EXHIBIT 10.2
Execution Copy
INDEMNIFICATION AGREEMENT
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This Agreement, dated as of March 12, 1998, 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 X.X. Xxxxxx Securities Inc., as
Representative (the "Representative") of itself and Credit Suisse First Boston
Corporation (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
issued by the Chevy Chase Auto Receivables Trust 1998-1 pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
dated as of March 1, 1998 between the Bank, as seller and servicer, and
U.S. 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
March 13, 1998, together with the Prospectus dated September 17, 1997,
included in the Registration Statement and any post-effective amendments
thereto.
"Registration Statement" means the registration statement on Form S-
3 of the Bank on behalf of the Chevy Chase Auto Receivables Trust 1998-1
(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 March 12, 1998.
"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
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duly 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
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power and authority to issue the Policy and execute and deliver this
Agreement and to perform all of its obligations hereunder and
thereunder.
(c) Authorization; Approvals. The issuance of the Policy and
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the 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
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and consummation of the transactions contemplated hereunder will not
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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
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Agreement will 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
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statements of 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.
(g) Certificate Insurer Information. The information in
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the 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.
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(h) Limitations. Nothing in this Agreement shall be construed
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as a 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
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registration 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
Statement, other than the Certificate Insurer Information and the
Underwriters Information, is true and correct in all material respects
and does not contain any untrue statement of a fact that is material
or omit to
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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
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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
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
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authority 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
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Certificates, the 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
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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 del ivered by the Bank and assuming
the due authorization, execution and 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.
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(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 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
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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 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
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below in 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
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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 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
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Section 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
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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; 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
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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, however, 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 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.
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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
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this 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
If to the Representative: X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
12. Governing Law. This Agreement shall be deemed to be a contract
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under 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
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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
Title:
CHEVY CHASE BANK, F.S.B.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
Vice President
X.X. XXXXXX SECURITIES INC.
as Representative
By: /s/ Xxxxx Xxxxx
-----------------------------
Name
Title:
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