Exhibit 99.2
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT is dated as of June 30, 1999 among CAPITAL
TRUST, INC., a Maryland corporation ("Lender"), having an address at 000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; PROMETHEUS SOUTHEAST
RETAIL TRUST, a Maryland real estate investment trust ("Prometheus"), having
an address at c/o Lazard Freres Real Estate Investors L. L.C., 00 Xxxxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxx, and LaSalle
National Bank ("Bank"), having an address at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Xxxx Xxxx Xxxxxxx.
RECITALS
A. Lender has agreed to make a loan to LSFRI II SPV REIT Corp., a
Delaware corporation ("Borrower"), in the principal sum of $52,500,000
("Loan") in accordance with the provisions of a certain Loan Agreement (the
"Loan Agreement") dated of even date herewith. The Loan Agreement, this
Agreement and all other documents of any nature whatsoever evidencing,
securing or guarantying the Loan in whole or in part, or otherwise executed
and delivered in connection with the Loan or relating thereto, as the same
may be modified or amended from time to time, are hereinafter collectively
called the "Loan Documents".
B. Capitalized terms used and not otherwise defined herein shall
have the respective meanings given to such terms in the Loan Agreement.
C. Prometheus is the sole record and beneficial owner of
21,052,631 shares capital stock ("Stock") of Konover Property Trust, Inc., a
Maryland corporation (the "Company"), evidenced by certificate numbers TKP
0028, TKP 0026, TKP 0027 and TKP 0033 (the "Certificates").
D. Lender is willing to make the Loan only if Prometheus agrees
to execute and deliver this Agreement as additional protection to the Lender
for the performance by the Borrower and the members of the Borrower Control
Group of their obligations contained in the Loan Documents.
E. Prometheus will derive substantial economical benefit from the
Loan, and therefore, Prometheus desires to execute this Agreement in order to
satisfy the conditions described in the foregoing paragraph.
NOW THEREFORE, in consideration of Lender's agreement to make the
Loan and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Prometheus hereby delivers to Bank as custodian for
Prometheus and Lender all the Certificates, and agrees to deliver all other
certificates and instruments representing the Stock from time to time
received, receivable or otherwise distributed in respect of or exchange for
the Stock. In addition, Prometheus agrees to deliver to Bank in its capacity
as custodian from time to time all securities, rights, options, warrants, and
other instruments issued to Prometheus from time to time on account of its
ownership of the Stock, to be held subject to the terms and provisions of
this Agreement.
Section 2. Prometheus shall be entitled to continue to exercise
any and all voting rights and powers relating to or pertaining to the Stock
or any part thereof for any purpose not inconsistent with the terms and
provisions of the Loan Documents.
Section 3. Each of Prometheus and Lender hereby appoints the Bank
as its agent, to hold on its behalf and for its benefit, the Certificates.
The Bank hereby accepts such appointments and agrees to perform the
responsibilities of the Bank under this Agreement. The sole responsibility
of the Bank hereunder shall be to hold the Certificates pursuant to the
direction of Lender. Lender agrees that, upon the payment in full of the
Indebtedness under the Loan Documents, Lender shall direct the Bank to return
the Certificates and all additions thereto to Prometheus.
Section 4. Borrower shall pay to the Bank the reasonable costs and
expenses incurred by the Bank and any reasonable fees of the Bank in the
performance of the Bank's obligation under this Agreement.
Section 5. Lender shall not be liable for any acts, omissions,
errors in judgment or mistakes of fact or law, including without limitation,
acts, omissions, errors or mistakes with respect to the Certificates, except
for those arising as a result of Lender's wilful misconduct or gross
negligence. Without limiting the generality of the foregoing, except as
otherwise expressly provided for in this Agreement or as required by
applicable law, Lender shall have no duty with respect to the Certificates,
as to ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to the Certificates
or the Stock, whether or not Lender has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other right pertaining to the Certificates or the
Stock. Lender is hereby authorized by Prometheus to act on any written
instruction reasonably believed by Lender in good faith to have been given or
sent by Prometheus.
Section 6. (a) Bank shall not be under any obligation or duty to
perform any act which will involve it in expense or liability or to institute
or defend any suit in respect hereof, or to advance any of its own monies.
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Prometheus shall indemnify and hold Bank, its employees and officers harmless
from and against any loss, cost or damage (including without limitation
reasonable attorneys' fees and costs) incurred by Bank in connection with the
transaction contemplated hereby, except for such loss, cost or damage
incurred because of the gross negligence or wilful misconduct of the Bank,
its employees and officers.
(b) Bank shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other paper,
document or signature reasonably believed by it in good faith to be genuine,
and it may be presumed that any Entity purporting to give any of the
foregoing in connection with the provisions hereof has been duly authorized
to do so unless Bank has actual knowledge to the contrary. Bank may consult
with counsel, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it
hereunder and in good faith in accordance therewith. Bank shall not be
liable to Prometheus or Lender for any act or omission done or omitted to be
done by Bank in reliance upon any instruction, direction or certification
received by Bank and without gross negligence or wilful misconduct.
Section 7. Bank shall have the right to resign as custodian under
this Agreement upon 30 days' prior written notice to the other parties hereto
and in the event of such resignation, Lender shall appoint a successor
custodian, which may be any U.S. banking institution regulated by the Federal
Deposit Insurance Corporation or by the laws of any State, which successor
shall be subject to the reasonable approval of Prometheus. No such
resignation by Bank shall become effective until a successor shall have been
appointed and shall have accepted such appointment and executed an instrument
by which it shall have assumed all of the rights and obligations of Bank
hereunder. If no such successor is appointed within 60 days after receipt
of the resigning Bank's notice of resignation, the resigning Bank may
petition a court for the appointment of a successor. In connection with any
resignation by Bank, the resigning Bank shall, at the reasonable cost of
Prometheus, duly assign, transfer and deliver to the successor this Agreement
and shall take such other actions as may be reasonably required by Lender or
the successor in connection with the foregoing.
Section 8. This Agreement may be amended from time to time in a
writing signed by all the parties hereto.
Section 9. All notices and other communications provided for under
this Agreement shall be given and deemed effective if given in accordance
with the provisions set forth in the Loan Agreement, except that notices to
Bank shall be given to the address of the Bank first written above.
SECTION 10. THIS IS NOT A PLEDGE OR GRANT OF A SECURITY INTEREST
IN OR OTHER RIGHTS, COLLATERAL OR OTHERWISE, TO LENDER IN THE STOCK OR THE
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CERTIFICATES EXCEPT THE RIGHTS EXPRESSLY SET FORTH HEREIN WITH RESPECT TO
CUSTODY THEREOF.
Section 11 The parties hereto agree that the provisions of Section
5, 9, 14, 15 and 16 ("Incorporated Provisions") of that certain Custodial
Agreement, dated as of June 8, 1998, among Bank as custodian, Lender as
borrower, and Xxxxxx Xxxxxxx Mortgage Capital Inc. as lender, as amended by
letter agreement, dated June 30, 1998, by and among the foregoing parties and
Xxxxxx Xxxxxxx & Co. International Limited are hereby incorporated in this
Agreement as if fully set forth herein and with "Custodian" referring to
Bank. For convenience of reference, the Incorporated Provisions are attached
as Exhibit A hereto. In the event of any inconsistency or conflict between
the provisions set forth in the body of this Agreement and the Incorporated
Provisions, the Incorporated Provisions shall govern. Prometheus
acknowledges that Lender shall deliver the Certificates pursuant to such
custodial agreement, but the rights of the Parties to the Certificates shall
be governed by this Agreement.
Section 12. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of laws.
Section 13. Prometheus acknowledges and agrees that Lender shall
deliver the Certificates to Bank pursuant to that certain Custodial Agreement
by and among Lender, Xxxxxx Xxxxxxx Mortgage Capital Inc. and Bank, dated
June 28, 1998, but the terms and provisions of this Agreement shall govern
the rights of the parties to the Certificates.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.
CAPITAL TRUST, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
PROMETHEUS SOUTHEAST
RETAIL TRUST
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Trust Officer
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