Document:

exv4w2

 

Exhibit 4.2

EXECUTION

 

AMENDED AND RESTATED TRUST AGREEMENT

among

HSBC FINANCE CORPORATION

HSBC HOME EQUITY LOAN CORPORATION I

as Depositor

U.S. BANK TRUST NATIONAL ASSOCIATION

as Owner Trustee

and

HSBC BANK USA, NATIONAL ASSOCIATION,

as Administrator

Dated July 12, 2006

HSBC HOME EQUITY LOAN TRUST (USA) 2006-1

Closed-End Home Equity Loan Asset Backed Notes, Series 2006-1

 

 

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I
	 	 	 	 
	 	 	 
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 1.1	 	Capitalized Terms
	 	 	1	 
	Section 1.2	 	Other Definitional Provisions
	 	 	4	 
	 	 	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 	 	 
	 	 	 	 
	ORGANIZATION
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 2.1	 	Name
	 	 	6	 
	Section 2.2	 	Offices
	 	 	6	 
	Section 2.3	 	Purposes and Powers
	 	 	6	 
	Section 2.4	 	Appointment of Owner Trustee
	 	 	6	 
	Section 2.5	 	[Reserved]
	 	 	7	 
	Section 2.6	 	[Reserved]
	 	 	7	 
	Section 2.7	 	Capital Contribution of Owner Trust Estate
	 	 	7	 
	Section 2.8	 	Declaration of Trust
	 	 	7	 
	Section 2.9	 	Title to Trust Property
	 	 	7	 
	Section 2.10	 	Situs of Trust
	 	 	7	 
	Section 2.11	 	Representations and Warranties of the Depositor
	 	 	8	 
	Section 2.12	 	Federal Income Tax Allocations
	 	 	9	 
	 	 	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 	 	 
	 	 	 	 
	OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 3.1	 	Initial Ownership
	 	 	10	 
	Section 3.2	 	The Ownership Interest
	 	 	10	 
	Section 3.3	 	[Reserved]
	 	 	10	 
	Section 3.4	 	Registration of Transfer and Exchange of Ownership Interest
	 	 	10	 
	Section 3.5	 	[Reserved]
	 	 	10	 
	Section 3.6	 	Persons Deemed Transferors
	 	 	10	 
	Section 3.7	 	[Reserved]
	 	 	10	 
	Section 3.8	 	Maintenance of Office or Agency
	 	 	10	 
	Section 3.9	 	Appointment of Paying Agent
	 	 	11	 
	Section 3.10	 	[Reserved]
	 	 	11	 
	Section 3.11	 	[Reserved]
	 	 	11	 
	Section 3.12	 	[Reserved]
	 	 	11	 
	Section 3.13	 	Restrictions on Transfers of Ownership Interest
	 	 	11	 

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	 	 	 	 	Page	 
	ARTICLE IV
	 	 	 	 
	 	 	 
	 	 	 	 
	ACTIONS BY OWNER TRUSTEE
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 4.1	 	Prior Notice to the Transferor and the Indenture Trustee with Respect to
Certain Matters
	 	 	14	 
	Section 4.2	 	Action by Transferor with Respect to Bankruptcy
	 	 	15	 
	Section 4.3	 	Action by Owner Trustee with Respect to Bankruptcy
	 	 	16	 
	Section 4.4	 	Restrictions on Transferor’s Power
	 	 	16	 
	 	 	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 	 	 
	 	 	 	 
	APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 5.1	 	Establishment of Trust Accounts
	 	 	17	 
	Section 5.2	 	Application of Trust Funds
	 	 	17	 
	Section 5.3	 	Method of Payment
	 	 	17	 
	Section 5.4	 	Derivative Contracts
	 	 	17	 
	Section 5.5	 	Accounting and Reports to the Transferor, the Internal Revenue Service
and Others
	 	 	18	 
	Section 5.6	 	Signature on Returns
	 	 	18	 
	 	 	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 	 	 
	 	 	 	 
	AUTHORITY AND DUTIES OF OWNER TRUSTEE
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 6.1	 	General Authority
	 	 	19	 
	Section 6.2	 	General Duties
	 	 	19	 
	Section 6.3	 	Action upon Instruction
	 	 	19	 
	Section 6.4	 	No Duties Except as Specified in this Agreement, the Transaction
Documents or in Instructions
	 	 	20	 
	Section 6.5	 	No Action Except Under Specified Documents or Instructions
	 	 	20	 
	Section 6.6	 	Restrictions
	 	 	21	 
	 	 	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 	 	 
	 	 	 	 
	CONCERNING THE OWNER TRUSTEE
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 7.1	 	Acceptance of Trusts and Duties
	 	 	22	 
	Section 7.2	 	Furnishing of Documents
	 	 	23	 
	Section 7.3	 	Representations and Warranties
	 	 	23	 
	Section 7.4	 	Reliance; Advice of Counsel
	 	 	24	 
	Section 7.5	 	Not Acting in Individual Capacity
	 	 	25	 
	Section 7.6	 	Owner Trustee Not Liable for the Ownership Interest or the Home Equity
Loans
	 	 	25	 
	Section 7.7	 	Owner Trustee May Own the Ownership Interest and the Notes
	 	 	25	 
	Section 7.8	 	Licenses
	 	 	25	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE VIII
	 	 	 	 
	 	 	 
	 	 	 	 
	COMPENSATION OF OWNER TRUSTEE
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 8.1	 	Fees and Expenses
	 	 	26	 
	Section 8.2	 	Indemnification
	 	 	26	 
	Section 8.3	 	Payments to the Owner Trustee
	 	 	26	 
	Section 8.4	 	Non-recourse Obligations
	 	 	26	 
	 	 	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	 	 	 
	 	 	 	 
	TERMINATION OF TRUST AGREEMENT
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 9.1	 	Termination of Trust Agreement
	 	 	27	 
	 	 	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	 	 	 
	 	 	 	 
	SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 10.1	 	Eligibility Requirements for Owner Trustee
	 	 	28	 
	Section 10.2	 	Resignation or Removal of Owner Trustee
	 	 	28	 
	Section 10.3	 	Successor Trustee
	 	 	29	 
	Section 10.4	 	Merger or Consolidation of Owner Trustee
	 	 	30	 
	Section 10.5	 	Appointment of Co-Owner Trustee or Separate Owner Trustee
	 	 	30	 
	 	 	 
	 	 	 	 
	ARTICLE XI
	 	 	 	 
	 	 	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 11.1	 	Supplements and Amendments
	 	 	32	 
	Section 11.2	 	No Legal Title to Owner Trust Estate in Transferor
	 	 	33	 
	Section 11.3	 	Limitations on Rights of Others
	 	 	33	 
	Section 11.4	 	Notices
	 	 	33	 
	Section 11.5	 	Severability
	 	 	34	 
	Section 11.6	 	Separate Counterparts
	 	 	34	 
	Section 11.7	 	Successors and Assigns
	 	 	34	 
	Section 11.8	 	No Petition
	 	 	34	 
	Section 11.9	 	[Reserved]
	 	 	34	 
	Section 11.10	 	No Recourse
	 	 	34	 
	Section 11.11	 	Headings
	 	 	34	 
	Section 11.12	 	GOVERNING LAW
	 	 	34	 
	Section 11.13	 	Inconsistencies with Sale and Servicing Agreement
	 	 	35	 
	Section 11.14	 	Third Party Beneficiary
	 	 	35	 
	Section 11.15	 	Servicer
	 	 	35	 
	Section 11.16	 	Rights Under Indenture
	 	 	35	 
	Section 11.17	 	Regulation AB
	 	 	35	 

iii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	EXHIBIT A	 	Certificate of Trust
	 	 	A-1	 
	EXHIBIT B	 	Form of Transfer Certificate
	 	 	B-1	 

iv

 

     AMENDED AND RESTATED TRUST AGREEMENT, dated July 12, 2006, among HSBC Finance Corporation
(“HSBC Finance”), HSBC Home Equity Loan Corporation I, as depositor (the
“Depositor”), U.S. Bank Trust National Association, a national banking association, as
owner trustee (in such capacity, the “Owner Trustee”), and HSBC Bank USA, National
Association, a national banking association, as administrator (the “Administrator”).

PRELIMINARY STATEMENT

     WHEREAS, the Trust was formed pursuant to a Trust Agreement, dated as of June 30, 2006, among
the Depositor and the Owner Trustee;

     NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto
hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Capitalized Terms. For all purposes of this Agreement, the following
terms shall have the meanings set forth below:

     “Administrator” shall mean HSBC Bank USA, National Association, not in its individual
capacity but solely as administrator under this Agreement and the other Transaction Documents to
which it is a party, and any successor administrator hereunder and thereunder.

     “Agreement” shall mean this Amended and Restated Trust Agreement, as the same may be
amended and supplemented from time to time.

     “Bankruptcy Action” shall have the meaning assigned to such term in Section 4.1.

     “Certificate of Trust” shall mean the Certificate of Trust in the form of Exhibit A
filed for the Trust pursuant to Section 3810(a) of the Statutory Trust Statute.

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

     “Collection Account” shall have the meaning assigned to such term in the Sale and
Servicing Agreement.

     “Corporate Trust Office” shall mean:

     (i) with respect to the Owner Trustee, a corporate trust office of the Owner Trustee, which
office, at date of execution of this Agreement is located at 209 S. LaSalle Street, Chicago,
Illinois 60604 Attention: Corporate Trust Services, Reference: HSBC Home Equity Loan Trust (USA)
2006-1 (facsimile number (312) 325-8905); or at such other address in the State of Delaware as the
Owner Trustee may designate by notice to the Transferor, the Administrator and the Trust, or the
principal corporate trust office of any successor owner trustee (the address of which the successor
owner trustee will notify the Administrator, the Transferor and the Trust);

 

 

     (ii) with respect to the Indenture Trustee, the corporate trust office of the Indenture
Trustee, which office at date of execution of this Agreement is located at 4 New York Plaza,
6th Floor, New York, New York 10004, Attention: Worldwide Securities Services/Structured
Finance Services, Reference: HSBC Home Equity Loan Trust (USA) 2006-1 (facsimile number (212)
623-5930), or at such other address as the Indenture Trustee may designate by notice to the Owner
Trustee, the Administrator, the Transferor and the Trust, or the principal corporate trust office
of any successor Indenture Trustee (the address of which the successor indenture trustee will
notify the Owner Trustee, the Administrator, the Transferor and the Trust); or

     (iii) with respect to the Administrator, the corporate trust office of the Administrator,
which office at date of execution of this Agreement is located at 452 Fifth Avenue, New York, New
York 10018, Attention: CTLA – Structured Finance, Reference: HSBC Home Equity Loan Trust (USA)
2006-1 (facsimile number (212) 525-1300), or at such other address as the Administrator may
designate by notice to the Transferor, the Indenture Trustee, the Owner Trustee and the Trust, or
the corporate trust office of any successor Administrator (the address of which the successor
co-trustee will notify the Indenture Trustee, the Owner Trustee, the Transferor and the Trust).

     “Depositor” shall mean HSBC Home Equity Loan Corporation I or its successors.

     “Derivative Contract” shall mean any ISDA Master Agreement, together with the related
Schedule and Confirmation, entered into by the Owner Trustee, on behalf of the Trust, and a
Derivative Counterparty in accordance with Section 5.4.

     “Derivative Counterparty” shall mean any counterparty to a Derivative Contract as
provided in Section 5.4.

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

     “Expenses” shall have the meaning assigned to such term in Section 8.2.

     “Form 8-K” shall mean a current report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.

     “HSBC Finance” shall mean HSBC Finance Corporation or its successors.

     “Indenture” shall mean the Indenture, dated July 12, 2006, by and among the Trust, the
Indenture Trustee, the Owner Trustee and the Administrator.

     “Indenture Trustee” shall mean JPMorgan Chase Bank, N.A., as Indenture Trustee under
the Indenture, or any successor indenture trustee appointed pursuant to the terms of the Indenture.

     “Initial Note Principal Amount” shall mean with respect to the Class A-1 Notes,
$637,800,000, with respect to the Class A-2 Notes, $159,560,000, with respect to the Class M-1
Notes, $138,380,000, and with respect to the Class M-2 Notes, $102,810,000.

     “Servicer” shall mean HSBC Finance, or any successor servicer appointed pursuant to
the Sale and Servicing Agreement.

2

 

     “Owner Trust Estate” shall mean the contribution of $1,000 and one share of the
Depositor’s Class SV-X Preferred Stock referred to in Section 2.7 and the Trust Estate.

     “Owner Trustee” shall mean U.S. Bank Trust National Association, a national banking
association, not in its individual capacity but solely as owner trustee under this Agreement, and
any successor owner trustee hereunder.

     “Ownership Interest” shall have the meaning specified in Section 3.2.

     “Paying Agent” shall mean the Person appointed to serve as Paying Agent pursuant to
Section 3.9.

     “Plan” shall have the meaning assigned to such term in Section 3.13.

     “Prospective Transferor” shall mean any prospective purchaser or prospective
transferee of the Ownership Interest.

     “Rating Agency Condition” shall mean, with respect to certain actions requiring Rating
Agency consent, that each Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the Rating Agencies shall
have notified the Depositor, the Owner Trustee and the Indenture Trustee that such action will not
result in a reduction or withdrawal of such Rating Agency’s then current ratings of the Notes.

     “Record Date” shall mean the last Business Day preceding the related Payment Date;
provided, however, that following the date on which Definitive Notes are available pursuant to
Section 2.2 of the Indenture, the Record Date shall be the last day of the calendar month preceding
the month in which the related Payment Date occurs.

     “Register” shall mean a register kept by the Registrar in which, subject to such
reasonable regulations as it may prescribe, the Registrar shall provide for the registration of the
Ownership Interest and the registration of transfers of the Ownership Interest. The location of
the Registrar shall be the same as that of the Corporate Trust Office of the Administrator.

     “Registrar” shall mean the Administrator as Registrar hereunder.

     “Sale and Servicing Agreement” shall mean the Sale and Servicing Agreement, dated as
of July 12, 2006, among the Trust, the Depositor, the Indenture Trustee, the Servicer and the
Administrator.

     “Secretary of State” shall mean the Secretary of State of the State of Delaware.

     “Statutory Trust Statute” shall mean 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.

     “Transaction Documents” shall have the meaning assigned to such term in the Sale and
Servicing Agreement.

3

 

     “Transfer Agreement” shall mean the transfer agreement dated July 12, 2006, between
the Trust and the Sellers pursuant to which the Sellers will assign to the Trust all of their
right, title and interest in and to the Transferred Assets not otherwise transferred pursuant to
the Home Equity Loan Purchase Agreement.

     “Transferor” shall mean the Depositor or any subsequent owner of the Ownership
Interest.

     “Transferred Assets” shall have the meaning specified in Section 2.1 of the Transfer
Agreement.

     “Treasury Regulations” shall mean 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” shall mean HSBC Home Equity Loan Trust (USA) 2006-1, the Delaware statutory
trust governed pursuant to this Agreement.

     “Trust Agreement” shall mean the Trust Agreement, dated as of June 30, 2006, among the
Depositor and the Owner Trustee.

     “Trust Estate” shall mean the assets transferred and assigned to the Trust pursuant to
the Sale and Servicing Agreement, the Transfer Agreement and this Agreement and pledged to the
Indenture Trustee pursuant to the Indenture, consisting of: (i) each Home Equity Loan and each
Eligible Substitute Home Equity Loan and the related Mortgage Note and other Mortgage File
documents for each Home Equity Loan and each Eligible Substitute Home Equity Loan, including such
Home Equity Loan’s, and each such Eligible Substitute Home Equity Loan’s, Principal Balance and all
collections in respect thereof received after the Cut-Off Date or Subsequent Cut-Off Date, as
applicable; (ii) property that secured each Home Equity Loan and each Eligible Substitute Home
Equity Loan that has become REO; (iii) the interest of the Depositor in certain hazard insurance
policies maintained by the Mortgagors or the Servicer in respect of each Home Equity Loan and each
Eligible Substitute Home Equity Loan transferred by the Depositor; (iv) the Collection Account and
all amounts on deposit in the Collection Account (exclusive of net earnings thereon); (v) the Yield
Maintenance Account and all amounts on deposit in the Yield Maintenance Account; (vi) one share of
Preferred Stock of the Depositor; (vii) the Trust’s rights under the Sale and Servicing Agreement;
(viii) any proceeds of any of the foregoing and (ix) all other assets included or to be included in
the Trust for the benefit of Noteholders.

     “Yield Maintenance Account” shall have the meaning assigned to such term in the Sale
and Servicing Agreement.

     Section 1.2 Other Definitional Provisions.

          (a) Capitalized terms used herein and not otherwise defined herein have the meanings assigned
to them in the Sale and Servicing Agreement or, if not defined therein, in the Indenture.

4

 

          (b) All terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

          (c) As used in this Agreement and in any certificate or other document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such
certificate or other document, and accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall control.

          (d) The words “hereof,” “herein,” “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement; Section and Exhibit references contained in this Agreement are references to Sections
and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall
mean “including without limitation.”

          (e) The definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and neuter genders of
such terms.

          (f) 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.

5

 

ARTICLE II

ORGANIZATION

     Section 2.1 Name. The Trust created hereby shall be known as “HSBC Home Equity Loan
Trust (USA) 2006-1,” in which name the Owner Trustee may conduct the business of the Trust and make
and execute contracts and other instruments on behalf of the Trust and the Trust may sue and be
sued.

     Section 2.2 Offices. The principal office of the Trust shall be in care of the Owner
Trustee at U.S. Bank Trust National Association, 300 Delaware Avenue, 8th Floor,
Wilmington, Delaware 19801, or at such other address in the State of Delaware as the Owner Trustee
may designate by written notice to the Transferor, the Indenture Trustee and the Administrator.

     Section 2.3 Purposes and Powers.

     (a) The purpose of the Trust is to engage in the following activities:

     (i) to issue the Notes pursuant to the Indenture and the Ownership Interest pursuant
to this Agreement and to sell such Notes and Ownership Interest;

     (ii) with the proceeds of the sale of the Notes and the Ownership Interest, to fund
start-up and transactional expenses of the Trust and to pay the balance to the Depositor, as
its interests may appear pursuant to the Sale and Servicing Agreement;

     (iii) to assign, grant, transfer, pledge, mortgage and convey the Trust Estate pursuant
to the Indenture and to hold, manage and distribute to the Transferor pursuant to the terms
of the Sale and Servicing Agreement any portion of the Trust Estate released from the lien
of, and remitted to the Trust pursuant to, the Indenture;

     (iv) to enter into and perform its obligations under the Transaction Documents to which
it is to be a party;

     (v) to engage in those activities, including entering into agreements, that are
necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or
connected therewith; and

     (vi) subject to compliance with the Transaction Documents, to engage in such other
activities as may be required in connection with conservation of the Owner Trust Estate and
the making of distributions to the Noteholders and the Transferor.

The Trust is hereby authorized to engage in the foregoing activities. The Trust shall not engage
in any activity other than in connection with the foregoing or other than as required or authorized
by the terms of this Agreement or the Transaction Documents.

     Section 2.4  Appointment of Owner Trustee. Pursuant to the Trust Agreement, effective
as of the date thereof, the Depositor appointed the Owner Trustee as trustee of the

6

 

Trust. Pursuant to this Agreement, the Owner Trustee shall have all the rights, powers and
duties set forth herein.

     Section 2.5 [Reserved]

     
Section 2.6 [Reserved]

     Section 2.7 Capital Contribution of Owner Trust Estate. Pursuant to the Trust
Agreement, as of the date thereof, the Depositor conveyed to the Trust the sum of $1,000. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Trust, as of the date
hereof, one share of its Class SV-X Preferred Stock. The Owner Trustee hereby acknowledges receipt
in trust from the Depositor, as of the date hereof, of the foregoing contributions, which shall
constitute the initial Owner Trust Estate and such cash contribution shall be deposited in the
Collection Account. The Depositor shall pay organizational expenses of the Trust as they may arise
or shall, upon the request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.

     Section 2.8 Declaration of Trust. The Owner Trustee hereby declares that it will hold
the Owner Trust Estate in trust upon and subject to the conditions set forth herein for the use and
benefit of the Transferor, subject to the obligations of the Trust under the Transaction Documents.
It is the intention of the parties hereto that the Trust constitute a statutory trust under the
Statutory Trust Statute and that this Agreement constitute the governing instrument of such
statutory trust. It is the intention of the parties hereto that, solely for income and franchise
tax purposes, the Trust shall be treated as a disregarded entity, with the assets of the Trust
being treated as owned by the Transferor as the owner of the Ownership Interest. The parties agree
that, unless otherwise required by appropriate tax authorities, the Trust will file or cause to be
filed annual or other necessary returns, reports and other forms, if any, consistent with the
characterization of the Trust as provided in the preceding sentence for such tax purposes.
Effective as of the date hereof, the Owner Trustee shall have all rights, powers and duties set
forth herein and in the Statutory Trust Statute with respect to accomplishing the purposes of the
Trust. The Owner Trustee has filed the Certificate of Trust with the Secretary of State.

     Section 2.9 Title to Trust Property.

          (a) Subject to the Indenture, legal title to (i) all of the Owner Trust Estate (other than the
Transferred Assets) shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Owner Trust Estate to be
vested in a trustee or trustees, in which case title shall be deemed to be vested in the Owner
Trustee, a co-owner trustee and/or a separate trustee, as the case may be, and (ii) all of the
Transferred Assets shall be vested at all times in the Owner Trustee.

          (b) The Transferor shall not have legal title to any part of the Owner Trust Estate. No
transfer by operation of law or otherwise of any interest of the Transferor shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to
the transfer to it of any part of the Owner Trust Estate.

     Section 2.10 Situs of Trust. The Trust will be located and administered in the State
of Delaware or Illinois. All bank accounts maintained by the Owner Trustee on behalf of the Trust

7

 

shall be located in the State of Delaware, the State of Illinois or the State of New York.
The Trust shall not have any employees; provided, however, that nothing herein shall restrict or
prohibit the Owner Trustee from having employees within or without the State of Delaware. Payments
will be received by the Trust only in Delaware, Illinois or New York, and payments will be made by
the Trust only from Delaware, Illinois or New York.

     Section 2.11 Representations and Warranties of the Depositor.

     The Depositor hereby represents and warrants to the Owner Trustee, the Noteholders, the
Indenture Trustee and the Administrator that:

          (a) The Depositor is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Depositor is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it require such qualification and in
which the failure to so qualify would have a material adverse effect on the business, properties,
assets or condition (financial or other) of the Depositor;

          (b) The Depositor has the power and authority to make, execute, deliver and perform its
obligations under this Agreement and to perform its obligations with respect to all of the
transactions contemplated under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of its obligations under this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and binding obligation of
the Depositor enforceable in accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights
generally and by the availability of equitable remedies (whether in a proceeding at law or in
equity);

          (c) The Depositor is not required to obtain the consent of any other Person or any consent,
license, approval or authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses, approvals or authorizations,
or registrations or declarations, as shall have been obtained or filed, as the case may be;

          (d) The execution and delivery of this Agreement and the performance of the transactions
contemplated hereby by the Depositor will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Depositor or any provision of the
Certificate of Incorporation or Bylaws of the Depositor, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Depositor is a party or by which the
Depositor may be bound; and

          (e) No litigation or administrative proceeding of or before any court, tribunal or
governmental body is currently pending, or to the knowledge of the Depositor threatened, against
the Depositor or any of its properties or with respect to this Agreement which in the

8

 

opinion of the Depositor has a reasonable likelihood of resulting in a material adverse effect
on the transactions contemplated by this Agreement.

     Section 2.12 Federal Income Tax Allocations. Net income of the Trust for any month,
as determined for Federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof), shall be allocated to the Transferor.

9

 

ARTICLE III

OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST

     Section 3.1 Initial Ownership. The Transferor is the sole beneficial owner of the
Trust. The initial Transferor shall furnish the Owner Trustee and the Administrator with its
contact information, wiring instructions and Federal taxpayer identification number on or prior to
the Closing Date. Such information may be amended by the initial Transferor or any successor
Transferor in accordance with the provisions of Section 11.4.

     Section 3.2 The Ownership Interest. The Ownership Interest (as defined below) shall
be uncertificated and shall represent the entire undivided beneficial ownership interest in the
Owner Trust Estate, subject to the debt represented by the Notes (the “Ownership
Interest”). The Ownership Interest may be assigned by the Transferor as provided in Section
3.13.

     Upon the completion of a transfer in accordance with the terms and conditions of this Article
III, a transferee of the Ownership Interest shall become the Transferor, and shall be entitled to
the rights and subject to the obligations of the Transferor hereunder, upon such transferee’s
acceptance of the Ownership Interest duly registered in such transferee’s name pursuant to Section
3.4 below.

     Section 3.3 [Reserved].

     Section 3.4 Registration of Transfer and Exchange of Ownership Interest. The Trust
hereby appoints the Administrator as Registrar under this Agreement. The Registrar shall keep or
cause to be kept, at the office or agency maintained pursuant to Section 3.8, a Register in which,
subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the
registration of the Ownership Interest and of transfer and exchange of the Ownership Interest as
herein provided. The Registrar, subject to Section 3.13 hereof, on behalf of the Trust shall note
on the Register the transfer of the Ownership Interest.

     Section 3.5 [Reserved].

     Section 3.6 Persons Deemed Transferors. Prior to due assignment of the Ownership
Interest for registration of transfer, the Depositor, the Owner Trustee, the Indenture Trustee, the
Administrator and the Registrar may treat the Person in whose name the Ownership Interest shall be
registered in the Register as the owner thereof for the purpose of receiving distributions pursuant
to Section 5.2 hereof and for all other purposes whatsoever, and none of the Depositor, the Owner
Trustee, the Indenture Trustee, the Administrator or the Registrar shall be bound by any notice to
the contrary.

     Section 3.7 [Reserved]

     Section 3.8 Maintenance of Office or Agency. The Registrar shall maintain an office
or offices or agency or agencies (initially, the Corporate Trust Office of the Administrator) where
instructions for the transfer of the Ownership Interest may be delivered for registration of
transfer or exchange pursuant to Section 3.4 and where notices and demands to or upon the Registrar
in respect of the Ownership Interest and the Transaction Documents may be served.

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The Registrar shall give prompt written notice to the Indenture Trustee, the Owner Trustee,
the Transferor and, unless the Administrator is the Registrar, the Administrator, of any change in
the location of the Register or any such office or agency.

     Section 3.9 Appointment of Paying Agent. The Trust hereby appoints the Administrator
as Paying Agent under this Agreement. The Paying Agent shall make distributions to the Transferor
from the Collection Account and the Yield Maintenance Account pursuant to Section 5.2 hereof and
Section 5.01 of the Sale and Servicing Agreement. The Paying Agent shall have the revocable power
to withdraw funds from the Collection Account and the Yield Maintenance Account for the purpose of
making the distributions referred to above. In the event that the Administrator shall no longer be
the Paying Agent hereunder, the Owner Trustee shall, pursuant to the direction of the Depositor,
appoint a successor to act as Paying Agent (which (x) shall at all times be a corporation duly
incorporated and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and subject to supervision
or examination by federal or state authorities and (y) shall not be entitled to compensation from
the Trust Estate). The Owner Trustee shall cause such successor Paying Agent or any additional
Paying Agent appointed by the Owner Trustee to execute and deliver to the Trust an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with the Trust that as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Transferor in trust for the benefit of the Transferor until such sums
shall be paid to the Transferor. The Paying Agent shall return all unclaimed funds to the Owner
Trustee, and upon removal of a Paying Agent, such Paying Agent shall also return all funds in its
possession to the Owner Trustee. Any reference in this Agreement to the Paying Agent shall include
any co-paying agent unless the context requires otherwise.

     Section 3.10 [Reserved].

     Section 3.11 [Reserved].

     Section 3.12 [Reserved].

     Section 3.13 Restrictions on Transfers of Ownership Interest. To the fullest extent
permitted by applicable law, the Ownership Interest shall not be sold, pledged, transferred or
assigned, except as provided below.

          (a) Unless the Prospective Transferor furnishes an opinion of counsel meeting the requirements
specified in Section 3.13(c)(ii) hereof, the Ownership Interest may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) that is subject to the provisions of
Title I of ERISA, (ii) a plan described in and subject to Section 4975 of the Code, or (iii) any
entity, including an insurance company separate account or general account, whose underlying assets
include plan assets by reason of a plan’s investment in the entity or otherwise under ERISA.

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          (b) Each Prospective Transferor, other than (subject to Section 3.13(d) hereof) an affiliate
of HSBC Finance, shall represent and warrant, in writing, to the Owner Trustee and the Registrar
and any of their respective successors that:

     (i) Such Person is (A) a “qualified institutional buyer” as defined in Rule 144A under
the Securities Act of 1933, as amended (the “Securities Act”), and is aware that the
seller of such Ownership Interest may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is acquiring such Ownership
Interest for its own account or for the account of one or more qualified institutional
buyers for whom it is authorized to act, (B) an “accredited investor” as defined in Rule
501(a) under the Securities Act , or (C) a Person involved in the organization or operation
of the Trust or an affiliate of such Person within the meaning of Rule 3a-7 of the 1940 Act,
as amended (including, but not limited to, HSBC Finance or the Transferor).

     (ii) Such Person understands that such Ownership Interest has not been and will not be
registered under the Securities Act and may be offered, sold, pledged or otherwise
transferred only to a person whom the seller reasonably believes is (A) a “qualified
institutional buyer,” (B) “an accredited investor” or (C) a Person involved in the
organization or operation of the Trust or an affiliate of such Person, in each case in a
transaction meeting the requirements of Rule 144A under the Securities Act or that is
otherwise exempt from registration under the Securities Act and in accordance with any
applicable securities laws of any state of the United States.

     (iii) Such Person shall comply with the provisions of Section 3.13(c), as applicable,
relating to the ERISA restrictions with respect to the acceptance or acquisition of such
Ownership Interest.

          (c) Each Prospective Transferor, other than the initial Transferor or an affiliate of the
initial Transferor, shall either:

     (i) represent and warrant, in writing, to the Owner Trustee and the Registrar and any
of their respective successors, in accordance with Exhibit B hereto, that the Prospective
Transferor is not (A) an “employee benefit plan” within the meaning of Section 3(3) of ERISA
that is subject to Title I of ERISA, (B) a plan within the meaning of and subject to Section
4975 of the Code (any such plan or employee benefit plan, a “Plan”) or (C) any
entity, including an insurance company separate account or general account, whose underlying
assets include plan assets by reason of a plan’s investment in the entity or otherwise under
ERISA, and is not directly or indirectly purchasing such Ownership Interest on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with assets of a Plan; or

     (ii) furnish to the Owner Trustee and the Registrar and any of their respective
successors an opinion of counsel acceptable to such persons that (A) the proposed issuance
or transfer of such Ownership Interest to such Prospective Transferor will not cause any
assets of the Trust to be deemed assets of a Plan, and (B) the proposed holding or transfer
of such Ownership Interest will not cause the Owner Trustee or the Registrar

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or any of their respective successors to be a fiduciary of a Plan within the meaning of
Section 3(21) of ERISA and will not give rise to a transaction described in Section 406 of
ERISA or Section 4975(c)(1) of the Code for which a statutory, regulatory or administrative
exemption is unavailable.

          (d) Neither the Ownership Interest nor any beneficial ownership interest therein may be
transferred to HSBC Finance or any Seller, or to any non-United States Person as defined in Section
7701(a)(30) of the Code, and any purported transfer in violation of this Section 3.13(d) shall be
null and void ab initio.

          (e) The Prospective Transferor, other than the initial Transferor or an affiliate of the
initial Transferor, shall deliver to the Registrar and the Owner Trustee an opinion of counsel
acceptable to such Persons to the effect that, as a matter of federal income tax law, such
Prospective Transferor is permitted to accept the transfer of the Ownership Interest.

          (f) The Ownership Interest may not be pledged or transferred without delivery to the Registrar
of an opinion of counsel acceptable to the Registrar to the effect that such transfer would not
jeopardize the tax treatment of the Trust, would not subject the Trust to an entity-level tax, and
would not jeopardize the status of the Notes as debt for all purposes.

          (g) No pledge or transfer of the Ownership Interest shall be effective unless such purchase or
transfer (i) results in the Ownership Interest being owned by a single beneficial owner and (ii) is
accompanied by an opinion of counsel satisfactory to the Owner Trustee, which opinion of counsel
shall not be an expense of the Trust, the Owner Trustee, the Indenture Trustee, the Registrar, the
Administrator or the Servicer, to the effect such pledge or transfer will not cause the Trust to be
treated for federal income tax purposes as a taxable mortgage pool, association or a publicly
traded partnership taxable as a corporation.

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ARTICLE IV

ACTIONS BY OWNER TRUSTEE

     Section 4.1 Prior Notice to the Transferor and the Indenture Trustee with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall not take
action, and neither the Transferor nor the Indenture Trustee shall direct the Owner Trustee to take
any action, unless (i) the Indenture Trustee has provided written consent to the Owner Trustee,
(ii) at least 30 days before the taking of such action, the Owner Trustee shall have notified the
Transferor and the Indenture Trustee in writing of the proposed action and neither the Transferor
nor the Indenture Trustee shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that the Transferor has withheld consent or the Transferor or the
Indenture Trustee has provided alternative direction, and (iii) in the case of clauses (b), (c),
(d), (g), (h), (i), (j), (k), (l) and (o), the Rating Agencies have confirmed that the taking of
the proposed action would not result in a withdrawal or a reduction of the then-current ratings of
the Notes.

          (a) the initiation of any claim or lawsuit by the Trust (except claims or lawsuits brought in
connection with the collection of the Home Equity Loans) and the compromise of any action, claim or
lawsuit brought by or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Home Equity Loans);

          (b) the election by the Trust to file an amendment to the Certificate of Trust (unless such
amendment is required to be filed under the Statutory Trust Statute);

          (c) the amendment or other change to this Agreement or any Transaction Document in
circumstances where the consent of any Noteholder is required;

          (d) the amendment or other change to this Agreement or any Transaction Document in
circumstances where the consent of any Noteholder is not required and such amendment materially
adversely affects the interest of the Transferor;

          (e) the appointment pursuant to the Indenture of a successor Note Registrar, Paying Agent (as
defined in the Indenture) or Indenture Trustee, or the consent to the assignment by the Note
Registrar, Paying Agent (as defined in the Indenture) or Indenture Trustee of its obligations under
the Indenture;

          (f) the consent to the calling or waiver of any default of any Transaction Document;

          (g) the consent to the assignment by the Indenture Trustee of its obligations under any
Transaction Document;

          (h) except as provided in Article IX hereof, dissolve, terminate or liquidate the Trust in
whole or in part;

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          (i) merge or consolidate the Trust with or into any other entity, or, except as contemplated
by the Sale and Servicing Agreement or the Indenture, convey or transfer all or substantially all
of the Trust’s assets to any other entity;

          (j) cause the Trust to incur, assume or guaranty any indebtedness other than as permitted by
the Transaction Documents, as set forth in this Agreement;

          (k) do any act that conflicts with any other Transaction Document;

          (l) do any act which would make it impossible to carry on the ordinary business of the Trust;

          (m) confess a judgment against the Trust;

          (n) possess Trust assets, or assign the Trust’s right to property, for other than a Trust
purpose; or

          (o) change the Trust’s purpose and powers from those set forth in this Agreement.

     In addition, except as specifically contemplated by the Transaction Documents, the Trust shall
not commingle its assets with those of any other entity. The Trust shall maintain its financial
and accounting books and records separate from those of any other entity. Except as expressly set
forth herein, the Trust shall pay its indebtedness, operating expenses and other liabilities from
its own funds, and the Trust shall not pay the indebtedness, operating expenses and liabilities of
any other Person. The Trust shall maintain appropriate minutes or other records of all appropriate
actions and shall maintain its office separate from the offices of the Depositor or HSBC Finance,
and any of their respective affiliates. This Agreement and the Transaction Documents shall be the
only agreements among the parties hereto with respect to the creation, operation and termination of
the Trust. For accounting purposes, the Trust shall be treated as an entity separate and distinct
from the Transferor. The pricing and other material terms of all transactions and agreements to
which the Trust is a party shall be intrinsically fair to all parties thereto.

     The Owner Trustee shall not have the power, except upon the written direction of the
Transferor or the Indenture Trustee, and to the extent otherwise consistent with the Transaction
Documents, to remove or replace the Servicer, the Indenture Trustee or the Administrator.

     Section 4.2 Action by Transferor with Respect to Bankruptcy. So long as the Indenture
remains in effect, the Transferor shall not have the power to, and shall not, and shall not direct
the Owner Trustee to (i) institute proceedings to have the Trust declared or adjudicated a bankrupt
or insolvent, (ii) consent to the institution of bankruptcy or insolvency proceedings against the
Trust, (iii) file a petition or consent to a petition seeking reorganization or relief on behalf of
the Trust under any applicable federal or state law relating to bankruptcy, (iv) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or any similar official) of
the Trust or a substantial portion of the property of the Trust, (v) make any assignment for the
benefit of the Trust’s creditors, (vi) cause the Trust to admit in writing its inability to pay its
debts generally as they become due, or (vii) take any action, or cause the Trust

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to take any action, in furtherance of any of the foregoing (any of the above, a
“Bankruptcy Action”). The terms of this Section 4.2 shall survive for one year and one day
following the termination of this Agreement.

     Section 4.3 Action by Owner Trustee with Respect to Bankruptcy. To the fullest extent
permitted by applicable law, the Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the prior consent and approval of the
Transferor, and the delivery to the Owner Trustee by the Transferor of a certificate certifying
that such Transferor reasonably believes that the Trust is insolvent. The terms of this Section
4.3 shall survive for one year and one day following the termination of this Agreement.

     Section 4.4 Restrictions on Transferor’s Power. The Transferor shall not direct the
Owner Trustee to take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Trust or the Owner Trustee under this Agreement or any of the
Transaction Documents or would be contrary to Section 2.3 hereof, nor shall the Owner Trustee be
obligated to follow any such direction, if given.

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ARTICLE V

APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

     Section 5.1 Establishment of Trust Accounts. The Administrator shall establish and
maintain the Collection Account and the Yield Maintenance Account in accordance with the Indenture.

     Section 5.2 Application of Trust Funds.

          (a) On each Payment Date, the Administrator shall make the distributions and payments set
forth in Section 5.01 of the Sale and Servicing Agreement from amounts on deposit in the Collection
Account and the Yield Maintenance Account.

          (b) On or before the second Business Day prior to each Payment Date, the Administrator shall
send to DTC the Servicing Certificate prepared by the Servicer pursuant to Section 3.18 of the Sale
and Servicing Agreement with respect to such Payment Date.

          (c) The Transferor will pay any and all taxes levied or assessed upon the Trust or upon all or
any part of the Trust Estate. In the event that the Servicer advises the Administrator in writing
that the amount of any such tax should be withheld from the Trust’s payment (or allocations of
income) to the Transferor, the amount of any such tax shall reduce the amount otherwise
distributable to the Transferor in accordance with this Section 5.2. The Administrator is hereby
authorized and directed to retain from amounts otherwise distributable to the Transferor sufficient
funds as the Servicer shall specify in writing to the Administrator for the payment of any tax that
is legally owed by the Trust. The amount of any such tax withheld from payments to the Transferor
shall be treated as cash distributed to the Transferor at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-U.S. Transferor), the
Administrator may in its sole discretion withhold such amounts in accordance with this paragraph
(c). In the event that the Transferor wishes to apply for a refund of any tax contemplated by this
paragraph (c), the Owner Trustee and the Administrator shall reasonably cooperate with the
Transferor in making such claim so long as the Transferor agrees to reimburse the Owner Trustee and
the Administrator for any out-of-pocket expenses incurred.

     Section 5.3 Method of Payment. Distributions required to be made to the Transferor on
any Payment Date shall be made to the Transferor of record on the preceding Record Date in the
manner set forth in Section 5.01 of the Sale and Servicing Agreement.

     Section 5.4 Derivative Contracts.

          (a) The Owner Trustee shall, at the written direction of the Servicer, on behalf of the Trust,
enter into Derivative Contracts, solely for the benefit of the holders of the Ownership Interest.
Any such Derivative Contract shall constitute a fully prepaid agreement. The Servicer shall
determine, in its sole discretion, whether any Derivative Contract conforms to the requirements of
clauses (b) and (c) of this Section 5.4. Any acquisition of a Derivative Contract shall be
accompanied by an appropriate amendment to this Agreement, including an Opinion of Counsel to the
effect that all such conditions precedent, if any, to such amendment have been

17

 

complied with, and either (i) an Opinion of Counsel to the effect that the existence of the
Derivative Contract will not adversely affect the availability of the exemptive relief afforded
under ERISA by U.S. Department of Labor Prohibited Transaction Class Exemption (“PTCE”) 96-23, PTCE
95-60, PTCE 91-38, PTCE 90-1, PTCE 84-14, or similar exemption, to the holders of the Notes, as of
the date the Derivative Contract is acquired by the Trust; or (ii) the consent of each holder of a
Note to the acquisition of such Derivative Contract.

          (b) Any Derivative Contract that provides for any payment obligation on the part of the Trust
must (i) be without recourse to the assets of the Trust, (ii) contain a non-petition covenant
provision from the Derivative Counterparty, (iii) limit payment dates thereunder to Payment Dates
and (iv) contain a provision limiting any cash payments due to the Derivative Counterparty on any
day under such Derivative Contract solely to funds otherwise available in the Collection Account to
make payments to the holders of the Ownership Interest on such Payment Date.

          (c) Each Derivative Contract must (i) provide for the direct payment of any amounts by the
Derivative Counterparty thereunder to the Collection Account on or before the related Deposit Date,
(ii) provide that in the event of the occurrence of an Event of Default, such Derivative Contract
shall terminate upon the direction of the holders of a majority interest in the Ownership Interest,
and (iii) prohibit the Derivative Counterparty from “setting-off’ or “netting” other obligations of
the Trust and its Affiliates against such Derivative Counterparty’s payment obligations thereunder.
All collections, proceeds and other amounts in respect of any Derivative Contract payable by the
Derivative Counterparty shall be distributed to the holders of the Ownership Interest on the
Payment Date following payment thereof to the Collection Account.

     Section 5.5 Accounting and Reports to the Transferor, the Internal Revenue Service and
Others. The Servicer shall deliver (or cause to be delivered) to the Transferor such
information, reports or statements as may be required by the Code and applicable Treasury
Regulations and as may be required to enable the Transferor to prepare its respective federal and
state income tax returns. Consistent with the Trust’s characterization as a disregarded entity
within the meaning of Treasury regulations Section 301.7701-2(a), no federal income tax return
shall be filed on behalf of the Trust unless either (a) the Trust or the Transferor shall receive
an opinion of counsel that, based on a change in applicable law occurring after the date hereof,
the Code requires such a filing or (b) the Internal Revenue Service shall determine that the Trust
is required to file such a return. The Servicer shall prepare or shall cause to be prepared any
tax returns required to be filed by the Trust and shall remit such returns to the Transferor at
least five days before such returns are due to be filed. Such returns shall be filed by, or at the
direction of, the Servicer with the appropriate tax authorities.

     Section 5.6 Signature on Returns.

     The Servicer shall sign on behalf of the Trust the tax returns of the Trust, if any, unless
applicable law requires the Transferor to sign such documents, in which case such documents shall
be signed by the Transferor.

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ARTICLE VI

AUTHORITY AND DUTIES OF OWNER TRUSTEE

     Section 6.1 General Authority. The Owner Trustee is authorized and directed to
execute and deliver or cause to be executed and delivered the Notes, and the Transaction Documents
to which the Trust is to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Transaction Documents to which the Trust is to be a party and any other
agreement or instrument described in Article III, in each case, in such form as the Owner Trustee
shall approve, as evidenced conclusively by the Owner Trustee’s execution thereof, and, on behalf
of the Trust, to direct the Administrator to authenticate and deliver each Class of Notes in its
respective Initial Note Principal Amount. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the Trust pursuant to the
Transaction Documents.

     Section 6.2 General Duties. It shall be the duty of the Owner Trustee to discharge
(or cause to be discharged) all of its responsibilities pursuant to the terms of this Agreement and
the Transaction Documents to which the Trust is a party and to administer the Trust in the interest
of the Transferor, subject to the Transaction Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Transaction Documents to the
extent the Servicer has agreed in the Sale and Servicing Agreement to perform any act or to
discharge any duty of the Owner Trustee hereunder or under any Transaction Document, and the Owner
Trustee shall not be held liable for the default or failure of the Servicer to carry out its
respective obligations under the Sale and Servicing Agreement.

     Section 6.3 Action upon Instruction.

          (a) Subject to Article IV herein and in accordance with the terms of the Transaction
Documents, the Transferor may by written instruction direct the Owner Trustee in the management of
the Trust but only to the extent consistent with the limited purpose of the Trust. Such direction
may be exercised at any time by written instruction of the Transferor pursuant to Article IV.

          (b) Notwithstanding the foregoing, the Owner Trustee shall not be required to take any action
hereunder or under any Transaction Document if the Owner Trustee shall have reasonably determined,
or shall have been advised by counsel, that such action is likely to result in liability on the
part of the Owner Trustee or is contrary to the terms hereof or of any Transaction Document or is
otherwise contrary to law.

          (c) Whenever the Owner Trustee is unable to decide between alternative courses of action
permitted or required by the terms of this Agreement or under any Transaction Document, the Owner
Trustee shall promptly give notice (in such form as shall be appropriate under the circumstances)
to the Transferor requesting instruction from the Transferor as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Transferor received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received

19

 

appropriate instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not inconsistent with this
Agreement or the Transaction Documents, as it shall deem to be in the best interest of the
Transferor, and shall have no liability to any Person for such action or inaction.

          (d) In the event that the Owner Trustee is unsure as to the application of any provision of
this Agreement or any Transaction Document or any such provision is ambiguous as to its
application, or is, or appears to be, in conflict with any other applicable provision, or in the
event that this Agreement provides no direction to the Owner Trustee or is silent or is incomplete
as to the course of action that the Owner Trustee is required to take with respect to a particular
set of facts, the Owner Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Transferor requesting instruction and, to the extent that the Owner Trustee
acts or refrains from acting in good faith in accordance with any such instruction received from
the Transferor, the Owner Trustee shall not be liable, on account of such action or inaction, to
any Person. If the Owner Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be specified in such notice or
may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Transaction Documents, as it
shall deem to be in the best interest of the Transferor, and shall have no liability to any Person
for such action or inaction.

     Section 6.4 No Duties Except as Specified in this Agreement, the Transaction Documents or
in Instructions. The Owner Trustee shall not have any duty or obligation to manage, make any
payment with respect to, register, record, sell, dispose of, or otherwise deal with the Owner Trust
Estate, or to otherwise take or refrain from taking any action under, or in connection with, any
document contemplated hereby to which the Owner Trustee or the Trust is a party, except as
expressly provided by the terms of this Agreement, any Transaction Document or in any document or
written instruction received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Transaction Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at anytime or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Transaction Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee in its individual capacity that are not related to
the ownership or the administration of the Owner Trust Estate.

     Section 6.5 No Action Except Under Specified Documents or Instructions. The Owner
Trustee shall not manage, control, use, sell, dispose of or otherwise deal with any part of the
Owner Trust Estate except (i) in accordance with the powers granted to and the authority conferred
upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with the Transaction
Documents and (iii) in accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3 above. The Owner Trustee shall not be required to take any action under
this Agreement if the Owner Trustee shall reasonably determine or shall have

20

 

been advised by counsel that such action is contrary to the terms of this Agreement or is
otherwise contrary to law.

     Section 6.6 Restrictions. The Owner Trustee shall not take any action (a) that is
inconsistent with the purposes of the Trust set forth in Section 2.3 hereof or (b) that, to the
actual knowledge of a responsible officer of the Owner Trustee, would result in the Trust’s
becoming taxable as a corporation for Federal income tax purposes. The Transferor shall not direct
the Owner Trustee to take action that would violate the provisions of this Section 6.6.

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ARTICLE VII

CONCERNING THE OWNER TRUSTEE

     Section 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts the trusts
hereby created and agrees to perform its duties hereunder with respect to such trusts but only upon
the terms of this Agreement and the Transaction Documents. The Owner Trustee also agrees to
disburse all moneys actually received by it constituting part of the Owner Trust Estate upon the
terms of the Transaction Documents and this Agreement. The Owner Trustee shall not be answerable
or accountable hereunder or under any Transaction Document under any circumstances, except (i) for
its own willful misconduct, bad faith or gross negligence or (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.3 below expressly made by the Owner Trustee.
In particular, but not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):

          (a) the Owner Trustee shall not be liable for any error of judgment made by a responsible
officer of the Owner Trustee;

          (b) no provision of this Agreement or any Transaction Document shall require the Owner Trustee
to expend or risk funds or otherwise incur any financial liability in the performance of any of its
rights or powers hereunder or under any Transaction Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;

          (c) under no circumstances shall the Owner Trustee be liable for indebtedness evidenced by or
arising under any of the Transaction Documents, including the principal of and interest on the
Notes;

          (d) the Owner Trustee shall not be responsible for or in respect of the validity or
sufficiency of this Agreement or for the due execution hereof by the Depositor or for the form,
character, genuineness, sufficiency, value or validity of any of the Owner Trust Estate or for or
in respect of the validity or sufficiency of the Transaction Documents, and the Owner Trustee shall
in no event assume or incur any liability, duty, or obligation to any Noteholder or the Transferor
other than as expressly provided for herein and in the Transaction Documents;

          (e) the Owner Trustee shall not be liable for the default or misconduct of the Indenture
Trustee or the Servicer under any of the Transaction Documents or otherwise and the Owner Trustee
shall not have any obligation or liability to perform the obligations of the Trust under this
Agreement or the Transaction Documents that are required to be performed by the Indenture Trustee
under the Indenture, the Servicer under the Sale and Servicing Agreement, or the Registrar or the
Administrator hereunder;

          (f) the Owner Trustee shall not be under any obligation to exercise any of the rights or
powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this
Agreement or otherwise or in relation to this Agreement or any Transaction Document, at the
request, order or direction of the Transferor, unless the Transferor has offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and

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liabilities that may be incurred by the Owner Trustee therein or thereby. The right of the
Owner Trustee to perform any discretionary act enumerated in this Agreement or in any Transaction
Document shall not be construed as a duty, and the Owner Trustee shall not be answerable for other
than its gross negligence or willful misconduct in the performance of any such act; and

          (g) the Owner Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in accordance with the instructions of the Transferor or any other Person to the extent
such action or direction is permitted by the Transaction Documents.

     With respect to the Noteholders, the Owner Trustee undertakes to perform or observe only such
of the covenants and obligations of the Owner Trustee as are expressly set forth in this Agreement,
and no implied covenants or obligations with respect to the Noteholders shall be read into this
Agreement or the other Transaction Documents against the Owner Trustee. The Owner Trustee shall
not be deemed to owe any fiduciary duty to the Noteholders, and shall not be liable to any such
person for the failure of the Trust to perform its obligations to such persons other than as a
result of the gross negligence or willful misconduct of the Owner Trustee in the performance of its
express obligations under this Agreement.

     Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish (a) to the
Transferor promptly upon receipt of a written request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee under the Transaction Documents and (b) to Noteholders promptly upon
written request therefor, copies of the Sale and Servicing Agreement and this Agreement.

     Section 7.3 Representations and Warranties.

     The Owner Trustee hereby represents and warrants to the Administrator and the Depositor, for
the benefit of the Transferor, the Noteholders and the Indenture Trustee, that:

          (a) It is a national banking association duly organized and validly existing under the laws of
the United States of America. It has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement;

          (b) It has taken all corporate action necessary to authorize the execution and delivery by it
of this Agreement, and this Agreement will be executed and delivered by one of its officers who is
duly authorized to execute and deliver this Agreement on its behalf;

          (c) Neither the execution nor the delivery by it of this Agreement nor the consummation by it
of the transactions contemplated hereby nor compliance by it with any of the terms or provisions
hereof will contravene any federal law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be bound;

          (d) The execution, delivery, authentication and performance by the Owner Trustee of this
Agreement will not require the authorization, consent or approval of, the giving of

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notice to, the filing or registration with, or the taking of any other action with respect to,
any governmental authority or agency;

          (e) This Agreement has been duly authorized, executed and delivered by the Owner Trustee and
constitutes a valid, legal and binding obligation of the Owner Trustee, enforceable against it in
accordance with the terms hereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors’ rights generally and to general
principles of equity, regardless of whether such enforcement is considered in a proceeding in
equity or at law;

          (f) The Owner Trustee is not in default with respect to any order or decree of any court or
any order, regulation or demand of any federal, state, municipal or governmental agency, which
default might have consequences that would materially and adversely affect the condition (financial
or other) or operations of the Owner Trustee or its properties or might have consequences that
would materially adversely affect its performance hereunder; and

          (g) No litigation is pending or, to the best of the Owner Trustee’s knowledge, threatened
against the Owner Trustee which would prohibit its entering into this Agreement or performing its
obligations under this Agreement.

     Section 7.4 Reliance; Advice of Counsel.

          (a) The Owner Trustee shall not incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be signed by the proper
party or parties. The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force and effect. As to
any fact or matter the method of the determination of which is not specifically prescribed herein,
the Owner Trustee may for all purposes hereof rely on a certificate, signed by the president or any
vice president or by the treasurer or other authorized officer of the relevant party, as to such
fact or matter and such certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.

          (b) In the exercise or administration of the trusts hereunder and in the performance of its
duties and obligations under this Agreement or the Transaction Documents, the Owner Trustee (i)
may, at the expense of HSBC Finance, act directly or through its agents or attorneys pursuant to
agreements entered into with any of them, and the Owner Trustee shall not be liable for the conduct
or misconduct of their respective agents or attorneys if such agents or attorneys shall have been
selected by the Owner Trustee with reasonable care, and (ii) may, at the expense of HSBC Finance,
consult with counsel, accountants and other skilled persons to be selected with reasonable care and
employed by them. The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the opinion or advice of any such counsel, accountants or other
such persons and not contrary to this Agreement or any Transaction Document.

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     Section 7.5 Not Acting in Individual Capacity. Except as provided in this Article
VII, in accepting the trusts hereby created, U.S. Bank Trust National Association acts solely as
Owner Trustee hereunder and not in its individual capacity, and all Persons having any claim
against the Owner Trustee by reason of the transactions contemplated by this Agreement or any
Transaction Document shall look only to the Owner Trust Estate for payment or satisfaction thereof.

     Section 7.6 Owner Trustee Not Liable for the Ownership Interest or the Home Equity
Loans. The recitals contained herein shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representation as to the validity or sufficiency of this Agreement, of any Transaction Document
or of the Ownership Interest (other than as specified in Section 7.3 hereof) or the Notes, or of
any Home Equity Loans or related documents. The Owner Trustee shall not at any time have any
responsibility or liability for or with respect to the legality, validity and enforceability of any
Home Equity Loan, or the perfection and priority of any security interest created by any Home
Equity Loan or the maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to be distributed to
the Transferor under this Agreement or to the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any insurance thereon; the existence and contents of any Home Equity Loan on any
computer or other record thereof; the validity of the assignment of any Home Equity Loan to the
Trust or of any intervening assignment; the completeness of any Home Equity Loan; the performance
or enforcement of any Home Equity Loan; the compliance by the Depositor or the Servicer with any
warranty or representation made under any Transaction Document or in any related document or the
accuracy of any such warranty or representation or any action of the Depositor, the Indenture
Trustee or the Servicer or any subservicer taken in the name of the Owner Trustee.

     Section 7.7 Owner Trustee May Own the Ownership Interest and the Notes. U.S. Bank
Trust National Association in its individual or any other capacity may become the owner or pledgee
of the Ownership Interest or the Notes and may deal with the Depositor, the Indenture Trustee, the
Administrator and the Servicer in banking transactions with the same rights as they would have if
it were not the Owner Trustee.

     Section 7.8 Licenses. The Servicer shall cause the Trust to use its best efforts to
obtain and maintain the effectiveness of any licenses required in connection with this Agreement
and the Transaction Documents and the transactions contemplated hereby and thereby until such time
as the Trust shall terminate in accordance with the terms hereof.

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ARTICLE VIII

COMPENSATION OF OWNER TRUSTEE

     Section 8.1 Fees and Expenses. The Owner Trustee shall receive as compensation for
its services hereunder such fees as have been separately agreed upon before the date hereof between
HSBC Finance and the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
HSBC Finance for its other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights and its duties
hereunder.

     Section 8.2 Indemnification. HSBC Finance shall be liable as primary obligor for, and
shall indemnify the Owner Trustee (in its individual and trustee capacities) and its respective
successors, assigns, agents and servants (collectively, the “Indemnified Parties”) from and
against, any and all liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including reasonable legal fees and
expenses) of any kind and nature whatsoever (collectively, “Expenses”) which may at any
time be imposed on, incurred by, or asserted against any Indemnified Party in any way relating to
or arising out of this Agreement, the Transaction Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner Trustee hereunder,
except only that HSBC Finance shall not be liable for or required to indemnify an Indemnified Party
from and against Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.1 hereof. The indemnities contained in this Section 8.2 shall survive the
resignation or removal of the Owner Trustee or the termination of this Agreement. In the event of
any claim, action or proceeding for which indemnity will be sought pursuant to this Section 8.2,
the choice of legal counsel of the Owner Trustee shall be subject to the approval of HSBC Finance,
which approval shall not be unreasonably withheld.

     Section 8.3 Payments to the Owner Trustee. The Owner Trustee shall be entitled to
receive payment from the Trust Estate for any amounts due to it pursuant to this Article VIII to
the extent set forth in the Transaction Documents. Any amounts paid to the Owner Trustee pursuant
to this Article VIII shall be deemed not to be a part of the Owner Trust Estate immediately after
such payment.

     Section 8.4 Non-recourse Obligations. Notwithstanding anything in this Agreement or
any Transaction Document, the Owner Trustee agrees in its individual capacity and in its capacity
as Owner Trustee for the Trust that all obligations of the Trust to the Owner Trustee individually
or as Owner Trustee for the Trust shall be recourse to the Trust only and specifically shall not be
recourse to the assets of any Noteholder.

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ARTICLE IX

TERMINATION OF TRUST AGREEMENT

     Section 9.1 Termination of Trust Agreement.

          (a) This Agreement (other than Article VIII) shall terminate and the Trust shall dissolve and
terminate pursuant to and in accordance with Section 3808(d) and (e) of the Statutory Trust Statute
and be of no further force or effect upon notice to the Indenture Trustee of the earliest of (i)
the final payment or other liquidation of the last Home Equity Loan remaining in the Trust; (ii)
the optional purchase by the Servicer of the Home Equity Loans as described in Section 8.01 of the
Sale and Servicing Agreement, (iii) the sale of the Home Equity Loans as described in Section 10.2
of the Indenture and the corresponding redemption of the Notes; and (iv) the Payment Date in
January 2036. The bankruptcy, liquidation, dissolution, death or incapacity of the Transferor
shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such Transferor’s
legal representatives or heirs to claim an accounting or to take any action or proceeding in any
court for a partition or winding-up of all or any part of the Trust or Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.

          (b) The Ownership Interest shall be subject to an early redemption or termination at the
option of the Servicer in the manner and subject to the provisions of Section 8.01 of the Sale and
Servicing Agreement.

          (c) Except as provided in Sections 9.1(a) and (b) above, neither the Depositor nor the
Transferor shall be entitled to revoke or terminate the Trust.

          (d) The Servicer shall be responsible for the liquidation of the Trust. Upon the winding up
of the Trust and its termination in accordance with Section 3808 of the Statutory Trust Statute,
the Owner Trustee shall at the direction and expense of the Servicer cause the Certificate of Trust
to be canceled by filing a certificate of cancellation with the Secretary of State in accordance
with Section 3810 of the Statutory Trust Statute.

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ARTICLE X

SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

     Section 10.1 Eligibility Requirements for Owner Trustee. (a) The Owner Trustee shall
at all times be a corporation or national banking association authorized to exercise corporate
powers; having a combined capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or state authorities; and having (or having a parent which has) a long-term
rating of at least “Baa3” (or its equivalent) by Moody’s and “A” (or its equivalent) by Standard &
Poor’s. If such corporation shall publish reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of
this Section 10.1, the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.

          (b) The Owner Trustee shall at all times be an entity satisfying the provisions of Section
3807(a) of the Delaware Statutory Trust Statute. If at any time the Owner Trustee ceases to be
eligible in accordance with the provisions of this Section, the Owner Trustee will resign
immediately in the manner and with the effect specified in Section 10.2.

     Section 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee may at any
time resign and be discharged from the trusts hereby created by giving written notice thereof to
the Trust, the Indenture Trustee and the Rating Agencies. As a condition precedent to the
effectiveness of any such resignation, the Owner Trustee shall, at least 30 calendar days prior to
the effective date of such resignation, provide to the Depositor and the Servicer written notice of
any successor owner trustee pursuant to this Section, in form and substance reasonably satisfactory
to the Depositor and the Servicer, containing all information reasonably requested by the Depositor
and the Servicer in order for the Depositor to comply with its reporting obligations under Item
6.02 of Form 8-K with respect to the resignation of the Owner Trustee. Upon receiving such notice
of resignation, the Depositor shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the resigning trustee
and one copy to the successor trustee, with a copy to the Indenture Trustee. If no successor Owner
Trustee shall have been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.

     If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions
of Section 10.1 above and shall fail to resign after written request therefor by the Indenture
Trustee, or if at any time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the Owner Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then the Indenture Trustee may,
and, at the written direction of the Majority Noteholder, shall, remove the Owner Trustee. If the
Indenture Trustee shall remove the Owner Trustee under the authority of the immediately preceding
sentence, the Indenture Trustee shall promptly appoint a successor

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Owner Trustee by written instrument in duplicate, one copy of which instrument shall be
delivered to the outgoing trustee so removed and one copy to the successor trustee and payment of
all fees owed to the outgoing trustee. As a condition precedent to such removal and appointment
described in the two preceding sentences, the Owner Trustee shall provide to the Depositor and the
Servicer, at least 30 calendar days prior to the effective date of such removal and appointment,
written notice, in form and substance reasonably satisfactory to the Depositor, and the Servicer
containing all information reasonably requested by the Depositor and the Servicer in order for the
Depositor to comply with its reporting obligation under Item 6.02 of Form 8-K with respect to the
removal of the outgoing Owner Trustee and the appointment of a successor Owner Trustee.

     If the Owner Trustee shall fail to fulfill its obligations under Section 10.2 (with respect to
notice to the Depositor and the Servicer) and such failure continues for the lesser of 10 calendar
days or such period in which the applicable report under the Exchange Act can be filed timely
(without taking into account any extensions), then the Depositor may remove the Owner Trustee. If
the Depositor removes the Owner Trustee under the authority of the immediately preceding sentence,
the Depositor shall promptly appoint a successor Owner Trustee by written instrument in duplicate,
one copy of which shall be delivered to the Owner Trustee so removed and one copy to the successor
Owner Trustee.

     Any resignation or removal of the Owner Trustee and appointment of a successor Owner Trustee
pursuant to any of the provisions of this Section 10.2 shall not become effective until acceptance
of appointment by the successor trustee pursuant to Section 10.3 and payment of all fees and
expenses owed to the outgoing trustee. The Indenture Trustee shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies and to the
Administrator.

     Section 10.3 Successor Trustee. Any successor Owner Trustee appointed pursuant to
Section 10.2 shall execute, acknowledge and deliver to the Indenture Trustee and to its predecessor
trustee an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties, and obligations of its predecessor under this Agreement, with like effect
as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of its
fees and expenses deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Indenture Trustee and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers,
duties, and obligations.

     No successor Owner Trustee shall accept appointment as provided in this Section 10.3 unless at
the time of such acceptance such successor Owner Trustee shall be eligible pursuant to Section 10.1
above.

     Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section 10.3, the
Indenture Trustee shall mail notice of the successor of such Owner Trustee to the Administrator,
the Transferor, the Noteholders and the Rating Agencies. If the Indenture Trustee

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fails to mail such notice within 10 days after acceptance of appointment by the successor
Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of
the Indenture Trustee.

     Any successor Owner Trustee shall promptly file a certificate of amendment identifying the
name and principal plan of business of the Owner Trustee in the State of Delaware.

     Section 10.4 Merger or Consolidation of Owner Trustee. Any Person into which the
Owner Trustee may be merged or converted or with which either may be consolidated or any Person
resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party,
or any Person succeeding to all or substantially all of the corporate trust business of the Owner
Trustee, shall be the successor of the Owner Trustee hereunder, provided such Person shall
be eligible pursuant to Section 10.1 above, without the execution or filing of any instrument or
any further act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee shall mail notice of such
merger or consolidation to the Depositor, HSBC Finance and the Rating Agencies.

     In addition, the Owner Trustee shall deliver to the Depositor and the Servicer, at least 30
calendar days prior to the effective date of any merger or consolidation of the Owner Trustee,
written notice thereof, in form and substance reasonably satisfactory to the Depositor and the
Servicer, containing all information reasonably requested by the Depositor and the Servicer in
order for the Depositor to comply with its reporting obligations under Form 8-K with respect to a
successor Owner Trustee. If the Owner Trustee shall fail to fulfill its obligations under Section
10.4 (with respect to notice to the Depositor or the Servicer), and such failure continues for the
lesser of 10 calendar days or such period in which the applicable report under the Exchange Act can
be filed timely (without taking into account any extensions), then the Depositor may remove the
Owner Trustee. If the Depositor removes the Owner Trustee under the authority of the immediately
preceding sentence, the Depositor shall promptly appoint a successor Owner Trustee by written
instrument in duplicate, one copy of which shall be delivered to the Owner Trustee so removed and
one copy to the successor Owner Trustee.

     Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the Owner Trust Estate or any Mortgaged
Property may at the time be located, the Owner Trustee shall have the power and shall execute and
deliver all instruments to appoint one or more Persons to act as co-owner trustee, jointly with the
Owner Trustee, or separate owner trustee or separate owner trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Owner Trustee may consider necessary or desirable. No
co-owner trustee or separate trustee under this Section 10.5 shall be required to meet the terms of
eligibility as a successor Owner Trustee pursuant to Section 10.1 above and no notice of the
appointment of any co-owner trustee or separate trustee shall be required pursuant to Section 10.3
above.

     Each separate trustee and co-owner trustee shall, to the extent permitted by law, be appointed
and act subject to the following provision and conditions:

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     (i) all rights, powers, duties and obligations conferred or imposed upon the Owner
Trustee shall be conferred upon and exercised or performed by the Owner Trustee and such
separate owner trustee or co-owner trustee jointly (it being understood that such separate
owner trustee or co-owner trustee is not authorized to act separately without the Owner
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 Owner 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 or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee or co-owner
trustee but solely at the direction of the Owner Trustee;

     (ii) no owner trustee under this Agreement shall be personally liable by reason of any
act or omission of any other owner trustee under this Agreement; and

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

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

     Any separate trustee or co-owner trustee may at any time appoint the Owner Trustee as 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 Agreement on its behalf and in its name. If any owner
trustee or co-owner 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 Owner
Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

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ARTICLE XI

MISCELLANEOUS

     Section 11.1 Supplements and Amendments. This Agreement may be amended by the
Depositor, HSBC Finance, the Owner Trustee and the Administrator with prior written notice to the
Rating Agencies and the Indenture Trustee, but without the consent of any of the Noteholders, the
Transferor or the Indenture Trustee, to cure any ambiguity, to correct or supplement any provisions
in this Agreement or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Transferor; provided, however, that such action shall not, as
evidenced by an opinion of counsel delivered to and acceptable to the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder or the Transferor. An amendment
described above shall be deemed not to adversely affect in any material respect the interests of
any Noteholder or the Transferor if the party requesting the amendment satisfies the Rating Agency
Condition with respect to such amendment. The Depositor and the Administrator each shall join in
any such amendment approved as provided in the preceding sentence so long as such amendment is not
adverse to the interests of the Depositor or the Administrator, as the case may be.

     This Agreement may also be amended from time to time by the Depositor, HSBC Finance, the Owner
Trustee and the Administrator with the prior written consent of the Rating Agencies, the Indenture
Trustee, the Majority Noteholder and the Transferor, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or modifying in any
manner the rights of the Noteholders or the Transferor; provided, however, that no
such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the Home Equity Loans or distributions that shall be required
to be made for the benefit of the Noteholders or the Transferor or (b) reduce the Percentage
Interest required to consent to any such amendment, without the consent of the holders of all the
outstanding Notes; and provided further, that no such amendment will be effective
unless such action will not, as evidenced by an opinion of counsel delivered to and acceptable to
the Indenture Trustee, adversely affect in any material respect the interests of any Noteholders.
The Depositor and the Administrator each shall join in any such amendment approved as provided in
the preceding sentence so long as such amendment is not adverse to the interests of the Depositor
or the Administrator, as the case may be.

     Promptly after the execution of any such amendment, the Servicer shall furnish written
notification of the substance of such amendment to the Indenture Trustee and each of the Rating
Agencies.

     It shall not be necessary for the consent of the Transferor, the Noteholders or the Indenture
Trustee pursuant to this Section 11.1 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of the Transferor provided for in this Agreement or
in any other Transaction Document) and of evidencing the authorization of the execution thereof by
the Transferor and the Noteholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.

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     Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee
shall cause the filing of such amendment with the Secretary of State.

     Prior to the execution of any amendment to this Agreement or the Certificate of Trust, each of
the Owner Trustee and the Administrator shall be entitled to receive and rely upon an opinion of
counsel stating that the execution of such amendment is authorized and permitted by this Agreement
and that all conditions precedent to such execution and delivery have been satisfied. The Owner
Trustee and the Administrator may, but shall not be obligated to, enter into any such amendment
which affects their respective rights, duties or immunities under this Agreement or otherwise.

     Prior to the execution of any amendment to this Agreement that requires the consent of the
Indenture Trustee, the Indenture Trustee shall be entitled to rely upon an opinion of counsel
stating that such amendment is authorized and permitted by this Agreement and that all conditions
precedent to such execution and delivery have been satisfied.

     Section 11.2 No Legal Title to Owner Trust Estate in Transferor. The Transferor shall
not have legal title to any part of the Owner Trust Estate. The Transferor shall be entitled to
receive distributions with respect to its undivided Ownership Interest therein only in accordance
with Articles V and IX herein. No transfer, by operation of law or otherwise, of any right, title,
or interest of the Transferor to and in its Ownership Interest shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to
it of legal title to any part of the Owner Trust Estate.

     Section 11.3 Limitations on Rights of Others. The provisions of this Agreement are
solely for the benefit of the Owner Trustee, the Administrator, the Trust, the Transferor and, to
the extent expressly provided herein, the Indenture Trustee and the Noteholders, and nothing in
this Agreement, whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.

     Section 11.4 Notices.

          (a) Unless otherwise expressly specified or permitted by the terms hereof, all notices shall
be in writing and shall be deemed given (1) upon receipt by the intended recipient via facsimile if
also mailed by first-class mail, postage prepaid or (2) upon receipt by the intended recipient or
three Business Days after mailing if mailed by certified mail, postage prepaid (except that notice
to the Owner Trustee shall be deemed given only upon actual receipt by the Owner Trustee), at the
following addresses: (i) if to the Owner Trustee, the Indenture Trustee or the Administrator, at
its respective Corporate Trust Office; (ii) if to the Depositor or HSBC Finance, 2700 Sanders Road,
Prospect Heights, Illinois 60070, Attention: Treasurer; or, as to each such party, at such other
address as shall be designated by such party in a written notice to each other party.

          (b) Any notice required or permitted to be given to the Transferor shall be given by
first-class mail, postage prepaid, at the address of such Transferor as shown in the Register. Any
notice so mailed within the time prescribed in this Agreement shall be

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conclusively presumed to have been duly given, whether or not the Transferor receives such
notice.

     Section 11.5 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     Section 11.6 Separate Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same instrument.

     Section 11.7 Successors and Assigns. All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of the Owner Trustee, the Administrator and the
Transferor and its successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by the Transferor shall bind the
successors and assigns of the Transferor.

     Section 11.8 No Petition. The Owner Trustee and the Administrator, by entering into
this Agreement, the Transferor, by accepting the Ownership Interest, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and agree that they
will not at any time institute against the Depositor or the Trust, or join in any institution
against the Depositor, or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or state bankruptcy
or law in connection with any obligations relating to the Ownership Interest and the Notes, this
Agreement or any of the Transaction Documents.

     Section 11.9 [Reserved].

     Section 11.10 No Recourse. The Transferor by accepting the Ownership Interest
acknowledges that the Transferor’s Ownership Interest represents a beneficial interest in the Trust
only and does not represent an interest in or an obligation of the Servicer, the Depositor, the
Owner Trustee, the Administrator or any Affiliate thereof and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated in this Agreement or
the other Transaction Documents.

     Section 11.11 Headings. The headings of the various Articles and Sections herein are
for convenience of reference only and shall not define or limit any of the terms or provisions
hereof.

     Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, 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.

34

 

     Section 11.13 Inconsistencies with Sale and Servicing Agreement.

     In the event certain provisions of this Agreement conflict with the provisions of the Sale and
Servicing Agreement, the parties hereto agree that the provisions of the Sale and Servicing
Agreement shall be controlling (other than the provisions governing the internal affairs of the
Trust, which shall be governed by Delaware law).

     Section 11.14 Third Party Beneficiary.

     The parties hereto acknowledge that the Indenture Trustee is an express third party
beneficiary hereof entitled to enforce the provisions hereof as if it were actually a party hereto.
Nothing in this Section 11.14 however shall be construed to mitigate in any way, the fiduciary
responsibilities of the Owner Trustee to the beneficiaries of the Trust.

     Section 11.15 Servicer.

     The Servicer is authorized to prepare, or to cause to be prepared, execute and deliver on
behalf of the Trust all such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Trust or the Owner Trustee to prepare, file or deliver pursuant to the
Transaction Documents. Upon written request, the Owner Trustee shall execute and deliver to the
Servicer a limited power of attorney appointing the Servicer the Trust’s agent and attorney-in-fact
to prepare, or to cause to be prepared, execute and deliver all such documents, reports, filings,
instruments, certificates and opinions.

     Section 11.16 Rights Under Indenture.

     HSBC Bank USA, National Association shall be afforded each of the rights, protections,
immunities and indemnities in acting as Administrator, Registrar and Paying Agent hereunder as it
is entitled to in its capacity as Administrator, Note Registrar and Paying Agent under the
Indenture.

     Section 11.17 Regulation AB.

     The Depositor, the Servicer and the Owner Trustee acknowledge and agree that the purpose of
this Section 11.17 is to facilitate compliance by the Depositor with the provisions of Regulation
AB and related rules and regulations of the Commission. The Depositor shall not exercise its right
to request delivery of information or other performance under these provisions other than in good
faith, or for purposes other than compliance with the Securities Act, the Exchange Act and the
rules and regulations of the Commission under the Securities Act and the Exchange Act. The Owner
Trustee acknowledges that interpretations of the Commission or its staff of the requirements of
Regulation AB may change over time and, accordingly, agrees to comply with reasonable requests made
by the Depositor or the Servicer in good faith for delivery of information under these provisions
on the basis of such interpretations of Regulation AB. The Owner Trustee shall cooperate fully with
the Depositor and the Servicer to deliver to the Depositor and the Servicer (and any assignees or
designees) any and all readily available and deliverable information regarding the Owner Trustee
that is reasonably necessary in the good faith determination of the Depositor or the Servicer to
permit the Depositor to comply with the provisions of Items 1109(a), 1109(b), 1117 and 1119 of
Regulation AB. Without limiting the

35

 

generality of the foregoing, for so long as the Trust is required to report under the Exchange
Act, the Owner Trustee shall (i) on or before the fifth Business Day of each month, provide to the
Servicer, in writing, such information regarding the Owner Trustee as is requested by the Servicer
for the purpose of compliance with Item 1117 of Regulation AB, (ii) on or before March 15 of each
calendar year, beginning March 15, 2007, provide to the Servicer, in writing, such information
regarding the Owner Trustee as is requested by the Servicer for the purpose of compliance with Item
1119 of Regulation AB; provided, however, that the Owner Trustee shall not be required to provide
information required by the foregoing clause (i) or (ii) in the event that there has been no change
to the information previously provided by the Owner Trustee to the Servicer, and (iii) as promptly
as practicable following notice to or discovery by a Responsible Officer of the Owner Trustee of
any changes to such information, provide to the Servicer, in writing, such updated information.

36

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	HSBC FINANCE CORPORATION  
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	     /s/ Dennis J. Mickey	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Dennis J. Mickey
	 	 	 	 	 	 	Title: Vice President and Assistant Treasurer
	 
	 	 	 	 	 	 	 	 
	 	 	HSBC HOME EQUITY LOAN CORPORATION I,
	 	 	as Depositor
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	     /s/ David J. Hunter	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: David J. Hunter
	 	 	 	 	 	 	Title: Vice President and Assistant Treasurer
	 
	 	 	 	 	 	 	 	 
	 	 	U.S.BANK TRUST NATIONAL ASSOCIATION
	 	 	as Owner Trustee
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	     /s/ Patricia M. Child	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Patricia M. Child
	 	 	 	 	 	 	Title: Vice President
	 
	 	 	 	 	 	 	 	 
	 	 	HSBC BANK USA, NATIONAL ASSOCIATION,
	 	 	as Administrator
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	     /s/ Elena Zheng	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Elena Zheng
	 	 	 	 	 	 	Title: Assistant Vice President

 

 

EXHIBIT A

CERTIFICATE OF TRUST

OF

HSBC HOME EQUITY LOAN TRUST (USA) 2006-1

     THIS Certificate of Trust of HSBC Home Equity Loan Trust (USA) 2006-1 (the “Trust”), is being
duly executed and filed on behalf of the trust by the undersigned, as trustee, to form a statutory
trust under the Delaware Statutory Trust Act (12 Del. C., § 3801 et seq.) (the “Act”).

     1. Name. The name of the statutory trust formed by this is HSBC Home Equity Loan
Trust (USA) 2006-1.

     2. Owner Trustee. The name and business address of the trustee of the Trust in the
State of Delaware are U.S. Bank Trust National Association, 300 Delaware Avenue, 8th
Floor, Wilmington, Delaware 19801. Attention: CTLA – Structured Finance.

     3. Effective Date. This Certificate of Trust shall be effective upon filing.

     IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of Trust in accordance
with Section 3811(a) of the Act.

	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION, not in

its individual capacity but solely as Owner Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

A-1

 

EXHIBIT B

TRANSFER CERTIFICATE

	 	 	 	 	 
	U.S. Bank Trust National Association, as Owner Trustee
	209 S. LaSalle Street
	Chicago, Illinois 60604
	Attention:	 	Corporate Trust Services
	 	 	Reference: HSBC Home Equity Loan Trust (USA) 2006-1
	 
	 	 	 	 
	HSBC Bank USA, National Association, as Registrar
	452 Fifth Avenue
	New York, New York 10018
	Attention:	 	CTLA – Structured Finance
	 	 	Reference: HSBC Home Equity Loan Trust (USA) 2006-1
	 
	 	 	 	 
	 

	 	Re:
	 	Amended and Restated Trust Agreement, dated July 12, 2006,
among HSBC Finance Corporation, HSBC Home Equity Loan Corporation I, as
Depositor, U.S. Bank Trust National Association, as Owner Trustee, and JPMorgan
Chase Bank, N.A., as Administrator; HSBC Home Equity Loan Trust (USA) 2006-1,
	 
	 	 	 	 
	 

	 	 	 	Closed-End Home Equity Loan Asset Backed Notes, Series 2006-1

Ladies and Gentlemen:

          The undersigned (the “Transferee”) has agreed to purchase from _____ (the “Transferor”) the Ownership Interest:

          A. Rule 144A “Qualified Institutional Buyers” should complete this section

          I. The Transferee is (check one):

	 	 	 
	     

	 	(i) An insurance company, as defined in Section
2(13) of the Securities Act of 1933, as amended (the “Securities Act”), (ii)
an investment company registered under the Investment Company Act of 1940,
as amended (the “Investment Company Act”), (iii) a business development
company as defined in Section 2(a)(48) of the Securities Act, (iv) a Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958, (v) a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, (vi) an employee

B-1

 

	 	 	 
	 

	 	benefit plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), (vii) a business development
company as defined in Section 202(a)(22) of the Investment Advisors Act of
1940, (viii) an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in Section 3(a)(2)
of the Securities Act or a savings and loan association or other institution
referenced in Section 3(a)(2) of the Securities Act or a foreign bank or
savings and loan association or equivalent institution), partnership, or
Massachusetts or similar business trust; or (ix) an investment advisor
registered under the Investment Advisors Act of 1940, which, for each of (i)
through (ix), owns and invests on a discretionary basis at least $100
million in securities other than securities of issuers affiliated with the
Transferee, securities issued or guaranteed by the United States or a person
controlled or supervised by and acting as an instrumentality of the
government of the United States pursuant to authority granted by the
Congress of the United States, bank deposit notes and certificates of
deposit, loan participations, repurchase agreements, securities owned but
subject to a repurchase agreement, and currency, interest rate and commodity
swaps (collectively, “Excluded Securities”);
	 
	 	 
	     

	 	a dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that in
the aggregate owns and invests on a discretionary basis at least $10 million
of securities other than Excluded Securities and securities constituting the
whole or part of an unsold allotment to, or subscription by, Transferee as a
participant in a public offering;
	 
	 	 
	     

	 	an investment company registered under the
Investment Company Act that is part of a family of investment companies (as
defined in Rule 144A of the Securities and Exchange Commission) which own in
the aggregate at least $100 million in securities other than Excluded
Securities and securities of issuers that are part of such family of
investment companies;
	 
	 	 
	     

	 	an entity, all of the equity owners of which are
entities described in this Paragraph A(I);
	 
	 	 
	     

	 	a bank as defined in Section 3(a)(2) of the
Securities Act, any savings and loan association or other institution as
referenced in Section 3(a)(5)(A) of the Securities Act, or any foreign bank
or savings and loan association or equivalent institution that in the
aggregate owns and invests on a discretionary basis at least $100 million in
securities other than Excluded Securities and has an audited net worth of at
least $25 million as demonstrated in its latest annual financial statements,
as of a date not more than 16 months preceding the date of transfer of the
Ownership Interest to the Transferee in the case of a U.S. bank or savings
and loan association, and not more than 18 months preceding such date in the
case of a foreign bank or savings association or equivalent institution.

B-2

 

          II. The Transferee is acquiring such Ownership Interest solely for its own account, for the
account of one or more others, all of which are “Qualified Institutional Buyers” within the meaning
of Rule 144A, or in its capacity as a dealer registered pursuant to Section 15 of the Exchange Act
acting in a riskless principal transaction on behalf of a “Qualified Institutional Buyer”. The
Transferee is not acquiring such Ownership Interest with a view to or for the resale, distribution,
subdivision or fractionalization thereof which would require registration of the Ownership Interest
under the Securities Act.

          B. “Accredited Investors” should complete this Section

          I. The Transferee is (check one):

	 	 	 
	     

	 	 a bank within the meaning of Section 3(a)(2) of
the Securities Act;
	 
	 	 
	     

	 	 a savings and loan association or other
institution defined in Section 3(a)(5) of the Securities Act;
	 
	 	 
	     

	 	 a broker or dealer registered pursuant to the
Exchange Act;
	 
	 	 
	     

	 	 an insurance company within the meaning of
Section 2(13) of the Securities Act;
	 
	 	 
	     

	 	 an investment company registered under the
Investment Company Act;
	 
	 	 
	     

	 	 an employee benefit plan within the meaning of
Title I of ERISA, which has total assets in excess of $5,000,000;
	 
	 	 
	     

	 	 another entity which is an “accredited investor”
within the meaning of paragraph ____ (fill in) of subsection (a) of
Rule 501 of the Securities and Exchange Commission.

          II. The Transferee is acquiring such Ownership Interest solely for its own account, for
investment, and not with a view to or for the resale, distribution, subdivision or
fractionalization thereof which would require registration of the Ownership Interest under the
Securities Act.

          C. If the Transferee is unable to complete one of paragraph A(I) or paragraph B(I) above, the
Transferee must furnish an opinion in form and substance satisfactory to the Trustee of counsel
satisfactory to the Trustee to the effect that such purchase will not violate any applicable
federal or state securities laws.

          D. The Transferee is not (A) an “employee benefit plan” within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that is subject
to Title I of ERISA, or (B) a “plan” within the meaning of and subject to Section 4975 of the Code
(any such plan or employee benefit plan, a “Plan”) or (C) any entity, including an
insurance company separate account or general account, whose underlying assets include plan assets
by reason of a plan’s investment in the entity and is not directly or indirectly purchasing

B-3

 

such Trust Security on behalf of, as investment manager of, as named fiduciary of, as trustee
of, or with assets of a Plan.

               (iii) the Transferee is an “accredited investor” as defined in Rule 501(a) of Regulation D
pursuant to the Securities Act.

	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 	 	[NAME OF TRANSFEREE]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 200_.

	 	 	 	 	 
	[NAME OF TRANSFEROR]  
	By:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

B-4exv4w3

 

Exhibit 4.3

EXECUTION

INDENTURE

among

HSBC HOME EQUITY LOAN TRUST (USA) 2006-1

as Issuer

and

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

as Indenture Trustee

and

U.S. BANK TRUST NATIONAL ASSOCIATION

as Owner Trustee

and

HSBC BANK USA, NATIONAL ASSOCIATION,

as Administrator

Dated July 12, 2006

HSBC HOME EQUITY LOAN TRUST (USA) 2006-1

Closed-End Home Equity Loan Asset Backed Notes, Series 2006-1

 

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 1.1
	 	Definitions	 	 	2	 
	SECTION 1.2
	 	Incorporation by Reference of Trust Indenture Act	 	 	10	 
	SECTION 1.3
	 	Rules of Construction	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE II
	 	 	 	 
	THE NOTES
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 2.1
	 	Form	 	 	12	 
	SECTION 2.2
	 	Execution, Authentication, Delivery and Dating	 	 	12	 
	SECTION 2.3
	 	Registration; Registration of Transfer and Exchange	 	 	13	 
	SECTION 2.4
	 	Mutilated, Destroyed, Lost or Stolen Notes	 	 	14	 
	SECTION 2.5
	 	Persons Deemed Owner	 	 	15	 
	SECTION 2.6
	 	Payment of Principal and Interest	 	 	15	 
	SECTION 2.7
	 	Cancellation	 	 	15	 
	SECTION 2.8
	 	[Reserved]	 	 	16	 
	SECTION 2.9
	 	Release of Trust Estate	 	 	16	 
	SECTION 2.10
	 	Book-Entry Notes	 	 	16	 
	SECTION 2.11
	 	Notices to Clearing Agency	 	 	17	 
	SECTION 2.12
	 	Definitive Notes	 	 	17	 
	SECTION 2.13
	 	Tax Treatment	 	 	18	 
	SECTION 2.14
	 	ERISA Representation	 	 	18	 
	 
	 	 	 	 	 	 
	ARTICLE III
	 	 	 	 
	COVENANTS 
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 3.1
	 	Payment of Principal and Interest	 	 	19	 
	SECTION 3.2
	 	Maintenance of Office or Agency	 	 	19	 
	SECTION 3.3
	 	Money for Payments To Be Held in Trust	 	 	19	 
	SECTION 3.4
	 	Existence	 	 	21	 
	SECTION 3.5
	 	Protection of Trust Estate	 	 	21	 
	SECTION 3.6
	 	Annual Opinions as to the Trust Estate	 	 	21	 
	SECTION 3.7
	 	Performance of Obligations; Servicing of Home Equity Loans	 	 	22	 
	SECTION 3.8
	 	Negative Covenants	 	 	23	 
	SECTION 3.9
	 	Annual Statement as to Compliance	 	 	25	 
	SECTION 3.10
	 	Covenants of the Issuer	 	 	25	 
	SECTION 3.11
	 	Servicer’s Obligations	 	 	25	 
	SECTION 3.12
	 	Restricted Payments	 	 	25	 
	SECTION 3.13
	 	Treatment of Notes as Debt for All Purposes	 	 	26	 
	SECTION 3.14
	 	Notice of Events of Default	 	 	26	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 3.15
	 	Further Instruments and Acts	 	 	26	 
	SECTION 3.16
	 	Issuer May Consolidate, etc.	 	 	26	 
	SECTION 3.17
	 	Successor or Transferee	 	 	28	 
	SECTION 3.18
	 	No Other Business	 	 	28	 
	SECTION 3.19
	 	No Borrowing	 	 	28	 
	SECTION 3.20
	 	Guarantees, Loans, Advances and Other Liabilities	 	 	28	 
	SECTION 3.21
	 	Capital Expenditures	 	 	28	 
	SECTION 3.22
	 	Representations and Warranties of the Issuer	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE IV 
	 	 	 	 
	SATISFACTION AND DISCHARGE
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 4.1
	 	Satisfaction and Discharge of Indenture	 	 	29	 
	SECTION 4.2
	 	Application of Trust Money	 	 	30	 
	SECTION 4.3
	 	[Reserved]	 	 	30	 
	SECTION 4.4
	 	Repayment of Moneys Held by Paying Agent	 	 	30	 
	 
	 	 	 	 	 	 
	ARTICLE V 
	 	 	 	 
	REMEDIES 
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 5.1
	 	Events of Default	 	 	31	 
	SECTION 5.2
	 	Acceleration of Maturity; Rescission and Annulment	 	 	32	 
	SECTION 5.3
	 	Collection of Indebtedness and Suits for Enforcement by Indenture Trustee	 	 	32	 
	SECTION 5.4
	 	Remedies; Priorities	 	 	35	 
	SECTION 5.5
	 	Optional Preservation of the Trust Estate	 	 	37	 
	SECTION 5.6
	 	Limitation of Suits	 	 	37	 
	SECTION 5.7
	 	Unconditional Rights of Noteholders To Receive Principal and Interest	 	 	38	 
	SECTION 5.8
	 	Restoration of Rights and Remedies	 	 	38	 
	SECTION 5.9
	 	Rights and Remedies Cumulative	 	 	38	 
	SECTION 5.10
	 	Delay or Omission Not a Waiver	 	 	38	 
	SECTION 5.11
	 	Control by Noteholders	 	 	38	 
	SECTION 5.12
	 	Waiver of Past Defaults	 	 	39	 
	SECTION 5.13
	 	Undertaking for Costs	 	 	39	 
	SECTION 5.14
	 	Waiver of Stay or Extension Laws	 	 	40	 
	SECTION 5.15
	 	Action on Notes	 	 	40	 
	SECTION 5.16
	 	Performance and Enforcement of Certain Obligations	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE VI
	 	 	 	 
	THE INDENTURE TRUSTEE AND THE ADMINISTRATOR
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 6.1
	 	Duties of Indenture Trustee	 	 	41	 
	SECTION 6.2
	 	Rights of Indenture Trustee	 	 	43	 
	SECTION 6.3
	 	Individual Rights of Indenture Trustee	 	 	44	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 6.4
	 	Indenture Trustee’s Disclaimer	 	 	44	 
	SECTION 6.5
	 	Notice of Defaults	 	 	44	 
	SECTION 6.6
	 	Provision of Information	 	 	45	 
	SECTION 6.7
	 	Compensation and Indemnity	 	 	45	 
	SECTION 6.8
	 	Replacement of Indenture Trustee	 	 	45	 
	SECTION 6.9
	 	Successor Indenture Trustee by Merger	 	 	47	 
	SECTION 6.10
	 	Appointment of Co-Indenture Trustee or Separate Indenture Trustee	 	 	47	 
	SECTION 6.11
	 	Eligibility; Disqualification	 	 	48	 
	SECTION 6.12
	 	Preferential Collection of Claims Against Issuer	 	 	48	 
	SECTION 6.13
	 	Representations and Warranties	 	 	48	 
	SECTION 6.14
	 	Directions to Indenture Trustee	 	 	49	 
	SECTION 6.15
	 	Duties, Liabilities and Limitations on Liability of Administrator	 	 	49	 
	SECTION 6.16
	 	Administrator Compensation and Indemnification	 	 	50	 
	SECTION 6.17
	 	Replacement of Administrator	 	 	51	 
	SECTION 6.18
	 	Successor Administrator by Merger	 	 	52	 
	SECTION 6.19
	 	Direction to Administrator	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE VII
	 	 	 	 
	NOTEHOLDERS’ LISTS AND REPORTS
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 7.1
	 	Issuer To Furnish Indenture Trustee and Administrator Names and Addresses of Noteholders	 	 	54	 
	SECTION 7.2
	 	Preservation of Information; Communications to Noteholders	 	 	54	 
	SECTION 7.3
	 	Reports by Issuer	 	 	54	 
	SECTION 7.4
	 	Reports by Indenture Trustee	 	 	55	 
	 
	 	 	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	ACCOUNTS, DISBURSEMENTS AND RELEASES
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 8.1
	 	Collection of Money	 	 	56	 
	SECTION 8.2
	 	Accounts; Distributions	 	 	56	 
	SECTION 8.3
	 	[Reserved]	 	 	57	 
	SECTION 8.4
	 	Monthly Payment Statements	 	 	57	 
	SECTION 8.5
	 	[Reserved]	 	 	57	 
	SECTION 8.6
	 	Opinion of Counsel	 	 	57	 
	 
	 	 	 	 	 	 
	ARTICLE IX
	 	 	 	 
	SUPPLEMENTAL INDENTURES
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 9.1
	 	Supplemental Indentures without Consent of Noteholders	 	 	58	 
	SECTION 9.2
	 	Supplemental Indentures with Consent of Noteholders	 	 	59	 
	SECTION 9.3
	 	Execution of Supplemental Indentures	 	 	60	 
	SECTION 9.4
	 	Effect of Supplemental Indenture	 	 	60	 
	SECTION 9.5
	 	Conformity with Trust Indenture Act	 	 	61	 

iii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 9.6
	 	Reference in Notes to Supplemental Indentures	 	 	61	 
	 
	 	 	 	 	 	 
	ARTICLE X
	 	 	 	 
	TERMINATION OF TRUST
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 10.1
	 	Early Termination	 	 	62	 
	SECTION 10.2
	 	Mandatory Redemption	 	 	62	 
	 
	 	 	 	 	 	 
	ARTICLE XI
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 11.1
	 	Compliance Certificates and Opinions, etc	 	 	65	 
	SECTION 11.2
	 	Form of Documents Delivered to Indenture Trustee	 	 	66	 
	SECTION 11.3
	 	Acts of Noteholders	 	 	67	 
	SECTION 11.4
	 	Notices	 	 	68	 
	SECTION 11.5
	 	Notices to Noteholders; Waiver	 	 	68	 
	SECTION 11.6
	 	[Reserved]	 	 	69	 
	SECTION 11.7
	 	Conflict with Trust Indenture Act	 	 	69	 
	SECTION 11.8
	 	Effect of Headings and Table of Contents	 	 	69	 
	SECTION 11.9
	 	Successors and Assigns	 	 	69	 
	SECTION 11.10
	 	Separability	 	 	69	 
	SECTION 11.11
	 	Benefits of Indenture	 	 	70	 
	SECTION 11.12
	 	Legal Holidays	 	 	70	 
	SECTION 11.13
	 	Governing Law	 	 	70	 
	SECTION 11.14
	 	Counterparts	 	 	70	 
	SECTION 11.15
	 	Recording of Indenture	 	 	70	 
	SECTION 11.16
	 	Trust Obligation	 	 	70	 
	SECTION 11.17
	 	No Petition	 	 	71	 
	SECTION 11.18
	 	Inspection	 	 	71	 
	SECTION 11.19
	 	Inconsistencies with the Sale and Servicing Agreement	 	 	71	 
	SECTION 11.20
	 	Third-Party Beneficiaries	 	 	71	 
	SECTION 11.21
	 	Limited Recourse	 	 	71	 
	SECTION 11.22
	 	Limitation on Voting of Preferred Stock	 	 	72	 
	SECTION 11.23
	 	Limitation of Liability	 	 	72	 
	SECTION 11.24
	 	[Reserved]	 	 	72	 
	SECTION 11.25
	 	Entire Agreement	 	 	72	 

iv

 

EXHIBITS

	 	 	 	 	 
	SCHEDULE A

	 	-
	 	Perfection Representations, Warranties and Covenants
	SCHEDULE B

	 	-
	 	Home Equity Loan Schedule
	EXHIBIT A

	 	-
	 	Form of Notes

v

 

     INDENTURE dated July 12, 2006 among HSBC HOME EQUITY LOAN TRUST (USA) 2006-1, a Delaware
statutory trust (the “Issuer”), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a banking
association organized under the laws of the United States, as trustee and not in its individual
capacity (the “Indenture Trustee”), U.S. BANK TRUST NATIONAL ASSOCIATION, a national
banking association, as owner trustee under the Trust Agreement defined herein (the “Owner
Trustee”), and HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association, as
administrator (the “Administrator”).

     Each party agrees as follows for the benefit of the other parties and for the equal and
ratable benefit of the holders of the Issuer’s Closed-End Home Equity Loan Asset-Backed Notes,
Series 2006-1 (the “Notes”):

GRANTING CLAUSE

     Subject to the terms of this Indenture, the Issuer and the Owner Trustee each hereby Grants to
the Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of the Noteholders,
all of its right, title and interest in and to: (i) the Trust Estate; (ii) the Sale and Servicing
Agreement (including the right of the Issuer to cause the Depositor or the Servicer to repurchase
Home Equity Loans from the Issuer under certain circumstances described therein); (iii) the
Transfer Agreement; (iv) all present and future claims, demands, causes of action 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, including all proceeds
of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, 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; (v) all other
property of the Trust from time to time; and (vi) any and all proceeds of the foregoing
(collectively the “Collateral”).

     The foregoing Grants are 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 Indenture Trustee on behalf of the holders of the Notes,
acknowledges the foregoing Grants, accepts the trusts hereunder in good faith and without notice of
any adverse claim or liens and agrees to perform its duties required in this Indenture to the best
of its ability to the end that the interests of the holders of the Notes may be adequately and
effectively protected. The Indenture Trustee further agrees and acknowledges that each item of
Collateral that is physically delivered to the Indenture Trustee will be held by the Indenture
Trustee in New York.

 

 

ARTICLE I

DEFINITIONS

     SECTION 1.1 Definitions.

     (a) 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 Sale and Servicing Agreement. All other capitalized
terms used herein shall have the meanings specified herein.

     “Accrual Period” shall have the meaning assigned thereto in the Sale and Servicing
Agreement.

     “Act” has the meaning specified in Section 11.3(a).

     “Action” has the meaning specified in Section 6.15(e).

     “Administrator” means HSBC Bank USA, National Association, a national banking
association, as Administrator under this Indenture and the other Transaction Documents to which it
is a party, or any successor Administrator hereunder and thereunder.

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

     “Authorized Officer” means, 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 the Administrator on the Closing Date (as such list may be modified or supplemented
from time to time thereafter).

     “Book-Entry Note” means any Note registered in the name of the Depository or its
nominee, ownership of which is reflected on the books of the Depository or on the books of a Person
maintaining an account with such Depository (directly or as an indirect participant in accordance
with the rules of such Depository).

     “Business Day” has the meaning assigned thereto in the Sale and Servicing Agreement.

     “Certificate of Trust” means the certificate of trust of the Issuer substantially in
the form of Exhibit C to the Trust Agreement.

2

 

     “Class A-1 Note” means any Closed-End Home Equity Loan Asset Backed Notes, Series
2006-1, Class A-1, issued and executed by the Issuer and authenticated by the Administrator
substantially in the form of Exhibit A hereto.

     “Class A-2 Note” means any Closed-End Home Equity Loan Asset Backed Notes, Series
2006-1, Class A-2, issued and executed by the Issuer and authenticated by the Administrator
substantially in the form of Exhibit A hereto.

     “Class M-1 Note” means any Closed-End Home Equity Loan Asset Backed Notes, Series
2006-1, Class M-1, issued and executed by the Issuer and authenticated by the Administrator
substantially in the form of Exhibit A hereto.

     “Class M-2 Note” means any Closed-End Home Equity Loan Asset Backed Notes, Series
2006-1, Class M-2, issued and executed by the Issuer and authenticated by the Administrator
substantially in the form of Exhibit A hereto.

     “Clearing Agency” means an organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act.

     “Clearing Agency Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects book-entry
transfers and pledges of securities deposited with the Clearing Agency.

     “Closing Date” means July 12, 2006.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and
Treasury Regulations promulgated thereunder.

     “Collateral” has the meaning specified in the Granting Clause of this Indenture.

     “Collection Account” means the Collection Account (as defined in the Sale and
Servicing Agreement) established by the Administrator.

     “Commission” shall mean the Securities and Exchange Commission.

     “Corporate Trust Office” means (i) with respect to the Indenture Trustee, the
principal office of the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at date of execution of this Indenture is located at 4
New York Plaza, 6th Floor, New York, New York 10004, Attention: Worldwide Securities
Services/Structured Finance Services – HSBC Home Equity Loan Trust (USA) 2006-1 (facsimile number
(212) 623-5930) and (ii) with respect to the Administrator, the office of the Administrator at
which at any particular time its corporate trust business shall be administered, which office at
date of execution of this Indenture is located at 452 Fifth Avenue, New York, New York 10018,
Attention: CTLA – Structured Finance, Reference: HSBC Home Equity Loan Trust (USA) 2006-1
(facsimile number (212) 525-1300), or in either case at such other address as the Indenture Trustee
or the Administrator, as applicable, may designate from time to time by notice

3

 

to the Noteholders and the other parties hereto or the principal corporate trust office of any
successor Indenture Trustee or Administrator, as the case may be, at the address designated by such
successor by notice to the Noteholders and the other parties hereto.

     “Default” means any occurrence that is, or with notice or the lapse of time or both
would become, an Event of Default.

     “Definitive Notes” has the meaning specified in Article II.

     “Depositor” shall mean HSBC Home Equity Loan Corporation I, a Delaware corporation, in
its capacity as depositor under the Sale and Servicing Agreement, and its successor in interest.

     “Depository Institution” means any depository institution or trust company, including
the Administrator, (i) that has short-term debt obligations and long-term debt obligations at the
time of any deposit therein and throughout the time the interest is maintained that are rated at
least “A-1” by Standard & Poor’s and “Baa3” by Moody’s, respectively, (ii) the deposits of which
are fully insured to the maximum extent provided by either the BIF or the SAIF and (iii) that is
any of (a) a federal savings and loan association duly organized, validly existing and in good
standing under the applicable banking laws of any state, (b) an institution duly organized, validly
existing and in good standing under the applicable banking laws of any state, (c) a national
banking association duly organized, validly existing and in good standing under the federal banking
laws or (d) a principal subsidiary of a bank holding company. Such Depository Institution shall
have (x) a segregated trust account maintained with the corporate trust department of a federal or
state chartered depository or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity or (y) an account otherwise acceptable to each Rating
Agency as evidenced by a letter from such Rating Agency to each of the Owner Trustee, the Indenture
Trustee and the Administrator, without reduction or withdrawal of either of its then current
ratings of the Notes.

     “Event of Default” has the meaning specified in Section 5.1.

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

     “Executive Officer” means, with respect to any corporation, the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, President, Executive Vice President, any
Vice President, the Secretary, the Treasurer, or any Assistant Treasurer of such corporation; and
with respect to any partnership, any general partner thereof.

     “Final Scheduled Payment Date” means, with respect to any Note, the Payment Date
occurring in January 2036.

     “Fitch” shall mean Fitch, Inc., or any successor thereto.

     “Form 8-K” means a current report pursuant to Section 13 or Section 15(d) of the
Exchange Act.

4

 

     “Grant” means to mortgage, pledge, bargain, 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 this Indenture. A Grant of the
Collateral with respect to 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 the Collateral 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.

     “Holder” or “Noteholder” means the Person in whose name a Note is registered
on the Note Register.

     “Home Equity Loan Schedule” means the listing of the Home Equity Loans set forth in
Schedule B, as supplemented as of any date on which a Defective Home Equity Loan has been
repurchased from the Trust or substituted with an Eligible Substitute Home Equity Loan pursuant to
the Sale and Servicing Agreement.

     “Indenture Trustee” means JPMorgan Chase Bank, National Association, a banking
association organized under the laws of the United States, as Indenture Trustee under this
Indenture, or any successor Indenture Trustee appointed pursuant to the terms of this Indenture.

     “Independent” means, when used with respect to any specified Person, that the Person
(a) is in fact independent of the Issuer, any other obligor on the Notes, the Transferor and any
Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the Transferor or any
Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other
obligor, the Transferor 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” means 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 11.1 herein, made by an Independent appraiser or other expert
appointed by an Issuer Order 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.

     “Issuer” means HSBC Home Equity Loan Trust (USA) 2006-1 until a successor replaces it
in accordance with the terms of the Transaction Documents and, thereafter, means the successor.

5

 

     “Issuer Order” and “Issuer Request” mean 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
and/or the Administrator, as the case may be.

     “LIBOR” shall have the meaning assigned thereto in the Sale and Servicing Agreement.

     “LIBOR Business Day” shall have the meaning assigned thereto in the Sale and Servicing
Agreement.

     “Lien” shall mean any lien, pledge, encumbrance or security interest on or in any
particular asset or property.

     “Majority Noteholder” shall mean the Holder or Holders of Notes representing at least
51% of the Outstanding Amount.

     “Mandatory Redemption Price” as of any date of determination shall mean an amount
equal to the sum of (i) the Outstanding Amount of the Notes, (ii) one month’s interest on the Notes
at their respective Note Rates, (iii) any unpaid Interest Carry Forward Amounts, together with
interest accrued thereon at the respective Note Rates, and (iv) any unpaid Supplemental Interest
Amounts, together with interest accrued thereon at the respective Formula Rates.

     “Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

     “Note” means any Class A-1 Note, Class A-2 Note, Class M-1 or Class M-2 Note.

     “Note Depository Agreement” means the agreement dated July 12, 2006, among the Issuer
and The Depository Trust Company, as the initial Clearing Agency, relating to the Book-Entry Notes.

     “Note Owner” means, with respect to a Book-Entry Note, the Person who is the
beneficial owner of such Book-Entry Note, as reflected on the books of the Clearing Agency or on
the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).

     “Note Rate” with respect to the Class A-1, Class A-2, Class M-1 or Class M-2 Notes
shall have the meaning assigned thereto in the Sale and Servicing Agreement.

     “Note Register” and “Note Registrar” have the respective meanings specified in
Article II.

     “Noteholder” means a Holder of a Note. Any reference to a “Class A-1 Noteholder”, a
“Class A-2 Noteholder”, a “Class M-1 Noteholder” or a “Class M-2 Noteholder” means a Holder of a
Class A-1, Class A-2, Class M-1 or Class M-2 Note, respectively.

     “Obligations” shall mean the Home Equity Loans.

6

 

     “Officer’s Certificate” means a certificate signed by any Authorized Officer of the
Issuer, under the circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 herein, and delivered to the Indenture Trustee and/or the
Administrator, as the
case may be. Unless otherwise specified, any reference in this Indenture to an Officer’s
Certificate shall be to an Officer’s Certificate of any Authorized Officer of the Issuer.

     “Opinion of Counsel” means one or more written opinions of counsel who may, except as
otherwise expressly provided in this Indenture, be employees of or counsel to the Issuer and who
shall be satisfactory to the Indenture Trustee and/or the Administrator, as the case may be, and
which opinion or opinions shall be addressed to the Indenture Trustee and/or the Administrator, as
the case may be, and shall comply with any applicable requirements of Section 11.1 herein and shall
be in form and substance reasonably satisfactory to the Indenture Trustee and/or the Administrator,
as the case may be.

     “Outstanding” means, with respect to any Note and as of the date of determination, any
Note theretofore authenticated and delivered under this Indenture except:

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

     (ii) Notes or portions thereof the payment for which money in the necessary amount has
been theretofore deposited with the Indenture Trustee or the Paying Agent in trust for the
Holders of such Notes (provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision for such notice
has been made, satisfactory to the Indenture Trustee);

     (iii) Notes in exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture unless proof satisfactory to the Administrator is
presented that any such Notes are held by a bona fide purchaser; and

     (iv) Notes for which the Final Scheduled Payment Date has occurred;

provided, however, in determining whether the Holders of the requisite Outstanding Amount of the
Notes have given any request, demand, authorization, direction, notice, consent, or waiver
hereunder or under any Transaction Document, Notes owned by the Issuer, any other obligor upon the
Notes, the Depositor, the Transferor or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture
Trustee and/or the Administrator shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that the Indenture Trustee or the
Administrator, as the case may be, knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Administrator, as the case may be, 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, the Transferor or any Affiliate of any of the foregoing Persons.

7

 

     “Outstanding Amount” means the aggregate principal amount of all Notes Outstanding at
the date of determination.

     “Owner Trustee” means U.S. Bank Trust National Association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors in interest and any
successor Owner Trustee under the Trust Agreement.

     “Ownership Interest” shall have the meaning assigned thereto in the Sale and Servicing
Agreement.

     “Paying Agent” means the Administrator or any other Person that meets the eligibility
standards for the Indenture Trustee specified in Section 6.11 of this Indenture and is authorized
by the Issuer to make payments to and distributions from the Collection Account and the Yield
Maintenance Account, including payment of principal of or interest on the Notes on behalf of the
Issuer.

     “Payment Date” shall mean the twentieth day of each month or, if such day is not a
Business Day, then the next Business Day, beginning in July 2006.

     “Perfection Representations” shall mean the representations contained in Schedule A
hereto.

     “Person” means any individual, corporation, estate, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof), unincorporated
organization, limited liability company, limited liability partnership, government or any agency or
political subdivision thereof, or any other entity.

     “Predecessor Note” means, with respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for
the purpose of this definition, any Note authenticated and delivered under Article II in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.

     “Proceeding” means any suit in equity, action at law or other judicial or
administrative proceeding.

     “Rating Agency” means any of (i) Fitch, (ii) Moody’s and (iii) Standard & Poor’s. If
no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally
recognized statistical rating organization or other comparable person designated by the Depositor,
notice of which designation shall have been given to the Indenture Trustee and the Administrator.

     “Rating Agency Condition” means, with respect to certain actions requiring prior
Rating Agency consent, that each Rating Agency shall have been given 10 days (or such shorter
period as is acceptable to each Rating Agency) prior notice thereof and that each of the Rating
Agencies

8

 

shall have notified the Transferor and the Servicer that such action will not result in a
reduction or withdrawal of such Rating Agency’s then current ratings of the Notes.

     “Record Date” shall have the meaning assigned thereto in the Sale and Servicing
Agreement.

     “Redemption Date” means, in the case of a redemption of the Notes pursuant to Section
10.1 or 10.2, the Payment Date specified by the Administrator pursuant to Section 10.1 or 10.2, as
applicable.

     “Registered Holder” means the Person in whose name a Note is registered on the Note
Register on the applicable Record Date.

     “Responsible Officer” shall have the meaning assigned thereto in the Sale and
Servicing Agreement.

     “Sale and Servicing Agreement” means the Sale and Servicing Agreement dated as of July
12, 2006, among the Issuer, the Depositor, the Servicer, the Indenture Trustee and the
Administrator.

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

     “Servicer” shall mean HSBC Finance Corporation, in its capacity as Servicer under the
Sale and Servicing Agreement, or any Successor Servicer appointed in accordance with the terms of
the Sale and Servicing Agreement.

     “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.

     “State” means any one of the 50 States of the United States of America or the District
of Columbia.

     “Successor Servicer” has the meaning specified in Section 3.7(e) hereof.

     “Transaction Documents” has the meaning set forth in the Sale and Servicing Agreement.

     “Transferor” shall have the meaning assigned thereto in the Sale and Servicing
Agreement.

     “Trust” means the Issuer.

     “Trust Agreement” shall mean the amended and restated trust agreement dated July 12,
2006, among the Depositor, HSBC Finance Corporation, the Owner Trustee and the Administrator, as
the same may be amended, supplemented or otherwise modified from time to time.

9

 

     “Trust Estate” shall mean the assets transferred and assigned to the Trust pursuant to
the Sale and Servicing Agreement, the Transfer Agreement and the Trust Agreement and pledged to the
Indenture Trustee pursuant to this Indenture, consisting of: (i) each Home Equity Loan and each
Eligible Substitute Home Equity Loan and its related Mortgage Note and other Mortgage
File documents for each Home Equity Loan and each Eligible Substitute Home Equity Loan,
including such Home Equity Loan’s, and each such Eligible Substitute Home Equity Loan’s, Principal
Balance and all collections in respect thereof received after the Cut-Off Date or Subsequent
Cut-Off Date, as applicable; (ii) property that secured each Home Equity Loan and each Eligible
Substitute Home Equity Loan that has become REO; (iii) the interest of the Depositor in certain
hazard insurance policies maintained by the Mortgagors or the Servicer in respect of each Home
Equity Loan and each Eligible Substitute Home Equity Loan transferred by the Depositor; (iv) the
Collection Account and all amounts on deposit in the Collection Account (exclusive of net earnings
thereon); (v) the Yield Maintenance Account and all amounts on deposit in the Yield Maintenance
Account; (vi) one share of Preferred Stock of the Depositor; (vii) the Trust’s rights under the
Sale and Servicing Agreement; (viii) any proceeds of any of the foregoing and (ix) all other assets
included or to be included in the Trust for the benefit of Noteholders.

     “Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.

     “UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in
effect in the relevant jurisdiction, as amended from time to time.

     “Yield Maintenance Account” means the Yield Maintenance Account (as defined in the
Sale and Servicing Agreement) established by the Administrator.

     SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever this
Indenture refers to a provision of 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.

10

 

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

     SECTION 1.3 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

     (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 (as provided in such
agreements) 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.

11

 

ARTICLE II

THE NOTES

     SECTION 2.1 Form. The Notes shall be designated as the “HSBC Home Equity Loan Trust
(USA) 2006-1, Closed-End Home Equity Loan Asset Backed Notes, Series 2006-1.” Each Note shall be
in substantially the form set forth in Exhibit A with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this Indenture and which do not
affect the rights, duties or obligations of the Administrator without the consent of the
Administrator, and may have such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may, consistent herewith, be determined by the officers executing
such Notes, as evidenced by their execution thereof. Any portion of the text of any Note may be
set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note.

     The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by
any combination of these methods, all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.

     The terms of the Notes are set forth in Exhibit A hereto. The terms of the Notes are
part of the terms of this Indenture.

     SECTION 2.2 Execution, Authentication, Delivery and Dating. The Notes shall be
executed on behalf of the Issuer by an Authorized Officer of the Issuer. 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 Administrator shall, upon receipt of an Issuer Order, authenticate and deliver the Class
A-1 Notes for original issue in the principal amount equal to $637,800,000, the Class A-2 Notes for
original issue in the principal amount equal to $159,560,000, the Class M-1 Notes for original
issue in the principal amount equal to $138,380,000, and the Class M-2 Notes for original issue in
the principal amount equal to $102,810,000. The Administrator need not receive an Opinion of
Counsel, Officer’s Certificate or any document authorizing or directing the authentication of the
Notes other than the Issuer Order identified in the immediately preceding sentence. The aggregate
principal amount of the Class A-1, Class A-2, Class M-1 and Class M-2 Notes outstanding at any time
may not exceed such amounts.

     The Notes that are authenticated and delivered by the Administrator to or upon the order of
the Issuer on the Closing Date shall be dated July 12, 2006. All other Notes that are
authenticated after the Closing Date for any other purpose under the Indenture shall be dated the

12

 

date of their authentication. The Notes shall be issuable as registered Notes in the minimum
denomination of $25,000 and 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 Administrator 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.

     SECTION 2.3 Registration; Registration of Transfer and Exchange. The Issuer shall
cause to be kept a register (the “Note Register”) in which, subject to such reasonable regulations
as it may prescribe, the Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Administrator initially shall be the “Note Registrar” for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of the Note Registrar.

     If a Person other than the Administrator is appointed by the Issuer as Note Registrar, the
Issuer will give the Indenture Trustee and the Administrator prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the location, of the Note
Register. The Indenture Trustee and, if it is no longer serving as Note Registrar hereunder, the
Administrator, shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee and the Administrator shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to
the names and addresses of the Holders of the Notes and the principal amounts and number of such
Notes.

     Upon surrender for registration of transfer of any Note at the office or agency of the Issuer
to be maintained as provided in Section 3.2 hereof, the Owner Trustee on behalf of the Issuer shall
execute, and the Administrator shall authenticate and the Noteholder shall obtain from the
Administrator, in the name of the designated transferee or transferees, one or more new Notes in
any authorized denominations, of a like aggregate principal amount.

     At the option of the Holder, Notes may be exchanged for other Notes in any authorized
denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute, and the Administrator shall authenticate and the Noteholder shall obtain from the
Administrator, the Notes which the Noteholder making the exchange is entitled to receive.

     All Notes issued upon any registration of transfer or exchange of Notes shall be the valid
obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Notes surrendered upon such registration of transfer or exchange.

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     Every Note presented or surrendered for registration of transfer or exchange shall be duly
endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar duly executed by, the Holder thereof or such Holder’s attorney duly authorized in
writing, with such signature guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee
program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.

     No service charge shall be made to a Holder for any registration of transfer or exchange of
Notes, but the Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of transfer or exchange
of Notes, other than exchanges pursuant to Section 2.4 or Section 9.6 hereof not involving any
transfer.

     SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is
surrendered to the Administrator or the Note Registrar, or the Administrator or the Note Registrar
receives evidence to its respective satisfaction of the destruction, loss or theft of any Note, and
(ii) there is delivered to the Note Registrar and the Administrator such security or indemnity as
may be reasonably required by such party to hold the Issuer, the Administrator and the Note
Registrar harmless, then, in the absence of notice to the Issuer, the Note Registrar or the
Administrator that such Note has been acquired by a bona fide purchaser, an Authorized Officer of
the Issuer shall execute, and upon its request the Administrator 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, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such destroyed, lost or
stolen Note when so due or payable or upon the Redemption Date 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, the
Administrator and the Note Registrar 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
Administrator in connection therewith.

     Upon the issuance of any replacement Note under this Section 2.4, 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 Administrator) connected therewith.

     Every replacement Note issued pursuant to this Section 2.4 in replacement of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional contractual

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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 2.4 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 2.5 Persons Deemed Owner. Prior to due presentment for registration of
transfer of any Note, the Issuer, the Indenture Trustee, the Administrator, the Note Registrar and
any agent of the Issuer, the Indenture Trustee, the Administrator or the Note Registrar 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 on, if any, such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Issuer,
the Indenture Trustee, the Administrator, the Note Registrar or any agent of any of them shall be
affected by notice to the contrary.

     SECTION 2.6 Payment of Principal and Interest.

     (a) Each Note shall accrue interest at the related Note Rate and such interest shall be
payable on each Payment Date as specified in Exhibit A hereto, subject to Section 3.1 hereof. 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 be paid to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the Record Date in the manner set
forth in Section 5.01(c) of the Sale and Servicing Agreement.

     (b) The principal of each Note shall be payable in installments on each Payment Date as
provided in the forms of the Notes set forth in Exhibit A hereto. Notwithstanding the foregoing,
the entire unpaid principal amount of the Notes shall be due and payable, if not previously paid,
on the earliest of (i) the Final Scheduled Payment Date, (ii) the Redemption Date or (iii) the date
on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the
Holders of Notes representing not less than 662/3% of the Outstanding Amount of the Notes have
declared the Notes to be immediately due and payable in the manner provided in Section 5.2 hereof.
All principal payments on the Notes shall be in the manner set forth in the Sale and Servicing
Agreement. Upon receiving notice from the Issuer, the Administrator shall notify the Person in
whose name a Note is registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and interest on such
Note will be paid. Such notice shall be mailed or transmitted by facsimile prior to such final
Payment Date and shall specify that such final installment 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 payment of such installment. Notices in connection with redemptions of Notes shall
be mailed to Noteholders as provided in Section 8.01 of the Sale and Servicing Agreement.

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     SECTION 2.7 Cancellation. All Notes surrendered for payment, registration of
transfer, exchange or redemption shall, if surrendered to any Person other than the Administrator,
be delivered to the Note Registrar and shall be promptly canceled by the Note Registrar. The
Issuer may at any time deliver to the Note Registrar with a written instruction 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 canceled by the Note
Registrar. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section, except as expressly permitted by this Indenture. All canceled Notes
may be held or disposed of by the Note Registrar in accordance with its standard retention or
disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided, that such Issuer Order is timely provided to the
Note Registrar and the Notes have not been previously disposed of by the Note Registrar.

     SECTION 2.8  [Reserved].

     SECTION 2.9 Release of Trust Estate.

     (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.9 and Section
11.1 hereof and the terms of the Transaction Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request accompanied by an
Officer’s Certificate, an Opinion of Counsel and Independent Certificates in accordance with TIA
Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.

     (b) The Servicer, on behalf of the Issuer, shall be entitled to obtain a release from the lien
of this Indenture for any Home Equity Loan and the related Mortgaged Property at any time in
accordance with the provisions of Section 3.08 of the Sale and Servicing Agreement.

     (c) The Indenture Trustee shall, if requested by the Servicer, temporarily release to the
Servicer any Mortgage File pursuant to the provisions of Section 3.08 of the Sale and Servicing
Agreement upon compliance by the Servicer of the provisions thereof provided that such Mortgage
File shall have been stamped to signify the Issuer’s pledge to the Indenture Trustee under the
Indenture.

     SECTION 2.10 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 Clearing Agency or its custodian, by, or on behalf of, the Issuer. The
Book-Entry Notes shall be registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner thereof will receive a definitive Note
representing such Note Owner’s interest in such Note, except as provided in Section 2.12 below.
Unless and until definitive, fully registered Notes (the “Definitive Notes”) have been issued to
such Note Owners pursuant to Section 2.12 below:

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

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     (ii) the Note Registrar, the Indenture Trustee and the Administrator shall be entitled
to deal with the Clearing Agency 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 Note Owners;

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

     (iv) the rights of Note Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between such Note Owners and the
Clearing Agency and/or the Clearing Agency Participants pursuant to the Note Depository
Agreement. Unless and until Definitive Notes are issued pursuant to Section 2.12 below, the
initial Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest on the Notes to
such Clearing Agency 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
Outstanding Amount of the Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect from Note
Owners and/or Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee and/or the Administrator, as the case may be.

     SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other communication to
the Noteholders is required under this Indenture, unless and until Definitive Notes shall have been
issued to such Note Owners pursuant to Section 2.12, the Indenture Trustee or the Administrator, as
the case may be, shall give all such notices and communications specified herein to be given to
Holders of the Notes, to the Clearing Agency, and shall have no obligation to such Note Owners.

     SECTION 2.12 Definitive Notes. If (i) the Clearing Agency or the Depositor advises
the Indenture Trustee or the Administrator in writing that the Clearing Agency is no longer
willing, qualified or able to properly discharge its responsibilities with respect to the
Book-Entry Notes and none of the Clearing Agency, the Depositor, the Issuer or the Indenture
Trustee is able to locate a qualified successor, (ii) the Depositor at its option advises the
Indenture Trustee and the Administrator in writing that it elects to initiate the termination of
the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Owners of the Book-Entry Notes representing beneficial interests aggregating at least 51%
of the Outstanding Amount of such Notes advise the Clearing Agency in writing that the continuation
of a book-entry system through the Clearing Agency is no longer in the best interests of such Note
Owners, then the Clearing Agency shall notify all Note Owners, the Indenture Trustee and the
Administrator of the occurrence of such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Administrator of the typewritten Notes

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representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions,
the Issuer shall execute and the Administrator shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the Note Registrar,
the Indenture Trustee or the Administrator 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, the Administrator
and the Note Registrar shall recognize the Holders of the Definitive Notes as Noteholders.

     SECTION 2.13 Tax Treatment. The Issuer has entered into this Indenture, and the Notes
will be issued, with the intention that, for all tax purposes, the Notes will qualify as
indebtedness secured by the Trust Estate. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note (and each Note Owner by its acceptance of an interest in
the applicable Book-Entry Note), agree to treat the Notes for all purposes as indebtedness of the
Issuer.

     SECTION 2.14 ERISA Representation. Each Person that acquires a Note shall be required
to represent, or in the case of a Book-Entry Note, will be deemed to represent by its acceptance of
the Note, that (i) it is not, and is not acquiring the Note on behalf of or with “plan assets” (as
determined under U.S. Department of Labor Regulations found at 29 C.F.R. §2510.3-101 or otherwise)
of an employee benefit plan or other plan that is subject to Title I of ERISA or Section 4975 of
the Code or any substantially similar federal, state or local law (“Similar Law”), or (ii) its
acquisition and holding of the Note are eligible for relief under Prohibited Transaction Class
Exemption (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar exemption, or
in the case of a plan subject to Similar Law, do not give rise to a nonexempt violation of that
Similar Law.

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ARTICLE III

COVENANTS

     SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and punctually
pay (or will cause to be duly and punctually paid) the principal of and interest, if any, on the
Notes in accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, on each Payment Date, the Administrator or the Paying Agent shall, pursuant to Section
5.01 of the Sale and Servicing Agreement, pay all amounts on deposit in the Collection Account and
the Yield Maintenance Account pursuant to the Sale and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.

     The Notes shall be non-recourse obligations of the Issuer and shall be limited in right of
payment to amounts available from the Collateral, as provided in this Indenture. The Issuer shall
not otherwise be liable for payments on the Notes. If any other provision of this Indenture shall
be deemed to conflict with the provisions of this Section 3.1, the provisions of this Section 3.1
shall control.

     SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain in New York,
New York an office or agency where 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 Administrator to serve as its
agent for the foregoing purposes and to serve as Paying Agent with respect to the Notes. If at any
time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the
Administrator with the address thereof, such surrenders, notices and demands may be made or served
at the Corporate Trust Office of the Administrator, and the Issuer hereby appoints the
Administrator as its agent to receive all such surrenders, notices and demands.

     SECTION 3.3 Money for Payments to Be Held in Trust. As provided in Section 8.2(a) and
(b), all payments of amounts due and payable with respect to any Notes that are to be remitted from
amounts withdrawn from the Collection Account and the Yield Maintenance Account pursuant to Section
8.2(c) shall be made on behalf of the Issuer by the Indenture Trustee, by the Paying Agent or the
Administrator, and no amounts so withdrawn from the Collection Account or the Yield Maintenance
Account for payments on the Notes shall be paid over to the Issuer.

     Any Paying Agent other than the Administrator shall be appointed by Issuer Order with written
notice thereof to the Indenture Trustee and the Administrator. Any Paying Agent appointed by the
Issuer shall be a Person who would be eligible to be Indenture Trustee hereunder as provided in
Section 6.11 hereof. The Issuer shall not appoint any Paying Agent (other than the Administrator)
which is not, at the time of such appointment, a Depository Institution.

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     The Issuer will cause each Paying Agent (other than the Indenture Trustee or the
Administrator) 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 or the Administrator
acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.3, 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;

     (ii) give the Indenture Trustee notice of any default by the Issuer (or any other
obligor upon the Notes) 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 a 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; and

     (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; provided,
however, that the Issuer or the Servicer shall have provided to the Paying Agent any
necessary information; and provided further, however, that with respect to withholding and
reporting requirements applicable to original issue discount (if any) on the Notes, the
Issuer shall have first provided the calculations pertaining thereto to the Indenture
Trustee and the Paying Agent.

     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 Order 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 terms 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.

     Any termination and release of a Trust Estate shall be done in accordance with the provisions
of Section 8.01 of the Sale and Servicing Agreement.

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     SECTION 3.4 Existence.

     (a) Subject to Section 3.4(b) below, 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 and the Trust
Estate.

     (b) Any successor to the Owner Trustee appointed pursuant to Section 10.2 of the Trust
Agreement shall be the successor Owner Trustee under this Indenture without the execution or filing
of any paper, instrument or further act to be done on the part of the parties hereto.

     (c) Upon any consolidation or merger of or other succession to the Owner Trustee, the Person
succeeding to the Owner Trustee under the Trust Agreement may exercise every right and power of the
Owner Trustee under this Indenture with the same effect as if such Person had been named as the
Owner Trustee herein.

     SECTION 3.5 Protection of Trust Estate. The Issuer and the Owner Trustee will from
time to time 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) provide further assurance with respect to a Grant of all or any portion of the
Trust Estate;

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

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

     (iv) enforce any rights with respect to the Trust Estate; or

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

     SECTION 3.6 Annual Opinions as to the Trust Estate.

     On or before March 31 in each calendar year, beginning in 2007, the Issuer shall furnish to
the Indenture Trustee and the Administrator an Opinion of Counsel 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

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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 security interest created by
this Indenture 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 of this Indenture until March 31 of the
following calendar year.

     SECTION 3.7 Performance of Obligations; Servicing of Home Equity Loans.

     (a) The Issuer will not take any action and will use its best efforts not to permit any action
to be taken by others that would release any Person from any of such Person’s material covenants or
obligations under any instrument or agreement included in the Trust Estate or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or agreement, except as expressly provided in this Indenture,
the Sale and Servicing Agreement or such other instrument or agreement.

     (b) The Issuer may contract with or otherwise obtain the assistance of 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 punctually perform and observe all of its obligations and agreements
contained in this Indenture, the Transaction Documents and in the instruments and agreements
included in the Trust Estate, including but not limited to (i) filing or causing to be filed all
UCC financing statements and continuation statements required to be filed by the terms of this
Indenture, the Home Equity Loan Purchase Agreement and the Sale and Servicing Agreement and (ii)
recording or causing to be recorded all Mortgages, Assignments of Mortgage, all intervening
Assignments of Mortgage and all assumption and modification agreements required to be recorded by
the terms of the Sale and Servicing Agreement and the Home Equity Loan Purchase Agreement, in
accordance with and within the time periods provided for in this Indenture and/or the Sale and
Servicing Agreement, as applicable. Except as otherwise expressly provided therein, the Issuer
shall not waive, amend, modify, supplement or terminate any Transaction Document or any provision
thereof without the consent of the Indenture Trustee and the Majority Noteholder or such other
percentage of Noteholders as is set forth in the applicable Transaction Document.

     (d) Subject to the terms of the Sale and Servicing Agreement, if the Issuer shall have
knowledge of the occurrence of an Servicer Termination Event under the Sale and Servicing
Agreement, the Issuer shall promptly notify the Indenture Trustee, the Depositor, the Servicer and
the Rating Agencies thereof, and shall specify in such notice the action, if any, the Servicer is
taking with respect of such default. If such a Servicer Termination Event shall arise from the
failure of the Servicer to perform any of its duties or obligations under the Sale and Servicing

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Agreement with respect to the Home Equity Loans, the Issuer shall take all reasonable steps
available to it to remedy or cause to be remedied such failure.

     (e) Subject to the terms of the Sale and Servicing Agreement, as promptly as possible after
the giving of notice of termination to the Servicer of the Servicer’s rights and powers pursuant to
Section 7.01 of the Sale and Servicing Agreement, a successor Servicer (the “Successor Servicer”)
shall be appointed pursuant to Section 7.02 of the Sale and Servicing Agreement. If the Indenture
Trustee shall succeed to the Servicer’s duties as Servicer of the Home Equity Loans as provided
herein, it shall do so in its individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the Indenture Trustee in
its duties as successor Servicer and the servicing of the Home Equity Loans. In case the Indenture
Trustee shall become successor Servicer under the Sale and Servicing Agreement, the Indenture
Trustee shall be entitled to appoint as Successor Servicer any one of its Affiliates, provided that
it shall be fully liable for the actions and omissions of such Affiliate in such capacity as
Successor Servicer.

     (f) Without derogating from the absolute nature of the assignment granted to the Indenture
Trustee under this Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees
(i) that it will not, without the prior written consent of the Indenture Trustee (which consent
shall not be unreasonably withheld), amend, modify, waive, supplement, terminate or surrender, or
agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms of
the Trust Estate (except to the extent otherwise provided in the Sale and Servicing Agreement or
the other Transaction Documents), or waive timely performance or observance by the Servicer or the
Depositor under the Sale and Servicing Agreement; and (ii) that any such amendment not otherwise
provided for in the Sale and Servicing Agreement or any other Transaction Document shall not (A)
reduce in any manner the amount of, or delay the timing of, collections of payments on home equity
loans, (B) reduce in any manner the amount of, or delay the timing of, payments that are required
to be made on a Note without the consent of the affected Noteholder, (C) impair the right of any
Noteholder to institute suit for the enforcement of the provisions of the Agreement, or (D) reduce
the aforesaid percentage of the Notes that is required to consent to any such amendment, without
the consent of the Holders of all the outstanding Notes. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee or the Majority Noteholder
(or such other percentage of Noteholders as required by the applicable Transaction Document), the
Issuer agrees, promptly following a request by the Indenture Trustee to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may deem necessary or appropriate in the circumstances.

     SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding, the Issuer
shall not:

     (i) except as expressly permitted by this Indenture or the Sale and Servicing
Agreement, sell, transfer, exchange or otherwise dispose of any of the properties or assets
of the Issuer, including those included in the Trust Estate, unless directed to do so by the
Indenture Trustee;

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     (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) engage in any business or activity other than as permitted by the Trust Agreement
or other than in connection with, or relating to, the issuance of Notes pursuant to this
Indenture and the Ownership Interest pursuant to the Trust Agreement, or amend the Trust
Agreement as in effect on the Closing Date other than in accordance with Section 11.1
thereof;

     (iv) issue debt obligations under any other indenture;

     (v) incur or assume any indebtedness or guaranty any indebtedness of any Person, except
for such indebtedness as may be incurred by the Issuer in connection with the issuance of
the Notes pursuant to this Indenture or as otherwise may be permitted by the Transaction
Documents;

     (vi) dissolve or liquidate in whole or in part or merge or consolidate with any other
Person;

     (vii) (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 (other than tax liens, mechanics’ liens and other liens that arise by operation of
law, in each case on any of the Mortgaged Properties and arising solely as a result of an
action or omission of the related Mortgagor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such tax, mechanics’ or
other lien) security interest in the Trust Estate; or

     (viii) take any other action or fail to take any action which may cause the Issuer to
be treated as (a) an association pursuant to Section 7701 of the Code and the corresponding
regulations, (b) a publicly traded partnership taxable as a corporation pursuant to Section
7704 of the Code and the corresponding regulations or (c) a taxable mortgage pool pursuant
to Section 7701(i) of the Code and the corresponding regulations.

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     SECTION 3.9 Annual Statement as to Compliance. The Servicer on behalf of the Issuer
will deliver to the Indenture Trustee, 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 such calendar year (or applicable
portion thereof) 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 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.

     The Officer’s Certificate referred to in this Section 3.9 will be delivered on or before March
15 of each calendar year, beginning March 15, 2007 and otherwise in compliance with the
requirements of TIA Section 314(a)(4), unless the Issuer is not required to file periodic reports
under the Exchange Act, in which case the certificate may be delivered on or before March 31 of
each calendar year and otherwise in compliance with the requirements of TIA Section 314(a)(4).

     SECTION 3.10 Covenants of the Issuer.

     All covenants of the Issuer in this Indenture are covenants of the Issuer and are not
covenants of the Owner Trustee. The Owner Trustee is, and any successor Owner Trustee under the
Trust Agreement will be, entering into this Indenture solely as Owner Trustee under the Trust
Agreement and not in its respective individual capacity, and in no case whatsoever shall the Owner
Trustee or any such successor Owner Trustee be personally liable on, or for any loss in respect of,
any of the statements, representations, warranties or obligations of the Issuer hereunder, as to
all of which the parties hereto agree to look solely to the property of the Issuer.

     SECTION 3.11 Servicer’s Obligations. The Issuer shall cause the Servicer to comply
with its obligations under the terms of the Sale and Servicing Agreement.

     SECTION 3.12 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 or to the Servicer, (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
payments or distributions to the Servicer, the Indenture Trustee, the Owner Trustee, the
Administrator, the Ownership Interest and the Noteholders as contemplated by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement or the Trust
Agreement. The Issuer will not, directly or indirectly, make or cause to be made payments to or

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distributions from the Collection Account or the Yield Maintenance Account except in accordance
with this Indenture and the Transaction Documents.

     SECTION 3.13 Treatment of Notes as Debt for All Purposes.

     The Issuer shall treat the Notes as indebtedness for all purposes.

     SECTION 3.14 Notice of Events of Default. The Issuer shall give the Indenture
Trustee, the Administrator and the Rating Agencies prompt written notice of each Event of Default
hereunder. The Issuer shall also give the Indenture Trustee, the Administrator and the Rating
Agencies prompt written notice of each default on the part of the Depositor of its obligations
under the Sale and Servicing Agreement.

     SECTION 3.15 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 3.16 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 and to the
Administrator and in form reasonably 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;

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

      (iii) each Rating Agency shall have notified the Issuer that such transaction will not
cause a reduction or withdrawal by such Rating Agency of either of its then current ratings
of the Notes;

      (iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered
copies thereof to the Indenture Trustee) to the effect that such transaction will not have
any material adverse tax consequence to the Issuer or any Noteholder;

      (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

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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).

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

      (i) 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, (B) expressly assumes, 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 agrees 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 Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agrees to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense arising under or related
to this Indenture and the Notes and (E) expressly agrees 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;

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

      (iii) each Rating Agency shall have notified the Issuer that such transaction will not
cause a reduction or withdrawal by such Rating Agency of either of its then current ratings
of the Notes;

      (iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered
copies thereof to the Indenture Trustee) to the effect that such transaction will not have
any material adverse tax consequence to the Issuer or any Noteholder;

      (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 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) above,
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) above, the Issuer shall be released from every covenant and agreement (except such
obligations that survive such transfer) 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, selling and managing the Home Equity Loans, owning Preferred
Stock of the Depositor and the issuance of the Notes in the manner contemplated by this Indenture
and the Transaction 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.

     SECTION 3.20 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Transaction 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 realty or personalty).

     SECTION 3.22 Representations and Warranties of the Issuer. The Perfection
Representations shall be a part of this Indenture.

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ARTICLE IV

SATISFACTION AND DISCHARGE

     SECTION 4.1 Satisfaction and Discharge of Indenture. Subject to and in accordance
with Section 8.01 of the Sale and Servicing Agreement, 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 3.3, 3.4, 3.5, 3.8 and
3.10 hereof, (v) the rights, obligations and immunities of the Indenture Trustee and the
Administrator hereunder (including the rights of the Indenture Trustee and the Administrator under
Section 6.7 hereof and the obligations of the Indenture Trustee and the Administrator under
Section 4.2 hereof) and (vi) the rights of Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee or the Administrator 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, when all of the following have occurred:

	 	(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 2.4 and (ii) Notes for whose payment money has theretofore been 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 3.3 above) have been delivered to
the Note Registrar for cancellation; or
	 
	 	(2)	 	all Notes not theretofore delivered to the Note Registrar for cancellation

	 	a.	 	have become due and payable,
	 
	 	b.	 	will become due and payable within one year
prior to the Final Scheduled Payment Date, or
	 
	 	c.	 	are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee and the
Administrator for the giving of notice of redemption by the
Administrator, upon the instructions of the Servicer or the Indenture
Trustee, as the case may be, in the name, and at the expense, of the
Issuer,

and the Issuer, in the case of a., b. or c. above, has irrevocably deposited or caused to be
irrevocably deposited with the Administrator 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 not theretofore delivered to the Administrator for cancellation when

29

 

due to the Final Scheduled Payment Date or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1 hereof), as the case may be;

     (B) the latest of (a) twelve months after payment in full of all outstanding obligations under
the Notes, (b) the payment in full of all unpaid fees, expenses and indemnities of the Indenture
Trustee and the Administrator hereunder and the other Transaction Documents, (c) the date on which
the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer, and (d)
the date on which the final resolution of any litigation against the Issuer regarding a preference
claim under the United States Bankruptcy Code (11 U.S.C.) has occurred; and

     (C) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of
Counsel and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable requirements of Section 11.1(a)
hereof and, subject to Section 11.2 hereof, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture with respect to the Notes
have been complied with.

     SECTION 4.2 Application of Trust Money. All moneys deposited with the Indenture
Trustee and/or the Administrator pursuant to Sections 3.3 and 4.1 hereof shall be held in trust and
applied by such party, in accordance with the provisions of the Sale and Servicing Agreement, to
the payment, either directly or through any Paying Agent, to the Holders of the particular Notes
for the payment or redemption of which such moneys have been deposited with the Indenture Trustee
and/or the Administrator, as the case may be, of all sums due and to become due thereon for
principal and interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by law.

SECTION 4.3 [Reserved].

     SECTION 4.4 Repayment of Moneys Held by Paying Agent. In connection with the
satisfaction and discharge of this Indenture with respect to the Notes, all moneys then held by any
Paying Agent under the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee (or the Administrator on behalf of the Indenture
Trustee) to be held and applied according to Section 3.3 above and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.

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ARTICLE V

REMEDIES

     SECTION 5.1 Events of Default. “Event of Default,” wherever used herein, means with
respect to the Notes 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):

     (a) default in the payment of any interest on any Note when the same becomes due and payable,
and continuance of such default for a period of five (5) days; or

     (b) default in the payment in full of the principal of the Note Principal Amounts of the Notes
on the Final Scheduled Payment Date; or

     (c) default in the observance or performance of any covenant or agreement of the Issuer made
in this Indenture (other than a covenant or agreement, a default in the observance or performance
of which is elsewhere in this Section 5.1 specifically dealt with), or any representation or
warranty of the Issuer made in this Indenture, the Sale and Servicing Agreement 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 has a
material adverse effect on Noteholders, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of 60 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 Outstanding Amount of the
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

     (d) 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

     (e) 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 Trust Estate, or the making by the Issuer of any general assignment for the benefit of
creditors,

31

 

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.

     The Issuer shall deliver to the Indenture Trustee, the Administrator and the Transferor within
five days after the occurrence thereof, 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 (c) above, its status and what action the Issuer is taking or proposes to take with
respect thereto.

     SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an Event of
Default should occur and be continuing and a Responsible Officer of the Indenture Trustee has
received written notice or has actual knowledge thereof, then and in every such case the Indenture
Trustee may, and shall, upon the prior written direction of the Holders of Notes representing not
less than 662/3% of the Outstanding Amount of the Notes, declare all the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid principal amount of such 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 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, the Majority Noteholder, by written notice to the Issuer
and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

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

         (A) all payments of principal of and interest on all Notes and all other
amounts that would then be due hereunder or upon such 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, indemnities, disbursements and advances of the
Indenture Trustee and its agents and counsel; and

      (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 below.

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

     SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

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     (a) The Issuer covenants that if (i) default occurs 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 occurs in the payment of the principal of or any installment of the principal of any
Note when the same becomes due and payable, and such default continues for a period of five days,
the Issuer will, upon demand of the Indenture Trustee, pay to the Indenture Trustee or the
Administrator, for the benefit of the Holders of the Notes, the whole amount then due and payable
on such Notes for principal and interest, with interest upon the overdue principal and, to the
extent payment at such rate of interest shall be legally enforceable, upon overdue installments of
interest at the rate borne by the Notes 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 may, and shall at the direction of the Holders of 662/3% of the Outstanding Amount
of the Notes, 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 such Notes and collect in the manner provided by law out of the property of
the Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged or decreed to
be payable.

     (c) If an Event of Default occurs and is continuing, the Indenture Trustee may, and shall at
the written direction of the Holders of 662/3% of the Outstanding Amount of the Notes, as more
particularly provided in Section 5.4 below, proceed to protect and enforce its rights and the
rights of the Noteholders, by such appropriate Proceedings as the Indenture Trustee shall deem most
effective 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, 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 5.3, 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

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Trustee (including any claim for reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee and its 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;

      (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 moneys or other property payable or deliverable on any
such claims and to distribute all amounts received with respect to the claims of the
Noteholders, 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 except as a result of negligence or bad faith.

     (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.

     (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

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shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and
it shall not be necessary to make any Noteholder a party to any such Proceedings.

     SECTION 5.4 Remedies; Priorities.

     (a) If an Event of Default shall have occurred and be continuing of which a Responsible
Officer of the Indenture Trustee has actual knowledge, the Indenture Trustee may and, at the
direction of the Holders of 662/3% of the Outstanding Amount of the Notes shall, do one or more of
the following (subject to Section 5.5 below):

      (i) institute Proceedings in its own name and as trustee of an express trust for the
collection of all amounts then payable on the related 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 moneys 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
or the related Noteholders; and

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

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 Outstanding Amount of the Notes, (B) the proceeds of such sale or liquidation
distributable to the Noteholders 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
Trust Estate will not continue to provide sufficient funds for the payment of principal of and
interest on the 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 the Holders of 662/3% of the Outstanding
Amount of the Notes. In determining such sufficiency or insufficiency with respect to clauses (B)
and (C) above, the Indenture Trustee may, but need not, obtain and rely upon an opinion 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.

     (b) If the Indenture Trustee collects any money or property pursuant to this Article V, the
Indenture Trustee shall pay out the money or property (or shall remit the money or property to the
Paying Agent, who shall pay out the money or property in accordance with the instructions of the
Indenture Trustee) in the following order:

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      FIRST: to the Indenture Trustee, the Owner Trustee and the Administrator for any
costs, expenses, reimbursements or indemnities remaining due to any of them including but in
no way limited to those incurred by any of them in connection with the enforcement of the
remedies provided for in this Article V;

      SECOND: concurrently, to the Class A-1 and Class A-2 Noteholders for amounts due and
unpaid on the Class A-1 and Class A-2 Notes for interest (excluding Supplemental Interest
Amounts) pro rata among the Holders of the Class A-1 and Class A-2 Notes, respectively,
according to the amounts due and payable on such Class A-1 and Class A-2 Notes;

      THIRD: to the Class M-1 Noteholders for amounts due and unpaid on the Class M-1 Notes
for interest (excluding Supplemental Interest Amounts) pro rata among the Holders of the
Class M-1 Notes, according to the amounts due and payable on such Class M-1 Notes;

      FOURTH: to the Class M-2 Noteholders for amounts due and unpaid on the Class M-2 Notes
for interest (excluding Supplemental Interest Amounts) pro rata among the Holders of the
Class M-2 Notes, according to the amounts due and payable on such Class M-2 Notes;

      FIFTH: to the Class A-1 Noteholders for amounts due and unpaid on the Class A-1 Notes
for principal pro rata among the Holders of the Class A-1 Notes according to the amounts due
and payable until the Note Principal Amount of the Class A-1 Notes is reduced to zero;

      SIXTH: to the Class A-2 Noteholders for amounts due and unpaid on the Class A-2 Notes
for principal pro rata among the Holders of the Class A-2 Notes according to the amounts due
and payable until the Note Principal Amount of the Class A-2 Notes is reduced to zero;

      SEVENTH: to the Class M-1 Noteholders for amounts due and unpaid on the Class M-1
Notes for principal pro rata among the Holders of the Class M-1 Notes according to the
amounts due and payable until the Note Principal Amount of the Class M-1 Notes is reduced to
zero;

      EIGHTH: to the Class M-2 Noteholders for amounts due and unpaid on the Class M-2 Notes
for principal pro rata among the Holders of the Class M-2 Notes according to the amounts due
and payable until the Note Principal Amount of the Class M-2 Notes is reduced to zero;

      NINTH: to the Class A-1, Class A-2, Class M-1 and Class M-2 Noteholders for any
Supplemental Interest Amounts due and unpaid on the Class A-1, Class A-2, Class M-1 and
Class M-2 Notes pro rata among the Holders of the Class A-1, Class A-2, Class M-1 and Class
M-2 Notes, respectively, according to the Supplemental Interest Amounts

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due and payable on the Class A-1, Class A-2, Class M-1 and Class M-2 Notes,
respectively; and

      TENTH: to the Administrator or the Paying Agent for any amounts to be distributed, to
the holder of the Ownership Interest, in the manner set forth in Section 5.01 of the Sale
and Servicing Agreement.

     The Indenture Trustee may fix a record date and payment date for any payment to be made to the
Noteholders pursuant to this Section 5.4. At least 15 days before such record date, the Indenture
Trustee shall mail (or shall provide the necessary information to the Administrator, who shall
mail) to each Noteholder and the Issuer a notice that states the record date, the payment date and
the amount to be paid.

     SECTION 5.5 Optional Preservation of the Trust Estate. If the Notes have been
declared to be due and payable under Section 5.2 above following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may,
and shall at the written direction of Holders of 662/3% of the Outstanding Amount of the Notes, elect
to 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 (although the parties hereto understand that there exists the possibility of
a shortfall in collections of the Home Equity Loans), and the Indenture Trustee shall take such
desire into account when determining whether or not to maintain possession of the Collateral. In
determining whether to maintain possession of the Collateral, the Indenture Trustee may, but need
not, obtain and rely upon an opinion 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
Collateral for such purpose.

     SECTION 5.6 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:

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

     (b) the Holders of not less than 25% of the Outstanding Amount of the Notes have made 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;

     (c) 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;

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

     (e) no direction inconsistent with such written request has been given to the Indenture
Trustee during such 60-day period by the Majority Noteholder.

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     It is understood and intended that no Noteholders 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 Noteholders 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.

     SECTION 5.7 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 date thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) to the extent funds are
available therefor out of the Trust Estate and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such Holder.

     SECTION 5.8 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 5.9 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 Noteholder to exercise any right or remedy accruing upon any Default or Event of
Default shall impair any such right or remedy or constitute a waiver of any such Default or 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
662/3% of the Outstanding Amount of
the 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; provided that:

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

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     (b) subject to the express terms of Section 5.4 above, any direction to the Indenture Trustee
to sell or liquidate the Trust Estate shall be in writing by the Holders of Notes representing not
less than 100% of the Outstanding Amount of the Notes;

     (c) if the conditions set forth in Section 5.5 above have been satisfied and the Indenture
Trustee elects to retain the Trust Estate pursuant to such Section 5.5, then any direction to the
Indenture Trustee by Holders of Notes representing less than 100% of the Outstanding Amount of the
Notes to sell or liquidate the Trust Estate shall be of no force and effect; and

     (d) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee
that is not inconsistent with such direction.

     Notwithstanding the rights of the Noteholders set forth in this Section 5.11, subject to
Section 6.1 hereof, the Indenture Trustee need not take any action that it determines might involve
it in liability or might materially adversely affect the rights of any Noteholders not consenting
to such action.

     SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the acceleration of
the maturity of the Notes as provided in Section 5.2 above, the Majority Noteholder may waive any
past Default or Event of Default and its consequences except a Default (a) in the payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or provision hereof
that 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 Default or impair any right consequent thereto.

     Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and
not to have occurred, and 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 Default or 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 by such Holder’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 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 Outstanding Amount 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

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after the respective
due dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after
the Redemption Date).

     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 will 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 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 5.4(b) above.

     SECTION 5.16 Performance and Enforcement of Certain Obligations.

     (a) Promptly following a request from the Indenture Trustee, the Issuer shall take all such
lawful action as the Indenture Trustee may request to compel or secure the performance and
observance by the Depositor and the Servicer, as applicable, of each of their obligations to the
Issuer under or in connection with 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 Sale and Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the Depositor or the
Servicer thereunder and the institution of legal or administrative actions or proceedings to compel
or secure performance by the Depositor or the Servicer of each of their obligations under the Sale
and Servicing Agreement.

     (b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and at
the written direction of the Holders of 662/3% of the Outstanding Amount of the Notes shall, exercise
all rights, remedies, powers, privileges and claims of the Issuer against the Depositor or the
Servicer under or in connection with the Sale and Servicing Agreement, including the right or power
to take any action to compel or secure performance or observance by the Depositor, the 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 Sale and Servicing Agreement,
and any right of the Issuer to take such action shall be suspended.

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ARTICLE VI

THE INDENTURE TRUSTEE AND THE ADMINISTRATOR

     SECTION 6.1 Duties of Indenture Trustee.

     (a) If an Event of Default has occurred and is continuing, the Indenture Trustee shall
exercise the rights and powers vested in it by this Indenture and the other Transaction Documents
to which it is a party and use the same degree of care and skill in their 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:

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

      (ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to
the requirements of this Indenture and the other Transaction Documents to which it is a
party; however, the Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture and the other
Transaction Documents to which it is a party. If any such instrument is found not to
conform in any material respect to the requirements of this Indenture and the other
Transaction Documents to which it is a party, the Indenture Trustee shall notify the
Noteholders of such instrument in the event that the Indenture Trustee, after so requesting,
does not receive a satisfactory corrected instrument.

     (c) The Indenture Trustee may not be relieved from liability for 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 6.1;

          (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by
a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining
the pertinent facts; and

          (iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits
to take in good faith in accordance with a direction received by it pursuant to Section 5.11 above.

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     (d) Every provision of this Indenture and the other Transaction Documents to which the
Indenture Trustee is a party that in any way relates to the Indenture Trustee is subject to
paragraphs (a), (b), (c) and (g) of this Section 6.1.

     (e) 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.

     (f) Money held in trust by the Indenture Trustee shall be segregated from other funds except
to the extent permitted by law or the terms of this Indenture or the Sale and Servicing Agreement.

     (g) No provision of this Indenture or any other Transaction Document to which the Indenture
Trustee is a party shall require the Indenture Trustee 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 adequate indemnity against such risk or liability is not reasonably assured to it; and
none of the provisions contained in this Indenture or any other Transaction Document to which the
Indenture Trustee is a party shall in any event require the Indenture Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the Servicer, the Issuer or
Transferor under this Indenture or such other Transaction Document, as the case may be, 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 Servicer in accordance with the terms of this
Indenture and the Sale and Servicing Agreement.

     (h) The Indenture Trustee shall challenge or cause to be challenged any attempt at substantive
consolidation of the assets and liabilities of the Issuer with those of the Transferor (as the term
“Transferor” is defined in the Trust Agreement) in connection with any insolvency proceeding of the
Issuer.

     (i) Every provision of this Indenture or any other Transaction Document to which the Indenture
Trustee is a party 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 6.1 and to the provisions
of the TIA.

     (j) Subject to the other provisions of this Indenture and the other Transaction Documents to
which the Indenture Trustee is a party and without limiting the generality of this Section 6.1, the
Indenture Trustee, unless it is acting as the Servicer under the Sale and Servicing Agreement,
shall have no duty (A) to see to any recording, filing, or depositing of this Indenture or any
agreement referred to herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to see to any insurance coverage, (C)
to see to the payment or discharge of any tax, assessment, or other governmental charge or any lien
or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust
Estate other than from funds available in the Collection Account, (D) to confirm or verify the
contents of any reports or certificates of the Issuer or Servicer delivered to the Indenture

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Trustee pursuant to this Indenture, or any other Transaction Document to which the Indenture
Trustee is a party, believed by the Indenture Trustee to be genuine and to have been signed or
presented by the proper party or parties.

     SECTION 6.2 Rights of Indenture Trustee.

     (a) The Indenture Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting on any resolution, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or matter stated in the document.

     (b) Before the Indenture Trustee acts or refrains from acting, it may require and shall be
entitled to receive an Officer’s Certificate or an Opinion of Counsel. The Indenture Trustee shall
not 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) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or a custodian or nominee.

     (d) The Indenture Trustee shall not 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
such action or omission by the Indenture Trustee does not constitute willful misconduct, negligence
or bad faith.

     (e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel
selected by it with due care with respect to legal matters relating to this Indenture, the Notes
and the Transaction Documents to which it is a party, 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.

     (f) The Indenture Trustee shall be under no obligation to exercise any of the trusts or powers
vested in it by this Indenture or the other Transaction Documents to which it is a party 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, relieve the Indenture Trustee of the obligation, upon the occurrence of an
Event of Default of which a Responsible Officer of the Indenture Trustee shall have actual
knowledge (which has not been cured), 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 or use under the circumstances in the conduct of such person’s own affairs.

     (g) The Indenture Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,

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request, consent, order, approval, bond or other paper or document, unless requested in writing to
do so by the Majority Noteholder; provided, however, that if the payment within a reasonable
time to the Indenture Trustee 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, not reasonably
assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action. The reasonable expense of every such examination shall be
paid by the Issuer or, if paid by the Indenture Trustee, shall be repaid by the Issuer upon demand.

     (h) The right of the Indenture Trustee to perform any discretionary act enumerated in this
Indenture or in any other Transaction Document to which the Indenture Trustee is a party shall not
be construed as a duty, and the Indenture Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of such act.

     (i) The Indenture Trustee shall not be required to give any bond or surety in respect of the
execution of the Trust Fund created hereby or the powers granted hereunder.

     (j) The Indenture Trustee shall have no liability in connection with the malfeasance or
nonfeasance by the Issuer or the Servicer. The Indenture Trustee shall have no liability in
connection with compliance by the Issuer or the Servicer with statutory or regulatory requirements
related to the Collateral or the Trust Estate. The Indenture Trustee shall not make or be deemed
to have made any representations or warranties with respect to the Collateral or the Trust Estate
or the validity or sufficiency of any assignment of the Collateral or the Trust Estate to the
Indenture Trustee.

     SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture Trustee 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 Indenture
Trustee. Any Paying Agent, 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 below.

     SECTION 6.4 Indenture Trustee’s Disclaimer. The Indenture Trustee shall not be (i)
responsible for and makes no representation as to the validity or adequacy of this Indenture, any
other Transaction Document to which it is a party or the Notes, (ii) shall not be accountable for
the Issuer’s use of the proceeds from the Notes or (iii) responsible for any statement of the
Issuer in the Indenture, any other Transaction Document to which it is a party or in any document
issued in connection with the sale of the Notes or in the Notes.

     SECTION 6.5 Notice of Defaults. The Indenture Trustee shall not be charged with the
knowledge of any Default or an Event of Default unless a Responsible Officer has received written
notice or has actual knowledge thereof. The Indenture Trustee shall mail to each Noteholder, the
Servicer and the Depositor notice of the Default within 30 days after it occurs at the expense of
the Issuer. Except in the case of a Default in payment of principal of or interest on any Note,
the Indenture Trustee may withhold the notice to the Noteholders if and so long as

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a committee of
its Responsible Officers in good faith determines that withholding the notice is in the interests
of Noteholders.

     SECTION 6.6 Provision of Information. The Administrator shall deliver, to the extent
provided by the Servicer, to each Noteholder, such information as may be required to enable such
Holder to prepare its federal and state income tax returns. In addition, upon Issuer Request, the
Administrator shall promptly furnish such information reasonably requested by the Issuer that is
reasonably available to the Administrator to enable the Issuer to perform its federal and state
income tax reporting obligations.

     SECTION 6.7 Compensation and Indemnity. The Issuer shall, or shall cause the Servicer
to, pay to the Indenture Trustee from time to time as compensation for its services, including but
not limited to its services, if any, (i) as successor custodian of the Mortgage Files pursuant to
Section 2.01 of the Sale and Servicing Agreement and (ii) in conducting the auction process for the
Trust Estate pursuant to Section 8.01 of the Sale and Servicing Agreement and Section 10.2 hereof,
a fee agreed to by the Servicer and the Indenture Trustee. The Indenture Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall
or shall cause the Servicer to reimburse the Indenture Trustee for all reasonable out-of-pocket
expenses incurred or made by it, including but in no way limited to costs of collection, in
addition to the compensation for its services. Such expenses shall include but shall in no way be
limited to the reasonable compensation and expenses, disbursements and advances of the Indenture
Trustee’s agents, outside counsel, accountants and experts. The Issuer shall or shall cause the
Servicer to indemnify the Indenture Trustee, and its respective officers, directors, employees and
agents against any and all loss, liability or expense (including but in no way limited to
attorneys’ fees and expenses) incurred by each of them in connection with the acceptance or the
administration of this trust and the performance of its duties hereunder. The Indenture Trustee
shall notify the Issuer and the Servicer promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer and the Servicer shall not relieve the
Issuer or the Servicer of its obligations hereunder. The Issuer shall defend or shall cause the
Servicer to defend any claim for indemnity that may arise against the Indenture Trustee, or the
Indenture Trustee may have separate counsel and the Issuer shall or shall cause the Servicer to pay
the fees and expenses of such counsel. Neither the Issuer nor the Servicer need reimburse any
expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee
through the Indenture Trustee’s own willful misconduct, negligence or bad faith. HSBC Finance’s
payment obligations to the Indenture Trustee pursuant to this Section 6.7 shall survive the
discharge of this Indenture.

     SECTION 6.8 Replacement of Indenture Trustee. No resignation or removal of the
Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until
the acceptance of appointment by the successor Indenture Trustee pursuant to this Section. The
Indenture Trustee may resign at any time by so notifying the Issuer; provided,
however, that as a condition precedent to the effectiveness of such resignation, the
Indenture Trustee shall provide to the Depositor and the Servicer, at least 30 calendar days prior
to the effective date of such resignation, written notice, in form and substance reasonably
satisfactory to the Depositor and the Servicer, containing all information reasonably requested by
the Depositor and the

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Servicer in order for the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to the resignation of the Indenture Trustee. The Majority
Noteholder may
remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor
Indenture Trustee. The Issuer shall remove the Indenture Trustee if:

     (a) the Indenture Trustee fails to comply with Section 6.11 below;

     (b) the Indenture Trustee is adjudged bankrupt or insolvent;

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

     (d) the Indenture Trustee otherwise becomes incapable of acting.

     If the Indenture Trustee fails to fulfill its obligations under this Section 6.8 with respect
to notice to the Depositor and the Servicer or under Article XI of the Sale and Servicing
Agreement, and such failure continues for the lesser of 10 calendar days or such period in which
the applicable Exchange Act report can be filed timely (without taking into account any
extensions), the Servicer may terminate the Indenture Trustee. If the Indenture Trustee resigns or
is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture
Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall
promptly appoint a successor Indenture Trustee that satisfies the eligibility requirements of
Section 6.11 and shall provide written notice to the Depositor of any successor pursuant to this
Section.

     In connection with its resignation or removal, the Indenture Trustee agrees to cooperate with
any successor Indenture Trustee in effecting the termination of the Indenture Trustee’s
responsibilities and rights hereunder and shall promptly provide such successor Indenture Trustee
all documents and records reasonably requested by it to enable it to assume the Indenture Trustee’s
functions hereunder.

     A successor Indenture Trustee shall deliver a written acceptance of its appointment to the
retiring Indenture Trustee, the Issuer and the Administrator and shall, at least 30 calendar days
prior to the effective date of its acceptance, provide to the Depositor and the Servicer written
notice thereof, in form and substance reasonably satisfactory to the Depositor and the Servicer,
containing all information reasonably requested by the Depositor and the Servicer in order for the
Depositor to comply with its reporting obligation under Item 6.02 of Form 8-K with respect to a
replacement of the Indenture Trustee. Thereupon the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture and the other Transaction
Documents to which it is a party. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.

     If a successor Indenture Trustee does not take office within 30 days after the retiring
Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Majority

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Noteholder may petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.

     If the Indenture Trustee fails to comply with Section 6.11 below, any Noteholder may petition
any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of
a successor Indenture Trustee.

     Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.8, the
Issuer’s obligations under Section 6.7 above shall continue for the benefit of the retiring
Indenture Trustee.

     SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially all 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;
provided, that such corporation or banking association shall be otherwise qualified and eligible
under Section 6.11 below. The Indenture Trustee shall provide to the Depositor and the Servicer,
on or within two Business Days following the effective date of any such merger or consolidation,
written notice thereof, in form and substance typically issued by the Indenture Trustee for such
purpose, containing all information reasonably required in order for the Depositor to comply with
its reporting obligation under Form 8-K with respect to a successor Indenture Trustee. If the
Indenture Trustee fails to fulfill its obligations under this Section 6.9 with respect to notice to
the Servicer or under Article XI of the Sale and Servicing Agreement, and such failure continues
for the lesser of 10 calendar days or such period in which the applicable Exchange Act report can
be filed timely (without taking into account any extensions), the Servicer may terminate the
Indenture Trustee.

     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, 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 6.10, 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 below and no notice to Noteholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.8 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:

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      (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, jointly with the Indenture Trustee, 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.

     (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. The Indenture Trustee shall remain primarily liable for all actions of a co-trustee.

     SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Indenture Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent published annual report
of condition. The Indenture Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there
shall be excluded from the operation of TIA Section 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 Section 310(b)(1) are met.

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

     SECTION 6.13 Representations and Warranties. The Indenture Trustee and the
Administrator each hereby represents and warrants as to itself that:

     (a) It is duly organized, validly existing and 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 currently conducted.

     (b) It has the power and authority to execute and deliver this Indenture and the other
Transaction Documents to which it is a party and to carry out its terms; and the execution,
delivery and performance of this Indenture have been duly authorized by it by all necessary
corporate action.

     (c) The consummation of the transactions contemplated by this Indenture and the other
Transaction Documents to which it is a party and the fulfillment of the terms hereof and thereof 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, its certificate of incorporation or bylaws or
any agreement or other instrument to which it is a party or by which it is bound.

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

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

     (b) to appoint, and the Indenture Trustee hereby appoints, the Administrator as authentication
agent to authenticate and deliver the Notes substantially in the form prescribed by Exhibit A 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.

     SECTION 6.15 Duties, Liabilities and Limitations on Liability of Administrator.

     (a) The Administrator shall undertake to perform such duties and only such duties as are
specifically set forth in this Indenture and the other Transaction Documents to which it is a
party. The duties and obligations of the Administrator with respect to the Notes and the Ownership
Interest and the Transaction Documents to which it is a party shall be determined solely by the
express provisions of such Transaction Documents, the Administrator shall not be liable except for
the performance of such duties and obligations as are specifically set forth in the Transaction
Documents to which it is a party, and no implied covenants or obligations shall be read into the
Transaction Documents against the Administrator.

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     (b) The Administrator shall have all of the rights and benefits of and limitations on
liability afforded to the Indenture Trustee under this Article VI to the same extent as though the
Administrator had been named in the various provisions of Article VI, except (i) to the extent
otherwise provided in Sections 6.15, 6.16, 6.17, 6.18 and 6.19 (for example, Section 6.16 shall
apply instead of Section 6.7) and (ii) with respect to Section 6.4, the Administrator shall be
responsible for the Administrator’s certificate of authentication.

     (c) In acting under this Indenture and the other Transaction Documents to which it is a party
and in connection with the Notes and the Ownership Interest, the Administrator is acting solely as
an agent of the Issuer and does not assume any obligation or relationship of agency for or with, or
any fiduciary obligation towards, any of the Holders of the Notes.

     (d) The Administrator shall be obligated to make payments pursuant to the terms of the
Transaction Documents only if, and only to the extent that, sufficient funds are available therefor
in the Collection Account and the Yield Maintenance Account. In no event shall the Administrator,
in its capacity as Administrator or Paying Agent or in its individual capacity, be liable for any
such payments.

     (e) In each case that the Administrator (including in its capacity as Paying Agent hereunder)
may or is required hereunder or under any other Transaction Document to which it is a party to take
any action (an “Action”), including without limitation to make any determination or
judgment (including without limitation the proper reporting and/or withholding for Federal income
tax purposes required with respect to any payment made under any Transaction Document for which the
Administrator has a reporting and/or withholding obligation for Federal income tax purposes), to
exercise rights or powers or otherwise act hereunder or thereunder, the Administrator may seek
direction from the Servicer. The Administrator shall not be liable with respect to any Action
taken or omitted to be taken by it in good faith in accordance with the direction from the
Servicer. If the Administrator shall request direction from the Servicer with respect to any
Action, the Administrator shall be entitled to refrain from such Action unless and until such
Administrator shall have received written direction from the Servicer, and the Administrator shall
not incur liability to any Person by reason of so refraining.

     (f) The Administrator may rely, and shall be fully protected in relying, on any direction or
instruction received from the Servicer, the Indenture Trustee or any other party hereto or to the
other Transaction Documents.

     (g) The Administrator shall not be responsible for filing any financing or continuation
statement or otherwise taking any action in connection with any security interest or lien granted
pursuant to the Transaction Documents.

     SECTION 6.16 Administrator Compensation and Indemnification.

     (a) The Administrator shall be entitled to such compensation as shall be mutually agreed upon
between it and the Servicer for its services hereunder and under the other Transaction Documents to
which it is a party, including its roles as Paying Agent and Registrar under the

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Trust Agreement.
The Administrator agrees and acknowledges that it shall look solely to the Servicer for payment of
such compensation and it shall not be entitled to payment of such compensation from the Issuer, the
Indenture Trustee or out of the Trust Estate.

     (b) The Administrator (including in its roles as Note Registrar and Paying Agent) and any
director, officer, employee or agent of the Administrator shall be indemnified by the Servicer and
held harmless by the Servicer against any loss, liability or expense (including reasonable
attorney’s fees and expenses) arising out of, relating to or in connection with (i) this Indenture,
the Notes and the other Transaction Documents to which it is a party or in connection with
their respective duties hereunder or any legal action relating thereto, other than any loss,
liability or expense incurred by reason of willful misconduct, negligence or bad faith in the
performance of the Administrator’s duties hereunder or thereunder and (ii) any audit, controversy
or judicial proceeding relating to a governmental taxing authority.

     (c) Notwithstanding anything contained in this Indenture or any of the other Transaction
Documents to the contrary, the indemnification provided for in this Section 6.16 shall survive the
payment of the Notes, the resignation or removal of the Administrator and/or the satisfaction and
discharge of this Indenture.

     SECTION 6.17 Replacement of Administrator. No resignation or removal of the
Administrator and no appointment of a successor Administrator shall become effective until the
acceptance of appointment by the successor Administrator pursuant to this Section. The
Administrator may resign at any time by so notifying the Issuer. The Issuer shall remove the
Administrator if:

     (a) the Administrator fails to comply with Section 6.11 above;

     (b) the Administrator is adjudged bankrupt or insolvent;

     (c) a receiver or other public officer takes charge of the Administrator or its property; or

     (d) the Administrator otherwise becomes incapable of acting.

     As a condition precedent to the effectiveness of any such resignation or removal, the
Administrator shall provide to the Depositor and the Servicer, at least 30 calendar days prior to
the effective date of any such resignation or removal, written notice, in form and substance
reasonably satisfactory to the Depositor and the Servicer, containing all information reasonably
requested by the Depositor and the Servicer in order for the Depositor to comply with its reporting
obligation under Item 6.02 of Form 8-K with respect to the replacement of the Administrator. If
the Administrator fails to fulfill its obligations under this Section 6.17 with respect to notice
to the Depositor and the Servicer or under Article XI of the Sale and Servicing Agreement, and such
failure continues for the lesser of 10 calendar days or such period in which the applicable
Exchange Act report can be filed timely (without taking into account any extensions), the Servicer
may terminate the Administrator. If the Administrator resigns or is removed or if a vacancy exists
in the office of Administrator for any reason (the Administrator in

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such event being referred to
herein as the retiring Administrator), the Issuer shall promptly appoint a successor Administrator.

     A successor Administrator shall deliver a written acceptance of its appointment to the
retiring Administrator, the Issuer and the Indenture Trustee and shall, at least 30 calendar days
prior to the effective date of its acceptance, provide to the Depositor and the Servicer written
notice thereof, in form and substance reasonably satisfactory to the Depositor and the Servicer,
containing all information reasonably requested by the Depositor and the Servicer in order for the
Depositor to comply with its reporting obligation under Item 6.02 of Form 8-K with respect
to a replacement of the Administrator. Thereupon the resignation or removal of the retiring
Administrator shall become effective, and the successor Administrator shall have all the rights,
powers and duties of the Administrator under this Indenture and the other Transaction Documents to
which it is a party. The successor Administrator shall mail a notice of its succession to
Noteholders. The retiring Administrator shall promptly transfer all property held by it as
Administrator to the successor Administrator.

     If a successor Administrator does not take office within 30 days after the retiring
Administrator resigns or is removed, the Indenture Trustee shall perform the obligations of the
Administrator hereunder until a successor Administrator shall be appointed, in which case, for so
long as the Indenture Trustee serves as Administrator hereunder, the Indenture Trustee shall be
entitled to such compensation in addition to its compensation pursuant to Section 6.7 hereunder as
the Servicer and the Indenture Trustee shall agree.

     Notwithstanding the replacement of the Administrator pursuant to this Section 6.17, the
Servicer’s obligations under Section 6.16 above shall continue for the benefit of the retiring
Administrator.

     SECTION 6.18 Successor Administrator by Merger. If the Administrator consolidates
with, merges or converts into, or transfers all or substantially all 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 Administrator; provided, that such
corporation or banking association shall be otherwise qualified and eligible under Section 6.11
above. The Administrator shall provide to the Depositor and the Servicer, at least 30 calendar days
prior to the effective date of any such merger or consolidation, written notice thereof, in form
and substance reasonably satisfactory to the Depositor and the Servicer, containing all information
reasonably requested by the Depositor and the Servicer in order for the Depositor to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to a successor Administrator. If
the Administrator fails to fulfill its obligations under this Section 6.18 with respect to notice
to the Depositor and the Servicer or under Article XI of the Sale and Servicing Agreement, and such
failure continues for the lesser of 10 calendar days or such period in which the applicable
Exchange Act report can be filed timely (without taking into account any extensions), the Servicer
may terminate the Administrator.

     In case, at the time such successor or successors by merger, conversion or consolidation to
the Administrator shall succeed to the rights, duties and responsibilities created by this

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Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to
the Administrator may adopt the certificate of authentication, if any, of any predecessor
administrator, and deliver such Notes so authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the Administrator may authenticate such Notes
either in the name of any predecessor hereunder or in the name of the successor to the
Administrator; and in all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of the Administrator shall
have.

     SECTION 6.19 Directions to Administrator. The Administrator is hereby directed to
authenticate and deliver the Notes substantially in the form prescribed by Exhibit A in accordance
with the terms of this Indenture.

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ARTICLE VII

NOTEHOLDERS’ LISTS AND REPORTS

     SECTION 7.1 Administrator to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Administrator (as Note Registrar, on behalf of the Issuer) will furnish or
cause to be furnished to the Indenture Trustee (a) not more than five days after the earlier of (i)
each Record Date and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the Noteholders 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 Administrator (as Note Registrar, on behalf of 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.

     SECTION 7.2 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 Noteholders contained in the most recent list furnished to the
Indenture Trustee as provided in Section 7.1 above. The Indenture Trustee may destroy any list
furnished to it as provided in such Section 7.1 upon receipt of a new list so furnished.

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

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

     SECTION 7.3 Reports by Issuer.

     (a) The Issuer shall:

      (i) file with the Indenture Trustee, within 15 days after the Issuer is required to
file the same with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;

      (ii) file with the Indenture Trustee and the Commission in accordance with the rules
and regulations prescribed from time to time by the Commission such additional information,
documents and reports with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by such rules and
regulations; and

      (iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail
to all Noteholders described in TIA Section 313(c)) such summaries of any

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information, documents and reports required to be filed by the Issuer pursuant to
clauses (i) and (ii) of this Section 7.3(a) and by rules and regulations prescribed from
time to time by the Commission.

     (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on
December 31 of each year.

     SECTION 7.4 Reports by Indenture Trustee. If required by TIA Section 313(a), within
60 days after each August 1, beginning with August 1, 2007, the Indenture Trustee shall mail to
each Noteholder as required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).

     A copy of each report at the time of its mailing to Noteholders shall be filed by the
Indenture Trustee with the Commission and each securities exchange, if any, on which the Notes are
listed. The Issuer shall notify the Indenture Trustee if and when the Notes are listed on any
securities exchange.

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ARTICLE VIII

ACCOUNTS, DISBURSEMENTS AND RELEASES

     SECTION 8.1 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, the Administrator or the Paying Agent on behalf of 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 herein.

     SECTION 8.2 Accounts; Distributions.

     (a) On or prior to the Closing Date, the Administrator shall establish and maintain or cause
to be established and maintained with the Administrator, in the name of the Administrator on behalf
of the Indenture Trustee for the benefit of the Noteholders and the Transferor, the Collection
Account and the Yield Maintenance Account as provided in Article V of the Sale and Servicing
Agreement into which amounts shall be deposited in accordance with the terms of the Sale and
Servicing Agreement.

     (b) The Indenture Trustee shall remit to the Administrator for deposit, and the Administrator
shall deposit, into the Collection Account any amounts representing payments on and any collections
in respect of the Home Equity Loans received by it, if any, and any other amounts required by the
terms of the Transaction Documents to be deposited, immediately following receipt thereof. Amounts
on deposit in the Collection Account may be invested in Permitted Investments pursuant to Section
3.02(d) of the Sale and Servicing Agreement.

     (c) On each Payment Date and the Redemption Date, to the extent funds are available in the
Collection Account and the Yield Maintenance Account, the Administrator shall make the
distributions and payments in the amounts and in the priority set forth in Section 5.01 of the Sale
and Servicing Agreement (except as otherwise provided in Section 5.4(b) herein).

     (d) On each Payment Date and the Redemption Date, to the extent of the interest of the
Indenture Trustee in the Collection Account and the Yield Maintenance Account (as described in
Section 5.01 of the Sale and Servicing Agreement), the Indenture Trustee hereby authorizes the
Administrator or the Paying Agent, as applicable, to make the distributions from the Collection
Account and the Yield Maintenance Account as required pursuant to Section 5.01 of the Sale and
Servicing Agreement.

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     SECTION 8.3 [Reserved].

     SECTION 8.4 Monthly Payment Statements.

     On each Payment Date, the Servicer shall, pursuant to the terms of the Sale and Servicing
Agreement, deliver the Monthly Payment Statement (as defined in the Sale and Servicing Agreement)
with respect to such Payment Date to DTC and the Rating Agencies through the Servicer’s website or
through such other means as the Servicer believes will make the distribution more convenient and/or
accessible, and the Servicer shall notify the Administrator, who shall in turn provide timely and
adequate notification to all Noteholders, regarding any such changes in the means of distribution.

     SECTION 8.5 [Reserved].

     SECTION 8.6 Opinion of Counsel. The Indenture Trustee shall receive at least seven
days’ notice when requested by the Issuer to take any action pursuant to Section 2.9(a) herein,
accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as
a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee addressed 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 and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required
to express an opinion as to the fair market value of a Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection with any such
action.

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ARTICLE IX

SUPPLEMENTAL INDENTURES

     SECTION 9.1 Supplemental Indentures without Consent of Noteholders.

     (a) Without the consent of the Holders of any Notes but with prior notice to the Rating
Agencies, the Issuer and the Administrator, the Owner Trustee and the Indenture Trustee, when
authorized by an Issuer Order, 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 Trust Indenture Act as
in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, 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 Noteholders, 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 or 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 adversely affect the interests of the Noteholders;

     (vi) 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 herein; or

     (vii) 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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     The Indenture Trustee is 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 Administrator, the Owner Trustee and the Indenture Trustee, when
authorized by an Issuer Order, may, also without the consent of any of the Noteholders but with
prior confirmation from the Rating Agencies, 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 Noteholders under
this Indenture; provided, however, that such action shall not, as evidenced by an Opinion of
Counsel or satisfaction of the Rating Agency Condition, adversely affect in any material respect
the interests of any Noteholder or cause the Issuer to be subject to entity level tax.

     SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The Issuer, the
Administrator, the Owner Trustee and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior consent of the Rating Agencies, and with the consent of the Majority
Noteholder, by Act of such Majority Noteholder delivered to the Issuer, the Administrator, the
Owner Trustee 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 Outstanding Note affected thereby:

     (a) change the date of payment of any installment of principal of or interest on any Note, or
reduce the principal amount thereof, the interest rate thereon or the amount required to be paid on
the Notes following the exercise of the option set forth in Section 8.01 of the Sale and Servicing
Agreement, 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 herein, to the payment of any such amount due on the Notes on or after the respective due
dates thereof (or, in the case of redemption, on or after the Redemption Date);

     (b) reduce the percentage of the Outstanding Amount 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;

     (c) modify or alter the provisions of the proviso to the definition of the term “Outstanding”;

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     (d) reduce the percentage of the Outstanding Amount of the Notes required to direct the
Indenture Trustee to direct the Issuer to sell or liquidate the Trust Estate pursuant to Section
5.4 herein;

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

     (f) 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

     (g) 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
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.

     The Indenture Trustee may in its discretion determine whether or not any Notes would be
affected by any supplemental indenture and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereunder. The
Indenture Trustee shall not be liable for any such determination made in good faith.

     In connection with requesting the consent of the Noteholders pursuant to this Section 9.2, 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 at the Issuer’s expense. It shall not be necessary for any Act of Noteholders under this
Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.

     SECTION 9.3 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
Administrator shall be entitled to receive, and subject to Sections 6.1 and 6.2 herein, shall be
fully protected in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture and all conditions precedent to
the execution of such supplemental indenture have been met. The Indenture Trustee and the
Administrator may, but shall not be obligated to, enter into any such supplemental indenture that
affects the Indenture Trustee’s or the Administrator’s, as the case may be, own rights, duties,
liabilities or immunities, as the case may be, under this Indenture or otherwise.

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     SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture 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 Owner Trustee, the 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 9.5 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 9.6 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 Administrator in exchange for Outstanding Notes.

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ARTICLE X

TERMINATION OF TRUST

     SECTION 10.1 Early Termination.

     The Servicer may effect an early termination of the Trust pursuant to Section 8.01 of the Sale
and Servicing Agreement on or after any Payment Date on which the Note Principal Amount of the
Notes declines to 15% or less of the initial Note Principal Amount of the Notes and the purchase
price for the Home Equity Loans has been paid, pursuant to the provisions of Section 8.01(b) of the
Sale and Servicing Agreement (such date, the “Redemption Date”). If the Servicer does not
terminate the Trust in accordance with Section 8.01(b) of the Sale and Servicing Agreement within
three months of the first Payment Date upon which such termination may be effected, then the
Indenture Trustee shall conduct an auction process for the Home Equity Loans as provided in Section
8.01(c) of the Sale and Servicing Agreement.

     The Administrator shall furnish notice of any redemption of the Notes that occurs as a result
of any of the foregoing in accordance with Section 8.01 of the Sale and Servicing Agreement.

     SECTION 10.2 Mandatory Redemption.

     (a) If the full amount of principal and interest then due on the Notes is not paid by the
Payment Date in June 2016, the Indenture Trustee or an agent thereof shall at the expense of the
Servicer begin a process for soliciting bids in connection with an auction of the Home Equity
Loans. The Indenture Trustee shall provide the Servicer written notice of such auction at least ten
(10) Business Days prior to the date bids must be received in such auction (the “Mandatory Auction
Date”). The auction shall be conducted as follows:

     (b) The Indenture Trustee or an agent thereof shall at the expense of the Servicer solicit new
bids and, if more than one bid is received, the Indenture Trustee or an agent thereof shall at the
expense of the Servicer solicit and resolicit new bids from all participating bidders until only
one bid remains or the remaining bidders decline to resubmit bids. The Indenture Trustee or an
agent thereof shall at the expense of the Servicer accept the highest of such remaining bids if it
is equal to or in excess of the Mandatory Redemption Price. If the highest of such remaining bids
is less than the Mandatory Redemption Price, then the Indenture Trustee shall neither accept such
bid nor consummate such sale unless the Holders of 662/3% of the aggregate principal amount of each
Class of Notes Outstanding consent within 10 Business Days from the date that notice of such bid is
distributed to such Holders.

     (c) If the first auction conducted by the Indenture Trustee does not produce any bid at least
equal to the Mandatory Redemption Price, then the Indenture Trustee or an agent thereof shall, at
the expense of the Servicer, beginning on the Payment Date occurring approximately three months
after the Mandatory Auction Date for the failed first auction, commence another auction in
accordance with the requirements of this subsection (c). If such second auction does

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not produce any bid at least equal to the Mandatory Redemption Price and the Holders of 662/3%
of the aggregate principal amount of each Class of Notes Outstanding do not consent to a sale at
such price within 10 Business Days from the date that notice of such bid is distributed to such
Holders, then the Indenture Trustee or an agent thereof shall, at the expense of the Servicer,
beginning on the Payment Date occurring approximately three months after the Mandatory Auction Date
for the failed second auction, commence another auction in accordance with the requirements of this
subsection (c), and shall, at the expense of the Servicer, continue to conduct similar auctions
approximately every three months thereafter until the earliest of (i) delivery by the Servicer of
notice of exercise of its repurchase option pursuant to Section 8.01(b) of the Sale and Servicing
Agreement, (ii) receipt by the Indenture Trustee of a bid meeting the conditions specified in the
preceding paragraph or the Holders of 662/3% of the aggregate principal amount of each Class of Notes
Outstanding consent to a sale at such price within 10 Business Days from the date that notice of
such bid is distributed to such Holders, or (iii) the Payment Date on which the Principal Balance
of all the Home Equity Loans is reduced to zero.

     (d) If the Indenture Trustee receives a bid meeting the conditions specified in this Section
10.2, the Servicer and the Issuer shall promptly arrange for the sale of the Home Equity Loans to
the winning bidder, the Indenture Trustee shall execute such agreements and termination statements
as may be reasonably required or appropriate to release the lien of this Indenture with respect to
the Home Equity Loans and Mortgage Files upon payment to the Indenture Trustee, or the
Administrator on behalf of the Indenture Trustee, of the bid purchase price (which purchase price
shall be deposited in the Collection Account) and satisfaction of any other terms of the auction
sale. The Indenture Trustee shall cooperate with the Servicer and the Issuer in the sale of the
Home Equity Loans, shall deliver to the winning bidder the related Mortgage Files in the Indenture
Trustee’s possession (if any), and shall take such other actions as the winning bidder may
reasonably request to effect the transfer of the Home Equity Loans.

     (e) Notice of any termination, specifying the Payment Date (which shall be a date that would
otherwise be a Payment Date) upon which the Noteholders may surrender their Notes to the
Administrator for payment of the final distribution and cancellation (the “Redemption
Date”), shall be given promptly by the Administrator (upon receipt of written directions from
the Servicer, if the Servicer is exercising its right to repurchase the Home Equity Loans, or the
Indenture Trustee, such instructions being given not later than the first day of the month
preceding the month of such final distribution) by letter to the Noteholders, such notice to be
mailed not earlier than the 15th day and not later than the 25th day of the month next preceding
the month of such Redemption Date and specifying (i) the Redemption Date upon which final
distribution of the Notes will be made upon presentation and surrender of Notes at the office or
agency of the Administrator therein designated, (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Payment Date is not applicable,
distributions being made only upon presentation and surrender of the Notes at the office or agency
of the Administrator therein specified. On the Redemption Date specified pursuant to this
subsection (e), the Administrator shall distribute all amounts on deposit in the Collection Account
in accordance with the priorities listed in Section 5.01 of the Sale and Servicing Agreement.

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     (f) Upon presentation and surrender of the Notes, to the extent of funds available therefor,
the Administrator shall cause to be distributed to the Holders of the Notes on the Redemption Date,
in proportion to the Percentage Interests of their respective Notes and to the extent that funds
are available for such purpose, an amount equal to the amount required to be distributed to
Noteholders pursuant to Section 5.01 of the Sale and Servicing Agreement for such Payment Date.

     (g) In the event that all of the Noteholders shall not surrender their Notes for final payment
and cancellation on or before such Redemption Date, the Administrator shall promptly following such
date cause all funds in the Collection Account not distributed in final payment to Noteholders, to
be withdrawn therefrom and credited to the remaining Noteholders by depositing such funds in a
separate escrow account for the benefit of such Noteholders, and the Servicer (if the Servicer has
exercised its right to purchase the Home Equity Loans) or the Administrator (in any other case)
shall give a second written notice to the remaining Noteholders to surrender their Notes for
cancellation and receive the final payment with respect thereto. If within nine months after the
second notice all the Notes shall not have been surrendered for cancellation, the holder of the
Ownership Interest will be entitled to all remaining unclaimed funds and other assets which remain
subject hereto, and the Administrator upon transfer of such funds at the written request of the
Transferor shall be discharged of any responsibility for such funds and the Noteholders shall look
to the holder of the Ownership Interest for payment.

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ARTICLE XI

MISCELLANEOUS

     SECTION 11.1 Compliance Certificates and Opinions, etc.

     (a) Upon any application or request by the Issuer made to the Indenture Trustee to take any
action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (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, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of
certified public accountants meeting the applicable requirements of this Section 11.1, 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; and
	 
	 	(4)	 	a statement as to whether, in the opinion of each such signatory, such
condition or covenant has been complied with.

     (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 (except in the case of the release of Home Equity Loans in
accordance with the Sale and Servicing Agreement), the Issuer shall, in addition to any obligation
imposed in Section 11.1(a) herein 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 of such deposit) to the Issuer of the Collateral or other
property or securities to be so deposited.

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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 (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent Certificate
as to the same matters, if the fair value to the Issuer of the Collateral, other property or
securities to be so deposited and of all other such Collateral, other property or 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 aggregate Note Principal Amount of the Notes, but such a
certificate need not be furnished with respect to any securities so deposited, if the fair value
thereof to the Issuer as set forth in the related Officer’s Certificate is less than either (A)
$25,000 or (B) one percent of the aggregate Note Principal Amount 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 of
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 aggregate Note Principal Amount 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 current aggregate Note Principal Amount of the Notes.

     SECTION 11.2 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 such officer’s 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 Servicer, the Transferor or the Issuer,
stating that

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the information with respect to such factual matters is in the possession of the Servicer, the
Transferor 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 hereof.

     SECTION 11.3 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 6.1 hereof) conclusive in favor of the Indenture Trustee, the Administrator and
the Issuer, if made in the manner provided in this Section 11.3.

     (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 Register.

     (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.

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     SECTION 11.4 Notices. Any request, demand, authorization, direction, instruction,
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:

     (a) the Indenture Trustee by any Noteholder, the Issuer, the Owner Trustee or the
Administrator shall be sufficient for every purpose hereunder if made, given, furnished or filed in
writing (including via facsimile) to or with the Indenture Trustee at its Corporate Trust Office,

     (b) the Administrator by any Noteholder, the Issuer, the Owner Trustee or the Indenture
Trustee shall be sufficient for every purpose hereunder if made, given, furnished or filed in
writing (including via facsimile) to or with the Administrator at its Corporate Trust Office,

     (c) the Owner Trustee by any Noteholder, the Issuer, the Administrator or the Indenture
Trustee shall be sufficient for every purchase hereunder if made, given, furnished or filed in
writing (including via facsimile) and mailed first-class, postage prepaid to the Owner Trustee
addressed to: U.S. Bank Trust National Association, 209 S. LaSalle Street, Chicago, Illinois 60604,
Attention: Corporate Trust Services, Reference: HSBC Home Equity Loan Trust (USA) 2006-1 (facsimile
number (312) 325-8905), or

     (d) the Issuer by the Indenture Trustee, the Administrator or any Noteholder shall be
sufficient for every purpose hereunder if in writing (including via facsimile) and mailed
first-class, postage prepaid to the Issuer addressed to: HSBC Home Equity Loan Trust (USA) 2006-1,
in care of the Owner Trustee at U.S. Bank Trust National Association, 209 S. LaSalle Street,
Chicago, Illinois 60604, Attention: Corporate Trust Services, Reference: HSBC Home Equity Loan
Trust (USA) 2006-1 (facsimile number (312) 325-8905), and to the Servicer addressed to: 2700
Sanders Road, Prospect Heights, Illinois 60070 (facsimile number (847) 205-7538), or at any other
address previously furnished in writing to the Indenture Trustee by the Issuer.

     Each of the Issuer, the Owner Trustee and the Administrator shall promptly transmit to the
Indenture Trustee any notice received by it from the Noteholders.

     Notices required to be given to the Rating Agencies by the Indenture Trustee, the
Administrator or the Owner Trustee shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, to (i) in the case of Fitch, at the following address: One State
Street Plaza, new York New York 10007, (ii) in the case of Moody’s, at the following address: 99
Church Street, New York, New York 10007, and (iii) in the case of Standard & Poor’s at the
following address: 55 Water Street, New York, New York 10041; or as to each of the foregoing, at
such other address as shall be designated by written notice to the other parties.

     SECTION 11.5 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 his address as it appears on the Note Register, not later

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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.

     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 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.

     SECTION 11.6 [Reserved].

     SECTION 11.7 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 Sections 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 11.8 Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not affect the
construction hereof.

     SECTION 11.9 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. All agreements of the Administrator in this Indenture shall bind its successors and
agents.

     SECTION 11.10 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.

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     SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in the Notes,
express or implied, shall give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders and any other party secured hereunder, and any other Person with an
ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.

     SECTION 11.12 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 11.13 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.

     SECTION 11.14 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 11.15 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 (which may be counsel to 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 11.16 Trust Obligation. No recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee, the Administrator or the
Indenture Trustee on the Notes or under this Indenture or the other Transaction Documents or any
certificate or other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee, the Administrator 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, the Administrator or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee, the Administrator or the Indenture Trustee or of any successor or assign of the Indenture
Trustee, the Administrator or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee, the Administrator
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

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or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement.

     SECTION 11.17 No Petition. The Indenture Trustee and the Administrator, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they
will not at any time institute against the Transferor (and any wholly-owned subsidiary thereof),
the Depositor, the Servicer or the Issuer, or join in any institution against the Transferor (and
any wholly-owned subsidiary thereof), the Depositor, the Servicer 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 Transaction Documents.

     SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior notice, it
will permit any representative of the Indenture Trustee, 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 and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and except to the extent
that the Indenture Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.

     SECTION 11.19 Inconsistencies with the Sale and Servicing Agreement. In the event
certain provisions of this Indenture conflict with the provisions of the Sale and Servicing
Agreement, the parties hereto agree that the provisions of the Sale and Servicing Agreement shall
be controlling.

     SECTION 11.20 Third-Party Beneficiaries. This Indenture will inure to the benefit of
and be binding upon the parties hereto, the Noteholders, the Note Owners and their respective
successors and permitted assigns. Except as otherwise provided in this Indenture, no other person
will have any right or obligation hereunder.

     SECTION 11.21 Limited Recourse.

     (a) Notwithstanding anything in this Indenture to the contrary, the Notes constitute limited
recourse obligations and are limited in recourse to the assets of the Trust. The Indenture
Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note, agree that
recourse for the Notes is limited to the assets of the Trust and, if the assets of the Trust shall
prove to be insufficient to pay amounts due under the Notes, the Noteholders shall have no claim
against the assets of the Depositor other than those which have been conveyed to the Trust.

     (b) If, notwithstanding paragraph (a) above, the Noteholders are deemed to have any interest
in any asset of the Depositor other than the Depositor’s interest in the assets of the Trust,

71

 

including any interest in assets of the Depositor, or any assets sold by the Depositor to
another trustee pursuant to a separate pooling and servicing agreement, sale and servicing
agreement or similar agreement, pledged to secure debt obligations of the Depositor other than the
Notes, the Indenture Trustee, by entering into this Indenture, and each Noteholder, by accepting a
Note, agree that any such interest is subordinate to the claims of the holders of any such debt
obligations, and the Indenture Trustee and the Noteholders shall have no rights in such assets
until such debt obligations are indefeasibly paid in full. The agreement of the Indenture Trustee
and the Noteholders pursuant to this Section 11.20 is intended to constitute a subordination
agreement for the purposes of Section 510(a) of title 11 of the United States Code, 11 U.S.C. §§
101 et seq. (the “Bankruptcy Code”).

     SECTION 11.22 Limitation on Voting of Preferred Stock. The Indenture Trustee shall
hold all of the Preferred Stock in trust, for the benefit of the Noteholders, and shall vote such
stock only pursuant to the written instructions of the Majority Noteholder; provided that:

     (i) any direction provided by the Majority Noteholder shall not be in conflict with any
rule of law or with any of the Transaction Documents; and

     (ii) the Trust and the Indenture Trustee may take any other action deemed proper by the
Trust or the Indenture Trustee that is not inconsistent with any direction;

and provided further, however, that the Trust or the Indenture Trustee need not take any action
that it determines might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to an action.

     The Indenture Trustee shall not permit a transfer of any of the Preferred Stock to HSBC
Finance or any of its Affiliates. Concurrently with any transfer of the Home Equity Loans to the
Servicer or sale in connection with any auction pursuant to Section 8.01(b) or 8.01(c),
respectively, of the Sale and Servicing Agreement, the Indenture Trustee shall transfer to the
Depositor for cancellation all shares of Preferred Stock held by the Indenture Trustee.

     SECTION 11.23 Limitation of Liability. It is understood by each party hereto that
the sole recourse of each party hereto in respect of the obligations of the Issuer hereunder and
under the other Transaction Documents to which it is a party shall be to the Trust Estate. In
addition, U.S. Bank Trust National Association is executing this Indenture and other Transaction
Documents to which the Issuer is a party solely in its capacity as Owner Trustee under the Trust
Agreement and not in its individual capacity and in no case shall U.S. Bank Trust National
Association (or any Person acting as successor Owner Trustee under the Trust Agreement) be
personally liable for or on account of any of the statements, representations, warranties,
covenants or obligations stated to be those of the Issuer hereunder or thereunder, all such
liability, if any, being expressly waived by the parties hereto and any person claiming by, through
or under such party.

     SECTION 11.24 [Reserved].

72

 

     SECTION 11.25 Entire Agreement. This Indenture sets forth the entire agreement
between the parties with respect to the subject matter hereof and thereof, and this Indenture
supersedes and replaces any agreement or understanding that may have existed between the parties
prior to the date hereof in respect of such subject matter.

73

 

     IN WITNESS WHEREOF, the Issuer, the Owner Trustee, the Indenture Trustee and the Administrator
have caused this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.

	 	 	 	 	 
	 	 	HSBC HOME EQUITY LOAN TRUST (USA) 2006-1
	 
	 	 	 	 
	 

	 	By:
	 	U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Patricia M. Child
	 

	 	 	 	 
	 

	 	Name:
	 	Patricia M. Child
	 

	 	Title:
	 	Vice President
	 
	 	 	 	 
	 	 	U.S. BANK TRUST NATIONAL ASSOCIATION,

as Owner Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Patricia M. Child
	 

	 	 	 	 
	 

	 	Name:
	 	Patricia M. Child
	 

	 	Title:
	 	Vice President
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

as Indenture Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Keith Richardson
	 

	 	 	 	 
	 

	 	Name:
	 	Keith Richardson
	 

	 	Title:
	 	Attorney-in-Fact
	 
	 	 	 	 
	 	 	HSBC BANK USA, NATIONAL ASSOCIATION

as Administrator
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Elena Zheng
	 

	 	 	 	 
	 

	 	Name:
	 	Elena Zheng
	 

	 	Title:
	 	Assistant Vice President
	 

	 	 	 	HSBC Bank USA, N.A.

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF ILLINOIS

	 	 	)	 	 	 	 	 
	 

	 	 	)	SS. 	 	
	 	 
	COUNTY OF COOK

	 	 	)	 	 	 	 	 

     BEFORE ME, the undersigned authority, a Notary Public in and for said county and state, on
this day personally appeared Patricia M. Child, known to me to be the person and officer whose name
is subscribed to the foregoing instrument and acknowledged to me that the same was the act of U.S.
BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee on
behalf of HSBC HOME EQUITY LOAN TRUST (USA) 2006-1, a Delaware statutory trust, and that such
person executed the same as the act of said statutory trust for the purpose and consideration
therein expressed, and in the capacities therein stated.

     GIVEN
UNDER MY HAND AND SEAL OF OFFICE, this ___ day of July 2006.

	 	 	 	 	 
	 	 	 
	 	                                              /s/ Melissa A. Rosal
 	 
	 	Notary Public in and for the State of Illinois 	 
	 	 	 
	 

(Seal)

My commission expires:

10-20-2007

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF ILLINOIS

	 	 	)	 	 	 	 	 
	 

	 	 	)	SS. 	 	
	 	 
	COUNTY OF COOK

	 	 	)	 	 	 	 	 

     BEFORE ME, the undersigned authority, a Notary Public in and for said county and state, on
this day personally appeared Keith R. Richardson, known to me to be the person and officer whose
name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a association organized under the laws of the United
States, and that such person executed the same as the act of said entity for the purpose and
consideration therein stated.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 7th day of July 2006.

	 	 	 	 	 
	 	 	 
	 	                                              /s/ Diane Mary Wuertz
 	 
	 	Notary Public in and for the State of                      	 
	 	 	 
	 

(Seal)

My commission expires:

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF New York

	 	 	)	 	 	 	 	 
	 

	 	 	)	SS. 	 	
	 	 
	COUNTY OF New York

	 	 	)	 	 	 	 	 

     BEFORE ME, the undersigned authority, a Notary Public in and for said county and state, on
this day personally appeared Elena Zheng, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and acknowledged to me that the same was the act of HSBC
BANK USA, NATIONAL ASSOCIATION, national banking association, and that such person executed the
same as the act of said entity for the purpose and consideration therein stated.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 12th  day of July 2006.

	 	 	 	 	 
	 	 	 
	 	                                              /s/ Ecliff C. Jackman
 	 
	 	Notary Public in and for the state of                      	 
	 	 	 
	 

(Seal)

My commission expires:

 

 

SCHEDULE A

PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

     Each of the Issuer and the Owner Trustee hereby represents, warrants, and covenants to the
Indenture Trustee as to itself, the Depositor and the Sellers as follows on the Closing Date and on
each Payment Date thereafter:

General

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

     2. The Home Equity Loans constitute “general intangibles” or “instruments” within the meaning
of the applicable UCC.

     3. The Collection Account and all subaccounts thereof constitute either a deposit account or a
securities account.

     4. To the extent that payments and collections received or made with respect to the Home
Equity Loans constitute securities entitlements, such payments and collections have been and will
have been credited to the Collection Account. The securities intermediary for the Collection
Account has agreed to treat all assets credited to the Collection Account as “financial assets”
within the meaning of the applicable UCC.

Creation

     5. The Issuer and the Owner Trustee own and have good and marketable title to the Collateral
free and clear of any Lien, claim or encumbrance of any Person, excepting only liens for taxes,
assessments or similar governmental charges or levies incurred in the ordinary course of business
that are not yet due and payable or as to which any applicable grace period shall not have expired,
or that are being contested in good faith by proper proceedings and for which adequate reserves
have been established, but only so long as foreclosure with respect to such a lien is not imminent
and the use and value of the property to which the Lien attaches is not impaired during the
pendency of such proceeding.

     6. (i) The Depositor has received all consents and approvals to the sale of the Home Equity
Loans to the Issuer required by the terms of the Home Equity Loans that constitute instruments and
(ii) each of the Originating Sellers (as defined in the Transfer Agreement) has received all
consents and approvals to the sale of the Transferred Assets to the Issuer required by the terms of
the Home Equity Loans or Transferred Assets that constitute instruments.

     7. To the extent the Collection Account or subaccounts thereof constitute securities
entitlements, certificated securities or uncertificated securities, the Issuer has received all
consents and approvals required to transfer to the Indenture Trustee its interest and rights in the
Collection Account hereunder.

A-1

 

Perfection

     8. The Issuer has caused or will have caused, within ten days after the effective date of this
Indenture, the filing of all appropriate financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to perfect the pledge of the Collateral
from the Issuer and the Owner Trustee to the Indenture Trustee and the security interest in the
Collateral granted to the Indenture Trustee under this Indenture.

     9. With respect to the Collection Account and all subaccounts that constitute deposit
accounts, either:

     (i) the Issuer has delivered to the Indenture Trustee a fully-executed agreement pursuant to
which the bank maintaining the deposit accounts has agreed to comply with all instructions
originated by the Indenture Trustee directing disposition of the funds in the Collection Account
without further consent by the Issuer; or

     (ii) the Issuer has taken all steps necessary to cause the Indenture Trustee to become the
account holder of the Collection Account.

     10. With respect to the Collection Account or subaccounts thereof that constitute securities
accounts or securities entitlements, either:

     (i) the Issuer has caused or will have caused, within ten days after the effective date of
this Agreement, 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 the
Collection Account granted by the Issuer to the Indenture Trustee; or

     (ii) the Issuer has delivered to the Indenture Trustee a fully-executed agreement pursuant to
which the securities intermediary has agreed to comply with all instructions originated by the
Indenture Trustee relating to the Collection Account without further consent by the Depositor; or

     (iii) the Issuer has taken all steps necessary to cause the securities intermediary to
identify in its records the Indenture Trustee as the person having a security entitlement against
the securities intermediary in the Collection Account.

Priority

     11. Other than the transfer of the Transferred Assets to the Trust under the Transfer
Agreement, the transfer of the Home Equity Loans to the Depositor under the Home Equity Loan
Purchase Agreement, the transfer of the Home Equity Loans to the Trust pursuant to the Sale and
Servicing Agreement and the security interest granted to the Indenture Trustee pursuant to this
Indenture, none of the Issuer, the Owner Trustee, the Depositor or the Sellers has pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral. None
of the Issuer, the Owner Trustee, the Depositor or the Sellers has authorized the filing of, or are
aware of any financing statements against the Issuer, the Owner Trustee, the Depositor or any of
the Sellers that include a description of collateral covering the Collateral other than any
financing statement relating to the security interest granted to the Indenture Trustee hereunder or
that has been terminated.

A-2

 

     12. The Issuer is not aware of any judgment, ERISA or tax lien filings against the Issuer, the
Owner Trustee, the Depositor or any of the Sellers.

     13. The Sellers have in their possession all original copies of the Mortgage Notes that
constitute or evidence the Home Equity Loans. To the Issuer’s knowledge, none of the instruments
that constitute or evidence the Home Equity Loans has any marks or notations indicating that they
have been pledged, assigned or otherwise conveyed to any Person other than the Issuer. All
financing statements filed or to be filed against the Issuer, the Owner Trustee, the Depositor and
the Sellers in favor of the Indenture Trustee in connection herewith describing the Collateral
contain a statement to the following effect: “A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the Indenture Trustee.”

     14. Neither the Collection Account nor any subaccount thereof is in the name of any person
other than the Issuer or the Indenture Trustee as trustee under the Indenture or in the name of its
nominee, including the Administrator. The Issuer has not consented to the bank at which the
Collection Account is maintained complying with the direction of any person, other than the
Indenture Trustee or the Administrator, with respect to the disposition of funds credited to the
Collection Account.

     15. Survival of Perfection Representations. Notwithstanding any other provision of
this Agreement or any other transaction document, the Perfection Representations contained in this
Schedule shall be continuing, and remain in full force and effect (notwithstanding any replacement
of the Servicer or Indenture Trustee or termination of the Servicer’s or Indenture Trustee’s rights
to act as such) until such time as all obligations under this Agreement have been finally and fully
paid and performed.

     16. No Waiver. The parties to this Agreement (i) shall not, without obtaining a
confirmation of the then-current ratings of the Notes, waive any of the Perfection Representations,
and (ii) shall provide the Rating Agencies with prompt written notice of any breach of the
Perfection Representations, and shall not, without obtaining a confirmation of the then-current
ratings of the Notes (as determined after any adjustment or withdrawal of the ratings following
notice of such breach), waive a breach of any of the Perfection Representations.

     17. Servicer to Maintain Perfection and Priority. The Issuer shall cause the
Servicer, in order to evidence the interests of the Depositor, the Issuer, the Owner Trustee and
the Indenture Trustee under the Sale and Servicing Agreement, to take such action, or execute and
deliver such instruments (other than effecting a Filing (as defined below), unless such Filing is
effected in accordance with this paragraph) as may be necessary or advisable (including, without
limitation, such actions as are requested by the Indenture Trustee) to maintain and perfect, as a
first priority interest, the Indenture Trustee’s security interest in the Collateral. The Issuer
shall cause the Servicer to, from time to time and within the time limits established by law,
prepare and present to the Indenture Trustee for the Indenture Trustee to authorize (based in
reliance on the Opinion of Counsel hereinafter provided for) the Servicer to file, all financing
statements, amendments, continuations, initial financing statements in lieu of a continuation
statement, terminations, partial terminations, releases or partial releases, or any other filings
necessary or advisable to continue, maintain and perfect the Indenture Trustee’s security interest
in the Collateral as a first-priority interest (each a “Filing”). The Issuer shall cause the
Servicer to

A-3

 

present each such Filing to the Indenture Trustee together with (x) an Opinion of Counsel to
the effect that such Filing is (i) consistent with grant of the security interest to the Trust
pursuant to Section 2.01 of the Sale and Servicing Agreement and the grant of the security interest
to the Indenture Trustee pursuant to this Indenture, (ii) satisfies all requirements and conditions
to such Filing in this Agreement and (iii) satisfies the requirements for a Filing of such type
under the Uniform Commercial Code in the applicable jurisdiction (or if the Uniform Commercial Code
does not apply, the applicable statute governing the perfection of security interests), and (y) a
form of authorization for the Indenture Trustee’s signature. Upon receipt of such Opinion of
Counsel and form of authorization, the Indenture Trustee shall promptly authorize in writing the
Servicer to, and the Issuer shall cause the Servicer to, effect such Filing under the Uniform
Commercial Code without the signature of the Depositor, the Owner Trustee or the Trust or the
Indenture Trustee where allowed by applicable law. Notwithstanding anything else in the
transaction documents to the contrary, the Servicer shall not have any authority to effect a Filing
without obtaining written authorization from the Indenture Trustee.

A-4

 

SCHEDULE B

HOME EQUITY LOAN SCHEDULE

[On file with the Indenture Trustee]

B-1

 

EXHIBIT A

FORM OF NOTES

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), TO THE ISSUER 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 PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.

	 	 	 
	No. [A-1][A-2][M-1][M-2]-[ ]

	 	CUSIP NO. [•]
	 
	Initial Note Principal Amount of this Class:

	 	Initial Note Principal Amount of this Note:
	$[•]

	 	$[•]

HSBC HOME EQUITY LOAN TRUST (USA) 2006-1

CLOSED-END HOME EQUITY LOAN ASSET BACKED NOTES, SERIES 2006-1

CLASS [A-1][A-2][M-1][M-2]

     HSBC HOME EQUITY LOAN TRUST (USA) 2006-1, a statutory trust organized and existing under the
laws of the State of Delaware (herein referred to as the “Trust”), for value received, hereby
promises to pay to CEDE & CO., or registered assigns, the principal sum of $                     payable on
each Payment Date in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is the Initial Note Principal Amount of this Note and the denominator of which
is the Initial Note Principal Amount of this Class by (ii) the aggregate amount, if any, payable
from the Collection Account in respect of principal on the Note pursuant to Section 5.01 of the
Sale and Servicing Agreement dated as of July 12, 2006 (the “Sale and Servicing Agreement”), among
the Trust, HSBC Home Equity Loan Corporation I, as Depositor (the “Depositor”), HSBC Finance
Corporation, as Servicer (“HSBC Finance”), JPMorgan Chase Bank, National Association, as Indenture
Trustee (the “Indenture Trustee”) and HSBC Bank USA, National Association, as Administrator (the
“Administrator”); provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earliest to occur of (i) the Payment Date occurring in January 2036 (the
“Final Scheduled Payment Date”), (ii) the Redemption Date or (iii) the date on which an Event of
Default under the Indenture dated July 12, 2006, between the Trust, the Indenture Trustee and the

A-1

 

Administrator shall have occurred and be continuing, if the Indenture Trustee or the Holders
of Notes representing not less than 662/3% of the Outstanding Amount of the Notes have declared the
Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture.
Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also
contains rules as to construction that shall be applicable herein.

     The Trust will pay interest on this Note at the rate per annum described in the Sale and
Servicing Agreement with respect to the Note on the Note Principal Amount of this Note outstanding
on the preceding Payment Date (after giving effect to all payments of principal made on the
preceding Payment Date) on each Payment Date until the principal of this Note is paid or made
available for payment in full. Interest on this Note will accrue for each Payment Date during the
period from and including the preceding Payment Date to the day immediately preceding such Payment
Date (or, in the case of the first Payment Date, the period from and including the Closing Date to
the day immediately preceding the first Payment Date) (each, an “Accrual Period”). Interest will
be computed on the basis of the actual number of days in each Accrual Period and a 360-day year.
Such principal of and interest on this Note shall be paid in the manner specified on the reverse
hereof.

     The principal of and interest on this Note are payable 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 Trust with respect to this Note shall be applied first to interest
due and payable on this Note as provided above and then to the unpaid principal of this Note.

     Reference is made to the further provisions of this Note set forth on the reverse hereof,
which shall have the same effect as though fully set forth on the face of this Note.

     Unless the certificate of authentication hereon has been executed by the Administrator whose
name appears below by manual signature, this Note shall not be entitled to any benefit under the
Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

A-2

 

     IN WITNESS WHEREOF, the Trust has caused this instrument to be signed, manually or in
facsimile, by its Authorized Officer, as of the date set forth below.

Date: July 12, 2006

	 	 	 	 	 
	 	 	HSBC HOME EQUITY LOAN TRUST (USA) 2006-1
	 
	 

	 	By:
	 	U.S. Bank Trust National Association,
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement
	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	          Authorized Signatory

ADMINISTRATOR’S CERTIFICATE OF AUTHENTICATION

     This is one of the Class [A-1][A-2][M-1][M-2] Notes designated above and referred to in the
within-mentioned Indenture.

Date: July 12, 2006

	 	 	 	 	 
	 	 	HSBC BANK USA, NATIONAL ASSOCIATION,
	 
	 	 	not in its individual
capacity but solely as Administrator
	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	          Authorized Signatory

A-3

 

(REVERSE OF NOTE)

     This Note is one of a duly authorized issue of Notes of the Trust, designated as Closed-End
Home Equity Loan Asset Backed Notes, Series 2006-1, all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Trust, the Owner Trustee, the Indenture
Trustee, the Administrator and the Holders of the Notes. The Notes are subject to all terms of the
Indenture.

     The Notes are and will be secured by the collateral pledged as security therefor as provided
in the Indenture.

     Principal of the Notes will be payable on each Payment Date in an amount described on the face
hereof. “Payment Date” means the 20th day of each month, or, if any such date is not a
Business Day, the next succeeding Business Day, commencing in July 2006.

     As described above, the entire unpaid principal amount of this Note shall be due and payable
on the earlier of the Final Scheduled Payment Date and the Redemption Date. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default under the Indenture shall have occurred and be continuing and the
Indenture Trustee, upon the prior written direction of the Holders of Notes representing not less
than
662/3% of the Outstanding Amount of the Notes, shall have declared the Notes to be immediately
due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on
the Notes shall be made pro rata to the Holders of the Notes entitled thereto.

     Payments of interest on this Note due and payable on each Payment Date, together with the
related installment of principal, if any, to the extent not in full payment of this Note, shall be
made by wire transfer of immediately available funds to, or by check or money order mailed to the
Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, or upon written request by a
Noteholder delivered to the Administrator at least five Business Days prior to such Record Date, by
wire transfer (but only if such Noteholder is the Depository or such Noteholder owns of record one
or more Notes having principal denominations aggregating at least $1,000,000) or by such other
means of payment as the Noteholder and the Administrator shall agree. Such checks or money orders
shall be mailed to the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be binding upon all
future Holders of this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then remaining unpaid principal
amount of this Note on a Payment Date, then the Administrator, in the name of and on behalf of the
Trust and in accordance with the terms of the Indenture, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and payable shall be
payable only upon

A-4

 

presentation and surrender of this Note at the Administrator’s Corporate Trust Office or at
the office of the Administrator’s agent appointed for such purposes located in New York, New York.

     As provided in the Sale and Servicing Agreement, the Notes may be redeemed in whole, but not
in part, at the option of the Servicer, on any Payment Date after the Payment Date on which the
Note Principal Amount of the Notes is less than or equal to 15% of the aggregate Initial Note
Principal Amount of the Notes after giving effect to all payments on such Payment Date.

     As provided in the Indenture, if the full amount of principal and interest then due on the
Notes is not paid by the Payment Date in June 2016, the Indenture Trustee or an agent thereof will
begin an auction process for the sale of the remaining Home Equity Loans. If the Indenture Trustee
receives a bid meeting the conditions specified in the Indenture, the remaining Home Equity Loans
will be sold and the Trust will use the proceeds of such sale to redeem the Notes.

     As provided in the Indenture and subject to certain limitations set forth therein, the
transfer of this Note may be registered on the Note Register upon surrender of this Note for
registration of transfer at the office or agency designated by the Trust pursuant to the Indenture,
duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar duly executed by, the Holder hereof or such Holder’s attorney duly authorized in
writing, with such signature guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or participation in the
Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee program”
as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Trust may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any such registration
of transfer or exchange.

     Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a
beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Trust, the Owner Trustee, the Administrator or
the Indenture Trustee on the Notes or under the Indenture or under the Transaction Documents or any
certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee,
the Administrator or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Trust or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee, the Administrator or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Trust, the Owner Trustee, the Administrator or
the Indenture Trustee or of any successor or assign of the Indenture Trustee, the Administrator or
the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed
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.

A-5

 

     Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a
beneficial interest in a Note, covenants and agrees that such Noteholder or Note Owner will not at
any time institute against the Transferor (and any wholly-owned subsidiary thereof), the Depositor,
the Servicer or the Trust, or join in any institution against the Transferor (and any wholly-owned
subsidiary thereof), the Depositor, the Servicer or the Trust 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 Transaction Documents.

     Each Person that acquires a Note shall be required to represent, or in the case of a
Book-Entry Note, will be deemed to represent by its acceptance of the Note, that (i) it is not, and
is not acquiring the Note on behalf of or with “plan assets” (as determined under Department of
Labor Regulation § 2510.3-101 or otherwise) of an employee benefit plan or other plan that is
subject to Title I of ERISA or Section 4975 of the Code or any substantially similar federal, state
or local law (“Similar Law”), or (ii) its acquisition and holding of the Note are eligible for
relief under Prohibited Transaction Class Exemption (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE
95-60, PTCE 96-23 or a similar exemption, or in the case of a plan subject to Similar Law, will not
result in a nonexempt violation of such Similar Law.

     The Trust has entered into the Indenture and this Note is issued with the intention that, for
federal, state and local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Trust secured by the Trust Estate. Each Noteholder, by acceptance of a Note
(and each Note Owner by acceptance of a beneficial interest in a Note), agrees to treat the Notes
for all purposes as indebtedness of the Trust.

     Prior to the due presentment for registration of transfer of this Note, the Trust, the
Administrator, the Indenture Trustee, the Note Registrar and any agent of the Trust, the
Administrator, the Indenture Trustee or the Note Registrar may treat the Person in whose name this
Note (as of the day of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none
of the Trust, the Administrator, the Indenture Trustee, the Note Registrar or any such agent 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 Trust and the rights of the Holders of the
Notes under the Indenture at any time by the Trust with the consent of the Majority Noteholder.
The Indenture also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of all the Notes, to
waive compliance by the Trust with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note
(or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any 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
this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the Notes issued
thereunder.

A-6

 

     The term “Trust” as used in this Note includes any successor to the Trust under the Indenture.

     The Notes are issuable only in registered form in denominations as provided in the Indenture,
subject to certain limitations therein set forth.

     This Note and the 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 and thereunder shall be determined in accordance with such laws.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Trust, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the coin or currency
herein prescribed.

     Anything herein to the contrary notwithstanding, except as expressly provided in the
Transaction Documents, none of the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Trust, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Transaction Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Trust for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.

A-7

 

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:                                                             

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

 

(name and address 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:          

                                        */

 

*/ NOTICE: The signature to this assignment must correspond with the name of the registered owner
as it appears on the face of the within Note in every particular, without alteration, enlargement
or any change whatever. Such signature must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.

A-8

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