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SETTLEMENT AGREEMENT AND MUTUAL RELEASE 

This Settlement Agreement nnd Mutual Release ( ..Agreement") is entered into by and 

between IndyMac Bnricorp, lnc., on its own behalf and on behalf of nil of its subsidiaries 

including IndyMac Bank (collectively referred to as "lndyMac"), on the one hand, and Those 

Certain Underwriters at Lloyd's, London severally subscribing to Mortgage Bankers Bond 

Insurance Policy No. 509/QA 009005 (collectively referred to as "Undervniters"). on the other 

hand. 

RECITALS 

(b){4) .----;A Underwriters issued Mortgage Bankers Bond Insurance Policy Nol · .. I 

(b){4) I· I(''the Bond") to IndyMac. As set forth in the Schedule of the Bond, the BOnd Period is 

from March I, 2005 to March I, 2006. The Limit of Indemnity under Insuring Clause Al 

[Dishonesty] of Section A [Fidelity/Crime] oftbe Bond is 520,000,000 any one loss and in the 

aggregate, with a $500,000 deductible each and every loss. 

B. By email dated August24, 2005, Marsh Los Angeles provided notice to Marsh 

London that IndyMac was investigating wrongdoing on the part of a closing agent who closed 

several loans but did not disburse the loan funds. After Underwriters granted several extensions 

of Lime to Indy Mac to submit a. proof of loss, by letter doted July 6, 2006 to counsel for 

Underwriters, IndyM.ac submitted a Proof of Loss alle~ing coverage under Insuring Clause Al(c] 

[DishonestyJof Section A [Fidelity/Crime] of the Bond for loss caused by LaMattina & 

Associates ("LMA ").Joseph LaMattina and other employees, officers and directors of L~ 

& Associates with respect to six loan transactions. LMA purponed to be a law fll111 wiillOITices 

in Nassau County, New York providing settlement and closing agent servic.es to lenders for 

residential real estate loan transactions. Pursuant to information provided by LMA, Indy Mac 

wire-transfened loan funds for the six loan transactions into an LMA bank account at Victory 

State Bank ethe LMA account"). The loss, in the total amount of$1,81 7,041.32, arose from 

misappropriations oflndyMac toan funds for the six loans from theLMA account. On or about 

September 12, 2006. IndyMac received n return of funds of $172,697.J 6, making the [otalloss 

amount claimed by IndyMac to be $1,644.344.16. (The above-noted Proof of Loss and all 

documents and information submitted by lndyMac in support ofthe loss claimed are collectively 

referred to as "the Bond Claim" and are hereby incorporo.ted by reference as though fully set 

forth herein.) 

C. On or about August 25, 2005, lndyMac filed a recovery action in New York state 

court against LMA and others to recover for its loss relating to the six loan transactions ("the 

recovery action"). Indyrvtnc has obtained liens on several pieces of property in which one or 

more of the defendants have an ownership interest, as well as cash from a bank account of 

Prelude Abstract, one of the companies used by the defendants to lmmder funds stolen from 

IndyMac. IndyMac has incurred attorneys' fees, costs and expenses in the recovery action. 

D. Undet"\vriters have conducted an investigation of the Bond Claim nnd the parties 

have engaged in seulement discussions concerning the Bond Claim. Indy Mac and Underwriters 
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desire to settle and resolve the disputes nod differences which exist or may exist between them 

that are based upon the Bond Claim. as set forth herein. 

NOW, THEREFORE, in consideration of the mutual undertakings contained in this 


Agreement and other good and sufficient consideration, 1he parties hereto agree as follows: 


I. 	 lncorooration of Recitals. 

The Recitals to this Agreement are inc01porated and made a pan hereof. 

2. 	 Payment. 

Within ten (I 0) days after the execution of this Agreement by IndyMac. Underwriters 

will pay to IndyMac the total sum of $1,144,344.16 (One Million One Hundred Forty-Four 

Thousand Three Hundred Forty-Four Dollars and Sixteen Cents) by check made payable to 

"lndyMac Bancorp, Inc." or by wire transf-er to an account designated in writing by IndyMac. 

3_ 	 Release. 

A. 	 Claim Release by IndvMac. 

In consideration of the payment described in Paragraph 2 ofthis Agreement, tmd 

conditioned upon the receipt of such payment by IndyMac, and except for any obligations 

expressly created by this Agreement., IndyMac, on behalf of itself and its directors, officers, 

agents, predecessors, successors. assig11ees. subsidiaries, attorneys, and affiliates, hereby releases 

and absolutely discharges Underwriters and their directors, officers, agents, predecessors, 

successors. assigneeS, insurers. attorneys, employees, subsidiaries, affiliates, and each of them, 

from any and all claims, demands, damages, debts, losses, liabilities, attorneys' fees, costs, 

expenses. and all other claims for relief of whatever kind or nature, known and unknown, 

suspected and unsuspected, whether in the past, present or future, and whether based upon the 

Bond, any other insurance policy or bond issued by Underwriters, or any contract, tort, stntute or 

other legal or equitable theory of recovery, based upon, arising out ofor related to: 

(a) 	 the losses and circumstances alleged in the Bond Claim and all matters referred to 

in Recitals B through D of this Agreement; 

(b) 	 any obligation to pny any amounts of loss incurred by IndyMac as n result of the 

Bond Claim and all matters referred to in Recitals B through D of this Agreement: 

{c) 	 the investigation, handling or any other conduct by or on behalf ofUuderv.Titers 

arising out of or related to the Bond Claim and lhe settlement described in this 

Agreement, including any negotiations leading to such settlement; 

(d) 	 interest ofany sort \'-'·ith respect to any amounts ofloss incurred by lndyMac as a 

result of the Bond Claim and all matters referred to in Recitals B through D of this 

Agreement; 

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(e) 	 attorneys' fees, costs and expenses ofnny sort incurred by IndyMac in pursuing 

coverage under the Bond for the losses claimed in the Bond Claim and all matters 

referred to in Recitals B through D of thls Agreement: 

(f) 	 any and all claims under any state or federal statute, regulation or common law 

for unfair claims handling practices, fraud, breach ofan implied covenant of good 

faith and fair dealing, punitive damages, nny type of insurance "bad faith" and 

any form of equitable relief with respect to: (i) any losses claimed by IndyMac in 

the Bond Claim. the settlement described in this Aereement and all matters 

referred to in R~citals B through D of this Agreem;nt: and (ii) the investigation, 

handling or any other conduct by or on behalf of Undenvriters arising out ofor 

related to the Bond Claim and the settlement described in this Agreement, 

including all negotiations between the parties concerning the Bond Claim, the 

settlement described in this Agreement, and the matters referred to in Recitals B 

through D of this Agreement; aod 

{g) 	 to the extem not described in subparagraphs (a) through (t) of this Paragraph 3. all 

matters referred to in Recitals B through D of this Agreement. 

B. 	 Claim Release bv Underwriters. 

In consideration of the payment described in Paragraph 2 of this AgreemenL and 

conditioned upon the receipt of such payment by lndyMac, and except for nny obligations 

expressly created bythis Agreement. Underwriters, on behalfof themselves and their directors, 

officers, agents. predecessors, successors, assignees. subsidiaries, attorneys, arid affiliates, 

hereby release and absolutely discharge IndyMac and its direCtors, officers, agents, predecessors. 

successors, assignees, insurers, nttotileys, employees. subsidiaries, affiliates, and each of them, 

from any nnd all claims, demands, damages, debts, losses, liabilities, attorneys' fees, costs, 

expenses. and all other claims for relief of whatever kind or nature, known and unknown, 

suspected and unsuspected, whether in the past, present or future, and whether based upon the 

Bond, any other insuranc-e policy or bond issue{) by Underwriters, or any contract, tort. statute or 

other legal or equitable theol)' of recovery. based upon, arising out of or related to the Bond 

Clnim. 

4. 	 Waiver of Unknown Claims. 

Each party to this Agreement acknowledges that it has been given the opportunity to be 

infonned by legal counsel of its choice and is a\l.'llre of the proVisions of California Civil Code 

Section 1542 and does expressly waive nod relinquish all rights and benefits which it has or may 

have had under said section and any other statute or common law principle of similar effect with 

respect to the matters released in Paragraph 3 of this Agreement. Section 1542 reads as follows: 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS 

WHTCH THE CREDITOR DOES NOT KNOW OR SUSPECT 

TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING 

THE RELEASE, \VHICH IF KNOWN BY HIM MUST HAVE 

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MATERJALL Y AFFECTED HIS SETTLEMENT WITH THE 

DEBTOR. 

Each party has had the opportunity to be advised by legal counsel of its choice as to this waiver 

and further understands and acknowledges the significance and consequences of specific waiver 

of Section 1542 and hereby assumes full responsibility for any damages or losses sustained by it 

of any sort or nature that might otherwise have been or be assertable as claims with respect to the 

matters released in Paragraph 3 ofthis Agreement. Each party acknowledges lhat it is aware that 

it may later discover facts in addition to or different from those \\ihich it now has or believes to 

be true with respect to the Bond Claim, but that it intends hereby fully, finally and forever to 

settle and release all released matters. known or unknov.n, suspected or \tnsuspected, which tlow 

exist, may exist or previously existed between IndyMnc and Underwriters wilh respect to the 

matters released in Paragraph 3 of" this Agreement. In furtherance of such intention, the releases 

given in Paragraph 3 ofthis Agreement shall be. nnd shall remain, in effect as full and complete 

releases to the extent of their provisions, notwithstanding the discovery or existence of any such 

additional or different facts. 

5. Recovery Efforts. 

(a) As further considenllion for the payment by Underwriters described in Paragraph 

2 of this Agreement, lndyMac hereby assigns to Underwriters all of its rights, title and interest 

and causes of action against any person or entity on nccount of the matters described in Recitals 

B through D ofihis Agreement but only to the eX.tent of the payment set forth in Paragraph 2 of 

this Agreement, including without limitation all rights and causes of action in connection with 

the recovery efforts currently being pursued by IndyMac as described in Recital C to this 

Agreement and the recovery action. 

(b) IndyMac ::md Underwriters agree to cooperate in the pursuit ofsuch recovery 

efforts, including joint retention oftile counsel currently retained by IndyMac at the currenl 

hourly rates to pursue sucb recovery efforts. and to cooperate with regard to lndyMac's defense 

to any counterclaims asserted against it in the recovery action; such as the countercln.ims filed by 

Vincent Ancona and Victory State Bank. While Underwriters participate in such recovery 

efforts, they shall be responsible for paying the reasonable attorneys' fees, costs and expenses of 

such recovel)' efforts, including the defense of counterclaims, incurred following the payment 

described in Paragraph 2 of this Agreement. 

(c) IndyMac will provide to Underwriters' counsel, or cause to be provided, copies of 

the invoices for attorneys' fees, costs and expenses incurred in the recovery action. 

(d) UnderwriLers retain the right. to be exercised in their sole discretion, to withdraw 

from the pursuit of any recovery efforts at any time and upon such withdrawal, Underwriters 

shall not be responsible for payment of any further attorneys' fees, costs and expenses of 

recovery efforts. 

(e) In the event of any actual recoveries, IndyMac shall first be entitled to 

reimbursement of those reasonable attorneys' fees, costs, and expenses incurred in the recovery 

action {e:xcluding, however, Indy Mac's own employee costs) up to the time UnderwriLers' begnn 

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paying such fees, costs Md expellSes pursuant to Parngrnph 5(b). Underwriters shall then be 

entitled to reimbursement of the reasonable attorneys fees, costs and expenses (excluding, 

however, IndyMac's own employee costs) incurred in the recovery effort which Undervtriters 

paid. 

(f) The remaining amount of the recovery, net ofthe expense of such recovery efforts 

as described in Paragraph 5(e), will be applied first to reimburse Undem'liters up to the amount 

paid under paragraph 2 of this Agreement, and, thereafter, to reimburse Indy Mac for its 

deductible in the amount of $500,000. 

6. 	 Confidentiality. 

Tile parties to this Agreement agree ilial, exc-ept as provided in this paragraph, they shall 

not disclose the terms of this Agreement, including but not limited to the a.mo\lnt ofpayment 

under Paragraph 2 of this Agreement, to any person not a party to this Agreement, except: 

(a) as reasonably necessary or appropriate in a communication to the parties released 

in this Agreement; 

(b) as reasonably necessary or appropriate in a communication to an accountant, 

auditor, consultant, attorney, insurance broker. reinsurer, insurer, prospective 

insurer or any employee, officer or director ofthe parties; 

(c) upon the written consent of the parties to this Agreement; 

(d) if required by court order or if required in response to a subpoena or other 

discovery request in a lawsuit; 

(e) as reasonably necessary or appropriate in a communication to any insurance 

regulatory agency or authority; 

(f) as reasonably necessary or appropriate in connection with the pursuit of recovery; 

or 

(g) as reasonably necessary to the Internal Revenue Service or any other taxing 

agency or entity. 

7. Representations and Warranties. 

The parties hereto represent and warrant to and agree with each other as follows: 

(a) 	 Each party has received independent legal advice from attorneys of their own 

choice \Vith respect to the advisability of making the settlement and the releases 

provided herein and with respect to the advisability of executing this Agreement. 

{b) 	 The recited considcrolions of this Agreement are the sole and only considerations 

of this Agreement, and 110 representations. promises, warranties, or other 

inducements have been made by the panies other than as appear in tl1is 

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instrument. Furthermore. this instrument represents the fi.1ll and final integrated 

agreement between the panies hereto. and Sllpersedes any and all prior oral or 

written ngreements or memoranda, express or implied, or positions as to coverage 

lhat exist or may exist between the parties '"-~th respect to the matters described 

and released herein. 

(c) 	 All parties hereto and their counsel have made an investigation of the facts 

pertaining to the releases, contained herein as they deem necessary. 

(d) 	 The terms of this Agreement are contractual, are the result ofnegotiation among 

d1e parties and are not mere recitals. 

(e) 	 This Agreement has been carefully read by each of the parties and the contents 

thereof nre known and understood by each of the parties. 

(f) 	 Each pruty covenants and agrees not to bring any claim, suit or proceeding against 

any party hereto, directly or indirectly, regarding or relating to !he matters 

released hereby (except to enforce this Agreement), and further covenant and 

agree that this Agreement is a bar to any such claim, suit or proceeding. 

(g) 	 lndyMac represents Olld warrants 1hat it is the sole and lawful owner ofall right. 

title and interest in and to evel)' claim or other matter which it releases herein, and 

that it has not heretofore assigned, transferred or purported to assign or transfer, to 

any person, firm, association, corporation or other enrity, any right, title or interest 

in any such claim or other matter. 

(h} 	 In making and entering into this Agreement, it is understood and agreed that each 

party relied fully upon his or its judgment, or the persons employed by them, and 

is not made upon any reliance on any statement or representation of any other 

party. 

(i) 	 No waiver of any provision of this Agreement shall constitute a waiver of any 

other provision, nor shall such waiver constitute a continuing waiver. 

8. 	 Modifications. 

This Agreement may not be amended, canceled, revoked or otherwise modified except by 

written agreement subscribed to by IndyMac and Underwriters or their authorized 

representatives. 

9. 	 Agreement Binding on Successors. 

This Agreement shaH be binding upon, and shall inure to the benefit of, the parties hereto 

and their respective past, present and future heirs, executors, legal representatives, attorneys, 

subrogees, successors, assigns, predecessors in interest, insurance companies. adjusters, 

insurance agents and brokers, investigators, appraisers, partners, directors, officers, owners, 

stockholders. administrators. executives, employees, agents, representatives and all parent, 

subsidiary, allied or affiliated corporations or survivors by merger. 

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10. No Admission of Liability. 

IndyMac and Underwriters explicitly acknowledge that this Agreement represents a 

setdemenl ofdisputed claims, and that by entering into this Agreement, they do not admit or 

acknowledge the existence of any liability or wrongdoing. Neither this Agreement, the 

settlement which led to it, nor the payment of consideration hereunder, is intended to be or shall 

be construed or treated in any respect as an admission of liability by Indy Mac or Undem-riters 

for any purpose. This Agreement and Lhe settlement which led to it is entirely without prejudice 

to the future interpretation by Unden,:riters and IndyMac ofthe tenns and conditions ofany 

bond or insurance policy issued by Undemliters. 

11. Attorneys' Fees and Costs. 

Each party to this Agreemenl agrees Lhat it vv"ill be responsible for all attorneys' fees, 

costs and expenses incurred by it in connection with the negotiation, execution and performance 

of this Agreement. 

12. Severabilitv. 

In the event any portions of this Agreement shall be deemed to be void, voidable or 

unenforceable, the remaining portions shall remain in full force and effect 

13. Warranty ofAuthoritv. 

Each person whose signature is affixed hereto in a representative cnpaciry represents and 

warrants that he is authorized to execute this Agreement on behalf ofand to bind the entity on 

whose behalf the signature is affixed. 

14. Counteronrts. 

This Agreement may be executed in one or more counterparts, each of which when 

executed and delivered shall be an original, and all ofwhich, when exectlted, shall constitute one 

and the same instrument. 

J5. Facsimile and Electronic Mail C.opies. 

The panies agree that facsimile and electronic mail copies of the signatures to this 

Agreement shall be treated as original signatures, are acceptable to each other, and shall bind the 

parties' respective right? nnd obligations under this Agreement, to the same extent as if such 

signatures were original (wet) signatures. 

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16. Good Faith Settlement_ 

All parties hereto acknowledge that the settlement set forth in this Agreement is entered 

into in good faith, as a result of arms length negotiations, and to resolve and compromise 

disputed substnntial claims between them. 

17. Constmction of Agreement. 

As used in this Agreement, the niasculine, feminine or neuter gender, and the singular or 

plural number, shall each be deemed to include the others whenever the context so indicates. 

This Agreement shall be construed without regard to the party or parties responsible for its 

preparation and shall be deemed to have been prepared jointly by the parties hereto. The parties 

hereto agree that any rule of construction to the effect that any ambiguities are to be or may be 

resolved against the drafting party shall not be employed in the interpretation of this Agreement 

to favor one party against the other. 

18. Additiona1 Acts. 

IndyMac and Underwriters shall. nt the reasonable request of the other, execute, 

acknowledge and deliver whatever additional instruments. and do such other acts, as may be 

required or convenient to cany out the intent and purpose of this Agreement. 

19. Governine Law. 

This Agreement shall be governed by l!lld construed under and in accordance with the 

laws ofthe State of California. 

IN WITNESS WHEREOF, the parties have executed this Agreement on the dntes set forth 

below. 

(b)(6) 

Dated: C!z//rJI

Name: Ser-f-:'" 

Title: (;: v 

THOSE CERTAIN UNDERWRITERS AT LLOYD'S, 

LONDON SEVERALLY SUBSCRIBING TO 

MORTGAGE BANKERS BOND INSURANCE NO. 

(b)(4) I I 

Dated:----­

Edv.--ard T. Stork. Esq. 

Their Authorized Representative