EXHIBIT 10.5(i)

Execution Copy

SEPARATION AND RELEASE AGREEMENT

This Separation and Release Agreement (“Agreement”) is entered into as of this
19th day of January, 2007, among HomeBanc Corp., a Georgia corporation (the
“Company”), and Patrick S. Flood (“Executive”).

Executive and the Company agree as follows:

1. Executive’s position as Chairman and Chief Executive Officer of the Company
was terminated on January 12, 2007. The employment relationship between
Executive and the Company will terminate on January 31, 2007 (the “Termination
Date”). Executive’s termination is a termination by the Company “without Cause”
for purposes of Executive’s Employment Agreement with the Company, dated as of
May 6, 2004 (the “Employment Agreement”).

2. Except to the extent specifically provided below in Section 6 of this
Agreement, this Agreement is not intended to and does not modify the terms of
the Employment Agreement, which shall continue to govern the rights and
obligations of Executive and the Company from and after the Termination Date, to
the extent applicable, including without limitation the post-termination
restrictive covenants of Executive as provided in Section 14 of the Employment
Agreement, the provisions pertaining to a Change in Control of the Company in
Sections 8(a) and 11 of the Employment Agreement, and the Cost of Enforcement
provision in Section 12 of the Employment Agreement.

3. In accordance with the Employment Agreement, the Company has agreed to pay
Executive certain payments and to make certain benefits available to Executive
after the Termination Date. Such amounts and benefits are summarized on Exhibit
A hereto and are qualified by the terms of the Employment Agreement, except as
specifically modified by this Agreement.

4. No payments shall be made to Executive under this Agreement or the Employment
Agreement until the later of (i) the Termination Date, or (ii) the date that the
Mutual Release attached here to as Exhibit B (the “Mutual Release”) shall have
been executed and become irrevocable.

5. Executive shall promptly pay to the Company the amount of $12,068, as
reimbursement for his private use of the Company’s aircraft in 2006. This
repayment obligation is not contingent on the execution of the Mutual Release
and shall be deducted from his final paycheck for services through January 31,
2007.

6. The rights and obligations of Executive and the Company under the Employment
Agreement are hereby modified as follows:

 

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(a) Section 8(a)(iv) of the Employment Agreement requires the Company to provide
Executive with reasonable outplacement services for a period of one year after
the Termination Date, subject to a cap of $218,750. Executive hereby waives his
rights to receive outplacement services provided by the Company, in exchange for
a lump sum payment of $50,000, which Executive may, but need not, apply to
seeking outplacement services on his own behalf.

(b) Executive hereby waives the right to have the Company subsidize any cost of
his continuation of group health benefits after the Termination Date as provided
in Section 8(a)(ii) of the Employment Agreement. For a period of 24 months after
the Termination Date, Executive and/or his dependents may continue to
participate in any group health benefits of the Company to which they would
otherwise be entitled to continue under COBRA; provided, however, that
(i) Executive shall pay the full COBRA cost of such coverage, and (ii) if
Executive becomes employed with another employer (including self-employment) and
receives group health benefits under another employer provided plan, the
Company’s obligation to make such group health benefits available to Executive
shall cease, except as otherwise provided by law.

7. Executive shall return to the Company promptly after the Termination Date all
the Company property in Executive’s possession, including, but not limited to,
the Company keys, credit cards, cellular phones, computer equipment, software
and peripherals and originals or copies of books, records, or other information
pertaining to the Company’s business. Executive may retain any leased or Company
automobile after the Termination Date at the sole cost of Executive. Executive
and the Company agree to take such action as may be required to transfer the
existing lease on such automobile to Executive.

8. The Company shall continue to satisfy in full any currently existing or
hereafter arising indemnification obligations to Executive (whether arising by
law, the Company’s bylaws or pursuant to separate indemnification agreements
with the Company). The Company hereby acknowledges that Executive’s service as
an officer, director, or other fiduciary of the Company, any and all current or
past subsidiaries and affiliates of the Company, and Executive’s past service as
a member of any benefit or investment committee related to the Company’s 401(k)
Plan, were made at the request of the Company and are covered by all the
Company’s indemnification obligations. Executive is deemed to be an “insured
person” under the Company’s existing Directors and Officers liability insurance
for his period of service to the Company prior to the Termination Date. The
Company agrees to maintain D&O insurance coverage in the future that provides
former directors and officers substantially similar coverage as then current
directors and officers until all applicable statutes of limitations expire and
to afford Executive substantially similar coverage under any D&O insurance
arrangement that may be provided to then current directors and officers of the
Company as part of a Change in Control of the Company (as defined in the
Employment Agreement). All of these obligations shall also apply to any
successor of the Company. Executive’s right to

 

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indemnification and insurance coverage as described in this Section 8 is
conditioned upon his meeting the applicable standards of conduct and otherwise
meeting the qualifications for indemnification or coverage, as the case may be,
under the terms provided in such arrangements.

9. Agreement Not to Disparage. Executive and the Company agree that neither
shall say, write or communicate in any manner anything substantially derogatory
about the other, regardless of the truth or falsity of the information;
provided, that nothing contained herein is intended to or shall limit
Executive’s or the Company’s ability to comply with applicable laws, rules or
regulations, to obtain any benefits under any bond and/or insurance policy, or
to commence, institute, prosecute or defend any lawsuit, action, claim or
proceeding before or in any court, regulatory, governmental, arbitral or other
authority. For purposes this Section 9, the “Company” means and includes the
Company and its officers, directors, employees, affiliates and representatives.

10. The Company and Executive agree that until January 12, 2007, Executive did
not have Good Reason to terminate his employment under the Employment Agreement.
The Company and Executive intend for all payments under this Agreement to be
either exempt from Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”), or to comply with its requirements. Accordingly, to the extent
applicable, this Agreement shall at all times be operated in accordance with the
requirements of Section 409A, and the regulations and rulings thereunder,
including any transition rules. The Company and Executive shall take action, or
refrain from taking any action, with respect to the payments and benefits under
this Agreement that is reasonably necessary to comply with Section 409A. To the
extent necessary to avoid the imposition of an additional tax under
Section 409A, the payment of any deferred compensation payable or deliverable
under this Agreement or the Employment Agreement shall be delayed for a period
of six months and one day after the Termination Date, and the Company shall pay
interest on such delayed payments at the rate of 4.75% per annum; provided,
however, Executive’s account in the Company’s Deferred Compensation Plan shall
only earn such interest if the Deferred Compensation Plan does not otherwise
provide a method for calculating earnings during such six-month period. The
Company shall have no liability to Executive for any later determination by
taxing authorities that a particular payment or benefit should have been delayed
for six months in order to avoid additional taxes under Section 409A, and
Executive shall indemnify the Company for any liability the Company may incur
based on any claimed failure to report or withhold for Section 409A income
resulting from such failure to delay payment.

11. This Agreement shall be governed by and construed in accordance with the
laws of the State of Georgia, without reference to the principles of conflict of
laws. Exclusive jurisdiction with respect to any legal proceeding brought
concerning any subject matter contained in this Agreement shall be settled by
arbitration as provided in the Employment Agreement.

12. This Agreement, together with the Employment Agreement and the Mutual
Release, represents the complete agreement between Executive and the Company

 

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concerning the termination of Executive’s employment with the Company and
supersedes all prior agreements or understandings, written or oral, other than
the Employment Agreement, as hereby modified. This Agreement may not be amended
or modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.

The parties to this Agreement have executed this Agreement as of the day and
year first written above.

 

HOMEBANC CORP. By:   /s/    CHARLES W. MCGUIRE  

Charles W. McGuire

Executive Vice President, General

Counsel and Secretary

  /s/    PATRICK S. FLOOD   PATRICK S. FLOOD

 

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EXHIBIT A

SUMMARY OF SEPARATION PAY AND BENEFITS

 

Benefit    Amount     Comment Accrued unpaid salary through 1/31/07    $43,576
       Represents salary from end of last pay period (1/12/07) through 1/31/07 –
13 working days @ $3,352 per day       Prorata Target Bonus through 1/31/07   
$55,736     Represents target bonus of $656,250 x 31/365       Vacation pay
accrued through 1/31/07    $67,040     Represents 20 days @ $3,352 per day      
Unpaid business expense reimbursement through 1/31/07    TBD     Subject to
receipt of documentation from Executive      

Vested balance of deferred compensation

as of 1/31/07

   $393,468     Deferred compensation plan balance as of December 29, 2006, per
Newport Group calculation. Amount will vary as provided in plan until payable on
August 1, 2007.       Severance payment    $3,426,924     Represents 2x base
salary and 2x average of 2004 and 2005 bonuses       Group health benefits
subsidy    $0     Waived by Executive       Vesting of SARs    $0     SARs are
underwater       Vesting of RSUs    $974,873     Estimated value of 272,311 RSUs
based on a HomeBanc share price of $3.58 (closing price as of 1/16/07). Value
will vary with stock price. No requirement that Executive sell shares.      
Outplacement    $50,000     Payment to Executive, in lieu of Company-provided
outplacement services       Reimbursement of reasonable legal fees through
1/31/07    TBD     Subject to receipt of invoice from Executive’s counsel      
Interest on delayed 409A payments for 6 months    TBD    

4.75% interest rate

 

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EXHIBIT B

MUTUAL RELEASE

THIS MUTUAL RELEASE (“Release”) is made and entered into effective as of the
         day of January, 2007, by and between Patrick S. Flood (“Executive”) and
HomeBanc Corp. (the “Company”). This is the Release referred to in that certain
Employment Agreement dated as of May 6, 2004 by and between the Company and
Executive (the “Employment Agreement”), and that certain Separation and Release
Agreement dated as of January 19, 2007 by and between the Company and Executive
(the “Separation Agreement”), with respect to which agreements this Release is
an integral part.

FOR AND IN CONSIDERATION of the payments and benefits provided by Section 8 of
the Employment Agreement, as modified by the Separation Agreement, and the
Company’s other promises and covenants as recited in the Employment Agreement
and the Separation Agreement, the receipt and sufficiency of which are hereby
acknowledged, Executive, for himself, his successors and assigns, now and
forever hereby releases and discharges the Company and all its past and present
officers, directors, employees, agents, parent corporations, predecessors,
subsidiaries, affiliates, estates, successors, assigns, benefit plans,
consultants, administrators, and attorneys (hereinafter collectively referred to
as “Releasees”) from any and all claims, charges, actions, causes of action,
sums of money due, suits, debts, covenants, contracts, agreements, promises,
demands or liabilities (hereinafter collectively referred to as “Claims”)
whatsoever, in law or in equity, whether known or unknown, which Executive ever
had or now has from the beginning of time up to the date of this Release
(“Release”) is executed, including, but not limited to, claims under the Age
Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act, Title VII of the Civil Rights Act of 1964 (and all of its
amendments), the Americans with Disabilities Act, as amended, or any other
federal or state statutes, all tort claims, all claims for wrongful employment
termination or breach of contract, and any other claims which Executive has,
had, or may have against the Releasees on account of or arising out of
Executive’s employment with or termination from the Company; provided, however,
that nothing contained in this Release shall in any way diminish or impair
(i) any rights of Executive to the benefits conferred or referenced in the
Employment Agreement, as modified by the Separation Agreement, (ii) any benefits
to which Executive is entitled under the Company’s benefit plans or programs,
(iii) any rights to indemnification that may exist from time to time under any
Indemnification Agreement between Executive and the Company, or the Company’s
certificate of incorporation or bylaws, or Georgia law, or (iv) Executive’s
ability to raise an affirmative defense in connection with any lawsuit or other
legal claim or charge instituted or asserted by the Company against Executive
(collectively, the “Excluded Claims”).

Executive specifically acknowledges and agrees that he has knowingly and
voluntarily released the Company and all other Releasees from any and all claims
arising under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §
621, et seq., which Executive ever had or now has from the beginning of time up
to the date this

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Release is executed, including but not limited to those claims which are in any
way connected with any employment relationship or the termination of any
employment relationship which existed between the Company and Executive.
Executive further acknowledges and agrees that he has been advised to consult
with an attorney prior to executing this Release and that he has been given
twenty-one (21) days to consider this Release prior to its execution. Executive
also understands that he may revoke this Release at any time within seven
(7) days following its execution. Executive understands, however, that this
Release shall not become effective and that none of the consideration described
above shall be paid to him until the expiration of the seven-day revocation
period.

For and in consideration of Executive’s release above and Executive’s agreement
to the covenants in Section 14 of the Employment Agreement, the Company, on
behalf of itself, its subsidiaries, and any related or successor corporation or
entity, does hereby release and forever discharge Executive, his heirs,
representatives, successors and agents (“Executive Releasees”) from any and all
claims, charges, actions, causes of action, sums of money due, suits, debts,
covenants, contracts, agreements, promises, demands, liabilities, damages,
losses or expenses (including reasonable attorneys’ fees and costs actually
incurred) of any kind or nature whatsoever, known or unknown (“Company Claims”),
which the Company has, may have, or later claim to have had against any of
Executive Releasees arising out of anything that has occurred up to the date of
this release, including any Company Claims against any of Executive Releasees
arising out of Executive’s employment with the Company or Executive’s
termination of employment. This Release shall not apply to (i) any breach of
Executive’s covenants under Section 14 of the Employment Agreement, (ii) any
breach by Executive of this Release, or (iii) any actions, any causes of action,
claims or demands for any damage, loss or injury that any party may have, may
have had, or purport to have against Executive or the Company, whether known or
unknown, which arise from the criminal or ultra vires acts or omissions of
Executive.

This Release and the rights and obligations of the parties hereto shall be
governed and construed in accordance with the laws of the State of Georgia. If
any provision hereof is unenforceable or is held to be unenforceable, such
provision shall be fully severable, and this document and its terms shall be
construed and enforced as if such unenforceable provision had never comprised a
part hereof, the remaining provisions hereof shall remain in full force and
effect, and the court or tribunal construing the provisions shall add as a part
hereof a provision as similar in terms and effect to such unenforceable
provision as may be enforceable, in lieu of the unenforceable provision.

This document, together with the Employment Agreement and the Separation
Agreement, represents the complete agreement between Executive and the Company
concerning the termination of Executive’s employment with the Company and the
mutual release of claims and supersedes all prior agreements or understandings,
written or oral, other than the Employment Agreement, as hereby modified.

 

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IN WITNESS WHEREOF, the Company and Executive acknowledge that they have read
and fully understand and accept this Release, and that they have signed it
knowingly and voluntarily this 19th day of January, 2007.

 

/s/    PATRICK S. FLOOD   Patrick S. Flood

HOMEBANC CORP. By:   /S/    CHARLES W. MCGUIRE  

Charles W. McGuire

Executive Vice President, General Counsel and Secretary

 

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