Exhibit 10.4

 

HOMEBANC MORTGAGE TRUST 2004-2

 

Issuer

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

Securities Administrator

 

and

 

U.S. BANK NATIONAL ASSOCIATION

 

Indenture Trustee

 

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INDENTURE

 

Dated as of October 29, 2004

 

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MORTGAGE-BACKED NOTES

 

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TABLE OF CONTENTS

 

Section

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        Page

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ARTICLE I

    

Definitions

    

Section 1.01

   Definitions    3

Section 1.02

   Incorporation by Reference of Trust Indenture Act    3

Section 1.03

   Rules of Construction    3

ARTICLE II

    

Original Issuance of Notes

    

Section 2.01

   Form    5

Section 2.02

   Execution, Authentication and Delivery    5

ARTICLE III

    

Covenants

    

Section 3.01

   Maintenance of Payment Account    6

Section 3.02

   Maintenance of Office or Agency    6

Section 3.03

   Money for Payments To Be Held in Trust; Paying Agent    6

Section 3.04

   Existence    8

Section 3.05

   Payment of Principal and Interest    8

Section 3.06

   Protection of Trust Estate    10

Section 3.07

   Opinions as to Trust Estate    11

Section 3.08

   Performance of Obligations    11

Section 3.09

   Negative Covenants    12

Section 3.10

   Annual Statement as to Compliance    12

Section 3.11

   [Reserved]    13

Section 3.12

   Representations and Warranties Concerning the Mortgage Loans    13

Section 3.13

   Amendments to Sale and Servicing Agreement    13

Section 3.14

   Master Servicer as Agent and Bailee of the Indenture Trustee    13

Section 3.15

   Investment Company Act    14

Section 3.16

   Issuer May Consolidate, etc    14

Section 3.17

   Successor or Transferee    16

Section 3.18

   No Other Business    16

Section 3.19

   No Borrowing    16

Section 3.20

   Guarantees, Loans, Advances and Other Liabilities    16

Section 3.21

   Capital Expenditures    16

Section 3.22

   Determination of Note Interest Rate    16

Section 3.23

   Restricted Payments    16

Section 3.24

   Notice of Events of Default    17

Section 3.25

   Further Instruments and Acts    17

Section 3.26

   Certain Representations Regarding the Trust Estate    17

Section 3.27

   Allocation of Realized Losses    18

 

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ARTICLE IV

    

The Notes; Satisfaction and Discharge of Indenture

    

Section 4.01

   The Notes    20

Section 4.02

   Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Note Registrar and Certificate Registrar    20

Section 4.03

   Mutilated, Destroyed, Lost or Stolen Notes    21

Section 4.04

   Persons Deemed Owners    22

Section 4.05

   Cancellation    22

Section 4.06

   Book-Entry Notes    22

Section 4.07

   Notices to Depository    23

Section 4.08

   Definitive Notes    23

Section 4.09

   Tax Treatment    24

Section 4.10

   Satisfaction and Discharge of Indenture    24

Section 4.11

   Application of Trust Money    25

Section 4.12

   [Reserved]    26

Section 4.13

   Repayment of Monies Held by Paying Agent    26

Section 4.14

   Temporary Notes    26

Section 4.15

   Representation Regarding ERISA    26

ARTICLE V

    

Default and Remedies

    

Section 5.01

   Events of Default    27

Section 5.02

   Acceleration of Maturity; Rescission and Annulment    27

Section 5.03

   Collection of Indebtedness and Suits for Enforcement by Indenture Trustee   
28

Section 5.04

   Remedies; Priorities    30

Section 5.05

   Optional Preservation of the Trust Estate    31

Section 5.06

   Limitation of Suits    32

Section 5.07

   Unconditional Rights of Noteholders To Receive Principal and Interest    32

Section 5.08

   Restoration of Rights and Remedies    33

Section 5.09

   Rights and Remedies Cumulative    33

Section 5.10

   Delay or Omission Not a Waiver    33

Section 5.11

   Control By Noteholders    33

Section 5.12

   Waiver of Past Defaults    33

Section 5.13

   Undertaking for Costs    34

Section 5.14

   Waiver of Stay or Extension Laws    34

Section 5.15

   Sale of Trust Estate    34

Section 5.16

   Action on Notes    36

Section 5.17

   Performance and Enforcement of Certain Obligations    36

ARTICLE VI

    

The Indenture Trustee and Securities Administrator

    

Section 6.01

   Duties of Indenture Trustee and Securities Administrator    37

Section 6.02

   Rights of Indenture Trustee and Securities Administrator    38

 

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Section 6.03

   Individual Rights of Indenture Trustee    40

Section 6.04

   Indenture Trustee’s and Securities Administrator’s Disclaimers    41

Section 6.05

   Notice of Event of Default    41

Section 6.06

   Reports by Indenture Trustee to Holders and Tax Administration    41

Section 6.07

   Compensation    41

Section 6.08

   Replacement of Indenture Trustee and the Securities Administrator    42

Section 6.09

   Successor Indenture Trustee and Securities Administrator by Merger    43

Section 6.10

   Appointment of Co-Indenture Trustee or Separate Indenture Trustee    44

Section 6.11

   Eligibility; Disqualification    45

Section 6.12

   Preferential Collection of Claims Against Issuer    45

Section 6.13

   Representations and Warranties    45

Section 6.14

   Directions to Indenture Trustee    46

Section 6.15

   The Agents    46

Section 6.16

   Other Basic Documents    46

ARTICLE VII

    

Noteholders’ Lists and Reports

    

Section 7.01

   Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders    47

Section 7.02

   Preservation of Information; Communications to Noteholders    47

Section 7.03

   Statements to Noteholders    47

ARTICLE VIII

    

Accounts, Disbursements and Releases

    

Section 8.01

   Collection of Money    51

Section 8.02

   Reserved    51

Section 8.03

   Officer’s Certificate    51

Section 8.04

   Termination Upon Distribution to Noteholders    51

Section 8.05

   Release of Trust Estate    51

Section 8.06

   Surrender of Notes Upon Final Payment    52

Section 8.07

   Optional Redemption of the Notes    52

ARTICLE IX

    

Supplemental Indentures

    

Section 9.01

   Supplemental Indentures Without Consent of Noteholders    53

Section 9.02

   Supplemental Indentures With Consent of Noteholders    54

Section 9.03

   Execution of Supplemental Indentures    56

Section 9.04

   Effect of Supplemental Indenture    56

Section 9.05

   Conformity with Trust Indenture Act    56

Section 9.06

   Reference in Notes to Supplemental Indentures    56

ARTICLE X

    

Miscellaneous

    

Section 10.01

   Compliance Certificates and Opinions, etc    57

 

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Section 10.02

   Form of Documents Delivered to Indenture Trustee    58

Section 10.03

   Acts of Noteholders    59

Section 10.04

   Notices etc., to Indenture Trustee, Securities Administrator, Issuer and
Rating Agencies    59

Section 10.05

   Notices to Noteholders; Waiver    60

Section 10.06

   Conflict with Trust Indenture Act    61

Section 10.07

   Effect of Headings    61

Section 10.08

   Successors and Assigns    61

Section 10.09

   Separability    61

Section 10.10

   [Reserved]    61

Section 10.11

   Legal Holidays    61

Section 10.12

   GOVERNING LAW    61

Section 10.13

   Counterparts    62

Section 10.14

   Recording of Indenture    62

Section 10.15

   Issuer Obligation    62

Section 10.16

   No Petition    62

Section 10.17

   Inspection    62

 

EXHIBITS

 

Exhibit A-1

  —    Form of Class A-[    ] Notes

Exhibit A-2

  —    Form of Class B-[    ] Notes

Exhibit A-3

  —    Form of Class M-[    ] Notes

Exhibit A-4

  —    Corridor Contracts

Appendix A

  —    Definitions

 

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This Indenture, dated as of October 29, 2004, is entered into between HomeBanc
Mortgage Trust 2004-2, a Delaware statutory trust, as Issuer (the “Issuer”),
Wells Fargo Bank, National Association, as Securities Administrator (the
“Securities Administrator”), and U.S. Bank National Association, a national
banking association, as Indenture Trustee (the “Indenture Trustee”).

 

WITNESSETH THAT:

 

Each party hereto agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer’s HomeBanc Mortgage
Trust 2004-2, Mortgage-Backed Notes, Series 2004-2 (the “Notes”).

 

GRANTING CLAUSE

 

The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Holders of the Notes, all of the Issuer’s right,
title and interest in and to whether now existing or hereafter created by (a)
the Mortgage Loans, Substitute Mortgage Loans and the proceeds thereof and all
rights under the Related Documents; (b) all funds on deposit from time to time
in the Protected Account excluding any investment income from such funds; (c)
all funds on deposit from time to time in the Master Servicer Collection Account
allocable to the Mortgage Loans excluding any investment income from such funds;
(d) all funds on deposit from time to time in the Payment Account; (e) any REO
Property, (f) the Required Insurance Policies and any amounts paid or payable by
the insurer under any Insurance Policy (to the extent the mortgagee has a claim
thereto), (g) all rights under (i) the Mortgage Loan Purchase Agreement as
assigned to the Issuer to the extent provided in Subsection 2.03(a) of the Sale
and Servicing Agreement and (ii) the rights with respect to the HomeBanc
Servicing Agreement as assigned to the Issuer by the Assignment Agreement; (h)
the rights with respect to the Corridor Contracts as assigned to the Indenture
Trustee on behalf of the Issuer; and (i) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing and all
payments on or under, and all proceeds of every kind and nature whatsoever in
respect of, any or all of the foregoing and all payments on or under, and all
proceeds of every kind and nature whatsoever in the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the “Trust Estate” or the “Collateral”).

 

The foregoing Grant is made in trust to secure the payment of principal of and
interest on, and any other amounts owing in respect of, the Notes, equally and
ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.

 

The Indenture Trustee, as trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trust under this Indenture in accordance
with the provisions hereof and each of the Indenture Trustee and the Securities
Administrator agree to perform their respective duties as Indenture Trustee and
Securities Administrator as required herein.

 

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The Issuer hereby directs the Indenture Trustee to enter into and execute the
Corridor Contracts and make all representations and warranties contained
therein. The Indenture Trustee hereby acknowledges receipt by it of the Corridor
Contracts. Upon receipt thereof from the counterparty under the Corridor
Contracts, the Indenture Trustee shall deposit into the Payment Account an
amount equal to all amounts actually received under the Corridor Contracts and
not previously deposited into the Payment Account.

 

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ARTICLE I

 

Definitions

 

Section 1.01 Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.

 

Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever this
Indenture refers to a provision of the Trust Indenture Act (the “TIA”), the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

 

“Commission” means the Securities and Exchange Commission.

 

“indenture securities” means the Notes.

 

“indenture security holder” means a Noteholder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

 

“obligor” on the indenture securities means the Issuer and any other obligor on
the indenture securities.

 

All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rules have the
meanings assigned to them by such definitions.

 

Section 1.03 Rules of Construction. Unless the context otherwise requires:

 

(i) a term has the meaning assigned to it;

 

(ii) an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from time
to time;

 

(iii) “or” is not exclusive;

 

(iv) “including” means including without limitation;

 

(v) words in the singular include the plural and words in the plural include the
singular; and

 

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(vi) any agreement, instrument or statute defined or referred to herein or in
any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

 

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ARTICLE II

 

Original Issuance of Notes

 

Section 2.01 Form. The Class A Notes, Class M Notes and Class B Notes, together
with the Indenture Trustee’s certificate of authentication, shall be in
substantially the form set forth in Exhibits A-1, A-2 and A-3 to this Indenture,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture.

 

The Notes shall be typewritten, printed, lithographed or engraved or produced by
any combination of these methods (with or without steel engraved borders).

 

The terms of the Notes set forth in Exhibits A-1, A-2 and A-3 to this Indenture
are part of the terms of this Indenture.

 

Section 2.02 Execution, Authentication and Delivery. The Notes shall be executed
on behalf of the Issuer by any of its Authorized Officers. The signature of any
such Authorized Officer on the Notes may be manual or facsimile.

 

Notes bearing the manual or facsimile signature of individuals who were at any
time Authorized Officers of the Issuer shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes or did not hold such offices at
the date of such Notes.

 

The Indenture Trustee shall upon Issuer Request authenticate and deliver the
Class A-1, Class A-2, Class M-1, Class M-2 and Class B-1 Notes for original
issue in an aggregate initial principal amount of $894,748,501. The Class A-1
Notes shall be issued in an aggregate initial principal amount of $687,048,300,
the Class A-2 Notes shall be issued in an aggregate initial principal amount of
$76,338,700, the Class M-1 Notes shall be issued in an aggregate initial
principal amount of $78,385,900, the Class M-2 Notes shall be issued in an
aggregate initial principal amount of $35,017,800, and the Class B-1 Notes shall
be issued in an aggregate initial principal amount of $17,957,801.

 

Each of the Notes shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes and the Notes shall be issuable in the minimum
initial Note Principal Balances of $25,000 and in integral multiples of $1,000
in excess thereof.

 

No Note shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.

 

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ARTICLE III

 

Covenants

 

Section 3.01 Maintenance of Payment Account. The Indenture Trustee shall
maintain the Payment Account established pursuant to Section 4.04 of the Sale
and Servicing Agreement in accordance with the requirements of such Section. The
Indenture Trustee shall make all payments of principal of and interest on the
Notes, subject to Section 3.03 as provided in Section 3.05 herein from monies on
deposit in the Payment Account.

 

Section 3.02 Maintenance of Office or Agency. The Issuer will maintain an office
or agency where, subject to satisfaction of conditions set forth herein, Notes
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuer in respect of the Notes and this Indenture may
be served. The Issuer hereby initially appoints the Indenture Trustee to serve
as its agent for the foregoing purposes. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders may be made at the Corporate
Trust Office and notices and demands may be made or delivered to the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.

 

Section 3.03 Money for Payments To Be Held in Trust; Paying Agent. (a) As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Payment Account
pursuant to Section 3.05 shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, based on information provided by the Securities
Administrator to the Indenture Trustee or Paying Agent, as applicable, and no
amounts so withdrawn from the Payment Account for payments of Notes shall be
paid over to the Issuer except as provided in this Section 3.03. The Securities
Administrator shall calculate the amount to be distributed to each Class and,
based on such amounts, the Securities Administrator shall determine the amount
to be distributed to each Noteholder. All of the Securities Administrator’s
calculations of payments shall be based solely on information provided to the
Securities Administrator by the Master Servicer pursuant to Section 3.01 of the
Sale and Servicing Agreement. Neither the Securities Administrator nor the
Indenture Trustee shall be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information. The
Issuer hereby appoints the Indenture Trustee as its Paying Agent.

 

The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent it hereby so agrees), subject to the provisions of this Section
3.03, that such Paying Agent will:

 

(i) hold all sums held by it for the payment of amounts due with respect to the
Notes in trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
pay such sums to such Persons as herein provided;

 

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(ii) give the Indenture Trustee notice of any default by the Issuer of which it
has actual knowledge in the making of any payment required to be made with
respect to the Notes;

 

(iii) at any time during the continuance of any such default, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture Trustee all
sums so held in trust by such Paying Agent;

 

(iv) immediately resign as Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of Notes if at any time it
ceases to meet the standards required to be met by a Paying Agent at the time of
its appointment;

 

(v) comply with all requirements of the Code with respect to the withholding
from any payments made by it on any Notes of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith; and

 

(vi) not commence a bankruptcy proceeding against the Issuer in connection with
this Indenture.

 

The Issuer may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, by Issuer Request direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.

 

Subject to applicable laws with respect to escheat of funds, any money held by
the Indenture Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for one year after such
amount has become due and payable shall be discharged from such trust and be
paid to the Issuer; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof (but
only to the extent of the amounts so paid to the Issuer), and all liability of
the Indenture Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Indenture Trustee or such
Paying Agent, before being required to make any such repayment, shall at the
expense and direction of the Issuer cause to be published once, in an Authorized
Newspaper published in the English language, notice that such money remains
unclaimed and that, after a date specified therein which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer. The Indenture Trustee may also
adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Notes have been called but
have not been surrendered for redemption or whose right to or interest in monies
due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for each
such Holder).

 

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Section 3.04 Existence. The Issuer will keep in full effect its existence,
rights and franchises as a statutory trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.

 

Section 3.05 Payment of Principal and Interest. (a) On each Payment Date from
amounts on deposit in the Payment Account, in accordance with payment
instructions provided to it by the Securities Administrator no later than two
Business Days prior to such Payment Date the Indenture Trustee shall pay to the
Persons specified below the Available Funds for such Payment Date.

 

(b) On each Payment Date, the Available Funds shall be distributed in the
following order of priority, in each case to the extent of the Available Funds
remaining for such Payment Date:

 

(i) to the Holders of the Class A-1 Notes and Class A-2 Notes, the related
Accrued Note Interest for such Class for such Payment Date, on a pro rata basis;

 

(ii) to the Holders of the Class M-1 Notes, the related Accrued Note Interest
for such Class for such Payment Date;

 

(iii) to the Holders of the Class M-2 Notes, the related Accrued Note Interest
for such Class for such Payment Date; and

 

(iv) to the Holders of the Class B-1 Notes, the related Accrued Note Interest
for such Class for such Payment Date.

 

(c) On each Payment Date, the Holders of the Class A-1, Class A-2, Class M-1,
Class M-2 and Class B-1 Notes shall be entitled to receive payments in respect
of principal equal to the Principal Distribution Amount for that Payment Date,
allocated on a pro rata basis, based on the Note Principal Balances thereof, in
reduction of the Note Principal Balances thereof, until the Note Principal
Balances thereof have been reduced to zero.

 

(d) On each Payment Date, any Net Monthly Excess Cashflow shall be paid as
follows, in each case to the extent of such remaining Net Monthly Excess
Cashflow:

 

(i) to the Holders of the Notes, pro rata, in an amount equal to any
Undercollateralization Amount, payable to such Holders as part of the Principal
Distribution Amount as described under Section 3.05(c) above;

 

(ii) to the Holders of the Notes, pro rata, in an amount equal to any
Overcollateralization Increase Amount, payable to such Holders as part of the
Principal Distribution Amount as described under Section 3.05(c) above;

 

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(iii) sequentially, in the following order, to the Holders of the Class A-1,
Class A-2, Class M-1, Class M-2 and Class B-1 Notes in an amount equal to the
Allocated Realized Loss Amount for such Notes, to the extent not previously
reimbursed;

 

(iv) sequentially, in the following order, to the Holders of the Class A-1,
Class A-2, Class M-1, Class M-2 and Class B-1 Notes any Basis Risk Shortfall
Carry-Forward Amount for such Notes on such Payment Date, to the extent not
covered by the Corridor Contracts; and

 

(v) any remaining amounts will be distributed to the Certificate Paying Agent,
as designee of the Issuer, for the benefit of the Holders of the Trust
Certificates.

 

(e) With respect to the Corridor Contracts and on each Payment Date, the amount
payable from the Corridor Counterparty with respect to such Payment Date shall
be distributed in the following order of priority, in each case to the extent of
amounts available:

 

(i) to the Holders of the Class A-1 Notes and Class A-2 Notes, pro rata, based
on the Note Principal Balance of each such Class of Notes, any Basis Risk
Shortfall Carry-Forward Amount for such Payment Date;

 

(ii) to the Holders of the Class M-1, Class M-2 and Class B-1 Notes, in that
order, any Basis Risk Shortfall Carry-Forward Amount for such Payment Date; and

 

(iii) any remaining amounts will be distributed to the Certificate Paying Agent,
as designee of the Issuer, for the benefit of the Holders of the Trust
Certificates.

 

(f) Each distribution with respect to a Book-Entry Note shall be paid to the
Depository, as Holder thereof, and the Depository shall be responsible for
crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the Note
Owners that it represents and to each indirect participating brokerage firm (a
“brokerage firm” or “indirect participating firm”) for which it acts as agent.
Each brokerage firm shall be responsible for disbursing funds to the Note Owners
that it represents. None of the Indenture Trustee, the Note Registrar, the
Paying Agent, the Depositor, the Securities Administrator or the Master Servicer
shall have any responsibility therefor except as otherwise provided by this
Indenture.

 

(g) On each Payment Date, the Certificate Paying Agent shall deposit in the
Certificate Distribution Account all amounts it received pursuant to Sections
3.05(d)(v) for the purpose of distributing such funds to the Certificateholders.
The Certificate Paying Agent shall make distributions to the Certificateholders
under the Trust Agreement as directed by the Securities Administrator hereunder.

 

(h) Any installment of interest or principal, if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall, if such Holder shall have so requested at least five Business Days
prior to the related Record Date, be

 

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paid to each Holder of record on the preceding Record Date, by wire transfer to
an account specified in writing by such Holder as of the preceding Record Date
or in all other cases or if no such instructions have been delivered to the
Indenture Trustee, by check to such Noteholder mailed to such Holder’s address
as it appears in the Note Register in the amount required to be distributed to
such Holder on such Payment Date pursuant to such Holder’s Notes; provided,
however, that the Indenture Trustee shall not pay to such Holders any amount
required to be withheld from a payment to such Holder by the Code.

 

(i) The principal of each Note shall be due and payable in full on the Final
Scheduled Payment Date for such Note as provided in the forms of Note set forth
in Exhibits A-1, A-2 and A-3 to this Indenture. All principal payments on the
Notes shall be made to the Noteholders entitled thereto in accordance with the
Percentage Interests represented by such Notes. Upon notice to the Indenture
Trustee by the Issuer, the Indenture Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date preceding
the Final Scheduled Payment Date or other final Payment Date (including any
final Payment Date resulting from any redemption pursuant to Section 8.07
hereof). Such notice shall to the extent practicable be mailed no later than
five Business Days prior to such Final Scheduled Payment Date or other final
Payment Date and shall specify that payment of the principal amount and any
interest due with respect to such Note at the Final Scheduled Payment Date or
other final Payment Date will be payable only upon presentation and surrender of
such Note and shall specify the place where such Note may be presented and
surrendered for such final payment. No interest shall accrue on the Notes on or
after the Final Scheduled Payment Date or any such other final Payment Date.

 

Section 3.06 Protection of Trust Estate. (a) The Issuer will from time to time
prepare, execute and deliver all such supplements and amendments hereto and all
such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:

 

(i) maintain or preserve the lien and security interest (and the priority
thereof) of this Indenture or carry out more effectively the purposes hereof;

 

(ii) perfect, publish notice of or protect the validity of any Grant made or to
be made by this Indenture;

 

(iii) cause the Issuer or the Indenture Trustee to enforce any of the rights to
the Mortgage Loans; or

 

(iv) preserve and defend title to the Trust Estate and the rights of the
Indenture Trustee and the Noteholders in the Trust Estate against the claims of
all persons and parties.

 

(b) Except as otherwise provided in this Indenture, the Indenture Trustee shall
not remove or permit the Custodian to remove any portion of the Trust Estate
that consists of money or is evidenced by an instrument, certificate or other
writing from the jurisdiction in which it was held at the date of the most
recent Opinion of Counsel delivered pursuant to Section 3.07 hereof (or from the
jurisdiction in which it was held as described in the Opinion of Counsel
delivered on

 

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the Closing Date pursuant to Section 3.07(a) hereof, or if no Opinion of Counsel
has yet been delivered pursuant to Section 3.07(b) hereof, unless the Indenture
Trustee shall have first received an Opinion of Counsel to the effect that the
lien and security interest created by this Indenture with respect to such
property will continue to be maintained after giving effect to such action or
actions).

 

The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to sign any financing statement, continuation statement or
other instrument required to be signed pursuant to this Section 3.06 upon the
Issuer’s preparation thereof and delivery to the Indenture Trustee with
appropriate instructions.

 

Section 3.07 Opinions as to Trust Estate. (a) On the Closing Date, the Issuer
shall furnish to the Indenture Trustee and the Owner Trustee an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the lien and first
priority security interest in the Collateral and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and first priority security interest effective.

 

(b) On or before April 15 in each calendar year, beginning in 2005, the Issuer
shall furnish to the Indenture Trustee an Opinion of Counsel at the expense of
the Issuer either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien and
first priority security interest in the Collateral and reciting the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest in the Collateral until December 31 in the
following calendar year.

 

Section 3.08 Performance of Obligations. (a) The Issuer will punctually perform
and observe all of its obligations and agreements contained in this Indenture,
the Basic Documents and in the instruments and agreements included in the Trust
Estate.

 

(b) The Issuer may contract with other Persons to assist it in performing its
duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officer’s Certificate of the Issuer
shall be deemed to be action taken by the Issuer.

 

(c) The Issuer will not take any action or permit any action to be taken by
others which would release any Person from any of such Person’s covenants or
obligations under any of the documents relating to the Mortgage Loans or under
any instrument included in the Trust Estate, or which would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any of the documents relating to the

 

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Mortgage Loans or any such instrument, except such actions as the Master
Servicer is expressly permitted to take in the Sale and Servicing Agreement. The
Indenture Trustee, as pledgee of the Mortgage Loans, may exercise the rights of
the Issuer to direct the actions of the Master Servicer pursuant to the Sale and
Servicing Agreement.

 

(d) The Issuer may retain an administrator and may enter into contracts with
other Persons for the performance of the Issuer’s obligations hereunder, and
performance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.

 

Section 3.09 Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:

 

(i) except as expressly permitted by this Indenture, sell, transfer, exchange or
otherwise dispose of the Trust Estate, unless directed to do so by the Indenture
Trustee;

 

(ii) claim any credit on, or make any deduction from the principal or interest
payable in respect of, the Notes (other than amounts properly withheld from such
payments under the Code) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed upon any
part of the Trust Estate;

 

(iii) (A) permit the validity or effectiveness of this Indenture to be impaired,
or permit the lien of this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any covenants
or obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the Trust Estate
or any part thereof or any interest therein or the proceeds thereof or (C)
permit the lien of this Indenture not to constitute a valid first priority
security interest in the Trust Estate; or

 

(iv) waive or impair, or fail to assert rights under, the Mortgage Loans, or
impair or cause to be impaired the Issuer’s interest in the Mortgage Loans, the
Mortgage Loan Purchase Agreement or in any Basic Document, if any such action
would materially and adversely affect the interests of the Noteholders.

 

Section 3.10 Annual Statement as to Compliance. The Issuer will deliver to the
Indenture Trustee, by March 1 of each year commencing with the calendar year
2005, an Officer’s Certificate stating, as to the Authorized Officer signing
such Officer’s Certificate, that:

 

(i) a review of the activities of the Issuer during the previous calendar year
and of its performance under this Indenture has been made under such Authorized
Officer’s supervision; and

 

(ii) to the best of such Authorized Officer’s knowledge, based on such review,
the Issuer has complied with all conditions and covenants under this Indenture

 

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throughout such year, or, if there has been a default in its compliance with any
such condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.

 

Section 3.11 [Reserved].

 

Section 3.12 Representations and Warranties Concerning the Mortgage Loans. The
Indenture Trustee, as pledgee of the Mortgage Loans, has the benefit of the
representations and warranties made by the Seller in the Mortgage Loan Purchase
Agreement concerning the Seller and the Mortgage Loans to the same extent as
though such representations and warranties were made directly to the Indenture
Trustee. If a Responsible Officer of the Indenture Trustee has actual knowledge
of any breach of any representation or warranty made by the Seller in the
Mortgage Loan Purchase Agreement, the Indenture Trustee shall promptly notify
the Seller of such finding and the Seller’s obligation to cure such defect or
repurchase or substitute for the related Mortgage Loan.

 

Section 3.13 Amendments to Sale and Servicing Agreement. The Issuer covenants
with the Indenture Trustee that it will not enter into any amendment or
supplement to the Sale and Servicing Agreement without the prior written consent
of the Indenture Trustee.

 

Section 3.14 Master Servicer as Agent and Bailee of the Indenture Trustee. (a)
Solely for purposes of perfection under Section 9-305 of the Uniform Commercial
Code or other similar applicable law, rule or regulation of the state in which
such property is held by the Master Servicer, the Issuer and the Indenture
Trustee hereby acknowledge that the Master Servicer is acting as bailee of the
Indenture Trustee in holding amounts on deposit in the Master Servicer
Collection Account, as well as its bailee in holding any Related Documents
released to the Master Servicer, and any other items constituting a part of the
Trust Estate which from time to time come into the possession of the Master
Servicer. It is intended that, by the Master Servicer’s acceptance of such
bailee arrangement, the Indenture Trustee, as a secured party of the Mortgage
Loans, will be deemed to have possession of such Related Documents, such monies
and such other items for purposes of Section 9-305 of the Uniform Commercial
Code of the state in which such property is held by the Master Servicer. The
Indenture Trustee shall not be liable with respect to such documents, monies or
items while in possession of the Master Servicer and the Master Servicer shall
not otherwise be deemed to be the agent of the Indenture Trustee.

 

(b) Solely for purposes of perfection under Section 9-305 of the Uniform
Commercial Code or other similar applicable law, rule or regulation of the state
in which such property is held by the Servicer, the Issuer and the Indenture
Trustee hereby acknowledge that the Servicer is acting as bailee of the
Indenture Trustee in holding amounts on deposit in the Protected Account, as
well as its bailee in holding any Related Documents released to the Servicer,
and any other items constituting a part of the Trust Estate which from time to
time come into the possession of the Servicer. It is intended that, by the
Servicer’s acceptance of such bailee arrangement, the Indenture Trustee, as a
secured party of the Mortgage Loans, will be deemed to have possession of such
Related Documents, such monies and such other items for purposes of Section
9-305 of the Uniform Commercial Code of the state in which such property is held
by the Servicer. The Indenture Trustee shall not be liable with respect to such
documents, monies or items while in

 

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possession of the Servicer and the Servicer shall not otherwise be deemed to be
the agent of the Indenture Trustee.

 

Section 3.15 Investment Company Act. The Issuer shall not become an “investment
company” or be under the “control” of an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended (or any successor or
amendatory statute), and the rules and regulations thereunder (taking into
account not only the general definition of the term “investment company” but
also any available exceptions to such general definition); provided, however,
that the Issuer shall be in compliance with this Section 3.15 if it shall have
obtained an order exempting it from regulation as an “investment company” so
long as it is in compliance with the conditions imposed in such order.

 

Section 3.16 Issuer May Consolidate, etc. (a) The Issuer shall not consolidate
or merge with or into any other Person, unless:

 

(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the laws
of the United States of America or any state or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form reasonably satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and interest
on all Notes, and all other amounts payable to the Indenture Trustee, the
Securities Administrator, the payment to the Certificate Paying Agent of all
amounts due to the Certificateholders, and the performance or observance of
every agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein;

 

(ii) immediately after giving effect to such transaction, no Event of Default
shall have occurred and be continuing;

 

(iii) each of the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the rating of the Notes to be reduced, suspended or
withdrawn or to be considered by such Rating Agency to be below investment
grade;

 

(iv) the Issuer shall have received an Opinion of Counsel (and shall have
delivered a copy thereof to the Indenture Trustee) to the effect that such
transaction will not (A) result in a “significant modification” of the Notes
under Treasury Regulation section 1.1001-3, or adversely affect the status of
the Notes as indebtedness for federal income tax purposes and (B) cause the
Trust to be subject to an entity level tax for federal income tax purposes;

 

(v) any action that is necessary to maintain the lien and security interest
created by this Indenture shall have been taken; and

 

(vi) the Issuer shall have delivered to the Indenture Trustee an Officer’s
Certificate and an Opinion of Counsel each stating that such consolidation or
merger and such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for or relating to such transaction have
been complied with (including

 

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any filing required by the Exchange Act), and that such supplemental indenture
is enforceable against the Issuer.

 

(vii) The Issuer shall not convey or transfer any of its properties or assets,
including those included in the Trust Estate, to any Person, unless:

 

(viii) the Person that acquires by conveyance or transfer the properties and
assets of the Issuer, the conveyance or transfer of which is hereby restricted,
shall (A) be a United States citizen or a Person organized and existing under
the laws of the United States of America or any state thereof, (B) expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture on
the part of the Issuer to be performed or observed, all as provided herein, (C)
expressly agree by means of such supplemental indenture that all right, title
and interest so conveyed or transferred shall be subject and subordinate to the
rights of the Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold harmless
the Issuer and the Indenture Trustee against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such Person (or if
a group of Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act in
connection with the Notes;

 

(ix) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;

 

(x) each of the Rating Agencies shall have notified the Issuer that such
transaction shall not cause the ratings of the Notes to be reduced, suspended or
withdrawn;

 

(xi) the Issuer shall have received an Opinion of Counsel (and shall have
delivered a copy thereof to the Indenture Trustee) to the effect that such
transaction will not (A) result in a “significant modification” of the Notes
under Treasury Regulation section 1.1001-3, or adversely affect the status of
the Notes as indebtedness for federal income tax purposes, and (B) cause the
Trust to be subject to an entity level tax for federal income tax purposes;

 

(xii) any action that is necessary to maintain the lien and security interest
created by this Indenture shall have been taken; and

 

(xiii) the Issuer shall have delivered to the Indenture Trustee an Officer’s
Certificate and an Opinion of Counsel each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act).

 

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Section 3.17 Successor or Transferee. (a) Upon any consolidation or merger of
the Issuer in accordance with Section 3.16(a), the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.

 

(b) Upon a conveyance or transfer of all the assets and properties of the Issuer
pursuant to Section 3.16(b), the Issuer will be released from every covenant and
agreement of this Indenture to be observed or performed on the part of the
Issuer with respect to the Notes immediately upon the delivery of written notice
to the Indenture Trustee of such conveyance or transfer.

 

Section 3.18 No Other Business. The Issuer shall not engage in any business
other than financing, purchasing, owning and selling and managing the Mortgage
Loans and the issuance of the Notes and Certificates in the manner contemplated
by this Indenture and the Basic Documents and all activities incidental thereto.

 

Section 3.19 No Borrowing. The Issuer shall not issue, incur, assume, guarantee
or otherwise become liable, directly or indirectly, for any indebtedness except
for the Notes under this Indenture.

 

Section 3.20 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the Basic Documents, the Issuer shall not make
any loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another’s payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.

 

Section 3.21 Capital Expenditures. The Issuer shall not make any expenditure (by
long-term or operating lease or otherwise) for capital assets (either reality or
personality).

 

Section 3.22 Determination of Note Interest Rate. On each Interest Determination
Date the Securities Administrator shall determine One-Month LIBOR and the
related Note Interest Rate for each Class of Notes for the following Accrual
Period. The establishment of One-Month LIBOR on each Interest Determination Date
by the Securities Administrator and the Securities Administrator’s calculation
of the rate of interest applicable to each Class of Notes for the related
Accrual Period shall (in the absence of manifest error) be final and binding.

 

Section 3.23 Restricted Payments. The Issuer shall not, directly or indirectly,
(i) pay any dividend or make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, (x) distributions and

 

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payments to the Owner Trustee, the Indenture Trustee, Noteholders and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under this Indenture, the Sale and Servicing Agreement and the
Trust Agreement and (y) payments to the Master Servicer, the Servicer and the
Special Servicer pursuant to the terms of the Sale and Servicing Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Master Servicer Collection Account or the Payment Account except in
accordance with this Indenture and the Basic Documents.

 

Section 3.24 Notice of Events of Default. The Issuer shall give the Indenture
Trustee, the Securities Administrator and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.

 

Section 3.25 Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

 

Section 3.26 Certain Representations Regarding the Trust Estate.

 

(a) With respect to that portion of the Collateral described in clauses (a)
through (h) of the definition of Trust Estate, the Issuer represents to the
Indenture Trustee that:

 

(i) This Indenture creates a valid and continuing security interest (as defined
in the applicable UCC) in the Collateral in favor of the Indenture Trustee,
which security interest is prior to all other liens, and is enforceable as such
as against creditors of and purchasers from the Issuer.

 

(ii) In each case, within the meaning of the applicable UCC: (A) the Collateral
described in clauses (a) through (d) constitutes “deposit accounts” or
“instruments,” as applicable; (B) the Collateral described in clause (e)
constitutes “real property;”(C) the Collateral described in clause (f)
constitutes “accounts;” and (D) the Collateral described in clause (h)
constitutes “general intangibles.”

 

(iii) The Issuer owns and has good and marketable title to the Collateral, free
and clear of any lien, claim or encumbrance of any Person.

 

(iv) The Issuer has taken all steps necessary to cause the Indenture Trustee to
become the account holder of the Collateral.

 

(v) Other than the security interest granted to the Indenture Trustee pursuant
to this Indenture, the Issuer has not pledged, assigned, sold, granted a
security interest in, or otherwise conveyed any of the Collateral.

 

(vi) The Collateral is not in the name of any Person other than the Issuer or
the Indenture Trustee. The Issuer has not consented to the bank maintaining the
Collateral to comply with instructions of any Person other than the Indenture
Trustee.

 

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(vii) With respect to any Collateral in which a security interest may be
perfected by filing, the Issuer has not authorized the filing of, and is not
aware of any financing statements against, the Issuer, that include a
description of collateral covering such Collateral, other than any financing
statement relating to the security interest granted to the Indenture Trustee
hereunder or that has been terminated. The Issuer is not aware of any judgment
or tax lien filings against the Issuer.

 

(viii) The Issuer has caused or will have caused, within ten days, the filing of
all appropriate financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to perfect the security
interest in all Collateral granted to the Indenture Trustee hereunder in which a
security interest may be perfected by filing. Any financing statement that is
filed in connection with this Section 3.26 shall contain a statement that a
purchase or security interest in any collateral described therein will violate
the rights of the secured party named in such financing statement.

 

(ix) The foregoing representations may not be waived and shall survive the
issuance of the Notes.

 

Section 3.27 Allocation of Realized Losses. (a) Prior to each Payment Date, the
Master Servicer shall determine, based solely on information provided to it by
the Servicer, the total amount of Realized Losses that occurred during the
related Prepayment Period.

 

(b) Any realized Losses on the Mortgage Loans will be allocated or covered on
any payment date as follows first, to the Net Monthly Excess Cashflow, by an
increase in the Overcollateralization Increase Amount for that Payment Date as
provided in Section 3.05 hereof; second, in reduction of the Overcollateralized
Amount, until reduced to zero (meaning, no losses will be allocated to the Class
A, Class M or Class B Notes until the aggregate Note Principal Balance of the
Notes equals the aggregate Scheduled Principal Balance of the Mortgage Loans);
and third, if such Realized Loss occurs, to the Class B-1, Class M-2, Class M-1,
Class A-2 and Class A-1 Notes, in that order, in reduction of the Note Principal
Balances thereof, until the Note Principal Balance thereof have been reduced to
zero. All Realized Losses allocated to a Class of Notes will be allocated in
proportion to the Percentage Interests evidenced thereby.

 

(c) In addition, in the event that the Master Servicer receives any Subsequent
Recoveries from the Servicer, the Master Servicer shall deposit such funds into
the Master Servicer Collection Account in accordance with Section 4.02 of the
Sale and Servicing Agreement. If, after taking into account such Subsequent
Recoveries, the amount of a Realized Loss is reduced, the amount of such
Subsequent Recoveries will be applied to increase the Note Principal Balance of
the Class of Class A, Class M or Class B Notes with the highest payment priority
to which Realized Losses have been allocated and not previously reimbursed
through the payment of an Allocated Realized Loss Amount pursuant to Sections
3.05(d)(iii), but not by more than the amount of Realized Losses previously
allocated to that Class of Class A, Class M or Class B Notes pursuant to this
Section 3.27. The amount of any remaining Subsequent Recoveries will be applied
to sequentially increase the Note Principal Balance of the related Class of
Class A, Class M or the Class B Notes, beginning with the Class of Notes with
the next highest payment priority, up to the amount of such Realized Losses
previously allocated (but

 

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only to the extent not previously reimbursed through the payment of an Allocated
Realized Loss Amount pursuant to Sections 3.05(d)(iii) to such Class of Class A,
Class M or the Class B Notes pursuant to this Section 3.27. Holders of such
Notes will not be entitled to any payment in respect of current interest on the
amount of such increases for any Accrual Period preceding the Payment Date on
which such increase occurs. Any such increases shall be applied to the Note
Principal Balance of each Class of Notes in accordance with its respective
Percentage Interest.

 

Section 3.28 Replacement Corridor Contracts. In the event of an early
termination by a Corridor Counterparty with respect to a Corridor Contract, the
Issuer, at its expense, may, but shall not be required to, direct the Indenture
Trustee to substitute a new corridor contract for the existing Corridor
Contracts or any other form of similar coverage for basis risk shortfalls;
provided, however, that the timing and mechanism for receiving payments under
such new corridor contracts shall be reasonably acceptable to the Indenture
Trustee. It shall be a condition to substitution of any new corridor contract
that there be delivered to the Indenture Trustee an Opinion of Counsel to the
effect that such substitution would not (a) result in a “substantial
modification” of the Notes as indebtedness for federal income tax purposes, or
(b) if 100% of the Certificates are not owned by HMB Acceptance Corp., cause the
Trust to be subject to an entity level tax for federal income tax purposes.

 

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ARTICLE IV

 

The Notes; Satisfaction and Discharge of Indenture

 

Section 4.01 The Notes. Each Class of Notes shall be registered in the name of a
nominee designated by the Depository. Beneficial Owners will hold interests in
the Notes through the book-entry facilities of the Depository in minimum initial
Note Principal Balances of $25,000 and integral multiples of $1,000 in excess
thereof.

 

The Indenture Trustee may for all purposes (including the making of payments due
on the Notes) deal with the Depository as the authorized representative of the
Beneficial Owners with respect to the Notes for the purposes of exercising the
rights of Holders of the Notes hereunder. Except as provided in the next
succeeding paragraph of this Section 4.01, the rights of Beneficial Owners with
respect to the Notes shall be limited to those established by law and agreements
between such Beneficial Owners and the Depository and Depository Participants.
Except as provided in Section 4.08 hereof, Beneficial Owners shall not be
entitled to definitive certificates for the Notes as to which they are the
Beneficial Owners. Requests and directions from, and votes of, the Depository as
Holder of the Notes shall not be deemed inconsistent if they are made with
respect to different Beneficial Owners. The Indenture Trustee may establish a
reasonable record date in connection with solicitations of consents from or
voting by Noteholders and give notice to the Depository of such record date.
Without the consent of the Issuer and the Indenture Trustee, no Note may be
transferred by the Depository except to a successor Depository that agrees to
hold such Note for the account of the Beneficial Owners.

 

In the event the Depository Trust Company resigns or is removed as Depository,
the Depositor may appoint a successor Depository. If no successor Depository has
been appointed within 30 days of the effective date of the Depository’s
resignation or removal, each Beneficial Owner shall be entitled to certificates
representing the Notes it beneficially owns in the manner prescribed in Section
4.08.

 

The Notes shall, on original issue, be executed on behalf of the Issuer by the
Owner Trustee, not in its individual capacity but solely as Owner Trustee,
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
or upon the order of the Issuer.

 

Section 4.02 Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Note Registrar and Certificate Registrar. The Issuer shall cause
to be kept at the office of the Note Registrar (which shall be the office
specified in Section 3.02) a Note Register in which, subject to such reasonable
regulations as it may prescribe, the Note Registrar shall provide for the
registration of Notes and of transfers and exchanges of Notes as herein
provided.

 

Subject to the restrictions and limitations set forth below, upon surrender for
registration of transfer of any Note at the office specified in Section 3.02,
the Issuer shall execute and the Note Registrar shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Notes
in authorized initial Note Principal Balances evidencing the same Class and
aggregate Percentage Interests.

 

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Subject to the foregoing, at the option of the Noteholders, Notes may be
exchanged for other Notes of like tenor and in authorized initial Note Principal
Balances evidencing the same Class and aggregate Percentage Interests upon
surrender of the Notes to be exchanged at the office specified in Section 3.02.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver the Notes which the
Noteholder making the exchange is entitled to receive. Each Note presented or
surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Note Registrar
duly executed by the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or
having a correspondent located in the city of New York. Notes delivered upon any
such transfer or exchange will evidence the same obligations, and will be
entitled to the same rights and privileges, as the Notes surrendered.

 

No service charge shall be made for any registration of transfer or exchange of
Notes, but the Note Registrar shall require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes.

 

The Issuer hereby appoints the Indenture Trustee as (i) Certificate Registrar to
keep at the office of its designated agent as specified in Section 3.02, a
Certificate Register pursuant to Section 3.09 of the Trust Agreement in which,
subject to such reasonable regulations as it may prescribe, the Certificate
Registrar shall provide for the registration of Certificates and of transfers
and exchanges thereof pursuant to Section 3.05 of the Trust Agreement and (ii)
Note Registrar under this Indenture. The Indenture Trustee hereby accepts such
appointments.

 

Section 4.03 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated
Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Indenture Trustee such security or indemnity as
may be required by it to hold the Issuer and the Indenture Trustee harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the UCC are met, the Issuer
shall execute, and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note; provided, however, that if any such destroyed,
lost or stolen Note, but not a mutilated Note, shall have become or within seven
days shall be due and payable, instead of issuing a replacement Note, the Issuer
may pay such destroyed, lost or stolen Note when so due or payable without
surrender thereof. If, after the delivery of such replacement Note or payment of
a destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer
and the Indenture Trustee shall be entitled to recover such replacement Note (or
such payment) from the Person to whom it was delivered or any Person taking such
replacement Note from such Person to whom such replacement Note was delivered or
any assignee of such Person, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.

 

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Upon the issuance of any replacement Note under this Section 4.03, the Issuer
may require the payment by the Holder of such Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other reasonable expenses (including the fees and expenses of the Indenture
Trustee) connected therewith.

 

Every replacement Note issued pursuant to this Section 4.03 in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section 4.03 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.

 

Section 4.04 Persons Deemed Owners. Prior to due presentment for registration of
transfer of any Note, the Issuer, the Indenture Trustee, the Paying Agent and
any agent of the Issuer or the Indenture Trustee may treat the Person in whose
name any Note is registered (as of the day of determination) as the owner of
such Note for the purpose of receiving payments of principal of and interest, if
any, on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and neither the Issuer, the Indenture Trustee, the Paying Agent
nor any agent of the Issuer or the Indenture Trustee shall be affected by notice
to the contrary.

 

Section 4.05 Cancellation. All Notes surrendered for payment, registration of
transfer, exchange or redemption shall, if surrendered to any Person other than
the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section 4.05, except as expressly permitted by
this Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Request that they
be destroyed or returned to it; provided, however, that such Issuer Request is
timely and the Notes have not been previously disposed of by the Indenture
Trustee.

 

Section 4.06 Book-Entry Notes. The Notes, upon original issuance, will be issued
in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Depository, by, or on
behalf of, the Issuer. The Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Depository, and
no Beneficial Owner will receive a Definitive Note representing such Beneficial
Owner’s interest in such Note, except as provided in Section 4.08. With respect
to such Notes, unless and until definitive, fully registered Notes (the
“Definitive Notes”) have been issued to Beneficial Owners pursuant to Section
4.08:

 

(i) the provisions of this Section 4.06 shall be in full force and effect;

 

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(ii) the Note Registrar, the Paying Agent and the Indenture Trustee shall be
entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Beneficial Owners of the Notes;

 

(iii) to the extent that the provisions of this Section 4.06 conflict with any
other provisions of this Indenture, the provisions of this Section 4.06 shall
control;

 

(iv) the rights of Beneficial Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and interest on
the Notes to such Depository Participants; and

 

(v) whenever this Indenture requires or permits actions to be taken based upon
instructions or directions of Holders of Notes evidencing a specified percentage
of the Note Principal Balances of the Notes, the Depository shall be deemed to
represent such percentage with respect to the Notes only to the extent that it
has received instructions to such effect from Beneficial Owners and/or
Depository Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.

 

Section 4.07 Notices to Depository. Whenever a notice or other communication to
the Note Holders is required under this Indenture, unless and until Definitive
Notes shall have been issued to Beneficial Owners pursuant to Section 4.08, the
Indenture Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Depository, and shall have no
obligation to the Beneficial Owners.

 

Section 4.08 Definitive Notes. If (i) the Depositor advises the Indenture
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities with respect to the Book-Entry Notes and the
Depositor is unable to locate a qualified successor within 30 days or (ii) the
Depositor, at its option (with the consent of the Indenture Trustee, such
consent not to be unreasonably withheld) elects to terminate the book-entry
system through the Depository, then the Indenture Trustee shall request that the
Depository notify all Beneficial Owners of the occurrence of any such event and
of the availability of Definitive Notes to Beneficial Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Depository, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.

 

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In addition, if an Event of Default has occurred and is continuing, each Note
Owner materially adversely affected thereby may at its option request a
Definitive Note evidencing such Noteholder’s interest in the related Class of
Notes. In order to make such request, such Noteholder shall, subject to the
rules and procedures of the Depository, provide the Depository or the related
Depository Participant with directions for the Indenture Trustee to exchange or
cause the exchange of the Noteholder’s interest in such Class of Notes for an
equivalent interest in fully registered definitive form. Upon receipt by the
Indenture Trustee of instructions from the Depository directing the Indenture
Trustee to effect such exchange (such instructions to contain information
regarding the Class of Notes and the Note Principal Balance being exchanged, the
Depository Participant account to be debited with the decrease, the registered
holder of and delivery instructions for the Definitive Note, and any other
information reasonably required by the Indenture Trustee), (i) the Indenture
Trustee shall instruct the Depository to reduce the related Depository
Participant’s account by the aggregate Note Principal Balance of the Definitive
Note, (ii) the Indenture Trustee shall execute, authenticate and deliver, in
accordance with the registration and delivery instructions provided by the
Depository, a Definitive Note evidencing such Noteholder’s interest in such
Class of Notes and (iii) the Indenture Trustee shall execute and authenticate a
new Book-Entry Note reflecting the reduction in the Note Principal Balance of
such Class of Notes by the amount of the Definitive Notes.

 

Section 4.09 Tax Treatment. The Issuer has entered into this Indenture, and the
Notes will be issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will qualify as
indebtedness. The Issuer and the Securities Administrator (in accordance with
Section 6.06 hereof), by entering into this Indenture, and each Noteholder, by
its acceptance of its Note (and each Beneficial Owner by its acceptance of an
interest in the applicable Book-Entry Note), agree to treat the Notes for
federal, state and local income, single business and franchise tax purposes as
indebtedness.

 

Section 4.10 Satisfaction and Discharge of Indenture. This Indenture shall cease
to be of further effect with respect to the Notes except as to (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09,
3.17, 3.19 and 3.20, (v) the rights, obligations (to the extent applicable to
the provisions of the Indenture remaining in effect) and immunities of the
Indenture Trustee and Securities Administrator hereunder (including the rights
of the Indenture Trustee and Securities Administrator under Section 6.07 and the
obligations of the Indenture Trustee under Section 4.11), (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes and shall release and deliver, or cause the Custodian to
deliver, the Collateral to or upon the order of the Issuer, when

 

(A) either

 

(1) all Notes theretofore authenticated and delivered (other than (i) Notes that
have been destroyed, lost or stolen and that have been replaced or paid as
provided in Section 4.03 hereof and (ii) Notes for whose payment money has
theretofore been

 

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deposited in trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in Section 3.03)
have been delivered to the Indenture Trustee for cancellation; or

 

(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation

 

a. have become due and payable,

 

b. will become due and payable at the Final Scheduled Payment Date within one
year, or

 

c. have been called for early redemption and the Trust has been terminated
pursuant to Section 8.07 hereof,

 

and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness on
such Notes then outstanding not theretofore delivered to the Indenture Trustee
for cancellation when due on the Final Scheduled Payment Date or other final
Payment Date and has delivered to the Indenture Trustee a verification report
from a nationally recognized accounting firm certifying that the amounts
deposited with the Indenture Trustee are sufficient to pay and discharge the
entire indebtedness of such Notes, or, in the case of c. above, the Issuer shall
have complied with all requirements of Section 8.07 hereof,

 

(B) the Issuer has paid or caused to be paid all other sums payable hereunder;
and

 

(C) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate
and an Opinion of Counsel, each meeting the applicable requirements of Section
10.01 hereof, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been complied
with and, if the Opinion of Counsel relates to a deposit made in connection with
Section 4.10(A)(2)b. above, such opinion shall further be to the effect that
such deposit will constitute an “in-substance defeasance” within the meaning of
Revenue Ruling 85-42, 1985-1 C.B. 36, and in accordance therewith, the Issuer
will be the owner of the assets deposited in trust for federal income tax
purposes.

 

Section 4.11 Application of Trust Money. All monies deposited with the Indenture
Trustee pursuant to Section 4.10 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent or the Issuer, Certificate
Paying Agent as designee of the Issuer, as the Indenture Trustee may determine,
to the Holders of Securities, of all sums due and to become due thereon for
principal and interest or otherwise; but such monies need not be segregated from
other funds except to the extent required herein or required by law.

 

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Section 4.12 [Reserved].

 

Section 4.13 Repayment of Monies Held by Paying Agent. In connection with the
satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Person shall be released from all further
liability with respect to such monies.

 

Section 4.14 Temporary Notes. Pending the preparation of any Definitive Notes,
the Issuer may execute and upon its written direction, the Indenture Trustee may
authenticate and make available for delivery, temporary Notes that are printed,
lithographed, typewritten, photocopied or otherwise produced, in any
denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.

 

If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the Corporate Trust Office, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Notes, the Issuer shall execute and the Indenture Trustee shall authenticate and
make available for delivery, in exchange therefor, Definitive Notes of
authorized denominations and of like tenor, class and aggregate principal
amount. Until so exchanged, such temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.

 

Section 4.15 Representation Regarding ERISA. By acquiring a Note or interest
therein, each Holder of such Note or Beneficial Owner of any such interest will
be deemed to represent that either (1) it is not acquiring the Note with Plan
Assets or (2) (A) the acquisition, holding and transfer of such Note will not
give rise to a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code and (B) the Notes are rated investment grade or better
and such person believes that the Notes are properly treated as indebtedness
without substantial equity features for purposes of the Department of Labor
regulation 29 C.F.R. § 2510.3-101, and agrees to so treat the Notes.
Alternatively, regardless of the rating of the Notes, such person may provide
the Indenture Trustee and the Owner Trustee with an Opinion of Counsel, which
Opinion of Counsel will not be at the expense of the Issuer, the Depositor, the
Seller, any Underwriter, the Owner Trustee, the Indenture Trustee, the
Securities Administrator, the Master Servicer, the Servicer or the Special
Servicer which opines that the acquisition, holding and transfer of such Note or
interest therein is permissible under applicable law, will not constitute or
result in a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code and will not subject the Issuer, the Seller, the Depositor, any
Underwriter, the Owner Trustee, the Indenture Trustee, the Securities
Administrator, the Master Servicer, the Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Indenture and the other Basic
Documents.

 

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ARTICLE V

 

Default and Remedies

 

Section 5.01 Events of Default. The Issuer shall deliver to the Indenture
Trustee, within five days after learning of the occurrence of an Event of
Default, written notice in the form of an Officer’s Certificate of any event
which with the giving of notice and the lapse of time would become an Event of
Default under clause (iii), (iv) or (v) of the definition of “Event of Default”,
its status and what action the Issuer is taking or proposes to take with respect
thereto. The Indenture Trustee shall not be deemed to have knowledge of any
Event of Default unless a Responsible Officer has actual knowledge thereof or
unless written notice of such Event of Default is received by a Responsible
Officer and such notice references the Notes, the Trust Estate or this
Indenture.

 

Section 5.02 Acceleration of Maturity; Rescission and Annulment. If an Event of
Default should occur and be continuing, then and in every such case the
Indenture Trustee at the written direction of the Holders of Notes representing
not less than a majority of the aggregate Note Principal Balance of the Notes
may declare the Notes to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if such notice is given by
Noteholders), and upon any such declaration the unpaid Note Principal Balance of
the Notes, together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.

 

At any time after such declaration of acceleration of maturity with respect to
an Event of Default has been made and before a judgment or decree for payment of
the money due has been obtained by the Indenture Trustee as hereinafter in this
Article V provided, Holders of the Notes representing not less than a majority
of the aggregate Note Principal Balance of the Notes, by written notice to the
Issuer and the Indenture Trustee, may, subject to Section 5.12, waive the
related Event of Default and rescind and annul such declaration and its
consequences if

 

(i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient
to pay:

 

(A) all payments of principal of and interest on the Notes and all other amounts
that would then be due hereunder or upon the Notes if the Event of Default
giving rise to such acceleration had not occurred; and

 

(B) all sums paid or advanced by the Indenture Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.

 

(ii) all Events of Default, other than the nonpayment of the principal of the
Notes that has become due solely by such acceleration, have been cured or waived
as provided in Section 5.12.

 

No such rescission shall affect any subsequent default or impair any right
consequent thereto.

 

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Section 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee.

 

(a) The Issuer covenants that if (i) default is made in the payment of any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer shall, upon demand of the Indenture Trustee,
acting at the direction of the Holders of a majority of the aggregate Note
Principal Balances of the Notes, pay to the Indenture Trustee, for the benefit
of the Holders of Notes, the whole amount then due and payable on the Notes for
principal and interest, with interest at the applicable Note Interest Rate upon
the overdue principal, and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.

 

(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.16 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor the Notes, wherever
situated, the monies adjudged or decreed to be payable.

 

(c) If an Event of Default occurs and is continuing, the Indenture Trustee,
subject to the provisions of Section 10.16 hereof may, as more particularly
provided in Section 5.04 hereof, in its discretion, proceed to protect and
enforce its rights and the rights of the Noteholders, by such appropriate
Proceedings, as directed in writing by Holders of a majority of the aggregate
Note Principal Balances of the Notes, to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law.

 

(d) In case there shall be pending, relative to the Issuer or any other obligor
upon the Notes or any Person having or claiming an ownership interest in the
Trust Estate, Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, as directed in writing by Holders
of a majority of the aggregate Note Principal Balances of the Notes,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:

 

(i) to file and prove a claim or claims for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable compensation to the
Indenture Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or bad faith)
and of the Noteholders allowed in such Proceedings;

 

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(ii) unless prohibited by applicable law and regulations, to vote on behalf of
the Holders of Notes in any election of a trustee, a standby trustee or Person
performing similar functions in any such Proceedings;

 

(iii) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute all amounts received with respect to the
claims of the Noteholders and of the Indenture Trustee on their behalf, and

 

(iv) to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture Trustee or
the Holders of Notes allowed in any judicial proceedings relative to the Issuer,
its creditors and its property;

 

and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee.

 

(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.

 

(f) All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes, subject to Section 5.05 hereof.

 

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(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.

 

Section 5.04 Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing and if an acceleration has been declared and not
rescinded pursuant to Section 5.02 hereof, the Indenture Trustee subject to the
provisions of Section 10.16 hereof may, and shall, at the written direction of
the Holders of a majority of the aggregate Note Principal Balances of the Notes
(subject to Section 6.02(k)) do one or more of the following (subject to Section
5.05 hereof):

 

(i) institute Proceedings in its own name and as trustee of an express trust for
the collection of all amounts then payable on the Notes or under this Indenture
with respect thereto, whether by declaration or otherwise, enforce any judgment
obtained and collect from the Issuer and any other obligor upon such Notes
monies adjudged due;

 

(ii) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate;

 

(iii) exercise any remedies of a secured party under the UCC and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee and the Holders of the Notes; and

 

(iv) sell the Trust Estate or any portion thereof or rights or interest therein,
at one or more public or private sales called and conducted in any manner
permitted by law;

 

(v) provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Holders of 100% of the aggregate
Note Principal Balance of the Notes, (B) the proceeds of such sale or
liquidation distributable to the Holders of the Notes are sufficient to
discharge in full all amounts then due and unpaid upon such Notes for principal
and interest or (C) the Indenture Trustee determines that the Mortgage Loans
will not continue to provide sufficient funds for the payment of principal of
and interest on the applicable Notes as they would have become due if the Notes
had not been declared due and payable, and the Indenture Trustee obtains the
consent of Holders of 662/3% of the aggregate Note Principal Balance of the
Notes. In determining such sufficiency or insufficiency with respect to clause
(B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an
opinion (obtained at the expense of the Trust) of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
Notwithstanding the foregoing, so long as an “Event of Default” under the
HomeBanc Servicing Agreement has not occurred, any Sale of the Trust Estate
shall be made subject to the continued servicing of the Mortgage Loans by the
Servicer as provided in the HomeBanc Servicing Agreement.

 

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(b) If the Indenture Trustee collects any money or property pursuant to this
Article V, it shall pay out the money or property in the following order:

 

FIRST: to the Indenture Trustee and the Securities Administrator for amounts due
under Section 6.07 hereof or the Sale and Servicing Agreement, to the Master
Servicer for amounts due under the Sale and Servicing Agreement and to the
Custodian for amounts due under Section 3.4 of the Custodial Agreement;

 

SECOND: to the Noteholders for amounts due and unpaid on the Notes with respect
to interest (not including any Basis Risk Shortfall Carry-Forward Amounts),
first, to the Class A-1 Noteholders, second, to the Class A-2 Noteholders,
third, to the Class M-1 Noteholders, fourth, to the Class M-2 Noteholders and
fifth, to the Class B-1 Noteholders, according to the amounts due and payable on
the Notes for interest;

 

THIRD: to the Noteholders for amounts due and unpaid on the Notes with respect
to principal, and to each Noteholder ratably, without preference or priority of
any kind, according to the amounts due and payable on such Notes for principal,
until the Note Principal Balance of each such Class is reduced to zero;

 

FOURTH: to the Noteholders, first to the Class A-1 Noteholders, second to the
Class A-2 Noteholders third, to the Class M-1 Noteholders, fourth, to the Class
M-2 Noteholders and fifth, to the Class B-1 Noteholders, the amount of any
related Allocated Realized Loss Amount not previously paid;

 

FIFTH: to the Noteholders for amounts due and unpaid on the Notes with respect
to any Basis Risk Shortfall Carry-Forward Amounts, from amount remaining, first,
to the Class A-1 Noteholders, second, to the Class A-2 Noteholders, third, to
the Class M-1 Noteholders, fourth, to the Class M-2 Noteholders and fifth, to
the Class B-1 Noteholders; and

 

SIXTH: to the payment of the remainder, if any to the Certificate Paying Agent
on behalf of the Issuer or to any other person legally entitled thereto.

 

The Indenture Trustee may fix a record date and Payment Date for any payment to
Noteholders pursuant to this Section 5.04. At least 15 days before such record
date, the Indenture Trustee shall mail to each Noteholder a notice that states
the record date, the Payment Date and the amount to be paid.

 

Section 5.05 Optional Preservation of the Trust Estate. If the Notes have been
declared to be due and payable under Section 5.02 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may elect to take and maintain possession of the Trust
Estate. It is the desire of the parties hereto and the Noteholders that there be
at all times sufficient funds for the payment of principal of and interest on
the Notes and other obligations of the Issuer and, the Indenture Trustee shall
take such desire into account when determining whether or not to take and
maintain possession of the Trust Estate. In determining whether to take and
maintain possession of the Trust Estate, the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment

 

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banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.

 

Section 5.06 Limitation of Suits. No Holder of any Note shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless and subject to the provisions of Section 10.16 hereof

 

(i) such Holder has previously given written notice to the Indenture Trustee of
a continuing Event of Default;

 

(ii) the Holders of not less than 25% of the aggregate Note Principal Balances
of the Notes have made a written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;

 

(iii) such Holder or Holders have offered to the Indenture Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;

 

(iv) the Indenture Trustee for 60 days after its receipt of such notice of
request and offer of indemnity has failed to institute such Proceedings; and

 

(v) no direction inconsistent with such written request has been given to the
Indenture Trustee during such 60-day period by the Holders of a majority of the
Note Principal Balances of the Notes.

 

It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.

 

Subject to the last paragraph of Section 5.11 herein, in the event the Indenture
Trustee shall receive conflicting or inconsistent requests and indemnity from
two or more groups of Holders of Notes, each representing less than a majority
of the Note Principal Balances of the Notes, the Indenture Trustee shall take
such action as requested by the Holders representing the highest amount (in the
aggregate) of Note Principal Balances notwithstanding any other provisions of
this Indenture.

 

Section 5.07 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.

 

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Section 5.08 Restoration of Rights and Remedies. If the Indenture Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.

 

Section 5.09 Rights and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to the Indenture Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

 

Section 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Indenture
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as
the case may be.

 

Section 5.11 Control By Noteholders. The Holders of a majority of the aggregate
Note Principal Balances of Notes shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee (subject to the Indenture Trustee’s right to receive
indemnity, as provided herein); provided that:

 

(i) such direction shall not be in conflict with any rule of law or with this
Indenture;

 

(ii) any direction to the Indenture Trustee to sell or liquidate the Trust
Estate shall be by Holders of Notes representing not less than 100% of the Note
Principal Balances of the Notes; and

 

(iii) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction of the Holders of
Notes representing a majority of the Note Principal Balances of the Notes.

 

(iv) Notwithstanding the rights of Noteholders set forth in this Section 5.11
the Indenture Trustee need not take any action that it deems unduly prejudicial
to any Noteholder or that it determines might subject it to liability.

 

Section 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02 hereof,
the Holders of Notes representing not

 

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less than a majority of the aggregate Note Principal Balance of the Notes may
waive any past Event of Default and its consequences except an Event of Default
(a) with respect to payment of principal of or interest on any of the Notes or
(b) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each Note. In the case of any such
waiver, the Issuer, the Indenture Trustee and the Holders of the Notes shall be
restored to their former positions and rights hereunder, respectively, but no
such waiver shall extend to any subsequent or other Event of Default or impair
any right consequent thereto.

 

Upon any such waiver, any Event of Default arising therefrom shall be deemed to
have been cured and not to have occurred, for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other Event of Default or
impair any right consequent thereto.

 

Section 5.13 Undertaking for Costs. All parties to this Indenture agree, and
each Holder of any Note and each Beneficial Owner of any interest therein by
such Holder’s or Beneficial Owner’s acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Note
Principal Balances of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture.

 

Section 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.

 

Section 5.15 Sale of Trust Estate. (a) The power to effect any sale or other
disposition (a “Sale”) of any portion of the Trust Estate pursuant to Section
5.04 hereof is expressly subject to the provisions of Section 5.05 hereof and
this Section 5.15. The power to effect any such Sale shall not be exhausted by
any one or more Sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until the entire Trust Estate shall have been sold
or all amounts payable on the Notes and under this Indenture shall have been
paid. The Indenture Trustee may from time to time postpone any public Sale by
public announcement made at the time and place of such Sale. The Indenture
Trustee hereby expressly waives its right to any amount fixed by law as
compensation for any Sale.

 

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(b) The Indenture Trustee shall not in any private Sale sell the Trust Estate,
or any portion thereof, unless

 

(1) the Holders of all Notes consent to or direct the Indenture Trustee to make,
such Sale, or

 

(2) the proceeds of such Sale would be not less than the entire amount which
would be payable to the Noteholders under the Notes, in full payment thereof in
accordance with Section 5.02 hereof, on the Payment Date next succeeding the
date of such Sale, or

 

(3) the Indenture Trustee determines that the conditions for retention of the
Trust Estate set forth in Section 5.05 hereof cannot be satisfied (in making any
such determination, the Indenture Trustee may rely upon an opinion of an
Independent investment banking firm obtained and delivered as provided in
Section 5.05 hereof) and the Holders of Notes representing at least 66-2/3% of
the Note Principal Balances of the Notes consent to such Sale.

 

The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).

 

(c) Unless the Holders representing at least 66-2/3% of the Note Principal
Balances of the Notes have otherwise consented or directed the Indenture
Trustee, at any public Sale of all or any portion of the Trust Estate at which a
minimum bid equal to or greater than the amount described in paragraph (2) of
subsection (b) of this Section 5.15 has not been established by the Indenture
Trustee and no Person bids an amount equal to or greater than such amount, the
Indenture Trustee, acting in its capacity as Indenture Trustee on behalf of the
Noteholders, shall bid an amount (which shall include the Indenture Trustee’s
right, in its capacity as Indenture Trustee, to credit bid) at least $1.00 more
than the highest other bid in order to preserve the Trust Estate on behalf of
the Noteholders.

 

(d) In connection with a Sale of all or any portion of the Trust Estate,

 

(1) any Holder or Holders of Notes may bid for and purchase the property offered
for sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability, and may,
in paying the purchase money therefor, deliver any Notes or claims for interest
thereon in lieu of cash up to the amount which shall, upon distribution of the
net proceeds of such sale, be payable thereon, and such Notes, in case the
amounts so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to show such
partial payment;

 

(2) the Indenture Trustee, may bid for and acquire the property offered for Sale
in connection with any Sale thereof, and, subject to any requirements of, and to
the extent permitted by, applicable law in connection therewith, may purchase
all or any portion of the Trust Estate in a private sale, and, in lieu of paying
cash therefor, may make settlement for the purchase price by crediting the gross
Sale price against the sum

 

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of (A) the amount which would be distributable to the Holders of the Notes and
Holders of Certificates as a result of such sale on the Payment Date next
succeeding the date of such Sale and (B) the expenses of the Sale and of any
Proceedings in connection therewith which are reimbursable to it, without being
required to produce the Notes in order to complete any such Sale or in order for
the net Sale price to be credited against such Notes, and any property so
acquired by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;

 

(3) the Indenture Trustee shall execute and deliver an appropriate instrument of
conveyance, prepared by the Issuer and satisfactory to the Indenture Trustee,
transferring its interest in any portion of the Trust Estate in connection with
a Sale thereof;

 

(4) the Indenture Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of the Trust Estate in connection with a Sale thereof, and to take all
action necessary to effect such Sale; and

 

(5) no purchaser or transferee at such a Sale shall be bound to ascertain the
Indenture Trustee’s authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.

 

Section 5.16 Action on Notes. The Indenture Trustee’s right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b) hereof.

 

Section 5.17 Performance and Enforcement of Certain Obligations. (a) Promptly
following a request from the Indenture Trustee to do so, the Issuer in its
capacity as holder of the Mortgage Loans, shall take all such lawful action as
the Indenture Trustee may request to cause the Issuer to compel or secure the
performance and observance by the Seller and the Master Servicer, as applicable,
of each of their obligations to the Issuer under or in connection with the
Mortgage Loan Purchase Agreement and the Sale and Servicing Agreement, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Mortgage Loan Purchase Agreement
and the Sale and Servicing Agreement to the extent and in the manner directed by
the Indenture Trustee, as pledgee of the Mortgage Loans, including the
transmission of notices of default on the part of the Seller or the Master
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Seller or the Master Servicer
of each of their obligations under the Mortgage Loan Purchase Agreement and the
Sale and Servicing Agreement.

 

(b) The Indenture Trustee, as pledgee of the Mortgage Loans, may, and at the
direction (which direction shall be in writing or by telephone (confirmed in
writing promptly thereafter)) of the Holders of 66-2/3% of the Note Principal
Balances of the Notes (subject to Section 6.02(k)) shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller or the
Master Servicer under or in connection with the Mortgage Loan Purchase Agreement
and the Sale and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the Seller or the Master
Servicer, as the case may be, of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Mortgage Loan Purchase Agreement and the Sale and
Servicing Agreement, as the case may be, and any right of the Issuer to take
such action shall not be suspended.

 

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ARTICLE VI

 

The Indenture Trustee and Securities Administrator

 

Section 6.01 Duties of Indenture Trustee and Securities Administrator. (a) If an
Event of Default of which the Indenture Trustee has actual knowledge or has
received written notice has occurred and is continuing, the Indenture Trustee
shall exercise the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs.

 

(b) Except during the continuance of an Event of Default of which the Indenture
Trustee has actual knowledge or has received written notice, in the case of the
Indenture Trustee and, at any time, in the case of the Securities Administrator:

 

(i) the Indenture Trustee and the Securities Administrator undertake to perform
such duties and only such duties as are specifically set forth in this Indenture
and the other Basic Documents to which it is a party and no implied covenants or
obligations shall be read into this Indenture and the other Basic Documents
against the Indenture Trustee or the Securities Administrator; and

 

(ii) in the absence of bad faith on its part, the Indenture Trustee and the
Securities Administrator may each conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to each of the Indenture Trustee and the
Securities Administrator and conforming to the requirements of this Indenture;
however, the Indenture Trustee and the Securities Administrator shall each
examine the certificates and opinions to determine whether or not they conform
on their face to the requirements of this Indenture.

 

(c) The Indenture Trustee and the Securities Administrator may not be relieved
from liability for each of its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:

 

(i) this paragraph does not limit the effect of paragraph (b) of this Section
6.01;

 

(ii) neither the Indenture Trustee nor the Securities Administrator shall be
liable for any error of judgment made in good faith by a Responsible Officer
unless it is proved that the Indenture Trustee or the Securities Administrator
was negligent in ascertaining the pertinent facts; and

 

(iii) neither the Indenture Trustee nor the Securities Administrator shall be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it from Noteholders or from the Issuer,
which they are entitled to give under the Basic Documents.

 

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(d) The Indenture Trustee shall not be liable for interest on any money received
by it except as the Indenture Trustee may agree in writing with the Issuer.

 

(e) Money held in trust by the Indenture Trustee need not be segregated from
other trust funds except to the extent required by law or the terms of this
Indenture, the Sale and Servicing Agreement or the Trust Agreement.

 

(f) No provision of this Indenture shall require the Indenture Trustee or the
Securities Administrator to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or indemnity satisfactory to it against
such risk or liability is not reasonably assured to it.

 

(g) Every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Indenture Trustee shall be subject
to the provisions of this Section and to the provisions of the TIA.

 

(h) The Indenture Trustee shall act in accordance with Sections 6.03 and 6.04 of
the Sale and Servicing Agreement and shall act as successor to the Master
Servicer or appoint a successor Master Servicer in accordance with Section 6.02
of the Sale and Servicing Agreement.

 

Section 6.02 Rights of Indenture Trustee and Securities Administrator. Except as
provided in Section 6.01: (a) The Indenture Trustee and the Securities
Administrator may rely on any document believed by it to be genuine and to have
been signed or presented by the proper person. The Indenture Trustee and the
Securities Administrator need not investigate any fact or matter stated in the
document.

 

(b) Before the Indenture Trustee or the Securities Administrator acts or
refrains from acting, it may require an Officer’s Certificate or an Opinion of
Counsel. Neither the Indenture Trustee nor the Securities Administrator shall be
liable for any action it takes or omits to take in good faith in reliance on an
Officer’s Certificate or Opinion of Counsel.

 

(c) Neither the Indenture Trustee nor the Securities Administrator shall be
liable for any action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers; provided, however, that the
Indenture Trustee’s or Securities Administrator’s conduct does not constitute
willful misconduct, negligence or bad faith.

 

(d) The Indenture Trustee or the Securities Administrator may each consult with
counsel, and the advice or Opinion of Counsel (which shall not be at the expense
of the Indenture Trustee or the Securities Administrator) with respect to legal
matters relating to this Indenture and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.

 

(e) For the limited purpose of effecting any action to be undertaken by each of
the Indenture Trustee and the Securities Administrator, but not specifically as
a duty of the Indenture Trustee or the Securities Administrator in the
Indenture, each of the Indenture Trustee and the

 

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Securities Administrator may execute any of the trusts or powers hereunder or
perform any duties hereunder, either directly or by or through agents,
attorneys, custodians or nominees appointed with due care, and shall not be
responsible for any willful misconduct or negligence on the part of any agent,
attorney, custodian or nominee so appointed.

 

(f) The Indenture Trustee or its Affiliates are permitted to receive additional
compensation that could be deemed to be in the Indenture Trustee’s economic
self-interest for (i) serving as investment adviser, administrator, shareholder
servicing agent, custodian or sub-custodian with respect to certain of the
Permitted Investments, (ii) using Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting transactions in certain Permitted
Investments. Such compensation shall not be considered an amount that is
reimbursable or payable to the Indenture Trustee (i) pursuant to Sections
3.05(d), 5.04(b) or 6.07 hereunder or (ii) out of Available Funds.

 

(g) Anything in this Indenture to the contrary notwithstanding, in no event
shall the Indenture Trustee or the Securities Administrator be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Indenture Trustee or
the Securities Administrator, respectively, has been advised of the likelihood
of such loss or damage and regardless of the form of action.

 

(h) None of the Securities Administrator, the Issuer or the Indenture Trustee
shall be responsible for the acts or omissions of the other, it being understood
that this Indenture shall not be construed to render them partners, joint
venturers or agents of one another.

 

(i) Neither the Indenture Trustee nor the Securities Administrator shall be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it, and none of the provisions contained in this
Indenture shall in any event require the Indenture Trustee or the Securities
Administrator to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under the Sale and Servicing
Agreement, except during such time, if any, as the Indenture Trustee shall be
the successor to, and be vested with the rights, duties, powers and privileges
of, the Master Servicer in accordance with the terms of the Sale and Servicing
Agreement.

 

(j) Except for those actions that the Indenture Trustee or the Securities
Administrator are required to take hereunder, neither the Indenture Trustee nor
the Securities Administrator shall have any obligation or liability to take any
action or to refrain from taking any action hereunder in the absence of written
direction as provided hereunder.

 

(k) Neither the Indenture Trustee nor the Securities Administrator shall be
under any obligation to exercise any of the trusts or powers vested in it by
this Indenture, other than its obligation to give notices pursuant to this
Indenture, or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders
pursuant to the provisions of this Indenture, unless such Noteholders shall have
offered to the Indenture Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
Nothing contained herein shall, however,

 

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relieve the Indenture Trustee of the obligation, upon the occurrence of an Event
of Default of which a Responsible Officer of the Indenture Trustee has actual
knowledge (which has not been cured or waived), to exercise such of the rights
and powers vested in it by this Indenture and to use the same degree of care and
skill in their exercise as a prudent person would exercise under the
circumstances in the conduct of his own affairs.

 

(l) Neither the Indenture Trustee nor the Securities Administrator shall be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by Holders of Notes representing not less than 25%
of the Note Principal Balance of the Notes and provided that the payment within
a reasonable time to the Indenture Trustee or the Securities Administrator, as
applicable, of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Indenture Trustee or
the Securities Administrator, as applicable, reasonably assured to the Indenture
Trustee or the Securities Administrator, as applicable, by the security afforded
to it by the terms of this Indenture. The Indenture Trustee or the Securities
Administrator may require reasonable indemnity against such expense or liability
as a condition to taking any such action. The reasonable expense of every such
examination shall be paid by the Noteholders requesting the investigation.

 

(m) Should the Indenture Trustee or the Securities Administrator deem the nature
of any action required on its part to be unclear, the Indenture Trustee or the
Securities Administrator, respectively, may require prior to such action that it
be provided by the Depositor with reasonable further instructions.

 

(n) The right of the Indenture Trustee or the Securities Administrator to
perform any discretionary act enumerated in this Indenture shall not be
construed as a duty, and neither the Indenture Trustee nor the Securities
Administrator shall be accountable for other than its negligence or willful
misconduct in the performance of any such act.

 

(o) Neither the Indenture Trustee nor the Securities Administrator shall be
required to give any bond or surety with respect to the execution of the trust
created hereby or the powers granted hereunder.

 

(p) Neither the Indenture Trustee nor the Securities Administrator shall have
any duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Mortgage Loan by the Seller pursuant
to this Indenture or the Mortgage Loan Purchase Agreement, as applicable, or the
eligibility of any Mortgage Loan for purposes of this Indenture.

 

(q) The Indenture Trustee shall not be deemed to have notice or actual knowledge
of any Event of Default unless actually known to a Responsible Officer of the
Indenture Trustee or written notice thereof (making reference to this Indenture
or the Notes) is received by the Indenture Trustee at the Corporate Trust
Office.

 

Section 6.03 Individual Rights of Indenture Trustee. (a) The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise

 

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deal with the Issuer or its Affiliates with the same rights it would have if it
were not Indenture Trustee, subject to the requirements of the Trust Indenture
Act. Any Note Registrar, co-registrar or co-paying agent may do the same with
like rights. However, the Indenture Trustee must comply with Sections 6.11 and
6.12 hereof.

 

(b) The Securities Administrator in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the Issuer or
its Affiliates with the same rights it would have if it were not Securities
Administrator, subject to the requirements of the Trust Indenture Act.

 

Section 6.04 Indenture Trustee’s and Securities Administrator’s Disclaimers.
Neither the Indenture Trustee nor the Securities Administrator shall be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Notes or the other Basic Documents, neither shall be
accountable for the Issuer’s use of the proceeds from the Notes, and neither
shall be responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than, with respect to the Indenture Trustee only, the Indenture Trustee’s
certificate of authentication.

 

Section 6.05 Notice of Event of Default. Subject to Section 5.01, the Indenture
Trustee shall promptly mail to each Noteholder notice of the Event of Default
after a Responsible Officer of the Indenture Trustee obtains actual knowledge or
written notice of such event, unless such Event of Default shall have been
waived or cured. Except in the case of an Event of Default in payment of
principal of or interest on any Note, the Indenture Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.

 

Section 6.06 Reports by Indenture Trustee to Holders and Tax Administration. The
Securities Administrator shall deliver to each Noteholder such information as
may be required and such other customary information as the Securities
Administrator may determine and/or to be required by the Internal Revenue
Service or by a federal or state law or rules or regulations to enable such
holder to prepare its federal and state income tax returns.

 

The Securities Administrator shall prepare and file (or cause to be prepared and
filed), on behalf of the Owner Trustee, all tax returns (if any) and information
reports, tax elections and such annual or other reports of the Issuer as are
necessary for preparation of tax returns and information reports as provided in
Section 5.03 of the Trust Agreement, including without limitation Form 1099. All
tax returns and information reports shall be signed by the Owner Trustee as
provided in Section 5.03 of the Trust Agreement.

 

Section 6.07 Compensation. The fees of the Indenture Trustee shall be paid by
the Securities Administrator pursuant to a separate agreement between the
Indenture Trustee and Securities Administrator. In addition, the Indenture
Trustee and the Securities Administrator will each be entitled to recover from
the Payment Account pursuant to Section 4.05(a) of the Sale and Servicing
Agreement all reasonable out-of-pocket expenses, disbursements and advances and
the expenses of the Indenture Trustee and the Securities Administrator,
respectively, in connection with any breach of this Agreement or any claim or
legal action (including any pending or threatened claim or legal action) or
otherwise incurred or made by the Indenture Trustee or the

 

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Securities Administrator, respectively, in the administration of the trusts
hereunder (including the reasonable compensation, expenses and disbursements of
its counsel) except any such expense, disbursement or advance as may arise from
its negligence or intentional misconduct or which is the responsibility of the
Noteholders as provided herein. Such compensation and reimbursement obligation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust. Additionally, each of the Indenture Trustee and the
Securities Administrator and any director, officer, employee or agent of the
Indenture Trustee or the Securities Administrator shall be indemnified by the
Trust and held harmless against any loss, liability or expense (including
reasonable attorney’s fees and expenses) incurred in the administration of this
Agreement (other than its ordinary out of pocket expenses incurred hereunder) or
in connection with any claim or legal action relating to (a) the Basic Documents
or (b) the Notes, other than any loss, liability or expense incurred by reason
of its negligence or intentional misconduct, or which is the responsibility of
the Noteholders as provided herein. Such indemnity and agreement to hold
harmless shall survive the termination of this Agreement or the resignation or
removal of the Indenture Trustee and the Securities Administrator, as
applicable, hereunder.

 

The Issuer’s payment obligations to the Indenture Trustee and Securities
Administrator pursuant to this Section 6.07 shall survive the discharge of this
Indenture and the termination or resignation of the Indenture Trustee or
Securities Administrator. When the Indenture Trustee or the Securities
Administrator incurs expenses after the occurrence of an Event of Default with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.

 

Section 6.08 Replacement of Indenture Trustee and the Securities Administrator.
No resignation or removal of the Indenture Trustee or the Securities
Administrator and no appointment of a successor Indenture Trustee or successor
Securities Administrator shall become effective until the acceptance of
appointment by the successor Indenture Trustee or successor Securities
Administrator pursuant to this Section 6.08. The Indenture Trustee or the
Securities Administrator may resign at any time by so notifying the Issuer.
Holders of a majority of Note Principal Balances of the Notes may remove either
of the Indenture Trustee or the Securities Administrator by so notifying the
Indenture Trustee or the Securities Administrator and may appoint a successor
Indenture Trustee or successor Securities Administrator. The Issuer shall remove
the Indenture Trustee or the Securities Administrator, as applicable, if:

 

(i) the Indenture Trustee or the Securities Administrator fails to comply with
Section 6.11 hereof;

 

(ii) the Indenture Trustee or the Securities Administrator is adjudged a
bankrupt or insolvent;

 

(iii) a receiver or other public officer takes charge of the Indenture Trustee
or the Securities Administrator or its property; or

 

(iv) the Indenture Trustee or the Securities Administrator otherwise becomes
incapable of acting.

 

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If the Indenture Trustee or the Securities Administrator resigns or is removed
or if a vacancy exists in the office of the Indenture Trustee or the Securities
Administrator for any reason (the Indenture Trustee or the Securities
Administrator in such event being referred to herein as the retiring Indenture
Trustee or the retiring Securities Administrator), the Issuer shall promptly
appoint a successor Indenture Trustee or successor Securities Administrator.

 

Each of a successor Indenture Trustee or successor Securities Administrator
shall deliver a written acceptance of its appointment to the retiring Indenture
Trustee or the retiring Securities Administrator, as applicable, and to the
Issuer. Thereupon, the resignation or removal of the retiring Indenture Trustee
or the retiring Securities Administrator shall become effective, and the
successor Indenture Trustee or successor Securities Administrator shall have all
the rights, powers and duties of the Indenture Trustee or the Securities
Administrator, as applicable, under this Indenture. The successor Indenture
Trustee or successor Securities Administrator shall each mail a notice of its
succession to Noteholders. The retiring Indenture Trustee or the retiring
Securities Administrator shall promptly transfer all property held by it as
Indenture Trustee or Securities Administrator, as applicable, to the successor
Indenture Trustee or successor Securities Administrator.

 

If a successor Indenture Trustee or successor Securities Administrator does not
take office within 60 days after the retiring Indenture Trustee or the retiring
Securities Administrator, as applicable, resigns or is removed, the retiring
Indenture Trustee or the retiring Securities Administrator, the Issuer or the
Holders of a majority of Note Principal Balances of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee or successor Securities Administrator.

 

Notwithstanding the replacement of the Indenture Trustee or the Securities
Administrator pursuant to this Section, the Issuer’s obligations under Section
6.07 shall continue for the benefit of the retiring Indenture Trustee or the
retiring Securities Administrator.

 

Section 6.09 Successor Indenture Trustee and Securities Administrator by Merger.
If the Indenture Trustee or the Securities Administrator consolidates with,
merges or converts into, or transfers all or substantially all of its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation, without any further act, shall
be the successor Indenture Trustee or successor Securities Administrator, as
applicable; provided, that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11 hereof. The Indenture
Trustee and the Securities Administrator shall each provide the Rating Agencies
with prior written notice of any such transaction.

 

If at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture and any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee and deliver such Notes so
authenticated; and if at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such

 

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cases such certificates shall have the full force which it is in the Notes or in
this Indenture provided that the certificate of the Indenture Trustee shall
have.

 

Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust Estate may at the time be located, the Indenture Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, such title to
the Trust Estate, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 hereof.

 

(b) Every separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:

 

(i) all rights, powers, duties and obligations conferred or imposed upon the
Indenture Trustee shall be conferred or imposed upon and exercised or performed
by the Indenture Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized to
act separately without the Indenture Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;

 

(ii) no trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder; and

 

(iii) the Indenture Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.

 

(c) Any notice, request or other writing given to the Indenture Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.

 

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(d) Any separate trustee or co-trustee may at any time constitute the Indenture
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.

 

Section 6.11 Eligibility; Disqualification. The Indenture Trustee shall at all
times satisfy the requirements of TIA § 310(a). The Indenture Trustee and the
Securities Administrator shall each have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition and it or its parent shall have a long-term debt rating of Baa3 or
better by Moody’s and BBB or better by Standard & Poor’s. The Indenture Trustee
shall comply with TIA § 310(b), including the optional provision permitted by
the second sentence of TIA § 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA § 310(b)(1) any indenture or indentures under
which other securities of the Issuer are outstanding if the requirements for
such exclusion set forth in TIA § 310(b)(1) are met.

 

Section 6.12 Preferential Collection of Claims Against Issuer. The Indenture
Trustee shall comply with TIA § 311(a), excluding any creditor relationship
listed in TIA § 311(b). An Indenture Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated.

 

Section 6.13 Representations and Warranties. The Indenture Trustee hereby
represents that:

 

(i) The Indenture Trustee is duly organized and validly existing as a national
banking association in good standing under the laws of the United States with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted;

 

(ii) The Indenture Trustee has the power and authority to execute and deliver
this Indenture and to carry out its terms; and the execution, delivery and
performance of this Indenture have been duly authorized by the Indenture Trustee
by all necessary corporate action;

 

(iii) The consummation of the transactions contemplated by this Indenture and
the fulfillment of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or bylaws of the
Indenture Trustee or any agreement or other instrument to which the Indenture
Trustee is a party or by which it is bound; and

 

(iv) There are no proceedings or investigations pending or to, the Indenture
Trustee’s knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Indenture Trustee or its properties: (A) asserting the invalidity of
this Indenture (B)

 

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seeking to prevent the consummation of any of the transactions contemplated by
this Indenture or (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Indenture Trustee of its obligations
under, or the validity or enforceability of, this Indenture.

 

Section 6.14 Directions to Indenture Trustee. The Indenture Trustee is hereby
directed:

 

(a) to accept the pledge of the Mortgage Loans and hold the assets of the Trust
Estate in trust for the Noteholders;

 

(b) to authenticate and deliver the Notes substantially in the form prescribed
by Exhibits A-1, A-2 and A-3 to this Indenture in accordance with the terms of
this Indenture; and

 

(c) to take all other actions as shall be required to be taken by the terms of
this Indenture and the Sale and Servicing Agreement.

 

Section 6.15 The Agents. The provisions of this Indenture relating to the
limitations of the Indenture Trustee’s liability and to its rights and
protections shall inure also to the Paying Agent, Note Registrar and Certificate
Registrar.

 

Section 6.16 Other Basic Documents. The Indenture Trustee is hereby authorized
and directed to execute and deliver the Sale and Servicing Agreement and any
other Basic Documents (other than this Indenture) naming it as a party. The
Indenture Trustee shall not be responsible for the sufficiency of the terms of
any of the Basic Documents. In entering into and acting under the other Basic
Documents, the Indenture Trustee shall be entitled to all of the rights,
immunities, indemnities and other protections set forth in this Article VI.

 

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ARTICLE VII

 

Noteholders’ Lists and Reports

 

Section 7.01 Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Holders of Notes as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished to the Indenture Trustee.

 

Section 7.02 Preservation of Information; Communications to Noteholders. (a) The
Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
hereof and the names and addresses of Holders of Notes received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.

 

(b) Noteholders may communicate pursuant to TIA § 312(b) with other Noteholders
with respect to their rights under this Indenture or under the Notes.

 

(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA § 312(c).

 

Section 7.03 Statements to Noteholders. (a) With respect to each Payment Date,
the Securities Administrator shall make available to each Noteholder and each
Certificateholder, the Depositor, the Owner Trustee, the Indenture Trustee, the
Certificate Paying Agent and each Rating Agency, a statement setting forth the
following information as to the Notes, to the extent applicable:

 

(i) the Note Principal Balance of each Class of Notes immediately prior to such
Payment Date;

 

(ii) the Available Funds and Net Monthly Excess Cash Flow, payable to each Class
of Noteholders for such Payment Date, and the Basis Risk Shortfall Carry-Forward
Amount on each Class of Notes for such Payment Date;

 

(iii) the amount of such distribution to each Class of Notes applied to reduce
the Note Principal Balance thereof;

 

(iv) the amount of such distribution to Holders of each Class of Notes allocable
to interest and the aggregate amount of Accrued Note Interest with respect to
each Class during the related Accrual Period;

 

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(v) the Note Rates for each Class of Notes with respect to such Payment Date;

 

(vi) the Note Principal Balance of each Class of Notes immediately after such
Payment Date;

 

(vii) the amount of such distribution to the Certificates;

 

(viii) the number and the aggregate Scheduled Principal Balance of the Mortgage
Loans as of the end of the related Due Period;

 

(ix) the amount of Scheduled Principal and Principal Prepayments, (including but
separately identifying the principal amount of Principal Prepayments, Insurance
Proceeds, the purchase price in connection with the purchase of Mortgage Loans,
cash deposits in connection with substitutions of Mortgage Loans and Excess
Liquidation Proceeds) and the number and principal balance of Mortgage Loans
purchased or substituted for during the relevant period and cumulatively since
the Cut-off Date;

 

(x) the aggregate Note Principal Balance of each Class of Notes, after giving
effect to the amounts distributed on such Payment Date, separately identifying
any reduction thereof due to Realized Losses other than pursuant to an actual
distribution of principal and the aggregate Note Principal Balance of the Notes,
after giving effect to the distribution of principal on such Payment Date;

 

(xi) information regarding any Mortgage Loan delinquencies as of the end of the
related Prepayment Period, including the aggregate number and aggregate
Outstanding Principal Balance of Mortgage Loans (a) delinquent 30 to 59 days on
a contractual basis, (b) delinquent 60 to 89 days on a contractual basis, and
(c) delinquent 90 or more days on a contractual basis, in each case as of the
close of business on the last Business Day of the immediately preceding month;

 

(xii) the Overcollateralization Increase Amount, Overcollateralization Target
Amount and Overcollateralized Amount, if any, in each case as the end of the
related Payment Date;

 

(xiii) the amount of any Monthly Advances, Compensating Interest Payments and
outstanding unreimbursed advances by the Master Servicer or Servicer;

 

(xiv) the aggregate Realized Losses with respect to the related Payment Date and
cumulative Realized Losses since the Closing Date;

 

(xv) with respect to each Mortgage Loan which incurred a Realized Loss during
the related Prepayment Period, (i) the loan number, (ii) the Scheduled Principal
Balance of such Mortgage Loan as of the Cut-off Date, (ii) the Scheduled
Principal Balance of such Mortgage Loan as of the beginning of the related Due
Period,

 

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(iii) the Excess Liquidation Proceeds with respect to such Mortgage Loan and
(iv) the amount of the Realized Loss with respect to such Mortgage Loan;

 

(xvi) the number and aggregate Scheduled Principal Balance of Mortgage Loans
repurchased by the Seller pursuant to the Mortgage Loan Purchase Agreement for
the related Payment Date and cumulatively since the Closing Date;

 

(xvii) the number and aggregate Outstanding Principal Balance of all Mortgage
Loans as to which the Mortgaged Property was REO Property as of the end of the
related Due Period;

 

(xviii) the book value (the sum of (A) the Outstanding Principal Balance of the
Mortgage Loan, (B) accrued interest through the date of foreclosure and (C)
foreclosure expenses) of any REO Property; provided that, in the event that such
information is not available to the Securities Administrator on the Payment
Date, such information shall be furnished promptly after it becomes available;

 

(xix) the Average Loss Severity Percentage;

 

(xx) the number of Mortgage Loans in the foreclosure process as of the end of
the related Due Period and the aggregate Outstanding Principal Balance of such
Mortgage Loans;

 

(xxi) the amount of any Interest Shortfalls less any Compensating Interest paid
by the Servicer or Master Servicer to cover Interest Shortfalls for such Payment
Date;

 

(xxii) the aggregate Scheduled Principal Balance of Mortgage Loans purchased by
the Servicer pursuant to Section 3.21 of the Sale and Servicing Agreement for
the related Payment Date and cumulatively since the Closing Date;

 

(xxiii) the aggregate Scheduled Principal Balance of defaulted Mortgage Loans
sold by the Servicer pursuant to Section 3.13 of the Sale and Servicing
Agreement or Section 4.03 of the HomeBanc Servicing Agreement for the related
Payment Date and cumulatively since the Closing Date; and

 

(xxiv) whether a Servicing Termination Trigger has occurred.

 

In addition, by January 31 of each calendar year following any year during which
the Notes are outstanding, the Securities Administrator shall furnish a report
to each Noteholder of record if so requested in writing at any time during each
calendar year as to the aggregate of amounts reported pursuant to (iii) and (iv)
with respect to the Notes for such calendar year.

 

The Securities Administrator may conclusively rely upon the information provided
by the Master Servicer pursuant to Section 3.01 of the Sale and Servicing
Agreement in its preparation of monthly statements to Noteholders. In addition,
the Securities Administrator shall furnish

 

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statements to Certificateholders on each Payment Date in accordance with Section
5.04 of the Trust Agreement.

 

The Securities Administrator may make available each month, to any interested
party, the monthly statement to Noteholders via the Securities Administrator’s
website initially located at “www.ctslink.com.” Assistance in using the website
can be obtained by calling the Securities Administrator’s customer service desk
at (301) 815-6600. Parties that are unable to use the above distribution option
are entitled to have a paper copy mailed to them via first class mail by calling
the Securities Administrator’s customer service desk and indicating such. The
Securities Administrator shall have the right to change the way such reports are
distributed in order to make such distribution more convenient and/or more
accessible to the parties, and the Securities Administrator shall provide timely
and adequate notification to all parties regarding any such change.

 

To the extent timely received from the Securities Administrator, the Indenture
Trustee will also make monthly statements available each month to Noteholders
and Certificateholders via the Indenture Trustee’s internet website. The
Indenture Trustee’s internet website will initially be located at
“https://trustinvestorreporting.usbank.com”. Assistance in using the Indenture
Trustee’s website service can be obtained by calling the Indenture Trustee’s
customer service desk at (800) 934-6802.

 

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ARTICLE VIII

 

Accounts, Disbursements and Releases

 

Section 8.01 Collection of Money. Except as otherwise expressly provided herein,
the Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.

 

Section 8.02 Reserved.

 

Section 8.03 Officer’s Certificate. The Indenture Trustee shall receive at least
seven Business Days’ notice when requested by the Issuer to take any action
pursuant to Section 8.05(a) hereof, accompanied by copies of any instruments to
be executed, and the Indenture Trustee shall, except in the case of a repurchase
of a Mortgage Loan pursuant to Sections 2.02 or 3.21 of the Sale and Servicing
Agreement, also require, as a condition to such action, an Officer’s
Certificate, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with.

 

Section 8.04 Termination Upon Distribution to Noteholders. This Indenture and
the respective obligations and responsibilities of the Issuer, the Securities
Administrator and the Indenture Trustee created hereby shall terminate upon the
distribution to Noteholders, the Certificate Paying Agent on behalf of the
Certificateholders, the Securities Administrator and the Indenture Trustee of
all amounts required to be distributed pursuant to Article III; provided,
however, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the survivor of the descendants of
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James, living on the date hereof.

 

Section 8.05 Release of Trust Estate. (a) Subject to the payment of its fees,
expenses and indemnities, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture Trustee’s interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture, including for the purposes of any repurchase by
the Seller of a Mortgage Loan pursuant to Section 2.02 of the Sale and Servicing
Agreement or any repurchase by the Servicer of a Mortgage Loan pursuant to
Section 3.21 of the Sale and Servicing Agreement; provided, however, any such
conveyance shall be without recourse to the Indenture Trustee and without any
obligation on its part to make any representations or warranties with respect to
such property released from the lien of this Indenture. No party

 

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relying upon an instrument executed by the Indenture Trustee as provided in
Article VIII hereunder shall be bound to ascertain the Indenture Trustee’s
authority, inquire into the satisfaction of any conditions precedent, or see to
the application of any monies.

 

(b) The Indenture Trustee shall, at such time as (i) there are no Notes
Outstanding and (ii) all sums due to the Indenture Trustee pursuant to this
Indenture have been paid, release any remaining portion of the Trust Estate that
secured the Notes from the lien of this Indenture.

 

(c) The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.05 only upon receipt of a request from the Issuer
which, except in the case of a repurchase of a Mortgage Loan pursuant to
Sections 2.02 or 3.21 of the Sale and Servicing Agreement, shall also be
accompanied by an Officers’ Certificate and an Opinion of Counsel stating that
all applicable requirements have been satisfied.

 

Section 8.06 Surrender of Notes Upon Final Payment. By acceptance of any Note,
the Holder thereof agrees to surrender such Note to the Indenture Trustee
promptly, prior to such Noteholder’s receipt of the final payment thereon.

 

Section 8.07 Optional Redemption of the Notes. (a) The Holder of the
Certificates, or, if there is no single Holder, the Majority Certificateholder,
shall have the option to redeem the Notes in whole, but not in part, on any
Payment Date on or after the Payment Date on which the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the end of the prior Due Period is
less than or equal to 20% of the aggregate Scheduled Principal Balance of the
Mortgage Loans as of the Cut-off Date. The aggregate redemption price for the
Notes will be equal to the unpaid Note Principal Balance of the Notes as of the
Payment Date on which the proposed redemption will take place in accordance with
the foregoing, together with accrued and unpaid interest thereon at the
applicable Note Interest Rate through such Payment Date (including any Basis
Risk Shortfall Carry-Forward Amounts), plus an amount sufficient to pay in full
all amounts owing to the Indenture Trustee, the Master Servicer and the
Securities Administrator pursuant to any Basic Document (which amounts shall be
specified by such Person in writing upon request of the Issuer, the Master
Servicer and the Securities Administrator, as applicable).

 

(b) In order to exercise the foregoing option, the Holder of the Certificates,
or the Majority Certificateholder, as applicable, shall provide written notice
of its exercise of such option to the Indenture Trustee, the Securities
Administrator, the Owner Trustee and the Master Servicer at least 15 days prior
to its exercise. Following receipt of the notice, the Indenture Trustee shall
provide notice to the Noteholders of the final payment on the Notes. In
addition, the Holder of the Certificates, or the Majority Certificateholder, as
applicable shall, not less than one Business Day prior to the proposed Payment
Date on which such redemption is to be made, deposit the aggregate redemption
price specified in (a) above with the Indenture Trustee, who shall deposit the
aggregate redemption price into the Payment Account and shall, on the Payment
Date after receipt of the funds, apply such funds to make final payments of
principal and interest on the Notes in accordance with the instructions of the
Securities Administrator and Section 3.05 hereof and payment in full to the
Indenture Trustee, and this Indenture shall be discharged subject to the
provisions of Section 4.10 hereof. If for any reason the amount deposited by the
Holder of the Certificates, or the Majority Certificateholder, as applicable is
not sufficient to make such redemption or such redemption cannot be completed
for any reason, the amount so deposited by the Holder of the Certificates, or
the Majority Certificateholder, as applicable with the Indenture Trustee shall
be immediately returned to the Holder of the Certificates, or the Majority
Certificateholder, as applicable in full and shall not be used for any other
purpose or be deemed to be part of the Trust Estate.

 

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ARTICLE IX

 

Supplemental Indentures

 

Section 9.01 Supplemental Indentures Without Consent of Noteholders. (a) Without
the consent of the Holders of any Notes but with prior notice to the Rating
Agency, the Issuer, the Securities Administrator and the Indenture Trustee, when
authorized by an Issuer Request in the case of the Securities Administrator and
the Indenture Trustee, at any time and from time to time, may enter into one or
more indentures supplemental hereto (which shall conform to the provisions of
the TIA as in force at the date of the execution thereof), in form satisfactory
to the Indenture Trustee and the Securities Administrator, for any of the
following purposes:

 

(i) to correct or amplify the description of any property at any time subject to
the lien of this Indenture, or better to assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subjected to the lien
of this Indenture, or to subject to the lien of this Indenture additional
property;

 

(ii) to evidence the succession, in compliance with the applicable provisions
hereof, of another person to the Issuer, and the assumption by any such
successor of the covenants of the Issuer herein and in the Notes contained;

 

(iii) to add to the covenants of the Issuer, for the benefit of the Holders of
the Notes, or to surrender any right or power herein conferred upon the Issuer;

 

(iv) to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee;

 

(v) to cure any ambiguity, to correct or supplement any provision herein or in
any supplemental indenture that may be inconsistent with any other provision
herein or in any supplemental indenture;

 

(vi) to make any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided, that such
action shall not materially and adversely affect the interests of the Holders of
the Notes;

 

(vii) to evidence and provide for the acceptance of the appointment hereunder by
a successor trustee with respect to the Notes and to add to or change any of the
provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI hereof; or

 

(viii) to modify, eliminate or add to the provisions of this Indenture to such
extent as shall be necessary to effect the qualification of this Indenture under
the TIA or under any similar federal statute hereafter enacted and to add to
this Indenture such other provisions as may be expressly required by the TIA;

 

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provided, however, that no such indenture supplements shall be entered into
unless the Indenture Trustee and the Securities Administrator shall have
received an Opinion of Counsel not at the expense of the Indenture Trustee or
the Securities Administrator as to the enforceability of any such indenture
supplement against the Issuer and to the effect that (i) such indenture
supplement is authorized or permitted hereunder and (ii) entering into such
indenture supplement will not result in a “significant modification” of the
Notes under Treasury Regulation Section 1.1001-3 or adversely affect the status
of the Notes as indebtedness for federal income tax purposes.

 

The Indenture Trustee and the Securities Administrator are hereby authorized to
join in the execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations that may be therein contained.

 

(b) The Issuer, the Securities Administrator and the Indenture Trustee, when
authorized by an Issuer Request in the case of the Securities Administrator and
the Indenture Trustee and the Indenture Trustee, may, also without the consent
of any of the Holders of the Notes and prior notice to the Rating Agency, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
as evidenced by an Opinion of Counsel, (i) is authorized or permitted by this
Indenture, and shall not (ii) adversely affect in any material respect the
interests of any Noteholder and (iii) will not cause the Issuer to be subject to
an entity level tax for federal income tax purposes.

 

Section 9.02 Supplemental Indentures With Consent of Noteholders. The Issuer,
the Securities Administrator and the Indenture Trustee, when authorized by an
Issuer Request in the case of the Securities Administrator and the Indenture
Trustee, also may, with prior notice to the Rating Agency and, with the consent
of the Holders of not less than a majority of the Note Principal Balance of each
Class of Notes affected thereby, by Act (as defined in Section 10.03 hereof) of
such Holders delivered to the Issuer, the Securities Administrator and the
Indenture Trustee, enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Note affected thereby:

 

(i) change the date of payment of any installment of principal of or interest on
any Note, or reduce the principal amount thereof or the interest rate thereon,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after the
respective due dates thereof;

 

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(ii) reduce the percentage of the Note Principal Balances of the Notes, the
consent of the Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;

 

(iii) modify or alter the provisions of the proviso to the definition of the
term “Outstanding” or modify or alter the exception in the definition of the
term “Holder”;

 

(iv) reduce the percentage of the Note Principal Balances of the Notes required
to direct the Indenture Trustee to direct the Issuer to sell or liquidate the
Trust Estate pursuant to Section 5.04 hereof;

 

(v) modify any provision of this Section 9.02 except to increase any percentage
specified herein or to provide that certain additional provisions of this
Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Note affected thereby;

 

(vi) modify any of the provisions of this Indenture in such manner as to affect
the calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date (including the calculation of any of the individual
components of such calculation); or

 

(vii) permit the creation of any lien ranking prior to or on a parity with the
lien of this Indenture with respect to any part of the Trust Estate or, except
as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Holder of
any Note of the security provided by the lien of this Indenture;

 

and provided, further, that such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer to be subject to an entity level tax.

 

Any such action shall not adversely affect in any material respect the interest
of any Holder (other than a Holder who shall consent to such supplemental
indenture) as evidenced by an Opinion of Counsel (provided by, and at the
expense of, the Person requesting such supplemental indenture) delivered to the
Indenture Trustee and the Securities Administrator.

 

It shall not be necessary for any Act of Noteholders under this Section 9.02 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

 

Promptly after the execution by the Issuer, the Securities Administrator and the
Indenture Trustee of any supplemental indenture pursuant to this Section 9.02,
the Indenture Trustee shall mail to the Holders of the Notes to which such
amendment or supplemental indenture relates a notice setting forth in general
terms the substance of such supplemental indenture. Any failure

 

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of the Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.

 

Section 9.03 Execution of Supplemental Indentures. In executing, or permitting
the additional trusts created by, any supplemental indenture permitted by this
Article IX or the modification thereby of the trusts created by this Indenture,
the Indenture Trustee and the Securities Administrator shall be entitled to
receive, and subject to Sections 6.01 and 6.02 hereof, shall be fully protected
in relying upon, an Opinion of Counsel not at the expense of the Indenture
Trustee or the Securities Administrator stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee and the Securities Administrator each may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee’s or the Securities Administrator’s own rights, duties,
liabilities or immunities under this Indenture or otherwise.

 

Section 9.04 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Securities Administrator, the Issuer and the Holders
of the Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

 

Section 9.05 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.

 

Section 9.06 Reference in Notes to Supplemental Indentures. Notes authenticated
and delivered after the execution of any supplemental indenture pursuant to this
Article IX may, and if required by the Indenture Trustee shall, bear a notation
in form approved by the Indenture Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Indenture Trustee shall so
determine, new Notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.

 

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ARTICLE X

 

Miscellaneous

 

Section 10.01 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee or the Securities
Administrator to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee and the Securities Administrator
(i) an Officer’s Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.

 

Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

 

(1) a statement that each signatory of such certificate or opinion has read or
has caused to be read such covenant or condition and the definitions herein
relating thereto;

 

(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

 

(3) a statement that, in the opinion of each such signatory, such signatory has
made such examination or investigation as is necessary to enable such signatory
to express an informed opinion as to whether or not such covenant or condition
has been complied with;

 

(4) a statement as to whether, in the opinion of each such signatory, such
condition or covenant has been complied with; and

 

(5) if the signatory of such certificate or opinion is required to be
Independent, the statement required by the definition of the term “Independent
Certificate”.

 

(b) (i) Prior to the deposit of any Collateral or other property or securities
with the Indenture Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 10.01 (a) or elsewhere in this
Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying
or stating the opinion of each person signing such certificate as to the fair
value (within 90 days prior to such deposit) to the Issuer of the Collateral or
other property or securities to be so deposited and a report from a nationally
recognized accounting firm verifying such value.

 

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(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer’s Certificate certifying or stating the opinion of any signer thereof as
to the matters described in clause (b)(i) above, the Issuer shall also deliver
to the Indenture Trustee an Independent Certificate from a nationally recognized
accounting firm as to the same matters, if the fair value of the securities to
be so deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then current fiscal year of
the Issuer, as set forth in the certificates delivered pursuant to clause (i)
above and this clause (ii), is 10% or more of the Note Principal Balances of the
Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof as set forth in the related
Officer’s Certificate is less than $25,000 or less than one percent of the Note
Principal Balances of the Notes.

 

(iii) Whenever any property or securities are to be released from the lien of
this Indenture, the Issuer shall also furnish to the Indenture Trustee an
Officer’s Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days prior to such release) of
the property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.

 

(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer’s Certificate certifying or stating the opinion of any signer thereof as
to the matters described in clause (iii) above, the Issuer shall also furnish to
the Indenture Trustee an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property or securities
released from the lien of this Indenture since the commencement of the
then-current calendar year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 10% or more of the Note Principal
Balances of the Notes, but such certificate need not be furnished in the case of
any release of property or securities if the fair value thereof as set forth in
the related Officer’s Certificate is less than $25,000 or less than one percent
of the then Note Principal Balances of the Notes.

 

Section 10.02 Form of Documents Delivered to Indenture Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.

 

Any certificate or opinion of an Authorized Officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller or the
Issuer, stating that the information

 

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with respect to such factual matters is in the possession of the Seller or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.

 

Whenever in this Indenture, in connection with any application or certificate or
report to the Indenture Trustee, it is provided that the Issuer shall deliver
any document as a condition of the granting of such application, or as evidence
of the Issuer’s compliance with any term hereof, it is intended that the truth
and accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions precedent
to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee’s right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.

 

Section 10.03 Acts of Noteholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the “Act” of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01
hereof) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03 hereof.

 

(b) The fact and date of the execution by any person of any such instrument or
writing may be proved in any manner that the Indenture Trustee deems sufficient.

 

(c) The ownership of Notes shall be proved by the Note Registrar.

 

(d) Any request, demand, authorization, direction, notice, consent, waiver or
other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.

 

Section 10.04 Notices etc., to Indenture Trustee, Securities Administrator,
Issuer and Rating Agencies. Any request, demand, authorization, direction,
notice, consent, waiver or act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or act of Noteholders is to be
made upon, given or furnished to or filed with:

 

(i) the Indenture Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if in writing and made, given, furnished or filed to
or with the Indenture Trustee at the Corporate Trust Office. The Indenture
Trustee shall promptly transmit any notice received by it from the Noteholders
to the Issuer;

 

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(ii) the Securities Administrator by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Securities Administrator at Wells Fargo Bank, National
Association, P.O. Box 98, Columbia Maryland 21046 (or, in the case of overnight
deliveries, 9062 Old Annapolis Road, Columbia, Maryland 21045) (Attention:
Corporate Trust Services - HomeBanc 2004-2), facsimile no.: (410) 715-2380, or
such other address as may hereafter be furnished to the other parties hereto in
writing. The Securities Administrator shall promptly transmit any notice
received by it from the Noteholders to the Issuer

 

(iii) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: HomeBanc Mortgage Trust 2004-2, in
care of Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19990-0001, Attention: Corporate Trust Administration, or
at any other address previously furnished in writing to the Indenture Trustee by
the Issuer. The Issuer shall promptly transmit any notice received by it from
the Noteholders to the Indenture Trustee.

 

 

Notices required to be given to the Rating Agency by the Issuer, the Indenture
Trustee, the Securities Administrator or the Owner Trustee shall be in writing,
mailed first-class postage pre-paid, to, in the case of Standard & Poor’s, at
the following address: Standard & Poor’s, 55 Water Street, 41st Floor, New York,
New York 10041, Attention of Asset Backed Surveillance Department, in the case
of Moody’s, at the following address: Moody’s Investors Service, Inc., 99 Church
Street, New York, New York 10007; or at such other address as shall be
designated by written notice to the other parties.

 

Section 10.05 Notices to Noteholders; Waiver. Where this Indenture provides for
notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at such
Person’s address as it appears on the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Noteholders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.

 

Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed

 

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with the Indenture Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such a waiver.

 

In case, by reason of the suspension of regular mail service as a result of a
strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.

 

Where this Indenture provides for notice to the Rating Agencies, failure to give
such notice shall not affect any other rights or obligations created hereunder,
and shall not under any circumstance constitute an Event of Default.

 

Section 10.06 Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts with another provision hereof that is required to be
included in this Indenture by any of the provisions of the Trust Indenture Act,
such required provision shall control.

 

The provisions of TIA §§ 310 through 317 that impose duties on any Person
(including the provisions automatically deemed included herein unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.

 

Section 10.07 Effect of Headings. The Article and Section headings herein are
for convenience only and shall not affect the construction hereof.

 

Section 10.08 Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.

 

Section 10.09 Separability. In case any provision in this Indenture or in the
Notes shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

Section 10.10 [Reserved].

 

Section 10.11 Legal Holidays. In any case where the date on which any payment is
due shall not be a Business Day, then (notwithstanding any other provision of
the Notes or this Indenture) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date on which nominally due, and no interest shall accrue for the
period from and after any such nominal date.

 

Section 10.12 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

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Section 10.13 Counterparts. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.

 

Section 10.14 Recording of Indenture. If this Indenture is subject to recording
in any appropriate public recording offices, such recording is to be effected by
the Issuer and at its expense accompanied by an Opinion of Counsel at its
expense (which may be counsel to the Issuer, the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.

 

Section 10.15 Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Securities
Administrator, the Owner Trustee or the Indenture Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Securities Administrator,
the Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of Article
VI, VII and VIII of the Trust Agreement.

 

Section 10.16 No Petition. The Indenture Trustee and the Securities
Administrator, by entering into this Indenture, each Noteholder, by accepting a
Note, and each Certificateholder, by accepting a Certificate, hereby covenant
and agree that they will not at any time prior to one year from the date of
termination hereof, institute against the Depositor or the Issuer, or join in
any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents; provided however, that nothing herein shall prohibit the
Indenture Trustee from filing proofs of claim in any proceeding.

 

Section 10.17 Inspection. The Issuer agrees that, at its expense, on reasonable
prior notice, it shall permit any representative of the Indenture Trustee or the
Securities Administrator, during the Issuer’s normal business hours, to examine
all the books of account, records, reports and other papers of the Issuer, to
make copies and extracts therefrom, to cause such books to be audited by
Independent certified public accountants, and to discuss the Issuer’s affairs,
finances and accounts with the Issuer’s officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee shall cause its representatives
to hold in confidence all such information except to the extent disclosure may
be required by law, regulation, judicial process or made to the Indenture
Trustee’s auditors, regulators, attorneys or other governmental authorities and
except to the extent that the Indenture Trustee or the Securities Administrator
may reasonably determine that such disclosure is consistent with its obligations
hereunder.

 

62

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

IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and the Securities
Administrator have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.

 

HOMEBANC MORTGAGE TRUST

2004-2, as Issuer

BY: Wilmington Trust Company, not in its individual capacity but solely as Owner

Trustee

By:  

/s/ Heather L. Williamson

Name:

 

Heather L. Williamson

Title:

 

Financial Services Officer

U.S. BANK NATIONAL ASSOCIATION,

as Indenture Trustee

By:  

/s/ Vaneta I. Bernard

Name:

 

Vaneta I. Bernard

Title:

 

Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Securities

Administrator

By:

 

/s/ Stacey Taylor

Name:

 

Stacey Taylor

Title:

 

Assistance Vice President

 

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

STATE OF MASSACHUSETTS    )           ) ss.:      COUNTY OF SUFFOLK    )     

 

On this 29th day of October 2004, before me personally appeared Vaneta Bernard
to me known, who being by me duly sworn, did depose and say, that s/he is a Vice
President of the Indenture Trustee, one of the corporations described in and
which executed the above instrument; and that he signed his name thereto by like
order.

 

Notary Public

 

NOTARY PUBLIC

 

[NOTARIAL SEAL]

 

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

STATE OF DELAWARE    )           ) ss.:      COUNTY OF NEW CASTLE    )     

 

On this 29th day of October 2004, before me personally appeared Heather L. Maier
to me known, who being by me duly sworn, did depose and say, that s/he is a
Financial Services Officer of the Owner Trustee, one of the entities described
in and which executed the above instrument; and that she signed her name thereto
by like order.

 

Notary Public

 

NOTARY PUBLIC

 

[NOTARIAL SEAL]

 

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

STATE OF MARYLAND    )           ) ss.:      COUNTY OF HOWARD    )     

 

On this 29th day of October 2004 before me, a notary public in and for said
State, personally appeared Stacey Taylor, known to me to be an Assistant Vice
President of Wells Fargo Bank, National Association, the entity that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said entity, and acknowledged to me that such entity executed the
within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.

 

 

Notary Public

 

[NOTARIAL SEAL]

 

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

 

EXHIBIT A-1

 

FORM OF CLASS A-[_] NOTES

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

THE HOLDER OF THIS NOTE OR BENEFICIAL OWNER OF ANY INTEREST HEREIN WILL BE
DEEMED TO REPRESENT TO ONE OF THE REPRESENTATIONS CONTAINED IN SECTION 4.15 OF
THE INDENTURE.

 

THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS NOTE.

 

PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.

 

A-1-1

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

 

HOMEBANC MORTGAGE TRUST 2004-2

MORTGAGE-BACKED NOTES

CLASS A-[    ]

 

AGGREGATE NOTE PRINCIPAL

BALANCE: $[                 ]

 

NOTE INTEREST

RATE: Adjustable Rate

INITIAL NOTE PRINCIPAL

BALANCE OF THIS NOTE: $[                ]

  NOTE NO. [    ]

PERCENTAGE INTEREST: 100%

  CUSIP NO. [                    ]

 

HomeBanc Mortgage Trust 2004-2 (the “Issuer”), a Delaware statutory trust, for
value received, hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of ($                                             ) in monthly
installments on the twenty-fifth day of each month or, if such day is not a
Business Day, the next succeeding Business Day (each a “Payment Date”),
commencing in November 2004 and ending on or before the Payment Date occurring
in [    ] (the “Final Scheduled Payment Date”) and to pay interest on the Note
Principal Balance of this Note (this “Note”) outstanding from time to time as
provided below.

 

This Note is one of a duly authorized issue of the Issuer’s Mortgage-Backed
Notes, Series 2004-2 (the “Notes”), issued under an Indenture dated as of
October 29, 2004 (the “Indenture”), among the Issuer, Wells Fargo Bank, National
Association (the “Securities Administrator”) and U.S. Bank National Association,
as indenture trustee (the “Indenture Trustee”, which term includes any successor
Indenture Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights thereunder of the Issuer, the Indenture Trustee, and the Holders of the
Notes and the terms upon which the Notes are to be authenticated and delivered.
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

 

Payments of principal and interest on this Note will be made on each Payment
Date to the Noteholder of record as of the related Record Date. The “Note
Principal Balance” of a Note as of any date of determination is equal to the
initial Note Principal Balance thereof, reduced by the aggregate of all amounts
previously paid with respect to such Note on account of principal and the
aggregate amount of cumulative Realized Losses allocated to such Note on all
prior Payment Dates.

 

The principal of, and interest on, this Note are due and payable as described in
the Indenture, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Note shall be equal to this
Note’s pro rata share of the aggregate payments on all Class A-[_] Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.

 

A-1-2

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

All principal and interest accrued on the Notes, if not previously paid, will
become finally due and payable at the Final Scheduled Payment Date.

 

The Notes are subject to redemption in whole, but not in part, by the Holder of
the Certificates, or, if there is no single Holder, the Majority
Certificateholder, on any Payment Date on or after the Payment Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the end of the
prior Due Period is less than or equal to 20% of the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the Cut-off Date.

 

The Issuer shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate will be the sole source of payments on the Class A-[    ] Notes,
and each Holder hereof, by its acceptance of this Note, agrees that (i) such
Note will be limited in right of payment to amounts available from the Trust
Estate as provided in the Indenture and (ii) such Holder shall have no recourse
to the Issuer, the Securities Administrator, the Owner Trustee, the Indenture
Trustee, the Depositor, EMC Mortgage Corporation, the Master Servicer, the
Servicer, the Special Servicer or any of their respective affiliates, or to the
assets of any of the foregoing entities, except the assets of the Issuer pledged
to secure the A-[    ] Notes pursuant to the Indenture and the rights conveyed
by the Issuer under the Indenture.

 

Any payment of principal or interest payable on this Note which is punctually
paid on the applicable Payment Date shall be paid to the Person in whose name
such Note is registered at the close of business on the Record Date for such
Payment Date by check mailed to such person’s address as it appears in the Note
Register on such Record Date, except for the final installment of principal and
interest payable with respect to such Note, which shall be payable as provided
below. Notwithstanding the foregoing, upon written request with appropriate
instructions by the Holder of this Note delivered to the Indenture Trustee at
least five Business Days prior to the Record Date, any payment of principal or
interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States designated by such
Holder. All scheduled reductions in the principal amount of a Note (or one or
more predecessor Notes) effected by payments of principal made on any Payment
Date shall be binding upon all Holders of this Note and of any note issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. The final payment of this
Note shall be payable upon presentation and surrender thereof on or after the
Payment Date thereof at the office designated by the Indenture Trustee or the
office or agency of the Issuer maintained by it for such purpose pursuant to
Section 3.02 of the Indenture.

 

Subject to the foregoing provisions, each Note delivered under the Indenture,
upon registration of transfer of or in exchange for or in lieu of any other Note
shall carry the right to unpaid principal and interest that were carried by such
other Note.

 

If an Event of Default as defined in the Indenture shall occur and be continuing
with respect to the Notes, the Notes may become or be declared due and payable
in the manner and with the effect provided in the Indenture. If any such
acceleration of maturity occurs prior to the payment of the entire unpaid Note
Principal Balance of the Notes, the amount payable to the

 

A-1-3

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

Holder of this Note will be equal to the sum of the unpaid Note Principal
Balance of the Notes, together with accrued and unpaid interest thereon as
described in the Indenture. The Indenture provides that, notwithstanding the
acceleration of the maturity of the Notes, under certain circumstances specified
therein, all amounts collected as proceeds of the Trust Estate securing the
Notes or otherwise shall continue to be applied to payments of principal of and
interest on the Notes as if they had not been declared due and payable.

 

The Holder of this Note or Beneficial Owner of any interest herein is deemed to
represent that either (1) it is not acquiring the Note with Plan Assets or (2)
(A) the acquisition, holding and transfer of a Note will not give rise to a
nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code and (B) the Notes are rated investment grade or better and such person
believes that the Notes are properly treated as indebtedness without substantial
equity features for purposes of the DOL Regulations, and agrees to so treat the
Notes. Alternatively, regardless of the rating of the Notes, such person may
provide the Indenture Trustee and the Owner Trustee with an Opinion of Counsel,
which Opinion of Counsel will not be at the expense of the Issuer, the Seller,
any Underwriter, the Owner Trustee, the Indenture Trustee, the Securities
Administrator, the Master Servicer, the Special Servicer or any successor
servicer which opines that the acquisition, holding and transfer of such Note or
interest therein is permissible under applicable law, will not constitute or
result in a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code and will not subject the Issuer, the Seller, the Depositor, any
Underwriter, the Owner Trustee, the Indenture Trustee, the Master Servicer, the
Securities Administrator, the Servicer or the Special Servicer to any obligation
in addition to those undertaken in the Indenture.

 

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Notes
of any authorized denominations and of a like aggregate initial Note Principal
Balance, will be issued to the designated transferee or transferees.

 

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.

 

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer and the Holders of a majority of all Notes at the time
outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the aggregate Note Principal Balance
of the Notes on behalf of the Holders of all the Notes, to waive any past
Default under the Indenture

 

A-1-4

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

and its consequences. Any such waiver by the Holder, at the time of the giving
thereof, of this Note (or any one or more predecessor Notes) shall bind the
Holder of every Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon such Note. The Indenture also permits the Issuer and the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of the Holders of the Notes issued thereunder.

 

Initially, the Notes will be registered in the name of Cede & Co. as nominee of
DTC, acting in its capacity as the Depository for the Notes. The Notes will be
delivered by the clearing agency in denominations as provided in the Indenture
and subject to certain limitations therein set forth. The Notes are exchangeable
for a like aggregate initial Note Principal Balance of Notes of different
authorized denominations, as requested by the Holder surrendering same.

 

Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

 

AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

 

A-1-5

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

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee.

 

Dated: October     , 2004

 

HOMEBANC MORTGAGE TRUST 2004-2 BY:  

WILMINGTON TRUST COMPANY, not in its individual capacity but solely in its
capacity as Owner Trustee

By:    

Authorized Signatory

 

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Class A-[    ] Notes referred to in the within-mentioned
Indenture.

 

U.S. BANK NATIONAL ASSOCIATION, as Indenture Trustee By:        

Authorized Signatory

 

A-1-6

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

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of the
Note, shall be construed as though they were written out in full according to
applicable laws or regulations:

 

TEN COM

   —      as tenants in common

TEN ENT

   —      as tenants by the entireties

JT TEN

   —      as joint tenants with right of survivorship and not as tenants in
common

UNIF GIFT MIN ACT

   —      ________________ Custodian           _________________________________
              (Cust)                                        (Minor)          
under Uniform Gifts to Minor Act           _______________________          

                                         (State)

 

Additional abbreviations may also be used though not in the above list.

 

A-1-7

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

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:

 

_____________________________________________________

_____________________________________________________

_____________________________________________________

(Please print or typewrite name and address, including zip code, of assignee)

 

                                                                               
                                                                                
                                        
                                                              

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints                      attorney to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.

 

Dated:            

Signature Guaranteed by

   

 

NOTICE: The signature(s) to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatsoever. Signature(s) must be guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.

 

A-1-8

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

 

EXHIBIT A-2

 

FORM OF CLASS M-[    ] NOTES

 

THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A NOTES [AND CLASS
M-1 NOTES] AS DESCRIBED IN THE INDENTURE.

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

THE HOLDER OF THIS NOTE OR BENEFICIAL OWNER OF ANY INTEREST HEREIN WILL BE
DEEMED TO REPRESENT TO ONE OF THE REPRESENTATIONS CONTAINED IN SECTION 4.15 OF
THE INDENTURE.

 

THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS NOTE.

 

PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.

 

A-2-1

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

 

HOMEBANC MORTGAGE TRUST 2004-2

MORTGAGE-BACKED NOTES

CLASS M-[_]

 

AGGREGATE NOTE PRINCIPAL BALANCE: $[             ]

   NOTE INTEREST RATE: Adjustable Rate INITIAL NOTE PRINCIPAL BALANCE OF THIS
NOTE: $[             ]    NOTE NO. 1

PERCENTAGE INTEREST: 100%

   CUSIP NO. [             ]

 

HomeBanc Mortgage Trust 2004-2 (the “Issuer”), a Delaware statutory trust, for
value received, hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of                                                          
($                    ) in monthly installments on the twenty-fifth day of each
month or, if such day is not a Business Day, the next succeeding Business Day
(each a “Payment Date”), commencing in November 2004 and ending on or before the
Payment Date occurring in [            ] (the “Final Scheduled Payment Date”)
and to pay interest on the Note Principal Balance of this Note (this “Note”)
outstanding from time to time as provided below.

 

This Note is one of a duly authorized issue of the Issuer’s Mortgage-Backed
Notes, Series 2004-2 (the “Notes”), issued under an Indenture dated as of
October 29, 2004 (the “Indenture”), among the Issuer, Wells Fargo Bank, National
Association (the “Securities Administrator”) and U.S. Bank National Association,
as indenture trustee (the “Indenture Trustee”, which term includes any successor
Indenture Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights thereunder of the Issuer, the Indenture Trustee, and the Holders of the
Notes and the terms upon which the Notes are to be authenticated and delivered.
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

 

Payments of principal and interest on this Note will be made on each Payment
Date to the Noteholder of record as of the related Record Date. The “Note
Principal Balance” of a Note as of any date of determination is equal to the
initial Note Principal Balance thereof, reduced by the aggregate of all amounts
previously paid with respect to such Note on account of principal and the
aggregate amount of cumulative Realized Losses allocated to such Note on all
prior Payment Dates.

 

The principal of, and interest on, this Note are due and payable as described in
the Indenture, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Note shall be equal to this
Note’s pro rata share of the aggregate payments on all Class M-[_] Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.

 

A-2-2

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

All principal and interest accrued on the Notes, if not previously paid, will
become finally due and payable at the Final Scheduled Payment Date.

 

The Notes are subject to redemption in whole, but not in part, by the Holder of
the Certificates, or, if there is no single Holder, the Majority
Certificateholder, on any Payment Date on or after the Payment Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than or
equal to 20% of aggregate Scheduled Principal Balance of the Mortgage Loans as
of the Cut-off Date.

 

The Issuer shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate will be the sole source of payments on the Class M-[    ] Notes,
and each Holder hereof, by its acceptance of this Note, agrees that (i) such
Note will be limited in right of payment to amounts available from the Trust
Estate as provided in the Indenture and (ii) such Holder shall have no recourse
to the Issuer, the Securities Administrator, the Owner Trustee, the Indenture
Trustee, the Depositor, EMC Mortgage Corporation, the Master Servicer, the
Servicer, the Special Servicer or any of their respective affiliates, or to the
assets of any of the foregoing entities, except the assets of the Issuer pledged
to secure the Class M-[    ] Notes pursuant to the Indenture and the rights
conveyed by the Issuer under the Indenture.

 

Any payment of principal or interest payable on this Note which is punctually
paid on the applicable Payment Date shall be paid to the Person in whose name
such Note is registered at the close of business on the Record Date for such
Payment Date by check mailed to such person’s address as it appears in the Note
Register on such Record Date, except for the final installment of principal and
interest payable with respect to such Note, which shall be payable as provided
below. Notwithstanding the foregoing, upon written request with appropriate
instructions by the Holder of this Note delivered to the Indenture Trustee at
least five Business Days prior to the Record Date, any payment of principal or
interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States designated by such
Holder. All scheduled reductions in the principal amount of a Note (or one or
more predecessor Notes) effected by payments of principal made on any Payment
Date shall be binding upon all Holders of this Note and of any note issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. The final payment of this
Note shall be payable upon presentation and surrender thereof on or after the
Payment Date thereof at the office designated by the Indenture Trustee or the
office or agency of the Issuer maintained by it for such purpose pursuant to
Section 3.02 of the Indenture.

 

Subject to the foregoing provisions, each Note delivered under the Indenture,
upon registration of transfer of or in exchange for or in lieu of any other Note
shall carry the right to unpaid principal and interest that were carried by such
other Note.

 

If an Event of Default as defined in the Indenture shall occur and be continuing
with respect to the Notes, the Notes may become or be declared due and payable
in the manner and with the effect provided in the Indenture. If any such
acceleration of maturity occurs prior to the payment of the entire unpaid Note
Principal Balance of the Notes, the amount payable to the

 

A-2-3

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

Holder of this Note will be equal to the sum of the unpaid Note Principal
Balance of the Notes, together with accrued and unpaid interest thereon as
described in the Indenture. The Indenture provides that, notwithstanding the
acceleration of the maturity of the Notes, under certain circumstances specified
therein, all amounts collected as proceeds of the Trust Estate securing the
Notes or otherwise shall continue to be applied to payments of principal of and
interest on the Notes as if they had not been declared due and payable.

 

The Holder of this Note or Beneficial Owner of any interest herein is deemed to
represent that either (1) it is not acquiring the Note with Plan Assets or (2)
(A) the acquisition, holding and transfer of a Note will not give rise to a
nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code and (B) the Notes are rated investment grade or better and such person
believes that the Notes are properly treated as indebtedness without substantial
equity features for purposes of the DOL Regulations, and agrees to so treat the
Notes. Alternatively, regardless of the rating of the Notes, such person may
provide the Indenture Trustee and the Owner Trustee with an Opinion of Counsel,
which Opinion of Counsel will not be at the expense of the Issuer, the Seller,
any Underwriter, the Owner Trustee, the Indenture Trustee, the Securities
Administrator, the Master Servicer, the Special Servicer or any successor
servicer which opines that the acquisition, holding and transfer of such Note or
interest therein is permissible under applicable law, will not constitute or
result in a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code and will not subject the Issuer, the Seller, the Depositor, any
Underwriter, the Owner Trustee, the Indenture Trustee, the Master Servicer, the
Servicer, the Special Servicer or any successor servicer to any obligation in
addition to those undertaken in the Indenture.

 

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Notes
of any authorized denominations and of a like aggregate initial Note Principal
Balance, will be issued to the designated transferee or transferees.

 

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.

 

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer and the Holders of a majority of all Notes at the time
outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the aggregate Note Principal Balance
of the Notes on behalf of the Holders of all the Notes, to waive any past
Default under the Indenture

 

A-2-4

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

and its consequences. Any such waiver by the Holder, at the time of the giving
thereof, of this Note (or any one or more predecessor Notes) shall bind the
Holder of every Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon such Note. The Indenture also permits the Issuer and the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of the Holders of the Notes issued thereunder.

 

Initially, the Notes will be registered in the name of Cede & Co. as nominee of
DTC, acting in its capacity as the Depository for the Notes. The Notes will be
delivered by the clearing agency in denominations as provided in the Indenture
and subject to certain limitations therein set forth. The Notes are exchangeable
for a like aggregate initial Note Principal Balance of Notes of different
authorized denominations, as requested by the Holder surrendering same.

 

Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

 

AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

 

A-2-5

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee.

 

Dated: October     , 2004

 

HOMEBANC MORTGAGE TRUST 2004-2

BY:       WILMINGTON TRUST COMPANY, not in its individual capacity but solely in
its capacity as Owner Trustee By:                

Authorized Signatory

 

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Class M-[    ] Notes referred to in the within-mentioned
Indenture.

 

U.S. BANK NATIONAL ASSOCIATION, as Indenture Trustee

 

By:                

Authorized Signatory

 

A-2-6

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ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of the
Note, shall be construed as though they were written out in full according to
applicable laws or regulations:

 

TEN COM

   —  

as tenants in common

TEN ENT 

   —  

as tenants by the entireties

JT TEN    

   —  

as joint tenants with right of survivorship and not

as tenants in common

UNIF GIFT MIN ACT

   —  

                     Custodian

        

__________________________

        (Cust)                    (Minor)

 

under Uniform Gifts to Minor Act

________________________

                                         (State)

 

Additional abbreviations may also be used though not in the above list.

 

A-2-7

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ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:

 

_____________________________________________

_____________________________________________

_____________________________________________

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

_____________________________________________________________________________________________

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints                                          attorney to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.

 

Dated:                                          

    

Signature Guaranteed by                                 
                                        
                                        
                                        
                                                          

 

NOTICE: The signature(s) to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatsoever. Signature(s) must be guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.

 

A-2-8

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EXHIBIT A-3

 

FORM OF CLASS B-1 NOTES

 

THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS M-1 AND
CLASS M-2 NOTES AS DESCRIBED IN THE INDENTURE.

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

THE HOLDER OF THIS NOTE OR BENEFICIAL OWNER OF ANY INTEREST HEREIN WILL BE
DEEMED TO REPRESENT TO ONE OF THE REPRESENTATIONS CONTAINED IN SECTION 4.15 OF
THE INDENTURE.

 

THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS NOTE.

 

PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.

 

A-3-1

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HOMEBANC MORTGAGE TRUST 2004-2

MORTGAGE-BACKED NOTES

CLASS B-1

 

AGGREGATE NOTE PRINCIPAL

BALANCE: $[             ]

  

NOTE INTEREST

RATE: Adjustable Rate

INITIAL NOTE PRINCIPAL

BALANCE OF THIS NOTE: $[             ]

   NOTE NO. 1

PERCENTAGE INTEREST: 100%

   CUSIP NO. [             ]

 

HomeBanc Mortgage Trust 2004-2 (the “Issuer”), a Delaware statutory trust, for
value received, hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of                                         
                         ($                    ) in monthly installments on the
twenty-fifth day of each month or, if such day is not a Business Day, the next
succeeding Business Day (each a “Payment Date”), commencing in November 2004 and
ending on or before the Payment Date occurring in [            ] (the “Final
Scheduled Payment Date”) and to pay interest on the Note Principal Balance of
this Note (this “Note”) outstanding from time to time as provided below.

 

This Note is one of a duly authorized issue of the Issuer’s Mortgage-Backed
Notes, Series 2004-2 (the “Notes”), issued under an Indenture dated as of
October 29, 2004 (the “Indenture”), among the Issuer, Wells Fargo Bank, National
Association (the “Securities Administrator”) and U.S. Bank National Association,
as indenture trustee (the “Indenture Trustee”, which term includes any successor
Indenture Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights thereunder of the Issuer, the Indenture Trustee, and the Holders of the
Notes and the terms upon which the Notes are to be authenticated and delivered.
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.

 

Payments of principal and interest on this Note will be made on each Payment
Date to the Noteholder of record as of the related Record Date. The “Note
Principal Balance” of a Note as of any date of determination is equal to the
initial Note Principal Balance thereof, reduced by the aggregate of all amounts
previously paid with respect to such Note on account of principal and the
aggregate amount of cumulative Realized Losses allocated to such Note on all
prior Payment Dates.

 

The principal of, and interest on, this Note are due and payable as described in
the Indenture, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Note shall be equal to this
Note’s pro rata share of the aggregate payments on all Class B-1 Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.

 

A-3-2

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All principal and interest accrued on the Notes, if not previously paid, will
become finally due and payable at the Final Scheduled Payment Date.

 

The Notes are subject to redemption in whole, but not in part, by the Holder of
the Certificates, or, if there is no single Holder, the Majority
Certificateholder, on any Payment Date on or after the Payment Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is less than or
equal to 20% of aggregate Scheduled Principal Balance of the Mortgage Loans as
of the Cut-off Date.

 

The Issuer shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate will be the sole source of payments on the Class B-1 Notes, and
each Holder hereof, by its acceptance of this Note, agrees that (i) such Note
will be limited in right of payment to amounts available from the Trust Estate
as provided in the Indenture and (ii) such Holder shall have no recourse to the
Issuer, the Securities Administrator, the Owner Trustee, the Indenture Trustee,
the Depositor, EMC Mortgage Corporation, the Master Servicer, the Servicer, the
Special Servicer or any of their respective affiliates, or to the assets of any
of the foregoing entities, except the assets of the Issuer pledged to secure the
Class B-1 Notes pursuant to the Indenture and the rights conveyed by the Issuer
under the Indenture.

 

Any payment of principal or interest payable on this Note which is punctually
paid on the applicable Payment Date shall be paid to the Person in whose name
such Note is registered at the close of business on the Record Date for such
Payment Date by check mailed to such person’s address as it appears in the Note
Register on such Record Date, except for the final installment of principal and
interest payable with respect to such Note, which shall be payable as provided
below. Notwithstanding the foregoing, upon written request with appropriate
instructions by the Holder of this Note delivered to the Indenture Trustee at
least five Business Days prior to the Record Date, any payment of principal or
interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States designated by such
Holder. All scheduled reductions in the principal amount of a Note (or one or
more predecessor Notes) effected by payments of principal made on any Payment
Date shall be binding upon all Holders of this Note and of any note issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such payment is noted on such Note. The final payment of this
Note shall be payable upon presentation and surrender thereof on or after the
Payment Date thereof at the office designated by the Indenture Trustee or the
office or agency of the Issuer maintained by it for such purpose pursuant to
Section 3.02 of the Indenture.

 

Subject to the foregoing provisions, each Note delivered under the Indenture,
upon registration of transfer of or in exchange for or in lieu of any other Note
shall carry the right to unpaid principal and interest that were carried by such
other Note.

 

If an Event of Default as defined in the Indenture shall occur and be continuing
with respect to the Notes, the Notes may become or be declared due and payable
in the manner and with the effect provided in the Indenture. If any such
acceleration of maturity occurs prior to the payment of the entire unpaid Note
Principal Balance of the Notes, the amount payable to the Holder of this Note
will be equal to the sum of the unpaid Note Principal Balance of the Notes,

 

A-3-3

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together with accrued and unpaid interest thereon as described in the Indenture.
The Indenture provides that, notwithstanding the acceleration of the maturity of
the Notes, under certain circumstances specified therein, all amounts collected
as proceeds of the Trust Estate securing the Notes or otherwise shall continue
to be applied to payments of principal of and interest on the Notes as if they
had not been declared due and payable.

 

The Holder of this Note or Beneficial Owner of any interest herein is deemed to
represent that either (1) it is not acquiring the Note with Plan Assets or (2)
(A) the acquisition, holding and transfer of a Note will not give rise to a
nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code and (B) the Notes are rated investment grade or better and such person
believes that the Notes are properly treated as indebtedness without substantial
equity features for purposes of the DOL Regulations, and agrees to so treat the
Notes. Alternatively, regardless of the rating of the Notes, such person may
provide the Indenture Trustee and the Owner Trustee with an Opinion of Counsel,
which Opinion of Counsel will not be at the expense of the Issuer, the Seller,
any Underwriter, the Owner Trustee, the Indenture Trustee, the Securities
Administrator, the Master Servicer, the Servicer, the Special Servicer or any
successor servicer which opines that the acquisition, holding and transfer of
such Note or interest therein is permissible under applicable law, will not
constitute or result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Issuer, the Seller, the
Depositor, any Underwriter, the Owner Trustee, the Indenture Trustee, the Master
Servicer, the Servicer, the Special Servicer or any successor servicer to any
obligation in addition to those undertaken in the Indenture.

 

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Notes
of any authorized denominations and of a like aggregate initial Note Principal
Balance, will be issued to the designated transferee or transferees.

 

Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.

 

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer and the Holders of a majority of all Notes at the time
outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the aggregate Note Principal Balance
of the Notes on behalf of the Holders of all the Notes, to waive any past
Default under the Indenture and its consequences. Any such waiver by the Holder,
at the time of the giving thereof, of this

 

A-3-4

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Note (or any one or more predecessor Notes) shall bind the Holder of every Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon such
Note. The Indenture also permits the Issuer and the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Notes issued thereunder.

 

Initially, the Notes will be registered in the name of Cede & Co. as nominee of
DTC, acting in its capacity as the Depository for the Notes. The Notes will be
delivered by the clearing agency in denominations as provided in the Indenture
and subject to certain limitations therein set forth. The Notes are exchangeable
for a like aggregate initial Note Principal Balance of Notes of different
authorized denominations, as requested by the Holder surrendering same.

 

Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

 

AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.

 

A-3-5

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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee.

 

Dated: October     , 2004

 

HOMEBANC MORTGAGE TRUST 2004-2 BY:   WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its capacity as Owner Trustee By:        

Authorized Signatory

 

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Class B-1 Notes referred to in the within-mentioned
Indenture.

 

U.S. BANK NATIONAL ASSOCIATION, as Indenture Trustee

 

By:        

Authorized Signatory

 

A-3-6

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ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of the
Note, shall be construed as though they were written out in full according to
applicable laws or regulations:

 

TEN COM

   —    as tenants in common

TEN ENT 

   —    as tenants by the entireties

JT TEN    

   —    as joint tenants with right of survivorship and not as tenants in common

UNIF GIFT MIN ACT

   —   

__________                                                          Custodian

______________________________

        (Cust)                                          (Minor)

         

under Uniform Gifts to Minor Act

_____________________

(State)

 

Additional abbreviations may also be used though not in the above list.

 

A-3-7

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ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:

 

____________________________________________________

 

____________________________________________________

 

_____________________________________________________

(Please print or typewrite name and address, including zip code, of assignee)

 

___________________________________________________________________________________________________

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints                                          attorney to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.

 

Dated:            

Signature Guaranteed by

       

 

NOTICE: The signature(s) to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatsoever. Signature(s) must be guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.

 

A-3-8

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EXHIBIT A-4

 

CORRIDOR CONTRACTS

 

(Provided upon request)

 

A-4-1

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APPENDIX A

DEFINITIONS

 

Accepted Master Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (x) those customary mortgage servicing practices of prudent
mortgage servicing institutions that master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located, to the extent applicable to the Master Servicer
(except in its capacity as successor to the Servicer), or (y) as provided in the
HomeBanc Servicing Agreement, to the extent applicable to the Servicer, but in
no event below the standard set forth in clause (x).

 

Account: The Master Servicer Collection Account, the Payment Account and the
Protected Account as the context may require.

 

Accrual Period: With respect to each Class of Notes and any Payment Date, the
period from the preceding Payment Date (or, in the case of the first Payment
Date, from the Closing Date) through the day preceding such Payment Date.

 

Accrued Note Interest: With respect to any Payment Date and each Class of Notes,
interest accrued during the related Accrual Period at the then-applicable Note
Interest Rate on the related Note Principal Balance thereof immediately prior to
such Payment Date, plus any Accrued Note Interest remaining unpaid from any
prior Payment Date with interest thereon at the related Note Interest Rate.
Accrued Note Interest for each Class of Notes shall be calculated on the basis
of a 360-day year consisting of twelve 30-day months.

 

Affiliate: With respect to any Person, any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
“control” means the power to direct the management and policies of a Person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and “controlling” and “controlled” shall have meanings
correlative to the foregoing.

 

Allocated Realized Loss Amount: With respect to any Class of Class A, Class M
and Class B Notes and any Payment Date, an amount equal to the sum of any
Realized Loss allocated to that Class of Notes on that Payment Date and any
Allocated Realized Loss Amount for that Class remaining unpaid from the previous
Payment Date, in each case, with interest thereon at the applicable Note
Interest Rate for such Payment Date for such Class for the related Accrual
Period.

 

Applicable Credit Rating: For any long-term deposit or security, a credit rating
of AAA in the case of S&P or Aaa in the case of Moody’s. For any short-term
deposit or security, a rating of A-l+ in the case of S&P or P-1 in the case of
Moody’s.

 

Appraised Value: For any Mortgaged Property related to a Mortgage Loan, the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the requirements of the Servicer and Fannie Mae.

 

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

Assignment Agreement: The agreement attached as Exhibit D to the Sale and
Servicing Agreement, whereby the HomeBanc Servicing Agreement was assigned to
the Indenture Trustee for the benefit of the Noteholders.

 

Assignment of Mortgage: An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.

 

Authorized Newspaper: A newspaper of general circulation in the Borough of
Manhattan, The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays.

 

Authorized Officer: With respect to the Issuer, any officer of the Owner Trustee
who is authorized to act for the Owner Trustee in matters relating to the Issuer
and who is identified on the list of Authorized Officers delivered by the Owner
Trustee to the Indenture Trustee and Securities Administrator on the Closing
Date (as such list may be modified or supplemented from time to time
thereafter).

 

Available Funds: With respect to any Payment Date, the sum of the following: (a)
all previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
portion of Excess Liquidation Proceeds) and all previously undistributed
payments on account of interest received after the Cut-off Date and on or prior
to the related Determination Date, (b) any Monthly Advances and Compensating
Interest Payments by the Servicer or the Master Servicer with respect such
Payment Date and (c) any reimbursed amount in connection with losses on
investments of deposits in an account, except:

 

  (1) all payments on the Mortgage Loans that were due on or before the Cut-off
Date;

 

  (2) all Principal Prepayments and Liquidation Proceeds on the Mortgage Loans
received after the applicable Prepayment Period;

 

  (3) all payments, other than Principal Prepayments, on the Mortgage Loans that
represent early receipt of Scheduled Payments due on a date or dates subsequent
to the related Due Date;

 

  (4) amounts received on particular Mortgage Loans as late payments of
principal or interest and respecting which, and to the extent that, there are
any unreimbursed Monthly Advances;

 

  (5) amounts representing Monthly Advances on the Mortgage Loans determined to
be Nonrecoverable Advances;

 

2

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  (6) any investment earnings on amounts on deposit in the Master Servicer
Collection Account, the Payment Account and amounts permitted to be withdrawn
from the Master Servicer Collection Account pursuant to the Sale and Servicing
Agreement and the Indenture relating to the Mortgage Loans;

 

  (7) amounts needed to pay the Servicing Fee, the Special Servicing Fee or to
reimburse the Servicer, the Special Servicer or the Master Servicer for amounts
due under the HomeBanc Servicing Agreement, the Special Servicing Agreement and
the Sale and Servicing Agreement to the extent such amounts have not been
retained by, or paid previously to, the Servicer, the Special Servicer or the
Master Servicer and to the extent such amounts relate to the Mortgage Loans; and

 

  (8) any fees, expenses or other amounts reimbursable or payable to the
Indenture Trustee, the Securities Administrator, the Master Servicer, the Owner
Trustee and the Custodian pursuant to the Sale and Servicing Agreement, the
Indenture, the Trust Agreement or the Custodial Agreement.

 

Available Funds Rate: On any Payment Date, the per annum rate equal to the
product of (i) the weighted average of the Net Rates on the Mortgage Loans
included in the Trust as of the end of the prior Due Period, weighted on the
basis of the Scheduled Principal Balances thereof as of the end of the prior Due
Period and (ii) a fraction equal to (x) the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the end of the prior Due Period divided by
(y) the aggregate Note Principal Balance of the Notes immediately prior to such
Payment Date.

 

Average Loss Severity Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the sum of the
Loss Severity Percentages for each Mortgage Loan which had a Realized Loss and
the denominator of which is the number of Mortgage Loans which had Realized
Losses.

 

Bankruptcy Code: The United States Bankruptcy Code, as amended as codified in 11
U.S.C. §§ 101-1330.

 

Bankruptcy Loss: With respect to any Mortgage Loan, any Deficient Valuation or
Debt Service Reduction related to such Mortgage Loan as reported by the Servicer
to the Master Servicer.

 

Basic Documents: The Trust Agreement, the Certificate of Trust, the Indenture,
the Sale and Servicing Agreement, the Administration Agreement, the HomeBanc
Servicing Agreement, the Mortgage Loan Purchase Agreement, the Assignment
Agreement, the Special Servicing Agreement, the Corridor Contracts and the other
documents and certificates delivered in connection with any of the above.

 

3

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Basic Principal Distribution Amount: With respect to any Payment Date, the
lesser of (a) the excess of (i) the Available Funds for such Payment Date over
(ii) the aggregate amount of Accrued Note Interest for the related Notes for
such Payment Date and (b) the Principal Remittance Amount for such Payment Date.

 

Basis Risk Shortfall: With respect to any Class of Notes, on each Payment Date
where clause (iii) of the definition of “Note Interest Rate” is less than
clauses (i) or (ii) of the definition of “Note Interest Rate”, the excess, if
any, of (x) the aggregate Accrued Note Interest thereon for such Payment Date
calculated pursuant to the lesser of clause (i) or (ii) of the definition of
Note Interest Rate over (y) interest accrued on the Mortgage Loans at the
Available Funds Rate.

 

Basis Risk Shortfall Carry-Forward Amount: With respect to each Class of Notes
and any Payment Date, as determined separately for each Class of Notes, an
amount equal to the aggregate amount of Basis Risk Shortfall for such Notes on
such Payment Date, plus any unpaid Basis Risk Shortfall for such Class of Notes
from prior Payment Dates, plus interest thereon at the Note Interest Rate for
such Payment Date for such Class for the related Accrual Period, to the extent
previously unreimbursed by proceeds from the Corridor Contracts or from the
related Net Monthly Excess Cash Flow.

 

Beneficial Owner: With respect to any Note, the Person who is the beneficial
owner of such Note as reflected on the books of the Depository or on the books
of a Person maintaining an account with such Depository (directly as a
Depository Participant or indirectly through a Depository Participant, in
accordance with the rules of such Depository).

 

Book-Entry Notes: Beneficial interests in the Notes, ownership and transfers of
which shall be made through book entries by the Depository as described in
Section 4.06 of the Indenture.

 

Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day on
which the New York Stock Exchange or Federal Reserve is closed or on which
banking institutions in the jurisdiction in which the Indenture Trustee, the
Master Servicer, the Servicer or the Securities Administrator is located are
authorized or obligated by law or executive order to be closed.

 

Calendar Quarter: January 1 to March 31, April 1 to June 30, July 1 to September
30, or October 1 to December 31, as applicable.

 

Corridor Contracts: The long-form confirmations dated October 29, 2004 between
the Indenture Trustee and the Corridor Counterparty.

 

Corridor Counterparty: Bear Stearns Financial Products Inc.

 

Certificate Distribution Account: The account or accounts created and maintained
pursuant to Section 3.10(c) of the Trust Agreement. The Certificate Distribution
Account shall be an Eligible Account.

 

4

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Certificate Paying Agent: The meaning specified in Section 3.10 of the Trust
Agreement.

 

Certificate Percentage Interest: With respect to each Certificate, the
Certificate Percentage Interest stated on the face thereof.

 

Certificate Register: The register maintained by the Certificate Registrar in
which the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates.

 

Certificate Registrar: Initially, the Indenture Trustee, in its capacity as
Certificate Registrar, or any successor to the Indenture Trustee in such
capacity.

 

Certificate of Trust: The Certificate of Trust filed for the Trust pursuant to
Section 3810(a) of the Statutory Trust Statute.

 

Certificates or Trust Certificates: The HomeBanc Mortgage Loan Trust 2004-2
Trust Certificates, Series 2004-2, evidencing the beneficial ownership interest
in the Issuer and executed by the Owner Trustee in substantially the form set
forth in Exhibit A to the Trust Agreement.

 

Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register. Owners of Certificates that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee, as the case may
be, the pledgee’s right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates or any
Affiliate of any of the foregoing Persons.

 

Class: Any of the Class A-1, Class A-2, Class M-1, Class M-2 and Class B-1
Notes.

 

Class A Notes: The Class A-1 Notes and Class A-2 Notes in the form attached as
Exhibit A-1 to the Indenture.

 

Class B Notes: The Class B-1 Notes in the form attached as Exhibit A-3 to the
Indenture.

 

Class M Notes: The Class M-1 Notes and Class M-2 Notes in the form attached as
Exhibit A-2 to the Indenture.

 

Closing Date: October 29, 2004.

 

Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

 

Collateral: The meaning specified in the Granting Clause of the Indenture.

 

Commission: The Securities and Exchange Commission.

 

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Compensating Interest Payment: As defined in Section 3.23 of the Sale and
Servicing Agreement.

 

Corporate Trust Office: With respect to the Indenture Trustee, Certificate
Registrar, Certificate Paying Agent and Paying Agent, the principal corporate
trust office of the Indenture Trustee and Note Registrar at which at any
particular time its engagement under the Indenture shall be administered, which
office at the date of the execution of this instrument is located at US Bank
Corporate Trust Services, One Federal Street, 3rd Floor, Boston, Massachusettes
02110, Attention: Corporate Trust Services—HomeBanc 2004-2. With respect to the
Owner Trustee, the principal corporate trust office of the Owner Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of the execution of this Trust Agreement is located at
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19801, Attention: HomeBanc Mortgage Trust 2004-2 (HomeBanc
2004-2).

 

Custodial Agreement: The custodial agreement dated as of October 29, 2004,
between the Issuer, the Indenture Trustee, the Depositor, the Master Servicer
and the Custodian, relating to the HomeBanc Mortgage Loan Trust 2004-2,
Mortgage-Backed Notes, Series 2004-2.

 

Custodian: JPMorgan Chase Bank and its successors and assigns.

 

Cut-off Date: With respect to the Mortgage Loans, October 1, 2004.

 

Cut-off Date Balance: $894,748,501.

 

Cut-off Date Principal Balance: With respect to any Mortgage Loan, the unpaid
principal balance thereof as of the Cut-off Date after applying the principal
portion of Monthly Payments due on or before such date, whether or not received,
and without regard to any payments due after such date.

 

Debt Service Reduction: Any reduction of the Scheduled Payments which a
Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of any
proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.

 

Default: Any occurrence which is or with notice or the lapse of time or both
would become an Event of Default.

 

Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
Mortgaged Property by a court of competent jurisdiction in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.

 

Definitive Notes: The meaning specified in Section 4.06 of the Indenture.

 

Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with a
Substitute Mortgage Loan.

 

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Depositor: Structured Asset Mortgage Investments II Inc., a Delaware
corporation, or its successor in interest.

 

Depository: The Depository Trust Company, the nominee of which is Cede & Co., or
any successor thereto.

 

Depository Participant: A Person for whom, from time to time, the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.

 

Designated Depository Institution: A depository institution (commercial bank,
federal savings bank, mutual savings bank or savings and loan association) or
trust company (which may include the Indenture Trustee), the deposits of which
are fully insured by the FDIC to the extent provided by law.

 

Determination Date: With respect to any Payment Date, the 15th day of the
related month, or if the 15th day of such month is not a Business Day, the
immediately preceding Business Day.

 

Due Date: With respect to each Mortgage Loan, the day of the month on which each
scheduled Monthly Payment is due.

 

Due Period: With respect to any Payment Date and the Mortgage Loans, the period
commencing on the second day of the month immediately preceding the month of
such Payment Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the first day of the month of such Payment Date.

 

Eligible Account: Any of (i) a segregated account maintained with a federal or
state chartered depository institution (A) the short-term obligations of which
are rated A-1 or better by S&P and P-1 by Moody’s at the time of any deposit
therein or (B) insured by the FDIC (to the limits established by such
corporation), the uninsured deposits in which account are otherwise secured such
that, as evidenced by an Opinion of Counsel (obtained by the Person requesting
that the account be held pursuant to this clause (i)) delivered to the Indenture
Trustee prior to the establishment of such account, the Noteholders will have a
claim with respect to the funds in such account and a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments, each of which shall mature not later than the Business Day
immediately preceding the Payment Date next following the date of investment in
such collateral or the Payment Date if such Permitted Investment is an
obligation of the institution that maintains the Payment Account) securing such
funds that is superior to claims of any other depositors or general creditors of
the depository institution with which such account is maintained, (ii) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company with trust powers acting in
its fiduciary capacity or (iii) a segregated account or accounts of a depository
institution acceptable to the Rating Agencies (as evidenced in writing by the
Rating Agencies that use of any such account as the Payment Account will not
have an adverse effect on the then-current ratings assigned to the Classes of
Notes then rated by such Rating Agency). Eligible Accounts may bear interest.

 

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

 

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Event of Default: With respect to the Indenture, any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

(i) a failure by the Issuer to pay (a) Accrued Note Interest on any Class of
Notes or (b) the Principal Distribution Amount with respect to a Payment Date on
such Payment Date; or

 

(ii) the failure by the Issuer on the Final Scheduled Payment Date to pay all
Accrued Note Interest and to reduce the Note Principal Balance of any of the
Notes to zero; or

 

(iii) there occurs a default in the observance or performance of any covenant or
agreement of the Issuer made in the Indenture, or any representation or warranty
of the Issuer made in the Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have been
made, and such default shall continue or not be cured, or the circumstance or
condition in respect of which such representation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of 30 days after
there shall have been given, by registered or certified mail, to the Issuer by
the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders
of at least 25% of the aggregate Note Principal Balance of the Outstanding
Notes, a written notice specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating that such notice is a
notice of default hereunder; or

 

(iv) there occurs the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Trust Estate in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust Estate,
or ordering the winding-up or liquidation of the Issuer’s affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or

 

(v) there occurs the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the assets of the Trust Estate, or the making by the Issuer
of any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking of any
action by the Issuer in furtherance of any of the foregoing.

 

Excess Liquidation Proceeds: To the extent that such amount is not required by
law to be paid to the related Mortgagor, the amount, if any, by which
Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the sum
of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued but
unpaid interest at the related Mortgage Interest Rate

 

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through the last day of the month in which the related Liquidation Date occurs,
(ii) related Liquidation Expenses (including Liquidation Expenses which are
payable therefrom to the Servicer, the Master Servicer or the Special Servicer
in accordance with the HomeBanc Servicing Agreement, the Special Servicing
Agreement or the Sale and Servicing Agreement) and (iii) unreimbursed advances
by the Servicer or the Master Servicer and Monthly Advances.

 

Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

Expenses: The meaning specified in Section 7.02 of the Trust Agreement.

 

Fannie Mae: Fannie Mae (formerly, the Federal National Mortgage Association), or
any successor thereto.

 

FDIC: The Federal Deposit Insurance Corporation or any successor thereto.

 

Fee Agreement: The Fee Agreement dated as of July 30, 2004, between the Owner
Trustee, the Depositor and the Master Servicer.

 

Final Certification: The final certification delivered by the Custodian pursuant
to Section 2.3(c) of the Custodial Agreement in the form attached thereto as
Exhibit Three.

 

Final Scheduled Payment Date: With respect to each Class of Notes, the Payment
Date in December 2034.

 

Freddie Mac: Freddie Mac (formerly, the Federal Home Loan Mortgage Corporation),
or any successor thereto.

 

Grant: Pledge, bargain, sell, warrant, alienate, remise, release, convey,
assign, transfer, create, and grant a lien upon and a security interest in and
right of set-off against, deposit, set over and confirm pursuant to the
Indenture. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such collateral or other agreement or instrument and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.

 

Gross Margin: As to each Mortgage Loan, the fixed percentage set forth in the
related Mortgage Note and indicated on the Mortgage Loan Schedule which
percentage is added to the related Index on each Interest Adjustment Date to
determine (subject to rounding, the minimum and maximum Mortgage Interest Rate
and the Periodic Rate Cap) the Mortgage Interest Rate until the next Interest
Adjustment Date.

 

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HomeBanc Servicing Agreement: The Purchase, Warranties and Servicing Agreement,
dated as of July 1, 2004, among EMC Mortgage Corporation, as purchaser, HMB
Acceptance Corp., as seller and HomeBanc Corp., as servicer and guarantor.

 

Indemnified Party: The meaning specified in Section 7.02 of the Trust Agreement.

 

Indenture: The indenture dated as of October 29, 2004, between the Issuer, the
Indenture Trustee and the Securities Administrator, relating to the HomeBanc
Mortgage Loan Trust 2004-2, Mortgage-Backed Notes, Series 2004-2.

 

Indenture Trustee: U.S. Bank National Association, and its successors and
assigns or any successor indenture trustee appointed pursuant to the terms of
the Indenture.

 

Independent: When used with respect to any specified Person, the Person (i) is
in fact independent of the Issuer, any other obligor on the Notes, the Seller,
the Master Servicer, the Depositor and any Affiliate of any of the foregoing
Persons, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller,
the Master Servicer, the Depositor or any Affiliate of any of the foregoing
Persons and (iii) is not connected with the Issuer, any such other obligor, the
Seller, the Master Servicer, the Depositor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.

 

Independent Certificate: A certificate or opinion to be delivered to the
Indenture Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 10.01 of the Indenture, made by an
independent appraiser or other expert appointed by an Issuer Request and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
“Independent” in this Indenture and that the signer is Independent within the
meaning thereof.

 

Index: The index, if any, specified in a Mortgage Note by reference to which the
related Mortgage Interest Rate will be adjusted from time to time.

 

Initial Note Principal Balance: With respect to the Class A-1 Notes,
$687,048,300, with respect to the Class A-2 Notes, $76,338,700, with respect to
the Class M-1 Notes, $78,385,900, with respect to the Class M-2 Notes,
$35,017,800, with respect to the Class B-1 Notes, $17,957,801.

 

Initial Certification: The initial certification delivered by the Custodian
pursuant to Section 2.3(a) of the Custodial Agreement in the form attached
thereto as Exhibit One.

 

Insurance Policy: With respect to any Mortgage Loan, any standard hazard
insurance policy, flood insurance policy or title insurance policy.

 

Insurance Proceeds: Amounts paid by the insurer under any Insurance Policy
covering any Mortgage Loan or Mortgaged Property other than amounts required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note or
Security Instrument and other than amounts used to repair or restore the
Mortgaged Property or to reimburse insured expenses.

 

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Interest Adjustment Date: With respect to a Mortgage Loan, the date, if any,
specified in the related Mortgage Note on which the Mortgage Interest Rate is
subject to adjustment.

 

Interest Determination Date: With respect to the first Accrual Period, the
second LIBOR Business Day preceding the Closing Date, and with respect to each
Accrual Period thereafter, the second LIBOR Business Day preceding the related
Payment Date on which such Accrual Period commences.

 

Interest Shortfall: With respect to any Payment Date and each Mortgage Loan that
during the related Prepayment Period was the subject of a Principal Prepayment
or constitutes a Relief Act Mortgage Loan, an amount determined as follows:

 

(a) Partial principal prepayments received during the relevant Prepayment
Period: The difference between (i) one month’s interest at the applicable Net
Rate on the amount of such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net Rate) received
at the time of such prepayment;

 

(b) Principal prepayments in full received during the relevant Prepayment
Period: The difference between (i) one month’s interest at the applicable Net
Rate on the Scheduled Principal Balance of such Mortgage Loan immediately prior
to such prepayment and (ii) the amount of interest for the calendar month of
such prepayment (adjusted to the applicable Net Rate) received at the time of
such prepayment; and

 

(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage Loan, the excess of
(i) 30 days’ interest (or, in the case of a principal prepayment in full,
interest to the date of prepayment) on the Scheduled Principal Balance thereof
(or, in the case of a principal prepayment in part, on the amount so prepaid) at
the related Net Rate over (ii) 30 days’ interest (or, in the case of a principal
prepayment in full, interest to the date of prepayment) on such Scheduled
Principal Balance (or, in the case of a Principal Prepayment in part, on the
amount so prepaid) at the Net Rate required to be paid by the Mortgagor as
limited by application of the Relief Act.

 

Interim Certification: The interim certification delivered by the Custodian
pursuant to Section 2.3(b) of the Custodial Agreement in the form attached
thereto as Exhibit Two.

 

Investment Company Act: The Investment Company Act of 1940, as amended, and any
amendments thereto.

 

IRS: The Internal Revenue Service.

 

Issuer: HomeBanc Mortgage Trust 2004-2, a Delaware statutory trust, or its
successor in interest.

 

Issuer Request: A written order or request signed in the name of the Issuer by
any one of its Authorized Officers and delivered to the Indenture Trustee.

 

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LIBOR Business Day: A day on which banks are open for dealing in foreign
currency and exchange in London and New York City.

 

Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.

 

Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the Servicer
or the Master Servicer has determined that all amounts it expects to recover
from or on account of such Mortgage Loan have been recovered.

 

Liquidation Date: With respect to any Liquidated Mortgage Loan, the date on
which the Master Servicer or the Servicer has certified that such Mortgage Loan
has become a Liquidated Mortgage Loan.

 

Liquidation Expenses: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer, the Servicer or the Special Servicer in connection with the
liquidation of such Mortgage Loan and the related Mortgage Property, such
expenses including (a) property protection expenses, (b) property sales
expenses, (c) foreclosure and sale costs, including court costs and reasonable
attorneys’ fees, and (d) similar expenses reasonably paid or incurred in
connection with liquidation.

 

Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through trustee’s sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise and any Subsequent
Recoveries.

 

Loan-to-Value Ratio: Has the meaning assigned to such term in the HomeBanc
Servicing Agreement.

 

Loss Severity Percentage: With respect to any Payment Date, the percentage
equivalent of a fraction, the numerator of which is the amount of Realized
Losses incurred on a Mortgage Loan and the denominator of which is the Scheduled
Principal Balance of such Mortgage Loan immediately prior to the liquidation of
such Mortgage Loan.

 

Lost Notes: The original Mortgage Notes that have been lost, as indicated on the
Mortgage Loan Schedule.

 

Majority Certificateholder: A Holder of a 50.01% or greater Certificate
Percentage Interest of the Certificates.

 

Master Servicer: Wells Fargo Bank, National Association, and its successors and
assigns.

 

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Master Servicer Certification: A written certification covering servicing of the
Mortgage Loans by the Servicer and signed by an officer of the Master Servicer
that complies with (i) the Sarbanes-Oxley Act of 2002, as amended from time to
time, and (ii) the February 21, 2003 Statement by the Staff of the Division of
Corporation Finance of the Securities and Exchange Commission Regarding
Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and 15d-14, as
in effect from time to time; provided that if, after the Closing Date (a) the
Sarbanes-Oxley Act of 2002 is amended, (b) the Statement referred to in clause
(ii) is modified or superceded by any subsequent statement, rule or regulation
of the Securities and Exchange Commission or any statement of a division
thereof, or (c) any future releases, rules and regulations are published by the
Securities and Exchange Commission from time to time pursuant to the
Sarbanes-Oxley Act of 2002, which in any such case affects the form or substance
of the required certification and results in the required certification being,
in the reasonable judgment of the Master Servicer, materially more onerous than
the form of the required certification as of the Closing Date, the Master
Servicer Certification shall be as agreed to by the Master Servicer and the
Depositor following a negotiation in good faith to determine how to comply with
any such new requirements.

 

Master Servicer Collection Account: The trust account or accounts created and
maintained pursuant to Section 4.02 of the Sale and Servicing Agreement. The
Master Servicer Collection Account shall be an Eligible Account.

 

Master Servicer Event of Default: Has the meaning assigned to such term in
Section 6.01 of the Sale and Servicing Agreement.

 

Master Servicing Compensation: For any Payment Date, any investment income on
funds on deposit in the Master Servicer Collection Account and the Payment
Account which is payable to the Master Servicer on such Payment Date pursuant to
Sections 3.14, 4.02(c) and 4.04(d) of the Sale and Servicing Agreement.

 

Maximum Note Interest Rate: 11.50% per annum.

 

Material Defect: The meaning specified in Section 2.02(a) of the Sale and
Servicing Agreement.

 

Maximum Lifetime Mortgage Rate: The maximum level to which a Mortgage Interest
Rate can adjust in accordance with its terms, regardless of changes in the
applicable Index.

 

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

 

MERS® System: The system of recording transfers of Mortgages electronically
maintained by MERS.

 

MIN: The Mortgage Identification Number for Mortgage Loans registered with MERS
on the MERS® System.

 

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Minimum Lifetime Mortgage Rate: The minimum level to which a Mortgage Interest
Rate can adjust in accordance with its terms, regardless of changes in the
applicable Index.

 

MOM Loan: With respect to any Mortgage Loan, MERS acting as the mortgagee of
such Mortgage Loan, solely as nominee for the originator of such Mortgage Loan
and its successors and assigns, at the origination thereof, or as nominee for
any subsequent assignee of the originator pursuant to an assignment of mortgage
to MERS.

 

Monthly Advance: An advance of principal or interest required to be made by the
Servicer pursuant to the HomeBanc Servicing Agreement or the Master Servicer
pursuant to Section 3.22 of the Sale and Servicing Agreement.

 

Monthly Payment: With respect to any Mortgage Loan (including any REO Property)
and any Due Date, the payment of principal and interest due thereon, or in the
case of an Interest Only Mortgage Loan, the payment of (i) interest or (ii)
principal and interest, if applicable, accordance with the amortization schedule
at the time applicable thereto (after adjustment, if any, for partial Principal
Prepayments and for Deficient Valuations occurring prior to such Due Date but
before any adjustment to such amortization schedule by reason of any bankruptcy,
other than a Deficient Valuation, or similar proceeding or any moratorium or
similar waiver or grace period).

 

Mortgage: The mortgage, deed of trust or other instrument reflected on the
Mortgage Loan Schedule as securing a Mortgage Loan.

 

Mortgage File: The file containing the Related Documents pertaining to a
particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to the Sale and Servicing Agreement.

 

Mortgage Interest Rate: The annual rate at which interest accrues from time to
time on any Mortgage Loan pursuant to the related Mortgage Note, which rate is
initially equal to the “Mortgage Interest Rate” set forth with respect thereto
on the Mortgage Loan Schedule.

 

Mortgage Loan: A mortgage loan transferred and assigned to the Trust pursuant to
Section 2.01 or Section 2.04 of the Sale and Servicing Agreement, as identified
in the Mortgage Loan Schedule, including a mortgage loan the property securing
which has become an REO Property.

 

Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement dated as
of October 29, 2004, between EMC Mortgage Corporation, as seller, and Structured
Asset Mortgage Investments II Inc., as purchaser, and all amendments thereof and
supplements thereto, attached to the Sale and Servicing Agreement as Exhibit E.

 

Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage Loans
held by the Issuer on such date. The schedule of Mortgage Loans as of the
Cut-off Date is the schedule set forth in Exhibit A to the Sale and Servicing
Agreement, which schedule sets forth as to each Mortgage Loan:

 

(i) the loan number;

 

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(ii) [reserved];

 

(iii) the city, state and zip code of the Mortgaged Property;

 

(iv) the Mortgage Rate;

 

(v) the Servicing Fee Rate;

 

(vi) the Net Rate;

 

(vii) the original term to maturity;

 

(viii) the maturity date;

 

(ix) the stated remaining term to maturity;

 

(x) the original principal balance;

 

(xi) the first Payment Date;

 

(xii) the Monthly Payment in effect as of the Cut-off Date;

 

(xiii) the Cut-off Date Principal Balance;

 

(xiv) the Loan-to-Value Ratio at origination;

 

(xv) the paid-through date of the Mortgage Loan;

 

(xvi) the Issuer of any Primary Mortgage Insurance Policy;

 

(xvii) the Index and the Gross Margin, if applicable;

 

(xviii) the Maximum Lifetime Mortgage Rate, if applicable;

 

(xix) the Minimum Lifetime Mortgage Rate, if applicable;

 

(xx) the Adjustment Date frequency and Payment Date frequency, if applicable;
and

 

(xxi) the number of days delinquent, if any.

 

The Mortgage Loan Schedule shall also set forth the total number of Mortgage
Loans, the total of each of the amounts described under (x) and (xiii) above for
all of the Mortgage Loans, the weighted average by principal balance of each of
the rates described under (iv), (v) and (vi) above for all of the Mortgage Loans
and the weighted average remaining term to maturity by unpaid principal balance
as of the Cut-off Date for all of the Mortgage Loans.

 

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

 

Mortgaged Property: Land and improvements securing the indebtedness of a
Mortgagor under the related Mortgage Loan or, in the case of REO Property, such
REO Property.

 

Mortgagor: The obligor on a Mortgage Note.

 

Net Monthly Excess Cash Flow: For any Payment Date, the excess of the Available
Funds for such Payment Date over (y) the sum for such Payment Date of (A) the
aggregate amount of Accrued Note Interest for the Notes and (B) the Principal
Remittance Amount.

 

Net Rate: With respect to each Mortgage Loan, the Mortgage Interest Rate in
effect from time to time less the sum of (x) the Servicing Fee Rate and (y) the
Special Servicing Fee Rate, if any, in each case expressed as a per annum rate.

 

Nonrecoverable Advance: Any advance or Monthly Advance (i) which was previously
made or is proposed to be made by the Master Servicer, the Indenture Trustee
solely as successor Master Servicer, or the Servicer and (ii) which, in the good
faith judgment of the Master Servicer, the Indenture Trustee as successor Master
Servicer or the Servicer, will not or, in the case of a proposed advance or
Monthly Advance, would not, be ultimately recoverable by the Master Servicer,
the Indenture Trustee as successor Master Servicer, or the Servicer from
Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage Loan
for which such advance or Monthly Advance was made or is proposed to be made.

 

Note: A Class A Note, Class M Note or Class B Note.

 

Note Interest Rate: With respect to each Payment Date and each Class of Notes, a
floating rate equal to the least of (i) One-Month LIBOR plus the related Note
Margin, (ii) the Maximum Note Interest Rate and (iii) the Available Funds Rate
with respect to such Payment Date.

 

Note Margin: With respect to the Class A-1 Notes, on any Payment Date prior to
the Step-Up Date, 0.37% per annum, and on any Payment Date on and after the
Step-Up Date, 0.74% per annum. With respect to the Class A-2 Notes, on any
Payment Date prior to the Step-Up Date, 0.45% per annum, and on any Payment Date
on and after the Step-Up Date, 0.90% per annum. With respect to the Class M-1
Notes, on any Payment Date prior to the Step-Up Date, 0.65% per annum, and on
any Payment Date on and after the Step-Up Date, 0.975% per annum. With respect
to the Class M-2 Notes, on any Payment Date prior to the Step-Up Date, 1.15% per
annum, and on any Payment Date on and after the Step-Up Date, 1.725% per annum.
With respect to the Class B-1 Notes, on any Payment Date prior to the Step-Up
Date, 1.50% per annum, and on any Payment Date on and after the Step-Up Date,
2.25% per annum.

 

Note Owner: The Beneficial Owner of a Note.

 

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Note Principal Balance: With respect to any Note as of any date of
determination, the initial Note Principal Balance as stated on the face thereof,
minus all amounts distributed in respect of principal with respect to such Note
and, in the case of any Class A Note, Class M Note or the Class B Note, the
aggregate amount of any reductions in the Note Principal Balance thereof deemed
to have occurred in connection with allocations of Realized Losses on all prior
Payment Dates, plus in the case of any Class A Note, Class M Note or the Class B
Note, any Subsequent Recoveries on the Mortgage Loans added to the Note
Principal Balance of such Class A Note, Class M Note or the Class B Note
pursuant to Section 3.27 of the Indenture. With respect to any Class of Notes,
the Note Principal Balance thereof shall be equal to the sum of the Note
Principal Balances of all Outstanding Notes of such Class.

 

Note Register: The register maintained by the Note Registrar in which the Note
Registrar shall provide for the registration of Notes and of transfers and
exchanges of Notes.

 

Note Registrar: The Indenture Trustee, in its capacity as Note Registrar, or any
successor to the Indenture Trustee in such capacity.

 

Noteholder or Holder: The Person in whose name a Note is registered in the Note
Register, except that, any Note registered in the name of the Depositor, the
Issuer, the Indenture Trustee, the Seller, the Securities Administrator or the
Master Servicer or any Affiliate of any of them shall be deemed not to be a
holder or holders, nor shall any so owned be considered outstanding, for
purposes of giving any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or the Trust Agreement; provided that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Indenture Trustee has actual knowledge
to be so owned shall be so disregarded. Owners of Notes that have been pledged
in good faith may be regarded as Holders if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Owner Trustee the pledgee’s right
so to act with respect to such Notes and that the pledgee is not the Issuer, any
other obligor upon the Notes or any Affiliate of any of the foregoing Persons.

 

Officer’s Certificate: With respect to the Master Servicer, a certificate signed
by the President, Managing Director, a Director, a Vice President or an
Assistant Vice President, of the Master Servicer and delivered to the Indenture
Trustee. With respect to the Issuer, a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in the Indenture to an Officer’s Certificate shall be to an Officer’s
Certificate of any Authorized Officer of the Issuer.

 

One-Month LIBOR: With respect to any Accrual Period, the rate determined by the
Securities Administrator on the related Interest Determination Date on the basis
of the London interbank offered rate for one-month United States dollar
deposits, as such rates appear on the Telerate Screen Page 3750, as of 11:00
a.m. (London time) on such Interest Determination Date.

 

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In the event that on any Interest Determination Date, Telerate Screen 3750 fails
to indicate the London interbank offered rate for one-month United States dollar
deposits, then One-Month LIBOR for the related Interest Accrual Period will be
established by the Securities Administrator as follows:

 

(i) If on such Interest Determination Date two or more Reference Banks provide
such offered quotations, One-Month LIBOR for the related Accrual Period shall be
the arithmetic mean of such offered quotations (rounded upwards if necessary to
the nearest whole multiple of 1/16%).

 

(ii) If on such Interest Determination Date fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR for the related Accrual Period
shall be the higher of (i) One-Month LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate.

 

The establishment of One-Month LIBOR on each Interest Determination Date by the
Securities Administrator and the Securities Administrator’s calculation of the
rate of interest applicable for the related Accrual Period shall (in the absence
of manifest error) be final and binding.

 

Opinion of Counsel: A written opinion of counsel acceptable to the Indenture
Trustee in its reasonable discretion which counsel may be in-house counsel for
the Depositor or the Seller if acceptable to the Indenture Trustee and the
Rating Agencies or outside counsel for the Depositor, the Seller, the Issuer or
the Master Servicer, as the case may be.

 

Outstanding: With respect to the Notes, as of the date of determination, all
Notes theretofore executed, authenticated and delivered under this Indenture
except:

 

(i) Notes theretofore canceled by the Note Registrar or delivered to the
Indenture Trustee for cancellation; and

 

(ii) Notes in exchange for or in lieu of which other Notes have been executed,
authenticated and delivered pursuant to the Indenture unless proof satisfactory
to the Indenture Trustee is presented that any such Notes are held by a holder
in due course.

 

Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage Loan which,
prior to such Due Date, was not the subject of a Principal Prepayment in full,
did not become a Liquidated Mortgage Loan and was not purchased or replaced.

 

Outstanding Principal Balance: As of the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid by the Mortgagor, or,
in the case of an REO Property, the principal balance of the related Mortgage
Loan remaining to be paid by the Mortgagor at the time such property was
acquired by the Trust less any Excess Liquidation Proceeds with respect thereto
to the extent applied to principal.

 

Overcollateralization Increase Amount: With respect to any Payment Date, the
lesser of (i) the Net Monthly Excess Cashflow for such Payment Date and (ii) the
excess, if any, of (a) the Overcollateralization Target Amount over (b) the
Overcollateralized Amount on such

 

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Payment Date (after taking into account payments to the Notes of the Basic
Principal Distribution Amount on such Payment Date).

 

Overcollateralization Target Amount: With respect to any Payment Date, 0.35% of
the Cut-off Date Balance.

 

Overcollateralized Amount: As of any Payment Date, the amount, if any, by which
(i) the aggregate principal balance of the Mortgage Loans (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period including Realized Losses on the Mortgage
Loans incurred during the related Prepayment Period) exceeds (ii) the aggregate
Note Principal Balance of the related Notes as of such Payment Date (assuming
that 100% of the Principal Remittance Amount is applied as a principal payment
on the Notes on such Payment Date).

 

Owner Trust Estate: The corpus of the Issuer created by the Trust Agreement
which consists of items referred to in Section 3.01 of the Trust Agreement.

 

Owner Trustee: Wilmington Trust Company and its successors and assigns or any
successor owner trustee appointed pursuant to the terms of the Trust Agreement.

 

Paying Agent: Any paying agent or co-paying agent appointed pursuant to Section
3.03 of the Indenture, which initially shall be the Indenture Trustee.

 

Payment Account: The trust account or accounts created and maintained pursuant
to Section 4.04 of the Sale and Servicing Agreement, which shall be denominated
“U.S. Bank National Association, as Indenture Trustee f/b/o holders of HomeBanc
Mortgage Trust 2004-2, Mortgage-Backed Notes, Series 2004-2—Payment Account.”
The Payment Account shall be an Eligible Account.

 

Payment Account Deposit Date: The Business Day prior to each Payment Date.

 

Payment Date: The 25th day of each month, or if such day is not a Business Day,
then the next Business Day.

 

Percentage Interest: With respect to any Note, the percentage obtained by
dividing the Note Principal Balance of such Note by the aggregate Note Principal
Balances of all Notes of that Class. With respect to any Certificate, the
percentage as stated on the face thereof.

 

Periodic Rate Cap: With respect to each Mortgage Loan, the maximum adjustment
that can be made to the Mortgage Interest Rate on each Interest Adjustment Date
in accordance with its terms, regardless of changes in the applicable Index.

 

Permitted Investments: Any one or more of the following obligations or
securities held in the name of the Indenture Trustee for the benefit of the
Noteholders:

 

(i) direct obligations of, and obligations the timely payment of which are fully
guaranteed by the United States of America or any agency or instrumentality of
the United

 

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States of America the obligations of which are backed by the full faith and
credit of the United States of America;

 

(ii) (a) demand or time deposits, federal funds or bankers’ acceptances issued
by any depository institution or trust company incorporated under the laws of
the United States of America or any state thereof (including the Indenture
Trustee or the Master Servicer or its Affiliates acting in its commercial
banking capacity) and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or the
short-term debt rating and/or the long-term unsecured debt obligations of such
depository institution or trust company at the time of such investment or
contractual commitment providing for such investment have the Applicable Credit
Rating or better from the Rating Agencies and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the Federal Deposit
Insurance Corporation;

 

(iii) repurchase obligations with respect to (a) any security described in
clause (i) above or (b) any other security issued or guaranteed by an agency or
instrumentality of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of America, in either
case entered into with a depository institution or trust company (acting as
principal) described in clause (ii)(a) above where the Indenture Trustee holds
the security therefor;

 

(iv) securities bearing interest or sold at a discount issued by any corporation
(including the Indenture Trustee or the Master Servicer or its Affiliates)
incorporated under the laws of the United States of America or any state thereof
that have the Applicable Credit Rating or better from the Rating Agencies at the
time of such investment or contractual commitment providing for such investment;
provided, however, that securities issued by any particular corporation will not
be Permitted Investments to the extent that investments therein will cause the
then outstanding principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate Outstanding Principal
Balances of all the Mortgage Loans and Permitted Investments held as part of the
Trust as determined by the Master Servicer;

 

(v) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) having the Applicable
Credit Rating or better from the Rating Agencies at the time of such investment;

 

(vi) a Reinvestment Agreement issued by any bank, insurance company or other
corporation or entity;

 

(vii) any other demand, money market or time deposit, obligation, security or
investment as may be acceptable to the Rating Agencies as evidenced in writing
by the Rating Agencies to the Indenture Trustee; and

 

(viii) any money market or common trust fund having the Applicable Credit Rating
or better from the Rating Agencies, including any such fund for which the
Indenture Trustee or Master Servicer or any affiliate of the Indenture Trustee
or Master Servicer acts as a manager or an advisor; provided, however, that no
instrument or security shall be a Permitted

 

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Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
instrument or security is purchased at a price greater than par as determined by
the Master Servicer.

 

Person: Any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

 

Plan: Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Keogh
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.

 

Plan Assets: Assets of a Plan within the meaning of Department of Labor
regulation 29 C.F.R. § 2510.3-101.

 

Pool Balance: With respect to any date of determination, the aggregate of the
Scheduled Principal Balances of all Mortgage Loans as of such date.

 

Prepayment Interest Shortfall: With respect to any Payment Date, the Prepayment
Interest Shortfall, if any, for such Payment Date net of Compensating Interest
Payments made with respect to such Payment Date.

 

Prepayment Period: With respect any Mortgage Loan and any Payment Date, the
calendar month immediately preceding the month in which such payment occurs.

 

Primary Mortgage Insurance Policy: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related Security Instrument, if any, or any replacement
policy therefor through the related Accrual Period for such Class relating to a
Payment Date.

 

Principal Distribution Amount: For any Payment Date, the sum of (a) the Basic
Principal Distribution Amount, (b) any amounts in respect of payments of the
Undercollateralization Amount from Net Monthly Excess Cashflow and (c) the
Overcollateralization Increase Amount.

 

Principal Prepayment: Any payment (whether partial or full) or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date to the extent that it is not accompanied by an amount as to interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment, including Insurance Proceeds and
Repurchase Proceeds, but excluding the principal portion of Excess Liquidation
Proceeds.

 

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Principal Remittance Amount: With respect to any Payment Date, the sum of the
following:

 

(i) the principal portion of each previously undistributed Monthly Payment due
after the Cut-off Date received on or prior to the related Determination Date or
advanced prior to such Payment Date (other than Monthly Payments due after the
related Due Period, which shall be treated as if received during the Due Period
they were due) on each Outstanding Mortgage Loan;

 

(ii) the principal portion of all proceeds of any Mortgage Loan i repurchased
during the related Prepayment Period (or deemed to have been so repurchased in
accordance with the Sale and Servicing Agreement) pursuant to the Sale and
Servicing Agreement and the amount of any shortfall deposited in the Master
Servicer Collection Account in connection with the substitution of a Deleted
Mortgage Loan pursuant to the Sale and Servicing Agreement during the related
Collection Period; and

 

(iii) the principal portion of all other unscheduled collections received during
the related Prepayment Period (including, without limitation, Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds and REO Proceeds) to the
extent applied by the Master Servicer as recoveries of principal on the Mortgage
Loans pursuant to the Sale and Servicing Agreement.

 

Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.

 

Prospectus: The Prospectus Supplement, dated October 27, 2004, together with the
attached Prospectus, dated May 14, 2004.

 

Protected Account: An account established and maintained for the benefit of
Noteholders by the Servicer with respect to the Mortgage Loans and with respect
to REO Property pursuant to the HomeBanc Servicing Agreement.

 

Purchaser: Structured Asset Mortgage Investments II Inc., a Delaware
corporation, and its successors and assigns.

 

Qualified Insurer: Any insurance company duly qualified as such under the laws
of the state or states in which the related Mortgaged Property or Mortgaged
Properties is or are located, duly authorized and licensed in such state or
states to transact the type of insurance business in which it is engaged and
approved as an insurer by the Master Servicer, so long as the claims paying
ability of which is acceptable to the Rating Agencies for mortgage-backed notes
having the same rating as the Notes rated by the Rating Agencies as of the
Closing Date.

 

Rating Agency: Any nationally recognized statistical rating organization, or its
successor, that rated the Notes at the request of the Depositor at the time of
the initial issuance of the Notes. Initially, Standard & Poor’s and Moody’s. If
such organization or a successor is no longer in existence, “Rating Agency” with
respect to the Notes shall be such nationally recognized statistical rating
organization, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Indenture Trustee and Master Servicer.
References herein to the highest short term unsecured rating category of a
Rating

 

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Agency shall mean A-1 or better in the case of Standard & Poor’s, P-1 in the
case of Moody’s and in the case of any other Rating Agency shall mean such
equivalent ratings. References herein to the highest long-term rating category
of a Rating Agency shall mean “AAA” in the case of Standard & Poor’s, “Aaa” in
the case of Moody’s and in the case of any other Rating Agency, such equivalent
rating.

 

Realized Loss: Any (i) Bankruptcy Loss or (ii) as to any Liquidated Mortgage
Loan, (x) the Outstanding Principal Balance of such Liquidated Mortgage Loan
plus accrued and unpaid interest thereon at the Mortgage Interest Rate through
the last day of the month of such liquidation, less (y) the related Excess
Liquidation Proceeds with respect to such Mortgage Loan and the related Mortgage
Property. In addition, to the extent the Master Servicer receives Subsequent
Recoveries with respect to any Mortgage Loan, the amount of the Realized Loss
with respect to that Mortgage Loan will be reduced to the extent such recoveries
are applied to reduce the Current Principal Amount of any Class of Notes on any
Payment Date.

 

Record Date: With respect to any Book-Entry Notes and any Payment Date, the
close of business on the Business Day immediately preceding such Payment Date.
With respect to any Notes that are not Book-Entry Notes, the close of business
on the last Business Day of the calendar month preceding such Payment Date.

 

Reference Banks: Any leading banks engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) whose quotations appear on the Telerate Screen Page
3750 on the Interest Determination Date in question, (iii) which have been
designated as such by the Securities Administrator and (iv) which are not
Affiliates of the Depositor or the Seller.

 

Registered Holder: The Person in whose name a Note is registered in the Note
Register on the applicable Record Date.

 

Reinvestment Agreements: One or more reinvestment agreements, acceptable to the
Rating Agencies, from a bank, insurance company or other corporation or entity
(including the Indenture Trustee).

 

Related Documents: With respect to each Mortgage Loan, the documents specified
in Section 2.01(b)(i)-(vii) of the Sale and Servicing Agreement and any
documents required to be added to such documents pursuant to the Sale and
Servicing Agreement or the Mortgage Loan Purchase Agreement.

 

Relief Act: The Servicemembers Civil Relief Act, as amended, or any similar
state law.

 

Relief Act Mortgage Loan: Any Mortgage Loan as to which the Scheduled Payment
thereof has been reduced due to the application of the Relief Act.

 

REO Property: A Mortgaged Property acquired in the name of the Indenture
Trustee, for the benefit of the Noteholders, by foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.

 

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Repurchase Price: With respect to any Mortgage Loan (or any property acquired
with respect thereto) required to be repurchased by the Seller pursuant to the
Mortgage Loan Purchase Agreement or Article II of the Sale and Servicing
Agreement, an amount equal to the sum of (i)(a) 100% of the Outstanding
Principal Balance of such Mortgage Loan as of the date of repurchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition), plus (b) accrued
but unpaid interest on the Outstanding Principal Balance at the related Mortgage
Interest Rate, through and including the last day of the month of repurchase,
plus (c) any unreimbursed Monthly Advances and servicing advances payable to the
Servicer or to the Master Servicer and (ii) any costs and damages (if any)
incurred by the Trust in connection with any violation of such Mortgage Loan of
any predatory lending laws.

 

Repurchase Proceeds: the Repurchase Price in connection with any repurchase of a
Mortgage Loan by the Seller and any cash deposit in connection with the
substitution of a Mortgage Loan.

 

Request for Release: A request for release in the form attached to the Sale and
Servicing Agreement as Exhibit B.

 

Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy which is required to be maintained from time to time under the Sale and
Servicing Agreement with respect to such Mortgage Loan.

 

Reserve Interest Rate: With respect to any Interest Determination Date, the rate
per annum that the Securities Administrator determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.0625%) of the one-month United States dollar lending rates which New York City
banks selected by the Securities Administrator are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or (ii) in the event that the Securities
Administrator can determine no such arithmetic mean, the lowest one-month United
States dollar lending rate which New York City banks selected by the Securities
Administrator are quoting on such Interest Determination Date to leading
European banks.

 

Responsible Officer: With respect to the Securities Administrator, any officer
of the Securities Administrator with direct responsibility for the
administration of the Indenture and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer’s
knowledge of and familiarity with the particular subject; and with respect to
the Indenture Trustee, any vice president, assistant vice president, any
assistant secretary or any assistant treasurer or any other officer of the
Indenture Trustee working in its Corporate Trust Department customarily
performing functions similar to those performed by any of the above designated
officers who at such time shall be officers to whom, with respect to a
particular matter, such matter is referred because of such officer’s knowledge
of and familiarity with the particular subject or who shall have direct
responsibility for the administration of this Indenture.

 

Sale and Servicing Agreement: The Sale and Servicing Agreement, dated October
29, 2004, among the Depositor, the Issuer, the Indenture Trustee, Wells Fargo
Bank, National

 

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Association, as master servicer and securities administrator, and EMC Mortgage
Corporation, as seller and company.

 

Scheduled Payment: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.

 

Scheduled Principal: The principal portion of any Scheduled Payment.

 

Scheduled Principal Balance: With respect to any Mortgage Loan and any Payment
Date (1) the unpaid principal balance of such Mortgage Loan as of the close of
business on the related Due Date (taking account of the principal payment to be
made on such Due Date and irrespective of any delinquency in its payment), as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any bankruptcy or similar
proceeding occurring after the Cut-off Date (other than a Deficient Valuation)
or any moratorium or similar waiver or grace period) less (2) any Principal
Prepayments and the principal portion of any Excess Liquidation Proceeds
received during or prior to the immediately preceding Prepayment Period;
provided that the Scheduled Principal Balance of any Liquidated Mortgage Loan is
zero.

 

Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

Securities Administrator: Wells Fargo Bank, National Association, or its
successor in interest, or any successor securities administrator appointed as
herein provided.

 

Security: Any of the Certificates or Notes.

 

Securityholder or Holder: Any Noteholder or a Certificateholder.

 

Security Instrument: A written instrument creating a valid first lien on a
Mortgaged Property securing a Mortgage Note, which may be any applicable form of
mortgage, deed of trust, deed to secure debt or security deed, including any
riders or addenda thereto.

 

Seller: EMC Mortgage Corporation, and its successors and assigns.

 

Servicer: HomeBanc Corp., and its successors and assigns; provided, however, in
the event that any Mortgage Loan becomes a Specially Serviced Mortgage Loan,
“Servicer” shall also refer to the Special Servicer in its capacity as servicer
of any Specially Serviced Mortgage Loans.

 

Servicer Remittance Date: With respect to each Mortgage Loan, the date set forth
in the Servicing Agreement.

 

Servicing Agreement: The HomeBanc Servicing Agreement or, in the case of any
Specially Serviced Mortgage Loan, the Special Servicing Agreement.

 

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Servicing Fee: With respect to each Mortgage Loan and any Payment Date, the fee
payable monthly to the Servicer (or in the case of any Mortgage Loan, the
servicing of which is transferred to the Special Servicer, the Special Servicer)
in respect of servicing compensation that accrues at an annual rate equal to the
Servicing Fee Rate multiplied by the Scheduled Principal Balance of such
Mortgage Loan as of the first day of the related Due Period.

 

Servicing Fee Rate: With respect to any Mortgage Loan, 0.375% per annum.

 

Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee by the Master Servicer, as such list may be amended from
time to time.

 

Special Servicing Agreement: The Letter Agreement, dated July 30, 2004, among
the Servicer, the Special Servicer and the Master Servicer.

 

Special Servicing Fee: With respect to each Specially Serviced Mortgage Loan and
any Payment Date, the additional fee payable monthly to the Special Servicer in
respect of special servicing compensation that accrues at an annual rate equal
to the Special Servicing Fee Rate multiplied by the Scheduled Principal Balance
of such Mortgage Loan as of the first day of the related Due Period.

 

Special Servicing Fee Rate: With respect to any Mortgage Loan being serviced by
the Special Servicer, 0.375% per annum.

 

Specially Serviced Mortgage Loan: The Mortgage Loans being serviced by the
Special Servicer pursuant to the Special Servicing Agreement.

 

Standard & Poor’s: Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc., or its successor in interest.

 

Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12 Del.
Code §§3801 et seq., as the same may be amended from time to time.

 

Step-Up Date: The Payment Date occurring after the first Payment Date for which
the aggregate Scheduled Principal Balance of the Mortgage Loans as of the end of
the related Due Period has been reduced to 20% or less of the Cut-off Date
Balance.

 

Subsequent Recoveries: As of any Payment Date, amounts received by the Master
Servicer during the related Due Period or surplus amounts held by the Master
Servicer to cover estimated expenses (including, but not limited to, recoveries
in respect of the representations and warranties made by the Seller pursuant to
the Mortgage Loan Purchase Agreement) specifically related to a Liquidated
Mortgage Loan or disposition of an REO Property prior to the related Prepayment
Period that resulted in a Realized Loss, after the liquidation or disposition of
such Mortgage Loan.

 

Substitute Mortgage Loan: A mortgage loan tendered to the Indenture Trustee or
the Custodian pursuant to the Mortgage Loan Purchase Agreement or Section 2.04
of the Sale

 

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and Servicing Agreement, as applicable, in each case, (i) which has an
Outstanding Principal Balance not greater nor materially less than the Mortgage
Loan for which it is to be substituted; (ii) which has a Mortgage Interest Rate
and Net Rate not less than, and not materially greater than, such Mortgage Loan;
(iii) which has a maturity date not materially earlier or later than such
Mortgage Loan and not later than the latest maturity date of any Mortgage Loan;
(iv) which is of the same property type and occupancy type as such Mortgage
Loan; (v) which has a Loan-to-Value Ratio not greater than the Loan-to-Value
Ratio of such Mortgage Loan; (vi) which is current in payment of principal and
interest as of the date of substitution; (vii) as to which the payment terms do
not vary in any material respect from the payment terms of the Mortgage Loan for
which it is to be substituted and (viii) which has a Gross Margin and Maximum
Lifetime Mortgage Rate no less than those of such Mortgage Loan, has the same
Index and interval between Interest Adjustment Dates as such Mortgage Loan, and
a Minimum Lifetime Mortgage Rate no lower than that of such Mortgage Loan.

 

Telerate Screen Page 3750: The display designated as page 3750 on the Telerate
Service (or such other page as may replace page 3750 on that service for the
purpose of displaying London interbank offered rates of major banks).

 

Treasury Regulations: Regulations, including proposed or temporary Regulations,
promulgated under the Code. References herein to specific provisions of proposed
or temporary regulations shall include analogous provisions of final Treasury
Regulations or other successor Treasury Regulations.

 

Trust: HomeBanc Mortgage Trust 2004-2 to be created pursuant to the Trust
Agreement.

 

Trust Agreement: The Amended and Restated Trust Agreement dated as of October
29, 2004, among the Owner Trustee, the Depositor and U.S. Bank National
Association, as Certificate Registrar and Certificate Paying Agent, relating to
the Trust.

 

Trust Estate: The meaning specified in the Granting Clause of the Indenture.

 

Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as amended from
time to time, as in effect on any relevant date.

 

UCC: The Uniform Commercial Code, as amended from time to time, as in effect in
any specified jurisdiction.

 

Underlying Seller: HMB Acceptance Corp.

 

Underwriters: Bear, Stearns & Co. Inc. and J.P. Morgan Securities, Inc.

 

Uninsured Cause: Any cause of damage to a Mortgaged Property or related REO
Property such that the complete restoration of such Mortgaged Property or
related REO Property is not fully reimbursable by the hazard insurance policies
required to be maintained pursuant to the HomeBanc Servicing Agreement, without
regard to whether or not such policy is maintained.

 

27