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SECOND AMENDMENT TO LEASE AND OPTION
TO PURCHASE AGREEMENT
by and between
CITY OF RIVERSIDE
and
PNC NCNVINV, INC.
Dated as of March 1, 2023
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SECOND AMENDMENT TO LEASE AND OPTION TO PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AND OPTION TO PURCHASE
AGREEMENT (this “Second Amendment”), dated as of and effective March 1, 2023 (the “Effective Date”), is made by and between PNC NCNVINV, INC. (successor-in-interest to Compass Mortgage Corporation) (“Lender”) and the CITY OF RIVERSIDE, a municipal corporation organized and existing under and by virtue of its charter and the Constitution of the State of California (the “City”), and amends and supplements that certain Lease and Option to Purchase Agreement, dated as of July 1, 2012 (the “Original Lease”), as amended by the Amendment to Lease and Option to Purchase Agreement, dated as of March 1, 2014 (the “First Amendment to Lease” and, together with Original Lease, the “Lease”), entered into by and between Lender and the City; WHEREAS, the City has undertaken the development, construction, installation, equipping and furnishing of certain public improvements (the “Project”); WHEREAS, to facilitate the Project, the City and Lender entered into that certain Site and Facilities Lease, dated as of July 1, 2012, as amended by that certain First Amendment to Site and Facilities Lease, dated as of March 1, 2014 (the “Site Lease”), pursuant to which the City leased certain real property and improvements more specifically described in Exhibit A attached t hereto (the “Site”) to Lender;
WHEREAS, pursuant to the Original Lease, Lender subleased the Site and leased the Project to the City;
WHEREAS, Lender and the City have determined that LIBOR (as defined in the Lease) hardwired replacement provisions that include a replacement waterfall that provides for a transition to a successor rate shall be incorporated into the Lease for all purposes under the Lease and under any other agreement, instrument, certificate or document (other than any derivative, swap agreement, hedge agreement or ISDA confirm or other analogous or similar document executed in connection with any interest rate hedging or swap transactions) executed and delivered in connection with the Lease, subject to the terms and conditions set forth in this Second Amendment; WHEREAS, Section 34 of the Original Lease provides that the Lease may be amended by the written agreement of the City and Lender; and
WHEREAS, the City and Lender now desire to amend the Lease as provided in this Second Amendment;
NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
SECTION 1. Definitions. Unless otherwise specifically defined herein, all capitalized terms used herein shall have the meanings stated in or ascribed thereto in the Lease.
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SECTION 2. Representations and Warranties. The City hereby represents and warrants that: (a) the execution, delivery and performance of this Second Amendment and any other document related hereto by the City have been duly authorized by all necessary corporate or other organizational action, and ( b) this Second Amendment and any other document related hereto have been duly executed and delivered by the City.
SECTION 3. Amendment of Section 1.01 of Exhibit B of the Lease. Section 1.01 of Exhibit B of the Lease is hereby amended and restated in its entirety as set forth below:
Section 1.01. Interest Rate.
(a) Interest Rate Computations; Rate Resets . Subject to Sections 1.01(a)(ii) and 1.03 below, the interest component s of the Base Rental Payments shall be computed at the following rates:
(i) Provided no Event of Default has occurred and is continuing, the outstanding amount of the Site Lease Payment drawn by the City and not previously repaid shall bear interest at the Variable Rate. The Variable Rate shall be effective for each applicable Rental Period.
(ii) Immediately upon the occurrence of an Event of Default, the outstanding amount the Site Lease Payment drawn by the City and not previously repaid shall bear interest at the applicable Default Rate. The Default Rate shall be applicable until such time as the Event of Default is cured in accordance with this Lease.
(iii) All interest components of Base Rental Payments due and payable under this Lease shall be calculated on the basis of a 360 -day year and actual number of days elapsed during each Rental Period. All interest components of Base Renal Payments shall be payable on the same day as the principal components of Base Rental Payments as set forth on Exhibit B attached hereto. Any outstanding principal and interest components of Base Rental Payments interest shall be due and payable in full on the expiration of this Lease.
(b) Notice of New Interest Rate . Lender shall provide the City with written notice of the rate of interest in effect promptly following such determination; provided, however, that the failure by Lender to provide such notice shall not relieve the City of any obligation to pay Rental Payments when due.
(c) Maximum Rate. Notwithstanding the foregoing provisions, the maximum interest rate that the City is authorized to pay with respect to the interest components of Base Rental Payments is the lesser of 12.00% per annum or the highest rate permitted by applicable law.
(d) Announcements Related to LIBOR. On March 5, 2021, the ICE Benchmark Administration, the administrator of USD LIBOR (the “IBA”) and the U.K. Financial Conduct Authority, the regulatory supervisor for the IBA, announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-week, 1-month, 3 4870-3832-5038.4
2-month, 3-month, 6-month and 12- month USD LIBOR tenor settings (collectively, the “Cessation Announcements”). Lender and the City acknowledge that, as a result of the Cessation Announcements, a Benchmark Transition Event occurred on March 5, 2021 with respect to USD LIBOR under clauses (1) and (2) of the definition of Benchmark Transition Event; provided however, no related Benchmark Replacement Date occurred as of such date.
(e) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Existing Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then, (i) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Existing Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment or further action or consent of any other party hereto or to any other Existing Document; and (ii) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Existing Document in respect of any Benchmark setting at or after 5:00 p.m. (Eastern time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the City without any amendment hereto or to any other Existing Document, or further action or consent of the City or any other party to any Existing Document. (f) Benchmark Replacement Conforming Changes . In connection with the implementation of a Benchmark Replacement, Lender may make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Existing Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any f urther action or consent of the City or any other party to any Existing Document. (g) Notices; Standards for Decisions and Determinations . Lender will promptly notify the City of (i) the implementation of any Benchmark Replacement, (ii) the effectiveness of any Benchmark Replacement Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement, (iii) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (e) below and (iv) the comm encement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by Lender pursuant to this Second Amendment , including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from the City or any other party to any Existing Document.
(h) Unavailability of Tenor of Benchmark . Notwithstanding anything to the contrary herein or in any other Existing Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark 4 4870-3832-5038.4
is a term rate and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by Lender in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then Lender may modify the definition of “Interest Period,” “Reference Period” or “Accrual Period” (or any similar terms that may appear in the Existing Documents ) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then Lender may modify the definition of “Interest Period,” “Reference Period” or “Accrual Period” (or any similar terms that may appear in the Existing Documents) for all Benchmark settings at or after such time to reinstate such previously removed tenor. (i) Benchmark Unavailability Period. Upon the City’s receipt of notice of the commencement of a Benchmark Unavailability Period, the City may elect to exercise its right to prepay the Base Rental Payments unde r this Lease and, failing that, the City will be deemed to have converted the determination of the interest component of the Base Rental Payments at the Fallback Rate. During any Benchmark Unavailability Period or at any time that a tenor for the then- current Benchmark is not an Available Tenor, the component (if any) of the Fallback Rate based upon the then- current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Fallback Rate.
SECTION 3. References to Compass. All references to “Compass” in the Lease, the Site Lease and any other document related to the Lease or the Site Lease shall refer to Lender and its successors and assigns.
SECTION 4. Exhibit C to Lease Agreement. Exhibit C of the Lease is hereby replaced with Exhibit C attached to this Second Amendment.
SECTION 5. Limitation; Effect of Amendment; No Novation. No provision of the Lease or any other Existing Document is amended or waived in any way other than as provided herein. Except as expressly set forth herein, all of the terms of the Lease and the other Existing Documents shall be and remain in full force and effect and are hereby ratified and confirmed, and constitute the legal, valid, binding, and enforceable obligations of the parties thereto. As of the Effective Date, each reference in the Lease to “this Lease,” “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Existing Documents to the Lease (including, without limitation, by means of words like “thereunder,” “thereof”, “therein” and words of like import), shall mean and be a reference to the Lease as amended by this Second Amendment. The City hereby confirms that the Lease and each other Existing Document have at all times, since the date of the execution and delivery of such documents, remained in full force and effect and the obligations thereunder are continued as amended by this Second Amendment. The City acknowledges and agrees that the amendment of the Lease and each other Existing Document by this Second Amendment is not intended to constitute, nor does it constitute, a novation, interruption, suspension of continuity, 5 4870-3832-5038.4
satisfaction, discharge or termination of the obligations, loans, liabilities, or indebtedness under the Lease and each other Existing Document, and this Second Amendment, the Lease and each other Existing Document are entitled to all rights and benefits originally pertaining to the Lease and each other Existing Document.
SECTION 6. Reaffirmation of Lease and Site Lease . The City hereby ack nowledges its receipt of a copy of this Second Amendment and its review of the terms and conditions hereof and consents to the terms and conditions of this Second Amendment and the transactions contemplated thereby. The City hereby (a) affirms and confirm s, as applicable, its pledges, grants and other undertakings under the Lease, the Site Lease and each other Existing Document, each as amended by this Second Amendment, to which it is a party and (b) agrees that (i) the Lease, the Site Lease and each other Existing Document, each as amended by this Second Amendment, to which it is a party continue to be in full force and effect and (ii) all pledges, grants and other undertakings thereunder continue to be in full force and effect (with the same priority, as applicable) and accrue to the benefit of the applicable secured party or parties thereunder.
SECTION 7. Partial Invalidity. If any one or more of the terms, provisions, promises, covenants or conditions of this Second Amendment shall to any extent be adj udged invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions, promises, covenants and conditions of this Second Amendment shall not be affected thereby, and s hall be valid and enforceable to the fullest extent permitted by law.
SECTION 8. Further Assurances. The City agrees to execute such other documents, instruments and agreements and take such further actions reasonably requested by Lender to effectuate the provisions of this Second Amendment.
SECTION 9. Governing Law. This Second Amendment shall be governed by the laws of the State of California.
SECTION 10. Counterparts; Effectiveness.
(a) This Second Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Second Amendment shall become effective as of the Effective Date set forth above. (b) The words “execution,” “signed,” “signature,” and words of like import in this Second Amendment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state Laws based on the Uniform Electronic Transactions Act. The Parties agree that this Second Amendment may, at Lender’s option, be in the form of an electronic record and may be signed or executed using electronic signatures. For the avoidance of doubt, the authorization under this paragraph may include, 6 4870-3832-5038.4
without limitation, use or acceptance by Lender of a manually signed paper signature page which has been converted into electronic form (such as scanned into PDF format) for transmission, delivery and/or retention.
SECTION 11. Section Headings. Section headings used in this Second Amendment are for convenience of reference only and shall not govern the interpretation of any of the provisions of this Second Amendment.
SECTION 12. Severability. The provisions of this Second Amendment are intended to be severable. If any provision of this Second Amendment shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
SECTION 13. Fees and Costs. The City will pay on demand all out-of-pocket fees, costs, and expenses of Lender, including but not limited to the fees and expenses of outside counsel, in connection with the preparation, execution, and delivery of this Second Amendment.
SECTION 14. Lender Responsibility for LIBOR. Lender does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBOR” (or any similar defined term) or with respect to any alternative or successor rate thereto, or replacement rate therefor. To the extent that any term or provision of this Second Amendment is or may be inconsistent with any term or provision in the remainder of any Existing Document, the terms and provisions of this Second Amendment shall control.
SECTION 15. Interest Rate Modification. Lender and City agree that: (i) the modifications to the interest rate set forth in this Second Amendment (the “Interest Rate Modification”) were proposed by Lender, stated to be consistent with its practice with other borrowers, and were not adjusted for this transaction, (ii) the Interest Rate Modification is not being made, and its terms were not altered, to induce any party to perform any act necessary for the approval of this Second Amendment or to compensate any party for granting such approval, (iii) the Interest Rate Modification is not a concession in favor of City due to any financial difficulty of City, (iv) the Interest Rate Modification is not a concession in favor of Lender due to any credit deterioration of City, and (v) the Interest Rate Modification is not intended to compensate either party for changes in rights or obligations under any arrangements between the parties, whether related to this Second Amendment or otherwise.
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed and attested by their proper officers thereunto duly authorized, as of the day and year first above written.
CITY OF RIVERSIDE
By
Michael Futrell
City Manager
ATTEST:
By
Donesia Gause, City Clerk
APPROVED AS TO FORM:
By__________________________________
Brian Forbath, President of the Board of Directors
Stradling Yocca Carlson & Rauth, Bond Counsel
PNC NCNVINV, INC.
By
Authorized Signatory
[Signature Page to the Second Amendment to Lease and Option to Purchase Agreement] C-1
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EXHIBIT C
DEFINED TERMS
“Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 8(e) hereof.
“Authorized Representative” means the Chief Financial Officer/Treasurer of the City or any designee thereof, and also means any other individual authorized by the City Council to act as an Authorized Representative hereunder, provided that the City has provided specimen signatures for such Authorized Representative(s) to Lender.
“Available Tenor” means, as of any date of determination and with respect to the then- current Benchmark, as applicable, (x) if the then- current Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark that is or may be used for determining such Benchmark or the length of an “Interest Period,” “Reference Period” or “Accrual Period” (or any period described by similar terms that may appear in the Existing Documents) under the terms of the Existing Documents as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period,” “Reference Period” or “Accrual Period” (or any similar terms that may appear in the Existing Documents) pursuant to paragraph 1(h) of Exhibit B, or (y) if the then-current Benchmark is not a term rate nor based on a term rate, any payment period for interest calculated with reference to such Benchmark under the terms of the Existing Documents as of such date. For the avoidance of doubt, the Available Tenor for the “Daily LIBOR Rate” (if such rate appears in the Existing Documents) is one month. “Base Rental Payments” means all amounts payable to Lender from the City as Base Rental Payments pursuant to Sections 8(a) through 8(d) hereof. “Benchmark” means, i nitially, USD LIBOR ; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 1.01(e) of Exhibit B to this Lease.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by Lender on the applicable Benchmark Replacement Date; provided, however, if (i) the City has outstanding an interest rate swap with Lender on the Benchmark Replacement Date to hedge, in whole or part, the floating rate risk under any credit facility evidenced by th e Existing Documents (each such swapped credit facility, a “Swapped Facility”), and (ii) such swap incorporates LIBOR fallback provisions with a Daily Simple SOFR rate as the primary alternative fallback rate for USD LIBOR, then for such Swapped Facility only, the Benchmark Replacement alternative set forth in clause (1) below shall not apply to such Swapped Facility and the alternative set forth below in clause (2) shall be the first alternative:
(1) the sum of: (a) Term SOFR and (b) the relat ed Benchmark Replacement Adjustment;
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(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(3) the sum of: (a) the alternate benchmark rate that has been selected by Lender as the replacement for the then- current Benchmark for the applicable Corresponding Tenor, giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then -current Benchmark for U.S. dollar -denominated syndicated or bilateral credit facilities at such time, and (b) the related Benchmark Replacement Adjustment;
provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by Lender in its reasonable discretion. If the Benchmark Replacement as determined above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes hereof and of the other Existing Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then- current Benchmark with an Unadjusted Benchmark Replacement for any Available Tenor for any setting of such Unadjusted Benchmark Replacement, the first applicable alternative set forth in the order below that can be determined by Lender:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the applicable amount(s) set forth below:
Available Tenor Benchmark Replacement Adjustment*
One-Month 0.11448% (11.448 basis points)
Three-Months 0.26161% (26.161 basis points)
Six-Months 0.42826% (42.826 basis points)
* These values represent the ARRC/ISDA recommended spread adjustment values available here: https://assets.bbhub.io/professional/sites/10/IBOR- Fallbacks-USD LIBOR-Cessation_Announcement_20210305.pdf. (2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Lender for the applicable Corresponding Tenor, giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then- prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread C-3
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adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar -denominated syndicated or bilateral credi t facilities;
provided that, if the then-current Benchmark is a term rate, more than one tenor of such Benchmark is available as of the applicable Benchmark Replacement Date and the applicable Unadjusted Benchmark Replacement will not be a term rate, the Available Tenor of such Benchmark for purposes of this definition of “Benchmark Replacement Adjustment” shall be deemed to be the Available Tenor that has approximately the same length (disregarding business day adjustments) as the payment period for inter est calculated with reference to such Unadjusted Benchmark Replacement.
“Benchmark Replacement Conforming Changes ” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “Interest Period,” “Reference Period” or “Accrual Period” (or any similar terms that may appear in the Existing Documents), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that Lender decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by Lender in a manner substantially consistent with market practice (or, if Lender decides that adoption of any portion of such market practice is not administratively feasible or if Lender determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as Lender decides is reasonably necessary in connection with the administration of the Existing Documents). “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of claus e (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by Lender, which date shall promptly follow the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, t he Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then -current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
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“Benchmark Transition Event ” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published com ponent used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by a Governmental Authority having jurisdiction over Lender, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jur isdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinit ely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or a Governmental Authority having jurisdiction over Lender announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then -current Benchmark for all purposes hereunder and under any Existing D ocument in accordance with this Lease, and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Existing Document in accordance with this Lease. “Business Day” means any day other than ( a) a Saturday or Sunday or ( b) a legal holiday on which comm ercial banks are authorized or required by law to be closed for business in Pittsburgh, Pennsylvania; provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination involving C-5
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SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Closing Date” means July 19, 2012.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“Completion Certificate” means a certificate of an Authorized Representative of the City delivered pursuant to and in the form required by Section 2(b) hereof to the effect that the Project has been completed substantially in conformity with the plans and specifications for the Project. “Construction Period” means the period of time commencing on the Closing Date and continuing until April 1, 2014.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Cumulative Excess Amount” as of any date, means the cumulative Excess Amount, if any, during the term of this Lease prior to such date, less any amount required to be paid from time to time pursuant to Section 8(b) hereof.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by Lender in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if Lender decides that any such convention is not administratively feasible for Lender, then Lender may establish another convention in its reasonable discretion.
“Default Rate” means a rate per annum equal to the Variable Rate plus 1.00%. “Determination of Taxability ” means any determination, decision or decre e by the Commissioner of Internal Revenue, or any District Director of Internal Revenue, any court of competent jurisdiction, or a legal opinion obtained by Lender from independent counsel nationally recognized in tax-exempt finance matters and reasonably acceptable to the City to the effect that an Event of Taxability shall have occurred. A Determination of Taxability also shall be deemed to have occurred on the first to occur of the following:
(a) the date when the City files any statement, supplemental statement, or other tax schedule, return or document, which discloses that an Event of Taxability shall have occurred;
(b) the effective date of any federal legislation enacted after the date of this Agreement or promulgation of any income tax regulation or ruling by the Internal Revenue Service that causes an Event of Taxability after the date of this Agreement; or C-6
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(c) a sale or other deliberate action within the meaning of Treas. Reg. § 1.141 2(d), occurs with respect to all or a portion of the Project (a s defined in the Tax Certificate) without the City furnishing Lender with an opinion of independent counsel nationally recognized in tax-exempt finance matters and reasonably acceptable to Lender to the effect that such change in use (and accompanying reme dial action, if any) will not cause interest component of the Rental Payments to become includable in the gross income of the recipient.
“Draw Request” means a draw request, substantially in the form attached hereto as Exhibit D, executed by Lender and the City from time to time to increase the outstanding principal amount of the Site Lease Payment and to disburse such amounts for Project Costs. “Event of Taxability” means, with respect to this Lease: (a) the application of the proceeds of the Site Lease Payment in such manner that such Lease becomes an “arbitrage bond” within the meaning of Code Sections 103(b)(2) and 148, and with the result that interest component of Base Rental Payment is or becomes includable in a recipient’s gross income (as defined in Code Section 61); or (b) if as the result of any act, failure to act or use of the proceeds of the Site Lease Payment or any misrepresentation or inaccuracy in any of the representations, warranties or covenants contained in this Lease or the Site Lease by the City or the enactment of any federal legislation or the promulgation of any federal rule or regulation after the date of this Lease, the interest component of Base Rental Payments is or becomes includable in a recipient’s gross income (as defined in Code Section 61).
“Excess Amount” means the difference in each Rental Period between the Fair Rental Value of the Leased Premises and the Rental Payments actually paid by the City during such Rental Period, to the extent that such Rental Payments actually paid are less than the Fair Rental Value. “Existing Document ” means, except as otherwise provided herein and as the con text requires, each and every document entered into between Lender and City in connection with the Project, including, without limitation, this Lease and the Site Lease (other than any derivative, swap agreement, hedge agreement or ISDA confirm or other analogous or similar document executed in connection with any interest rate hedging or swap transactions). “Fallback Rate ” means the alternative rate of interest that would have been applicable under the terms of the Existing Documents (absent the Second Amendment) if Lender had given notice that USD LIBOR had become unavailable (or had otherwise exercised its rights under th e Existing Documents relating to LIBOR unavailability) or, if no such alternative rate can be determined, an alternative value or rate ( which may include a spread adjustment) determined by Lender in its discretion.
“Fitch” means Fitch Ratings and its successors and assigns. “Floor” means the minimum rate of interest, if any, provided under the terms of the Existing Documents with respect to USD LIBOR or, if no minimum rate of interest is specified, zero.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, C-7
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authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any s upra-national bodies such as the European Union or the European Central Bank).
“Government Securities” means the securities described in clause (a) of the definition of Qualified Investments as set forth herein.
“Gross-Up Rate” means, an interest rate equal to the interest component of Base Rental Payment applicable to this Lease (without regard to Section 1.03 of Exhibit B hereof) plus a rate sufficient such that the total interest to be paid on any payment date would, after such interest was reduced by th e amount of any federal income tax and state personal income tax (including any interest or penalties) actually payable thereon, equal the amount of interest due with respect to the Loan (calculated without regard to Section 2.05(e) hereof). “Interest Period” means a period which commences on the first day of a calendar month and ends on (but excludes) the first day of the immediately following calendar month; provided, however, if the last day of an Interest Period would not fall on a Business Day, then the Interest Period will end on the next following Business Day. The initial Interest Period shall commence on the Closing Date, and each succeeding Interest Period shall commence on the day immediately following the expiration of the preceding Interest Per iod. The actual Interest Periods under this Lease may be for periods of more than or less than one (1) month, depending on whether or not the last day of the Interest Period falls on a Business Day. “Interest Reset Date” means the first day of each Interest Period. “ISDA Definitions ” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto. “Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business, facilities or operations of the City, (b) the ability of the City to carry out its business in the manner conducted as of the date of this Lease or to meet or perform its obligations under this Lease on a timely basis, (c) the validity or enforceability of this Lease, or (d) the exclusion of the interest component of the Base Rental Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes.
“Material Litigation” means any action, suit, proceeding, inquiry or investigation against the City in any court or before any arbitrator of any kind or before or by any Governmental Authority, (i) if determined adversely to the City, may have a Material Adverse Effect, (ii) seek to restrain or enjoin any of the transactions contemplated by this Lease, or (iii) may adversely affect (A) the exclusion of the interest component of the Rental Payments from gross income for federal income tax purposes or the exemption of such interest for state income tax purposes or (B) the ability of the City to perform its obligations under this Lease.
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“Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation, and its successors and assigns.
“NYFRB” means the Federal Reserve Bank of New York.
“PNC” means PNC Bank, National Association, and its successors and assigns. “Prior Interest Payment” means a payment of interest component of Base Rental Payment made on or prior to the date of any Determination of Taxability. “Project” means the development, construction, installation, equipping and furnishing of certain capital improvements on the real property more particularly described in Exhibit A to this Lease.
“Project Costs” means the amount paid or to be paid for any portion of the Project incurred by the City in connection with the Project , costs associated with this Lease transaction, and capitalized interest with respect thereto during the Construction Period, all as permitted under the Code.
“Project Fund” means the fund by that name established by the provisions of Section 7 hereof.
“Qualified Investments” means, if and to the extent permitted by law:
(a) direct obligations of the United States of Ame rica and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America (“U.S. Government Securities”);
(b) direct obligations 1 of the following federal agencies which are fully guaranteed by the full faith and credit of the United States of America:
(i) Export-Import Bank of the United States – Direct obligations and fully guaranteed certificates of beneficial interest;
(ii) Federal Housing Administration – debentures;
(iii) General Services Administration – participation certificates; (iv) Government National Mortgage Association (“GNMAs”) – guaranteed mortgage-backed securities and guaranteed participation certificates; (v) Small Business Administration – guaranteed participation certificates and guaranteed pool certificates;
(vi) U.S. Department of Housing & Urban Development – local authority bonds;
(vii) U.S. Maritime Administration – guaranteed Title XI financings; and C-9
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(viii) Washington Metropolitan Area Transit Authority – guaranteed transit bonds;
(c) direct obligations 1 of the following federal agencies which are not fully guaranteed by the faith and credit of the United States of America:
(i) Federal National Mortgage Association (“FNMAs”) – participation certificates and senior debt obligations rated in one of the top two rating categories by Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”);
(ii) Federal Home Loan Mortgage Corporation (“FHLMCs”) – participation certificates and senior de bt obligations rated in one of the top two rating categories by Moody’s and S&P;
(iii) Federal Home Loan Banks (“FHLBs”) – consolidated debt obligations;
(iv) Student Loan Marketing Association (“SLMAs”) – debt obligations; and
(v) Resolution Funding Corporation (“REFCORPs”) – debt obligations; (d) direct, of any state of the United States of America or any subdivision or agency thereof whose uninsured and unguaranteed debt is rated, at the time of purchase, in the top two rating categories by two or more Rating Agencies, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose uninsured and unguaranteed debt is rated, at the time of purchase, in the top two rating categories by two or more Rating Agencies;
(e) commercial paper (having original maturities of not more than 270 days) rated, at the time of purchase, “P-1” by Moody’s and “A-1” or better by S&P; (f) certificates of deposit, savings accounts, deposit accounts or money market deposits in amounts that are conti nuously and fully insured by the Federal Deposit Insurance Authority (“FDIC”), including Lender Insurance Fund and the Savings Association Insurance Fund;
(g) certificates of deposit, deposit accounts, federal funds or bankers’ acceptances (in each case having maturities of not more than 365 days following the date of purchase) of any domestic commercial bank or United States branch office of a foreign
1 The following are explicitly excluded from the securities enumerated in (b) and (c):
(1) all derivative obligations, including without limitation inverse floaters, residuals, interest-only, principal-only and range notes;
(2) obligations that have a possibility of returning a zero or negative yield if held to maturity; (3) obligations that do not have a fixed par value or those whose terms do not promise a fixed dollar amount at maturity or call date; and
(4) Collateralized Mortgage-Backed Obligations (“CMOs”).
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bank; provided that such bank’s short -term certificates of deposit are rated “P -1” by Moody’s and “A-1” or better by S&P (not considering holding company ratings); (h) investments in money- market funds rated “AAAm” or “AAAm -G” by S&P;
(i) state-sponsored investment pools rated “AA-” or better by S&P; (j) repurchase agreements that meet the following criteria:
(i) a master repurchase agreement or specific written repurchase agreement, substantially similar in form and substance to the Public Securities Association or Bond Market Association master repurchase agreement, governs the transaction;
(ii) acceptable providers shall consist of (A) registered broker/dealers or banks subject to Securities Investors’ Protection Corporation (“SIPC”) jurisdiction or commercial banks insured by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed rating of “A3”/”P-1” or better by Moody’s and “A-”/”A-1” or better by S&P; (B) domestic structured investment companies rated “Aaa” by Moody’s and “AAA” by S&P; or (C) any other financial institution rated, or guaranteed by an entity rated, at least “A3” /”P-1” or better by Moody’s and “A-“/”A-1” by S&P;
(iii) the repurchase agreement shall require downgrade remedies if the counterparty’s ratings are suspended, withdrawn or fall below “A3” or “P-1” from Moody’s, or “A-” or “A-1” from S&P;
(iv) the repurchase agreement shall limit acceptable securities to U.S.
Government Securities and to the obligations of GNMA, FNMA or FHLMC described in (b)(iv), (c)(i) and (c)(ii) above. The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and accrued interest, is equal to a collateral level of at least 104% for U.S. Government Securities and 105% for GNMAs, FNMAs or FHLMCs. The repurchase agreement shall require (A) the Trustee or the Agent to value the coll ateral securities no less frequently than weekly, (B) the delivery of additional securities if the fair market value of the securities is below the required level on any valuation date, and (C) liquidation of the repurchase securities if any deficiency in the required percentage is not restored within two business days of such valuation; (v) the repurchase securities shall be delivered free and clear of any lien to the issuer (herein, the “Trustee”) or to an independent third party acting solely as agent (“Agent”) for the Trustee, and such Agent is (A) a Federal Reserve Bank; or (B) a bank which is a member of the FDIC and which has combined capital, surplus and undivided profits or, if appropriate, a net worth, of not less than $50 million, and the Trustee shall have received written confirmation from such third party that such third party holds such securities, free and clear of any lien, as agent for the Trustee;
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(vi) a perfected first security interest in the repurchase securities shall be created for the benefit of the Trustee, and the issuer and the Trustee shall receive an opinion of counsel as to the perfection of the security interest in such repurchase securities and any proceeds thereof;
(vii) the repurchase agreement shall have a term of one year o r less, or shall be due on demand;
(viii) the repurchase agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate liquidation of the repurchase securities:
(A) insolvency of the broker/dealer or commercial bank serving as the counterparty under the repurchase agreement;
(B) failure by the counterparty to remedy any deficiency in the required collateral level or to satisfy the margin maintenance call under clause (b)(iv) above; or
(C) failure by the counterparty to repurchase the repurchase securities on the specified date for repurchase;
(k) investment agreements, guaranteed investment contracts, funding agreements, or any other form of obligation or corporate note which represents the unconditional obligation of one or more banks, insurance companies or other financial institutions, or are guaranteed in full by a financial institution which has an unsecured rating, or which agreement is itself rated, as of the date of execution thereof, in one of the three highest Rating Categories by two or more Rating Agencies; (l) forward delivery agreements in which the securities delivered mature on or before each interest payment date (for debt service or debt service reserve funds) or draw down date (construction funds) that meet the following criteria:
(i) a specific written agreement governs the transaction; (ii) acceptable providers shall be limited to (A) any registered broker/dealer subject to the Securities Investors’ Protection Corporation jurisdiction, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated “A3/P -1” or better by Moody’s and “A -/A-1” or better by S&P; (B) any commercial bank insured by the FDIC, if such bank has an uninsured, unsecured and unguaranteed obligation rated “A3”/”P -1” or better by Moody’s and “A -”/”A-1” or better by S&P; (C) domestic structured investment companies rated “Aaa” by Moody’s and “AAA” by S&P; and (D) any other financial institution rated, or guaranteed by an entity rated, at least “A3”/”P-1” or better by Moody’s and “A-“/”A-1” by S&P;
(iii) the forward delivery agreement shall provide for termination or assignment (to a qualified provider hereunder) of the agreement if the provider’s C-12
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ratings are suspended, withdrawn or fall below “A3” or “P -1” from Moody’s or “A-” or “A-1” from S&P. Within 10 days, the provider shall fulfill any obligations it may have with respect to shortfalls in market value. There shall be no breakage fee payable to the provider in such event;
(iv) permitted securities shall include the investments listed in clauses (a), (b) and (c) above;
(v) the forward delivery agreement shall include the following provisions:
(A) the permitted securities must mature at least one business day before a debt service payment date or scheduled draw. The maturity amount of the permitted securities must equal or exceed the amount required to be in the applicable fund on the applicable valuation date; (B) the agreement shall include market standard termination provisions, including the right to terminate for the provider’s failure to deliver qualifying securities or otherwise to perform under the agreement.
There shall be no breakage fee or penalty payable to the provider in such event;
(C) any breakage fees shall be pay able only on debt service payment dates and shall be subordinated to the payment of debt service and debt service reserve fund replenishments;
(D) the provider must submit at closing a bankruptcy opinion to the effect that upon any bankruptcy, insolvency or receivership of the provider, the securities will not be considered to be a part of the provider’s estate; and
(E) the agreement may not be assigned (except to a provider that would otherwise be acceptable under these guidelines) or amended; (m) an arrangement with a financial institution in which the securities delivered mature after the funds may be required but provide for the right of the issuer or the Trustee to put the securities back to the provider under a put, guaranty or other hedging arrangement;
(n) certificates of deposit (including those of the Custodian, its parent and its affiliates) secured at all times by collateral that may be used by a national bank for purposes of satisfying its obligations to collateralize pursuant to federal law whic h are issued by commercial banks, savings and loan associations or mutual savings banks whose short-term obligations are rated on the date of purchase A -1 or better by S&P, Moody’s and Fitch; and
(p) the Local Agency Investment Fund (“LAIF”).
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(o) Maturity of investments shall be governed by the following:
(i) investments of moneys (other than reserve funds) shall be in securities and obligations maturing not later than the dates on which such moneys will be needed to make payments;
(ii) investments shall b e considered as maturing on the first date on which they are redeemable without penalty at the option of the holder or the date on which the Trustee may require their repurchase pursuant to repurchase agreements; and
(iii) investments of moneys in reserve funds not payable upon demand shall be restricted to maturities of five years or less. “Rating Agencies” means, collectively, Fitch, Moody’s and S&P, and, if any such Rating Agency shall for any reason no longer perform the functions of a securities rating agency, shall be deemed to refer to any other nationally recognized securities rating agency designated by the City.
Unless the context dictates otherwise, whenever rating categories of any Rating Agency are specified herein, such categories shall be irrespective of gradations within a category. “Reference Time” with respect to any setting of the then- current Benchmark means (1) if such Benchmark is USD LIBOR (other than the Daily LIBOR Rate), 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR or is the Daily LIBOR Rate, the time determined by Lender in its reasonable discretion.
“Relevant Governmental Body ” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Rental Payments ” means, collectively, the Base Rental Payments and the Additional Rental Payments.
“Rental Period” means the period from the Closing Date through November 30, 2012 and, thereafter, the twelve- month period commencing on Jul y 1 of each year during the term of this Lease.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day. “SOFR Administrator ” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
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“S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, and its successors and assigns.
“Swap Agreement” means, collectively, the ISDA Master Agreement (Local Currency – Single Jurisdiction 1992), the U.S. Municipal Counterparty Schedule thereto, and a Confirmation, entered into on the Closing Date, between the Swap Agreement Counterparty and the City, as amended and restated.
“Swap Agreement Counterparty ” means PNC Bank, National Association, a national banking association, as successor to Compass Bank in its capacity as the counterparty under the Swap Agreement, and its successor and assigns.
“Term SOFR ” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward -looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Unadjusted Benchmark Replacement ” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “U.S. Government Securities Business Day ” means any day except for (A) a Saturday or Sunday or (B) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “USD LIBOR” means, for purposes of this Lease, an y interest rate that is based on the London Interbank Offered Rate for U.S. dollars.
“Variable Rate” means a rate per annum equal to the sum of 1.50% plus 65.01% of the Benchmark for each Interest Period. The Variable Rate shall be reset on each Interest Reset Date with interest payable monthly, as provided herein.