INSURANCE AND INDEMNITY AGREEMENT

Exhibit 10.3

EXECUTION COPY

MBIA INSURANCE CORPORATION,

as Insurer,

INDYMAC BANK, F.S.B.,

as Seller and Servicer,

INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,

SERIES 2006-H4,

as Issuer,

INDYMAC ABS, INC.,

as Depositor,

and

DEUTSCHE BANK NATIONAL TRUST COMPANY,

as Indenture Trustee

INSURANCE AND INDEMNITY AGREEMENT

$650,000,000

IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4

Home Equity Mortgage Loan Asset-Backed Notes, Series 2006-H4

Dated as of December 21, 2006

TABLE OF CONTENTS

INSURANCE AND INDEMNITY AGREEMENT

This INSURANCE AND INDEMNITY AGREEMENT (this "Insurance Agreement"), dated as of December 21, 2006 by and among MBIA INSURANCE CORPORATION, as Insurer (the "Insurer"), INDYMAC BANK, F.S.B. ("IndyMac"), as Seller and Servicer, INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST, SERIES 2006-H4 (the "Issuer"), as Issuer, INDYMAC ABS, INC. (the "Depositor"), as Depositor, and DEUTSCHE BANK NATIONAL TRUST COMPANY (the "Indenture Trustee"), as Indenture Trustee.

RECITALS

WHEREAS, IndyMac, as Seller, has sold and assigned its interests to the Depositor, and the Depositor has accepted from IndyMac the sale and assignment of such interests, in the Mortgage Loans pursuant to the Mortgage Loan Purchase Agreement dated as of December 21, 2006 (the "Purchase Agreement"), by and between the Depositor and IndyMac,;

WHEREAS, a Sale and Servicing Agreement dated as of December 12, 2006, by and among IndyMac, as Seller and Servicer, the Issuer, the Depositor, and the Indenture Trustee (as may be amended, modified or supplemented from time to time as set forth therein, the "Sale and Servicing Agreement") provides for sale of the Mortgage Loans by the Depositor to the Issuer and servicing of the Mortgage Loans;

WHEREAS, an Amended and Restated Trust Agreement dated as of December 21, 2006, by and among the Depositor, the Owner Trustee, and Deutsche Bank National Trust Company as Administrator (as may be amended, modified or supplemented from time to time as set forth therein, the "Trust Agreement") provides for, among other things, the formation of the IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4 (the "Issuer" or the "Trust");

WHEREAS, an Indenture dated as of December 21, 2006 (the "Indenture"), by and between the Issuer and the Indenture Trustee (as may be amended, modified or supplemented from time to time as set forth therein, the "Indenture") provides for, among other things, the issuance of the IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4

Home Equity Mortgage Loan Asset-Backed Notes, Series 2006-H4 (the "Notes"), representing indebtedness of the Trust;

WHEREAS, the Notes will be secured by all of the Issuer’s right, title and interest in the Mortgage Loans and certain other accounts and funds;

WHEREAS, the Insurer has issued the Policy, pursuant to which it has agreed to pay in favor of the Indenture Trustee on behalf of the Issuer and for the benefit of the Owners of the Notes certain payments as set forth in the Policy;

WHEREAS, the Insurer shall be paid a Premium as set forth herein; and

WHEREAS, each of IndyMac, the Issuer and the Depositor has undertaken certain obligations in consideration for the Insurer’s issuance of the Policy;

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

ARTICLE I

DEFINITIONS

The terms defined in this Article I shall have the meanings provided herein for all purposes of this Insurance Agreement, unless the context clearly requires otherwise, in both singular and plural form, as appropriate. Unless the context clearly requires otherwise, all capitalized terms used herein and not otherwise defined in this Article I shall have the meanings assigned to them in Appendix A to the Indenture. All words used herein shall be construed to be of such gender or number as the circumstances require. This "Insurance Agreement" shall mean this Insurance Agreement as a whole and as the same may, from time to time hereafter, be amended, supplemented or modified. The words "herein," "hereby," "hereof," "hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to this Insurance Agreement as a whole and not to any particular paragraph, clause or other subdivision hereof, unless otherwise specifically noted.

" Administration Agreement " means the Administration Agreement, dated as of December 21, 2006, among the Issuer, the Administrator, the Owner Trustee and the Depositor, as amended.

" Business Day " means any day other than (a) a Saturday or a Sunday (b) a day on which banking institutions in the States of New York or California or the city in which the Corporate Trust Office or the office of the Insurer is located are required or authorized by law or executive order to be closed.

" Certificates " has the meaning assigned thereto in the Trust Agreement.

" Closing Date " means December 21, 2006.

" Commission " means the Securities and Exchange Commission.

" Default " means any event which results, or which with the giving of notice or the lapse of time or both would result, in an Event of Default.

" Depositor Documents " has the meaning in Section 2.03(i).

" Event of Default " means any event of default specified in Section 5.01 of this Insurance Agreement.

" Financial Statements " means, with respect to IndyMac, the consolidated statements of financial condition and the statements of operations, equity and cash flows and the notes thereto which have been provided to the Insurer.

" Fiscal Agent " means the Fiscal Agent, if any, designated pursuant to the terms of the Policy.

" Incorporation Termination Date " means March 31, 2007 or if, prior to January 31, 2007, the Insurer receives a written notification from the Depositor that no Form 15D will be filed prior to such date with the SEC in respect of the Notes (a "No Form 15D Notice"), the first March 31 to occur thereafter as of which the Insurer shall not have received, on or before January 31 in the same year in which such March 31 occurs, a No Form 15D Notice prior to such date; provided, that if the Annual Report on Form 10-K for the Issuing Entity that was due on or before the Incorporation Termination Date is filed late, it shall be deemed to have been filed prior to the Incorporation Termination Date for purposes of this Insurance Agreement. " Indenture " has the meaning in the Recitals.

" Indenture Trustee " means Deutsche Bank National Trust Company, a national banking association, as Indenture Trustee under the Indenture, and any successor to the Indenture Trustee under the Indenture.

" IndyMac " means IndyMac Bank, F.S.B. as a Seller under the Purchase Agreement and Servicer under the Sale and Servicing Agreement, and any successor thereto under any of these agreements.

"IndyMac Bancorp" means IndyMac Bancorp, Inc. and any successor corporate parent of IndyMac. If IndyMac has no corporate parent, IndyMac Bancorp means IndyMac.

" IndyMac Documents " has the meaning in Section 2.01(j).

" IndyMac Information " has the meaning in Section 3.04(a).

" Insurance Agreement " has the meaning in the initial paragraph hereof.

" Insurer" means MBIA Insurance Corporation or any successor thereto, as the issuer of the Policy.

" Insurer Financial Statements " has the meaning given such term in Section 2.04(j) of this Insurance Agreement.

" Insurer Information " shall have the meaning in Section 2.12 hereof.

" Investment Company Act " means the Investment Company Act of 1940, including, unless the context otherwise requires, the rules and regulations thereunder, as amended.

" Issuer " has the meaning in the Recitals.

" Late Payment Rate " means, for any date of determination, lesser of (a) the greater of (i) the per annum rate of interest as it is publicly announced by Citibank, N.A. at its principal office in New York, New York as its prime rate (any change in such prime rate of interest to be effective on the date such change is announced by Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on the Notes and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates, as determined by the Insurer. The Late Payment Rate shall be applied to the amounts due and owing the Insurer hereunder and computed on the basis of a year of 365 days and calculating the actual number of days elapsed.

In no event shall the Late Payment Rate exceed the maximum rate permissible under any applicable law limiting interest rates.

" Liabilities " shall have the meaning in Section 3.04(a) hereof.

" Material Adverse Change " means, in respect of any Person, a material adverse change in the ability of such Person to perform its obligations under any of the Transaction Documents, including any material adverse change in the business, financial condition, results of operations or properties of such Person on a consolidated basis with its subsidiaries which might have such effect.

" Moody’s " means Moody’s Investors Service, Inc., a Delaware corporation, and any successor thereto, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, "Moody’s" shall be deemed to refer to any other nationally recognized rating agency designated by the Insurer.

" Note " means any one of the Securities designated as a Note, substantially in the form of Exhibit A to the Indenture.

" Offering Document " means the Prospectus dated December 11, 2006, the Free Writing Prospectus dated December 11, 2006, and the Prospectus Supplement dated December 20, 2006, in respect of the Notes (and any amendment or supplement thereto) and any other offering document in respect of the Securities prepared by or on behalf of IndyMac that makes reference to the Policy.

"Owner Trustee" means Wilmington Trust Company, a banking corporation organized and existing under the laws of Delaware, as owner trustee under the Trust Agreement, and any successor thereto under the Trust Agreement.

" Owners " means registered holders of the Notes.

" Person " means an individual, joint stock company, trust, unincorporated association, joint venture, corporation, business or owner trust, limited liability company, partnership or other organization or entity (whether governmental or private).

" Policy " means the Note Guaranty Insurance Policy No. 490190 issued by the Insurer in favor of the Indenture Trustee, for the benefit of the Owners.

" Premium " means the premium payable in accordance with Section 3.02 hereof.

" Premium Letter " means the Premium Letter from the Insurer to IndyMac, the Issuer and the Indenture Trustee dated December 21, 2006.

" Premium Percentage " shall have the meaning ascribed to such term in Section 3.02 hereof.

" Purchase Agreement " has the meaning given such term in the Recitals.

" Registration Statement " means the registration statement on Form S-3, including the form of prospectus, relating to the Notes, as amended or supplemented to the date hereof.

" Regulation AB " has the meaning given to such term in the Sale and Servicing Agreement.

"Sale and Servicing Agreement" has the meaning given to such term in the Recitals.

" Securities " means the Notes and the Certificates.

" Securities Act " means the Securities Act of 1933, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time.

" Securities Exchange Act " means the Securities Exchange Act of 1934, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time.

" S&P " means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized rating agency designated by the Insurer.

" Term of the Insurance Agreement " shall be determined as provided in Section 4.01 hereof.

" Transaction " means the transactions contemplated by the Transaction Documents, including the transactions described in the Offering Document.

" Transaction Documents " means this Insurance Agreement, the Premium Letter, the Indenture, the Sale and Servicing Agreement, the Offering Document, the Securities, the Purchase Agreement, the Underwriting Agreement, the Administration Agreement, and the Indemnification Agreement.

" Trust " means the IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4 created pursuant to the Trust Agreement.

" Trust Indenture Act " means the Trust Indenture Act of 1939, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time.

" Underwriters " means Lehman Brothers Inc., Bear, Stearns & Co. Inc., Credit Suisse Securities (USA) LLC, and IndyMac Securities Corporation.

" Underwriter Information" has the meaning assigned to such term in the Indemnification Agreement.

" Underwriting Agreement " means the Underwriting Agreement between the Depositor, IndyMac Bank, F.S.B., and the Underwriters with respect to the offer and sale of the Notes, as the same may be amended from time to time.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01. Representations and Warranties of IndyMac . IndyMac represents and warrants as of the Closing Date, as follows:

• • (a)    Due Organization and Qualification . IndyMac is a federal savings bank duly organized, validly existing and in good standing under the laws of the United States. IndyMac is, or will become, duly qualified to do business, is, or will be, in good standing and has obtained, or will obtain, all necessary licenses, permits, charters, registrations and approvals (together, "approvals") necessary for the conduct of its business as currently conducted and as described in the Offering Document and the performance of its obligations under the Transaction Documents to which it is a party in each jurisdiction in which the failure to be so qualified or to obtain such approvals would render any Transaction Document to which it is a party unenforceable in any respect or would have a material adverse effect upon the Transaction, the Owners or the Insurer.

    (b)    Power and Authority . IndyMac has all necessary corporate power and authority to conduct its business as currently conducted and as described in the Offering Document, to execute, deliver and perform its obligations under the Transaction Documents to which it is a party and to consummate the Transaction.

    (c)    Due Authorization . The execution, delivery and performance of the Transaction Documents to which it is a party by IndyMac have been duly authorized by all necessary corporate action and do not require any additional approvals or consents of, or other action by or any notice to or filing with, any Person, including, without limitation, any governmental entity or any of the stockholders of IndyMac, which have not previously been obtained or given by IndyMac.

    (d)    Noncontravention . The execution and delivery by IndyMac of the Transaction Documents to which it is a party, the consummation of the Transaction and the satisfaction of the terms and conditions of the Transaction Documents to which it is a party do not and will not:

    • • • (i)           conflict with or result in any breach or violation of any provision of the applicable organizational documents of IndyMac or any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award currently in effect having applicability to IndyMac or any of its material properties, including regulations issued by any administrative agency or other governmental authority having supervisory powers over IndyMac, which conflict, breach or violation might reasonably result in a Material Adverse Change;

          (ii)          constitute a default by IndyMac under, result in the acceleration of any obligation under, or breach any provision of any loan agreement, mortgage, indenture or other agreement or instrument to which IndyMac is a party or by

           

• • • • • which any of its properties is or may be bound or affected, which default, acceleration or breach reasonably could result in a Material Adverse Change; or

          (iii)        result in or require the creation of any lien upon or in respect of any assets of IndyMac, which lien reasonably could result in a Material Adverse Change, other than any lien created by the Transaction Documents.

    (e)    Legal Proceedings . There is no action, proceeding or investigation by or before any court, governmental or administrative agency or arbitrator against or affecting IndyMac or any of its subsidiaries, any properties or rights of IndyMac or any of its subsidiaries or any of the Mortgage Loans pending or, to IndyMac’s knowledge after reasonable inquiry, threatened, which, in any case, if decided adversely to IndyMac or any such subsidiary could reasonably be expected to result in a Material Adverse Change with respect to IndyMac.

    (f)     Valid and Binding Obligations . The Transaction Documents (other than the Securities) to which it is a party, when executed and delivered by IndyMac, will constitute the legal, valid and binding obligations of IndyMac enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equitable principles and public policy considerations as to rights of indemnification for violations of federal securities laws.

    (g)    Financial Statements . The Financial Statements of IndyMac, copies of which have been furnished to the Insurer, (i) are, as of the dates and for the periods referred to therein, complete and correct in all material respects, (ii) present fairly the financial condition and results of operations of IndyMac Bancorp as of the dates and for the periods indicated and (iii) have been prepared in accordance with generally accepted accounting principles consistently applied, except as noted therein (subject as to interim statements to normal year-end adjustments). Since the date of the most recent Financial Statements, there has been no Material Adverse Change in respect of IndyMac Bancorp. Except as disclosed in the Financial Statements, IndyMac is not subject to any contingent liabilities or commitments that, individually or in the aggregate, have a material possibility of causing a Material Adverse Change in respect of IndyMac.

    (h)    Compliance With Law, Etc . No practice, procedure or policy employed, or proposed to be employed, by IndyMac in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to IndyMac that, if enforced, could result in a Material Adverse Change with respect to IndyMac.

    (i)     Taxes . IndyMac has filed prior to the date hereof all federal and state tax returns that are required to be filed and has paid all taxes, including any assessments received by it that are not being contested in good faith, to the extent that such taxes have become due. Any taxes, fees and other governmental charges payable by IndyMac in connection with the Transaction, the execution and delivery of the Transaction Documents to which it is a party and the issuance of the Securities have been paid or

     

• • shall have been paid at or prior to the Closing Date if such taxes, fees or other governmental charges were due on or prior to the Closing Date.

    (j)     Accuracy of Information . Neither the information supplied by IndyMac contained in the Transaction Documents to which it is a party nor other material information relating to the Mortgage Loans, the operations of IndyMac or the financial condition of IndyMac (collectively, the "IndyMac Documents"), as amended, supplemented or superseded, furnished to the Insurer by IndyMac in writing or in electronic form by IndyMac contains any statement of a material fact made by IndyMac which was untrue or misleading in any material respect as of the date reflected therein. IndyMac has no knowledge of any circumstances that could reasonably be expected to cause a Material Adverse Change with respect to IndyMac. Since the furnishing of the IndyMac Documents, there has been no change nor any development or event involving a prospective change known to IndyMac that would render any of the IndyMac Documents untrue or misleading in any material respect as of the Closing Date.

    (k)    Transaction Documents . Each of the representations and warranties of IndyMac contained in the Transaction Documents to which it is a party is true and correct in all material respects as of the date reflected therein, and IndyMac hereby makes each such representation and warranty to, and for the benefit of, the Insurer as if the same were set forth in full herein; provided, however, that the remedy for any breach of a representation and warranty of IndyMac in Section 3.01 of the Purchase Agreement or Section 2.04 of the Sale and Servicing Agreement and the remedy with respect to any defective Mortgage Loan or Mortgage Loan as to which there has been a breach of a representation or warranty under Section 3.01 of the Purchase Agreement and Section 2.04 of the Sale and Servicing Agreement shall be limited to the remedies specified in the related Transaction Document..

    (l)     Solvency; Fraudulent Conveyance . IndyMac is solvent and will not be rendered insolvent by the Transaction and, after giving effect to the Transaction, IndyMac will not be left with an unreasonably small amount of capital with which to engage in the ordinary course of its business, and IndyMac does not intend to incur, or believe that it has incurred, debts beyond its ability to pay as they mature. IndyMac does not contemplate the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of IndyMac or any of its assets. The amount of consideration being received by IndyMac upon the sale of the Mortgage Loans to the Depositor constitutes reasonably equivalent value and fair consideration. IndyMac is not transferring the Mortgage Loans to the Depositor, as provided in the Transaction Documents, with any intent to hinder, delay or defraud any of IndyMac’s creditors.

    (m)  Principal Place of Business . The principal place of business of IndyMac is located in Pasadena, California and IndyMac is a federal savings bank organized under the laws of the United States. "IndyMac Bank, F.S.B." is the correct legal name of IndyMac indicated on the public records of IndyMac’s jurisdiction which shows IndyMac to be organized.

Section 2.02. Representations and Warranties of the Issuer . The Issuer represents and warrants as of the Closing Date as follows:

• • (a)    Due Organization and Qualification . The Issuer is a statutory trust duly organized, validly existing and in good standing under the laws of Delaware. The Issuer is, or will become, duly qualified to do business, is, or will be, in good standing and has obtained, or will obtain, all necessary licenses, permits, charters, registrations and approvals (together, "approvals") necessary for the conduct of its business as currently conducted and as described in the Offering Document and the performance of its obligations under the Transaction Documents to which it is a party in each jurisdiction in which the failure to be so qualified or to obtain such approvals would render any Transaction Document to which it is a party unenforceable in any respect or would have a material adverse effect upon the Transaction.

    (b)    Power and Authority . The Issuer has all necessary power and authority to conduct its business as currently conducted and as described in the Offering Document, to execute, deliver and perform its obligations under the Transaction Documents to which it is a party and to consummate the Transaction.

    (c)    Due Authorization . The execution, delivery and performance by the Issuer of the Transaction Documents to which it is a party by the Issuer have been duly authorized by all necessary action and do not require any additional approvals or consents of, or other action by or any notice to or filing with, any Person, including, without limitation, any governmental entity or any of the beneficial owners of the Issuer, which have not previously been obtained or given by the Issuer.

    (d)    Noncontravention . The execution and delivery by the Issuer of the Transaction Documents to which it is a party, the consummation of the Transaction and the satisfaction of the terms and conditions of the Transaction Documents to which it is a party do not and will not:

    • • • (i)           conflict with or result in any breach or violation of any provision of the applicable organizational documents of the Issuer or any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award currently in effect having applicability to the Issuer or any of its material properties, including regulations issued by any administrative agency or other governmental authority having supervisory powers over the Issuer, which conflict, breach or violation reasonably could result in a Material Adverse Change;

          (ii)          constitute a default by the Issuer under, result in the acceleration of any obligation under, or breach any provision of any loan agreement, mortgage, indenture or other agreement or instrument to which the Issuer is a party or by which any of its properties is or may be bound or affected, which default, acceleration or breach reasonably could result in a Material Adverse Change; or

• • • • • (iii)        result in or require the creation of any lien upon or in respect of any assets of the Issuer, which lien reasonably could result in a Material Adverse Change, other than any lien created by the Transaction Documents.

    (e)    Legal Proceedings . There is no action, proceeding or investigation by or before any court, governmental or administrative agency or arbitrator against or affecting the Issuer, any properties or rights of the Issuer or any of the Mortgage Loans pending or, to the Issuer’s knowledge after reasonable inquiry, threatened, which, in any case, if decided adversely to the Issuer could reasonably be expected to result in a Material Adverse Change with respect to the Issuer.

    (f)     Valid and Binding Obligations . The Transaction Documents (other than the Securities) to which it is a party, when executed and delivered by the Issuer, will constitute the legal, valid and binding obligations of the Issuer, enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equitable principles and public policy considerations as to rights of indemnification for violations of federal securities laws. The Notes, when executed, authenticated and delivered in accordance with the Indenture, will be validly issued and outstanding and entitled to the benefits of the Indenture, and the Certificates, when executed, authenticated and delivered in accordance with the Trust Agreement, will be validly issued and outstanding and entitled to the benefits of the Trust Agreement.

    (g)    Compliance With Law, Etc . No practice, procedure or policy employed, or proposed to be employed, by the Issuer in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to the Issuer that, if enforced, could result in a Material Adverse Change with respect to the Issuer.

    (h)    Taxes . The Issuer has filed prior to the date hereof all federal and state tax returns that are required to be filed and has paid all taxes, including any assessments received by it that are not being contested in good faith, to the extent that such taxes have become due. Any taxes, fees and other governmental charges payable by the Issuer in connection with the Transaction, the execution and delivery of the Transaction Documents to which it is a party and the issuance of the Securities have been paid or shall have been paid at or prior to the Closing Date if such taxes, fees or other governmental charges were due on or prior to the Closing Date.

    (i)     Accuracy of Information . Neither the Transaction Documents to which it is a party nor other material information relating to the Mortgage Loans, the operations of the Issuer or the financial condition of the Issuer (collectively, the "Issuer Documents"), as amended, supplemented or superseded, furnished to the Insurer by the Issuer in writing or in electronic form by the Issuer contains any statement of a material fact by the Issuer which was untrue or misleading in any material respect when made. The Issuer has no knowledge of any circumstances that could reasonably be expected to cause a Material Adverse Change with respect to the Issuer. Since the furnishing of the Issuer Documents, there has been no change nor any development or event involving a prospective change

     

• • known to Issuer that would render any of the Issuer Documents untrue or misleading in any material respect as of the Closing Date.

    (j)     Compliance With Securities Laws . The Offering Document did not, as of the Closing Date, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; provided, however, that no representation is made with respect to the IndyMac Information, the Depositor Information, the Underwriter Information or the Insurer Information. The offer and the sale of the Notes has not been and will not be in violation of the Securities Act or any other federal or state securities laws. Based upon the advice of legal counsel, the Trust Agreement is not required to be qualified under the Trust Indenture Act and the Trust is not required to be registered as an "investment company" under the Investment Company Act. The Issuer will satisfy in all material respects any of the information reporting requirements of the Securities Exchange Act arising out of the Transaction to which it is subject.

    (k)    Transaction Documents . Each of the representations and warranties of the Issuer contained in the Transaction Documents to which it is a party is true and correct in all material respects as of the date reflected therein, and the Issuer hereby makes each such representation and warranty to, and for the benefit of, the Insurer as if the same were set forth in full herein.

    (l)     Solvency; Fraudulent Conveyance . The Issuer is solvent and will not be rendered insolvent by the Transaction and, after giving effect to the Transaction, the Issuer will not be left with an unreasonably small amount of capital with which to engage in the ordinary course of its business, and the Issuer does not intend to incur, or believe that it has incurred, debts beyond its ability to pay as they mature. The Issuer does not contemplate the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of the Issuer or any of its assets. The amount of consideration being received by the Depositor upon the sale of the Securities constitutes reasonably equivalent value and fair consideration for the ownership and/or debt interest evidenced by the Securities. The Issuer is not selling the Securities, as provided in the Transaction Documents, with any intent to hinder, delay or defraud any of the Issuer’s creditors.

    (m)  Principal Place of Business . The principal place of business of the Issuer is located in Wilmington, Delaware, and the Issuer is a statutory trust organized under the laws of the State of Delaware. "IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006 H4" is the correct legal name of the Issuer indicated on the public records of the Issuer’s jurisdiction which shows the Issuer to be organized.

Section 2.03. Representations and Warranties of the Depositor . The Depositor represents and warrants as of the Closing Date as follows:

• • (a)    Due Organization and Qualification . The Depositor is a corporation, duly organized, validly existing and in good standing under the laws of Delaware. The Depositor is, or will become, duly qualified to do business, is, or will be, in good

     

• • standing and has obtained, or will obtain, all necessary licenses, permits, charters, registrations and approvals (together, "approvals") necessary for the conduct of its business as currently conducted and as described in the Offering Document and the performance of its obligations under the Transaction Documents to which it is a party in each jurisdiction in which the failure to be so qualified or to obtain such approvals would render any Transaction Document to which it is a party unenforceable in any respect or would have a material adverse effect upon the Transaction, the Owners or the Insurer.

    (b)    Power and Authority . The Depositor has all necessary corporate power and authority to conduct its business as currently conducted and as described in the Offering Document, to execute, deliver and perform its obligations under the Transaction Documents to which it is a party and to consummate the Transaction.

    (c)    Due Authorization . The execution, delivery and performance of its obligations under the Transaction Documents to which it is a party by the Depositor have been duly authorized by all necessary corporate action and do not require any additional approvals or consents of, or other action by or any notice to or filing with, any Person, including, without limitation, any governmental entity or any of the stockholders of the Depositor, which have not previously been obtained or given by the Depositor.

    (d)    Noncontravention . The execution and delivery by the Depositor of the Transaction Documents to which it is a party, the consummation of the Transaction and the satisfaction of the terms and conditions of the Transaction Documents to which it is a party do not and will not:

    • • • (i)           conflict with or result in any breach or violation of any provision of the applicable organizational documents of the Depositor or any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award currently in effect having applicability to the Depositor or any of its material properties, including regulations issued by any administrative agency or other governmental authority having supervisory powers over the Depositor, which conflict, breach, or violation reasonably could result in a Material Adverse Change;

          (ii)          constitute a default by the Depositor under, result in the acceleration of any obligation under, or breach any provision of any loan agreement, mortgage, indenture or other agreement or instrument to which the Depositor is a party or by which any of its properties is or may be bound or affected, which default, acceleration or breach might reasonably result in a Material Adverse Change; or

          (iii)        result in or require the creation of any lien upon or in respect of any assets of the Depositor, except as contemplated by the Transaction Documents, which lien might reasonably result in a Material Adverse Change.

    (e)    Legal Proceedings . There is no action, proceeding or investigation by or before any court, governmental or administrative agency or arbitrator against or affecting

     

• • the Depositor or any of its subsidiaries, any properties or rights of the Depositor or any of its subsidiaries or any of the Mortgage Loans pending or, to the Depositor’s knowledge after reasonable inquiry, threatened, which, in any case, if decided adversely to the Depositor or any such subsidiary could reasonably be expected to result in a Material Adverse Change with respect to the Depositor.

    (f)     Valid and Binding Obligations . The Transaction Documents (other than the Securities) to which it is a party, when executed and delivered by the Depositor, will constitute the legal, valid and binding obligations of the Depositor, enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equitable principles and public policy considerations as to rights of indemnification for violations of federal securities laws.

    (g)    Compliance With Law, Etc . No practice, procedure or policy employed, or proposed to be employed, by the Depositor in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to the Depositor that, if enforced, could result in a Material Adverse Change with respect to the Depositor.

    (h)    Taxes . The Depositor has filed prior to the date hereof all federal and state tax returns that are required to be filed and has paid all taxes, including any assessments received by it that are not being contested in good faith, to the extent that such taxes have become due. Any taxes, fees and other governmental charges payable by the Depositor in connection with the Transaction, the execution and delivery of the Transaction Documents to which it is a party and the issuance of the Securities have been paid or shall have been paid at or prior to the Closing Date if such taxes, fees or other governmental charges were due on or prior to the Closing Date.

    (i)     Accuracy of Information . Neither the material information supplied by the Depositor contained in the Transaction Documents to which it is a party nor other material information relating to the Initial Mortgage Loans supplied by the Depositor, the operations of the Depositor or the financial condition of the Depositor (collectively, the "Depositor Documents"), as amended, supplemented or superseded, furnished to the Insurer by the Depositor in writing or in electronic form by the Depositor contains any statement of a material fact by the Depositor which was untrue or misleading in any material respect when made. The Depositor has no knowledge of any circumstances that could reasonably be expected to cause a Material Adverse Change with respect to the Depositor. Since the furnishing of the Depositor Documents, there has been no change nor any development or event involving a prospective change known to the Depositor that would render any of the Depositor Documents untrue or misleading in any material respect as of the Closing Date.

    (j)     Reserved.

    (k)     Transaction Documents . Each of the representations and warranties of the Depositor contained in the Transaction Documents to which it is a party is true and correct in all material respects as of the date reflected therein, and the Depositor hereby

     

• • makes each such representation and warranty to, and for the benefit of, the Insurer as if the same were set forth in full herein.

    (l)     Solvency; Fraudulent Conveyance . The Depositor is solvent and will not be rendered insolvent by the Transaction and, after giving effect to the Transaction, the Depositor will not be left with an unreasonably small amount of capital with which to engage in the ordinary course of its business, and the Depositor does not intend to incur, or believe that it has incurred, debts beyond its ability to pay as they mature. The Depositor does not contemplate the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of the Depositor or any of its assets. The Depositor is not transferring the Initial Mortgage Loans to the Trust nor, to the best of the Depositor’s knowledge, is the Trust selling the Securities, as provided in the Transaction Documents, with any intent to hinder, delay or defraud any of the Depositor’s creditors.

    (m)  Principal Place of Business . The principal place of business of the Depositor is located in Pasadena, California, and the Depositor is a corporation organized under the laws of the State of Delaware. "IndyMac ABS, Inc." is the correct legal name of the Depositor indicated on the public records of the Depositor’s jurisdiction which shows the Depositor to be organized.

Section 2.04. Affirmative Covenants of IndyMac . IndyMac hereby agrees that during the Term of the Insurance Agreement, unless the Insurer shall otherwise expressly consent in writing:

• • (a)    Compliance With Agreements and Applicable Laws . IndyMac shall comply in all material respects with the terms and conditions of and perform its obligations under the Transaction Documents to which it is a party in all cases in which the failure to so comply or perform would result in a default thereunder and shall comply with all requirements of any law, rule or regulation applicable to it in all circumstances where non-compliance reasonably could result in a Material Adverse Change. IndyMac will not at any time in the future deny that the Transaction Documents to which it is a party constitute the legal, valid and binding obligations of IndyMac.

    (b)    Corporate Existence . IndyMac and its successors and permitted assigns, shall maintain its corporate existence and shall at all times continue to be duly organized under the laws of its jurisdiction of incorporation and duly qualified and duly authorized (as described in Section 2.01(a), (b) and (c) hereof) and shall conduct its business in accordance with the terms of its applicable organizational documents.

    (c)    Financial Statements; Accountants’ Reports; Other Information . IndyMac shall keep or cause to be kept in reasonable detail books and records of account of its assets and business relating to the Transaction, and shall, as applicable, clearly reflect therein the sale of the Mortgage Loans to the Depositor, the transfer of the Mortgage Loans by the Depositor to the Trust and the sale of the Certificates, respectively, as a sale of the Mortgage Loans by IndyMac to the Depositor, a sale of the Mortgage Loans by the Depositor to the Trust and a sale of the equity interest in the Trust to the holders of the

     

• • Certificates. IndyMac shall furnish or cause to be furnished to the Insurer either by delivery or by publication on IndyMac’s public web site:

    • • • (i)            Annual Financial Statements . As soon as available, and in any event within 105 days after the close of each fiscal year of IndyMac, IndyMac Bancorp’s statement of operations, equity and cash flows for such fiscal year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the preceding fiscal year, prepared in accordance with generally accepted accounting principles consistently applied and accompanied by the audit opinion of IndyMac’s independent accountants (which shall be a nationally recognized independent public accounting firm or otherwise acceptable to the Insurer) and by the certificate specified in Section 2.04(d) hereof.

          (ii)           Quarterly Financial Statements. Within 60 days after the end of each of the first three fiscal quarters in each of its fiscal years, the unaudited consolidated statement of operations, equity and cash flows for the portion of the fiscal year then ended, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the preceding fiscal year, prepared in accordance with generally accepted accounting principles consistently applied (subject to normal year-end adjustments), and each delivery of quarterly financial statements shall be accompanied by a certificate of one (or more) corporate officers stating that the quarterly financial statements are correct in all material respects and present fairly the financial condition and results of operations of IndyMac Bancorp and its subsidiaries as of the dates and for the periods indicated, in accordance with generally accepted accounting principles, consistently applied (subject to normal year-end adjustments).

          (iii)         Initial and Continuing Reports. On or before the Closing Date, IndyMac will provide the Insurer an electronic copy of the Mortgage Loan Schedule to be delivered to the Indenture Trustee on the Closing Date, setting forth, as to each Mortgage Loan, the information required under the definition of "Mortgage Loan Schedule" in Exhibit A to the Indenture.

          (iv)          Certain Information . Upon the reasonable request of the Insurer, IndyMac shall promptly provide copies of any requested proxy statements, financial statements, reports and registration statements which IndyMac files with, or delivers to, the Commission or any national securities exchange.

• • • • • (v)           Other Information . (A) Promptly upon receipt thereof, IndyMac shall provide copies of all schedules, financial statements or other similar reports delivered to or by IndyMac pursuant to the terms of any of the Transaction Documents, including all reports provided to either the Indenture Trustee, any Noteholder or holder of a Certificate pursuant to the Indenture or the Sale and Servicing Agreement, (B) promptly upon request, such other data as the Insurer may reasonably request and (C) all information required to be furnished to the Owner Trustee, the Indenture Trustee, the Noteholders or the holders of the Certificates simultaneously with the furnishing thereof to the Owner Trustee, the Indenture Trustee, the Noteholders or the holders of the Certificates, as the case may be.

    (d)    Compliance Certificate . IndyMac (in its capacity as Servicer) shall deliver to the Insurer, concurrently with the delivery or publication of the financial statements required pursuant to Section 2.04(c)(i) hereof, one or more certificates signed by an officer of IndyMac authorized to execute such certificates on behalf of IndyMac stating that:

    • • • (i)           a review of IndyMac’s performance under the Transaction Documents to which it is a party during such period has been made under such officer’s supervision;

          (ii)          to the best of such officer’s knowledge following reasonable inquiry, no Default or Event of Default has occurred or, if a Default or Event of Default has occurred, specifying the nature thereof and, if IndyMac has a right to cure pursuant to Section 7.01 of the Sale and Servicing Agreement, stating in reasonable detail (including, if applicable, any supporting calculations) the steps, if any, being taken by IndyMac to cure such Default or Event of Default or to otherwise comply with the terms of the agreement to which such Default or Event of Default relates;

          (iii)        the attached financial statements submitted in accordance with Section 2.04(c)(i) hereof, as the case may be, are complete and correct in all material respects and present fairly the financial condition and results of operations of IndyMac as of the dates and for the periods indicated, in accordance with generally accepted accounting principles consistently applied; and

          (iv)         IndyMac, as Servicer, has in full force and effect a fidelity bond (or direct surety bond) and an errors and omissions insurance policy in accordance with the terms and requirements of Section 3.06 of the Sale and Servicing Agreement.

    So long as IndyMac shall continue to act as Servicer, the annual Officer’s Certificate prepared by IndyMac as Servicer pursuant to Section 3.10 of the Sale and Servicing Agreement shall be deemed to satisfy IndyMac’s obligations as imposed by this Section 2.04(d).

• • (e)    Access to Records; Discussions With Officers and Accountants . On an annual basis, or upon the occurrence of a Material Adverse Change, IndyMac shall, upon the reasonable request of the Insurer, permit the Insurer or its authorized agents:

    • • • (i)           to inspect the books and records of IndyMac as they may relate to the Securities, the obligations of IndyMac under the Transaction Documents to which it is a party, and the Transaction;

          (ii)          to discuss the affairs, finances and accounts of IndyMac with the responsible financial officer of IndyMac; and

          (iii)        if the Insurer reasonably believes that a Material Adverse Change may have occurred and with IndyMac’s consent, which consent shall not be unreasonably withheld or delayed, to discuss the affairs, finances and accounts of IndyMac with IndyMac’s independent accountants, provided that an officer of IndyMac shall have the right to be present during such discussions.

    Such inspections and discussions shall be conducted during normal business hours and shall not unreasonably disrupt the business of IndyMac. The books and records of IndyMac shall be maintained at the address of IndyMac designated herein for receipt of notices, unless IndyMac shall otherwise advise the parties hereto in writing.

    (f)     Notice of Material Events . IndyMac shall be obligated (which obligation shall be satisfied if performed by IndyMac or the Issuer) promptly to inform the Insurer in writing of the occurrence of any of the following to the extent any of the following relate to it:

    • • • (i)           the submission of any claim or the initiation or threat of any legal process, litigation or administrative or judicial investigation in any federal, state or local court or before any arbitration board or rule making or disciplinary proceeding by or against IndyMac that (A) would be required to be disclosed to the Commission or to IndyMac’s shareholders or (B) could result in a Material Adverse Change with respect to IndyMac, or the promulgation of any proceeding or any proposed or final rule which would likely result in a Material Adverse Change with respect to IndyMac or any of its subsidiaries;

          (ii)          any change in the location of IndyMac’s principal office or the principal office of any of its subsidiaries, IndyMac’s jurisdiction of organization, legal name as indicated on the public records of IndyMac’s jurisdiction of organization which shows IndyMac to be organized, or any change in the location of IndyMac’s books and records;

          (iii)        the occurrence of any Default or Event of Default or of any Material Adverse Change in respect of IndyMac;

          (iv)         the commencement of any proceedings by or against IndyMac under any applicable bankruptcy, reorganization, liquidation, rehabilitation, insolvency or other similar law now or hereafter in effect or of any proceeding in

           

• • • • • which a receiver, liquidator, conservator, trustee or similar official shall have been, or may be, appointed or requested for IndyMac or any of its assets; or

          (v)          the receipt of notice that (A) IndyMac is being placed under regulatory supervision, (B) any license, permit, charter, registration or approval necessary for the conduct of IndyMac’s business is to be, or may be, suspended or revoked and such prospective or potential suspension or revocation may reasonably be expected to result in a Material Adverse Change with respect to IndyMac, or (C) IndyMac is to cease and desist any practice, procedure or policy employed by IndyMac in the conduct of its business, and such cessation may reasonably be expected to result in a Material Adverse Change with respect to IndyMac.

    (g)    Financing Statements and Further Assurances . IndyMac will cause to be filed all necessary financing statements or other instruments, and any amendments or continuation statements relating thereto, necessary to be kept and filed in such manner and in such places as may be required by law to preserve and protect fully the interest of the Indenture Trustee in the Trust Estate. IndyMac shall, upon the reasonable request of the Insurer, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, within 10 days of such request, such amendments hereto and such further instruments and take such further action as may be reasonably necessary to effectuate the intention, performance and provisions of the Transaction Documents to which it is a party. In addition, IndyMac agrees to cooperate with S&P and Moody’s in connection with any review of the Transaction that may be undertaken by S&P and Moody’s after the date hereof and to provide all information reasonably requested by S&P and Moody’s.

    (h)    Maintenance of Licenses . IndyMac, and any successors thereof, shall maintain or cause to be maintained all licenses, permits, charters and registrations the loss or suspension of which could result in a Material Adverse Change.

    (i)     Disclosure Document . Any Offering Document delivered with respect to the Notes shall clearly disclose that the Policy is not covered by the property/casualty insurance security fund specified in Article 76 of the New York Insurance Law.

    (j)     Servicing of Mortgage Loans . All Mortgage Loans will be serviced in all material respects in compliance with the Sale and Servicing Agreement and the Indenture and IndyMac, as Servicer, agrees that the Sale and Servicing Agreement shall provide that IndyMac’s obligations under this Insurance Agreement shall be binding on any successor servicers thereunder but only to the extent of IndyMac’s obligations as Servicer under the Sale and Servicing Agreement and from the effective time of any such succession.

    (k)    Closing Documents . IndyMac shall provide or cause to be provided to the Insurer an executed original copy of each document executed in connection with the Transaction within 60 days after the Closing Date.

• • (l)     Corporate Formalities. IndyMac shall observe all corporate formalities necessary to preserve its existence under the laws of the United States, including, if and to the extent required by such laws, (i) the obligation to hold annual meetings and (ii) the obligation to prepare and file annual income, franchise and other tax returns.

    (m)  Due Diligence. The Insurer shall have the right, subject to the Insurer’s confidentiality obligations hereunder set forth in Section 2.12(g), so long as any of the Notes remain outstanding, to conduct an ongoing review of IndyMac’s practices as Servicer through reviews of the Mortgage Loans, reappraisals of Mortgaged Properties and reviews of servicing practices. Such ongoing due diligence shall be conducted at the expense of the Insurer and shall be conducted in a reasonable manner convenient to both IndyMac and the Insurer.

Section 2.05. RESERVED

Section 2.06. Affirmative Covenants of the Depositor . The Depositor hereby agrees that during the Term of this Insurance Agreement, unless the Insurer shall otherwise expressly consent in writing:

• • (a)    Compliance With Agreements and Applicable Laws . The Depositor shall comply in all material respects with the terms and conditions of and perform its obligations under the Transaction Documents to which it is a party in all cases in which the failure to so comply or perform would result in a default thereunder and shall comply with all