upon which the Shares may then be listed or quoted, as they are in effect on
      the
      date of grant of the Award and also on the date of exercise or other issuance.
      Notwithstanding any other provision in this Plan, the Company will have no
      obligation to issue or deliver certificates for Shares under this Plan prior
      to:
      (a) obtaining any approvals from governmental agencies that the Company
      determines are necessary or advisable; and/or (b) completion of any registration
      or other qualification of such Shares under any state or federal law or ruling
      of any governmental body that the Company determines to be necessary or
      advisable. The Company will be under no obligation to register the Shares with
      the SEC or to effect compliance with the registration, qualification or listing
      requirements of any state securities laws, stock exchange or automated quotation
      system, and the Company will have no liability for any inability or failure
      to
      do so.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    18.
      NO
      OBLIGATION TO EMPLOY.

    

    Nothing
      in this Plan or any Award granted under this Plan will confer or be deemed
      to
      confer on any Participant any right to continue in the employ of, or to continue
      any other relationship with, the Company or any Parent or Subsidiary of the
      Company or limit in any way the right of the Company or any Parent or Subsidiary
      of the Company to terminate Participant’s employment or other relationship at
      any time, with or without cause.

    

    19.
      CORPORATE TRANSACTIONS.

    

    19.1
       Assumption
      or Replacement of Awards by Successor.
      In the
      event of (a) a dissolution or liquidation of the Company, (b) a merger or
      consolidation in which the Company is not the surviving corporation (other
      than
      a merger or consolidation with a wholly-owned subsidiary, a reincorporation
      of
      the Company in a different jurisdiction, or other transaction in which there
      is
      no substantial change in the stockholders of the Company or their relative
      stock
      holdings and the Awards granted under this Plan are assumed, converted or
      replaced by the successor corporation, which assumption will be binding on
      all
      Participants), (c) a merger in which the Company is the surviving corporation
      but after which the stockholders of the Company immediately prior to such merger
      (other than any stockholder that merges, or which owns or controls another
      corporation that merges, with the Company in such merger) cease to own their
      shares or other equity interest in the Company, (d) the sale of substantially
      all of the assets of the Company, or (e) the acquisition, sale, or transfer
      of
      more than 50% of the outstanding shares of the Company by tender offer or
      similar transaction, any or all outstanding Awards may be assumed, converted
      or
      replaced by the successor corporation (if any), which assumption, conversion
      or
      replacement will be binding on all Participants. In the alternative, the
      successor corporation may substitute equivalent Awards or provide substantially
      similar consideration to Participants as was provided to stockholders (after
      taking into account the existing provisions of the Awards). The successor
      corporation may also issue, in place of outstanding Shares of the Company held
      by the Participant, substantially similar shares or other property subject
      to
      repurchase restrictions no less favorable to the Participant. In the event
      such
      successor corporation (if any) refuses to assume or substitute Awards, as
      provided above, pursuant to a transaction described in this Subsection 19.1,
      such Awards will expire on such transaction at such time and on such conditions
      as the Committee will determine. Notwithstanding anything in this Plan to the
      contrary, the Committee may provide that the vesting of any or all Awards
      granted pursuant to this Plan will accelerate upon a transaction described
      in
      this Section 19. If the Committee exercises such discretion with respect to
      Options, such Options will become exercisable in full prior to the consummation
      of such event at such time and on such conditions as the Committee determines,
      and if such Options are not exercised prior to the consummation of the corporate
      transaction, they shall terminate at such time as determined by the
      Committee.

    

    19.2
       Other
      Treatment of Awards.
      Subject
      to any greater rights granted to Participants under the foregoing provisions
      of
      this Section 19, in the event of the occurrence of any transaction described
      in
      Section 19.1, any outstanding Awards will be treated as provided in the
      applicable agreement or plan of merger, consolidation, dissolution, liquidation,
      or sale of assets.

    

    19.3
       Assumption
      of Awards by the Company.
      The
      Company, from time to time, also may substitute or assume outstanding awards
      granted by another company, whether in connection with an acquisition of such
      other company or otherwise, by either; (a) granting an Award under this Plan
      in
      substitution of such other company’s award; or (b) assuming such award as if it
      had been granted under this Plan if the terms of such assumed award could be
      applied to an Award granted under this Plan. Such substitution or assumption
      will be permissible if the holder of the substituted or assumed award would
      have
      been eligible to be granted an Award under this Plan if the other company had
      applied the rules of this Plan to such grant. In the event the Company assumes
      an award granted by another company, the terms and conditions of such award
      will
      remain unchanged (except that the exercise price and the number and nature
      of
      Shares issuable upon exercise of any such option will be adjusted appropriately
      pursuant to Section 424(a) of the Code). In the event the Company elects to
      grant a new Option rather than assuming an existing option, such new Option
      may
      be granted with a similarly adjusted Exercise Price.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    20 ADOPTION
      AND EFFECTIVE DATE.

    

    This
      2006
      Equity Incentive Plan is effective as of September 29, 2006 the date it was
      adopted by the Board.

    

    21. STOCKHOLDER
      APPROVAL.

    

    This
      Plan
      shall be approved by the stockholders of the Company within twelve (12) months
      before or after the date this Plan is adopted by the Board.

    

    

    22.
      TERM
      OF PLAN/GOVERNING LAW.

    

    Unless
      earlier terminated as provided herein, this Plan will terminate on December
      31,
      2006. This Plan and all agreements thereunder shall be governed by and construed
      in accordance with the laws of the State of Nevada.

    

    23. 
      AMENDMENT OR TERMINATION OF PLAN.

    

    The
      Board
      may at any time terminate or amend this Plan in any respect, including without
      limitation amendment of any form of Award Agreement or instrument to be executed
      pursuant to this Plan; provided, however, that the Board will not, without
      the
      approval of the stockholders of the Company, amend this Plan in any manner
      that
      requires such stockholder approval under the Code, if applicable, or by any
      stock exchange or market on which the Common Stock of the Company is listed
      for
      trading.

    

    24. NONEXCLUSIVITY
      OF THE PLAN.

    

    Neither
      the adoption of this Plan by the Board, the submission of this Plan to the
      stockholders of the Company for approval, nor any provision of this Plan will
      be
      construed as creating any limitations on the power of the Board to adopt such
      additional compensation arrangements as it may deem desirable, including,
      without limitation, the granting of stock options and bonuses otherwise than
      under this Plan, and such arrangements may be either generally applicable or
      applicable only in specific cases.

    

    25. ACTION
      BY
      COMMITTEE.

    

    Any
      action permitted or required to be taken by the Committee or any decision or
      determination permitted or required to be made by the Committee pursuant to
      this
      Plan shall be taken or made in the Committee’s sole and absolute
      discretion.

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