EXHIBIT 1.1
EXECUTION COPY
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$178,024,000
CHEVY CHASE BANK, F.S.B.
Capitol Revolving Home Equity Loan Asset Backed Certificates,
Series 1997-1, Investor Certificates
UNDERWRITING AGREEMENT
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November 20, 1997
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 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 1997-1, Investor
Certificates (the "Investor Certificates"), and of Capitol Revolving Home Equity
Loan Asset Backed Certificates, Series 1997-1, Transferor Certificates (the
"Transferor Certificates" and together with the Investor Certificates, the
"Certificates"), evidencing interests in the Capitol Revolving Home Equity Loan
Trust 1997-1 (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
August 20,
1998 (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 by first, second
or third 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 November 1, 1997 between
Chevy Chase, as transferor and servicer, and U.S. Bank National Association, 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 $178,024,000 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 Assurance Corporation (the
"Certificate Insurer") pursuant to an insurance and indemnity agreement dated as
of November 25, 1997 (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 Chevy Chase 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 Chevy
Chase 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 Chevy Chase. Chevy Chase represents
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and warrants to, and agrees with, each of the Underwriters that:
(a) Chevy Chase has filed with the Securities and Exchange Commission
(the "Commission") registration statements (Nos. 333-1682 and 333-33733) on Form
S-3, including a prospectus, relating to the Investor Certificates, which have
become effective. Such registration statements, as amended as of the date of
this Agreement, are 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 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 Xxxxx Xxxxxx Inc. 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) Chevy Chase meets the requirements for use of Form S-3 under the
Act.
(d) The documents incorporated by reference in the Registration
Statement and the 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; provided,
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however that no representation or warranty is made with respect to any financial
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statements of the Certificate Insurer.
(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")
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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.
(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 Chevy Chase 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,
(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 the Insurance Agreement may be limited
by state or federal securities laws or the policies underlying such laws.
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(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 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 Chevy Chase as required by the 1933 Act and the Rules and
Regulations.
(l) The direction by Chevy Chase 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 Chevy Chase 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 Chevy Chase 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.
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(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 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 Chevy Chase 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 a nd Servicing Agreement and the Insurance Agreement
will be true and correct in all material respects.
Any certificate signed by an officer of Chevy Chase 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.
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3. Purchase and Sale. The Underwriters' commitment to purchase the
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Investor 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. Chevy Chase
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
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of, any Investor Certificates to be purchased by you shall be made at the office
of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, 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 November 25, 1997 (the "Closing Date"), or at such
other time or date as shall be agreed upon in writing by you and Chevy Chase.
Payment shall be made to Chevy Chase by wire transfer of same day funds payable
to the account of Chevy Chase. 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. Chevy Chase 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
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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 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. Chevy Chase 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) Chevy Chase will deliver to you as many signed and as many
conformed copies of the 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.
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(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 Chevy Chase 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;
provided, however, that notwithstanding the foregoing, the Underwriters hereby
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consent to an offering by Chevy Chase of certificates in a public transaction
secured by first mortgage loans.
(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 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
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the 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 Chevy Chase made pursuant hereto,
to the performance by Chevy Chase 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.
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(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 national banking association under the laws of the United
States of America.
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 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
Minnesota, (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 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 November 25, 1997 (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.
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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 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 Chevy Chase, 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
favor of the Trustee in the Trust Balances of the Initial Mortgage Loans.
(f) You shall have received an opinion, dated the Closing Date, of
Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, counsel to Chevy Chase, addressed to, and
satisfactory to, you to the effect that the Investor Certificates will be
treated as debt for federal income tax purposes.
(g) Chevy Chase shall have furnished to you a certificate signed on
behalf of Chevy Chase by the principal accounting or principal financial officer
thereof, dated the Closing Date, as to (i) the accuracy of the representations
and warranties of Chevy Chase herein at and as of the Closing Date, (ii) the
performance by Chevy Chase 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
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Insurer since December 31, 1996 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, 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 Chevy Chase,
excluding any questions of legal interpretation, and (ii) they have performed
certain specified procedures with respect to the Mortgage Loans.
(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 Chevy Chase in connection with the issuance and sale of the Investor
Certificates as herein contemplated shall be satisfactory in form and sub stance
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.
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(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.
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 Chevy Chase, and fifty
percent of the fees and disbursements of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, the
remaining fifty percent of such fees and the remaining fifty percent of such
disbursements to be paid by the Underwriters, (v) fifty percent of the fees and
disbursements relating to 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(g), including filing fees, in connection therewith and in
connection with the preparation of any Blue Sky Survey and the remaining fifty
percent of such fees and disbursements to be paid by the Underwriters, (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; and (xi) the fees and expenses of the Custodial Agent and its
counsel.
The Underwriters agree to pay (i) fifty percent of the fees and
disbursements of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, including fees and
disbursements relating to 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(g), including filing fees, in connection therewith and in
connection with the preparation of any Blue Sky Survey and (ii) other expenses
of Chevy Chase relating to the transactions contemplated hereby in an amount
equal to $44,506.00.
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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) Chevy Chase 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 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 Supplement (discussing the lack of a secondary
market); (B) the last paragraph on the cover of the Prospectus Supplement
(discussing the offering of the Investor Certificates); (C) the second paragraph
on the inside cover of the Prospectus Supplement (discussing over-allotments and
stabilization); and (D) the information contained under the heading
"Underwriting" in the Prospectus Supplement.
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, 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, 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.
-14-
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 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
-15-
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 Chevy Chase 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 Chevy Chase 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 0000 Xxx) 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 Chevy 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 Chevy Chase, each
officer of Chevy Chase 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 Chevy Chase 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 Chevy Chase and shall survive delivery of any Investor Certificates
to you.
-16-
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 Xxxxx Xxxxxx Inc. 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 212/723-8904,
attention: Fixed Income Syndicate Operations. Notices to Credit Suisse 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 Chevy Chase shall be directed to Chevy
Chase Bank, F.S.B., 0000 Xxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000, 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 Chevy Chase, 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.
-17-
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.
-18-
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:
XXXXX XXXXXX INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
By: XXXXX XXXXXX INC.,
as Representative
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
-19-
Schedule 1
Underwriting
------
Purchase Price Proceeds to
Underwriter Percentage Principal Amount Chevy Chase /1/
----------- --------------- ---------------- -----------
Xxxxx Xxxxxx Inc. 99.70% $89,012,000 $88,744,964
Credit Suisse First Boston 99.70% $89,012,000 $88,744,964
Corporation
/1/ Excludes accrued interest.
-20-
