EXHIBIT 10.67
Execution Copy
CUSTODY AGREEMENT
Dated as of August 19, 1998
CAI LEASE SECURITIZATION - II CORP., a Delaware corporation (the
"Borrower"), CAPITAL ASSOCIATES INTERNATIONAL, INC., a Colorado corporation
("Capital Associates"), as originator (the "Originator"), KEY CORPORATE CAPITAL
INC., as agent for the "Lenders" under the "Credit Agreement" defined below (the
"Agent"), and BANKERS TRUST COMPANY ("Bankers Trust") agree as follows:
PRELIMINARY STATEMENTS.
(1) The Agent has requested that Bankers Trust act as collateral
custodian (the "Collateral Custodian") for the purposes of receiving and holding
all original copies of Leases which have been sold by Capital Associates to the
Borrower and in which a security interest has been granted by the Borrower to
the Agent for the benefit of the "Lenders" under the Credit Agreement pursuant
to that certain Credit Agreement dated August 19, 1998 (the "Credit Agreement"),
among the Borrower, Capital Associates, as servicer (the "Servicer"), Concord
Minutemen Capital Company, LLC, as Senior Lender, and Key Corporate Capital Inc.
as Junior Lender, Residual Lender and Agent. Capitalized terms which are used
herein and not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement.
(2) Bankers Trust is willing to act in such capacity as Collateral
Custodian in order to perfect the security interest of the Borrower as purchaser
of such Leases and to perfect the security interest of the Agent in such Leases.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used herein, the following terms shall
have the meanings assigned thereto below:
"AGREEMENT" shall mean this Custody Agreement, as the same may from
time to time be amended, restated, supplemented or otherwise modified.
"AUTHORIZED EMPLOYEE" means any of the employees of the Agent listed on
SCHEDULE I hereto and any other employee of the Agent who is hereafter
authorized in writing by an existing Authorized Employee (which authorization
must be delivered to the Borrower and to the Collateral Custodian) to act as an
Authorized Employee of Agent hereunder, PROVIDED, HOWEVER, that any Authorized
Employee may send a notice to the Borrower and the Collateral Custodian
informing them of any other Authorized Employee who ceases to be an Authorized
Employee.
"REPORT" has the meaning ascribed to such term in Section 2.08.
"REPORT EFFECTIVE DATE" has the meaning ascribed to such term in
Section 2.08.
"TERMINATION DATE" means that date when the Agent notifies the
Collateral Custodian in writing that the Credit Agreement is terminated and all
amounts payable under the Credit Agreement have been paid.
ARTICLE II
COLLATERAL CUSTODIAN
SECTION 2.01. DESIGNATION AND APPOINTMENT OF BANKERS TRUST AS
COLLATERAL CUSTODIAN. Bankers Trust is hereby designated as, and hereby agrees
to perform the duties and obligations of, the Collateral Custodian under, and as
such duties and obligations are set forth in, this Agreement. Bankers Trust
shall serve as Collateral Custodian from the date hereof until the Termination
Date, subject to resignation or removal pursuant to SECTION 4.05 hereof.
SECTION 2.02. DUTIES OF THE COLLATERAL CUSTODIAN. At all times that
Bankers Trust shall be the Collateral Custodian, it shall duly discharge its
duties of receiving and holding the Leases in accordance with this Agreement. As
to any matters not expressly provided for by this Agreement, the Collateral
Custodian shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the written instructions
of the Agent (executed by an Authorized Employee); PROVIDED, HOWEVER, that the
Collateral Custodian shall not be required to take any action which is contrary
to this Agreement or applicable law.
SECTION 2.03. LEASES. (a) From time to time as provided in the Lease
Receivables Sale and Contribution Agreement and the Credit Agreement, the Leases
sold by Capital Associates to the Borrower and pledged by the Borrower to the
Agent for the benefit of the "Lenders" under the Credit Agreement shall be
delivered by the Originator or the Borrower to the Collateral Custodian for
purposes of perfecting the Borrower's security interest therein as purchaser of
the Leases and perfecting the security interest therein of the Agent on behalf
of the Lenders under the Credit Agreement. Each such Lease shall be delivered to
the Custodian together with an electronic tape and shall be held by the
Collateral Custodian pursuant to the terms hereof. As used herein, "Lease" shall
mean a certified copy of the original Master Lease, the original equipment
schedule and riders, if any, thereto, and an original acceptance certificate.
(b) Within five (5) Business Days of delivery by the Borrower to the
Collateral Custodian of any Leases, as provided for in SECTION 2.03(a) above,
the Collateral Custodian shall deliver to the Agent a certification with respect
to such Leases in the form attached hereto as EXHIBIT A.
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SECTION 2.04. REMOVAL OF DOCUMENTS. (a) The Agent shall have the
unlimited right, upon written notice (by facsimile or otherwise) executed by an
Authorized Employee and delivered to the Collateral Custodian, with a copy sent
to the Borrower, to remove any or all of the Leases from the custody of the
Collateral Custodian.
(b) From time to time, with not less than twenty-four hours' prior
written notice (substantially in the form of EXHIBIT B hereto) delivered to the
Collateral Custodian (with simultaneous delivery thereof by facsimile to the
Agent), the Borrower may request the Collateral Custodian to release certain
Leases held by the Collateral Custodian to the Borrower; PROVIDED, that the
Collateral Custodian shall release such Leases only if (i) at least twenty-four
hours shall have passed since the receipt of such notice, and the Agent shall
not have notified the Collateral Custodian not to release such Leases, and (ii)
the Borrower shall have certified that either (1) the applicable Advances with
respect to such Lease have been paid in full, or (2) the Originator shall have
repurchased such Lease in accordance with the terms of the Lease Sale and
Contribution Agreement. The right of the Borrower to request the release of
Leases under this SECTION 2.04(b) may be withdrawn by the Agent at any time by
written notice to the Collateral Custodian (with a copy to the Borrower) from an
Authorized Employee stating that an Event of Termination under the Credit
Agreement has occurred and that Leases may not thereafter be released to the
Borrower without the written consent of the Agent..
(c) Other than as described in the this SECTION 2.04, the Collateral
Custodian shall have no authority to release any Lease to any Person, including,
without limitation, the Borrower or the Originator.
SECTION 2.05. DOCUMENTS HELD BY THE COLLATERAL CUSTODIAN. Any and all
Leases coming into the possession of the Collateral Custodian, (a) shall be held
by it in trust for the benefit of the Agent, on behalf of the Borrower and the
Lenders, and shall be segregated from all other documents held by the Collateral
Custodian and placed for safekeeping in a fireproof file cabinet (or similar
safekeeping device) located on its premises, (b) shall be held by it as agent
and bailee on behalf of the Borrower, subject to the rights of the Agent, on
behalf of the Lenders hereunder and under the Credit Agreement, for the purpose
of perfecting the security interest therein of the Borrower as the purchaser of
Leases from the Originator, (c)shall be held by it as agent and bailee on behalf
of the Agent for the purposes of perfecting the security interest therein of the
Agent on behalf of the "Lenders" under the Credit Agreement, (d) shall be made
available to the Agent on any Business Day, for inspection or otherwise, upon
the Agent's request therefor, and (e) shall be held in a manner which allows
such Leases to be released within one Business Day following the Collateral
Custodian's receipt of notice pursuant to the terms set forth in SECTION 2.04
above.
SECTION 2.06. NO LIENS OR ENCUMBRANCES. The Collateral Custodian hereby
agrees not to assert any statutory or possessory liens or encumbrances of any
kind with respect to the Leases held by it, and hereby waives all such liens and
encumbrances.
SECTION 2.07. MAINTENANCE OF RECORDS. The Collateral Custodian shall
implement and maintain administrative and operating procedures pursuant to which
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it shall keep and maintain all records and information necessary to permit the
regular identification of all Leases held or released by it.
SECTION 2.08. REPORTS; VISITATION RIGHTS; OTHER INFORMATION. (a) The
Collateral Custodian shall furnish to the Agent (with a copy to the Borrower),
not later than the Settlement Date for each month that is the last month of a
calendar quarter (and, upon the request of the Agent, for any other month), a
report substantially in the form of EXHIBIT C hereto (each, a "Report"), setting
forth, as of the last day of such month (with respect to each Report, the
"Report Effective Date"), (i) the Leases held by the Collateral Custodian as of
such Report Effective Date and as of the Report Effective Date for the
immediately preceding Report, (ii) the Leases delivered to the Collateral
Custodian since the Report Effective Date for the immediately preceding Report,
and (iii) the Leases released by the Collateral Custodian since the Report
Effective Date for the immediately preceding Report. For purposes of CLAUSES
(iii) above with respect to the first Report delivered by the Collateral
Custodian hereunder, "the Report Effective Date for the immediately preceding
Report" shall be deemed to mean the date on which the Leases are initially
delivered to the Collateral Custodian hereunder. Each Report shall identify the
applicable Leases by lease number.
(b) At any time and from time to time, during normal business hours,
the Agent and any of its respective agents, employees or representatives
(including, without limitation, an independent accounting firm performing an
audit of the Borrower or Servicer in accordance with the terms of the Credit
Agreement), shall have the right (i) to visit the office of the Collateral
Custodian where the Leases are kept, (ii) to examine the facilities for the
storage and safekeeping thereof, (iii) to review the procedures with which such
documents are stored and catalogued, (iv) to examine and make copies of and
abstracts from such documents, and (v) to discuss matters relating to the Leases
and the Collateral Custodian's performance hereunder with any of the officers or
employees of the Collateral Custodian having knowledge of such matters.
(c) The Collateral Custodian shall provide to the Agent such other
information, as the Agent may from time to time reasonably request, concerning
the Leases which are in the possession of the Collateral Custodian.
SECTION 2.09. COLLATERAL CUSTODIAN'S LIABILITY. The Collateral
Custodian shall have no liability whatsoever by reason of any error of judgment
for any act done or step taken or omitted by it, or for any mistake of fact or
law for anything which it may do or refrain from doing in connection herewith,
unless caused by or arising out of its own gross negligence or willful
misconduct. Furthermore, the Agent and the Borrower agree to indemnify and hold
the Collateral Custodian harmless from any and all losses, expenses, damages and
costs (including, without limitation, attorneys fees and expenses) incurred by
it as a result of its execution of, or performance as Collateral Custodian under
this Agreement, unless however, such losses, expenses, damages and costs are
caused by or arise out of the Collateral Custodian's gross negligence or willful
misconduct.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COLLATERAL CUSTODIAN. The Collateral Custodian hereby represents, warrants and
covenants to the Borrower and to the Agent, on behalf of itself and the Lenders,
as follows:
(i) The Collateral Custodian is a bank duly organized, validly existing
and in good standing under the laws of the State of New York and has all
required power, authority, licenses, permits and franchises in order to
enter into and perform its obligations under this Agreement.
(ii) The execution, delivery and performance by the Collateral
Custodian of this Agreement has been duly authorized by all necessary
organizational action on the part of the Collateral Custodian and the
performance of and compliance with the terms hereof by it will not (i)
violate contravene or create a default under any applicable laws, license or
permits to the best of its knowledge, or (ii) violate, contravene or create
a default under any charter document or by-law of the Collateral Custodian.
(iii) The Collateral Custodian has not created any liens against any
Lease.
(iv) This Agreement has been duly executed and delivered by the
Collateral Custodian and constitutes a valid, legal and binding obligation
of the Collateral Custodian, enforceable against the Collateral Custodian in
accordance with its terms, except (A) as the enforcement thereof may be
limited by applicable debtor relief laws and (B) that certain equitable
remedies may not be available regardless of whether enforcement is sought in
equity or at law.
(v) No Uniform Commercial Code financing statements or other filings or
recordations exe cuted by or, to the best of its knowledge, on behalf of the
Collateral Custodian (in its individual capacity) have been filed by or
against it with respect to any of the Leases.
SECTION 3.02. REPRESENTATION AND WARRANTY OF THE COLLATERAL CUSTODIAN
AND THE BORROWER. As of the date hereof, each of the Collateral Custodian and
the Borrower hereby represent and warrant that the Collateral Custodian is not
an agent of, controlled by, under common control with, or otherwise an affiliate
of, the Borrower, except that the Collateral Custodian is the agent of the
Borrower for the limited purpose of perfecting the Borrower's security interest
in the Leases as purchaser thereof. The Borrower and the Collateral Custodian
acknowledge and agree that for so long as this Custody Agreement is in effect,
the Agent's and the Lenders' rights with respect to the Leases hereunder and
under the Credit Agreement shall in all respects be superior to the Borrower's
rights hereunder.
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ARTICLE IV
MISCELLANEOUS
SECTION 4.01. FEES AND EXPENSES OF THE COLLATERAL CUSTODIAN. The
Borrower agrees to pay the Collateral Custodian such fees (the "Collateral
Custodian Fees") and expenses as the Borrower and the Collateral Custodian may
mutually agree from time to time. Furthermore, no party hereto shall pay any
other fees, costs or expenses to the Collateral Custodian with respect to the
Collateral Custodian's obligations and duties created herein other than the
Collateral Custodian Fees.
SECTION 4.02. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by each party hereto,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 4.03. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall be effective, upon receipt, or in the case of delivery by
mail, five days after being deposited in the mails, or in the case of notice by
telex, when telexed against receipt of answer back, or in the case of notice by
facsimile copy, when verbal communication of receipt is obtained, in each case
addressed as aforesaid.
SECTION 4.04. BINDING EFFECT; ASSIGNABILITY; TERM. This Agreement shall
be binding upon and inure to the benefit of the Agent, the Borrower and the
Collateral Custodian and their respective successors and permitted assigns. The
Agent may assign at any time its rights and obligations hereunder and interests
herein without the consent of the Borrower or the Collateral Custodian. This
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the Termination Date. The Collateral Custodian may not assign any of its
rights, duties and obligations hereunder or any interest herein without the
prior written consent, executed by an Authorized Employee, of the Agent.
SECTION 4.05. RESIGNATION AND REMOVAL. The Collateral Custodian may
resign at any time by giving written notice thereof to the Agent not less than
two (2) months prior to the effective date of such resignation. The Collateral
Custodian may be removed by the Agent (at the direction of the Lenders) at any
time, with or without cause, by the Agent giving written notice thereof to the
Collateral Custodian not less than ten (10) days prior to the effective date of
such removal. Upon any such resignation or removal, the Agent (at the direction
of the Lenders) shall have the right to appoint a successor Collateral
Custodian. Any such successor shall, upon its acceptance thereof, succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Custodian, and the retiring Collateral Custodian shall be discharged
from its duties and obligations as Collateral Custodian under this Agreement.
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SECTION 4.06. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws (including, without limitation, Section
5-1401 of the General Obligations Laws of New York, but otherwise without regard
to conflict of laws provisions) and decisions of the State of New York.
SECTION 4.07. EXECUTION IN COUNTERPARTS; SEVERABILITY. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
BORROWER: CAI LEASE SECURITIZATION - II CORP.
By /s/Xxxxxxx X. XxXxxxx
-------------------------------
Title: Chief Financial Officer and Treasurer
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
Telecopy No.: (000) 000-0000
ORIGINATOR:
CAPITAL ASSOCIATES INTERNATIONAL, INC.
By /s/Xxxxxxx X. XxXxxxx
-------------------------------
Title: Chief Financial Officer and Treasurer
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attn:
Telecopy No.: (000) 000-0000
AGENT: KEY CORPORATE CAPITAL INC.,
as Agent
By /s/Xxxxxx X. Xxxxx
-------------------------------
Duly Authorized Signatory
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Risk Manager
Telecopy No.: (000) 000-0000
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COLLATERAL CUSTODIAN: BANKERS TRUST COMPANY
as Collateral Custodian
By /s/Xxxx Xxxxxxx
-------------------------------
Title: Assistant Secretary
0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Trust and Services
Telecopy No.: (000) 000-0000
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