June 14, 2023
Redevelopment Agency of the City of Santa Monica
1717 Fourth Street, Ste. 250
Santa Monica, California 90401
Facsimile: 310-394-0647
Redevelopment Agency of the City of Santa Monica
1717 Fourth Street. Ste. 250
Santa Monica, California 90401
Attn: Carol Swindell, Director of Finance
Facsimile: 310-458-8243
Redevelopment Agency of the City of Santa Monica
1685 Main Street
Mail Stop 9
Santa Monica, CA 90401
Office: 310.458.8775
Mobile: 310-425-5983
Ladies and Gentlemen:
We refer to that certain Credit Agreement dated as of May 1, 2008 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Agreement”) by and among, inter alia, you and Bank of America, N.A., as lender (in such capacity, the “Lender”).
We previously communicated to you that the ICE Benchmark Administration, the administrator of the London Interbank Offered Rate (“LIBOR”) and the Financial Conduct Authority (“FCA”) made public statements specifying that, after June 30, 2023, LIBOR would cease to be available, or would cease to be available on a representative basis. This impacts loans and/or other extensions of credit (each a “Loan” and collectively, the “Loans”) denominated in U.S. Dollars (“U.S. Dollar LIBOR”) to the extent such Loans incur interest based on the overnight, one month, three month, six month, and twelve month interest periods for U.S. Dollar LIBOR.
For additional detail, please refer to our Global Benchmark Reform website: https://business.bofa.com/enus/content/benchmark-interest-rate-reform.html.
According to our records, you have not signed and delivered to the Bank an amendment to the Agreement selecting an alternative reference rate to replace U.S. Dollar LIBOR. Based on the terms of the Agreement, on July 3, 2023, any interest rate(s) based on U.S. Dollar LIBOR will transition by operation of law under the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”), and the implementing rule issued by the Board of Governors of the Federal Reserve System, to a new rate based on SOFR plus a specified spread adjustment; provided, that, to the extent any Loan bearing interest at U.S. Dollar LIBOR set for a specified interest period is outstanding on July 3, 2023, such Loan shall continue to bear interest at such U.S. Dollar LIBOR until the end of the interest period applicable to such Loan before transitioning to the new rate.
As a result of the transition by operation of law pursuant to the LIBOR Act, as of July 3, 2023, any references to “LIBOR Rate” as an optional rate shall be deemed to refer to “Term SOFR,” as defined on Exhibit A, for interest periods specified in the Agreement; provided, that, any interest period with a duration other than of one month, three months, six months, and twelve months shall no longer be available. Pursuant to the LIBOR Act, as of July 3, 2023, the definitions of Term SOFR Daily Floating Rate, Term SOFR (Adjusted Periodically), and Term SOFR, as applicable, in Exhibit A shall be incorporated as benchmark replacement conforming changes into the Agreement by operation of law.
For the avoidance of doubt, the interest rate margin applicable to any U.S. Dollar LIBOR-based rate in the Agreement will not be changed and will continue to be added to the applicable SOFR-based rate plus spread adjustment.
This notice is provided merely as a business courtesy and does not constitute a course of dealing to provide future notices.
Very truly yours,
Bank of America, N.A., as Lender
Appendix A
TERMS APPLICABLE TO TERM SOFR LOANS
(a) “Term SOFR” means, for any applicable interest period, the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such interest period with a term equivalent to such interest period; provided that if the rate is not published prior to 11:00 a.m. (Eastern time) on such determination date then Term SOFR means the Term SOFR Screen Rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such interest period. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by the Bank. If at any time Term SOFR is less than zero, such rate shall be deemed to be zero for purposes of the Loan Documents. For purposes of this paragraph only:
(i) “CME” means CME Group Benchmark Administration Limited. (ii) “SOFR” means the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator). (iii) “SOFR Adjustment” with respect to Term SOFR means 0.11448% for an interest period with a duration of one month, 0.26161% for an interest period with a duration of three months, and 0.42826% for an interest period with a duration of six months. (iv) “Term SOFR Screen Rate” means the forward-looking SOFR term rate administered by CME (or any successor administrator satisfactory to the Bank) and published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Bank from time to time). (v) “U.S. Government Securities Business Day” means any banking day, except any banking day on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
Banking Days: For purposes hereof, a banking day is a day other than a Saturday, Sunday or other day on which commercial banks are authorized to close, or are in fact closed, in the state where the Bank's lending office is located and in New York City.