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EXHIBIT 10.7
CUSTODIAL AGREEMENT
This Custodial Agreement is made and entered into this ___ day of June,
1999, by and between Transition Auto Finance III, Inc. (the "Company") and Trust
Management, Inc., a Texas corporation ("TMI").
W I T N E S S E T H
WHEREAS, Company and TMI entered into that certain Indenture dated as
of 1996 (the "Indenture");
WHEREAS, pursuant to the Indenture, Company proposes to issue up to
$20,000,000 of 11% Secured Notes (the "Notes");
WHEREAS, to secure payment of the Notes, Company has granted TMI, in
its capacity as Trustee under the Indenture (the "Trustee"), a security interest
in, among other things, certain automobile lease contracts (the "Contracts") and
all of the related title documents (the "Title Documents") (the Contracts and
the Title Documents being hereinafter referred as the "Contract Documents");
WHEREAS, Company wishes to engage TMI to serve as custodian for the
Contract Documents pledged to TMI in its capacity as Trustee, and TMI wishes to
serve as custodian for such Contract Documents, all as more particularly
provided for herein;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TMI shall serve as Custodian for the Contract Documents and for any
other property delivered to TMI from time to time by Company pursuant to this
Agreement (collectively, the "Custodial Property"). In such capacity, TMI shall
at all times maintain possession of the Custodial Property as custodian and
bailee for itself, in the capacity as Trustee under the Indenture.
2. TMI may in its discretion hold the Custodial Property on deposit at
other financial institutions provided, however, that any Custodial Property held
at other institutions shall at all times be readily deliverable upon direction
of Company.
3. For its services hereunder, TMI shall be entitled to compensation as
shown on Exhibit "A" attached hereto, which compensation shall be paid by
Company upon receipt of invoice. Without limiting Company's liability to pay
such compensation, it is agreed that TMI shall have the right, but shall not be
under any duty, to collect such compensation from the Custodial Property or the
proceeds therefrom upon Company's failure to pay the same.
4. Company shall indemnify and hold TMI, its officers, directors,
employees, agents and representatives (collectively, the "TMI Affiliated
Parties") harmless from all costs, damages, attorneys' fees, expenses,
liabilities, suits or other claims arising out of or in connection with any
action taken or not taken by one or more of the TMI Affiliated Parties either
pursuant thereto or at the direction of Company. The TMI Affiliated Parties
shall be protected in acting upon any written
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notice, request, waiver, consent, certificate, receipt, authorization, or other
paper or document which they believe to be genuine and what it purports to be.
The TMI Affiliated Parties shall not be liable for anything which they may do or
refrain from doing in connection with this Agreement except their own gross
negligence or willful misconduct.
5. Notices and other communications to be delivered to Company pursuant
to this Agreement will be effective only if in writing and delivered to:
Transition Auto Finance III, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxx, President
Notices, instructions and other communications to TMI pursuant to this
Agreement will be effective only if in writing and delivered to:
Trust Management, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
6. TMI shall keep adequate records of its activities as Custodian. Such
records shall be available to Company or persons authorized by Company for
inspection during TMI's regular business hours.
7. TMI may confer with legal counsel in the event of any dispute or
questions as to the construction of any of the provisions hereof, or its duties
hereunder, and it shall incur no liability and it shall be fully protected in
acting in accordance with the opinions of such counsel.
8. TMI may resign as Custodian upon giving written notice thirty (30)
days before the termination shall become effective. Upon termination, TMI, if
necessary shall deduct proper charges payable to it pursuant to paragraph 3, and
shall deliver the remainder of the Custodial Property to the person designated
in the notice of termination.
Executed this ___ day of ______________, 1999.
TRANSITION AUTO FINANCE III, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
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TRUST MANAGEMENT, INC., a Texas
Corporation
By:
---------------------------------
Name:
-------------------------------
Title:
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