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
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.)
Page
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
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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;
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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.
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"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.
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"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 ▇▇▇▇▇'▇ 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.
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"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
▇▇▇▇▇▇-▇▇▇▇ 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.
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"Underwriter Information" has the meaning assigned to such term in the
Indemnification Agreement.
"Underwriters" means ▇▇▇▇▇▇ Brothers Inc., IndyMac Securities Corporation,
Bear, ▇▇▇▇▇▇▇ & Co., Inc., Credit Suisse Securities (USA) LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇
& 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
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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.
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(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
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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.
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(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
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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.
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(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.
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(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;
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(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
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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 -
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.
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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 -
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 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. Upon the reasonable request of the Insurer from time
to time, IndyMac shall, and shall exert all reasonable efforts to cause
all other necessary parties to, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, within twenty 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 Operative Documents.
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(viii) Maintenance of Licenses. IndyMac and any of its successors,
and the Depositer and the Issuing Entity has and shall maintain all
licenses, permits, charters and registrations the loss or suspension of
which, or the failure to hold which, could reasonably be expected to
result in a Material Adverse Change.
(ix) Retirement of Class A Notes. The Seller shall instruct the
Indenture Trustee upon a retirement or other payment of all of the Class A
Notes, to surrender the Policy to the Insurer for cancellation.
(x) Rating Agencies. It and any of its successors will 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.
(xi) Servicing of Mortgage Loans. All Mortgage Loans will be
serviced in all material respects in compliance with the Sale and
Servicing Agreement.
(xii) Corporate Formalities. IndyMac shall, and shall cause the
Depositor and the Issuing Entity to, observe all the formalities necessary
to preserve its corporate or trust existence, as applicable, under the
laws of the State of its formation.
(xiii) Incorporation of Covenants. It agrees to comply with its
covenants set forth in the Operative Documents and hereby incorporate such
covenants by reference as if each were set forth herein.
(xiv) Incorporation by Reference. The Depositor shall cause the
Issuing Entity or agents acting on its behalf to respond to Item 7 of each
Form 10-D filing as required pursuant to Regulation AB with respect to the
Class A Notes, that the Issuing Entity is incorporating by reference any
Insurer Financial Statements filed by the Insurer or its parent during the
period covered by such Form 10-D, together with the Commission filing
number of the Insurer and its parent, as applicable.
(xv) Right of Rescission Notices. No later than 45 days after the
Closing Date, IndyMac shall present evidence to the Insurer satisfactory
to the Insurer of the cure of issues concerning missing or defective
notices of rights of rescission reported by the Underwriters' due
diligence service provider, for at least 35 of the Mortgage Loans for
which such issues were reported by such due diligence provider. If IndyMac
fails to present such evidence of cure by such 45th day, and if IndyMac's
long-term unsecured debt rating from S&P or Fitch, Inc. is subsequently
reduced below "BBB-" before the third anniversary of the Cut-off Date,
IndyMac, the Depositor and the Issuing Entity shall permit the Insurer to
perform due diligence on the files for up to 10% of the Mortgage Loans
then remaining in the Trust Fund, at IndyMac's expense. If any such due
diligence uncovers missing or defective right of rescission notices with
respect to 5% or more of the Mortgage Loans so reviewed, IndyMac, the
Depositor and the Issuing Entity shall permit the Insurer to extend its
due diligence review to 100% of the files for the Mortgage Loans then in
the Trust Fund. Any such missing or defective or missing right of
rescission notice shall be deemed to be a breach of a representation and
warranty set forth in Section 3.01 of the Mortgage Loan Purchase Agreement
and in Section 2.04 of
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the Sale and Servicing Agreement and must be cured or repurchased by
IndyMac as described in the Mortgage Loan Purchase Agreement and the Sale
and Servicing Agreement.
(b) 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:
(i) Compliance With Agreements and Applicable Laws. The Depositor
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 and shall comply with
all requirements of any law, rule or regulation applicable to it in all
circumstances where non-compliance reasonably could be expected to result
in a Material Adverse Change. The Depositor will not at any time in the
future deny that the Operative Documents to which it is a party
constitutes its legal, valid and binding obligations.
(ii) Existence. The Depositor and its successors and assigns shall
maintain its corporate existence, and shall at all times continue to be
duly organized under the laws of the State of Delaware and duly qualified
and duly authorized (as described in subsections 2.01(B)(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 Depositor in accordance with the
requirements of the Operative Documents.
(iii) Further Assurances. The Depositor 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
thirty (30) 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 Operative
Documents. In addition, the Depositor agrees to cooperate with S&P and
Moody's in connection with any review of the Transaction which may be
undertaken by S&P and Moody's after the date hereof.
(iv) Closing Documents; Post Closing Matters. The Depositor shall
cause to be delivered within 60 days of the Closing Date two closing sets
to the Insurer and one closing set to its counsel, which closing sets
shall include execution copies of each of the Operative Documents other
than the Class A Notes.
(v) Disclosure Document. It will not use, or distribute to any
Person for use, any information relating to the Insurer unless such
information has been furnished by the Insurer and the use or distribution
of such information has been approved by the Insurer in writing. The
Insurer hereby consents to the inclusion of the information in respect of
the Insurer included as of the date hereof in the Preliminary Offering
Document and the Final offering Document. Any Offering Document delivered
with respect to the Class A
- 21 -
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.
(vi) Compliance With Anti-Money Laundering Laws. The Depositor shall
not employ any practice, procedure or policy in the conduct of its
business that would violate 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.
IndyMac shall use its best efforts to cause the Depositor to observe the
provisions of this Section 2.02.
Section 2.03. Negative Covenants.
(a) Negative Covenants of IndyMac. IndyMac, in its capacity as Seller and
the Servicer, hereby agrees that during the term of this Insurance Agreement,
unless the Insurer shall otherwise expressly consent in writing:
(i) Impairment of Rights. It shall not take any action, or fail to
take any action, if such action or failure to take action may result in a
material adverse change as described in clause (i) of the definition of
Material Adverse Change, nor interfere in any material respect with the
enforcement of any rights of the Insurer under or with respect to any of
the Operative Documents. It shall give the Insurer written notice when any
event, action or, to its knowledge, omission to act, may result in a
material adverse change as described in clause (i) of the definition of
Material Adverse Change, on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such event,
action or omission to act and (ii) promptly prior to the date of
occurrence of such event, action or failure to act. It shall furnish to
the Insurer all information reasonably requested by it that is necessary
to determine compliance with this paragraph.
(ii) Waiver, Amendments, Etc. Except as provided in and in
accordance with the Operative Documents, it shall not modify, waive or
amend, or consent to any modification, waiver or amendment of, any of the
terms, provisions or conditions of the Operative Documents to which it is
a party (other than any amendment to the Offering Documents required by
law) without the prior written consent of the Insurer thereto, which
consent shall not be unreasonably withheld, conditioned or delayed.
(iii) Limitation on Mergers, Etc. It shall not consolidate with or
merge with or into any Person or transfer all or substantially all of its
assets to any Person or liquidate or dissolve except as provided in the
Operative Documents or as permitted hereby. It shall furnish to the
Insurer all information requested by the Insurer that is reasonably
necessary to determine compliance with this paragraph.
(iv) Successors. It shall not terminate or designate, or consent to
the termination or designation of, any successor Servicer or Indenture
Trustee without the prior written approval of the Insurer.
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(v) Bankruptcy Remoteness. The Seller shall not cause either the
Depositor or the Issuing Entity to fail to be a bankruptcy remote entity.
(b) Negative 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:
(i) Impairment of Rights. The Depositor shall not take any action,
or fail to take any action, if such action or failure to take action may
result in a material adverse change as described in clause (i) of the
definition of Material Adverse Change, nor interfere in any material
respect with the enforcement of any rights of the Insurer under or with
respect to any of the Operative Documents. The Depositor shall give the
Insurer written notice when any event, action or, to the knowledge of the
Depositor, omission to act, in each case, of the Depositor, may result in
a material adverse change as described in clause (i) of the definition of
Material Adverse Change, on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such event,
action or omission to act and (ii) promptly prior to the date of
occurrence of such event, action or failure to act. The Depositor shall
furnish to the Insurer all information reasonably requested by it that is
necessary to determine compliance with this paragraph.
(ii) Waiver, Amendments, Etc. Except as provided in and in
accordance with the Operative Documents, the Depositor shall not modify,
waive or amend, or consent to any modification, waiver or amendment of,
any of the terms, provisions or conditions of the Operative Documents to
which it is a party (other than any amendment to the Offering Documents
required by law) without the prior written consent of the Insurer thereto,
which consent shall not be unreasonably withheld, conditioned or delayed.
(iii) Limitation on Mergers, Etc. The Depositor shall not
consolidate with or merge with or into any Person or transfer all or
substantially all of its assets to any Person or liquidate or dissolve
except as provided in the Operative Documents. The Depositor shall furnish
to the Insurer all information requested by the Insurer that is reasonably
necessary to determine compliance with this paragraph.
(iv) Successors. The Depositor shall not terminate or designate, or
consent to the termination or designation of, any successor Indenture
Trustee without the prior written approval of the Insurer.
Section 2.04. Representations, Warranties and Covenants of the Insurer.
The Insurer represents and warrants as of the Closing Date or such other
date as specified below, and, in the case of Section 2.04(h) below, covenants
during the term of this Insurance Agreement, to each of IndyMac and the
Depositor as follows:
(a) Organization and Licensing. The Insurer is a duly incorporated and
existing New York stock insurance company licensed to do business in the State
of New York and is in good standing under the laws of such state.
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(b) Corporate Power. The Insurer has the corporate power and authority to
issue the Policy, execute and deliver this Insurance Agreement and perform all
of its obligations hereunder and thereunder.
(c) Authorization; Approvals; No Conflicts. The issuance of the Policy and
the execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate proceedings and will not result in any
violation of (i) any law, regulation, rule or order applicable to the Insurer,
(ii) the Insurer's organizational documents or (iii) any material indenture,
contract or other agreement to which the Insurer is a party. No further
approvals or filings of any kind, including, without limitation, any further
approvals of or further filings with any governmental agency or other
governmental authority, or any approval of the Insurer's board of directors or
stockholders, are necessary for the Policy and this Insurance Agreement to
constitute the legal, valid and binding obligations of the Insurer.
(d) Enforceability. The Policy, when issued, and this Insurance Agreement
will each constitute a legal, valid and binding obligation of the Insurer,
enforceable in accordance with its terms, subject to applicable laws affecting
the enforcement of creditors' rights generally.
(e) Insurer Information. The Insurer Information in the Prospectus
Supplement, is limited due only to the fact that the Insurer is not the
registrant under the Securities Act of 1933 in the transaction described in the
Prospectus Supplement and, therefore, does not purport to provide the scope of
disclosure required to be included in a prospectus under the Securities Act of
1933, in connection with the public offer and the sale of securities of the
Insurer, if Insurer were the registrant. Within such limited scope of
disclosure, as of the date of the Prospectus Supplement and as of the Closing
Date, the Insurer Information does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge, threatened
against it at law or in equity or before or by any court, governmental agency,
board or commission or any arbitrator which would cause a Material Adverse
Change.
(g) Confidential Information. The Insurer agrees that it and its
shareholders, directors, agents, accountants and attorneys shall keep
confidential any information provided to the Insurer pursuant to or in
connection with this Agreement or the issuance of the Policy or otherwise
related to the Transaction, including any matter of which it becomes aware
during the inspections conducted or discussions had pursuant to Section
2.02(a)(v) (unless such information is readily available from public sources)
and including in particular any such information that constitutes "customer
information" within the meaning of 12 C.F.R. Part 30.1 (the "Regulation"), which
the Insurer shall keep confidential in accordance with the Regulation, except as
may be otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its rights or
security under or to enforce the Operative Documents or the Policy; provided,
however, that the foregoing shall not limit the right of the Insurer to make
such information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants. If the
Insurer is requested or required (by oral questions, interrogatories, requests
for information or documents
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subpoena, civil investigative demand or similar process) to disclose information
provided to the Insurer pursuant to or in connection with this Agreement or the
issuance of the Policy or otherwise related to the Transaction, including any
information of which it becomes aware through such inspections or discussions,
the Insurer will promptly notify IndyMac or the Depositor of such request(s) so
that IndyMac or the Depositor may seek an appropriate protective order and/or
waive the Insurer's compliance with the provisions of this Insurance Agreement.
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Insurer is, nonetheless, in the opinion of its counsel (which shall be
delivered to IndyMac and the Depositor), compelled to disclose such information
to any tribunal or else stand liable for contempt or suffer other censure or
significant penalty, the Insurer may disclose such information to such tribunal
that the Insurer is compelled to disclose; provided, however, that a copy of all
information disclosed is provided to the Sponsor, the Issuer and the Depositor
promptly upon such disclosure.
(h) Compliance with Law, Etc. No practice, procedure or policy employed,
or proposed to be employed, by the Insurer in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable to
the Insurer that, if enforced, could result in a Material Adverse Change with
respect to the Insurer.
(i) Consent to Incorporation of Insurer Financial Statements. As of the
date of the Prospectus Supplement and thereafter through the Incorporation
Termination Date, the Insurer agrees that all consolidated financial statements
of XL Capital Assurance Inc. and its subsidiaries included in documents filed by
its direct or indirect parent with the SEC pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act, may be incorporated by reference into
any Form 8-K, Form 10-D or Form 10-K filed by the Depositor, solely to the
extent required to comply with the requirements of Item 1114(b)(2) of Regulation
AB. It is understood and agreed that, to the extent any consent letter of the
Insurer's accountants is required by the Depositor in connection with such
filing in order to comply with the requirements of Regulation AB, the Insurer
shall use commercially reasonable efforts to obtain such consent letter on
behalf of the Depositor, provided that the fees and expenses payable in respect
thereof shall be paid by the Seller upon demand.
(j) Eligibility for Incorporation by Reference. As of the date of the
Prospectus Supplement and thereafter through the Incorporation Termination Date,
the Insurer represents and warrants that XL Capital Ltd. or Security Capital
Assurance Ltd, as applicable, is subject to the reporting requirements of the
Exchange Act and has filed all reports and other materials required to be filed
by it pursuant to Section 13(a) or 15(d) of the Exchange Act during the 12
months preceding the date of the Prospectus Supplement (or such shorter period
as such party was required to file reports under the Securities Exchange Act).
If this representation is breached as of any date after the date of the Free
Writing Prospectus or Prospectus Supplement and prior to the Incorporation
Termination Date, the sole result of such breach shall be that the Insurer shall
be required to furnish its Insurer Financial Statements thereafter pursuant to
Section 2.04(k) below until the earlier of (i) the Incorporation Termination
Date and (ii) the date on which the representation and warranty in this Section
2.04(j) shall be true again.
(k) Furnishing of Insurer Financial Statements. If the reports filed by
the Insurer or its parent no longer include (or no longer properly incorporate
by reference) the
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Insurer Financial Statements, or if the representation in Section 2.04(j) is no
longer true, as soon as reasonably practicable after the release of its
unaudited financial statements for each of the March, June and September fiscal
quarters and the release of its audited financial statements for any fiscal
year, the Insurer shall furnish to the Depositor such unaudited or audited
financial statements, as appropriate for the related period meeting the
requirements of Item 1114(b)(2)(ii) of Regulation AB. Any Insurer Financial
Statements shall be delivered in electronic form via electronic mail to such
address that has been designated by the Depositor and provided in writing to the
Insurer. If applicable, the Insurer shall continue to furnish such quarterly and
annual financial statements as set forth above until the Incorporation
Termination Date.
(l) Financial Information. As of the date of the Free Writing Prospectus
and the Prospectus Supplement and as of the Closing Date, in the case of
financial statements of the Insurer incorporated by reference into the
Prospectus Supplement on its date, and as of the date any subsequent financial
statements are incorporated by reference into the Prospectus Supplement or
furnished to the Depositor pursuant to Section 2.04(k) above, such financial
statements of the Insurer incorporated by reference in the Prospectus Supplement
(collectively, the "Insurer Financial Statements"), (a) fairly present in all
material respects the financial condition of the Insurer as of the dates
referenced therein and for the periods covered by such statements in accordance
with generally accepted accounting principles in the United States consistently
applied, and, since the date of the last such financial statements there has
been no material change in such financial condition of the Insurer which would
materially and adversely affect its ability to perform its obligations under the
Policy and (b) comply with Item 1114(b)(2)(ii) of Regulation AB.
(m) Affiliations/Item 1119 Information. Upon receipt of an officer's
certificate of the Depositor on or prior to January 15 of each calendar year
that occurs prior to the Incorporation Termination Date, which officer's
certificate furnishes the Insurer with a list of the parties with whom
affiliations or relationships must be disclosed pursuant to Item 1119 of
Regulation AB, the Insurer shall provide to the Depositor, to the extent
actually known and material, a description of any affiliation or relationship
required to be disclosed under Item 1119 of Regulation AB between the Insurer
and any of the parties listed in Items 1119(a)(1)-(6) of Regulation AB that
develops following the date hereof, no later than fifteen calendar days prior to
the date the Depositor is required to file its Form 10-K disclosing such
affiliation.
(n) Assurances to Provide Additional Information. Until the Incorporation
Termination Date, the Insurer agrees to comply with all reasonable requests of
the Depositor for the delivery of such additional information as may be
necessary for the Depositor to comply with Item 1114, so long as such
information is available to the Insurer and not otherwise available to the
Depositor.
(o) No Affiliations. As of the date hereof, to the Insurer's actual
knowledge, the Insurer is not an affiliate (as defined in Rule 405 of the
Securities Act) of the 1119 Parties without regard to affiliations by common
control with the Insurer.
(p) Policy Exempt from Registration. The Policy is exempt from
registration under the Securities Act.
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ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy.
The Insurer agrees to issue the Policy on the Closing Date subject to
satisfaction of the conditions precedent set forth below on or prior to the
Closing Date:
(a) Payment of Premium and Expenses; Premium Letter. The Insurer shall
have been reimbursed for fees and expenses identified in the Premium Letter or
in Section 3.02 below as payable at closing, unless otherwise agreed between the
Depositor and the Insurer;
(b) Operative Documents. The Insurer shall have received a copy of each of
the Operative Documents, in form and substance reasonably satisfactory to the
Insurer, duly authorized, executed and delivered by each party thereto;
(c) Governmental Approvals. The Insurer shall have received a copy of any
governmental approval necessary for the Transaction;
(d) Representations and Warranties. The representations and warranties
(other than with respect to the Mortgage Loans) of each of the Seller, the
Servicer and the Depositor that are made on and as of the Closing Date or
Cut-off Date, as applicable, set forth or incorporated by reference in this
Insurance Agreement shall be true and correct on and as of such Closing Date or
Cut-off Date, as applicable;
(e) Opinions of Counsel. The Insurer shall have received all opinions of
counsel addressed to any of Moody's and S&P, the Indenture Trustee, the Owner
Trustee, IndyMac, the Depositor and the Underwriter, or any other parties to the
Operative Documents and the Transaction dated the Closing Date in form and
substance reasonably satisfactory to the Insurer, addressed to the Insurer and
addressing such matters as the Insurer may reasonably request, and the counsel
providing each such opinion shall have been instructed by its client to deliver
such opinion to the addressees thereof;
(f) Approvals, Etc. The Insurer shall have received true and correct
copies of all approvals, licenses and consents, if any, including any required
approval of the shareholders or beneficial owners, as applicable, of IndyMac and
the Depositor, required in connection with the Transaction;
(g) No Litigation, Etc. No suit, action or other proceeding, investigation
or injunction, or final judgment relating thereto, shall be pending or
threatened before any court, governmental or administrative agency or arbitrator
in which it is sought to restrain or prohibit or to obtain damages or other
relief in connection with any of the Operative Documents or the consummation of
the Transaction;
(h) Legality. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court that would make the Transaction illegal or
otherwise prevent the consummation thereof;
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(i) Satisfaction of Conditions of the Underwriting Agreement. All
conditions in the Underwriting Agreement relating to the Underwriters'
obligation to purchase the Class A Notes shall have been satisfied, without
taking into account any waiver by the Underwriter of any condition unless such
waiver has been approved by the Insurer;
(j) Issuance of Ratings. The Insurer shall have received confirmation that
the Class A Notes are rated at least "BBB" by S&P and at least "Baa2" by
Moody's, without regard to the Policy, and that the Class A Notes, when issued,
will be rated "AAA" by S&P and "Aaa" by Moody's;
(k) No Default. No Default or Event of Default shall have occurred;
(l) Satisfactory Documentation. The Insurer and its counsel shall have
reasonably determined that all documents, certificates and opinions to be
delivered in connection with the Class A Notes conform to the terms of the Sale
and Servicing Agreement, the Indenture and this Insurance Agreement; and
(m) Delivery of Mortgage Notes. The Insurer shall have received evidence
satisfactory to it that delivery has been made to the Indenture Trustee or a
custodian of the Mortgage Note for each Mortgage Loan (or a copy of such
Mortgage Note and a Lost Note Affidavit).
Section 3.02. Payment of Fees and Premium.
(a) Legal, Accounting and Due Diligence Fees. IndyMac shall pay or cause
to be paid to the Insurer, at the Closing Date, legal fees, due diligence
expenses and accounting fees incurred by the Insurer in connection with the
issuance of the Policy in amounts and as described in the Premium Letter.
(b) Premium. In consideration of the issuance by the Insurer of the
Policy, the Insurer shall be paid the Premium in Premium Amounts in accordance
with the terms of the Premium Letter and Section 5.01 of the Sale and Servicing
Agreement. The Premium Amounts paid hereunder and pursuant to the Operative
Documents and the Premium Letter shall be nonrefundable without regard to
whether the Insurer makes any payment under the Policy or any other
circumstances relating to the Class A Notes or provision being made for payment
of the Class A Notes prior to maturity. All payments of Premium Amounts shall be
made by wire transfer to an account designated from time to time by the Insurer
by written notice to the Indenture Trustee. Although the Premium is fully earned
by the Insurer as of the date of issuance, the Premium shall be payable in
periodic installments of Premium Amounts as provided in the Premium Letter. The
Premium Amount for each period shall be calculated on the basis of the actual
number of days elapsed in the related period for which the premium is being paid
divided by 360.
(c) Rating Agency Fees. IndyMac shall promptly pay the initial fees of S&P
and Moody's with respect to the Class A Notes and the transaction following
receipt of a statement with respect thereto. All periodic and subsequent fees of
S&P or Moody's with respect to, and directly allocable to, the Class A Notes
shall be for the account of, and shall be billed to, IndyMac. The fees for any
other rating agency shall be paid by the party requesting such other
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agency's rating unless such other agency is a substitute for S&P or Moody's in
the event that S&P or ▇▇▇▇▇'▇ is no longer rating the Class A Notes, in which
case the fees for such agency shall be paid by IndyMac.
Section 3.03. Reimbursement Obligation.
(a) As and when due in accordance with and from the Net Available Funds as
specified in Section 5.01 of the Sale and Servicing Agreement, the Insurer shall
be entitled to reimbursement for any payment made by the Insurer under the
Policy (including any portion of any amounts that are payable with Insured
Amounts under the Policy as a result of the nonpayment of Premium Amounts to the
Insurer), which reimbursement shall be due and payable on the date that any
amount is paid under the Policy, in an amount equal to the amount to be so paid
and all amounts previously paid that remain unreimbursed, together with interest
on any and all such amounts remaining unreimbursed (to the extent permitted by
law, if in respect of any unreimbursed amounts representing interest) from the
date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(b) Anything herein or in any Operative Document to the contrary
notwithstanding, the Insurer shall be entitled to full reimbursement (i) from
IndyMac for any payment made under the Policy arising as a result of IndyMac's
failure to substitute for or deposit an amount in respect of any defective
Mortgage Loan as required pursuant to Section 3.01 of the Mortgage Loan Purchase
Agreement or Section 2.03 and Section 2.04 of the Sale and Servicing Agreement,
together with interest on any and all such amounts remaining unreimbursed (to
the extent permitted by law, if in respect of any such unreimbursed amounts
representing interest) from the date such amounts became due until paid in full
(after as well as before judgment), at a rate of interest equal to the Late
Payment Rate, and (ii) from each of the Seller or the Servicer for any payment
made under the Policy arising as a result of IndyMac's failure to pay or deposit
any amount required to be paid or deposited pursuant to the Operative Documents
on the date such amounts become due, together with interest on any and all such
amounts remaining unreimbursed (to the extent permitted by law, if in respect of
any such unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate.
(c) IndyMac agrees to pay to the Insurer any and all reasonable charges,
fees, costs and expenses that the Insurer may reasonably pay or incur, including
reasonable attorneys' and accountants' fees and expenses, in connection with (i)
in the event of payments under the Policy, any accounts established to
facilitate payments under the Policy to the extent the Insurer has not been
reimbursed within five Business Days after the date that any amount is paid by
the Insurer under the Policy; (ii) the enforcement, defense or preservation of
any rights in respect of any of the Operative Documents, including defending,
monitoring or participating in any litigation or proceeding (including any
insolvency proceeding in respect of any Transaction participant or any affiliate
thereof) relating to any of the Operative Documents, any party to any of the
Operative Documents (in its capacity as such a party) or the Transaction,
including any foreclosure against, sale or other disposition of any collateral
securing any obligations under any of the Operative Documents, or pursuit of any
other remedies under any of the Operative Documents, to the extent such costs
and expenses are not recovered from such foreclosure, sale or other disposition;
- 29 -
and (iii) any amendment, waiver or other action with respect to, or related to,
any Operative Document, whether or not executed or completed; Provided that
three Business Days written notice of the intended payment or incurrence shall
have been given to IndyMac by the Insurer, such reimbursement shall be due on
the dates on which such charges, fees, costs or expenses are paid or incurred by
the Insurer. Notwithstanding the foregoing, in no event shall the Insurer have
any recourse under this subsection against the Seller or the Servicer with
respect to any payments the Insurer has made in respect of principal or interest
distributions on the Class A Notes (except pursuant to Section 3.03(b) above and
Section 3.04 below). In addition, IndyMac shall be responsible for payment of
all costs and expenses that the Insurer shall incur relating to any insolvency,
bankruptcy or liquidation of IndyMac.
(d) IndyMac agrees to pay to the Insurer interest (without duplication) on
any and all amounts described in subsections 3.03(b), 3.03(c) and 3.03(e) and
Sections 3.02 and 3.04 from the date such amounts become due or, in the case of
subsection 3.03(c) or Section 3.04, are incurred or paid by the Insurer until
payment thereof in full (after as well as before judgment), at the Late Payment
Rate.
(e) IndyMac agrees to pay to the Insurer as follows: any payments made by
the Insurer on behalf of, or advanced to, IndyMac or the Depositor with respect
to any amounts payable by IndyMac or the Depositor pursuant to any of the
Operative Documents on the date any such payment is made or advanced by the
Insurer. Notwithstanding the foregoing, in no event shall the Insurer have any
recourse under this subsection against IndyMac or the Depositor with respect to
any payments the Insurer has made in respect of principal or interest
distributions on the Class A Notes (except pursuant to Section 3.03(b) above and
Section 3.04 below).
(f) The Insurer shall have no right to set-off payments to be made under
the Policy against payments to be made to the Insurer by IndyMac or the
Depositor (or any person or organization acting on their behalf), the Indenture
Trustee, any Seller or any Holder or any affiliate, officer or director of any
of them.
Section 3.04. Indemnification.
(a) In addition to any and all of the Insurer's rights of reimbursement,
indemnification and subrogation and to any other rights of the Insurer pursuant
hereto or under law or in equity, IndyMac, as Seller and as Servicer, agrees to
pay, and to protect, indemnify and save harmless, the Insurer and its officers,
directors, shareholders, employees, agents and each Person, if any, who controls
the Insurer within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act from and against, any and all claims,
losses, liabilities (including penalties), actions, suits, judgments, demands,
damages, costs or expenses (including, without limitation, reasonable fees and
expenses of attorneys, consultants and auditors and reasonable costs of
investigations) incurred by the Insurer, its officers, directors, shareholders,
employees, agents and each Person, if any, who controls the Insurer within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act, arising out of or relating to the transactions
contemplated by the Operative Documents by reason of:
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(i) any statement, omission or action (other than any resulting from
a statement in or omission from the Insurer Information or the Underwriter
Information or any action by the Insurer other than any such action
expressly required to be performed by IndyMac, the Servicer, the Owner
Trustee or the Indenture Trustee pursuant to the Operative Documents) in
connection with the offering or delivery of the Class A Notes other than
those covered by subparagraph (v) below;
(ii) the misfeasance or malfeasance of, or negligence, bad faith,
willful misconduct or theft committed by, any director, officer, employee
or agent of the Seller, the Servicer, the Depositor or the Issuing Entity
in connection with any Transaction arising from or relating to the
Operative Documents;
(iii) the violation or alleged violation by the Seller, the
Servicer, the Depositor or the Issuing Entity of any federal or state law,
rule or regulation, or any judgment, order or decree applicable to it;
(iv) the breach by the Seller, the Servicer, the Depositor or the
Issuing Entity of any representation, warranty or covenant under any of
the Operative Documents (it being understood that this provision shall
only apply with respect to the representations and warranties as to the
Mortgage Loans made in Section 3.01 of the Mortgage Loan Purchase
Agreement and Section 2.04 of the Sale and Servicing Agreement if the
Seller and the Depositor shall have failed to perform their obligations
under Section 3.01 of the Mortgage Loan Purchase Agreement or Sections
2.04 and 2.05 of the Sale and Servicing Agreement in respect of such
breach) or the occurrence, in respect of IndyMac, in its capacity as
Servicer, of any Event of Servicing Termination under the Sale and
Servicing Agreement; or
(v) any untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, other than with respect to the
Insurer Information or the Underwriter Information.
(b) In addition to any and all of the Insurer's rights of reimbursement,
indemnification and subrogation and to any other rights of the Insurer pursuant
hereto or under law or in equity, the Depositor agrees to pay, and to protect,
indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents and each Person, if any, who controls the
Insurer within the meaning of either Section 15 of the Securities Act or Section
20 of the Securities Exchange Act from and against, any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) incurred by the
Insurer, its officers, directors, shareholders, employees, agents and each
Person, if any, who controls the Insurer within the meaning of either Section 15
of the Securities Act or Section 20 of the Securities Exchange Act, arising out
of or relating to the transactions contemplated by the Operative Documents to
which it or any Affiliate is a party by reason of:
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(i) any statement, omission or action (other than any statement in
or omission from the Insurer Information or the Underwriter Information or
any action of the Insurer other than any such action explicitly required
to be performed by the Depositor pursuant to the Operative Documents) in
connection with the offering, issuance or delivery of the Class A Notes by
the Depositor;
(ii) the misfeasance or malfeasance of, or gross negligence or theft
committed by, any director, officer, employee or agent of the Depositor in
connection with any Transaction arising from or relating to the Operative
Documents to which it is a party;
(iii) the violation or alleged violation by the Depositor of any
federal or state law, rule or regulation, or any judgment, order or decree
applicable to it; or
(iv) the breach by the Depositor of any representation, warranty or
covenant under any of the Operative Documents to which it is a party.
(c) The Insurer agrees to pay, and to protect, indemnify and save
harmless, each of IndyMac and the Depositor and their respective officers,
directors, shareholders, employees, agents and each Person, if any, who controls
IndyMac and the Depositor within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act from and against,
any and all claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or expenses (including reasonable fees and
expenses of attorneys, consultants and auditors and reasonable costs of
investigations) of any nature incurred by IndyMac, the Depositor or their
respective officers, directors, shareholders, employees, agents and each Person,
if any, who controls the Insurer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act, arising out of or
by reason of (i) any untrue statement or alleged untrue statement of a material
fact contained in the Insurer Information or any omission or alleged omission to
state in the Insurer Information a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (ii) any failure of the Insurer to make a
payment required to be made under the Policy on the date when such payment is
due pursuant to the terms of the Policy or (iii) a breach of any of the
representations, warranties and covenants of the Insurer contained in Section
2.04.
(d) If any action or proceeding (including any governmental investigation)
shall be brought or asserted against any Person (individually, an "Indemnified
Party" and, collectively, the "Indemnified Parties") in respect of which the
indemnity provided in Section 3.04(a), (b) or (c) may be sought from IndyMac or
the Depositor, on the one hand, or the Insurer, on the other (each, an
"Indemnifying Party") hereunder, each such Indemnified Party shall promptly
notify the Indemnifying Party in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all expenses. The
omission so to notify the Indemnifying Party will not relieve it from any
liability which it may have to any Indemnified Party except to the extent the
Indemnifying Party is prejudiced thereby. The Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof at the expense of the Indemnified Party; provided, however, that
the fees and expenses of such separate counsel shall be at the expense of the
Indemnifying Party if (i) the Indemnifying Party has agreed in writing to
- 32 -
pay such fees and expenses, (ii) the Indemnifying Party shall have failed within
a reasonable period of time to assume the defense of such action or proceeding
and employ counsel reasonably satisfactory to the Indemnified Party in any such
action or proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party (in which case,
if the Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time (in addition to local counsel) for
the Indemnified Parties, which firm shall be designated in writing by the
Indemnified Party and shall be reasonably satisfactory to the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any
such action or proceeding effected without its written consent, which consent
shall not be unreasonably withheld, conditioned or delayed, but, if settled with
its written consent, or if there is a final judgment for the plaintiff in any
such action or proceeding with respect to which the Indemnifying Party shall
have received notice in accordance with this subsection (c), the Indemnifying
Party agrees to indemnify and hold the Indemnified Parties harmless from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding anything in this paragraph to the contrary, the consent of such
Indemnified Party shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such
Indemnified Party.
(e) To provide for just and equitable contribution if the indemnification
provided by the Indemnifying Party is determined to be unavailable or
insufficient to hold harmless any Indemnified Party (other than due to
application of this Section), each Indemnifying Party shall contribute to the
losses incurred by the Indemnified Party on the basis of the relative fault of
the Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand.
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
(f) The relative fault of each Indemnifying Party, on the one hand, and
each Indemnified Party on the other, shall be determined by reference to, among
other things, whather the indemnification event was within the control of the
Indemnifying Party or the Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
event.
Section 3.05. Payment Procedure.
In the event of any payment by the Insurer, the Indenture Trustee, IndyMac
and the Depositor agree to accept the voucher or other evidence of payment as
prima facie evidence of
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the propriety thereof and the liability, if any, described in Section 3.03
therefor to the Insurer. All payments to be made to the Insurer under this
Insurance Agreement shall be made to the Insurer in lawful currency of the
United States of America in immediately available funds to the account number
provided in the Premium Letter before 1:00 PM (New York, New York time) on the
date when due or as the Insurer shall otherwise direct by written notice to the
other parties hereto. In the event that the date of any payment to the Insurer
or the expiration of any time period hereunder occurs on a day that is not a
Business Day, then such payment or expiration of time period shall be made or
occur on the next succeeding Business Day with the same force and effect as if
such payment was made or time period expired on the scheduled date of payment or
expiration date.
Section 3.06. Subrogation.
Subject only to the priority of payment provisions of Sections 5.01 and
5.08 of the Sale and Servicing Agreement and not in limitation of the Insurer's
equitable right of subrogation, the parties hereto acknowledge that, to the
extent of any payment made by the Insurer pursuant to the Policy for which the
Insurer has not been reimbursed, the Insurer is to be fully subrogated to the
extent of such payment and any additional interest due on any late payment, to
the rights of the Holders of the Class A Notes to any moneys paid or payable in
respect of the Class A Notes under the Operative Documents or otherwise, as and
to the extent set forth in the Policy. The parties hereto agree to such
subrogation and, further, agree to execute such instruments and to take such
actions as, in the sole judgment of the Insurer, are necessary to evidence such
subrogation and to perfect the rights of the Insurer to receive any moneys paid
or payable in respect of the Notes under the Operative Documents or otherwise.
Section 3.07. Deductions.
All payments made to the Insurer in respect of this Article III shall be
made without any deduction or withholding for or on account of any tax, levy,
impost, duty, charge, assessment or fee of any nature unless such deduction or
withholding is required by applicable law, as modified by practice of any
relevant governmental revenue authority, then in effect. If a payor is required
to deduct or withhold, then IndyMac shall (a) promptly notify the Insurer of
such requirement, (b) pay to the Insurer, in addition to the amount to which the
Insurer is otherwise entitled, such additional amount as is necessary to ensure
that the net amount actually received by the Insurer (free and clear of any
taxes, whether assessed against the payor or the Insurer) will equal the full
amount the Insurer would have received had no such deduction or withholding been
required and (c) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be deducted or
withheld from any additional amount paid to the Insurer pursuant to foregoing
clause (b)).
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement.
This Insurance Agreement shall take effect on the Closing Date and shall
remain in effect until the later of (a) such time as the Insurer is no longer
subject to a claim under the Policy and
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the Policy shall have been surrendered to the Insurer for cancellation and (b)
all amounts payable to the Insurer by IndyMac or the Depositor hereunder or from
any other source hereunder or under the Operative Documents or the Policy and
all amounts payable under the Class A Notes have been paid in full; provided,
however, that the provisions of Sections 2.04, 3.02, 3.03, 3.04 and 6.15 hereof
shall survive any termination of this Insurance Agreement.
Section 4.02. Waiver of Rights.
Except at such times as an Insurer Default shall exist and be continuing,
none of IndyMac, the Depositor or the Indenture Trustee shall grant any waiver
of rights under any of the Operative Documents to which any of them is a party
without the prior written consent of the Insurer, which shall not be
unreasonably withheld, conditioned or delayed and any such waiver without prior
written consent of the Insurer shall be null and void and of no force or effect.
Section 4.03. Obligations Absolute.
(a) The obligations of IndyMac and the Depositor hereunder shall be
absolute and unconditional and shall be paid or performed strictly in accordance
with this Insurance Agreement under all circumstances irrespective of:
(i) any lack of validity or enforceability of any of the Operative
Documents or the Class A Notes, or any amendment or other modifications
of, or waiver, with respect to any of the Operative Documents or the Class
A Notes, that have not been approved by the Insurer;
(ii) any exchange or release of any other obligations hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that IndyMac or the Depositor may have at any
time against the Insurer or any other Person;
(iv) any document presented in connection with the Policy proving to
be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(v) any payment by the Insurer under the Policy against presentation
of a certificate or other document that does not strictly comply with
terms of that Policy;
(vi) any failure of IndyMac or the Depositor to receive the proceeds
from the sale of the Class A Notes;
(vii) any other circumstances, other than payment in full, that
might otherwise constitute a defense available to, or discharge of,
IndyMac or the Depositor in respect of any Operative Document;
(viii) the bankruptcy or insolvency of the Insurer or any other
party;
(ix) any default or alleged default of the Insurer under the Policy;
or
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(x) the inaccuracy or alleged inaccuracy of any notice or
certificate upon which a claim under the Policy is based.
(b) IndyMac and the Depositor and any and all others who are now or may
become liable for all or part of the obligations of IndyMac or the Depositor
under this Insurance Agreement irrevocably renounce the right to assert as a
defense to the performance of their respective obligations each of the
following: (i) to the extent permitted by law, any and all redemption and
exemption rights and the benefit of all valuation and appraisement privileges
against the indebtedness and obligations evidenced by any Operative Document or
by any extension or renewal thereof; (ii) presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor and notice of
protest; (iii) all notices in connection with the delivery and acceptance hereof
and all other notices in connection with the performance, default or enforcement
of any payment hereunder, except as required by the Operative Documents; (iv)
all rights of abatement, diminution, postponement or deduction, or to any
defense other than payment, or to any right of setoff or recoupment arising out
of any breach under any of the Operative Documents, by any party thereto or any
beneficiary thereof, or out of any obligation at any time owing to IndyMac or
the Depositor (v) agree that its liabilities hereunder shall be unconditional
and without regard to any set-off, counterclaim or the liability of any other
Person for the payment hereof; (vi) agree that any consent, waiver or
forbearance hereunder with respect to an event shall operate only for such event
and not for any subsequent event; (vii) consent to any and all extensions of
time that may be granted by the Insurer with respect to any payment hereunder or
other provisions hereof and to the release of any security at any time given for
any payment hereunder, or any part thereof, with or without substitution, and to
the release of any Person or entity liable for any such payment; and (viii)
consent to the addition of any and all other makers, endorsers, guarantors and
other obligors for any payment hereunder, and to the acceptance of any and all
other security for any payment hereunder, and agree that the addition of any
such obligors or security shall not affect the liability of the parties hereto
for any payment hereunder.
(c) IndyMac and the Depositor and any and all others who are now or may
become liable for all or part of the obligations of IndyMac or the Depositor
under this Insurance Agreement agree to be bound by this Insurance Agreement and
(i) agree that any consent, waiver or forbearance hereunder with respect to an
event shall operate only for such event and not for any subsequent event and
(ii) consent to any and all extensions of time that may be granted by the
Insurer with respect to any payment hereunder or other provisions hereof and to
the release of any security at any time given for any payment hereunder, or any
part thereof, with or without substitution, and to the release of any Person or
entity liable for any such payment.
(d) Nothing herein shall be construed as prohibiting IndyMac or the
Depositor from pursuing any rights or remedies it may have against any Person in
a separate legal proceeding.
Section 4.04. Assignments; Reinsurance; Third-Party Rights.
(a) This Insurance Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither IndyMac
nor the Depositor may assign any of their respective rights under this Insurance
Agreement or the Policy, or delegate any of their
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respective duties hereunder or thereunder, without the prior written consent of
the Insurer, which consent shall not be unreasonably withheld, delayed or
conditioned. Any assignments made in violation of this Insurance Agreement shall
be null and void.
(b) The Insurer shall have the right to give participations in its rights
under this Insurance Agreement and to enter into contracts of reinsurance with
respect to the Policy upon such terms and conditions as the Insurer may in its
discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve the Insurer of any of its
obligations hereunder or under the Policy, nor shall IndyMac or the Depositor be
required to deal directly with any such parties, nor shall such parties have
direct rights against IndyMac or the Depositor.
(c) In addition, the Insurer shall be entitled to assign or pledge to any
bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any rights
of the Insurer under the Operative Documents or with respect to any real or
personal property or other interests pledged to the Insurer, or in which the
Insurer has a security interest, in connection with the Transaction; provided
that the Insurer shall notify IndyMac in writing upon any such assignment.
(d) Except as provided herein with respect to participants and reinsurers,
nothing in this Insurance Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Holder, other
than the Insurer against IndyMac or the Depositor, or IndyMac or the Depositor
against the Insurer, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive benefit of the
parties hereto and their successors and permitted assigns. Neither the Indenture
Trustee nor any Holder shall have any right to payment from any Premiums paid or
payable hereunder or under the Sale and Servicing Agreement or from any amounts
paid by IndyMac pursuant to Sections 3.02 or 3.03.
Section 4.05. Liability of the Insurer.
Neither the Insurer nor any of its officers, directors or employees shall
be liable or responsible for: (a) the use that may be made of the Policy by the
Indenture Trustee or for any acts or omissions of the Indenture Trustee in
connection therewith; (b) the validity, sufficiency, accuracy or genuineness of
documents delivered to the Insurer in connection with any claim under the
Policy, or of any signatures thereon, even if such documents or signatures
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged (unless the Insurer shall have actual knowledge thereof) or
(c) any acts or omissions of the Servicer, the Issuing Entity, the Depositor,
the Indenture Trustee or the Owner Trustee in connection with the Transaction or
the Operative Documents to which it is a party. In furtherance and not in
limitation of the foregoing, the Insurer may accept documents that appear on
their face to be in order, without responsibility for further investigation.
Section 4.06. Annual Servicing Audit and Certification.
The annual servicing audit required pursuant to Section 3.11 of the Sale
and Servicing Agreement shall be performed by an independent third party
reasonably acceptable to the
- 37 -
Insurer. Any one of the four major nationally recognized firms of independent
public accountants is deemed to be acceptable.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Defaults.
The occurrence of any of the following shall constitute an Event of
Default hereunder:
(a) [Reserved]
(b) Any representation or warranty (other than a representation or
warranty in respect of the Mortgage Loans contained in Section 3.01 of the
Mortgage Loan Purchase Agreement or Section 2.04 of the Sale and Servicing
Agreement) made by IndyMac or the Depositor hereunder or under the Operative
Documents, or in any certificate furnished hereunder or under the Operative
Documents, shall prove to be untrue or incorrect in any material respect
(including, without limitation, any representation or warranty made by the
Seller, the Servicer or the Depositor as to the Trust Fund);
(c) (i) IndyMac or the Depositor shall fail to pay when due any amount
payable by it hereunder or (ii) a legislative body has enacted any law that
declares or a court of competent jurisdiction shall find or rule that this
Insurance Agreement or any other Operative Document is not valid and binding on
IndyMac or the Depositor; provided that, with respect to any law or judicial
action within the scope of this clause (ii), IndyMac and the Depositor shall
have 30 days to reinstate the binding effect of this Insurance Agreement or any
other Operative Document, and the Insurer agrees to take such actions as may be
reasonably requested of it to facilitate the reinstatement of such binding
effect;
(d) The occurrence and continuance of any "Event of Servicing Termination"
under any Operative Document; provided that it is understood that any failure to
maintain a perfected first priority security interest in favor of the Indenture
Trustee in any of the Collateral shall constitute an Event of Default hereunder;
(e) Any failure on the part of IndyMac or the Depositor duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of IndyMac or the Depositor contained in this Insurance Agreement which
continues unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to IndyMac by the Insurer (with a copy to the Indenture Trustee) or by the
Indenture Trustee (with a copy to the Insurer, including, without limitation,
any covenants of the Servicer or the Depositor made as to the Trust Fund);
provided, that such failure shall not constitute an Event of Default hereunder,
if within such 30-day period IndyMac or the Depositor, as the case may be, shall
have given notice to the Insurer of corrective action it proposes to take, which
corrective action is satisfactory to the Insurer as evidenced by its written
acceptance thereof, and IndyMac or the Depositor shall thereafter pursue such
corrective action diligently until such default is cured;
- 38 -
(f) A decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator or other similar official in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against IndyMac or the Depositor and such
decree or order shall have remained in force undischarged or unstayed for a
period of 90 consecutive days;
(g) IndyMac or the Depositor shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to IndyMac or the Depositor or
of or relating to all or substantially all of their respective property; or
(h) IndyMac or the Depositor shall become insolvent or admit in writing
its inability to pay its debts generally as they become due, file a petition to
take advantage of or otherwise voluntarily commence a case or proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar statute,
make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations.
Section 5.02. Remedies; No Remedy Exclusive.
(a) Upon the occurrence of an Event of Default, the Insurer may exercise
any one or more of the rights and remedies set forth below:
(i) declare all indebtedness under any of the Operative Documents or
arising out of the Transaction of every type or description then owed by
the Seller, the Servicer or the Depositor to the Insurer to be immediately
due and payable, and the same shall thereupon be immediately due and
payable;
(ii) exercise any rights and remedies of the Insurer under the Trust
Agreement in its own capacity or in its capacity as the Person entitled to
exercise the rights of the Holders of the Class A Notes, in accordance
with the terms thereof or direct the Owner Trustee to exercise such rights
and remedies in accordance with the terms of the Trust Agreement;
(iii) exercise any rights and remedies of the Insurer under the
Indenture in its own capacity or in its capacity as the Person entitled to
exercise the rights of the Holders of the Class A Notes, in accordance
with the terms thereof or direct the Indenture Trustee to exercise such
rights and remedies in accordance with the terms of the Indenture;
(iv) exercise any rights and remedies of the Insurer under the Sale
and Servicing Agreement or the Mortgage Loan Purchase Agreement in its own
capacity or in its capacity as the Person entitled to exercise the rights
of the Holders of the Class A Notes, in accordance with the terms thereof
or direct the appropriate party to exercise such rights and remedies in
accordance with the terms of the Sale and Servicing Agreement or the
Mortgage Loan Purchase Agreement (including, without limitation, the right
to terminate the Servicer as described in the Sale and Servicing
Agreement); or
- 39 -
(v) take whatever action at law or in equity as may appear necessary
or desirable in its judgment to collect the amounts, if any, then due
under this Insurance Agreement or any other Operative Document or to
enforce performance and observance of any obligation, agreement or
covenant of IndyMac or the Depositor under this Insurance Agreement or any
other Operative Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under this Insurance Agreement, the Indenture, or existing at law or in equity.
No delay or omission to exercise any right or power accruing under this
Insurance Agreement or the Indenture upon the happening of any event set forth
in Section 5.01 shall impair any such right or power or shall be construed to be
a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Insurer to
exercise any remedy reserved to the Insurer in this Article, it shall not be
necessary to give any notice, other than such notice as may be required by this
Article.
Section 5.03. Waivers.
(a) No failure by the Insurer to exercise, and no delay by the Insurer in
exercising, any right hereunder shall operate as a waiver thereof. The exercise
by the Insurer of any right hereunder shall not preclude the exercise of any
other right, and the remedies provided herein to the Insurer are declared in
every case to be cumulative and not exclusive of any remedies provided by law or
equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Insurer and
delivered to IndyMac. Unless such writing expressly provides to the contrary,
any waiver so granted shall extend only to the specific event or occurrence
which gave rise to the Event of Default so waived and not to any other similar
event or occurrence which occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Third-Party Beneficiary.
IndyMac, in its capacity as the Seller and the Servicer, and the Depositor
hereby agree that the Insurer shall have all rights provided to the Insurer in
the Operative Documents and that the Insurer shall constitute a third-party
beneficiary with respect to such rights in respect of the Operative Documents
and hereby incorporates and restates its representations, warranties and
covenants as set forth therein for the benefit of the Insurer. The Insurer
agrees that the rights it shall have as a third-party beneficiary under the
Indenture shall be limited to the rights granted to it in the Indenture, either
acting in its own capacity or in its capacity as the Person entitled to exercise
the rights of the Holders of the Class A Notes.
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Section 6.02. Amendments, Etc.
This Insurance Agreement may be amended, modified, supplemented or
terminated only by written instrument or written instruments signed by the
parties hereto. IndyMac agrees to provide a copy of any amendment to this
Insurance Agreement promptly to the Indenture Trustee and the rating agencies
maintaining a rating on the Class A Notes. No act or course of dealing shall be
deemed to constitute an amendment, modification, supplement or termination
hereof.
Section 6.03. Notices.
All demands, notices and other communications to be given hereunder shall
be in writing (except as otherwise specifically provided herein) and shall be
mailed by registered mail or personally delivered and telecopied or emailed to
the recipient as follows:
(a) To the Insurer:
XL Capital Assurance Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Surveillance
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
(in each case in which notice or other communication to the Insurer
refers to an Event of Default, a claim on the Policy or with respect
to which failure on the part of the Insurer to respond shall be
deemed to constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to the attention
of the general counsel of each of the Insurer, IndyMac and the
Indenture Trustee and, in all cases, both any original and all
copies shall be marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To IndyMac:
IndyMac Bank, F.S.B.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Notice to IndyMac shall also constitute notice to the Depositor to
the extent the party providing such notice is required to provide
notice to both parties (in each case in which notice or other
communication to IndyMac refers to an Event of Default, a claim
against IndyMac or the Depositor or with respect to which failure on
the part of IndyMac or the Depositor to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or
other communication should also be sent to the attention of the
general counsel of each of IndyMac, the Insurer and the Indenture
Trustee and, in all cases, both any original and all copies shall be
marked to indicate "URGENT MATERIAL ENCLOSED.").
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(c) To the Depositor:
IndyMac MBS, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) To the Indenture Trustee:
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Trust Administration-- IN06H3
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation: ▇▇▇-▇▇▇-▇▇▇▇
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.04. Severability.
In the event that any provision of this Insurance Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, the parties
hereto agree that such holding shall not invalidate or render unenforceable any
other provision hereof. The parties hereto further agree that the holding by any
court of competent jurisdiction that any remedy pursued by any party hereto is
unavailable or unenforceable shall not affect in any way the ability of such
party to pursue any other remedy available to it.
Section 6.05. Governing Law.
This Insurance Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to the conflict of
laws provisions thereof other than Sections 5-1401 and 5-1402 of the General
Obligations Law) which the Parties expressly rely upon as the governing law
hereunder.
Section 6.06. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York and any court in the State of New York located in the City and County
of New York, and any appellate court from any thereof, in any action, suit or
proceeding brought against it and to or in connection with any of the Operative
Documents, the Policy or the Transaction or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York state court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final unappealable
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. To the extent permitted by applicable law, the parties hereto
hereby waive and agree not to
- 42 -
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such courts, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that the
related documents or the subject matter thereof may not be litigated in or by
such courts.
(b) To the extent permitted by applicable law, the parties hereto shall
not seek and hereby waive the right to any review of the judgment of any such
court by any court of any other nation or jurisdiction which may be called upon
to grant an enforcement of such judgment.
(c) Service on the IndyMac or the Depositor may be made by mailing or
delivering copies of the summons and complaint and other process which may be
served in any suit, action or proceeding to IndyMac or the Depositor, in each
case at the address specified in Section 6.03 hereunder. Such address may be
changed by the applicable party or parties by written notice to the other
parties hereto. The provision of notice to change the address set forth in
Section 6.03 shall constitute notice for purposes of the preceding sentence,
unless such notice shall expressly state to the contrary.
(d) Nothing contained in this Insurance Agreement shall limit or affect
any party's right to serve process in any other manner permitted by law or to
start legal proceedings relating to any of the Operative Documents against any
other party or its properties in the courts of any jurisdiction.
Section 6.07. Consent of the Insurer.
In the event that the consent of the Insurer is required under any of the
Operative Documents, the determination whether to grant or withhold such consent
shall be made by the Insurer in its sole discretion without any implied duty
towards any other Person, except as otherwise expressly provided therein, and
such consent is only effective when and if given by the Insurer in writing.
Section 6.08. Counterparts.
This Insurance Agreement may be executed in counterparts by the parties
hereto, and all such counterparts shall constitute one and the same instrument.
Section 6.09. Headings.
The headings of Articles and Sections and the Table of Contents contained
in this Insurance Agreement are provided for convenience only. They form no part
of this Insurance Agreement and shall not affect its construction or
interpretation.
Section 6.10. Trial by Jury Waived.
Each party hereby waives, to the fullest extent permitted by law, any
right to a trial by jury in respect of any litigation arising directly or
indirectly out of, under or in connection with any of the Operative Documents,
the Policy or any of the Transactions contemplated thereunder. Each party hereto
(A) certifies that no representative, agent or attorney of any party hereto has
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represented, expressly or otherwise, that it would not, in the event of
litigation, seek to enforce the foregoing waiver and (B) acknowledges that it
has been induced to enter into the Operative Documents to which it is a party
(or, in the case of the Policy, the Insurer so acknowledges) by, among other
things, this waiver.
Section 6.11. Limited Liability.
No recourse under any Operative Document shall be had against, and no
personal liability shall attach to, any officer, employee, director, affiliate
or shareholder of any party hereto, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise in respect of any of the Operative Documents or the Policy, it being
expressly agreed and understood that each Operative Document is solely a
corporate obligation of each party thereto, and that any and all personal
liability, either at common law or in equity, or by statute or constitution, of
every such officer, employee, director, affiliate or shareholder for breaches of
any party thereto of any obligations under any Operative Document is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Insurance Agreement.
Section 6.12. Limitation of Owner Trustee Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Insurance Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally, but solely as Owner Trustee, in the exercise of the
powers and authority conferred and vested in it, pursuant to the Trust
Agreement, (b) each of the representations, undertakings and agreements herein
made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company, individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties hereto and by any person claiming by, through or under the parties
hereto, and (d) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of the Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Insurance
Agreement or any Operative Document.
Section 6.13. Entire Agreement.
This Insurance Agreement and the Policy set forth the entire agreement
between the parties with respect to the subject matter hereof and thereof, and
this Insurance Agreement supersedes and replaces any agreement or understanding
that may have existed between the parties prior to the date hereof in respect of
such subject matter.
Section 6.14. No Partnership.
Nothing in this Insurance Agreement or any other agreement entered into in
connection with the Transaction shall be deemed to constitute the Insurer a
partner, co-venturer or joint owner of property with any other entity.
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Section 6.15. No Petition.
Each party hereto, by entering into this Insurance Agreement, hereby
covenants and agrees that they will not at any time institute against the
Depositor or the Issuing Entity, or join any institution against the Depositor
or the Issuing Entity of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law or similar laws of other
jurisdictions in connection with any obligation relating to the Class A Notes,
this Insurance Agreement or any of the Operative Documents; provided that
nothing herein shall prohibit the Indenture Trustee from filing proofs of claim
with respect to any such proceedings. This Section 6.15 will survive for one
year and one day following the last payment on the Class A notes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all
as of the day and year first above mentioned.
XL CAPITAL ASSURANCE INC.
as Insurer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
INDYMAC BANK, F.S.B.,
as Seller and Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
INDYMAC MBS, INC.,
as Depositor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signer
INDYMAC HOME EQUITY MORTGAGE LOAN
ASSET-BACKED TRUST, SERIES 2006-H3,
as Issuing Entity
By: Wilmington Trust Company, not in
its individual capacity but solely as
Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
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