Exhibit 10.5
MBIA INSURANCE CORPORATION,
as Insurer,
CAPITAL ONE AUTO FINANCE, INC.,
and
CAPITAL ONE AUTO RECEIVABLES, LLC
as Issuer Parties
and
WACHOVIA SECURITIES, INC.
as Representative of the Underwriters
INDEMNIFICATION AGREEMENT
$1,100,000,000
Capital One Auto Finance Trust 2002-B
Automobile Receivable-Backed Notes, Series 2002-B
Class A-1 Notes, Class A-2-A Notes, Class A-2-B Notes, Class A-3-A Notes,
Class A-3-B Notes, Class A-4-A Notes and Class A-4-B Notes
Dated as of September 4, 2002
TABLE OF CONTENTS
Page
Section 1. Definitions................................................ 1
Section 2. Representations and Warranties of the Insurer.............. 3
Section 3. Representations and Warranties of the Underwriters......... 4
Section 4. Reserved................................................... 5
Section 5. Indemnification............................................ 5
Section 6. Notice To Be Given......................................... 6
Section 7. Contribution............................................... 7
Section 8. Notices.................................................... 9
Section 9. Governing Law, Etc......................................... 10
Section 10. Other Obligations Not Effected............................. 10
Section 11. Limitations................................................ 10
Section 12. Counterparts............................................... 10
Section 13. Non-petition............................................... 10
INDEMNIFICATION AGREEMENT
This Agreement, dated as of September 4, 2002 is between MBIA Insurance
Corporation (the "Insurer"), as the Insurer under the Note Guaranty Insurance
Policy (the "Policy") issued in connection with the Offered Notes described
below, CAPITAL ONE AUTO FINANCE, INC. ("COAF") and CAPITAL ONE AUTO RECEIVABLES,
LLC ("XXXX" and together with COAF, the "Issuer Parties") and WACHOVIA
SECURITIES, INC. as Representative of the Underwriters (the "Representative") on
behalf of the Underwriters (as defined below).
Section 1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings stated herein, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate.
Capitalized terms used in this Agreement but not otherwise defined herein will
have the meanings ascribed to such terms in the Indenture (as described below).
"Act" means the Securities and Exchange Act of 1933, as amended, together
with all related rules and regulations.
"Agreement" means this Indemnification Agreement by and between the Insurer
and the Representative of the Underwriters.
"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.
"Indenture" means the Indenture dated as of September 16, 2002 by and
between the Owner Trustee, and JPMorgan Chase Bank, as Indenture Trustee.
"Insurance Agreement" means the Insurance Agreement, dated as of September
16, 2002 by and among the Insurer, the Owner Trustee, the Seller, the
Transferor, the Servicer and JPMorgan Chase Bank, as the Indenture Trustee.
"Insurer Party" means the Insurer and its respective 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.
"Issuer Party" means each of COAF and XXXX and its parent, subsidiaries,
and affiliates and any member, shareholder, director, officer, employee, agent
or any "controlling person" (as such term is used in the Act) of any of the
following.
"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).
"Offered Notes" means the Capital One Auto Finance Trust 2002-B Automobile
Receivable-Backed Notes, Series 2002-B, Class A-1 Notes, Class A-2-A Notes,
Class A-2-B Notes, Class A-3-A Notes, Class A-3-B Notes, Class A-4-A Notes and
Class A-4-B Notes, issued in accordance with the provisions of the Indenture.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely in its capacity as owner trustee for Capital One Auto
Finance Trust 2002-B.
"Person" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization or any government or agency or political
subdivision thereof.
"Prospectus" means the Preliminary Prospectus Supplement dated August 28,
2002 to the Prospectus dated June 14, 2002, and the Prospectus Supplement dated
September 4, 2002 to the Prospectus dated June 14, 2002, with respect to the
Offered Notes.
"Servicer" means Capital One Auto Finance, Inc. as the Servicer of the
Receivables or any other Eligible Servicer acting as servicer pursuant to the
Servicing Agreement. Unless the context otherwise requires "Servicer" also
refers to any successor Servicer appointed under the Indenture or pursuant to
the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement dated as of September
16, 2002 by and among the Owner Trustee, JPMorgan Chase Bank, as the Indenture
Trustee and the Servicer.
"Underwriter Party" means, with respect to the Underwriters, each such
Underwriter and its parent, 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.
"Underwriting Agreement" means the Underwriting Agreement by and among
COAF, Capital One Auto Receivables, LLC and the Representative as representative
of the Underwriters dated as of September 4, 2002.
"Underwriter" means in plural form Wachovia Securities, Inc., Barclays
Capital LLC, Banc of America Securities LLC, Credit Suisse First Boston and
Deutsche Bank Securities and in singular form each of Wachovia Securities, Inc.,
Barclays Capital, Banc of America Securities LLC, Credit Suisse First Boston and
Deutsche Bank Securities.
2
Section 2. Representations and Warranties of the Insurer The Insurer
represents and warrants to each Underwriter and the each Issuer Party as
follows:
(a) Organization and Licensing. The Insurer is a duly incorporated
and existing New York stock insurance company licensed to do business in
the State of New York and is in good standing under the laws of such state.
(b) Corporate Power. The Insurer has the corporate 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 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 filings with any governmental agency or other governmental
authority, or any approval of the 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 Insurer.
(d) Enforceability. The Policy, when issued, and this Agreement
will each constitute a legal, valid and binding obligation of the Insurer,
enforceable in accordance with its terms, subject to applicable laws
affecting the enforceability of creditors' rights generally.
(e) Financial Information. The consolidated financial statements of
the Insurer and its subsidiaries as of December 31, 2001 and December 31,
2000 and for each of the three years in the period ended December 31, 2001
incorporated by reference in the Prospectus Supplement (the "Insurer
Financial Statements"), fairly present in all material respects the
financial condition of the Insurer as of such date and for the period
covered by such statements in accordance with generally accepted accounting
principles consistently applied, and since December 31, 2001, there has
been no material change in such financial condition of the Insurer which
would materially and adversely affect its ability to perform its
obligations under the Policy.
(f) Insurer Information. The information in the Prospectus of the
date hereof under the caption "THE NOTE GUARANTY INSURANCE POLICY AND THE
NOTE INSURER" (the "Insurer Information") is limited and does not purport
to provide the scope of disclosure required to be included in a prospectus
for a registrant under the Securities Act of 1933, in connection with the
public offer and sale of securities of such registrant. Within such limited
scope of disclosure, the Insurer Information does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
3
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the 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 of it or would materially and
adversely affect its ability to perform its obligations under this
Agreement or the Policy.
Section 3. Representations and Warranties of the Underwriters. Each
Underwriter severally represents and warrants (only with respect to itself) to
the Insurer as follows:
(a) Prospectus. It represents and warrants to and agrees with the
Insurer that the statements in the Prospectus made in reliance upon and in
conformity with written information relating to such Underwriter furnished
to Capital One Auto Finance, Inc. specifically for use in the preparation
of the Prospectus, and acknowledged in writing set forth in the second
paragraph (regarding concessions and discounts) and the first sentence of
the ninth paragraph (regarding marketmaking) under the caption
"Underwriting" in the Prospectus (referred to herein as the "Underwriter
Information"), are true and correct in all material respects.
(b) Corporate Power. It has the corporate power and authority to
execute and deliver this Agreement and the Underwriting Agreement and to
perform all of its obligations hereunder and thereunder in all material
respects.
(c) Authorization; Approvals. The execution, delivery and
performance of this Agreement and the Underwriting Agreement by such
Underwriter 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
such Underwriter's board of directors or stockholders, are necessary for
this Agreement and the Underwriting Agreement to constitute the legal,
valid and binding obligation of such Underwriter.
(d) Enforceability. This Agreement and the Underwriting Agreement
will each constitute a legal, valid and binding obligation of such
Underwriter, each enforceable in accordance with its terms, subject, as to
the enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforceability of
creditors' rights generally applicable in the event of the bankruptcy,
insolvency or reorganization of such Underwriter and to general principles
of equity.
(e) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of such Underwriter'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
4
or otherwise) or its operations or would materially and adversely affect
its ability to perform its obligations under this Agreement and the
Underwriting Agreement.
Section 4. Reserved.
Section 5. Indemnification.
(a) The Insurer hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless each
Issuer Party and each Underwriter Party against (i) any and all Losses
incurred by them with respect to the offer and sale of any of the Offered
Notes and resulting from the Insurer's breach of any of its representations
and warranties set forth in Section 2 of this Agreement, and (ii) any and
all Losses to which any Issuer Party or any Underwriter Party may become
subject, under the Act or otherwise, subject to the limited scope of the
Insurer Information described below insofar as such Losses arise out of or
result from an untrue statement of a material fact contained in the
Prospectus or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue
statement or omission was made in the Insurer Information included therein;
and provided further, that it is understood that the Insurer Information is
limited and does not purport to provide the scope of disclosure required to
be included in a prospectus for a registrant under the Securities Act of
1933, in connection with the public offer and sale of securities of such
registrant.
(b) Each Underwriter hereby agrees, severally and not jointly, upon
the terms and subject to the conditions of this Agreement, to indemnify,
defend and hold harmless each Insurer Party against (i) any and all Losses
incurred by it with respect to the offer and sale of any of the Offered
Notes and resulting from such Underwriter's breach of any of its
agreements, representations and warranties set forth in Section 3 of this
Agreement and (ii) any and all Losses to which any Insurer Party may become
subject, under the Act or otherwise, insofar as such Losses arise out of or
result from an untrue statement of a material fact contained in the
Prospectus Supplement or the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading in each case to the extent, but only to the extent, that
such untrue statement or omission was made in the Underwriter Information
(as defined above) included therein.
(c) Upon the incurrence of any Losses entitled to indemnification
hereunder, the Indemnifying Party shall reimburse the Indemnified Party
promptly upon establishment by the Indemnified Party to the Indemnifying
Party of the Losses incurred.
5
Section 6. Notice To Be Given.
(a) Except as provided in Section 7 below with respect to contribution,
the indemnification provided herein by the Indemnifying Party shall be the
exclusive remedy of each Indemnified Party for the Losses resulting from the
Indemnifying Party's breach of a representation, warranty or agreement
hereunder; provided, however, that each Indemnified 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.
(b) In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Indemnified Party to be
indemnified under this Agreement, such party shall give the Indemnifying Party
written or facsimile notice of such action or claim reasonably promptly after
receipt of written notice thereof.
(c) Upon request of the Indemnified Party, the Indemnifying Party shall
retain counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. The Indemnifying Party may, at its option, at any time upon
written notice to the Indemnified Party, assume the defense of any proceeding
and may designate counsel reasonably satisfactory to the Indemnified Party in
connection therewith, provided that the counsel so designated would have no
actual or potential conflict of interest in connection with such representation.
Unless it shall assume the defense of any proceeding, the Indemnifying Party
shall not be liable for any settlement of any proceeding, effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. The Indemnifying Party shall be entitled to participate
in the defense of any such action or claim in reasonable cooperation with, and
with the reasonable cooperation of, each Indemnified Party.
(d) The Indemnified Party will have the right to employ its own counsel
in any such action, but the fees and expenses of such counsel will be at the
expense of such Indemnified Party unless (i) the employment of counsel by the
Indemnified Party at the Indemnifying Party's expense has been authorized in
writing by the Indemnifying Party, (ii) the Indemnifying Party 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 (iii) the named
parties to any such action include the Indemnifying Party on the one hand and,
on the other hand, the Indemnified Party, and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them (in which case if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party,
6
the Indemnifying Party 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 Indemnifying Party, and all such fees and expenses will be
reimbursed promptly as they are incurred. In the event that any expenses so paid
by the Indemnifying Party are subsequently determined not to be required to be
borne by the Indemnifying Party hereunder, the party which received such payment
shall promptly refund to the Indemnifying Party the amount so paid by such
Indemnifying Party. Notwithstanding the foregoing, 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
Indemnifying Party shall not be liable for the fees and expenses of more than
one counsel for the Issuer Parties, more than one counsel for all Underwriter
Parties and more than one counsel for all Insurer Parties, as applicable.
(e) The Indemnified Parties shall cooperate with the Indemnifying
Parties in resolving any event, which would give rise to an indemnity obligation
pursuant to Section 5 hereof in the most efficient manner.
(f) No settlement of any such claim or action shall be entered into
without the consent of each Indemnified Party who is subject to such claim or
action, on the one hand, and each Indemnifying Party who is subject to such
claim or action, on the other hand; provided, however, that the consent of such
Indemnified Party shall not be required if such settlement fully discharges,
with prejudice against the plaintiff, the claim or action against such
Indemnified Party.
(g) Any failure by an Indemnified Party to comply with the provisions of
this Section shall relieve the Indemnifying Party of liability only if such
failure is materially prejudicial to any legal pleadings, grounds, defenses or
remedies in respect thereof or the Indemnifying Party's financial liability
hereunder, and then only to the extent of such prejudice.
Section 7. Contribution.
(a) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be unavailable for any
Underwriter Party (other than pursuant to Section 4 or 5 of this Agreement), or
if the indemnification provided by the Underwriters is determined to be
unavailable for any Insurer Party (other than pursuant to Section 4 or 6 of this
Agreement), the Insurer and the relevant Underwriter shall contribute to the
aggregate costs of liabilities arising from any breach of their respective
representations and warranties set forth in this Agreement on the basis of the
relative fault of all Insurer Parties and all relevant Underwriter Parties.
7
(b) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be unavailable for the
Issuer Parties (other than pursuant to Section 5 or 6 of this Agreement), the
Insurer shall contribute to the aggregate cost of liabilities arising from any
breach of their respective representations and warranties set forth in this
Agreement on the basis of the relative fault of all Insurer Parties and the
Issuer Parties.
(c) Notwithstanding anything in this Section 7 to the contrary, (i) the
Insurer shall not be required to contribute an amount in excess of the amount by
which the total of the insurance premiums that have been received by the Insurer
under the Insurance Agreement exceeds the amount of any damages that the Insurer
has otherwise been required to pay in respect of any breach by the Insurer of
the representations and warranties contained in Section 2 hereof, and (ii) no
Underwriter shall be required to contribute an amount in excess of the amount by
which the total underwriting fees, discounts and commissions received by such
Underwriter exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of any breach by such Underwriter of
its representations and warranties contained in Section 3 hereof.
(d) The relative fault of each Indemnifying Party, on the one hand, and
of each Indemnified Party, on the other hand, 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 Section 2 or 3 of this Agreement
relates to information supplied by, or action within the control of, the Insurer
Party or the relevant Underwriter Party and the Parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
breach.
(e) The Parties agree that the Insurer shall be solely responsible for
the Insurer Information and for the Insurer Financial Statements, that each
Underwriter shall be responsible for the Underwriter Information provided by
such Underwriter in writing for use in the Prospectus Supplement.
(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 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 Insurer Party or any Issuer Party,
(ii) the issuance of any Offered Notes or the Policy or (iii) any termination of
this Agreement.
8
(h) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to
contribution promptly upon establishment by the party entitled to
contribution to the contributor of the Losses incurred.
(i) The Underwriters shall be severally and not jointly liable for any
contribution required by this Section 7.
Section 8. Notices. All notices and other communications provided for
under 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 party.
(a) If to the Insurer:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Insured Portfolio Management--Structured Finance (IPM-SF)
Facsimile:(000) 000-0000
Confirmation:(000) 000-0000
(b) If to the Issuer Parties:
Capital One Auto Finance, Inc.
0000 Xxxxx Xxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
With a copy to Legal Department
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
Capital One Auto Receivables, LLC
0000 Xxxxx Xxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
With a copy to Legal Department
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
9
(c) If to the Representative:
Wachovia Securities, Inc.
NC0610
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxx, Managing Director
Section 9. Governing Law, Etc. This Agreement shall be deemed to be a
contract 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 each of the Insurer, each Issuer Party and
the Underwriters.
Section 10. Other Obligations Not Effected. This Agreement in no way limits
or otherwise affects the indemnification obligations of the Underwriters and
COAF under the Underwriting Agreement.
Section 11. Limitations. Nothing in this Agreement shall be construed as a
representation or undertaking by the Insurer concerning maintenance of the
rating currently assigned to its claims-paying ability by Xxxxx'x Investors
Service, Inc. ("Moody's") and/or Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc. ("S&P") or any other rating agency (collectively,
the "Rating Agencies").
Section 12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
Section 13. Non-petition. So long as the Insurance Agreement is in effect,
and for one year and one day following its termination, each of the parties
hereto agree that it (with respect to itself) will not file any involuntary
petition or otherwise institute any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceeding under any federal or
state bankruptcy or similar law against the Issuer Parties or the Seller.
[Remainder of page intentionally left blank; signature page follows]
10
IN WITNESS WHEREOF, the Parties hereto have caused this Indemnification
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/ Xxxx X. Xxxxxx
--------------------------------
Title Assistant Secretary
WACHOVIA SECURITIES, INC., for itself
and as Representative of the
Underwriters
By /s/ Xxxx Xxxxxx
--------------------------------
Title Director
By /s/ Xxxxxx Xxxxx
--------------------------------
Title Director
CAPITAL ONE AUTO FINANCE, INC., as
Issuer Party
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Title Manager of Securitization
CAPITAL ONE AUTO RECEIVABLES, LLC, as
Issuer Party
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Title President
