EXECUTION COPY
$120,460,000
CHEVY CHASE BANK, F.S.B.
Capitol Revolving Home Equity Loan Asset Backed Certificates,
Series 1996-1, Investor Certificates
UNDERWRITING AGREEMENT
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September 20, 1996
CS FIRST BOSTON CORPORATION
Park Avenue Plaza
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
World Financial Center
North Tower
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
1. Introduction. Chevy Chase Bank, F.S.B., a federally chartered stock
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savings bank ("Chevy Chase"), has authorized the issuance and sale of Capitol
Revolving Home Equity Loan Asset Backed Certificates, Series 1996-1, Investor
Certificates (the "Investor Certificates"), and of Capitol Revolving Home Equity
Loan Asset Backed Certificates, Series 1996-1, Transferor Certificates (the
"Transferor Certificates" and together with the Investor Certificates, the
"Certificates"), evidencing interests in the Capitol Revolving Home Equity Loan
Trust 1996-1 (the "Trust") consisting primarily of the Cut-Off Date Trust
Balances of a pool of revolving credit line home equity loans conveyed to the
Trust on the Closing Date (the "Initial Mortgage Loans") and, to the extent of
the availability thereof, the Cut-Off Date Trust Balances of such other
revolving credit line home equity loans to be conveyed to the Trust on or before
June 20, 1997 (the "Subsequent Mortgage Loans") (the Subsequent Mortgage Loans
and the Initial Mortgage Loans and any substitutions therefor, collectively the
"Mortgage Loans" or the "Mortgage Loan Pool") and any additional balances
thereon ("Additional Balances" and together with the Cut-Off Date Trust
Balances, the "Trust Balances"). The Mortgage Loans are secured primarily by
second deeds of trust or mortgages on one-to-four family residential properties.
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of September 1, 1996 between
Chevy Chase, as transferor and servicer, and The Chase Manhattan Bank, as
trustee (the "Trustee") and custodial agent (the "Custodial Agent"). The
Certificates will evidence fractional undivided interests in the Mortgage Loan
Pool and certain other property held in trust for the holders of such
Certificates (collectively, the "Trust Fund"). The aggregate undivided interest
in the Trust Fund represented by the Investor Certificates will initially be
equal to $120,460,000 which is approximately 98% of (i) the Cut-Off Date Trust
Balances of the Initial Mortgage Loans and (ii) the Original Pre-Funded Amount.
The Trustee, on behalf of the holders of the Investor Certificates will have the
benefit of an irrevocable certificate guaranty insurance policy (the
"Certificate Insurance Policy") issued by AMBAC Indemnity Corporation (the
"Certificate Insurer") pursuant to an insurance and indemnity agreement dated as
of September 24, 1996 (the "Insurance Agreement") among the Certificate Insurer,
Chevy Chase, in its individual capacity and as Transferor and Servicer, and the
Trustee. The forms of the Pooling and Servicing Agreement and the Certificate
Insurance Policy will be filed on a timely basis as exhibits to the Registration
Statement (as such term is hereinafter defined).
The Investor Certificates are more fully described in a Registration
Statement which Xxxxx Xxxxx has furnished to each of you (together the
"Underwriters," and each of you an "Underwriter"). Capitalized terms used but
not defined herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
The offering of the Investor Certificates will be made by you, and Xxxxx
Xxxxx understands that you propose to make a public offering of the Investor
Certificates as soon after the date hereof as you deem advisable.
2. Representations and Warranties of Xxxxx Xxxxx. Xxxxx Xxxxx represents
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and warrants to, and agrees with, each of the Underwriters that:
(a) Xxxxx Xxxxx has filed with the Securities and Exchange Commission
(the "Commission"), on February 27, 1996, a registration statement (No. 333-
1682) on Form S-3, including a prospectus, relating to the Investor
Certificates, which has become effective. Such registration statement, as
amended as of the date of this Agreement, is hereinafter referred to as the
"Registration Statement," and the prospectus included in such Registration
Statement, as supplemented by a prospectus supplement (the "Prospectus
Supplement") to reflect the terms of the Investor Certificates as first filed
with the Commission after the date of this Agreement pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933, as
amended (the "1933 Act"), including all material incorporated by reference
therein, is hereinafter referred to as the "Prospectus." A "preliminary
prospectus" means any form of prospectus, including any prospectus supplement,
relating to the Investor Certificates used prior to the date of this Agreement
that is subject to completion.
(b) On the effective date of the Registration Statement, such
Registration Statement conformed in all material respects to the requirements of
the 1933 Act and the rules
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and regulations of the Commission thereunder (the "Rules and Regulations") and
did not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and on the date of this Agreement the Registration
Statement and the preliminary prospectus conform, and at the time of the filing
of the Prospectus in accordance with Rule 424(b), the Registration Statement and
the Prospectus will conform, in all respects to the requirements of the 1933 Act
and the Rules and Regulations, and neither of such documents will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein (and with
respect to the Prospectus, in the light of the circumstances under which they
were made) not misleading, except that the foregoing does not apply to
statements in or omissions from any of such documents based upon written
information furnished to Chevy Chase by any Underwriter through CS First Boston
Corporation as representative of the Underwriters (the "Representative")
specifically for use therein (it being understood that the only such information
is the Underwriter Information, as defined in Section 8(a)(i)).
(c) Xxxxx Xxxxx meets the requirements for use of Form S-3 under the
Act.
(d) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder.
(e) Since the respective dates as of which information is given in the
Prospectus, or the Prospectus as amended and supplemented, there has not been
any material adverse change in the general affairs, management, or results of
operations of Chevy Chase or of its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus or the Prospectus as amended and supplemented,
nor has there been any adverse change in the general affairs, management, or
results of operations of any other affiliate of Chevy Chase which could have a
material adverse effect on the general affairs, management or results of
operations of Chevy Chase or its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus or the Prospectus as amended and supplemented.
(f) Chevy Chase is a federally chartered stock savings bank duly
organized and validly existing under the laws of the United States of America,
and has full corporate power, authority and legal right to own its properties
and conduct its business as such properties are presently owned and such
business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement, the Pooling and Servicing Agreement, the
Insurance Agreement and the Custodial Agreement, dated the Closing Date (the
"Custodial Agreement") among Chevy Chase, the Trustee, the Custodial Agent and
Norwest Bank Minnesota, National Association, as Document Custodian, and to
cause the Certificates to be issued. Chevy Chase has conducted and is
conducting its business so as to comply in all material respects with all
applicable statutes and all regulations, including, without limitation, all
regulations, decisions, directives and orders of, as applicable, the Office of
Thrift Supervision and the Federal Home Loan Bank of Atlanta.
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(g) Except as set forth in the Prospectus, or the prospectus as amended
and supplemented, (i) there are no legal, governmental or regulatory proceedings
pending to which Chevy Chase is a party or of which any of its property is the
subject, which, if determined adversely to Chevy Chase, would individually or in
the aggregate have a material adverse effect on the performance by Chevy Chase
of this Agreement, the Pooling and Servicing Agreement, the Insurance Agreement
or the Custodial Agreement or the consummation of the transactions contemplated
hereunder or thereunder and (ii) to the best of its knowledge, no such
proceedings are threatened or contemplated by governmental or regulatory
authorities or threatened by others.
(h) This Agreement has been duly authorized and validly executed and
delivered by Chevy Chase and constitutes a valid and binding agreement of Chevy
Chase, enforceable against Chevy Chase in accordance with its terms, except to
the extent that (i) the enforceability hereof may be subject to insolvency,
reorganization, moratorium, receivership, conservatorship, or other similar
laws, regulations or procedures of general applicability now or hereafter in
effect relating to or affecting creditors', or other obligees', rights generally
or the rights of creditors or obligees of federally chartered stock savings
banks, the deposits of which are insured by the Federal Deposit Insurance
Corporation (the "FDIC"), (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought
and (iii) rights to indemnification and contribution under this Agreement may be
limited by state or federal securities laws or the policies underlying such
laws.
(i) The Pooling and Servicing Agreement, the Insurance Agreement and
the Custodial Agreement have been duly authorized and, when executed and
delivered by Xxxxx Xxxxx and assuming the due authorization, execution and
delivery of the Pooling and Servicing Agreement, the Insurance Agreement and the
Custodial Agreement by the other parties thereto, will constitute valid and
binding obligations of Chevy Chase enforceable against Chevy Chase in accordance
with their respective terms, except to the extent that (i) the enforceability
thereof may be subject to insolvency, reorganization, moratorium, receivership,
conservatorship, or other similar laws, regulations or procedures of general
applicability now or hereafter in effect relating to or affecting creditors', or
obligees' rights generally or the rights of creditors' or obligees' of federally
chartered stock savings banks, the deposits of which are insured by the FDIC and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(j) The issuance and delivery of the Certificates, the consummation of
any other of the transactions contemplated herein, in the Pooling and Servicing
Agreement, in the Insurance Agreement, or in the Custodial Agreement, or the
fulfillment of the terms of this Agreement, the Pooling and Servicing Agreement,
the Insurance Agreement, or the Custodial Agreement do not and will not conflict
with or violate any term or provision of the Charter or By-Laws of Chevy Chase,
any statute, order or regulation applicable to Chevy Chase of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over Chevy Chase and do not and will not conflict with, result in a breach or
violation or the acceleration of or constitute a
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default under or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of Chevy Chase pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Chevy Chase is a party or by which Chevy Chase
may be bound or to which any of the property or assets of Chevy Chase may be
subject except for conflicts, violations, breaches, accelerations and defaults
which would not, individually or in the aggregate, be materially adverse to
Chevy Chase or materially adverse to the transactions contemplated by this
Agreement.
(k) Xxxxxx Xxxxxxxx LLP is an independent public accountant with
respect to Xxxxx Xxxxx as required by the 1933 Act and the Rules and
Regulations.
(l) The direction by Xxxxx Xxxxx to the Trustee to execute,
authenticate, issue and deliver the Certificates has been duly authorized by
Chevy Chase, and, assuming the Trustee has been duly authorized to do so, when
executed, authenticated, issued and delivered by the Trustee in accordance with
the Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits of the Pooling and Servicing
Agreement.
(m) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance and sale of the Investor Certificates, or
the consummation by Xxxxx Xxxxx of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement, the Insurance Agreement, or the
Custodial Agreement, except the registration under the 1933 Act of the Investor
Certificates and such consents, approvals, authorizations, registrations or
qualifications as may have been obtained or effected or as may be required under
securities or Blue Sky laws in connection with the purchase and distribution of
the Investor Certificates by you.
(n) Chevy Chase possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus and Xxxxx Xxxxx has not received notice of
proceedings relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations, financial condition or
income.
(o) At the time of execution and delivery of the Pooling and Servicing
Agreement, with respect to the Initial Mortgage Loans, and as of the applicable
Transfer Date, with respect to the Subsequent Mortgage Loans, Chevy Chase (i)
will have good and marketable title to the Mortgage Loans being transferred by
it to the Trustee pursuant thereto, free and clear of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "Liens"), except for the transfers and encumbrances for the
benefit of the Prior Trusts, (ii) will not have assigned to any person any of
its right, title or interest in such Mortgage Loans (other than such Prior
Trusts) or in the Pooling and Servicing Agreement or the Investor Certificates
and (iii) will have the power and authority to sell such Mortgage Loans to the
Trustee and to sell the Investor Certificates to you, and upon execution and
delivery of the Pooling and Servicing
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Agreement by the Trustee, the Trustee will have acquired beneficial ownership of
all of Xxxxx Xxxxx'x right, title and interest in and to the Mortgage Loans,
except for the transfers and encumbrances for the benefit of the Prior Trusts,
and upon delivery to you of the Investor Certificates you will have good and
marketable title to the Investor Certificates, in each case free of Liens.
(p) As of the Initial Cut-Off Date, each of the Initial Mortgage Loans
will meet the eligibility criteria described in the Prospectus and as of the
related Cut-Off Date for the Subsequent Mortgage Loans and any Eligible
Substitute Mortgage Loans, each of the Subsequent Mortgage Loans and Eligible
Substitute Mortgage Loans, as applicable, will meet the eligibility criteria
described in the Prospectus.
(q) The Trust Fund created by the Pooling and Servicing Agreement is
not, and immediately following the issuance and sale of the Investor
Certificates will not be, required to be registered as an "investment company"
under the Investment Company Act of 1940, as amended (the "1940 Act"), as in
effect on the date hereof.
(r) Each of the Investor Certificates, the Pooling and Servicing
Agreement, the Insurance Agreement and the Certificate Insurance Policy conforms
in all material respects to the descriptions thereof contained in the
Prospectus.
(s) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement and the Certificates that are
required to be paid by Xxxxx Xxxxx at or prior to the Closing Date have been
paid or will be paid at or prior to the Closing Date.
(t) As of the Closing Date, the representations and warranties of Chevy
Chase in the Pooling and Servicing Agreement and the Insurance Agreement will be
true and correct in all material respects.
Any certificate signed by an officer of Xxxxx Xxxxx and delivered to you in
connection with an offering of the Investor Certificates shall be deemed, and
shall state that it is, a representation and warranty as to the matters covered
thereby to each person to whom the representations and warranties in this
Section 2 are made.
3. Purchase and Sale. The Underwriters' commitment to purchase the Investor
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Certificates pursuant to this Agreement shall be deemed to have been made on the
basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth. Xxxxx Xxxxx agrees to
instruct the Trustee to issue and agrees to sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase from Chevy Chase at a
purchase price set forth on Schedule 1 hereto, the principal amount of Investor
Certificates set forth opposite your respective names on Schedule 1 hereto.
4. Delivery and Payment. Payment of the purchase price for, and delivery of,
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any Investor Certificates to be purchased by you shall be made at the office of
Shaw, Pittman, Xxxxx
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& Xxxxxxxxxx, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X., or at such other place as
shall be agreed upon by you and Chevy Chase, at 10:00 a.m. New York City time on
September 24, 1996 (the "Closing Date"), or at such other time or date as shall
be agreed upon in writing by you and Xxxxx Xxxxx. Payment shall be made to Chevy
Chase by wire transfer of same day funds payable to the account of Xxxxx Xxxxx.
Delivery of the Investor Certificates shall be made to you for your account
against payment of the purchase price thereof. Such Investor Certificates shall
be in such denominations and registered in such names as you may request in
writing at least one Business Day prior to the Closing Date. For purposes of
Rule 15c6-1 under the Exchange Act, the Closing Date (if later than the
otherwise applicable settlement date) shall be the settlement date for payment
of funds and delivery of the Investor Certificates. Such Investor Certificates,
which may be in temporary form, will be made available for examination and
packaging by you no later than 3:00 p.m. on the Business Day prior to the
Closing Date.
5. Covenants of Chevy Chase. Chevy Chase covenants with each of the
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Underwriters as follows:
(a) Chevy Chase will file the Prospectus with the Commission pursuant to
and in accordance with subparagraph (2) (or, if applicable and if consented to
by the Underwriters, subparagraph (5)) of Rule 424(b) not later than the second
Business Day following the execution and delivery of this Agreement. Xxxxx
Xxxxx will advise the Underwriters promptly of any such filing pursuant to Rule
424(b).
(b) If at any time when the Prospectus as amended or supplemented is
required by the 1933 Act to be delivered in connection with sales of the
Investor Certificates by you, any event shall occur or condition exist as a
result of which it is necessary, in the opinion of counsel for Chevy Chase, to
further amend or supplement the Prospectus as then amended or supplemented in
order that the Prospectus as amended or supplemented will not include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of circumstances existing at the time
it is delivered to a purchaser, not misleading or if it shall be necessary, in
the opinion of any such counsel, at any such time to amend or supplement the
Registration Statement or the Prospectus as then amended or supplemented in
order to comply with the requirements of the 1933 Act or the Rules and
Regulations thereunder, Chevy Chase will promptly prepare and, subject to the
other provisions of this Section 5, file with the Commission such amendment or
supplement as may be necessary to correct such untrue statement or omission or
to make the Registration Statement comply with such requirements, and within two
Business Days will furnish to you as many copies of the Prospectus, as amended
or supplemented, as you shall reasonably request.
(c) Chevy Chase will give you reasonable notice of its intention to file
any amendment to the Registration Statement, the Prospectus or the Prospectus as
amended or supplemented, pursuant to the 1933 Act, will furnish you with copies
of any such amendment or supplement proposed to be filed a reasonable time in
advance of filing, and will not file any such amendment or supplement to which
you shall object. Neither the consent of the Underwriters (or
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their Representative) to, nor the delivery by the Representative of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(d) Chevy Chase will notify you immediately, and confirm the notice in
writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing of
any supplement to the Prospectus or the Prospectus as amended or supplemented,
(iii) of the receipt and contents of any comments from the Commission with
respect to the Registration Statement or the Prospectus or the Prospectus as
amended or supplemented, (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus
or for additional information and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. Xxxxx Xxxxx will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(e) Xxxxx Xxxxx will deliver to you as many signed and as many conformed
copies of each Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus) as
you may reasonably request.
(f) Chevy Chase will cause the Trust Fund to make generally available to
holders of the Investor Certificates, as soon as practicable, but not later than
90 days after the close of the period covered thereby, an earnings statement of
the Trust Fund covering a period of at least 12 consecutive months beginning not
later than the first day of the first fiscal quarter following the Closing Date
and, in each case, satisfying the provisions of Section 11(a) of the 1933 Act
and the Rules and Regulations (including Rule 158).
(g) Chevy Chase will endeavor, in cooperation with you, to qualify the
Investor Certificates for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as you may
designate, and will maintain or cause to be maintained such qualifications in
effect for as long as may be required for the distribution of the Investor
Certificates. Chevy Chase will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in which the
Investor Certificates have been qualified as above provided.
(h) Chevy Chase will not, without your prior consent, publicly offer or
sell or contract to sell any mortgage pass-through certificates, mortgage pass-
through notes or collateralized mortgage obligations or other similar
securities, of which Xxxxx Xxxxx is the issuer, representing interests in or
secured by other mortgage-related assets for a period of 30 days following the
commencement of the offering of the Investor Certificates to the public.
(i) So long as the Investor Certificates shall be outstanding, Chevy
Chase will deliver to you the annual statement as to compliance delivered to the
Trustee pursuant to Section 3.9 of the Pooling and Servicing Agreement and the
annual statement of a firm of independent
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public accountants furnished to the Trustee pursuant to Section 3.10 of the
Pooling and Servicing Agreement, as soon as such statements are furnished to the
Trustee.
(j) Chevy Chase will apply the net proceeds from the sale of the Investor
Certificates in the manner set forth in the Prospectus.
(k) If, between the date hereof or, if earlier, the dates as of which
information is given in the Prospectus and the Closing Date, to the knowledge of
Chevy Chase there shall have been any material change, or any development
involving a prospective material change in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
Chevy Xxxxx, Xxxxx Xxxxx will give prompt written notice thereof to you.
(l) Chevy Chase, during the period when the Prospectus is required to be
delivered under the 1933 Act, will file promptly all documents required to be
filed with the Commission pursuant to Section 13 or 14 of the Exchange Act,
including, without limitation, a Form 8-K containing this Agreement, the Pooling
and Servicing Agreement and the Certificate Insurance Policy.
6. Conditions of the Obligations of the Underwriters. The obligations of the
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several Underwriters to purchase the Investor Certificates pursuant to this
Agreement are subject to the accuracy on and as of the Closing Date of the
representations and warranties on the part of Chevy Chase herein contained, to
the accuracy of the statements of officers of Xxxxx Xxxxx made pursuant hereto,
to the performance by Xxxxx Xxxxx of all of its obligations hereunder and to the
following conditions at the Closing Date:
(a) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) hereof. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or, to the
knowledge of Chevy Chase, threatened by the Commission.
(b) You shall have received the favorable opinion, dated the Closing
Date, of Xxxx, Xxxxxxx, Xxxxx & Xxxxxxxxxx, counsel to Chevy Chase, in the form
attached hereto as Exhibit A.
(c) You shall have received the favorable opinion of counsel to the
Trustee, dated the Closing Date, addressed to you and in form and scope
satisfactory to you, to the effect that:
i) The Trustee is duly organized and is validly existing and in good
standing as a banking corporation under the laws of the State of New York.
ii) The Trustee has duly authorized, executed and delivered the
Pooling and Servicing Agreement and the Insurance Agreement.
iii) The Trustee has full power and authority to execute and deliver
the Pooling and Servicing Agreement and the Insurance Agreement and to perform
its obligations
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thereunder and each of the Pooling and Servicing Agreement and the Insurance
Agreement constitutes the valid, legal and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms (subject, as to
enforcement, to bankruptcy, reorganization, insolvency, moratorium and other
laws affecting creditors' rights generally and to general equity principles).
iv) The Certificates have been duly executed and authenticated by the
Trustee.
v) The execution and delivery by the Trustee of the Pooling and
Servicing Agreement and the Insurance Agreement and the performance by the
Trustee of its duties thereunder do not conflict with or result in a violation
of (a) any law or regulation of the United States of America or the State of New
York, (b) the charter or by-laws of the Trustee or (c) any order, writ, judgment
or decree.
vi) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body of the
United States of America or any state thereof is required for the execution,
delivery or performance by the Trustee of the Pooling and Servicing Agreement
and the Insurance Agreement.
(d) You shall have received the favorable opinion, dated the date of
Closing Date, of counsel for the Certificate Insurer, in form and scope
satisfactory to you, to the effect that:
i) The Certificate Insurer is duly organized as a corporation and is
validly existing under the laws of the State of Wisconsin, and has the full
power and authority (corporate and other) to issue the Certificate Insurance
Policy, and to take all action required of it under, the Certificate Insurance
Policy, the Insurance Agreement and the Indemnification Agreement, dated
September 20, 1996 (the "Indemnification Agreement") between the Certificate
Insurer and the Underwriters.
ii) The execution, delivery and performance by the Certificate Insurer
of the Certificate Insurance Policy, the Insurance Agreement and the
Indemnification Agreement have been duly authorized by all necessary corporate
action on the part of the Certificate Insurer.
iii) The execution, delivery and performance by the Certificate Insurer
of the Certificate Insurance Policy, the Insurance Agreement and the
Indemnification Agreement do not require the consent or approval of, the giving
of notice to, the registration with, or the taking of any other action in
respect of any state or other governmental agency or authority which has not
previously been effected.
iv) The Certificate Insurance Policy, the Insurance Agreement and the
Indemnification Agreement have been duly authorized, executed and delivered by
the Certificate Insurer and constitute legal, valid and binding obligations of
the Certificate Insurer, enforceable against the Certificate Insurer in
accordance with their terms (subject, as to enforcement, to bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights
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generally and to general equity principles and to state or federal securities
laws or the policies underlying such laws).
v) The Certificate Insurance Policy is not required to be registered
under the 1933 Act.
(e) You shall have received an opinion, dated the Closing Date, of Xxxx,
Xxxxxxx, Xxxxx & Xxxxxxxxxx, counsel to Xxxxx Xxxxx, addressed to, and
satisfactory to, Standard and Poor's Ratings Services, Xxxxx'x Investors
Service, Inc. and you, relating to the perfection of a security interest in the
Trust Balances of the Initial Mortgage Loans to the Custodial Agent.
(f) You shall have received an opinion, dated the Closing Date, of Xxxx,
Xxxxxxx, Xxxxx & Xxxxxxxxxx, counsel to Xxxxx Xxxxx, addressed to, and
satisfactory to, you to the effect that the Certificates will be treated as debt
for federal income tax purposes.
(g) Xxxxx Xxxxx shall have furnished to you a certificate signed on
behalf of Xxxxx Xxxxx by the principal accounting or principal financial officer
thereof, dated the Closing Date, as to (i) the accuracy of the representations
and warranties of Xxxxx Xxxxx herein at and as of the Closing Date, (ii) the
performance by Xxxxx Xxxxx of all of its obligations hereunder to be performed
at or prior to the Closing Date and (iii) such other matters as you may
reasonably request.
(h) The Trustee shall have furnished to you a certificate of the Trustee,
signed by one or more duly authorized officers of the Trustee, dated the Closing
Date, as to the due acceptance of the Pooling and Servicing Agreement by the
Trustee and the due execution and delivery of the Certificates by the Trustee
thereunder and such other matters as you shall reasonably request.
(i) The Certificate Insurer shall have furnished to you and Chevy Chase a
certificate of the Certificate Insurer, signed by one or more duly authorized
officers of the Certificate Insurer, dated the Closing Date, to the effect that
(i) the information relating to the Certificate Insurer in the Prospectus is
true and correct in all material respects as of the dates specified therein and
(ii) there has been no change in the financial condition of the Certificate
Insurer since December 31, 1995 which could have a material adverse effect on
the Certificate Insurer's ability to meet its obligations under the Certificate
Insurance Policy.
(j) The Certificate Insurance Policy shall have been issued by the
Certificate Insurer pursuant to the Insurance Agreement.
(k) The Investor Certificates shall have been rated "AAA" by Standard and
Poor's Ratings Services or "Aaa" by Xxxxx'x Investors Service, Inc., and such
ratings shall not have been rescinded.
(l) You shall have received from Xxxxxx Xxxxxxxx LLP, or other independent
certified public accountants acceptable to you, letters, on or prior to the date
of this Agreement,
-11-
delivered at such times in form satisfactory to you, confirming that they are
independent public accountants within the meaning of the 1933 Act and the
applicable published Rules and Regulations thereunder and stating in effect that
(i) they have performed certain specified procedures as a result of which they
determined that certain information of an accounting, financial or statistical
nature (which is limited to accounting, financial or statistical information
derived from the general accounting records of Chevy Chase) set forth in the
Registration Statement and the Prospectus (and any supplements thereto), agrees
with the accounting records of Xxxxx Xxxxx, excluding any questions of legal
interpretation, and (ii) they have performed certain specified procedures with
respect to the accounts.
(m) Prior to the Closing Date, you shall have been furnished with such
documents and opinions as you may reasonably require in order to evidence the
accuracy and completeness of any of the representations and warranties or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by Xxxxx Xxxxx in connection with the issuance and sale of the Investor
Certificates as herein contemplated shall be satisfactory in form and substance
to you.
(n) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of Chevy Chase otherwise
than as set forth in the Prospectus, the effect of which is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Investor Certificates on the terms
and in the manner contemplated in the Prospectus.
(o) You shall have received evidence satisfactory to you that (i) on or
before the Closing Date, UCC-1 financing statements have been filed with the
Virginia State Corporation Commission and with the Maryland State Department of
Assessments and Taxation, reflecting the interest of the Trust Fund in the
Mortgage Loans and the proceeds thereof.
(p) The Representative shall have received copies of each opinion of
counsel and certificate delivered to either Rating Agency or the Certificate
Insurer, together with a letter addressed to the Representative, dated the
Closing Date, to the effect that each Underwriter may rely on each such opinion
to the same extent as if such opinion were addressed to it as of such date.
(q) Prior to the Closing Date, Chevy Chase shall have furnished to you
such further information, certificates and documents as you may reasonably
request.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by you by
notice to Chevy Chase at any time at or prior to the Closing Date, and such
termination shall be without liability of any party to any other party except as
provided in Section 7.
-12-
7. Payment of Expenses. Chevy Chase agrees to pay all expenses incident to
-------------------
the performance of its obligations under this Agreement, including without
limitation those related to (i) the filing of the Registration Statement and all
amendments thereto, (ii) the duplication and delivery to you, in such quantities
as you may reasonably request, of copies of this Agreement, (iii) the
preparation, issuance and delivery of the Investor Certificates, (iv) the fees
and disbursements of Xxxxxx Xxxxxxxx LLP, accountants of Xxxxx Xxxxx, and fifty
percent of the fees and disbursements of Shaw, Pittman, Xxxxx & Xxxxxxxxxx, the
remaining fifty percent of such fees (not to exceed the amount previously agreed
upon by Xxxxx Xxxxx and the Underwriters) and the remaining fifty percent of
such disbursements to be paid by the Underwriters, (v) the qualification of the
Investor Certificates under securities and Blue Sky laws and the determination
of the eligibility of the Investor Certificates for investment in accordance
with the provisions of subsection 5(i), including filing fees, in connection
therewith and in connection with the preparation of any Blue Sky Survey, (vi)
the printing and delivery to you, in such quantities as you may reasonably
request, hereinabove stated, of copies of the Registration Statement and
Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey, (vii) the duplication and delivery to you, in such quantities as you may
reasonably request, of copies of the Pooling and Servicing Agreement and the
Insurance Agreement, (viii) the fees charged by nationally recognized
statistical rating agencies for rating the Investor Certificates, (ix) the fees
and expenses of the Trustee and its counsel; (x) the fees and expenses of the
Certificate Insurer and its counsel; (xi) the fees and expenses of the Custodial
Agent and its counsel; and (xii) fifty percent of the fees and disbursements of
Stroock & Stroock & Xxxxx in the amount previously agreed, the remaining fifty
percent of such amount to be paid by the Underwriters.
Notwithstanding the foregoing, if this Agreement is terminated by you in
accordance with the provisions of Section 6 and Section 11(i), Chevy Chase shall
reimburse you for all reasonable out-of-pocket expenses.
8. Indemnification.
---------------
(a) Xxxxx Xxxxx agrees to indemnify and hold harmless you and each
person, if any, who controls you within the meaning of the 1933 Act or the
Exchange Act, as follows:
i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any related preliminary prospectus or preliminary prospectus
supplement (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such untrue statement or omission or alleged untrue statement
or omission was made in reliance upon and in conformity with written information
furnished to Chevy Chase
-13-
by any Underwriter through the Representative expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the only
such information furnished by any Underwriter consists of the following
information (collectively, the "Underwriter Information"): (A) the first two
sentences of the sixth paragraph on the cover of the Prospectus (discussing the
lack of a secondary market); (B) the last paragraph on the cover of the
Prospectus (discussing the offering of the Certificates); (C) the first
paragraph on the inside cover of the Prospectus (discussing over-allotments and
stabilization); and (D) the information contained under the heading
"Underwriting" in the Prospectus.
ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever arising out
of or based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of Chevy Chase; and
iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by you, subject to subsection 8(c)) as
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever arising out of or based upon
any such untrue statement or omission, to the extent that any such expense is
not paid under i) or ii) above.
This indemnity agreement will be in addition to any liability which Chevy
Chase may otherwise have.
(b) Each of you agrees, severally and jointly, to indemnify and hold
harmless Chevy Chase, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls Chevy Chase within
the meaning of the 1933 Act or the Exchange Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or the Prospectus, or any related
preliminary prospectus or preliminary prospectus supplement (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to Chevy Chase by any Underwriter through the Representative expressly
for use therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the Underwriter Information. This
indemnity agreement will be in addition to any liability which you may otherwise
have.
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this indemnity
agreement other than to the extent that such indemnifying party is materially
prejudiced by the indemnified party's failure to provide such notification. An
-14-
indemnifying party may participate at its own expense in the defense of such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action, unless such
indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them which are different from or in
addition to those available to such indemnifying party. If an indemnifying
party assumes the defense of such action, the indemnifying parties shall not be
liable for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
unless (i) if the defendants in any such action include one or more of the
indemnified parties and the indemnifying party, one or more of the indemnified
parties shall have employed separate counsel after having reasonably concluded
that there may be legal defenses available to it or them that are different from
or additional to those available to the indemnifying party or to one or more of
the other indemnified parties or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the commencement
of the action. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action.
9. Contribution. In order to provide for just and equitable contribution in
------------
circumstances in which the indemnity agreement provided for in Section 8 is for
any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, Chevy Chase on the one hand, and each
of you, on the other, shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by Chevy Chase and you (i) in such proportion as is
appropriate to reflect the relative benefits received by Chevy Chase on the one
hand and each of you on the other from the offering of the Investor Certificates
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
Chevy Chase on one hand and each of you on the other in connection with the
statements or omissions which resulted in the losses, liabilities, claims,
damages and expenses. The relative benefits received by Xxxxx Xxxxx on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by Xxxxx Xxxxx bear to the total underwriting discounts and
commissions received by the Underwriters; provided, however, that no person
-------- -------
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Xxxxx
-15-
Chase or by you and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. Notwithstanding the provisions of this Section 9, you shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Investor Certificates underwritten by you and distributed to
the public were offered to the public exceeds the amount of any damages which
you may have otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this Section 9, each
person, if any, who controls you within the meaning of the 1933 Act or the
Exchange Act shall have the same rights to contribution as each of you and each
director of Xxxxx Xxxxx, each officer of Xxxxx Xxxxx who signed the Registration
Statement, and each person, if any, who controls Chevy Chase within the meaning
of the 1933 Act or the Exchange Act shall have the same rights to contribution
as Chevy Chase.
10. Representations, Warranties and Agreements to Survive Delivery. All
--------------------------------------------------------------
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of Xxxxx Xxxxx submitted pursuant hereto
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of you or controlling person of you, or by or
on behalf of Xxxxx Xxxxx and shall survive delivery of any Investor Certificates
to you.
11. Termination of Agreement. You may terminate this Agreement, immediately
------------------------
upon notice to Chevy Chase, at any time at or prior to the Closing Date (i) if
there has occurred any outbreak of hostilities or other calamity or crisis the
effect of which on the financial market of the United States of America is such
as to make it, in your judgment, impracticable to market the Investor
Certificates or enforce contracts for the sale of the Investor Certificates, or
(ii) if trading generally on either the New York Stock Exchange or the American
Stock Exchange has been suspended, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
either of such exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by either Federal or New
York State authorities. In the event of any such termination, the covenant set
forth in subsection 5(d), the provisions of Section 7, the indemnity agreement
set forth in Section 8, the contribution provisions set forth in Section 9 and
the provisions of Sections 10 and 13 shall remain in effect.
12. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to CS First Boston Corporation
shall be directed to the address set forth on the first page hereof, or sent by
facsimile machine which produces an electronic confirmation of receipt to
212/318-0532, attention: Investment Banking Department, Transactions Advisory
Group. Notices to Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated shall be
directed to the address set forth on the first page hereof, or sent by facsimile
machine which produces an electronic confirmation of receipt to 212/449-2784,
attention: Syndicate Operations. Notices to Chevy Chase shall be directed to
Chevy Chase Bank, F.S.B., 8401
-16-
Connecticut Avenue, Chevy Chase, Maryland 20815, or sent by facsimile machine
which produces an electronic confirmation of receipt to 301/986-7401, attention:
Xxxxxxx X. Xxxxxx, Xx.
13. Parties. This Agreement shall inure to the benefit of and be binding
-------
upon you and Xxxxx Xxxxx, and their respective successors. Nothing expressed or
mentioned in this Agreement is intended nor shall it be construed to give any
person, firm or corporation, other than the parties hereto or thereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or with respect to this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties and their respective successors and said controlling persons and
officers and directors and their heirs and legal representatives (to the extent
of their rights as specified herein and therein) and except as provided above
for the benefit of no other person, firm or corporation. No purchaser of
Investor Certificates from you shall be deemed to be a successor by reason
merely of such purchase.
14. Representation of Underwriters. The Representative will act for the
------------------------------
several Underwriters in connection with this financing, and any action taken by
the Representative under this Agreement will be binding upon all the
Underwriters.
15. Governing Law and Time. This Agreement shall be governed by the laws of
----------------------
the State of New York and shall be construed in accordance with such laws.
Specified times of day refer to New York City time.
16. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed to be an original, but together they shall constitute but
one instrument.
-17-
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and
Chevy Chase in accordance with its terms.
Very truly yours,
CHEVY CHASE BANK, F.S.B.
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
CONFIRMED AND ACCEPTED, as of the
date first above written:
CS FIRST BOSTON CORPORATION
XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
By: CS FIRST BOSTON CORPORATION,
as Representative
By: /s/ Xxxx Xxx Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Director
-18-
Schedule 1
Underwriting
----------
Purchase Price Proceeds to
Underwriter Percentage Principal Xxxxxx Xxxxx Xxxxx
----------- --------------- ---------------- -----------
CS First Boston Corporation 99.70% $60,230,000 $60,049,310
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & 99.70% $60,230,000 $60,049,310
Xxxxx Incorporated
-19-
Exhibit A
[XXXX, XXXXXXX, XXXXX & XXXXXXXXXX LETTERHEAD]
September 24, 1996
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
XX First Boston Corporation Incorporated
Park Avenue Plaza World Financial Center
00 Xxxx 00xx Xxxxxx North Tower - 15th Floor
New York, New York 10055 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Standard & Poor's Ratings Xxxxx'x Investor Service, Inc.
Services 00 Xxxxxx Xxxxxx
00 Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Capitol Revolving Home Equity Loan Asset Backed
Certificates, Series 1996-1
----------------------------------------
Dear Sirs:
We have acted as counsel to Chevy Chase Bank, F.S.B., a federally
chartered stock savings bank ("Chevy Chase"), in connection with the issuance
and sale of $120,460,000 principal amount of Capitol Revolving Home Equity Loan
Asset Backed Certificates, Series 1996-1, (the "Certificates"), issued by
Capitol Revolving Home Equity Loan Trust 1996-1 (the "Trust"). The Certificates
will be issued pursuant to the terms of a Pooling and Servicing Agreement dated
as of September 1, 1996 (the "Pooling and Servicing Agreement") between Chevy
Chase, as Transferor and as Servicer, and The Chase Manhattan Bank, as trustee
and custodial agent (the "Trustee" and the "Custodial Agent," respectively, as
the case may be). Holders of the Certificates will be entitled to the benefits
of a Certificate Insurance Policy (the "Policy") issued pursuant to an Insurance
and Indemnity Agreement dated as of September 24, 1996 (the "Insurance
Agreement") among Chevy Chase, as Transferor and Servicer, AMBAC Indemnity
Corporation ("AMBAC") and the Trustee.
This opinion is furnished pursuant to Section 6(b) of the Underwriting
Agreement dated September 20, 1996 (the "Underwriting Agreement") among Chevy
Xxxxx, XX First Boston Corporation ("First Boston") and Merrill, Lynch, Xxxxxx
Xxxxxx & Xxxxx Incorporated ("Xxxxxxx") (First Boston and Xxxxxxx collectively
referred to herein as, the "Underwriters"). Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the
Underwriting Agreement.
Because the primary purpose of our professional engagement as counsel to
Chevy Chase was not to establish or confirm factual matters or financial or
accounting matters and because of the wholly or partially non-legal character of
many of the statements contained in the Registration Statement, the Prospectus
and the Prospectus Supplement (or the 8-Ks (as defined below)), we are not
passing upon and do not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement, the
Prospectus, or the Prospectus Supplement (or the 8-Ks (as defined below)), and
we make no representation that we have independently verified the accuracy,
completeness or fairness of such statements. Without limiting the foregoing, we
assume no responsibility for, and have not independently verified, the accuracy,
completeness or fairness of the financial statements and schedules and other
financial or statistical data included in the Registration Statement, the
Prospectus, or the Prospectus Supplement (or the 8-Ks (as defined below)), and
we have not examined the accounting or financial records from which such
financial statements, schedules and data are derived. We note that, although
certain portions of the Registration Statement (including financial statements
and schedules) have been included therein on the authority of "experts" within
the meaning of the 1933 Act, we are not such experts with respect to any portion
of the Registration Statement, including, without limitation, such financial
statements or schedules or other financial or statistical data included therein.
We have not been requested to, and we render no opinion with respect to the
information contained in the Registration Statement, the Prospectus or the
Prospectus Supplement under the heading "Description of the Certificate Insurer"
or with respect to the Underwriter Information.
In rendering our opinion, we have examined the federal stock charter, as
amended, of Chevy Chase; the bylaws, as amended, of Chevy Chase; a written
consent of the Executive Committee of the Board of Directors of Chevy Chase
effective September 10, 1996; a certificate of corporate existence of Chevy
Chase issued by the Office of Thrift Supervision, Department of the Treasury;
and executed copies of the Pooling and Servicing Agreement, the Underwriting
Agreement, the Custodial Agreement and the Insurance Agreement. In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies
and the authenticity of the originals of such latter documents.
As to factual matters material to our opinion, we have relied upon
certificates of public officials and the certificate of officers of Xxxxx Xxxxx
attached hereto as Exhibit A (the "Officers' Certificate"), without independent
investigation or verification by us of the accuracy of
such matters. In basing our opinion and other matters set forth herein on "our
knowledge" or matters "known to us," the words "our knowledge" or "known to us,"
or words to that effect, signify that, in the course of our representation of
Xxxxx Xxxxx and any affiliates thereof in matters with respect to which we have
been engaged by any of them as legal counsel, no information has come to our
attention that would give us actual knowledge that any such opinions or other
matters are not accurate or that any of the information on which we have relied
is not accurate and complete. Except as otherwise stated herein, we have
undertaken no investigation or verification of such matters. We have not
undertaken to communicate the substance or details of this transaction to all
attorneys in our firm who have performed services for Xxxxx Xxxxx or its
affiliates as counsel on other matters. The words "our knowledge" or "known to
us," or other words to that effect used herein, are intended to be limited to
the current, actual knowledge of those attorneys in our firm who are familiar
with the subject matter of this opinion and the subject transaction.
In rendering this opinion, we have assumed that each party (other than
Xxxxx Xxxxx) that has executed or will execute an agreement to which Xxxxx Xxxxx
is a party has all requisite power and authority and has taken all necessary
action to execute and deliver such agreement and to perform the transactions
contemplated thereby, and that all such agreements are the legal, valid and
binding obligations of such parties (other than Chevy Chase) enforceable against
such parties in accordance with their respective terms.
Based upon the foregoing and subject to the limitations and qualifications
hereinafter set forth, we are of the opinion that:
(i) Chevy Chase has been duly chartered and is validly existing as a
federally chartered stock savings bank under the laws of the United States of
America, and has full corporate power and authority to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted, and has full corporate power and authority to execute,
deliver and perform its obligations under the Underwriting Agreement, the
Pooling and Servicing Agreement, the Custodial Agreement and the Insurance
Agreement and to cause the Certificates to be issued.
(ii) The Underwriting Agreement, the Pooling and Servicing Agreement, the
Custodial Agreement and the Insurance Agreement have been duly authorized,
executed and delivered by Xxxxx Xxxxx.
(iii) The Pooling and Servicing Agreement, the Underwriting Agreement, the
Custodial Agreement and the Insurance Agreement constitute valid and binding
obligations of Chevy Chase, enforceable against Chevy Chase in accordance with
their respective terms, subject, as to enforcement, to (A) the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
receivership, conservatorship or other similar laws, regulations or procedures
of general applicability relating to or affecting creditors' or other obligees'
rights generally or the
rights of creditors or obligees of federally chartered stock savings banks, the
deposits of which are insured by the Federal Deposit Insurance Corporation; (B)
the application of general principles of equity and the discretion of the court
before which any proceeding is brought (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (C) the qualification that
enforceability of rights to indemnification and contribution under the
Underwriting Agreement may be limited by state or federal securities laws or the
policies underlying such laws. We express no opinion as to the enforceability of
any provision of the Pooling and Servicing Agreement, the Custodial Agreement or
Insurance Agreement specifying post-judgment interest at the contract rate or
providing for waiver of jury trial.
(iv) The direction by Xxxxx Xxxxx to the Trustee to execute, issue,
countersign and deliver the Certificates, the consummation of any other of the
transactions contemplated in the Underwriting Agreement, the Pooling and
Servicing Agreement, the Custodial Agreement, the Insurance Agreement, or the
fulfillment of the terms of the Underwriting Agreement, the Pooling and
Servicing Agreement, the Custodial Agreement or the Insurance Agreement, (A) do
not and will not conflict with or violate any term or provision of the federal
stock charter or bylaws of Chevy Chase, of any federal or state statute or
regulation applicable to Chevy Chase, or of any order of which we have knowledge
which is applicable to Chevy Chase and issued by any court, regulatory body,
administrative agency or governmental body having jurisdiction over Chevy Chase,
and (B) do not and will not conflict with, result in a breach or violation or
the acceleration of, constitute a default under, or, other than pursuant to the
Pooling and Servicing Agreement, the Custodial Agreement or the Insurance
Agreement, result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of Chevy Chase pursuant to, the
terms of any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which Chevy Chase is a party or by which Chevy
Chase may be bound or to which any of the property or assets of Chevy Chase may
be subject. We render no opinion pursuant to clause (A) of this paragraph (iv)
with respect to any statute, order or regulation under which rights to indemnity
and contribution for violation of federal or state securities laws may be
limited or prohibited. The opinion in this paragraph (iv) is based solely upon
the Officers' Certificate and our knowledge with respect to the identification
of the material indentures, mortgages, deeds of trust, loan agreements or other
agreements or instruments referred to in clause (B).
(v) The direction by Xxxxx Xxxxx to the Trustee to execute, countersign
and deliver the Certificates has been duly authorized by Chevy Chase and,
assuming that the Trustee has been duly authorized to do so, the Certificates,
when executed, countersigned and delivered by the Trustee, will be validly
issued and outstanding and will be entitled to the benefits of the Pooling and
Servicing Agreement.
(vi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Certificates to the Underwriters on the date hereof, or the
consummation by Chevy Chase of the other transactions contemplated by the
Underwriting Agreement, the Pooling and Servicing Agreement, the Custodial
Agreement or the Insurance Agreement, except (A) the registration under the 1933
Act of the offering of the Certificates, (B) such consents, approvals,
authorizations, registrations or qualifications as may have been obtained or
effected or as may be required under the securities or "blue sky" laws of any
jurisdiction in connection with the purchase and distribution of the
Certificates and except where the failure to obtain the same would not have a
material adverse effect upon the rights of the Certificateholders and (C) the
filing of a Uniform Commercial Code Financing Statement in the Maryland State
Department of Assessments and Taxation and the Office of the Virginia State
Corporation Commission with respect to the transfer of Mortgage Loans to the
Trust.
(vii) The Registration Statement is effective under the 1933 Act and, to
our knowledge, based upon the Officers' Certificate and oral advice rendered to
us by a staff member of the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
or proceedings therefor initiated or threatened by the Commission.
(viii) Xxxxx Xxxxx meets the requirements for use of Form S-3 under the 1933
Act.
(ix) To our knowledge, there are no actions, proceedings or investigations
pending or threatened before any court, administrative agency or other tribunal
to which Chevy Chase is a named party or to which its assets are subject
(A) asserting the invalidity of the Pooling and Servicing Agreement, the
Custodial Agreement, the Insurance Agreement or the Certificates, (B) seeking
to prevent the issuance of the Certificates or the consummation by Chevy Chase
of any of the transactions contemplated by the Pooling and Servicing Agreement,
the Custodial Agreement, the Insurance Agreement or the Underwriting Agreement,
or (C) that might adversely affect the validity or enforceability of the Pooling
and Servicing Agreement, the Insurance Agreement, the Underwriting Agreement or
the Certificates.
(x) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
(xi) The Trust is not required to be registered under the Investment
Company Act of 1940, as amended, and immediately following the issuance and sale
of the Certificates in the manner contemplated by the Pooling and Servicing
Agreement and the Underwriting Agreement, the Trust will not be required to be
so registered.
(xii) The Certificates, the Pooling and Servicing Agreement and the Policy
conform as to legal matters in all material respects to the respective
descriptions thereof contained in the Prospectus.
(xiii) The statements in the Prospectus Supplement under the headings
"Prospectus Supplement Summary of Terms - Certain Federal Income Tax
Consequences," "Prospectus
Supplement Summary - ERISA Considerations," "Risk Factors - Insolvency-Related
Matters," "Certain Legal Aspects of the Mortgage Loans," "Certain Federal Income
Tax Consequences" and "ERISA Considerations," to the extent that they constitute
matters of law or legal conclusions with respect thereto, have been prepared or
reviewed by us and are correct in all material respects.
We have not participated in the preparation of the documents incorporated
by reference in the Registration Statement or the Prospectus (such documents
(other than (i) the Current Report on Form 8-K filed with the Commission by
Xxxxx Xxxxx under the Pooling and Servicing Agreement on September 13, 1996 for
the purpose of filing the Consent of KPMG Peat Marwick LLP, the Consent of Shaw,
Pittman, Xxxxx & Xxxxxxxxxx, and certain audited and unaudited financial
statements of AMBAC Indemnity Corporation, and (ii) the Current Report on Form
8-K that will be filed with the Commission by Xxxxx Xxxxx as transferor and
servicer under the Pooling and Servicing Agreement after September 24, 1996 for
the purpose of filing the Underwriting Agreement and the Certificate Insurance
Policy (such documents set forth in (i) and (ii), collectively, the "8-Ks")) at
the time they were filed with the Commission pursuant to the Exchange Act, the
"Incorporated Documents").
On the basis of (i) our participation, as counsel to Xxxxx Xxxxx, with
representatives of Chevy Chase in the preparation of the Prospectus Supplement
and our participation with representatives of Chevy Chase, its accountants and
the Underwriters at meetings in which the contents of the Prospectus Supplement
and related matters were reviewed and discussed and (ii) the examination by us
of such corporate records, statutes, documents and questions of law as we deemed
necessary, but without independent verification by us of the accuracy,
completeness and fairness of the statements contained in the Registration
Statement, the Prospectus or the Prospectus Supplement (in each case excluding
the Incorporated Documents), and without commenting as to the financial
statements and schedules and other financial or statistical data included
therein, nothing has come to out attention that would lead us to believe that
(A) the Registration Statement (excluding the Incorporated Documents), at the
time it became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that (B) the Prospectus or the
Prospectus Supplement (excluding the Incorporated Documents), as of the date
thereof and as of the Closing Date, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
The foregoing opinions are, with your concurrence, predicated upon and
qualified by the following:
(a) The foregoing opinions are based upon and are limited to the laws
of the State of Maryland, the Commonwealth of Virginia, the State of New York
and the relevant laws of the United States of America, in each case excluding
the choice of law provisions thereof, and we
render no opinion with respect to the law of any other jurisdiction. You are
advised that Xxxxxx X. Xxxxxx, Xx., whose professional corporation is a member
of our firm, is a director of Xxxxx Xxxxx and a trustee or director of several
entities affiliated with Xxxxx Xxxxx. Our opinion does not reflect any
information concerning the matters discussed therein which has been communicated
to Xx. Xxxxxx by reason of his service in the foregoing capacities.
(b) Our opinion is based upon and limited to laws and regulations as
in effect on the date of this letter. We assume no obligation to update the
opinion set forth herein.
(c) Our opinion is limited to the matters set forth in this letter,
and no other opinions should be inferred beyond the matters expressly stated.
Except as agreed by us in writing, our opinion is solely for the benefit of
the addressees shown on the first page hereof and may be relied upon solely by
such addressees for the purposes for which it is being furnished. Without our
express permission, this opinion letter may not be used, circulated, quoted or
otherwise referred to for any purpose except as stated herein, except that
reference may be made to this letter in the list of closing documents pertaining
to the offering of the Certificates.
Very truly yours,
/s/ Xxxx, Xxxxxxx, Xxxxx & Trowbridge
XXXX, XXXXXXX, XXXXX & XXXXXXXXXX
xx: Chevy Chase Bank, F.S.B.
