EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
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This Agreement, dated as of December 11, 1997, is by and among MBIA
Insurance Corporation, a New York stock insurance corporation (the "Certificate
Insurer"), as the Certificate Insurer under the certificate guaranty insurance
policy (the "Policy") to be issued in connection with the Certificates described
below, Chevy Chase Bank, F.S.B. (the "Bank") and Credit Suisse First Boston
Corporation, as Representative (the "Representative") of itself, X.X. Xxxxxx
Securities Inc. and Salomon Brothers Inc (collectively, the "Underwriters").
1. Definitions. As used in this Agreement, the following terms shall
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have the respective meanings stated below:
"Act" means the Securities Act of 1933, as amended, together with all
related rules and regulations.
"Agreement" means this Indemnification Agreement by and among the
Certificate Insurer, the Bank and the Representative.
"Bank Party" means the Bank, its parents, subsidiaries and affiliates
and any shareholder, director, officer, employee, agent or any "controlling
person" (as such term is used in the Act) of any of the foregoing.
"Certificates" means the Auto Receivables Backed Certificates, Class
A, issued by the Chevy Chase Auto Receivables Trust 1997-4 pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
dated as of December 1, 1997 between the Bank, as seller and servicer, and
U.S. Bank National Association, doing business as First Bank National
Association, as trustee.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 5 below, as the context requires.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 5 below, as the context requires.
"Insurer Party" means the Certificate Insurer, its parents,
subsidiaries and affiliates and any shareholder, director, officer,
employee, agent or any "controlling person" (as such term is used in the
Act) of any of the foregoing.
"Losses" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable
fees and expenses of its counsel, to the extent not paid, satisfied or
reimbursed from funds provided by any other Person (provided that the
foregoing shall not create or imply any obligation to pursue recourse
against any such other Person).
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust or unincorporated
organization or any government or agency or political subdivision thereof.
"Prospectus" means the form of final Prospectus Supplement, dated
December 11, 1997, together with the Prospectus dated September 17, 1997,
included in the Registration Statement.
"Registration Statement" means the registration statement on Form S-3
of the Bank on behalf of the Chevy Chase Auto Receivables Trust 1997-4
(Registration No. 333-21707) relating to the Certificates in the form
in which it has become effective, as supplemented by the Prospectus.
"State Securities Law" means any state, local or foreign statute, and
any rule or regulation thereunder, regulating (i) transactions and dealings
in securities, (ii) any person or entity engaging in such transactions or
advising with respect to securities or (iii) investment companies.
"Underwriting Agreement" means the Underwriting Agreement by and
between the Bank and the Representative, dated December 11, 1997.
"Underwriter Party" means each of the Underwriters, its respective
parents, subsidiaries and affiliates and any shareholder, director,
officer, employee, agent or "controlling person" (as such term is used in
the Act) of any of the foregoing.
2. Representations and Warranties of the Certificate Insurer. The
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Certificate Insurer represents and warrants to the Underwriters and the Bank as
follows:
(a) Organization and Licensing. The Certificate Insurer is a duly
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incorporated and existing New York stock insurance corporation licensed to
do business in the State of New York.
(b) Corporate Power. The Certificate Insurer has the corporate power
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and authority to issue the Policy and execute and deliver this Agreement
and to perform all of its obligations hereunder and thereunder.
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(c) Authorization; Approvals. The issuance of the Policy and the
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execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate proceedings. No further approvals or
filings of any kind, including, without limitation, any further approvals
of or further filing with any governmental agency or other governmental
authority, or any approval of the Certificate Insurer's board of directors
or stockholders, are necessary for the Policy and this Agreement to
constitute the legal, valid and binding obligations of the Certificate
Insurer.
(d) No Conflicts. The execution and delivery of this Agreement and
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consummation of the transactions contemplated hereunder will not result in
the breach of any terms or provisions of the certificate of incorporation
or by-laws of the Certificate Insurer, or result in the breach of a term or
provision of, or conflict with or constitute a default under or result in
the acceleration of any obligation under, any material agreement or other
material instrument to which the Certificate Insurer or its property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Certificate Insurer or any of its property
is subject or result in the creation of any lien on any of the Certificate
Insurer's assets or property (other than pursuant to this Agreement).
(e) Enforceability. The Policy, when issued, and this Agreement will
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each constitute a legal, valid and binding obligation of the Certificate
Insurer, enforceable in accordance with its terms subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally applicable in the event of the bankruptcy, insolvency or
reorganization of the Certificate Insurer and to general principles of
equity, and, as to indemnification and contribution, to limits which may be
imposed by state or federal securities laws or the policies underlying such
laws.
(f) Financial Information. The consolidated financial statements of
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the Certificate Insurer as of December 31, 1996 and December 31, 1995 and
for the three years in the period ended December 31, 1996 incorporated by
referenced in the Prospectus (the "Insurer Audited Financial Statements"),
fairly present in all material respects the financial condition of the
Certificate Insurer as of such dates and for the period covered by such
statements in accordance with generally accepted accounting principles
consistently applied. The consolidated financial statements of the
Certificate Insurer and its subsidiaries as of September 30, 1997 and for
the periods ending September 30, 1997 and September 30, 1996 incorporated
by reference in the Prospectus (the "Insurer Unaudited Financial
Statements") present fairly in all material respects the financial
condition of the Certificate Insurer as of such date and for the periods
covered by such statements in accordance with generally accepted accounting
principles applied in a manner consistent with the accounting principles
used in preparing the Insurer Audited Financial Statements, and, since
September 30, 1997 there has been no material change in such financial
condition of the Certificate Insurer which would materially and adversely
affect its ability to perform its obligations under the Policy.
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(g) Certificate Insurer Information. The information in the
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Prospectus as of the date hereof under the captions "The Certificate
Insurer" and "The Certificate Insurance Policy" (collectively, the "Insurer
Information") is true and correct in all material respects and does not
contain any untrue statement of a fact that is material to the Certificate
Insurer's ability to perform its obligations under the Policy.
(h) Limitations. Nothing in this Agreement shall be construed as a
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representation or undertaking by the Certificate Insurer concerning
maintenance of the rating currently assigned to its claims-paying ability
by Xxxxx'x Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings
Group, a division of The XxXxxx-Xxxx Companies, Inc. ("S&P"), Fitch IBCA,
Inc. ("Fitch") or any other nationally recognized statistical rating
organization (collectively, the "Rating Agencies"). The Rating Agencies, in
assigning such rating, may take into account facts and assumptions not
described in the Prospectus, and the facts and assumptions which are
considered by the Rating Agencies are subject to change over time. The
Certificate Insurer has not attempted to disclose all facts and assumptions
which the Rating Agencies deem relevant in assigning a rating within a
particular rating category to the Certificate Insurer's claims-paying
ability. Notwithstanding the foregoing, the Certificate Insurer is not
aware of any facts that, if disclosed to Moody's, S&P or Fitch, would be
reasonably expected to result in a downgrade of the rating of the claims-
paying ability of the Certificate Insurer by any of such Rating Agencies.
(i) No Litigation. There are no actions, suits, proceedings or
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investigations pending, or to the best of the Certificate Insurer's
knowledge, threatened against it at law or in equity or before or by any
court, governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its condition
(financial or otherwise) or operations or would materially and adversely
affect its ability to perform its obligations under this Agreement or the
Policy.
(j) 1933 Act Registration. The Policy is exempt from registration
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under the Act.
3. Agreements, Representations and Warranties of the Underwriters. The
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Underwriters represent and warrant to and agree with the Bank and the
Certificate Insurer that the statements contained in the last paragraph at the
bottom of the cover page of the Prospectus Supplement concerning the terms of
the offering by the Underwriters, the legend concerning overallotments and
stabilizing on the inside front cover page of the Prospectus Supplement and the
statements in the Prospectus Supplement under the caption "Underwriting"
(referred to herein as the "Underwriters Information") are true and correct in
all material respects.
4. Agreements, Representations and Warranties of the Bank. The Bank
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represents and warrants to and agrees with the Certificate Insurer and the
Underwriters as follows:
(a) Registration Statement. The information in the Registration
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Statement, other than the Certificate Insurer Information and the
Underwriters Information, is true
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and correct in all material respects and does not contain any untrue
statement of a fact that is material or omit to state a fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) Organization. The Bank is a federally chartered stock savings
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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 presently conducted. The
Bank is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification.
(c) Corporate Power. The Bank has the corporate power and authority
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to execute and deliver this Agreement, the Underwriting Agreement and the
Pooling and Servicing Agreement and to perform all of its obligations
hereunder and thereunder.
(d) Authorization; Approvals. The issuance and delivery of the
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Certificates and the execution, delivery and performance of this Agreement,
the Underwriting Agreement and the Pooling and Servicing Agreement by the
Bank have been duly authorized by all necessary corporate proceedings. No
further approvals or filings of any kind, including, without limitation,
any further approvals of or further filing with any governmental agency or
other governmental authority, or any further approval of the Bank's board
of directors or stockholders, are necessary for this Agreement, the
Underwriting Agreement and the Pooling and Servicing Agreement to
constitute the legal, valid and binding obligations of the Bank.
(e) No Conflicts. The issuance and delivery of the Certificates, the
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consummation of any other of the transactions contemplated herein or in the
Pooling and Servicing Agreement or the Underwriting Agreement, or the
fulfillment of the terms of this Agreement, the Underwriting Agreement or
the Pooling and Servicing Agreement, do not and will not conflict with or
violate any term or provision of the Charter or By-Laws of the Bank, any
statute, order or regulation applicable to the Bank of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Bank 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 the Bank pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Bank is a party or by which the Bank may be bound
or to which any of the property or assets of the Bank may be subject except
for conflicts, violations, breaches, accelerations and defaults which would
not, individually or in the aggregate, materially and adversely affect its
ability to perform its obligations under this Agreement, the Underwriting
Agreement or the Pooling and Servicing Agreement.
(f) Enforceability. This Agreement, the Pooling and Servicing
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Agreement and the Underwriting Agreement have been duly authorized by the
Bank, and, when executed and delivered by the Bank and assuming the due
authorization, execution and
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delivery of the Pooling and Servicing Agreement and the Underwriting
Agreement by the other parties thereto, will constitute valid and binding
obligations of the Bank, enforceable against the Bank 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 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) the rights to indemnification and
contribution may be limited by state or federal securities laws or the
policies underlying such laws. When executed, authenticated and delivered
in accordance with the terms of the Pooling and Servicing Agreement and
paid for by the Underwriters pursuant to the Underwriting Agreement, the
Certificates will be duly and validly issued and outstanding and will be
entitled to the benefits of the Pooling and Servicing Agreement.
(g) No Litigation. There are no actions, suits, proceedings or
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investigations pending or, to the best of the Bank's knowledge, threatened
against it at law or in equity or before any court, governmental agency,
board or commission or any arbitrator which, if decided adversely, would
materially and adversely affect its condition (financial or otherwise) or
operations or would materially and adversely affect its ability to perform
its obligations under this Agreement, the Underwriting Agreement or the
Pooling and Servicing Agreement.
5. Indemnification.
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(a) The Certificate Insurer hereby agrees, upon the terms and subject
to the conditions of this Agreement, to indemnify, defend and hold harmless
each Bank Party and each Underwriter Party against any and all Losses
incurred by such Bank Party or Underwriter Party, as applicable, with
respect to the offer and sale of the Certificates and resulting from the
Certificate Insurer's breach of any of its representations and warranties
set forth in Section 2 of this Agreement.
(b) The Underwriters hereby agree, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any and all Losses incurred by such Insurer Party
which arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact in the Underwriters Information or (ii)
the omission or alleged omission to state in the Underwriters Information a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) The Bank hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Insurer Party against any
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and all losses incurred by such Insurer Party with respect to the offer and
sale of the Certificates and resulting from the Bank's breach of any of its
representations and warranties set forth in Section 4 of this Agreement.
(d) Upon the incurrence of any Losses entitling a party to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by written notice from the
Indemnified Party to the Indemnifying Party of the Losses incurred.
6. Certificate Insurer Undertaking. The Certificate Insurer hereby
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agrees that, for so long as the Underwriters are required under the Act to
deliver a Prospectus in connection with the sale of the Certificates, the
Certificate Insurer will furnish to either the Representative or the Bank, or
both, upon written request of such party or parties and at the expense of the
requesting party, copies of the Certificate Insurer's most recent financial
statements (annual or interim, as the case may be) prepared in accordance with
generally accepted accounting principles (subject, as to interim statements, to
normal year-end adjustments and to the absence of footnotes) within a reasonable
time after they are available.
7. Notice to be Given to the Certificate Insurer. Except as provided
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below in Section 10 with respect to contribution, the indemnification provided
herein by the Certificate Insurer shall be the exclusive remedy of any
Underwriter Party or Bank Party for the Losses resulting from the Certificate
Insurer's breach of a representation, warranty or agreement hereunder; provided,
however, that any Underwriter Party or Bank Party shall be entitled to pursue
any other remedy at law or in equity for any such breach so long as the damages
sought to be recovered shall not exceed the Losses incurred thereby resulting
from such breach. In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Underwriter Party or Bank Party
to be indemnified under this Agreement, such party shall give the Certificate
Insurer written notice of such action or claim reasonably promptly after receipt
of written notice thereof. The Certificate Insurer shall be entitled to
participate in the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Underwriter Party or the Bank
Party, as the case may be. The Indemnified Party will have the right to employ
its own counsel in any such action in addition to counsel for the Certificate
Insurer, but the fees and expenses of the Indemnified Party's own counsel will
be at the expense of such Indemnified Party unless (1) the employment of such
counsel by the Indemnified Party at the Certificate Insurer's expense has been
authorized in writing by the Certificate Insurer, or (2) the Certificate Insurer
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or (3)
the named parties to any such action include the Certificate Insurer and the
Indemnified Party, and such Indemnified Party shall have been advised by counsel
in writing that there may be one or more legal defenses available to it which
are different from or additional to those available to the Certificate Insurer
(in which case, if such Indemnified Party notifies the Certificate Insurer in
writing that it elects to employ separate counsel at the expense of the
Certificate Insurer, the Certificate Insurer shall not have the right to assume
the defense of such action or proceeding on such Indemnified Party's behalf), in
each of which cases the reasonable fees and expenses of counsel (including local
counsel) will be at the expense of the Certificate Insurer and all such
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fees and expenses will be reimbursed promptly as they are incurred (provided,
that the party seeking reimbursement must provide documentation of expenses). In
no event will the Certificate Insurer be liable for the fees and expenses of
more than one counsel for all Bank Parties and more than one counsel for all
Underwriter Parties in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. The Underwriter Parties and Bank
Parties shall cooperate with the Certificate Insurer in resolving any event
which would give rise to an indemnity obligation pursuant to Section 5(a) hereof
in the most efficient manner. No settlement of any such claim or action shall be
entered into without the consent of the Bank Party or Underwriter Party, as the
case may be, who is subject to such claim or action and the Certificate Insurer;
provided, however, that the consent of such Bank Party or such Underwriter
Party, as applicable, shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such Bank
Party or Underwriter Party. Any failure by a Bank Party or Underwriter Party, as
the case may be, to comply with the provisions of this Section shall relieve the
Certificate Insurer of liability only if such failure is materially prejudicial
to any legal pleadings, grounds, defenses or remedies in respect thereof or the
Certificate Insurer's liability hereunder and then only to the extent of such
prejudice.
8. Notice to be Given to the Representative. Except as provided below in
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Section 10 with respect to contribution, the indemnification provided herein by
the Underwriters shall be the exclusive remedy of any Insurer Party for the
Losses resulting from matters specified in Section 5(b) hereof; provided,
however, that the Insurer Party shall be entitled to pursue any other remedy at
law or in equity for any such breach so long as the damages sought to be
recovered shall not exceed the Losses incurred thereby resulting from such
breach. In the event that any action or regulatory proceeding shall be commenced
or claim asserted which may entitle an Insurer Party to be indemnified under
this Agreement, such party shall give the Representative written notice of such
action or claim reasonably promptly after receipt of written notice thereof. The
Underwriters shall be entitled to participate in the defense of any such action
or claim in reasonable cooperation with, and with the reasonable cooperation of,
the Insurer Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to counsel for the Underwriters, but the
fees and expenses of the Indemnified Party's own counsel will be at the expense
of such Indemnified Party unless (1) the employment of such counsel by the
Indemnified Party at the Underwriters' expense has been authorized in writing by
the Representative, or (2) the Underwriters have not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, or (3) the named parties to any such
action include the Underwriters and the Indemnified Party, and such Indemnified
Party shall have been advised by counsel in writing that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Underwriters (in which case, if such Indemnified Party
notifies the Underwriters in writing that it elects to employ separate counsel
at the expense of the Underwriters, the Underwriters shall not have the right to
assume the defense of such action or proceeding on such Indemnified Party's
behalf), in each of which cases the reasonable fees and expenses of counsel
(including local counsel) will be at the expense of the Underwriters and all
such fees and expenses will be reimbursed promptly as they are incurred
(provided, that the party seeking reimbursement must provide documentation of
expenses). In no event will the Underwriters be liable for the fees and
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expenses of more than one counsel for all Insurer Parties in connection with any
one action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. The
Insurer Party shall cooperate with the Underwriters in resolving any event which
would give rise to an indemnity obligation pursuant to Section 5(b) hereof in
the most efficient manner. No settlement of any such claim or action shall be
entered into without the consent of the Insurer Party who is subject to such
claim or action and the Underwriters; provided, however, that the consent of
such Insurer Party shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such Insurer
Party. Any failure by an Insurer Party to comply with the provisions of this
Section shall relieve the Underwriters of liability only if such failure is
materially prejudicial to any legal pleadings, grounds, defenses or remedies in
respect thereof or the Underwriters' liability hereunder and then only to the
extent of such prejudice.
9. Notice to be Given to the Bank. Except as provided below in Section
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10 with respect to contribution, the indemnification provided herein by the Bank
shall be the exclusive remedy of any Insurer Party for the Losses resulting from
the Bank's breach of a representation, warranty or agreement hereunder;
provided, however, that the Insurer Party shall be entitled to pursue any other
remedy at law or in equity for any such breach so long as the damages sought to
be recovered shall not exceed the Losses incurred thereby resulting from such
breach. In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Insurer Party to be indemnified
under this Agreement, such party shall give the Bank written notice of such
action or claim reasonably promptly after receipt of written notice thereof. The
Bank shall be entitled to participate in the defense of any such action or claim
in reasonable cooperation with, and with the reasonable cooperation of, the
Insurer Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to counsel for the Bank, but the fees and
expenses of the Indemnified Party's own counsel will be at the expense of such
Indemnified Party unless (1) the employment of such counsel by the Indemnified
Party at the Bank's expense has been authorized in writing by the Bank, or (2)
the Bank has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, or (3) the named parties to any such action include the Bank and the
Indemnified Party, and such Indemnified Party shall have been advised by counsel
in writing that there may be one or more legal defenses available to it which
are different from or additional to those available to the Bank (in which case,
if such Indemnified Party notifies the Bank in writing that it elects to employ
separate counsel at the expense of the Bank, the Bank shall not have the right
to assume the defense of such action or proceeding on such Indemnified Party's
behalf), in each of which cases the reasonable fees and expenses of counsel
(including local counsel) will be at the expense of the Bank and all such fees
and expenses will be reimbursed promptly as they are incurred (provided, that
the party seeking reimbursement must provide documentation of expenses). In no
event will the Bank be liable for the fees and expenses of more than one counsel
for all Insurer Parties in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. The Insurer Party shall cooperate
with the Bank in resolving any event which would give rise to an indemnity
obligation pursuant to Section 5(c) hereof in the most efficient manner. No
settlement of any such claim or action shall be entered into without the consent
of the Insurer Party, who is subject to such claim or action and the Bank;
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provided, however, that the consent of such Insurer Party shall not be required
if such settlement fully discharges, with prejudice against the plaintiff, the
claim or action against such Insurer Party. Any failure by an Insurer Party to
comply with the provisions of this Section shall relieve the Bank of liability
only if such failure is materially prejudicial to any legal pleadings, grounds,
defenses or remedies in respect thereof or the Bank's liability hereunder and
then only to the extent of such prejudice.
10. Contribution.
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(a) To provide for just and equitable contribution if the
indemnification provided by the Certificate Insurer is determined to be
unavailable for any Underwriter Party or Bank Party (other than pursuant to
Sections 5 or 7 of this Agreement), the Certificate Insurer shall
contribute to the aggregate costs and liabilities arising from any breach
of a representation or warranty set forth in this Agreement on the basis of
the relative fault of all Underwriter Parties, all Bank Parties and all
Insurer Parties, respectively.
(b) To provide for just and equitable contribution if the
indemnification provided by the Bank is determined to be unavailable for
any Insurer Party (other than pursuant to Sections 5 or 9 of this
Agreement), the Bank shall contribute to the aggregate costs and
liabilities arising from any breach of a representation or warranty set
forth in this Agreement on the basis of the relative fault of all
Underwriter Parties, all Bank Parties and all Insurer Parties,
respectively.
(c) To provide for just and equitable contribution if the
indemnification provided by the Underwriters is determined to be
unavailable for any Insurer Party (other than pursuant to Sections 5 or 8
of this Agreement), the Underwriters shall contribute to the aggregate
costs and liabilities arising from (i) any untrue statement or alleged
untrue statement of a material fact in the Underwriters Information or (ii)
the omission or alleged omission to state in the Underwriters Information a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, on the basis of the relative fault of all Underwriter
Parties, all Bank Parties and all Insurer Parties, respectively; provided,
how ever, that the Underwriters shall not be liable for any amount in
excess of (i) the excess of the sales prices of the Certificates to the
public over the prices paid therefor by the Underwriters over (ii) the
aggregate amount of any damages which the Underwriters have been otherwise
required to pay in respect of the same or any substantially similar claim.
(d) The relative fault of each Indemnifying Party, on the one hand,
and of each Indemnified Party, on the other, shall be determined by
reference to, among other things, whether the breach of, or alleged breach
of, any of its representations and warranties set forth in Sections 2, 3 or
4 of this Agreement relates to information supplied by, or action within
the control of, the Indemnifying Party or the Indemnified Party and
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the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such breach.
(e) The parties agree that the Certificate Insurer shall be solely
responsible for the Insurer Information and for the Insurer Audited and
Unaudited Financial Statements, that the Underwriters shall be solely
responsible for the Underwriters Information and that the Bank shall be
responsible solely for all other information in the Registration Statement
and in the Prospectus.
(f) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(g) The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter Party, any
Bank Party or any Insurer Party, (ii) the issuance of the Certificates or
the Policy or (iii) any termination of this Agreement.
(h) Upon the occurrence of any Losses entitling a party to
contribution hereunder, the contributor shall reimburse the party entitled
to contribution promptly upon establishment by the party entitled to
contribution of the Losses incurred.
It is understood and agreed that the indemnities set forth in this
Agreement shall survive the execution and delivery of this Agreement and the
issuance, sale and delivery of the Certificates.
11. Notices. All notices and other communications provided for under this
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Agreement shall be addressed to the address set forth below as to each party or
at such other address as shall be designated by a party in a written notice to
the other parties.
If to the Certificate Insurer: MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: General Counsel
If to the Bank: Chevy Chase Bank, F.S.B.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: General Counsel
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If to the Representative: Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
12. Governing Law. This Agreement shall be deemed to be a contract under
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the laws of the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
conflicts of laws provisions. This Agreement may not be assigned by any party
without the express written consent of each other party. Amendments of this
Agreement shall be in writing signed by each party. This Agreement shall not be
effective until executed by the Certificate Insurer, the Bank and the
Underwriters.
13. Underwriting Agreement; Pooling and Servicing Agreement. This
-------------------------------------------------------
Agreement in no way limits or otherwise affects the indemnification obligations
of (a) the Bank or the Underwriters under the Underwriting Agreement or (b) the
Bank under the Pooling and Servicing Agreement.
14. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, all as of the date first above written.
MBIA INSURANCE CORPORATION
By: /s/ Xxx X. XxXxxxx
--------------------------------
Name: Xxx X. XxXxxxx
Title: Assistant Secretary
CHEVY CHASE BANK, F.S.B.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Vice President
CREDIT SUISSE FIRST BOSTON CORPORATION
as Representative
By: /s/ Xxxx Xxxxxx
--------------------------------
Name: Xxxx Xxxxxx
Title: Director
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