EXHIBIT 1.2
EXECUTION COPY
CHEVY CHASE AUTO RECEIVABLES TRUST 1998-1
5.97% Auto Receivables Backed Certificates
UNDERWRITING AGREEMENT
March 12, 1998
X.X. Xxxxxx Securities Inc.
as Representative of the Underwriters
identified on Schedule 1
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
1. INTRODUCTION. Chevy Chase Bank, F.S.B., a federally chartered
stock savings bank ("Chevy Chase"), has authorized the issuance and sale of
5.97% Auto Receivables Backed Certificates (the "Certificates"), evidencing
interests in a trust (the "Trust") consisting, among other things, of (i) simple
interest retail installment sales contracts and installment loans (the
"Receivables") secured by new and used automobiles, light duty trucks and vans
(the "Vehicles") financed thereby, (ii) amounts due or received thereunder on or
after March 1, 1998 (the "Cut-Off Date"), and (iii) security interests in the
Vehicles financed thereby. The Certificates will be issued under a Pooling and
Servicing Agreement dated as of March 1, 1998 (the "Trust Agreement") between
Chevy Chase as seller and as servicer and U.S. Bank National Association, as
trustee (the "Trustee").
The Certificates will evidence fractional undivided interests in 100%
of the Trust. The Trustee, on behalf of the holders of the Certificates (the
"Certificateholders"), will have the benefit of a financial guaranty insurance
policy (the "Certificate Insurance Policy") from MBIA Insurance Corporation (the
"Certificate Insurer"). The Trustee will also have access to a Reserve Account
to be established for the benefit of the Certificateholders and the Certificate
Insurer. Each Certificateholder will also purchase the right to receive a pro
rata share of the applicable portion of the amounts payable under the Yield
Maintenance Account established pursuant to the Trust Agreement. The
Certificates will be issued in an aggregate principal amount of $151,000,787.82,
which is equal to the original pool balance of the Receivables, exclusive of
accrued interest, as of the opening of business on the Cut-Off Date. The forms
of the Trust Agreement and the Certificate Insurance Policy have been timely
filed as exhibits to the Registration Statement (as such term is hereinafter
defined). Capitalized terms used but not defined herein shall have the meanings
given to them in the Trust Agreement.
Chevy Chase hereby agrees with the several Underwriters named in
Schedule 1 hereto (the "Underwriters") as follows:
2. REPRESENTATIONS AND WARRANTIES OF CHEVY CHASE. Chevy Chase
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A Registration Statement on Form S-3 (No. 333-21707) relating to
the Certificates, including a form of Prospectus, has been filed with the
Securities and Exchange Commission (the "Commission") and either (i) has been
declared effective under the Securities Act of 1933 (the "Act") and is not
proposed to be amended or (ii) is proposed to be amended by amendment or post-
effective amendment. If Chevy Chase does not propose to amend such Registration
Statement or if any post effective amendment to such Registration Statement has
been filed with the Commission prior to the execution and delivery of this
Agreement, such Registration Statement or such post-effective amendment, as the
case may be, has been declared effective by the Commission. For purposes of this
Agreement, "Effective Time" means (i) if Chevy Chase has advised X.X. Xxxxxx
Securities Inc., as representative of the Underwriters (the "Representative"),
that it does not propose to amend such Registration Statement, the date and time
as of which such Registration Statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission, or (ii) if Chevy Chase has
advised the Representative that it proposes to file an amendment or post-
effective amendment to such Registration Statement, the date and time as of
which such Registration Statement, as amended by such amendment or post-
effective amendment, as the case may be, is declared effective by the
Commission. "Effective Date" means the date of the Effective Time. Such
Registration Statement, as amended at the Effective Time, including all material
incorporated by reference therein and including all information, if any, deemed
to be a part of such Registration Statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, is referred to herein as the "Registration
Statement". The term "Base Prospectus" means the prospectus included in the
Registration Statement, as such Base Prospectus has been amended or supplemented
subsequent to the Effective Time by any Prospectus filed with the Commission
pursuant to Rule 424(b)(2), (3), (4) or (5). The term "Prospectus Supplement"
means the preliminary prospectus supplement dated March 10, 1998 and the
prospectus supplement dated March 13, 1998, both specifically relating to the
Certificates, as both were filed with the Commission pursuant to Rule 424 under
the Act (together the "Prospectus Supplement"). The Base Prospectus and the
Prospectus Supplement, together with all material incorporated by reference in
such Base Prospectus or such Prospectus Supplement, is hereinafter referred to
as the "Prospectus."
(b) If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement conformed,
and on the date of this Agreement the Registration Statement conforms, in all
material respects with the requirements of the Act and the rules and regulations
of the Commission ("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
(ii) on the date of this Agreement, the Prospectus conforms, and at
2
the time of filing of the Prospectus pursuant to Rule 424(b) and at the Closing
Date, the Prospectus will conform, in all material respects to the requirements
of the Act and the Rules and Regulations and the Prospectus does not include,
and will not include, any untrue statement of a material fact, and does not omit
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. If
the Effective Time is subsequent to the execution and delivery of this
Agreement, on the Effective Date the Registration Statement and the Prospectus
will conform in all material respects to the requirements of the Act and the
Rules and Regulations, and (i) the Registration Statement will not include any
untrue statement of a material fact or will not omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and (ii) the Prospectus will not include an untrue statement of a
material fact or will not omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The two preceding sentences do not apply to
statements in or omissions from the Registration Statement or Prospectus based
upon written information furnished to Chevy Chase by any Underwriters through
the Representative specifically for use therein, it being understood the only
such information is that described as such in Section 8(b). The conditions to
the use by Chevy Chase of a Registration Statement on Form S-3 under the Act, as
set forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus. There are no contracts
or documents which were required to be filed as exhibits to the Registration
Statement pursuant to the Act or the Rules and Regulations on or prior to the
Effective Date which have not been so filed on or prior to the Effective Date or
that were required to be filed as exhibits to the Registration Statement
pursuant to the Act or the Rules and Regulations which have not been filed as
exhibits to reports filed under the Exchange Act that are incorporated by
reference into the Registration Statement.
(c) 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.
(d) 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 Trust Agreement and the Indemnification
Agreement, 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 regulations, including, without limitation, all
3
regulations, decisions, directives and orders of the Office of Thrift
Supervision. Chevy Chase 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.
(e) (i) There are no legal, governmental or regulatory proceedings
pending to which Chevy Chase is a party or to which any of its property is
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 Trust Agreement and the Indemnification 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.
(f) 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.
(g) The Trust Agreement and the Indemnification Agreement have been
duly authorized by Chevy Chase and, when executed and delivered by Chevy Chase
and assuming the due authorization, execution and delivery of the Trust
Agreement and the Indemnification 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 may be limited by state or
federal securities laws or the policies underlying such laws.
(h) The issuance and delivery of the Certificates, the consummation
of any other of the transactions contemplated herein, in the Trust Agreement and
the Indemnification Agreement or the fulfillment of the terms of this Agreement,
the Trust
4
Agreement or the Indemnification 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.
(i) Xxxxxx Xxxxxxxx LLP is an independent public accountant with
respect to Chevy Chase as required by the Act and the Rules and Regulations.
(j) The direction by Chevy Chase to the Trustee to execute,
countersign, 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, countersigned, issued and delivered by the Trustee in accordance with
the Trust Agreement, the Certificates will be validly issued and outstanding and
will be entitled to the benefits of the Trust Agreement.
(k) 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 Certificates, or the
consummation by Chevy Chase of the other transactions contemplated by this
Agreement, the Trust Agreement or the Indemnification Agreement, except the
registration under the Act of the 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 Certificates by the Underwriters.
(l) Chevy Chase possesses all material licenses, certificates,
authorizations 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, authorization 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.
(m) At the time of execution and delivery of the Trust Agreement,
Chevy Chase (i) will not have assigned to any person any of its right, title or
interest in the Receivables or in the Trust Agreement or the Certificates and
(ii) will have the power and authority to sell the Receivables to the Trustee
and to sell the Certificates to the Underwriters, and upon execution and
delivery of the Trust Agreement by the Trustee,
5
the Trustee will have acquired beneficial ownership of all of Xxxxx Xxxxx'x
right, title and interest in and to the Receivables, and upon delivery to the
Underwriters of the Certificates the Underwriters will have good and marketable
title to the Certificates.
(n) As of the Cut-Off Date, the Receivables will meet the eligibility
criteria described in the Prospectus.
(o) The Trust created by the Trust Agreement is not, and immediately
following the issuance and sale of the 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.
(p) Chevy Chase has authorized the conveyance of the Receivables to
the Trust, and Chevy Chase has authorized the Trust to issue the Certificates.
(q) Each of the Certificates, the Trust Agreement and the Certificate
Insurance Policy conforms in all material respects to the descriptions thereof
contained in the Prospectus.
(r) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement, the Trust Agreement, the
Indemnification Agreement, the Certificate Insurance Policy 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.
(s) Chevy Chase will not apply the proceeds of the sale of the
Certificates pursuant to this Agreement to purchase securities (which term does
not include the Receivables) within the meaning of Regulation T promulgated by
the Federal Reserve Board.
(t) As of the Closing Date, the representations and warranties of
Chevy Chase in the Trust Agreement and the Indemnification Agreement will be
true and correct.
Any certificate signed by an officer of Chevy Chase and delivered to
the Underwriters or the Underwriters' counsel in connection with an offering of
the Certificates shall be deemed, and shall state that it is, a representation
and warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 2 are made.
3. PURCHASE, SALE, DELIVERY AND PAYMENTS. The Underwriters'
commitment to purchase the 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, severally and not jointly, agree, to
purchase from Chevy Chase at the purchase price for the Certificates set forth
opposite the names of the Underwriters on Schedule 1
6
hereto, the respective principal amount of Certificates set forth on Schedule 1
hereto. Payment of the purchase price for, and delivery of, any Certificates to
be purchased by the Underwriters shall be made at the offices of Xxxxx
Xxxxxxxxxx LLP, 1301 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000-0000 or at
such other place as shall be agreed upon by the Underwriters and Chevy Chase, at
10:00 a.m. New York time on March 20, 1998 (the "Closing Date"), or at such
other date or time as shall be agreed upon in writing by the Representative and
Chevy Chase. On the Closing Date, payment shall be made to Chevy Chase by wire
transfer of same day funds payable to the account of Chevy Chase against
delivery to the Trustee as custodian for The Depository Trust Company ("DTC") of
the Certificates in the form of one or more global certificates in definitive
form (the "Global Certificates") and registered in the name of Cede & Co., as
nominee for DTC. The Global Certificates will be made available for checking at
the offices of Xxxxx Xxxxxxxxxx LLP at least 24 hours prior to the Closing Date.
4. OFFERING BY UNDERWRITERS. It is understood that the Underwriters
propose to offer the Certificates for sale to the public (which may include
selected dealers) as set forth in the Prospectus.
5. COVENANTS OF CHEVY CHASE. Chevy Chase covenants with the
Underwriters as follows:
(a) To prepare a Prospectus setting forth any price related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act within the time period prescribed by Rule
430A, and to transmit such Prospectus to the Commission for filing pursuant to
Rule 424(b) under the Act within the prescribed time period, and prior to the
Closing Date to provide evidence satisfactory to the Underwriters of such timely
filing, or to prepare and timely file a post-effective amendment to the
Registration Statement providing such information, which post-effective
amendment shall have been declared effective in accordance with the requirements
of Rule 430A under the Act and to provide evidence satisfactory to the
Underwriters of the effectiveness thereof.
(b) If at any time when the Prospectus as amended or supplemented is
required by the Act to be delivered in connection with sales of the Certificates
by the Underwriters, any event shall occur or condition exist as a result of
which it is necessary, in the opinion of the Underwriters' counsel or counsel
for Chevy Chase, further to 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 Act or the Rules
and Regulations, or if required by such Rules and Regulations, including Rule
430A thereunder, to file a post-effective amendment to such Registration
Statement (including an amended Prospectus), Chevy Chase will promptly notify
the Representative of such event and will prepare and file with the Commission
(subject to the Representative's prior review), at its own expense, such
amendment or supplement as may be necessary to
7
correct such untrue statement or omission or to make the Registration Statement
comply with such requirements, and within two Business Days will furnish to the
Underwriters as many copies of the Prospectus, as amended or supplemented, as
the Underwriters shall reasonably request. Neither the Representative's consent
to, nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6 of this
Agreement.
(c) Chevy Chase will give the Underwriters 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 Act, and will furnish
the Underwriters 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 the Underwriters or the Underwriters' counsel
shall object.
(d) Chevy Chase will notify the Underwriters 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, or threat of, any proceedings for that purpose
or (vi) the suspension of qualification of the Certificates for offering or sale
in any jurisdiction or the initiation of any proceeding 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 the Underwriters 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),
each related preliminary prospectus, and so long as delivery of a Prospectus
relating to the Certificates is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Underwriters may reasonably request. Chevy Chase
will also furnish to the Representative copies of any report required by Rule
463 under the Act.
(f) Chevy Chase will make generally available to holders of the
Certificates as soon as practicable, but in any event not later than the
Availability Date (as defined below), earning statements of the Trust (which
need not be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including Rule 158) and covering a period of at least twelve
consecutive months beginning after the Effective Date which will satisfy the
provisions of Section 11(a) of the Act. For the purposes of the preceding
sentence, the "Availability Date" means the 45th day after the
8
end of the Trust's fourth fiscal quarter following the fiscal quarter that
includes the Effective Date, except that, if such fourth fiscal quarter is the
last quarter of the Trust's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter.
(g) Chevy Chase will endeavor, in cooperation with the Underwriters,
to qualify the Certificates for sale and the determination of their eligibility
for investment under the applicable securities laws of such states and other
jurisdictions of the United States as the Representative 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 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 Certificates have been qualified as above
provided.
(h) Chevy Chase will not, directly or indirectly, without the
Underwriters' prior consent, publicly offer or sell or contract to sell or
attempt to offer, sell or dispose of any securities representing interests in or
secured by the Receivables for a period of 30 days following the commencement of
the offering of the Certificates to the public.
(i) For a period from the date of this Agreement until the retirement
of the Certificates, Chevy Chase, as Servicer, will deliver to the
Representative and, upon request, to each of the other Underwriters, as soon as
practicable, copies of each certificate, report or notice and the annual
statements of compliance delivered by Chevy Chase, as Servicer, to the Trustee
pursuant to Section 4.10 of the Trust Agreement, the annual statement of a firm
of independent public accountants furnished to the Trustee pursuant to Section
4.11 of the Trust Agreement and such other information concerning the
Receivables, Chevy Chase (including in its capacities as the Seller and
Servicer) or the Certificates, as the Representative may from time to time
reasonably request.
(j) On or before the Closing Date, Chevy Chase shall furnish or make
available to the Underwriters or its counsel such additional documents and
information regarding Chevy Chase (including in its capacities as the Seller and
Servicer) and its affairs as the Underwriters may from time to time reasonably
request, including any and all documentation reasonably requested in connection
with their due diligence efforts regarding information in the Prospectus and in
order to evidence the accuracy or completeness of any of the conditions
contained in this Agreement.
(k) So long as any Certificate is outstanding, Chevy Chase shall
furnish to the Representative by first class mail as soon as practicable, (A)
all documents distributed, or caused to be distributed, by Chevy Chase to
Certificateholders, (B) all documents filed, or caused to be filed, by Chevy
Chase with the Commission relating to the Trust pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (C) any order of the
Commission under the Exchange Act or pursuant to a "no action" letter from the
staff of the Commission relating to the Trust and (D) from time to time, such
other information in the possession of Chevy Chase concerning the Trust as the
Representative may reasonably request.
9
(l) Chevy Chase shall apply the net proceeds from the sale of the
Certificates in the manner set forth in the Prospectus Supplement.
(m) 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 the
Underwriters.
(n) To the extent, if any, that any rating provided with respect to
the Certificates set forth in Section 6(k) hereof is conditional upon the
furnishing of documents reasonably available to Chevy Chase or the taking of any
other reasonable actions by Chevy Xxxxx, Xxxxx Xxxxx shall furnish such
documents or take any such other actions.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the 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 Representative shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the Registration Statement to be filed shortly prior to the
Effective Time), from Xxxxxx Xxxxxxxx LLP, in form and substance satisfactory to
the Underwriters and counsel for the Underwriters, confirming that they are
independent public accountants within the meaning of the 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 have
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 the Trust and Chevy Chase set
forth in the Registration Statement and the Prospectus), agrees with the
accounting records of the Trust and Chevy Chase, excluding any questions of
legal interpretation, and (ii) they have performed certain specified procedures
with respect to the computer programs used to select the Receivables and to
generate information with respect to the Receivables set forth in the
Registration Statement and the Prospectus.
For purposes of this subsection (a), if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended by
the amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean
10
the prospectus included in such Registration Statement. Financial statements
included in material incorporated by reference into the Prospectus shall be
deemed included in the Registration Statement for purposes of this subsection
(a).
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than 10:00
p.m., New York time, on the date of this Agreement or such later date as shall
have been consented to by the Representative. If the Effective Time is prior to
the execution and delivery of this Agreement, the Prospectus shall have been
filed with the Commission in accordance with the Rules and Regulations and
Section 5 (a) of this Agreement.
(c) The Registration Statement shall have been declared effective by
the Commission and no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission, any price related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act shall have been included in the Prospectus
and transmitted to the Commission for filing pursuant to Rule 424 under the Act
within the prescribed time period, and Chevy Chase shall have provided evidence
satisfactory to the Underwriters of such timely filing, or a post-effective
amendment to the Registration Statement providing such information shall have
been promptly filed with the Commission and declared effective in accordance
with the requirements of Rule 430A under the Act, and prior to the Closing Date,
Chevy Chase shall have provided evidence satisfactory to the Underwriters of
such effectiveness and there shall not have come to the attention of the
Underwriters facts that would cause the Underwriters to believe that the
Prospectus, at the time it was required to be delivered to a purchaser of the
Certificates, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(d) The Underwriters shall have received the favorable opinion, dated
the Closing Date, of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, counsel to Chevy Chase, or
other counsel to Chevy Chase, acceptable to the Underwriters and their counsel,
addressed to the Underwriters and in form and scope satisfactory to the
Underwriters' counsel, to the effect that:
i) Chevy Chase has been duly chartered and is validly existing
as a federally chartered stock savings bank under the laws of the United States
of America and has full corporate power and authority to own its properties and
conduct its business as described in the Prospectus; Chevy Chase has full
corporate power and authority to execute, deliver, and perform its obligations
under this Agreement, the Trust Agreement and the Indemnification Agreement and
to cause the Certificates to be issued and to consummate the transactions
contemplated hereby and thereby.
ii) Chevy Chase has duly authorized and executed this Agreement,
the Trust Agreement and the Indemnification Agreement.
11
iii) The execution, delivery and performance of this Agreement,
the Trust Agreement and the Indemnification Agreement, the transfer of the
Receivables to the Trust, the issuance and sale of the Certificates and the
consummation of any other of the transactions contemplated herein or in the
Trust Agreement do not conflict with or result in a violation of (a) any law or
regulation of the United States of America or the State of New York or Maryland,
(b) the Charter or By-laws of Chevy Chase, (c) any order, writ, judgment or
decree known to such counsel to which Chevy Chase is a party or is subject or
(d) result in any lien, charge or encumbrance upon any of the properties or
assets of Chevy Chase.
iv) There are no actions, proceedings or investigations pending
or threatened before any court, administrative agency or other tribunal to which
Chevy Chase is a named party or to which its assets are subject (A) asserting
the invalidity of the Trust Agreement, the Indemnification Agreement, this
Agreement or the Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation by Chevy Chase of any of the transactions
contemplated by the Trust Agreement, the Indemnification Agreement, or this
Agreement, (C) that might adversely affect the validity or enforceability of the
Trust Agreement, the Indemnification Agreement, this Agreement or the
Certificates, or (D) seeking to adversely affect the federal income tax
attributes of the Certificates as described in the Prospectus Supplement under
the heading "Certain Federal Income Tax Consequences."
(e) The Underwriters shall have received the favorable opinions of
Xxxxx Xxxxxxxxxx LLP, special counsel to the Underwriters, dated the Closing
Date, addressed to the Underwriters and in form and scope satisfactory to the
Underwriters, to the effect that:
i) Assuming the due authorization and execution by Chevy Chase
of this Agreement, the Trust Agreement and the Indemnification Agreement, each
such agreement constitutes the valid, legal and binding obligation of Chevy
Chase enforceable against Chevy Chase in accordance with its terms.
ii) The Certificates have been duly authorized and, when
executed and authenticated in accordance with the terms of the Trust Agreement
and delivered to and paid for by the Underwriters pursuant to this Agreement,
will be duly and validly issued and outstanding and will be entitled to the
benefits of the Trust Agreement.
iii) The Registration Statement was declared effective under the
Act as of the date and time specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424 (b) specified
in such opinion on the date specified therein or was included in the
Registration Statement (as the case may be), and, to the best of the knowledge
of such counsel, no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been instituted or is pending or contemplated
under the Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereof, as of their respective effective or issue
dates, complies as to form in all material respects with the requirements of the
Act
12
and the Rules and Regulations; such counsel have no reason to believe that the
Registration Statement or any amendment thereto, as of its Effective Date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Registration Statement as of the Closing
Date, or the Prospectus, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration Statement or
the Prospectus.
iv) The conditions to the use by Chevy Chase of a registration
statement on Form S-3 under the Act, as set forth in the General Instructions to
Form S-3, have been satisfied with respect to the Registration Statement and the
Prospectus. There are no contracts or documents of Chevy Chase which are
required to be filed as exhibits to the Registration Statement pursuant to the
Act or the Rules and Regulations thereunder which have not been so filed.
v) The Registration Statement at the time it became effective,
and any amendment thereto at the time such amendment became effective, complied
as to form in all material respects with the applicable requirements of the Act
and the Rules and Regulations.
vi) The Trust Agreement is not required to be qualified under
the Trust Indenture Act of 1939, as amended.
vii) The Trust is not required to be registered under the 1940
Act, and immediately following the issuance and sale of the Certificates in the
manner contemplated by the Trust Agreement and this Agreement, the Trust will
not be required to be so registered.
viii) The Certificates, this Agreement, the Trust Agreement and
the Certificate Insurance Policy conform in all material respects to the
respective descriptions thereof in the Registration Statement and the
Prospectus.
ix) The statements in the Base Prospectus under the headings
"RISK FACTORS --Financial Institution Insolvency Risks," "CERTAIN LEGAL ASPECTS
OF THE RECEIVABLES," and in the Prospectus Supplement under the headings
"SUMMARY OF TERMS -- Certain Legal Aspects of the Receivables," "SUMMARY OF
TERMS -- Certain Federal Tax Considerations," "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES," and "ERISA CONSIDERATIONS," to the extent that they constitute
matters of law or legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material respects.
x) No filing or other action, except the filing of a Uniform
Commercial Code financing statement on Form UCC-1 with the Maryland State
Department of Assessments and Taxation naming Chevy Chase as "debtor" and the
13
Trustee as "secured party," is necessary to perfect the transfer of the
Receivables and proceeds (as defined in Section 9-306 of the Maryland Uniform
Commercial Code) thereof against the claims of creditors of, and transferees
from, Chevy Chase. Such security interest would be enforceable notwithstanding
the insolvency of Chevy Chase or a receivership or conservatorship of Chevy
Chase in which the FDIC is appointed a receiver or conservator for Chevy Chase.
xi) The Receivables constitute "chattel paper" as defined in
Section 9-105 of the Uniform Commercial Code as in effect in the State of
Maryland.
In addition, such counsel shall state that nothing has come to their
attention that would lead them to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus, as of its
date and as of the Closing Date, contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(f) The Underwriters shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to the Underwriters' counsel, to the effect
that:
i) The Trustee has duly authorized, executed and delivered the
Trust Agreement.
ii) The Trustee has been duly organized and is validly existing
as a national banking corporation in good standing under the laws of the United
States of America and has full power and authority to execute and deliver the
Trust Agreement and to perform its obligations thereunder and such Agreement
constitutes the valid, legal and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms.
iii) The Certificates have been duly executed and countersigned
by the Trustee.
iv) The execution and delivery by the Trustee of the Trust
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, (c) any order, writ, judgment or decree or (d) any agreement,
instrument, order, writ, judgment or decree known to such counsel to which the
Trustee is a party or is subject.
v) 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 Trust Agreement.
14
vi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance and sale of the Certificates, or the
consummation by Chevy Chase of the other transactions contemplated by this
Agreement, the Trust Agreement or the Indemnification Agreement, except the
registration under the Act of the 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 Certificates by the Underwriters.
(g) The Underwriters shall have received the favorable opinion or
opinions, dated the Closing Date, of the Underwriters' counsel, Xxxxx Xxxxxxxxxx
LLP, with respect to the issuance and sale of the Certificates, the Registration
Statement, this Agreement, the Prospectus and such other related matters as the
Underwriters may require.
(h) The Underwriters shall have received an opinion, dated the
Closing Date, of Xxxxx Xxxxxxxxxx LLP, counsel to the Underwriters, addressed
to, and satisfactory to, Standard & Poor's Ratings Group, a division of The
XxXxxx-Xxxx Companies, Inc. ("S&P"), Xxxxx'x Investors Service, Inc.
("Xxxxx'x"), Fitch IBCA, Inc. ("Fitch"), the Underwriters and the Underwriters'
counsel, relating to the sale of the Receivables to the Trustee.
(i) Chevy Chase shall have furnished to the Underwriters a
certificate signed on behalf of Chevy Chase by any two of the chairman of the
board, the president, any vice chairman of the board, any executive vice
president, any senior vice president, any vice president, the treasurer, or the
controller of the Seller or the Servicer, as appropriate, dated the Closing
Date, as to (i) the accuracy of the representations and warranties of Chevy
Chase herein and in the Trust Agreement 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 the Underwriters
may reasonably request.
(j) The Trustee shall have furnished to the Underwriters 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 Trust
Agreement by the Trustee and the due execution and delivery of the Certificates
by the Trustee thereunder and such other matters as the Underwriters shall
reasonably request.
(k) The Certificates shall have been rated "AAA" by S&P, "Aaa" by
Xxxxx'x and "AAA" by Fitch, and such ratings shall not have been rescinded.
(l) The Underwriters shall have received from Xxxxxx Xxxxxxxx LLP, or
other independent certified public accountants acceptable to the Underwriters, a
letter, dated as of the date of the Closing Date, delivered at such time in form
satisfactory to the Underwriters.
15
(m) Prior to the Closing Date the Underwriters' counsel, Xxxxx
Xxxxxxxxxx LLP, shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Certificates as herein contemplated and related
proceedings or 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 Certificates as herein contemplated shall be
satisfactory in form and substance to the Underwriters and Xxxxx Xxxxxxxxxx LLP.
(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
or the Certificate Insurer otherwise than as set forth in the Prospectus, the
effect of which is in the Underwriters' judgment so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Certificates on the terms and in the manner contemplated in the
Prospectus or which, in the judgment of the Underwriters, materially impairs the
investment quality of the Certificates or the ability of the Servicer to service
the Receivables.
(o) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of Chevy Chase or its automobile loan business or the
Certificate Insurer which, in the judgment of the Underwriters, is material and
adverse and makes it impracticable or inadvisable to proceed with the completion
of the public offering or the sale of and payment for the Certificates; (ii) any
banking moratorium declared by Federal, New York, Minnesota or Maryland
authorities; or (iii) any downgrading in the rating of any securities of Chevy
Chase or the Certificate Insurer by any nationally recognized statistical rating
organization (as defined for purposes of Rule 436(g) under the Act) or any
public announcement that any such organization has under surveillance or review
its rating of any securities of Chevy Chase or the Certificate Insurer (other
than an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); or (iv) any suspension
or limitation of trading in securities generally on the New York Stock Exchange,
or any setting of minimum prices for trading on such exchange; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity, emergency or change in financial markets if, in the
Representative's judgment, the effect of any such outbreak, escalation,
declaration, calamity, emergency or change makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Certificates.
(p) The Underwriters shall have received evidence satisfactory to the
Underwriters and its counsel that (i) on or before the Closing Date, UCC-1
financing statements have been filed in the offices of the Maryland State
Department of Assessments and Taxation, reflecting the interest of the Trust in
the Receivables and the
16
proceeds thereof and (ii) the Trust will have a first priority perfected
security interest in the amounts on deposit from time to time in the Reserve
Account and the Yield Maintenance Account.
(q) Chevy Chase will provide or cause to be provided to the
Representative such conformed copies of such opinions, certificates, letters and
documents being provided pursuant hereto and such further information,
certificates and documents as the Representative may reasonably request. The
Representative may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters hereunder.
(r) The Certificate Insurance Policy shall have been duly executed
and issued at or prior to the Closing Date and shall conform in all material
respects to the description thereof in the Prospectus.
(s) The Underwriters shall have received the favorable opinion, dated
the Closing Date, of counsel for the Certificate Insurer, in form and scope
satisfactory to their counsel, to the effect that:
i) The Certificate Insurer is duly organized as a New York stock
insurance corporation and is validly existing under the laws of New York, and
has the full power and authority (corporate and other) to issue, and to take all
action required of it under, the Certificate Insurance Policy.
ii) The execution, delivery and performance by the Certificate
Insurer of the Certificate Insurance Policy has been duly authorized by all
necessary corporate action on the part of the Certificate Insurer.
iii) The execution, delivery and performance by the Certificate
Insurer of the Certificate Insurance Policy does 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 has been duly authorized,
executed and delivered by the Certificate Insurer and constitutes a legal, valid
and binding obligation of the Certificate Insurer, enforceable against the
Certificate Insurer 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).
v) The Certificate Insurance Policy is not required to be
registered under the Securities Act.
vi) The information set forth under the caption "The Certificate
Insurance Policy" in the Prospectus, insofar as such statements constitute a
description of the Certificate Insurance Policy, accurately summarizes the
Certificate Insurance Policy.
17
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Certificate Insurer and
public officials. Such opinion may assume the due authorization, execution and
delivery of the instruments and documents referred to therein by the parties
thereto other than the Certificate Insurer.
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, certifying (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, (ii) there
has been no change in the financial condition of the Certificate Insurer since
September 30, 1997 which could have a material adverse effect on the Certificate
Insurer's ability to meet its obligations under the Certificate Insurance Policy
and (iii) such other matters as the Underwriters may reasonably request.
(t) The Certificate Insurance Policy shall have been issued by the
Certificate Insurer.
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 the Underwriters 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, and will
reimburse the Underwriters (if and to the extent incurred by them) for any
filing fees and other expenses (including fees and disbursements of counsel),
including, without limitation, those related to (i) the filing of the
Registration Statement and all amendments thereto, (ii) the duplication and
delivery to the Underwriters, in such quantities as the Underwriters may
reasonably request, of copies of this Agreement, (iii) the preparation, issuance
and delivery of the Certificates and the determination of their eligibility for
investment under the laws of such jurisdictions as the Representative
designates, (iv) 50% of the fees and disbursements of Xxxx Xxxxxxx Xxxxx &
Xxxxxxxxxx, counsel for Chevy Chase, 50% of the fees and disbursements of Xxxxx
Xxxxxxxxxx LLP, counsel for the Underwriters and special counsel for Chevy Chase
and the fees and disbursements of Xxxxxx Xxxxxxxx LLP, accountants of Chevy
Chase, (v) the qualification of the Certificates under securities and Blue Sky
laws and the determination of the eligibility of the Certificates for investment
in accordance with the provisions of Section 5(g), including filing fees and
disbursements and 50% of the fees of Xxxxx Xxxxxxxxxx LLP in connection
therewith and in connection with the preparation of any Blue Sky Survey, (vi)
the printing and delivery to the Underwriters, in such quantities as the
Underwriters may reasonably request, of copies of the Registration Statement and
Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey, (vii) the filing fee of the National Association of Securities Dealers,
Inc., (viii) the duplication and delivery to the Underwriters in such quantities
as the Underwriters may reasonably request, of copies of the Trust Agreement,
(ix) the fees charged by nationally recognized statistical rating agencies for
rating the Certificates, (x) the fees and expenses of the Trustee and its
18
counsel, and (xi) the fees and expenses of the Certificate Insurer and its
counsel. The Underwriters agree to pay (i) 50% of the fees and disbursements of
Xxxxx Xxxxxxxxxx LLP and Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx and (ii) other expenses
of Chevy Chase relating to the transactions contemplated hereby in an amount
equal to $37,750.20.
8. INDEMNIFICATION. Chevy Chase agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls each Underwriter
within the meaning of the Act or the Exchange Act, as follows:
(a) Chevy Chase will indemnify and hold harmless the Underwriters
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriters may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of the Prospectus, any related
preliminary prospectus or any amendment or supplement thereto, in the light of
the circumstances under which they were made) and will reimburse the
Underwriters for any legal or other expenses reasonably incurred by such
Underwriters in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
-------- -------
that Chevy Chase will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to Chevy Chase by any Underwriters through the
Representative specifically for use therein, it being understood and agreed that
the only such information furnished by any Underwriters consists of the
information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless Chevy Chase against any losses, claims, damages or liabilities to
which Chevy Chase may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of the Prospectus or any related
Preliminary Prospectus, in the light of the circumstances under which they were
made), in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to Chevy
Chase by such Underwriter through the Representative specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
Chevy Chase in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred,
19
it being understood and agreed that the only such information furnished by any
Underwriters consists of the following information in the Prospectus furnished
on behalf of the Underwriters: 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 information under the
caption "Underwriting" in the Prospectus Supplement.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
9. CONTRIBUTION. If the indemnification provided for in Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) of Section 8 above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in such subsection (a)
or (b) (i) in such proportion as is appropriate to reflect the relative benefits
received by Chevy Chase on the one hand and each of the Underwriters on the
other from the offering of the 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 the one hand and each of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. 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. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged
20
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 the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this Section 9 shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this Section 9. 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. The Underwriters' obligations in this Section 9 to contribute
are several in proportion to their respective underwriting obligations and not
joint.
The obligations of Chevy Chase under Section 8 and this Section 9
shall be in addition to any liability which Chevy Chase may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under Section 8 and this Section 9 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of Chevy Chase, to each
officer of Chevy Chase who has signed the Registration Statement and to each
person, if any, who controls Chevy Chase within the meaning of the Act.
Each Underwriter, with respect to the Certificates, agrees that it
will not prepare or distribute to any proposed purchaser of any Certificates any
Derived Information (as such term is hereinafter defined), unless it shall have
provided to the Servicer a copy of such Derived Information and a sufficient
time prior to its proposed distribution to permit the Servicer to review and
comment upon such Derived Information, and such Underwriters shall have obtained
the prior written consent of the Servicer thereto following its review. In
addition, such Underwriters agree to provide the Servicer, no later than the
date on which the Prospectus is required to be filed pursuant to Rule 424, with
a definitive copy of its Derived Information with respect to such Certificates
provided by the Underwriters for filing with the Commission on Form 8-K.
Each Underwriter agrees, severally and not jointly, assuming all
Companies-Provided Information (as such term is hereinafter defined) provided by
Chevy Chase is accurate and complete in all material respects, to indemnify and
hold harmless Chevy Chase, each of Xxxxx Xxxxx'x officers and directors and each
person who controls Chevy Chase within the meaning of the Act against any and
all losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Derived
Information provided by such Underwriters, or arise out of or are based upon the
omission or alleged omission to state therein 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, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by him, her or
21
it in connection with investigating or defending or preparing to defend any such
loss, claim, damage, liability or action as such expenses are incurred. The
obligations of the Underwriters under this Section 9 shall be in addition to any
liability which the Underwriters may otherwise have.
For purposes of this Section 9, the term "Derived Information" means
such portion, if any, of the information delivered to Chevy Chase for filing
with the Commission on Form 8-K as:
i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
ii) does not constitute Companies-Provided Information; and
iii) is not information provided by the Certificate Insurer.
"Companies-Provided Information" means any computer tape furnished to the
Underwriters by Chevy Chase concerning the Receivables assigned to the Trust.
Notwithstanding the provisions of Sections 8 and 9, the Underwriters
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Certificates underwritten by the Underwriters and
distributed to the public were offered to the public exceeds the amount of any
damages which the Underwriters 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 the Underwriters within the meaning
of the Act or the Exchange Act shall have the same rights to contribution as
each of the Underwriters, 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 Act or the Exchange Act shall
have the same rights to contribution as Chevy Chase.
10. DEFAULT OF UNDERWRITERS. If any Underwriter defaults in its
obligations to purchase Certificates hereunder on the Closing Date and the
aggregate principal amount of Certificates that such defaulting Underwriter or
Underwriters have agreed but failed to purchase does not exceed 10% of the total
principal amount of Certificates that the Underwriters are obligated to purchase
on such Closing Date, the Representative may make arrangements satisfactory to
Chevy Chase for the purchase of such Certificates by other persons, including
any of the Underwriters, but if no such arrangements are made by such Closing
Date, the nondefaulting Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Certificates that
such defaulting Underwriters agreed but failed to purchase on such Closing Date.
If any Underwriters so default and the aggregate principal amount of
Certificates with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Certificates that the Underwriters are obligated
to purchase on such Closing Date and arrangements satisfactory to the
Representative and Chevy Chase for the purchase of such Certificates by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-
22
defaulting Underwriter or Chevy Chase, except as provided in Section 11. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
11. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of Chevy Chase or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, Chevy Chase or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If this Agreement is
terminated or if for any reason the purchase of the Certificates by the
Underwriters is not consummated, Chevy Chase and the Underwriters shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
7 and the respective obligations of Chevy Chase and the Underwriters pursuant to
Section 8 and 9 shall remain in effect, and if any Certificates have been
purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 and 6 shall also remain in effect. If the purchase
of the Certificates by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 10
or the occurrence of any event specified in clause (ii), (iv) or (v) of Section
6(o), Chevy Chase will reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of Xxxxx Xxxxxxxxxx LLP, Underwriters'
counsel) reasonably incurred by them in connection with the offering of the
Certificates.
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 the Representative 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)
648-5251 attention: Xxxxx X. Xxxxx. 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 (000) 000-0000, attention: Xxxxxxx X. Xxxxxx, Xx.
13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters 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 such
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
23
the benefit of no other person, firm or corporation. No purchaser of
Certificates from the Underwriters shall be deemed to be a successor by reason
merely of such purchase.
14. REPRESENTATIONS OF UNDERWRITERS. The Representative will act for
the several Underwriters in connection with the transactions contemplated by
this Agreement, and any action under this Agreement taken by the Representative
will be binding upon all the Underwriters.
15. GOVERNING LAW AND TIME; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
CHEVY CHASE HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND
STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. 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.
24
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
-------------------------
Xxxx X. Xxxxxx
Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
X.X. Xxxxxx Securities Inc.
By: /s/ Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
Title: Vice President
25
Schedule 1
--------------------------------------------------------------------------------------------------------
Underwriters Purchase Price Principal Amount Proceeds to Chevy
Percentage Chase (includes
accrued interest)
--------------------------------------------------------------------------------------------------------
X.X. Xxxxxx Securities Inc. 99.979543 75,500,787.82 75,485,342.62
--------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corporation 99.979543 75,500,000.00 75,484,554.97
--------------------------------------------------------------------------------------------------------
26
