<Page>
XL CAPITAL ASSURANCE INC.,
as Insurer,
INDYMAC BANK, F.S.B.
as Seller and Servicer,
INDYMAC MBS, INC.,
as Depositor,
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,
SERIES 2006-H3
as Issuing Entity
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee
INSURANCE AND INDEMNITY AGREEMENT
INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,
SERIES 2006-H3,
HOME EQUITY MORTGAGE LOAN ASSET-BACKED NOTES, SERIES 2006-H3
Dated as of September 29, 2006
<Page>
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and
shall not be
deemed to be part of this Insurance Agreement. All capitalized
terms used in
this Insurance Agreement and not otherwise defined shall have
meanings set forth
in Article I of this Insurance Agreement.)
<TABLE>
<CAPTION>
Page
<S>
<C>
ARTICLE I
DEFINITIONS........................................................
3
Section 1.01.
Defined
Terms.............................................. 3
Section 1.02.
Other Definitional
Provisions.............................. 7
ARTICLE II REPRESENTATIONS, WARRANTIES AND
COVENANTS......................... 7
Section 2.01.
Representations and
Warranties............................. 7
Section 2.02.
Affirmative
Covenants...................................... 15
Section 2.03.
Negative
Covenants......................................... 22
Section 2.04.
Representations,
Warranties and Covenants of the Insurer... 23
ARTICLE III THE POLICY;
REIMBURSEMENT........................................ 27
Section 3.01.
Issuance of the
Policy..................................... 27
Section 3.02.
Payment of Fees and
Premium................................ 28
Section 3.03.
Reimbursement
Obligation................................... 29
Section 3.04.
Indemnification............................................
30
Section 3.05.
Payment
Procedure.......................................... 33
Section 3.06.
Subrogation................................................
34
Section 3.07.
Deductions.................................................
34
ARTICLE IV FURTHER
AGREEMENTS................................................
34
Section 4.01.
Effective Date; Term
of the Insurance Agreement............ 34
Section 4.02.
Waiver of
Rights........................................... 35
Section 4.03.
Obligations
Absolute....................................... 35
Section 4.04.
Assignments;
Reinsurance; Third-Party Rights............... 36
Section 4.05.
Liability of the
Insurer................................... 37
ARTICLE V DEFAULTS AND
REMEDIES.............................................. 38
Section 5.01.
Defaults...................................................
38
Section 5.02.
Remedies; No Remedy
Exclusive.............................. 39
Section 5.03.
Waivers....................................................
40
ARTICLE VI
MISCELLANEOUS.....................................................
40
Section 6.01.
Third-Party
Beneficiary.................................... 40
Section 6.02.
Amendments,
Etc............................................ 41
Section 6.03.
Notices....................................................
41
Section 6.04.
Severability...............................................
42
Section 6.05.
Governing
Law.............................................. 42
Section 6.06.
Consent to
Jurisdiction.................................... 42
Section 6.07.
Consent of the
Insurer..................................... 43
Section 6.08.
Counterparts...............................................
43
Section 6.09.
Headings...................................................
43
Section 6.10.
Trial by Jury
Waived....................................... 43
Section 6.11.
Limited
Liability.......................................... 44
Section 6.12.
Limitation of Owner
Trustee Liability...................... 44
Section 6.13.
Entire
Agreement........................................... 44
Section 6.14.
No
Partnership.............................................
44
Section 6.15.
No
Petition................................................
45
</TABLE>
- 1 -
<Page>
This
INSURANCE AND INDEMNITY AGREEMENT (as amended, modified or
supplemented from time to time, this "Insurance Agreement"), dated
as of
September 29, 2006, is by and among XL CAPITAL ASSURANCE INC., as
Insurer,
INDYMAC BANK, F.S.B. ("IndyMac"), as Seller and Servicer, INDYMAC
MBS, INC., as
Depositor, INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,
SERIES 2006-H3
(the "Issuing Entity" or the "Trust") and DEUTSCHE BANK NATIONAL
TRUST COMPANY,
as Indenture Trustee with respect to the IndyMac Home Equity
Mortgage Loan
Asset-Backed Trust, Series 2006-H3, Home Equity Mortgage Loan
Asset-Backed
Notes, Series 2006-H3 (the "Notes").
W I T N E S S E T H :
WHEREAS,
pursuant to the terms of that certain Mortgage Loan Purchase
Agreement, dated as of September 29, 2006 (as the same may be
amended, modified
or supplemented from time to time, the "Mortgage Loan Purchase
Agreement"), by
and between the Seller and the Depositor, the Seller has
transferred and
assigned to the Depositor certain adjustable rate, first lien and
second lien
revolving home equity line of credit loans (the "Mortgage
Loans");
WHEREAS,
the Depositor has transferred and assigned its entire interest
in
the Mortgage Loans to the Indenture Trustee pursuant to that
certain Sale and
Servicing Agreement, dated as of September 14, 2006 (as the same
may be amended,
modified or supplemented from time to time as set forth therein,
the "Sale and
Servicing Agreement"), by and among the Seller and Servicer, the
Depositor, the
Trust and the Indenture Trustee, for the benefit of the Noteholders
and the
Insurer;
WHEREAS,
an Amended and Restated Trust Agreement, dated as of September
29, 2006, by and among the Depositor, the Owner Trustee and the
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 Issuing Entity and the issuance of certain certificates
representing
undivided beneficial ownership interests in the Trust (the
"Certificates");
WHEREAS,
an Indenture, dated as of September 29, 2006, by and between
the
Trust 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 Notes, representing indebtedness
of the Trust;
WHEREAS,
the Notes will be secured by all of the Issuing Entity's right,
title and interest in the Mortgage Loans and certain other accounts
and funds;
WHEREAS,
the Insurer has agreed to issue the Policy, as provided in
Article III of this Insurance Agreement, pursuant to which it will
agree to pay
in favor of the Indenture Trustee for the benefit of the Holders of
the Class A
Notes (as defined herein), certain payments in respect of the Class
A Notes;
WHEREAS,
the Insurer shall be paid a Premium for the Policy as set forth
herein; and
WHEREAS,
each of IndyMac and the Depositor has undertaken certain
obligations in consideration for the Insurer's issuance of the
Policy;
- 2 -
<Page>
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section
1.01. Defined Terms.
Unless the
context clearly requires otherwise, all capitalized terms used
but not defined herein shall have the respective meanings assigned
to them in
the Policy or, if not defined therein, in the Sale and Servicing
Agreement or
the Indenture. For purposes of this Insurance Agreement, the
following terms
shall have the following meanings:
"1119
Parties" means each of IndyMac Bank, F.S.B., IndyMac MBS, Inc.,
the
Issuing Entity, Deutsche Bank National Trust Company, each of the
Underwriters,
and Wilmington Trust Company.
"Access
Trigger Event" means the occurrence of any Default, Rapid
Amortization Event, Event of Servicer Termination, Insurance
Agreement Event of
Default, Trigger Event or event which with notice and/or the
passage of time
would become an Event of Servicer Termination or an Insurance
Agreement Event of
Default, which event has not been waived or cured, or any reduction
of any
servicer rating assigned to the Servicer by Moody's or S&P as
of the Closing
Date.
"Certificates" has the meaning given such term in the Recitals
section of
this Insurance Agreement.
"Class A
Notes" means the IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H3, Home Equity Mortgage Loan Asset-Backed
Notes, Series
2006-H3, Class A Notes.
"Closing
Date" means September 29, 2006.
"Cut-off
Date" means the close of business on September 14, 2006.
"Data
Tape" has the meaning assigned to such term in Section
2.02(a)(iv)(1) of this Insurance Agreement.
"Default"
means any Event of Default or any event or circumstance that,
with the giving of notice or the lapse of time or both, would
result in an Event
of Default.
"Depositor" means IndyMac MBS, Inc., a Delaware corporation, or
any
successor thereto.
"Documents" has the meaning given such term in Section 2.01(xi) of
this
Insurance Agreement.
- 3 -
<Page>
"Event of
Default" means any event of default specified in Section 5.01
of
this Insurance Agreement.
"Final
Offering Document" means the Prospectus, dated June 24, 2006,
as
supplemented by the prospectus supplement, dated September 27,
2006, in respect
of the Class A Notes.
"Financial
Statements" means, with respect to IndyMac, (i) the
consolidated statements of financial condition as of June 30, 2006,
December 31,
2005, and December 31, 2004, and the statements of operations,
stockholders'
equity and cash flows for each of the years in the three-year
period ended
December 31, 2005, and the notes thereto and (ii) its unaudited
six-month
statements of financial condition as of June 30, 2006 and June 30,
2005.
"Holder"
has the meanings given such term in 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.
"Indemnification Agreement" means the Indemnification Agreement,
dated as
of September 27, 2006, among the Insurer, IndyMac and the
Underwriters.
"Indenture" has the meaning given such term in the Recitals section
of
this Insurance Agreement.
"Insurance
Agreement" has the meaning given such term in the Recitals
section of this Insurance Agreement.
"Insurer"
means XL Capital Assurance Inc., or any successor thereto, as
issuer of the Policy.
"Insurer
Financial Statements" has the meaning given such term in
Section
2.04(j) of this Insurance Agreement.
"Insurer
Information" means the information in the Preliminary Offering
Document and the Final Offering Document regarding the Insurer,
which consists
solely of the information set forth under the caption "The Insurer
and The
Policy" and the financial statements of the Insurer and XL
financial Assurance
Ltd. ("XLFA") as of December 31, 2005 and December 31, 2004 and for
each of the
years in the three-year period ended December 31, 2005 as provided
to the
Depositor for inclusion in the Offering Documents or incorporated
therein by
reference or specifically referred to therein, and the unaudited
financial
statements of the Insurer and XLFA for the three-month and
six-month periods
ended June 30, 2006 and June 30, 2005 as provided to the Depositor
for inclusion
in the Preliminary Offering Document or incorporated therein by
reference or
specifically referred to therein.
- 4 -
<Page>
"Investment Company Act" means the Investment Company Act of
1940,
including, unless the context otherwise requires, the rules and
regulations
thereunder, as amended from time to time.
"Issuing
Entity" means IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H3.
"Late
Payment Rate" means the lesser of (a) the greater of (i) the
per
annum rate of publicly announced from time to time by Citibank,
N.A. as its
"prime rate" (any change in such rate of interest to be effective
on the date
such change is announced by Citibank, N.A.), plus 2% per annum, and
(ii) the
then applicable highest rate of interest on the Class A 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
for any
Payment Date shall be computed on the basis of the actual number of
days elapsed
over a year of 360 days.
"Material
Adverse Change" means, in respect of any Person, a material
adverse change in (i) the ability of such Person to perform its
obligations
under any of the Operative Documents or (ii) the business,
management, financial
condition, results of operations, assets or properties of such
Person.
References to a "Material Adverse Change" herein which do not refer
to a
particular Person mean a Material Adverse Change with regard to the
Seller, the
Servicer, the Depositor or the Issuing Entity.
"Moody's"
means Moody's Investors Service, Inc., and any successor
thereto.
"Mortgage
Loan Purchase Agreement" has the meaning given such term in the
Recitals section of this Insurance Agreement.
"Mortgage
Loans" means the mortgage loans included in the Trust Fund.
"Notes"
has the meaning given such term in the Recitals section of this
Insurance Agreement.
"Offering
Documents" means any of the Preliminary Offering Document, the
Final Offering Document (each as further supplemented by any
subsequent
amendment or supplement thereto), and any other offering document
in respect of
the Class A Notes.
"Operative
Documents" means this Insurance Agreement, the Notes, the
Mortgage Loan Purchase Agreement, the Sale and Servicing Agreement,
the
Custodial Agreement, the Trust Agreement and the Indenture and each
other
document contemplated by any of the foregoing to which the
Depositor, the
Issuing Entity, the Indenture Trustee or IndyMac is a party.
"Person"
means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust,
partnership or
other organization or entity (whether governmental or private).
"Policy"
means the Financial Guaranty Insurance Policy, No. CA03295A,
together with all endorsements thereto, issued by the Insurer in
favor of the
Indenture Trustee, for the benefit of the Holders of the Class A
Notes.
- 5 -
<Page>
"Preliminary Offering Document" means the free writing prospectus,
dated
September 25, 2006, in respect of the Class A Notes.
"Premium"
means the premium payable in accordance with the Insurance
Agreement, which shall be payable as "Premium Amounts" pursuant as
the Premium
Letter and payable in accordance with the Indenture.
"Premium
Letter" means the letter agreement among the Insurer, the
Indenture Trustee, IndyMac and the Depositor dated the date hereof
in respect of
the Premium payable in consideration of the issuance of the
Policy.
"Prospectus Supplement" means the portion of the Final Offering
Document
that is the Prospectus Supplement, dated September 27, 2006.
"Registration Statement" means the registration statement on Form
S-3 (No.
333-132042), including the prospectus, relating to the Class A
Notes, at the
time it became effective.
"Regulation AB" has the meaning assigned to such term in the Sale
and
Servicing Agreement.
"S&P"
means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.
"Sale and
Servicing Agreement" has the meaning given such term in the
Recitals section of this Insurance Agreement.
"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.
"Seller"
means IndyMac, in its capacity as seller under the Mortgage
Loan
Purchase Agreement.
"Transaction"
means the transactions contemplated by the Operative
Documents, including the transactions described in the Offering
Documents.
"Trust
Agreement" has the meaning assigned to such term in the
Recitals
section of this Insurance Agreement.
"Trust
Fund" has the meaning given such term in the Sale and Servicing
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.
- 6 -
<Page>
"Underwriter Information" has the meaning assigned to such term in
the
Indemnification Agreement.
"Underwriters" means Lehman Brothers Inc., IndyMac Securities
Corporation,
Bear, Stearns & Co., Inc., Credit Suisse Securities (USA) LLC
and Goldman Sachs
& Co.
"Underwriting Agreement" means the Underwriting Agreement, dated
September
27, 2006, among the Underwriters, IndyMac and the Depositor with
respect to the
Class A Notes, as amended, modified or supplemented from time to
time.
Section
1.02. Other Definitional Provisions.
The words
"hereof," "herein" and "hereunder" and words of similar import
when used in this Insurance Agreement shall refer to this Insurance
Agreement as
a whole and not to any particular provision of this Insurance
Agreement.
Section, subsection, Schedule and Exhibit references are to this
Insurance
Agreement unless otherwise specified. The meanings given to terms
defined herein
shall be equally applicable to both the singular and plural forms
of such terms.
The words "include" and "including" shall be deemed to be followed
by the phrase
"without limitation."
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section
2.01. Representations and Warranties.
(a)
Representations and Warranties of IndyMac. IndyMac, in its capacity
as
the Seller and the Servicer, represents and warrants as of the
Closing Date as
follows:
(i) Due Organization and Qualification. IndyMac is a federal
savings
bank
organized under the laws of the United States, and is duly
organized,
validly
existing and in good standing under the laws of the United
States.
It is, or will become,
duly qualified to do business, is, or will be, in
good
standing and has obtained, or will obtain, all necessary
consents,
licenses,
permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as
currently
conducted
and as described in the Offering Documents and the performance
of its
obligations under the Operative 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 Operative Document unenforceable in
any
material
respect or would have a material adverse effect upon the
Transaction.
(ii) Power and Authority. It has all necessary corporate or
other
power and
authority to conduct its business as currently conducted and as
described
in the Offering Documents, to execute and deliver, and to
perform
its obligations under, the Operative Documents to which it is a
party and to
consummate the Transaction.
(iii) Due Authorization. The execution, delivery and performance
of
the
Operative Documents by it have been duly authorized by all
necessary
corporate
or other action and does not require any additional approvals
or
consents,
or other action by or
- 7 -
<Page>
any notice
to or filing with any Person, including any governmental entity
or any of
its stockholders or other owners, which have not previously
been
obtained
or given by it.
(iv) Noncontravention. The execution and delivery by it of the
Operative
Documents to which it is a party, the consummation of the
Transaction and the satisfaction of the terms and conditions of
the
Operative
Documents do not and will not:
(1) conflict
with or result in any breach or violation of
any provision of its organizational documents or any
law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in
effect having applicability to it or any of its material
properties, including regulations issued by any
administrative agency or other governmental authority
having supervisory powers over it, which conflict,
breach or violation reasonably could be expected to
result in a Material Adverse Change;
(2) constitute a
default by it 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 it is a party or
by which any of its properties is or may be bound or
affected, which default, acceleration or breach
reasonably could be expected to result in a Material
Adverse Change; or
(3) result in or
require the creation of any lien upon or in
respect of any of its assets, which lien reasonably
could be expected to result in a Material Adverse
Change, other than any lien created by the Operative
Documents.
(v) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or
administrative
agency or
arbitrator against or affecting it or any of its subsidiaries,
any of its
properties or rights or any of its subsidiaries or any of the
Mortgage
Loans pending or, to its knowledge after reasonable inquiry,
threatened, which, in any case, if decided adversely to it or any
of its
subsidiaries could result in a Material Adverse Change with respect
to it.
(vi) Valid and Binding Obligations. The Operative Documents to
which
it is a
party, when executed and delivered by it and the other parties
thereto,
will constitute its legal, valid and binding obligations,
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
Class A
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. It will not at any time in the future deny that
the
Operative Documents to which it is a party constitute its legal,
valid
and
binding obligations.
- 8 -
<Page>
(vii) 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 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 to
normal
year-end adjustments). Since the date of the most recent
Financial
Statements, there has been no Material Adverse Change with respect
to it
and it 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 it.
(viii) 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 it which, if enforced, could result in a Material
Adverse
Change.
(ix) Good Title; Absence of Liens or Security Interest. The
Issuing
Entity is
the owner of, and has good and marketable title to, all of the
Collateral
free and clear of all liens and has full right, power and
lawful
authority to assign, transfer and pledge the Collateral (and
any
documents
which are a part thereof) and all such substitutions therefor
and
additions thereto delivered under the Indenture.
(x) Indenture Trustee's Security Interest. On the Closing Date,
the
Indenture
Trustee shall have a first priority reflected security interest
in the
Mortgage Loans and all other Collateral.
(xi) Taxes. It 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, except
with
respect to
any failures to file or pay that, individually or in the
aggregate,
would not result in a Material Adverse Change with respect to
it. Any
taxes, fees and other governmental charges payable by it in
connection
with the transaction, the execution and delivery of the
Operative
Documents to which it is a party and the issuance of the Class
A
Notes have
been paid or shall have been paid at or prior to the Closing
Date if
such taxes, fees or other governmental changes were due on or
prior to
the Closing Date.
(xii) Accuracy of Information. Neither the Operative Documents,
the
Offering
Documents nor other material information relating to the
Mortgage
Loans or
IndyMac or IndyMac's operations (collectively, the
"Documents"),
as
amended, supplemented or superseded, furnished to the Insurer
in
writing or
in electronic form by it in connection with the Transaction,
including,
without limitation, the Data Tape contains any statement of a
material
fact which was untrue or misleading in any material respect
when
made. It
does not have any knowledge of any circumstances that could
reasonably
be expected to cause the Documents to include a statement of
material
fact which is untrue or misleading when made. Since the
furnishing
of the Documents, there has been no change nor any development
or event
involving a prospective change known to it that would render
any
- 9 -
<Page>
of the
Documents untrue or misleading in any material respect. Without
limiting
the generality of the foregoing, the information in the Data
Tape
with
respect to each Mortgage Loan is true and correct as of the
Cut-off
Date.
(xiii) Compliance With Securities Laws. The offering and sale of
the
Class A
Notes complies in all material respects with all requirements
of
law,
including the registration requirements of applicable
securities
laws.
Without limiting the foregoing, the Offering Documents do not
contain
any untrue statement of a material fact and do not 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 Insurer
Information, the representations, warranties and covenants of the
Insurer
or the
Underwriter Information. The offering of the Class A Notes has
not
been and
will not be in violation of the Securities Act or any other
federal or
state securities laws. The Indenture has been qualified under
the Trust
Indenture Act of 1939, as amended. Based upon advice of legal
counsel,
the Indenture is not required to be qualified under the Trust
Indenture
Act and the Depositor is not required to be registered as an
"investment company" under the Investment Company Act.
(xiv) Operative Documents. Each of its representations and
warranties
contained in the applicable Operative Documents is true and
correct in
all material respects and it 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
available
to the Insurer hereunder for any breach of a representation and
warranty
of the Seller in Section 3.02 of the Mortgage Loan Purchase
Agreement,
the Seller in Section 2.03 of the Sale and Servicing Agreement,
and the
remedy with respect to any defective Mortgage Loan or any
Mortgage
Loan as to
which there has been a breach of a representation or warranty
under
Section 3.01 of the Mortgage Loan Purchase Agreement and
Section
2.04 of
the Sale and Servicing Agreement shall be limited to the
remedies
specified
in the related Operative Document.
(xv) Solvency; Fraudulent Conveyance. It is solvent and will not
be
rendered
insolvent by the Transaction, is adequately capitalized in
light
of its
anticipated business activities and, after giving effect to the
Transaction, it will not be left with an unreasonably small amount
of
capital
with which to engage in the ordinary course of its business,
and
it does
not intend to incur, nor does it believe that it has incurred,
debts
beyond its ability to pay as they mature. It does not
contemplate
the
commencement of insolvency, liquidation or consolidation
proceedings
or the
appointment of a receiver, liquidator, conservator, trustee or
similar
official in respect of it or any of its assets. The amount of
consideration being received by it upon the transfer, sale, pledge
or
assignment
of the Mortgage Loans or the Class A Notes, as applicable, and
the amount
of consideration received by it upon the transfer, sale, pledge
or
assignment of the Mortgage Loans, pursuant to the terms and
conditions
of the
related Operative Documents constitutes reasonably equivalent
value
and fair
consideration for the Mortgage Loans or the Class A Notes, as
applicable. It is not transferring or pledging the Mortgage Loans
or the
Class A
Notes, as applicable, as provided in the Operative Documents,
with
any intent
to hinder, delay or defraud any of its creditors.
- 10 -
<Page>
(xvi) Primary Beneficiary of Trust or Qualifying SPE Status.
With
respect to
the Trust, IndyMac Bank F.S.B. is either the primary
beneficiary of the
Trust (as the term is defined in FASB Interpretation
No. 46
issued by the Financial Accounting Standards Board) or the Trust
is
a
Qualifying SPE (as such term is defined in Statement of
Financial
Accounting
Standards No. 140 issued by the Financial Accounting Standards
Board).
(xvii) Compliance With Anti-Money Laundering Laws. No practice,
procedure
or policy employed or proposed to be employed by it in the
conduct of
its business violates any anti-money laundering law or
regulation
(including without limitation, the USA PATRIOT Act, Public Law
No. 107-56
(2001), and regulations promulgated thereunder) applicable to
it.
(b)
Representations and Warranties of the Depositor.
(i) Due Organization and Qualification. The Depositor is a
Delaware
corporation, is duly organized, validly existing and in good
standing
under the
laws of the State 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 consents, licenses, permits,
charters,
registrations and approvals (together, "approvals") necessary
for the
conduct of its business as currently conducted and as described
in
the
Offering Documents and the performance of its obligations under
the
Operative
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
Operative Document to which it is a party unenforceable in any
material
respect or would have a material adverse effect upon the
Transaction.
(ii) Power and Authority. The Depositor has all necessary
corporate
or other
power and authority to conduct its business as currently
conducted
and as described in the Offering Documents, to execute and
deliver,
and to perform its obligations under, the Operative Documents
to
which it
is a party and to consummate the Transaction.
(iii) Due Authorization. The execution, delivery and performance
of
the
Operative Documents by the Depositor have been duly authorized by
all
necessary
corporate or other action and does not require any additional
approvals
or consents, or other action by or any notice to or filing with
any
Person, including any governmental entity or any of the
stockholders
or other
owners of the Depositor, which have not previously been
obtained
or given
by the Depositor.
(iv) Noncontravention. The execution and delivery by the
Depositor
of the
Operative Documents to which it is a party, the consummation of
the
Transaction and the satisfaction of the terms and conditions of
the
Operative
Documents do not and will not:
(1) 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
- 11 -
<Page>
issued by any administrative agency or other
governmental authority having supervisory powers over
the Depositor, which conflict, breach or violation
reasonably could be expected to result in a Material
Adverse Change;
(2) 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
reasonably could be expected to result in a Material
Adverse Change; or
(3) result in or
require the creation of any lien upon or in
respect of any assets of the Depositor, which lien
reasonably could be expected to result in a Material
Adverse Change, except as otherwise contemplated by the
Operative Documents.
(v) 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 Class A Notes pending or, to the
Depositor's
knowledge,
threatened, which, in any case, if decided adversely to the
Depositor
or any such subsidiary could result in a Material Adverse
Change
with
respect to the Depositor.
(vi) Valid and Binding Obligations. The Operative Documents to
which
it is a
party, when executed and delivered by the Depositor and the
other
parties
thereto, 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. The Class A 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. The
Depositor
will not
at any time in the future deny that the Operative Documents to
which it
is a party constitute the legal, valid and binding obligations
of
the
Depositor.
(vii) Accuracy of Information. None of the Operative Documents
contains
any statement of a material fact with respect to the Depositor
which was
untrue or misleading in any material respect when made. With
respect to
information relating to the Depositor contained in the
Operative
Documents, there has been no change nor any development or
event
involving
a prospective change known to the Depositor that would render
any such
information with respect to the Depositor untrue or misleading
in
any
material respect. There is no fact known to the Depositor which has
a
material
possibility of causing a Material Adverse Change with respect
to
the
Depositor or the Class A Notes.
- 12 -
<Page>
(viii) Compliance With Securities Laws. The offering of the Class
A
Notes
complies in all material respects with all requirements of law,
including
the registration requirements of applicable securities laws.
(ix) Operative Documents. Each of the representations and
warranties
of the
Depositor contained in the applicable Operative Documents is
true
and
correct in all material respects 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.
(x) 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, nor does the
Depositor
believe that it has incurred, debts beyond its ability to pay
as
they
mature. The Depositor does not contemplate the commencement of
insolvency, liquidation or consolidation proceedings or the
appointment of
a
receiver, liquidator, conservator, trustee or similar official
in
respect of
itself or any of its assets. The amount of consideration being
received
by the Depositor upon the sale of the Class A Notes constitutes
reasonably
equivalent value and fair consideration for the Class A Notes.
The
Depositor is not selling the Class A Notes, as provided in the
Underwriting Agreement, with any intent to hinder, delay or defraud
any of
its
creditors.
(xi) Taxes. The Depositor is not delinquent in the filing of
any
federal
and state tax returns that are required to be filed and is not
delinquent
in the payment of any taxes, including any assessments received
by it that
are not being contested in good faith, to the extent that such
taxes have
become due, except with respect to any failures to file or pay
that,
individually or in the aggregate, would not result in a
Material
Adverse
Change with respect to the Depositor. Any taxes, fees and other
governmental charges payable by the Depositor in connection with
the
transaction, the execution and delivery of the Operative Documents
to
which it
is a party and the issuance of the Class A Notes have been paid
or shall
have been paid at or prior to the Closing Date if such taxes,
fees or
other governmental changes were due on or prior to the Closing
Date.
(xii) Compliance With Anti-Money Laundering Laws. No practice,
procedure
or policy employed or proposed to be employed by the Depositor
in the
conduct of its business violates any anti-money laundering law
or
regulation
(including without limitation, the USA PATRIOT Act, Public Law
No. 107-56
(2001), and regulations promulgated thereunder) applicable to
it.
(c) Representations,
Warranties and Covenants of Indenture Trustee. The
Indenture Trustee represents and warrants to, as of the Closing
Date, and
covenants with the other parties hereto as follows:
(i) Due Organization and Qualification. The Indenture Trustee
is
duly
organized, existing and authorized to engage in the business of
banking as
a national bank.
- 13 -
<Page>
(ii) Due Authorization. The Indenture Trustee has full power,
authority
and right to execute, deliver and perform the Operative
Documents
to which it is a party, and has taken all necessary steps to
authorize
the execution, delivery and performance by it of the Operative
Documents
to which it is a party.
(iii) Due Execution. The Operative Documents to which the
Indenture
Trustee is
a party have been duly executed and delivered by the Indenture
Trustee.
(d)
Representations and Warranties of the Issuing Entity. Each of
IndyMac,
the Depositor and the Issuing Entity represents and warrants with
respect to the
Issuing Entity, as of the Closing Date, and covenants with the
other parties
hereto, as follows:
(i) Due Organization and Qualification. The Issuing Entity is a
statutory
trust duly organized, validly existing and in good standing
under the
laws of the State of Delaware. The Issuing Entity is, or will
become,
duly qualified to do business, is, or will be, in good standing
and has
obtained, or will obtain, all necessary consents, licenses,
permits,
charters, registrations and approvals (together, "approvals")
necessary
for the conduct of its business as currently conducted and as
described
in the Offering Documents and the performance of its
obligations
under the
Operative 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
Operative Document to which it is a party unenforceable in any
material
respect or would have a material adverse effect upon the
Transaction.
(ii) Power and Authority. The Issuing Entity has all necessary
power
and
authority to conduct its business as currently conducted and as
described
in the Offering Documents, to execute and deliver, and to
perform
its obligations under, the Operative Documents to which it is a
party and
to consummate the Transaction.
(iii) Due Authorization. The execution, delivery and performance
of
the
Operative Documents by the Issuing Entity have been duly authorized
by
all
necessary action and does not require any additional approvals
or
consents,
or other action by or any notice to or filing with any Person,
including
any governmental entity or any of the beneficial owners of the
Issuing
Entity, which have not previously been obtained by the Issuing
Entity.
(iv) Noncontravention. The execution and delivery by the
Issuing
Entity of
the Operative Documents to which it is a party, the
consummation
of the
Transaction and the satisfaction of the terms and conditions of
the
Operative
Documents do not and will not:
(1) conflict with or result in any
breach or violation of
any provision of the applicable organizational documents
of the Issuing Entity or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to the
Issuing Entity or any of its material properties,
including regulations issued by any administrative
agency or other governmental authority having
supervisory powers over the Issuing Entity;
- 14 -
<Page>
(2) constitute a
default by the Issuing Entity 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 Issuing
Entity is a party or by which any of its properties is
or may be bound or affected, which default, acceleration
or breach reasonably could be expected to result in a
Material Adverse Change; or
(3) result in or
require the creation of any lien upon or in
respect of any assets of the Issuing Entity, which lien
reasonably could be expected to result in a Material
Adverse Change, except as otherwise contemplated by the
Operative Documents.
(v) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or
administrative
agency or
arbitrator against or affecting the Issuing Entity, any
properties
or rights of the Issuing Entity or any of the Class A Notes
pending
or, to the knowledge of IndyMac, the Depositor or the Issuing
Entity,
threatened, which, in any case, if decided adversely to the
Issuing
Entity or any such subsidiary could result in a Material
Adverse
Change
with respect to the Issuing Entity.
(vi) Valid and Binding Obligations. The Operative Documents to
which
it is a
party, when executed and delivered by the Issuing Entity and
the
other
parties thereto, will constitute the legal, valid and binding
obligations of the Issuing Entity, 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 Issuing Entity will not at any
time in
the future deny that the Operative Documents to which it is a
party
constitute the legal, valid and binding obligations of the
Issuing
Entity.
(vii) Operative Documents. Each of the representations and
warranties
of the Issuing Entity contained in the applicable Operative
Documents
is true and correct in all material respects and each of
IndyMac,
the Depositor and the Issuing Entity 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.
Section
2.02. Affirmative Covenants.
(a)
Affirmative Covenants of IndyMac. IndyMac, in its capacity as
the
Seller and the Servicer, hereby agrees that during the term of this
Insurance
Agreement, unless the Insurer shall otherwise expressly consent in
writing:
(i) Compliance With
Agreements and Applicable Laws. It shall comply
within the
grace periods provided therein in all material respects with
the terms
and conditions of and perform its obligations under the
Operative
Documents to which it is a party in all cases in which failure
so to
comply or perform would result in a default
- 15 -
<Page>
thereunder
and shall comply in all material respects with all requirements
of any
law, rule or regulation applicable to it.
(ii) Existence. It and its successors and assigns shall maintain
its
existence
as a federal savings bank and shall at all times continue to be
duly
organized under the laws of the United States and duly qualified
and
duly
authorized (as described in subsections 2.01(a), (b) and (c)
hereof)
and shall
conduct its business in accordance with the terms of its
applicable
organizational documents; provided, however, that nothing
contained herein shall
prohibit the amendment of such documents or the
sale,
merger or consolidation of the Servicer in accordance with the
requirements of the Operative Documents; provided, further, that a
change
its form
of organization or any sale, merger or consolidation of the
Seller
shall not be considered a breach of this clause (b), so long as
such
change, sale, merger or consolidation could not reasonably be
expected
to result in a Material Adverse Change.
(iii) Financial Statements; Accountants' Reports; Other
Information.
It shall
keep or cause to be kept in reasonable detail books and records
of account
of its assets and business relating to the Transaction. It
shall
furnish or cause to be furnished to the Insurer:
(1) Annual
Financial Statements. As soon as available, and
in any event within 105 days after the close of each
fiscal year, its 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 a
certificate relating to such statements equivalent to
the certificate required by Section 2.02(a)(ii).
(2) 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
statements of operation, 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); 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 operation of
IndyMac
and its subsidiaries as of the dates and for the
periods indicated, in accordance with generally accepted
accounting
- 16 -
<Page>
principles
consistently applied (subject to normal
year-end adjustments).
(3) Initial
Report. On or before the Closing Date, a copy of
the magnetic tape or Mortgage Loan Schedule in the form
of an electronic database or spreadsheet file, using
database or spreadsheet software that is readily
available to the Insurer, 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 the Sale
and Servicing Agreement.
(iv) Other Information. IndyMac shall furnish or cause to be
furnished
to the Insurer upon request:
(1) HELOC Data. (A) On or before the Closing Date, a
copy of a magnetic tape (the "Data Tape") setting forth,
as to each HELOC, the information required under the
definition of "Mortgage Loan Schedule" in the Sale and
Servicing Agreement and (B) on each Payment Date, (x)
the complete servicing tape provided by the Servicer to
the Indenture Trustee with respect to such Payment Date,
including updated HELOC data, including changes to
information discovered to have been incorrect, and
including codes indicating the delinquency status of
each HELOC (e.g., less than 30 days delinquent, 30-59
days delinquent, 60-89 days delinquent, 90+ days
delinquent) and identifying Mortgage Loans that are in
foreclosure, Mortgage Loans for which the mortgagor is
the subject of a bankruptcy or other insolvency
proceeding, and Mortgage Loans that have been converted
into real estate owned ("REO"), (y) a report
identifying any Mortgage Loans that were modified,
waived or amended during the prior calendar month and
(z) any other information reasonably requested by the
Insurer.
(2) Other Information. (A) Promptly upon receipt
thereof, copies of all schedules, financial statements
or other similar reports delivered to or by the Seller,
the Servicer, the Issuing Entity or the Depositor
pursuant to the terms of any of the Operative Documents,
(B) promptly upon request, such other data regarding the
Loans, the servicing and administration of the Mortgage
Loans, the Transaction or the IndyMac's financial
condition as the Insurer may reasonably request and (C)
all information required to be furnished by the Seller,
the Servicer, the Issuing Entity or the Depositor to the
Owner Trustee, the Indenture Trustee, the Noteholders or
the Certificateholders simultaneously with the
furnishing thereof to the Owner Trustee, the Indenture
Trustee, the
Noteholders or the Certificateholders, as
the case may be.
- 17 -
<Page>
The
information supplied pursuant to clause (1) above will be in Excel
or
Word format or another form of an electronic data file accessible
by the Insurer
by means of standard application software; provided, however, that
the
information required to be furnished pursuant to Section
2.02(iv)(1)(B) may be
made available on IndyMac's internet website.
(v) Access to Records; Discussions with Officers and Accountants.
It
shall,
upon the reasonable request of the Insurer once each calendar
year
or
otherwise promptly following an Access Trigger Event and on a
semi-annual basis thereafter until such Access Trigger Event is no
longer
in effect,
permit the Insurer or its authorized agents:
(1) to inspect
its books and records and the books and
records of it as they may relate to the Mortgage Loans,
the Class A Notes, its obligations under the Operative
Documents to which it is a party and the Transaction
(including, without limitation, access to information
reasonably required for purposes of complying with FASB
Financial Interpretation No. 46 and SFAS 140; provided
that the Insurer will maintain confidentiality with
respect to such
information in accordance with its
internal policies);
(2) to discuss
its affairs, finances and accounts as they
relate to the Mortgage Loans, the Class A Notes, the
Transaction or, with respect to the Servicer, its
ability to perform its obligations under the Operative
Documents;
(3) to discuss
its affairs, finances and accounts with its
independent accountants; provided, however, that its
officers shall have the right to be present during such
discussions; and
(4) to conduct a
review of the Servicer's practices as a
Servicer through reviews of the Mortgage Loans,
reappraisals of Mortgaged Properties and reviews of
servicing practices.
Such
inspections and discussions shall be conducted during normal
business
hours and shall not unreasonably disrupt the business of the Seller
or the
Servicer, as applicable, and shall be at the cost of the Seller or
the Servicer
up to once in any 12-month period, or more often if an Access
Trigger Event has
occurred, and shall otherwise be at the cost of the Insurer. The
books and
records of the Seller and the Servicer shall be maintained at the
address
designated herein for receipt of notices, unless the Seller or the
Servicer
shall otherwise advise the parties hereto in writing.
(vi) Notice of Material Events. It shall be obligated promptly
to
inform the
Insurer in writing of the occurrence of any of the following
(of which
it obtains actual knowledge):
(1) the submission of any claim or the initiation or
threat of any legal process, litigation or
administrative or judicial investigation, or rule making
or disciplinary proceeding by or against it that (A)
relates to the Mortgage Loans, the Class A
- 18 -
<Page>
Notes, the Transaction or its ability to perform its
obligations under any Operative Documents and would be
required to be disclosed to potential purchasers of the
Class A Notes if the Class A Notes were at the time
being publicly offered or to the IndyMac's shareholders
or (B) could result in a Material Adverse Change, or the
initiation of any proceeding or the promulgation of any
proposed or final rule (but only to the extent it has
actual knowledge thereof) which would likely result in a
Material Adverse Change;
(2) any change in its jurisdiction of organization;
(3) the occurrence of any Default or Event of Default or
any Material Adverse Change;
(4) the commencement of any proceedings by or against it
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 it or any of its assets;
(5) the receipt of notice that (A) it is being placed
under regulatory supervision, (B) any license, permit,
charter, registration or approval materially necessary
for the conduct of its business (including its mortgage
business) is to be, or may be, suspended or revoked or
(C) it is to cease and desist any practice, procedure or
policy employed by it in the conduct of its business
(including its mortgage business), and such suspension,
revocation or cessation may reasonably be expected to
result in a Material Adverse Change; or
(6) the receipt of an order from a bank regulator
requiring it (a) to reorganize or recapitalize itself or
to acquire or be acquired by any other bank or (b) to
restate its financial statements.
(vii) Financing Statements and Further Assurances. IndyMac
shall
cause
to
