EXHIBIT 40
SUPPLEMENTAL SECURITIES LOAN AGREEMENT
AGREEMENT dated as of June 18, 2003 between XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED, a broker-dealer registered pursuant to the Securities
Exchange Act of 1934, as borrower ("Borrower"), XXXXXXX XXXXX INTERNATIONAL,
through Borrower as its agent ("MLI"), SECURITY CAPITAL SHOPPING MALL BUSINESS
TRUST, a Maryland real estate investment trust, as lender ("Lender") and UBS
SECURITIES LLC ("UBS"), a dealer registered pursuant to the Securities Exchange
Act of 1934, as agent for the Lender. This Supplemental Agreement, with respect
only to the loan of securities referred to below, supplements and amends the
Securities Lending Agency Client Agreement dated as of June 17, 2003 (the
"Client Agreement") between Lender and UBS and the Securities Loan Agreement
dated as of February 24, 2002 (the "Agency Securities Loan Agreement") between
UBS and Borrower.
The parties hereto agree as follows:
1. LOANS OF REGENCY CENTERS CORPORATION COMMON STOCK.
1.1 Subject to the terms and conditions of this Agreement and the
Agency Securities Loan Agreement and the Client Agreement, if after reasonable
efforts the Borrower is unable to borrow, on terms reasonably acceptable to
Borrower, shares of the Common Stock of Regency Centers Corporation ("Regency
Shares") from lenders reasonably acceptable to Borrower available in the market,
the Borrower may orally initiate a transaction whereby UBS, as agent for Lender,
may lend to Borrower, who along with Wachovia Bank, National Association,
JPMorgan Chase Bank and Citigroup Global Markets, Inc., shall be the sole
Eligible Borrowers with respect to the Regency Shares under the Client
Agreement, up to 11,720,000 Regency Shares which are fully-paid or which
constitute excess margin shares owned by Lender. Each such loan shall be on the
terms and conditions contained in the Agency Securities Loan Agreement, as
supplemented by this Agreement. Terms not defined herein shall have the meanings
ascribed to them in the Agency Securities Loan Agreement as in existence on the
date hereof, as amended by this Agreement
2. FEE FOR LOAN.
2.1 Unless otherwise agreed, (a) the Loan Fee under Section 4.1 of the
Agency Securities Loan Agreement shall be at the rate of 20 basis points (0.20%)
per annum, computed daily on the basis of a 360-day year, and (b) the Cash
Collateral Fee under Section 4.2 of the Agency Securities Loan Agreement shall
be as displayed on the page Feds Open - Index - [GO] on the BLOOMBERG
Professional Service, or successor page or such other source for the US dollar
Federal Funds rate designated by Borrower and Lender.
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3. TERMINATION OF THE LOAN.
3.1 Borrower may terminate a Loan on any Business Day by giving notice
to Lender and UBS and transferring the Loaned Securities to UBS before the close
of business of Borrower on such Business Day.
3.2 UBS, as agent for Lender, may terminate a Loan on a termination
date established by notice given to Borrower prior to the close of business on a
Business Day. The termination date established by a termination notice given by
UBS to Borrower shall be a date no earlier than the standard settlement date for
trades of the Loaned Securities entered into on the date of such notice, which
date shall, unless Borrower, Lender and UBS agree to the contrary, be the third
Business Day following such notice.
4. RIGHTS OF BORROWER IN RESPECT OF THE LOANED SHARES.
4.1 The rights of Borrower in respect of Loaned Securities under
Section 6 of the Agency Securities Loan Agreement are limited to the extent that
Borrower shall not have any incidents of ownership or take any action with
respect to the Loaned Securities that would cause any Loaned Securities to
become "Excess Shares" under the articles of incorporation of Regency Centers
Corporation; PROVIDED, HOWEVER, that, to the extent required to prevent any
Loaned Securities to become "Excess Shares", Borrower shall have the right, upon
written consent of the Lender (which consent shall not be unreasonably withheld)
to assign its obligations under this Agreement to any entity with a credit
rating of AA- or above or to an affiliate of the Borrower without the prior
consent of the Lender; PROVIDED, FURTHER, that the Borrower may not make any
such assignment if immediately after giving effect to the proposed assignment,
there would be an Event of Default or Potential Event of Default of the Borrower
or such proposed assignee pursuant to the Confirmation.
5. XXXX TO MARKET MARGIN.
5.1 For purposes of Section 8 of the Agency Securities Loan Agreement
and Sections 3(a) and 3(b) of the Client Agreement, the Market Value of the
Collateral and the Required Collateral Level shall be 102% of the Market Value
of the Loaned Securities, and shall be valued on an Account-by-Account basis as
contemplated by Section 8.4 of the Agency Securities Loan Agreement. Without the
prior written consent of Borrower, Lender will not permit the collateral to be
held other than in Lender's Client Account at UBS. Collateral shall consist only
of cash and shall be invested as specified by Lender and Borrower.
6. Forward Sale Agreement.
6.1 Notwithstanding anything in this Agreement to the contrary,
Borrower, UBS and Lender hereby agree and acknowledge that, pursuant to the
terms of a Confirmation dated June 18, 2003 between Lender and Xxxxxxx Xxxxx
International (the "Confirmation"), in the event that Borrower does not deliver
Regency Shares to Lender as required under this Agreement, then Lender shall
have the right to
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assign to MLI its right to receive Regency Shares from Borrower under the Agency
Securities Loan Agreement and this Agreement to satisfy an equivalent delivery
obligation of Lender under the Confirmation.
6.2 Notwithstanding anything in the Agency Securities Loan Agreement
and this Agreement to the contrary, Borrower, UBS and Lender hereby agree and
acknowledge that if upon tender or delivery of Regency Shares to Lender by
Borrower under the Agency Securities Loan Agreement and this Agreement, Lender
fails to return the Collateral as required under the Agency Securities Loan
Agreement and this Agreement, then MLI shall have the right to satisfy any
portion of the payment obligation due to Lender under the Confirmation, in whole
or in part, by paying all or part of such amount due to the Borrower and the
Lender shall retain an amount of the Collateral under the Agency Securities Loan
Agreement and this Agreement equal to the amount of MLI's payment to Borrower,
in which event the Borrower shall deliver to MLI the number of Regency Shares
corresponding to such payment amount.
6.3 Notwithstanding anything in the Agency Securities Loan Agreement
and this Agreement to the contrary, Borrower and Lender hereby agree and
acknowledge that, in the event that MLI fails to make any payment to Lender
required under the Confirmation, Lender may retain an amount of Collateral equal
to such payment and apply it in satisfaction of MLI's payment obligation under
the Confirmation and assign to MLI its right to receive Regency Shares in
repayment of the Loan evidenced by the Agency Securities Loan Agreement and this
Agreement.
6.4 Notwithstanding anything in the Agency Securities Loan Agreement
and this Agreement to the contrary, if Physical Settlement (as defined in the
Confirmation) is elected under the Confirmation, either Lender may assign, or,
to the extent, but only to the extent, that MLI concurrently tenders payment to
Lender as required thereunder, MLI may cause Lender to assign to MLI, any right
of Lender to receive delivery of Regency Shares from Borrower under the Agency
Securities Loan Agreement and this Agreement to satisfy the delivery obligation
of Lender under the Confirmation with respect to the number of Regency Shares
that Lender is then entitled to receive from Borrower hereunder. In such event,
Lender shall return the Collateral to Borrower upon receipt of payment by MLI
under the Confirmation.
7. APPLICABLE LAW.
7.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed wholly within such state, without reference to its conflicts of laws
principles or rules.
8. REPRESENTATION OF THE LENDER.
8.1 Lender hereby represents and warrants to Borrower that the
representations and warranties of Lender contained in Section 4(a) of the Client
Agreement are true and correct as of the date hereof (provided that Section
4(a)(iii) is subject to the rights of MLI
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under the Confirmation) and shall be deemed made and repeated for all purposes
at and as of all times when any Loan entered into under the Agency Securities
Loan Agreement is outstanding.
9. TERMINATION.
9.1 Lender and UBS agree that they will not terminate the Client
Agreement prior to the Settlement Date specified in the Confirmation without the
prior written consent of Borrower.
10. DEFAULT.
10.1 In the event of any default by Borrower under any Loan, UBS shall
take action only in accordance with express instructions from Lender, Section
3(f) of the Client Agreement to the contrary notwithstanding.
11. COMPENSATION OF UBS.
11.1 The compensation of UBS under the Client Agreement shall be paid
by Lender and UBS is not authorized to collect any compensation from the
principal of the Collateral or that would affect the Cash Collateral Fee payable
to Borrower.
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XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ XXXXX XXXXXXX
------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
XXXXXXX XXXXX INTERNATIONAL
By: /s/ XXXXXXXX XXXXX
------------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Authorized Signatory
SECURITY CAPITAL SHOPPING MALL BUSINESS
TRUST
By: /s/ XXXXXX X. XXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
UBS SECURITIES LLC
By: /s/ XXXXXX XXXXXXXX
------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Executive Director
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GUARANTY
GUARANTY (the "Guaranty"), dated as of June ____, 2003 by GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("GE Capital") in favor of
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (the "Counterparty").
RECITALS
WHEREAS, UBS Securities LLC ("UBS") and Security Capital Shopping Mall
Business Trust, a Maryland real estate investment trust (the "Lender") have
entered into a Securities Lending Agency Client Agreement, dated as of June 17,
2003 (the "Client Agreement"), UBS and Counterparty have entered into a
Securities Loan Agreement dated June 17, 2003 (the "Agency Securities Loan
Agreement") and UBS, Lender and Counterparty have entered into a Supplemental
Securities Loan Agreement (the "Supplemental Agreement") providing, among other
things, for the Lender to lend to Counterparty certain securities against a
pledge of collateral (the "Transactions");
WHEREAS, the Counterparty has requested GE Capital, as the parent of the
Lender, to provide a guaranty to the Counterparty on the terms and conditions
hereinafter provided; and
WHEREAS, GE Capital is willing to enter into this Guaranty to induce the
Counterparty to enter into the Transactions with the Lender;
NOW, THEREFORE, GE Capital hereby agrees:
Section 1. GUARANTY BY GE CAPITAL.
(a) From and after the date hereof, GE Capital hereby
irrevocably and unconditionally guarantees the due and punctual payment
of all amounts payable by UBS, as agent of the Lender, to the
Counterparty pursuant to the terms of Sections ___________ of the Agency
Securities Loan Agreement and Section ___ of the Supplemental Agreement
when the same shall become due and payable, whether on scheduled payment
dates or otherwise, in each case after any applicable grace periods or
notice requirements; provided, however, that GE Capital shall not be
liable to make any payment until two Business Days (as used herein, a
"Business Day" shall refer to a day other than a Saturday or a Sunday on
which commercial banks are open for business in the City of New York,
United States of America) following receipt by GE Capital of written
notice from the Counterparty that a payment is due thereunder. GE Capital
hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Agency
Securities Loan Agreement or the Supplemental Agreement; any change in or
amendment thereto, the absence of any action to enforce the same, any
waiver or consent by the Counterparty with respect to any provision
thereof; the recovery of any judgment against the Lender or any action to
enforce the same; or
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any other circumstances which may otherwise constitute a legal or
equitable discharge or defense of a guarantor; provided, however, that
nothing contained herein shall be constituted to be a waiver by GE
Capital of presentment or demand of payment or notice to GE Capital with
respect to the Agency Securities Loan Agreement or the Supplemental
Agreement and the obligations evidenced thereby or hereby. GE Capital
covenants that this Guaranty will not be discharged except by complete
performance of the obligations contained in the Agency Securities Loan
Agreement, in the Supplemental Agreement and in this Guaranty.
(b) GE Capital shall be subrogated to all rights of the
Counterparty in respect of any amounts paid by GE Capital pursuant to the
provisions of this Guaranty; provided, however, that GE Capital shall be
entitled to enforce, or to receive any payments arising out of or based
upon, such right of subrogation with respect to any Transaction only
after the payment of all amounts owed by the Lender to the Counterparty
with respect to such Transaction have been paid in full.
(c) This Guaranty shall continue to be effective or reinstated,
as the case may be, if at any time any payment made by the Lender to the
Counterparty with respect to a Transaction or pursuant to the terms of
the Agency Securities Loan Agreement and in the Supplemental Agreement is
rescinded or must otherwise be returned by the Counterparty upon the
insolvency, bankruptcy or reorganization by GE Capital, the Lender or
otherwise, all as though such payment had not been made.
Section 2. MISCELLANEOUS.
(a) NOTICES. All notices to GE Capital under this Guaranty and
copies of all notices of payment failure or other breaches by UBS or the
Lender of the Client Agreement or the Agency Securities Loan Agreement
shall, until GE Capital furnishes written notice to the contrary, be
mailed or delivered to GE Capital at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000-0000, and directed to the attention of the Senior Vice
President-Corporate Treasury and Global Funding Operation of GE Capital.
(b) GOVERNING LAW. This Guaranty shall be construed and
enforced in accordance with, and governed by, the laws of the State of
New York, United States of America.
(c) INTERPRETATION. The headings of the sections and other
subdivisions of this Guaranty are inserted for convenience only and shall
not be deemed to constitute a part hereof.
(d) ATTORNEY'S COST. GE Capital agrees to pay all reasonable
attorney's fees and disbursements and all other reasonable and actual
costs and expenses
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which may be incurred by the Counterparty in the enforcement of this
Guaranty of the Agency Securities Loan Agreement and the Supplemental
Agreement.
(e) NO SET-OFF. By acceptance of this Guaranty, the
Counterparty shall be deemed to have waived any right to set-off,
combine, consolidate, or otherwise appropriate and apply, any
indebtedness at any time held or owing by the Counterparty against, or on
account of, any obligations or liabilities of GE Capital under this
Guaranty.
(f) CURRENCY OF PAYMENT. Any payment to be made by GE Capital
shall be made in the same currency as designated for payment in the
Agency Securities Loan Agreement and the Supplemental Agreement and such
designation of the currency of payment is of the essence.
(g) TRANSFER. Neither this Guaranty nor any interest or
obligation in or under this Guaranty may be transferred (whether by way
of security or otherwise) by GE Capital or the Counterparty without the
prior written consent of the other, except that the Counterparty may,
without the consent of GE Capital, transfer its interest in this Guaranty
to any person or entity to which any interest or obligation in or under
the Agency Securities Loan Agreement or the Supplemental Agreement or any
Transaction is transferred in a manner that is not inconsistent with the
Agency Securities Loan Agreement or the Supplemental Agreement.
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------------------------------
Senior Vice President - Corporate Treasury
and Global Funding Operation
ACKNOWLEDGEMENT AND AGREEMENT
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED HEREBY ACKNOWLEDGES AND
CONSENTS TO THE PROVISIONS OF THE FOREGOING GUARANTY.
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XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:___________________________________
Title:
