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CHEVY CHASE AUTO RECEIVABLES TRUST 2000-1
Auto Receivables Backed Notes
UNDERWRITING AGREEMENT
June 13, 2000
Salomon Smith Barney, Inc.
as Representative of the Underwriters
identified on Schedule 1
390 Greenwich Street, 6th Floor
New York, NY 10013
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 the Class A-1
6.87% Asset Backed Notes (the "Class A-1 Notes"), Class A-2 7.25% Asset
Backed Notes (the "Class A-2 Notes"), Class A-3 7.39% Asset Backed Notes
(the "Class A-3 Notes"), Class A-4 7.47% Asset Backed Notes (the "Class A-4
Notes", and collectively with the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes, the "Class A Notes"), Class B 7.76% Asset Backed Notes
(the "Class B Notes") and Class C 8.15% Asset Backed Notes (the "Class C
Notes" and together with the Class A Notes and the Class B Notes, the
"Notes") issued by Chevy Chase Auto Receivables Trust 2000-1 (the "Trust").
2. THE NOTES. The Notes will represent obligations of the Trust, and will be
secured by the pledge of assets of 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 June 1, 2000 (the "Cut-Off Date"),
and (iii) security interests in the Vehicles financed thereby. The Notes
will be issued pursuant to an Indenture, dated as of June 1, 2000 (the
"Indenture") between the Trust and U.S. Bank National Association, as
indenture trustee (the "Indenture Trustee"), and a Sale and Servicing
Agreement, dated as of June 1, 2000 (the "Sale and Servicing Agreement")
among the Trust, Chevy Chase, as seller and as servicer, and the Indenture
Trustee. The Indenture Trustee will have access to a Reserve Account to be
established for the benefit of the holders of the Notes. The Notes will be
issued in an aggregate principal amount of $349,390,000. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture and the Sale and Servicing Agreement.
Chevy Chase hereby agrees with the several Underwriters named in Schedule 1
hereto (the "Underwriters") as follows:
3. REPRESENTATIONS AND WARRANTIES OF CHEVY CHASE. Chevy Chase represents and
warrants to, and agrees with, each of the Underwriters that:
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(a) A Registration Statement on Form S-3 (No. 333-21707) relating to the Notes,
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 Salomon Smith Barney 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 June 7, 2000 and the prospectus
supplement dated June 13, 2000, both specifically relating to the Notes, 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 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, as
of the date of this Agreement and at the Closing Date, respectively, 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
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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 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
9(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 Sale and Servicing Agreement and the
Trust Agreement, and to cause the Notes 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 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 Sale and Servicing Agreement or the Trust Agreement
or the consummation of the transactions contemplated hereunder or
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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 Sale and Servicing Agreement and the Trust 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 Sale and
Servicing Agreement and the Trust 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 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 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 Notes, the consummation of any other of
the transactions contemplated herein, in the Sale and Servicing Agreement
and the Trust Agreement or the fulfillment of the terms of this Agreement,
the Sale and Servicing Agreement and the Trust 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.
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(i) Arthur Andersen LLP is an independent public accountant with respect to
Chevy Chase as required by the Act and the Rules and Regulations.
(j) The Notes have been duly authorized, and when the Notes are issued and
delivered pursuant to the Indenture, the Notes will have been duly issued
and delivered and will be entitled to the benefits provided by the
Indenture and the Sale and Servicing Agreement, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity (regardless of whether the
entitlement to such benefits is considered in a proceeding in equity or at
law), and will conform in substance to the description thereof contained in
the Registration Statement and the Prospectus, and will in all material
respects be in the form contemplated by the Indenture and the Sale and
Servicing 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 Notes, or the consummation by
Chevy Chase of the other transactions contemplated by this Agreement, the
Indenture, the Sale and Servicing Agreement or the Trust Agreement, except
the registration under the Act of the Notes 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 Notes 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 Sale and Servicing Agreement,
Chevy Chase (i) will not have assigned to any person any of its right,
title or interest in the Receivables or in the Sale and Servicing Agreement
or the Notes and (ii) will have the power and authority to sell the
Receivables to the Trust and to sell the Notes to the Underwriters, and
upon execution and delivery of the Sale and Servicing Agreement by the
Trust and the Indenture Trustee, the Trust will have acquired beneficial
ownership of all of Chevy Chase's right, title and interest in and to the
Receivables, and upon delivery to the Underwriters of the Notes the
Underwriters will have good and marketable title to the Notes.
(n) As of the Cut-Off Date, the Receivables will meet the eligibility criteria
described in the Prospectus.
(o) The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended, and the Trust is not, and immediately following the
issuance and sale of the Notes 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.
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(p) Chevy Chase has authorized the conveyance of the Receivables to the
Trust, and Chevy Chase has caused the Trust to issue the Notes.
(q) Each of the Notes, the Sale and Servicing Agreement, the Indenture and
the Trust Agreement 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 Sale and
Servicing Agreement, the Indenture, the Trust Agreement and the Notes
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 Notes
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 Sale and Servicing 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 Notes 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 3 are
made.
4. PURCHASE, SALE, DELIVERY AND PAYMENTS. The Underwriters' commitment to
purchase the Notes 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 Indenture Trustee to issue and agrees to sell
to the Underwriters, and the Underwriters, severally and not jointly,
agree, to purchase from Chevy Chase at a purchase price for the Notes of
each class calculated by multiplying the purchase price percentage set
forth on Schedule 1 hereto by the respective principal amount of Notes of
each class as set forth on Schedule 1 hereto. Payment of the purchase price
for, and delivery of, any Notes to be purchased by the Underwriters shall
be made at the offices of Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York 10019 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 June 21, 2000 (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 Indenture Trustee as custodian for The Depository Trust Company ("DTC")
of the Notes in the form of one or more global Notes in definitive form
(the "Global Notes") and registered in the name of Cede & Co., as nominee
for DTC. The Global Notes will be made available for checking at the
offices of Dewey Ballantine LLP at least 24 hours prior to the Closing
Date.
5. OFFERING BY UNDERWRITERS. It is understood that the Underwriters propose to
offer the Notes for sale to the public (which may include selected dealers)
as set forth in the Prospectus.
6. COVENANTS OF CHEVY CHASE. Chevy Chase covenants with the Underwriters as
follows:
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(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 Notes 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 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 7 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, (v) of the issuance by the Commission of any stop
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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 Notes 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 Notes 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 Notes 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 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 Notes 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 Notes. 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 Notes 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 Notes to the public; provided, however,
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that Chevy Chase may, without the Underwriters' prior consent, contract to
sell or attempt to offer, sell or dispose of securities in public
transactions secured by first or second mortgage loans, home equity lines
of credit, home improvement loans and "sub-prime" auto loans (but not
"prime" auto loans).
(i) For so long as any of the Notes remain outstanding, 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
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compliance delivered by Chevy Chase, as Servicer, to the Indenture
Trustee pursuant to Section 4.10 of the Sale and Servicing Agreement,
the annual statement of a firm of independent public accountants
furnished to the Indenture Trustee pursuant to Section 4.11 of the
Sale and Servicing Agreement and such other information concerning the
Receivables, Chevy Chase (including in its capacities as the Seller
and Servicer) or the Notes, 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 of the Notes 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 Noteholders, (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.
(l) The net proceeds from the sale of the Notes shall be applied 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 Chase, Chevy
Chase will give prompt written notice thereof to the Underwriters.
(n) To the extent, if any, that any rating provided with respect to the
Notes set forth in Section 7(i) hereof is conditional upon the
furnishing of documents reasonably available to Chevy Chase or the
taking of any other reasonable actions by Chevy Chase, Chevy Chase
shall furnish such documents or take any such other actions.
7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
Underwriters to purchase the Notes 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:
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(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 Arthur Andersen 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 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 6 (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 Notes, contained an untrue statement of a material fact or
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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 Shaw Pittman, special 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 Sale and Servicing
Agreement and the Trust Agreement and to cause the Notes to be
issued and to consummate the transactions contemplated hereby
and thereby.
(ii) Chevy Chase has duly authorized and executed this Agreement, the
Sale and Servicing Agreement and the Trust Agreement.
(iii) The execution, delivery and performance of this Agreement, the
Sale and Servicing Agreement and the Trust Agreement, the
transfer of the Receivables to the Trust, the issuance and sale
of the Notes and the consummation of any other of the
transactions contemplated herein, in the Sale and Servicing
Agreement or in the Trust Agreement do not conflict with or
result in a violation of (a) any applicable law or regulation of
the United States of America or the State of New York or
Maryland to which Chevy Chase is subject, (b) the Charter or By-
laws of Chevy Chase or (c) any order, writ, judgment or decree
known to such counsel to which Chevy Chase is a party or is
subject, or 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, to the
knowledge of such counsel, 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 Sale and
Servicing Agreement, this Agreement or the Notes, (B) seeking to
prevent the issuance of the Notes or the consummation by Chevy
Chase of any of the transactions contemplated by the Trust
Agreement, the Sale and Servicing Agreement or this Agreement,
(C) that might adversely affect the validity or enforceability
of the Trust Agreement, this Agreement, the Sale and Servicing
Agreement or the Notes, or (D) seeking to adversely affect the
federal income tax attributes of the Notes as described in the
Prospectus Supplement under the heading "Material Federal Income
Tax Consequences."
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(v) Each of this Agreement, the Sale and Servicing Agreement
and the Trust Agreement, constitutes the valid, legal and
binding obligation of Chevy Chase enforceable against Chevy
Chase in accordance with its terms.
(vi) 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 Trust 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.
(vii) 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 concerning Chevy Chase that would lead them to believe that
the information set forth in the Prospectus Supplement under the caption
"THE BANK-General" AND "THE BANK-Litigation", 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.
(e) The Underwriters shall have received the favorable opinion of counsel
to the Indenture 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 Indenture Trustee has duly authorized, executed and
delivered the Indenture and the Sale and Servicing
Agreement.
(ii) The Indenture 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
Indenture and the Sale and Servicing Agreement and to
perform its obligations thereunder and each such Agreement
constitutes the valid, legal and binding obligation of the
Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms.
(iii) The Notes have been duly executed, authenticated and
delivered by the Indenture Trustee.
(iv) The execution and delivery by the Indenture Trustee of the
Sale and Servicing Agreement and the Indenture and the
performance by the Indenture 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 Indenture Trustee, (c) any order,
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writ, judgment or decree or (d) any agreement, instrument,
order, writ, judgment or decree known to such counsel to
which the Indenture 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 Indenture Trustee of the Sale and Servicing Agreement or
the Indenture.
(f) The Underwriters shall have received an opinion, dated the Closing
Date, of Shaw Pittman, special counsel to Chevy Chase, addressed to,
and satisfactory to, Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. ("S&P"), Moody's Investors Service,
Inc. ("Moody's"), Fitch IBCA, Inc. ("Fitch"), and the Underwriters,
relating to the transfer of the Receivables to the Trust.
(g) Chevy Chase shall have furnished to the Underwriters a certificate
signed on behalf of Chevy Chase by one or more 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 Chevy Chase, dated the Closing Date,
as to (i) the accuracy of the representations and warranties of Chevy
Chase herein and in the Sale and Servicing 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.
(h) The Indenture Trustee shall have furnished to the Underwriters a
certificate of the Indenture Trustee, signed by one or more duly
authorized officers of the Indenture Trustee, dated the Closing Date,
as to the due execution of the Sale and Servicing Agreement and the
Indenture by the Indenture Trustee and the due execution and delivery
of the Notes by the Indenture Trustee thereunder and such other
matters as the Underwriters shall reasonably request.
(i) The Class A-1 Notes shall have been rated "A-1+" by S&P, "Prime -1" by
Moody's and "F- 1+" by Fitch, the other Class A Notes shall have been
rated "AAA" by S&P, "Aaa" by Moody's and "AAA" by Fitch, the Class B
Notes shall have been rated "A" by S&P, "A2" by Moody's and "A" by
Fitch and the Class C Notes shall have been rated "BBB+" by S&P,
"Baa2" by Moody's and "BBB+" by Fitch, and such ratings shall not have
been rescinded.
(j) The Underwriters and Chevy Chase shall have received from Arthur
Andersen LLP, or other independent certified public accountants
acceptable to the Underwriters, a letter, dated as of the Closing
Date, delivered at such time in form satisfactory to the Underwriters.
(k) Prior to the Closing Date the Underwriters 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
Notes 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
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Chevy Chase in connection with the issuance and sale of the Notes as
herein contemplated shall be satisfactory in form and substance to the
Underwriters.
(l) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of Chevy Chase otherwise than as set forth in the
Prospectus, the effect of which is in 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 Notes 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 Notes or the ability of the Servicer to service the
Receivables.
(m) 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 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 Notes; (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 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 (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 Notes.
(n) The Underwriters shall have received evidence satisfactory to the
Underwriters that on or before the Closing Date, UCC-1 financing
statements have been filed (i) in the offices of the Maryland State
Department of Assessments and Taxation, reflecting the interest of the
Trust in the Receivables and the proceeds thereof and (ii) in the
offices of the Secretaries of State of the States of Delaware and of
Minnesota, reflecting the security interest of the Indenture Trustee
in the Trust Estate and the proceeds thereof.
(o) The Underwriters and Chevy Chase shall have received the favorable
opinion, dated the Closing Date, of Dewey Ballantine LLP, counsel for
the Underwriters, in form and scope satisfactory to the Underwriters,
to the effect that:
(i) 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
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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 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.
(ii) 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.
(iii) 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.
(iv) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended.
(v) The Trust is not required to be registered under the 1940
Act, and immediately following the issuance and sale of the
Notes in the manner contemplated by the Sale and Servicing
Agreement, the Indenture and this Agreement, the Trust will
not be required to be so registered.
(vi) The Notes, this Agreement, the Trust Agreement, the Sale
and Servicing Agreement and the Indenture conform in all
material respects to the respective descriptions thereof in
the Registration Statement and the Prospectus.
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(vii) The Notes have been duly authorized and, when executed and
authenticated in accordance with the terms of the Sale and
Servicing Agreement and the Indenture 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 Sale and Servicing
Agreement and the Indenture.
(viii) 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 Notes, or the consummation by
Chevy Chase of the other transactions contemplated by this
Agreement, the Sale and Servicing Agreement or the Trust
Agreement, except the registration under the Act of the
Notes 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 Notes by the Underwriters.
(ix) The statements in the Base Prospectus under the headings
"RISK FACTORS -- Financial Institution Insolvency Risks,"
and "CERTAIN LEGAL ASPECTS OF THE RECEIVABLES," and in the
Prospectus Supplement under the headings "SUMMARY OF TERMS
--Federal Income Tax Consequences," "MATERIAL 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.
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.
(p) 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.
If any condition specified in this Section 7 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 8.
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8. 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 Notes and the determination of their
eligibility for investment under the laws of such jurisdictions as the
Representative designates, (iv) 100% of the fees and disbursements of Shaw
Pittman, counsel for Chevy Chase, (v) the fees and disbursements of Burbage
& Weddell, LLC and of Jenkens & Gilchrist, a professional corporation, in
excess of the amount paid by the Underwriters as set forth below, (vi) 50%
of the fees and disbursements of Dewey Ballantine LLP, (vii) the fees and
disbursements of Arthur Andersen LLP, accountants of Chevy Chase, (viii)
50% of the fees relating to the qualification of the Notes under securities
and Blue Sky laws and the determination of the eligibility of the Notes for
investment in accordance with the provisions of Section 6(g), including
filing fees and disbursements and the fees of Dewey Ballantine LLP in
connection therewith and in connection with the preparation of any Blue Sky
Survey, (ix) 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, (x) the filing fee of the National
Association of Securities Dealers, Inc., if any, (xi) the duplication and
delivery to the Underwriters in such quantities as the Underwriters may
reasonably request, of copies of the Sale and Servicing Agreement and the
Indenture, (xii) the fees charged by nationally recognized statistical
rating agencies for rating the Notes and (xiii) the fees and expenses of
the Indenture Trustee and its counsel. The Underwriters agree to pay (i)
50% of the fees and disbursements of Dewey Ballantine LLP, including fees
and disbursements relating to the new shelf registration filing, (ii) 50%
of the fees and disbursements of Burbage & Weddell, LLC and of Jenkens &
Gilchrist, a professional corporation, which the Underwriters are only
obligated to pay to the extent of $3,500 in the aggregate, and (iii) 50% of
the fees relating to the qualification of the Notes under securities and
Blue Sky laws and the determination of the eligibility of the Notes for
investment in accordance with the provisions of Section 6(g), including
filing fees and disbursements and the fees of Dewey Ballantine LLP in
connection therewith and in connection with the preparation of any Blue Sky
Survey.
9. 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, 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,
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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 Underwriter through the
Representative specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter
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, any related Preliminary Prospectus or any amendment or
supplement thereto, 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, it
being understood and agreed that the only such information furnished
by any Underwriter consists of the following information in the
Prospectus furnished on behalf of the Underwriters: the table at the
bottom of the cover page of the Prospectus Supplement concerning the
terms of the offering by the Underwriters and the information under
the caption "Underwriting" in the Prospectus Supplement.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above 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
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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.
10. CONTRIBUTION. If the indemnification provided for in Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) of Section 9 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 Notes 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 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 10 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 10. 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 10 to contribute are several in
proportion to their respective underwriting obligations and not joint.
The obligations of Chevy Chase under Section 9 and this Section
10 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 9 and this Section 10 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.
Notwithstanding the provisions of Sections 9 and 10, the
Underwriters shall not be required to contribute any amount in excess of
the amount by which the total price at which the Notes underwritten by the
Underwriters and distributed to the public were offered to the
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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 10, 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.
11. DEFAULT OF UNDERWRITERS. If any Underwriter defaults in its obligations to
purchase Notes hereunder on the Closing Date and the aggregate principal
amount of Notes that such defaulting Underwriter or Underwriters have
agreed but failed to purchase does not exceed 10% of the total principal
amount of Notes 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 Notes 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 Notes
that such defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriters so default and the aggregate principal
amount of Notes with respect to which such default or defaults occur
exceeds 10% of the total principal amount of Notes 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
Notes by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter or Chevy Chase, except as provided in Section 12.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 11. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
12. 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 Notes. If this
Agreement is terminated or if for any reason the purchase of the Notes 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 8 and the respective obligations of Chevy Chase and the
Underwriters pursuant to Section 9 and 10 shall remain in effect, and if
any Notes have been purchased hereunder the representations and warranties
in Section 3 and all obligations under Section 6 and 7 shall also remain in
effect. If the purchase of the Notes by the Underwriters is not
consummated for any reason other than solely because of the termination of
this Agreement pursuant to Section 11 or the occurrence of any event
specified in clause (ii), (iv) or (v) of Section 7(m), Chevy Chase will
reimburse the Underwriters for all out-of-pocket expenses reasonably
incurred by them in connection with the offering of the Notes.
20
<PAGE>
13. 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) 723-8591 attention: Asset-Backed Group.
Notices to Chevy Chase shall be directed to Chevy Chase Bank, F.S.B., 8401
Connecticut Avenue, Chevy Chase, Maryland 20815, or sent by facsimile
machine which produces an electronic confirmation of receipt to (301) 986-
7401, attention: Stephen R. Halpin, Jr.
14. 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 9 and 10 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
the benefit of no other person, firm or corporation. No purchaser of Notes
from the Underwriters shall be deemed to be a successor by reason merely of
such purchase.
15. 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.
16. 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.
17. 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.
21
<PAGE>
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/ Mark A. Holles
___________________________
Name: Mark A. Holles
Title: Group Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
Salomon Smith Barney Inc.
By: /s/ Paul Humphrey
__________________________
Name: Paul Humphrey
Title: Vice President
<PAGE>
Schedule 1
Class A-1; Purchase Price Percentage: 99.8450000%
------------------------------------------------------------
Underwriters Principal
Amount
------------------------------------------------------------
Salomon Smith Barney Inc. $26,333,334
------------------------------------------------------------
Deutsche Bank Securities Inc. $26,333,333
------------------------------------------------------------
J.P. Morgan Securities Inc. $26,333,333
------------------------------------------------------------
Class A-2; Purchase Price Percentage: 99.8163168%
------------------------------------------------------------
Underwriters Principal
Amount
------------------------------------------------------------
Salomon Smith Barney Inc. $23,333,334
------------------------------------------------------------
Deutsche Bank Securities Inc. $23,333,333
------------------------------------------------------------
J.P. Morgan Securities Inc. $23,333,333
------------------------------------------------------------
Class A-3; Purchase Price Percentage: 99.7704541%
------------------------------------------------------------
Underwriters Principal
Amount
------------------------------------------------------------
Salomon Smith Barney Inc. $37,000,000
------------------------------------------------------------
Deutsche Bank Securities Inc. $37,000,000
------------------------------------------------------------
J.P. Morgan Securities Inc. $37,000,000
------------------------------------------------------------
Class A-4; Purchase Price Percentage: 99.7302377%
------------------------------------------------------------
Underwriters Principal
Amount
------------------------------------------------------------
Salomon Smith Barney Inc. $24,502,668
------------------------------------------------------------
Deutsche Bank Securities Inc. $24,502,666
------------------------------------------------------------
J.P. Morgan Securities Inc. $24,502,666
------------------------------------------------------------
Class B; Purchase Price Percentage: 99.5747781%
------------------------------------------------------------
Underwriters Principal
------------------------------------------------------------
<PAGE>
------------------------------------------------------------
Amount
------------------------------------------------------------
Salomon Smith Barney Inc. $7,059,000
------------------------------------------------------------
Class C; Purchase Price Percentage: 99.4855679%
------------------------------------------------------------
Underwriters Principal
Amount
------------------------------------------------------------
Salomon Smith Barney Inc. $8,823,000
------------------------------------------------------------
