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SR 12-13-2022 5Q Redevelopment Successor Agency Report City Council Meeting: December 13, 2022 Agenda Item: 5.Q 1 of 5 To: Redevelopment Successor Agency From: David Martin, Director, Administration Subject: Adoption of Resolutions Approving the Annual Recognized Obligation Payment Schedule (ROPS) Recommended Action Staff recommends that the Redevelopment Successor Agency: 1. Adopt a finding that the adoption of a recognized obligation payment schedule and administrative budget is not a project within the meaning of the California Environmental Quality Act (CEQA); or, alternatively, is subject to the commonsense exemption under CEQA Guideline 15061(b)(3). 2. Adopt resolutions approving the Agency’s recognized obligation payment schedule and administrative budget for July 1, 2023 through June 30, 2024. Summary The City of Santa Monica established the Santa Monica Redevelopment Successor Agency (Successor Agency) to assume responsibility for all Redevelopment Agency funds when the State eliminated Redevelopment Agencies in 2012. As the Successor Agency, the City must prepare and adopt an annual Recognized Obligation Payment Schedule (ROPS) and Administrative Budget and submit it to the California Department of Finance (DOF) and the Los Angeles County Auditor-Controller no later than February 1st of each year. The DOF-approved ROPS and Administrative Budget for fiscal year 2023-24 provides the basis for the County Auditor-Controller to remit Redevelopment Property Tax Trust Funds (RPTTF) to the Successor Agency and authorize the Successor Agency to make scheduled payments for enforceable obligations for the period July 1, 2023 through June 30, 2024. 5.Q Packet Pg. 376 2 of 5 Background Following the elimination of Redevelopment Agencies in 2012, under California Health and Safety Code (HSC) Section 34177, the City became the Successor Agency to administer outstanding enforceable obligations and comply with necessary state regulations, and designated the City Council as the Governing Board of the Successor Agency. Additionally, Per ABX1 26, the Santa Monica Redevelopment Successor Agency Oversight Board was established to oversee certain fiscal management matters and assets of the former redevelopment agency, except for affordable housing. Per SB 107, on July 1, 2018, each of the 71 Oversight Boards in Los Angeles County were consolidated into five Consolidated Oversight Boards organized by supervisorial district. The Third Supervisorial District Consolidated Oversight Board has jurisdiction over the Santa Monica Successor Agency. The City must submit its approved ROPS and Administrative Budget to the Third Supervisorial District Consolidated Oversight Board for approval prior to submitting it to DOF and the LA County Auditor-Controller for approval. The ROPS identifies the former redevelopment agency’s enforceable obligations and the agency’s administrative costs. The ROPS also identifies the sources of payment for the obligations, including bond proceeds, interest income, and distributions of tax increment revenue from the State’s Redevelopment Property Tax Trust Fund (RPTTF). Discussion The ROPS 2023-24 includes Successor Agency enforceable obligations of $17,944,699, including an Administrative Budget of $188,500 covering July 1, 2023 to June 30, 2024. All proposed enforceable obligations have been previously listed and approved for payment on a previous ROPS. In addition, all enforceable obligations have received final and conclusive determinations from the DOF. Staff recommends that the Successor Agency adopt the proposed resolutions (Attachments A and B) authorizing the submission of the ROPS 2023-24 and Administrative Budget to both the DOF and the County Auditor-Controller. 5.Q Packet Pg. 377 3 of 5 One of the enforceable obligations included in the ROPS, the Bank of America Term Loan, is subject to semi-annual payments based on floating interest rates. On November 21, 2014 DOF issued a letter notifying the Successor Agency of its final and conclusive approval of the Bank of America Term Loan as an enforceable obligation (Attachment C). Pursuant to an April 26, 2022 letter from Bank of America (Attachment E), the 6-month LIBOR Rate currently used to set interest payments will cease publication after June 30, 2023. Thereafter, in accordance with the Credit Agreement (Attachment D), interest will be reset at the Fed Funds rate plus 1.70%. Payments will continue to be due on January 15 and July 15 of each year. As interest rates are continuing to rise, the payments are estimated based on the actual Fed Funds rate published November 30, 2022 plus a 2 percent escalation in order to ensure sufficient funding is available to make the next payments. Should the final interest payment be less than forecasted, any excess RPTTF would be recovered through the prior period adjustment process. Under AB 26 and SB 107, the Agency may receive an administrative cost allowance (ACA) of up to three percent of the property tax allocated to the Agency the prior fiscal year less the prior year administrative cost allowance. Furthermore, the ACA shall not exceed fifty percent of the RPTTF distributed to pay enforceable obligations in the preceding year and shall be based upon an approved Administrative Budget which justifies the ACA. Based on the estimated property tax allocation to the Successor Agency, the ACA of $188,500 is within the cap of $390,593 for fiscal year 2023-24 and is included as an enforceable obligation on the ROPS 2023-24 (see Attachment A, Exhibit 1, Item 30). Environmental Review The adoption of a recognized obligation payment schedule (ROPS) and administrative budget is not a project within the meaning of the California Environmental Quality Act (CEQA)(Public Resources Code section 21000 et seq.) because adoption will not cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment; or, alternatively, adoption is subject to the common 5.Q Packet Pg. 378 4 of 5 sense exemption under CEQA Guideline 15061(b)(3), in that it can be seen with certainty that there is no possibility that the FY 2023-24 ROPS or administrative budget will have any significant effect on the environment. Next Steps The Third Supervisorial District Consolidated Oversight Board (Consolidated Oversight Board), which has jurisdiction over the Santa Monica Successor Agency, is meeting on January 10, 2023 and will be asked to approve the Successor Agency’s ROPS 2023-24 and administrative budget, for the period July 1, 2023 through June 30, 2024, and authorize the transmittal to the Department of Finance for approval. The ROPS 2023- 24, as approved by the Consolidated Oversight Board, must be sent to the State Controller’s Office and the Department of Finance and posted on the Successor Agency’s website no later than February 1, 2023. The Department of Finance must make its determination regarding the ROPS 2023-24 no later than April 15, 2023. Financial Impacts and Budget Actions On June 1, 2023 and January 3, 2024, the Los Angeles County Auditor-Controller will transfer property taxes into the Successor Agency’s cash account from which the Agency will pay enforceable obligations listed on the approved ROPS 2023-24. Before the distributions take place, the DOF must issue a determination letter with the total RPTTF revenues to be disbursed for enforceable obligations along with a final administrative cost allowance cap amount. Prepared By: Melissa Lindley, Principal Administrative Analyst Approved Forwarded to Council 5.Q Packet Pg. 379 5 of 5 Attachments: A. SA Attachment A - ROPS 23-24 B. SA Attachment B - ROPS 23-24 C. SA Attachment C - Letter from DOF D. SA Attachment D - Credit Agreement E. SA Attachment E - BofA Letter 5.Q Packet Pg. 380 Successor Agency Meeting: December 13, 2022 Santa Monica, California RESOLUTION NO. (SA) A RESOLUTION OF THE SANTA MONICA REDEVELOPMENT SUCCESSOR AGENCY APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD JULY 1, 2023 THROUGH JUNE 30, 2024 WHEREAS, pursuant to ABx 1 26, enacted on June 28, 2011, and as subsequently amended by AB 1484, SB 341, and SB 107 ("Dissolution Act"), the Redevelopment Agency to the City of Santa Monica was dissolved as of February 1, 2012, and the City of Santa Monica elected to serve as the Successor Agency to the former Redevelopment Agency to the City of Santa Monica (“Successor Agency”); and WHEREAS, pursuant to Health and Safety Code Section 34179 (q), commencing on and after July 1, 2018, in the County of Los Angeles, where more than 40 oversight boards were created by the Dissolution Act, the oversight boards were consolidated into five consolidated oversight boards each encompassing one of the County’s five supervisorial districts; and WHEREAS, the Third Supervisorial District Consolidated Oversight Board ("Third District Consolidated Oversight Board") has jurisdiction over the Successor Agency of the Former Redevelopment Agency to the City of Santa Monica; and WHEREAS, Section 34177(a)(3) of the Health and Safety Code, as reformed by the California Supreme Court in California Redevelopment Association v. Matosantos (2011) 53 Cal. 4th 231, provides that commencing on May 1, 2012, only those payments listed in a Recognized Obligation Payment Schedule (“ROPS”) may be made by the Successor Agency from the funds specified in the ROPS; and WHEREAS, Section 34177(o) of the Health and Safety Code requires that the Successor Agency submit an oversight board-approved ROPS to the Department of Finance (“DOF”) and 5.Q.a Packet Pg. 381 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) County Auditor-Controller (“CAC”) no later than February 1 of each year, commencing February 1, 2016; and WHEREAS, the Third District Consolidated Oversight Board is scheduled to hold a regular meeting on January 10, 2023; and WHEREAS, the Third District Consolidated Oversight Board is scheduled to review and duly consider the Recognized Obligation Payment Schedule for the period July 2023 – June 2024, inclusive, attached as Exhibit 1, and other written evidence presented at the meeting, if any; and WHEREAS, under Title 14 of the California Code of Regulations, Section 15061(b)(3), the approval of the FY 2023-24 ROPS is exempt from the requirements of the California Environmental Quality Act (“CEQA”), in that it can be seen with certainty that there is no possibility that the FY 2023-24 ROPS will have any significant effect on the environment. NOW THEREFORE, THE SUCCESSOR AGENCY DOES HEREBY RESOLVE AND FIND AS FOLLOWS: SECTION 1. The Successor Agency hereby finds and determines that the foregoing recitals are true and correct. SECTION 2. The Successor Agency hereby approves and adopts the Recognized Obligation Payment Schedule for the period July 2023 – June 2024, inclusive, attached hereto as Exhibit 1 (referenced hereinafter as “the Recognized Obligation Payment Schedule”). SECTION 3. The Successor Agency authorizes the Community Development Director to: (1) Submit the Recognized Obligation Payment Schedule to the County Auditor-Controller for review; 5.Q.a Packet Pg. 382 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) and (2) Submit an electronic copy of the Recognized Obligation Payment Schedule to the State Department of Finance for approval; and Designate a Successor Agency representative to respond to all questions related to the Recognized Obligation Payment Schedule; and (3) Take such other actions and execute such other documents as are appropriate to effectuate the intent of this Resolution. SECTION 4. The Secretary of the Successor Agency shall certify the adoption of this Resolution and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: DOUGLAS SLOAN Successor Agency Counsel 5.Q.a Packet Pg. 383 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Exhibit 1 Recognized Obligation Payment Schedule (ROPS 23-24) 5.Q.a Packet Pg. 384 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Recognized Obligation Payment Schedule (ROPS 23-24) - Summary Filed for the July 1, 2023 through June 30, 2024 Period Successor Agency: Santa Monica County: Los Angeles Current Period Requested Funding for Enforceable Obligations (ROPS Detail) 23-24A Total (July - December) 23-24B Total (January - June) ROPS 23-24 Total A Enforceable Obligations Funded as Follows (B+C+D) $ - $ 3,300,000 $ 3,300,000 B Bond Proceeds - - - C Reserve Balance - - - D Other Funds - 3,300,000 3,300,000 E Redevelopment Property Tax Trust Fund (RPTTF) (F+G) $ 9,118,714 $ 5,525,985 $ 14,644,699 F RPTTF 8,930,214 5,525,985 14,456,199 G Administrative RPTTF 188,500 - 188,500 H Current Period Enforceable Obligations (A+E) $ 9,118,714 $ 8,825,985 $ 17,944,699 Certification of Oversight Board Chairman: Name Title Pursuant to Section 34177 (o) of the Health and Safety code, I hereby certify that the above is a true and accurate Recognized Obligation Payment Schedule for the above named successor agency. /s/ Signature Date 5.Q.a Packet Pg. 385 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Santa Monica Recognized Obligation Payment Schedule (ROPS 23-24) - ROPS Detail July 1, 2023 through June 30, 2024 A B C D E F G H I J K L M N O P Q R S T U V W Item # Project Name Obligation Type Agreement Execution Date Agreement Termination Date Payee Description Project Area Total Outstanding Obligation Retired ROPS 23-24 Total ROPS 23-24A (Jul - Dec) 23-24A Total ROPS 23-24B (Jan - Jun) 23-24B Total Fund Sources Fund Sources Bond Proceeds Reserve Balance Other Funds RPTTF Admin RPTTF Bond Proceeds Reserve Balance Other Funds RPTTF Admin RPTTF $256,594,176 $17,944,699 $- $- $- $8,930,214 $188,500 $9,118,714 $- $- $3,300,000 $5,525,985 $- $8,825,985 1 2011 Earthquake RDA Bonds Bonds Issued After 12/31/10 06/07/ 2011 07/01/2042 Union Bank Bond Payment Earthquake 71,134,825 N $2,262,413 - - - 2,262,413 - $2,262,413 - - - - - $- 2 2006 Earthquake RDA Series A Bonds Bonds Issued On or Before 12/31/10 04/27/ 2006 07/01/2029 Union Bank Bond Payment Earthquake 30,531,684 N $4,373,895 - - - 4,373,895 - $4,373,895 - - - - - $- 5 2011 Earthquake RDA Bonds (Reserve) Reserves 06/07/ 2011 07/01/2042 Union Bank 2011 Earthquake RDA Bonds reserve as required by the bond indenture Earthquake - N $- - - - - - $- - - - - - $- 13 Bank of America Term Loan Third-Party Loans 05/08/ 2008 07/15/2028 Bank of America Bank of America Loan Payment Earthquake 19,746,667 N $4,516,591 - - - 2,290,606 - $2,290,606 - - - 2,225,985 - $2,225,985 24 Arizona and 4th Notes Miscellaneous 10/13/ 2010 01/01/2042 Multiple entities Mixed-use development with public plaza and underground parking Earthquake 65,100,000 N $3,300,000 - - - - - $- - - 3,300,000 - - $3,300,000 30 Successor Administrative Cost Allowance Admin Costs 02/01/ 2012 06/30/2014 Successor Agency 3% Administration Costs All 4,938,500 N $188,500 - - - - 188,500 $188,500 - - - - - $- 34 Bond Trustee Fees- 2011 Earthquake RDA Bonds Fees 06/07/ 2011 07/01/2042 Union Bank of California Annual Bond Administrative Fees Earthquake 36,000 N $2,000 - - - 2,000 - $2,000 - - - - - $- 35 Bond Trustee Fees- 2006 Earthquake RDA Series A Bonds Fees 04/27/ 2006 07/01/2029 Union Bank of California Annual Bond Administrative Fees Earthquake 6,500 N $1,300 - - - 1,300 - $1,300 - - - - - $- 40 Arizona and 4th- Reimbursement Agreement Miscellaneous 06/23/ 2010 01/01/2042 City of Santa Monica Mixed-use development with public plaza and underground parking Earthquake 65,100,000 N $3,300,000 - - - - - $- - - - 3,300,000 - $3,300,000 5.Q.a Packet Pg. 386 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Santa Monica Recognized Obligation Payment Schedule (ROPS 23-24) - Report of Cash Balances July 1, 2020 through June 30, 2021 (Report Amounts in Whole Dollars) Pursuant to Health and Safety Code section 34177 (l), Redevelopment Property Tax Trust Fund (RPTTF) may be listed as a source of payment on the ROPS, but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation. A B C D E F G H ROPS 20-21 Cash Balances (07/01/20 - 06/30/21) Fund Sources Comments Bond Proceeds Reserve Balance Other Funds RPTTF Bonds issued on or before 12/31/10 Bonds issued on or after 01/01/11 Prior ROPS RPTTF and Reserve Balances retained for future period(s) Rent, grants, interest, etc. Non-Admin and Admin 1 Beginning Available Cash Balance (Actual 07/01/20) RPTTF amount should exclude "A" period distribution amount. 2,262,414 829,224 2 Revenue/Income (Actual 06/30/21) RPTTF amount should tie to the ROPS 20-21 total distribution from the County Auditor-Controller 20 7,640 33,420,623 D2 and F2 are for interest earned and return of security deposit 3 Expenditures for ROPS 20-21 Enforceable Obligations (Actual 06/30/21) 77,978 32,391,104 4 Retention of Available Cash Balance (Actual 06/30/21) RPTTF amount retained should only include the amounts distributed as reserve for future period(s) 2,262,434 5 ROPS 20-21 RPTTF Prior Period Adjustment RPTTF amount should tie to the Agency's ROPS 20-21 PPA form submitted to the CAC No entry required 1,029,519 6 Ending Actual Available Cash Balance (06/30/21) C to F = (1 + 2 - 3 - 4), G = (1 + 2 - 3 - 4 - 5) $- $- $- $758,886 $- F6 includes Other Funds authorized for use in future periods. 5.Q.a Packet Pg. 387 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Santa Monica Recognized Obligation Payment Schedule (ROPS 23-24) - Notes July 1, 2023 through June 30, 2024 Item # Notes/Comments 1 2 5 13 Variable interest rate. Payment based on Fed Funds rate published on 11/30/2022 + 2% inflator. 24 30 34 35 40 5.Q.a Packet Pg. 388 Attachment: SA Attachment A - ROPS 23-24 [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Successor Agency Meeting: December 13, 2022 Santa Monica, California RESOLUTION NO. ______ (SA) A RESOLUTION OF THE SANTA MONICA REDEVELOPMENT SUCCESSOR AGENCY APPROVING THE ADMINISTRATIVE BUDGET FOR THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY TO THE CITY OF SANTA MONICA FOR THE PERIOD JULY 1, 2023 THROUGH JUNE 30, 2024 WHEREAS, pursuant to ABx 1 26, enacted on June 28, 2011, and as subsequently amended by AB 1484, SB 341, and SB 107 ("Dissolution Act"), the Redevelopment Agency to the City of Santa Monica was dissolved as of February 1, 2012, and the City of Santa Monica elected to serve as the Successor Agency to the former Redevelopment Agency to the City of Santa Monica (“Successor Agency”); and WHEREAS, pursuant to Health and Safety Code Section 34179 (q), commencing on and after July 1, 2018, in the County of Los Angeles, where more than 40 oversight boards were created by the Dissolution Act, the oversight boards were consolidated into five consolidated oversight boards each encompassing one of the County’s five supervisorial districts; and WHEREAS, the Third Supervisorial District Consolidated Oversight Board ("Third District Consolidated Oversight Board") has jurisdiction over the Successor Agency of the Former Redevelopment Agency to the City of Santa Monica; and WHEREAS, Section 34177(j) of the Health and Safety Code, provides that the Successor Agency shall prepare an administrative budget (“Administrative Budget”) and submit it to the Oversight Board of the Successor Agency for its approval; and WHEREAS, the Administrative Budget shall include the following: (1) Estimated amounts for successor agency administrative costs for the upcoming annual fiscal period; 5.Q.b Packet Pg. 389 Attachment: SA Attachment B - ROPS 23-24 (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (2) Proposed sources of payment for the costs identified in subparagraph (1); (3) Proposals for arrangements for administrative and operations services provided by a city, county, city and county, or other entity; and WHEREAS, on February 2, 2012, the Successor Agency approved a Reimbursement Agreement by and between the City of Santa Monica and Successor Agency, Contract No. 9549 (CCS/RAS/SA), in accordance with Section 34171(d)(1)(F) of the California Health and Safety Code; and WHEREAS, Section 34177(k) of the California Health and Safety Code requires the Successor Agency to provide administrative cost estimates, from its approved Administrative Budget, that are to be paid from property tax revenues deposited in the Redevelopment Property Tax Trust Fund, to the Los Angeles County Auditor-Controller for each six-month fiscal period; and WHEREAS, under Title 14 of the California Code of Regulations, Section 15061(b)(3), the approval of the Administrative Budget is exempt from the requirements of the California Environmental Quality Act (“CEQA”), in that it is not a project as the adoption of the Administrative Budget will not have the potential of causing a significant environmental effect and it can be seen with certainty that there is no possibility that the adoption of the Administrative Budget will have any significant effect on the environment; and WHEREAS, the Third District Consolidated Oversight Board is scheduled to hold a regular meeting on January 10, 2023; and WHEREAS, the Third District Consolidated Oversight Board is schedule to review and duly considered the Administrative Budget for the period July 2023 – June 2024, inclusive, attached as Exhibit 1, and other written evidence presented at the meeting. 5.Q.b Packet Pg. 390 Attachment: SA Attachment B - ROPS 23-24 (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) NOW THEREFORE, THE SUCCESSOR AGENCY DOES HEREBY RESOLVE AND FIND AS FOLLOWS: SECTION 1. The Successor Agency hereby finds and determines that the foregoing recitals are true and correct. SECTION 2. The Successor Agency hereby approves and adopts the Administrative Budget for the period July 2023 – June 2024, inclusive, attached hereto as Exhibit 1. SECTION 3. The Successor Agency authorizes the Community Development Director to: (1) Provide an administrative cost estimate to the County Auditor-Controller for the period July 2023 – June 2024, inclusive, based upon the approved Administrative Budget; and (2) Submit the Administrative Budget to the Department of Finance; and (3) Take such other actions and execute such other documents as are appropriate to effectuate the intent of this Resolution and to implement the Administrative Budget on behalf of the Successor Agency. SECTION 4. The Secretary of the Successor Agency shall certify the adoption of this Resolution and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: _____________________________ DOUGLAS SLOAN Successor Agency Counsel 5.Q.b Packet Pg. 391 Attachment: SA Attachment B - ROPS 23-24 (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Exhibit 1 Successor Agency Administrative Budget July 1, 2023 to June 30, 2024 Department/Responsibilities Budget Community Development Oversees Successor Agency, prepares ROPS, PPA and acts as liaison to the Consolidated Oversight Board, Department of Finance, and County Auditor‐Controller. Works with Finance to facilitate payments of enforceable obligations and maintain records of Successor Agency. 83,700$ Finance Department Processes Successor Agency payments for enforceable obligations, records accounting, oversees financial audit. 62,500$ City Attorney's Office Legal review of all Successor Agency actions, staff reports, resolutions, and reporting obligations. Attends Successor Agency and Oversight Board meetings. 7,300$ Records and Elections Services Department Facilitates Successor Agency meetings, agendas, and minutes. 6,000$ Staffing Budget 159,500$ Supplies and Expenses Financial Consulting Services 8,000$ Audit Services 9,000$ Insurance 7,000$ Computer Equipment/Software 5,000$ Supplies and Expenses Budget 29,000$ Total Budget 188,500$ SUCCESSOR AGENCY ADMINISTRATIVE BUDGET July 1, 2023 to June 30, 2024 5.Q.b Packet Pg. 392 Attachment: SA Attachment B - ROPS 23-24 (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Attachment C November 21, 2014 letter from the California Department of Finance 5.Q.c Packet Pg. 393 Attachment: SA Attachment C - Letter from DOF (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) 5.Q.c Packet Pg. 394 Attachment: SA Attachment C - Letter from DOF (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) 5.Q.c Packet Pg. 395 Attachment: SA Attachment C - Letter from DOF (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Attachment D May 1, 2008 Credit Agreement with Bank of America 5.Q.d Packet Pg. 396 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) CREDIT AGREEMENT This Agreement dated as of May 1, 2008, is between Bank of America, N.A. (the "Bank") and the Redevelopment Agency of the City of Santa Monica, a public body corporate and politic (the "Borrower''). 1. LINE OF CREDIT; AMOUNT AND TERMS 1.1 Line of Credit. (a) During the availability period described below, the Bank will provide a line of credit (the "Line of Credit") to the Borrower. The amount of the Line of Credit ("Commitment") is Fifty Million Dollars ($50,000,000.00). (b) At any time during the availability period, Borrower may request that the initial Commitment be increased to a total Commitment of up to $75,000,000, which is the maximum commitment amount under this Agreement. Such request of the Borrower must be in the form attached hereto as Exhibit "B" and must be accompanied by the most recent financial information of Borrower set forth in Sections 8.2(a) and (b). Within thirty (30) days following the receipt of such request and accompanying information, and receipt of such other information as the Bank may reasonably request, the Bank shall send written notice to Borrower of its election to increase or not increase the Commitment; provided, that if the Bank fails to send such notice, the Bank shall be deemed to have denied the requested increase. Any increase to the Commitment is subject to, but not limited to, the conditions that (i) On or before the date the increased Commitment becomes available, Borrower shall pay an additional loan fee equal to .05% of the amount of the increase to the Commitment; (ii) Borrower and Lender shall enter into an Amendment to Credit Agreement in the form attached hereto as Exhibit "C"; (iii) No Event of Default (as defined in Section 9 of this Agreement) or event which with the passage of time, the giving of notice or both, would constitute an Event of Default has occurred and is continuing under this Agreement; (iv) No Material Adverse Change has occurred; and (v) No litigation or governmental action that purports to have a Material Adverse Change shall have occurred and be continuing. For purposes of this Agreement, the terms "Material Adverse Change" and "Material Adverse Effect" have the following meanings: 5.Q.d Packet Pg. 397 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) "Material Adverse Change" shall mean the occurrence of any event or change resulting in a material and adverse change in the business, financial condition or operations of the Borrower with respect to the Project Area that materially and adversely affects the ability of the Borrower to collect sufficient Pledged Revenues to pay its obligations hereunder and under any other Parity Debt when due or which materially and adversely affects the enforceability of this Agreement or the ability of the Borrower to perform its obligations hereunder. "Material Adverse Effect" means a materially adverse effect on the Borrower's ability to collect sufficient Pledged Revenues to pay its obligations hereunder and under any other Parity Debt when due or on the Borrower's ability to perform its obligations under this Agreement. (c) At any time after May 1, 2009, the Borrower may elect to reduce the Commitment by giving the Bank at least 10 Business Days written notice of such election specifying the amount of the Commitment to be maintained and the date on which the Commitment will be reduced. (d) This is a revolving Line of Credit solely to provide financing for housing activities eligible for funding from the Borrower's Low and Moderate Income Housing Fund funded from the Earthquake Recovery Redevelopment Project Area (the "Project"). During the availability period, Borrower may repay and reborrow principal amounts repaid; provided, that the outstanding principal amount may not exceed the amount of the Commitment at any time; provided that the Commitment shall be reduced by any amounts that are converted to Term Loans. (e) Each advance of the Commitment (each an "Advance") shall be subject to all of the conditions set forth in Section 6. 1.2 Availability Period. (a) Initial Expiration Date. The Line of Credit is available between the date of this Agreement and June 1, 2013 (the "Availability Period") or such earlier date as the availability may terminate as provided in this Agreement or such later date if the Line of Credit is extended pursuant to Section 1.2(b) (the "Expiration Date"). (b) Extensions. On any date on or after March 1, 201 0 and at least one year prior to the Expiration Date then in effect and not more frequently than once per year, the Borrower may request a one, two or three-year extension of the Availability Period and the Expiration Date; provided, that (i) the Availability Period may not exceed five years from the date the extension is requested and (ii) the Availability Period may not be extended beyond June 1, 2016 and the Expiration Date may not be extended beyond June 1, 2031. Such request must be in writing and must be accompanied by the following: (i) Annual cash flow projections for the Borrower for the proposed extension period, together with the assumptions made in preparation of such cash flow projections; (ii) The most recent Five-Year Implementation Plan for the Earthquake Recovery Redevelopment Project Area (the "Project Area"); -2-5/13/08 5.Q.d Packet Pg. 398 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (iii) The most recent fiscal consultant's report with respect to the Project Area; (iv) The most recent Annual Report and any other disclosure provided by the Borrower pursuant to the Continuing Disclosure Certificate dated April 27, 2006 (the "Continuing Disclosure Certificate") with respect to the Borrower's Senior Debt; and (v) Most recently available audited annual financial statements. Within thirty (30) days following the Bank's receipt of the foregoing and any other documents and information reasonably requested by the Bank, the Bank shall send written notice to Borrower of its election to extend or not to extend the Expiration Date; provided, that if the Bank fails to send such notice, the Bank shall be deemed to have denied the requested extension. Any extension is subject to, but not limited to, the conditions that: (A) No Event of Default or event which with the passage of time, the giving of notice, or both, would constitute an Event of Default has occurred and is continuing under this Agreement; (B) No Material Adverse Change has occurred with respect to the Borrower; and (C) No litigation or governmental action that purports to have a Material Adverse Change on the Borrower shall have occurred and be continuing. 1.3 Prime Rate Defined. The Prime Rate is the rate of interest publicly announced frorn time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank's Prime Rate. 1.4 Interest Rate; Optional Interest Rates. Unless the Borrower elects one of the optional interest rates described below, the interest rate is a rate per year equal to (i) during the Availability Period, the LIBOR Rate plus .55% for a one-month period and (ii) during the Term- Out Period, the LIBOR Rate plus 1.25% for a one-month period. The optional interest rates shall be subject to the terms and conditions described later in this Agreement. Any principal amount bearing interest at an optional rate under this Agreement is referred to as a "Portion." The following optional interest rates are available: (a) During the Availability Period, (i) the Prime Rate less 2.0%; (ii) the LIBOR Rate plus .55% during interest periods elected by Borrower pursuant to Section 2.2 below; and (iii) the IBOR Rate plus .55% during the interest periods elected by Borrower pursuant to Section 2.3 below; or, at the Borrower's election and upon delivery of an opinion of nationally recognized bond counsel in form and content acceptable to Bank, Borrower may elect a tax-exempt rate equal to 62.347% of the LIBOR Rate plus 1.47% or the 62.347% of the Prime Rate less 0.12%; and -3-5/13/08 5.Q.d Packet Pg. 399 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (b) During the Term-Out Period, (i) the Prime Rate less 1.30%; (ii) the LIBOR Rate plus 1.25% during interest periods elected by Borrower pursuant to Section 2.2 below; and (iii) the IBOR Rate plus 1.25% during the interest periods elected by Borrower pursuant to Section 2.3 below; or, at the Borrower's election and upon delivery of an opinion of nationally recognized bond counsel in form and content acceptable to Bank, Borrower may elect a tax-exempt rate equal to 62.347% of the LIBOR Rate in effect on the Conversion Date (as defined below) plus 1.91% or 62.347% of the Prime Rate plus .32%. (c) In the event that the Borrower's long-term rating for the Senior Debt for the Project Area is reduced below BBB+ by Standard & Poor's Rating Service or below BBB+/Baa1/BBB+ by any two of Standard & Poor's Rating Service, Moody's Investors Service or Fitch Ratings, respectively, the interest rate during the Availability Period will be increased to the Prime Rate less 1.75% or.80% over the LIBOR Rate or IBOR Rate, as applicable, or for loans bearing interest at a tax-exempt rate, 62.347% of the LIBOR Rate plus 1.63% or 62.347% of the Prime Rate plus 0.04% and the interest rate for Term Loans will be increased to the Prime Rate less 1.00% or 1.55% over the LIBOR Rate or IBOR Rate, as applicable or for loans bearing interest at a tax-exempt rate, 62.347% of the LIBOR Rate plus 2.10% or 62.347% of the Prime Rate plus 0.51%. Notwithstanding the foregoing, the Borrower shall have the right to obtain from the above-referenced rating agencies, a rating with respect to the Pledged Revenues, which if rated BBB+ from Standard & Poor's or BBB+/Baa1/BBB+ by any two of such rating agencies shall restore the spread over the Prime Rate, the LIBOR Rate or IBOR Rate during the Availability and the Term-Out Period to the prior rate before the downgrade by such rating agencies. (d) In the event LIBOR rates are not available pursuant to Section 2.2(g) or 2.3(f), the Borrower may elect a Fed Funds Rate pursuant to Section 2.4. 1.5 Repayment Terms. (a) Interest Payments. Interest shall accrue from the date the Portion is advanced to the Borrower and shall be paid in arrears commencing on July 1, 2008 and quarterly thereafter; provided, that with respect to Portions, the Borrower will pay interest on the final day of the interest period for each Portion with an interest period of less than 90 days, and if the interest period applicable to any Portion is 90 days or more, the Borrower shall pay interest quarterly and on the final day of the applicable interest period. In all cases, interest shall be paid on all outstanding amounts until payment in full of any principal outstanding under the Line of Credit. Interest shall be calculated on the basis of a 360-day year and actual days elapsed. (b) Principal Repayment. (i) Except as provided in subsections (ii) and (iii) below, the Borrower will repay in full all remaining principal and any unpaid interest or other charges outstanding under the Line of Credit no later than the Expiration Date (the "Line of Credit Maturity Date"). Any interest period for a LIBOR-based interest rate (as described below) shall expire no later than the Line of Credit Maturity Date. -4-5/13/08 5.Q.d Packet Pg. 400 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (ii) To the extent that Borrower receives cash proceeds from the sale or refinance of any Borrower owned asset financed with the proceeds of the Line of Credit and such cash proceeds are not reinvested in the Project within 180 days upon such sale or refinance, Borrower shall repay a portion of the outstanding principal amount of the Line of Credit on the last day of next Interest Rate Period for Advances bearing interest at a LIBOR Rate or IBOR Rate or on the first day of the next succeeding month for Advances bearing interest at the Prime Rate. (iii) (A) Term-Out Period. At any time during the Availability Period, subject to the conditions set forth below, the Borrower may elect to convert all or a portion of the outstanding principal amount .of the Line of Credit to a permanent loan with a maturity date the earlier of (a) fifteen years plus the remaining term of the Availability Period and (b) fifteen years after the end of the Availability Period (the "Term-Out Maturity Date"). The period between the Conversion Date and the Term-Out Maturity Date for each amount so converted is referred to as the "Term-Out Period." Each amount so converted is referred to as a "Term Loan." (B) Payment during Term-Out Period. During the Term-Out Period, the Borrower shall make equal semi-annual payments of principal plus accrued interest with respect to each Term Loan on January 15 and July 15 of each year, and the Borrower will repay in full all remaining principal and any unpaid interest or other charges outstanding with respect to each Term Loan no later than Term-Out Maturity Date. (C) Conversion to Term-Out Period. Upon not less than ten days written notice to Lender in the form attached hereto as Exhibit "D", Borrower may elect to convert not less than $5,000,000 of the outstanding principal of the Line of Credit to a Term Loan. The conversion notice shall include the amount to be converted to a Term Loan and the date upon which the amount is to be converted (the "Conversion Date"). Any conversion is subject to, but not limited to, the conditions that: (1) No Event of Default or event which with the passage of time and giving notice, or both, would constitute an Event of Default has occurred and is continuing under this Agreement; (2) The Conversion Date shall be the last day of all Portions that are to be converted to a Term Loan on such date; and (3) Upon each conversion, the Commitment available to be drawn down by Borrower shall be reduced by the amount of such Term Loan. (c) Notice of Amount Due. At least 5 business days prior to each interest or principal payment date, the Bank shall provide the Borrower with written notice containing a calculation of the principal and interest due on each Portion on such date. 2. OPTIONAL INTEREST RATES 2.1 Optional Rates. Each optional interest rate is a rate per year. Interest will be paid as provided in Section 1.4. At the end of any interest period, the Borrower shall be -5-5/13/08 5.Q.d Packet Pg. 401 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) deemed to have elected for the Portion a new interest rate based on the same optional interest rate program for a one-month period, unless the Borrower provides different instructions to Lender at least three days prior to the end of such interest period if Borrower elects a LIBOR- based interest rate or at least one Business Day prior to the end of such interest period if Borrower elects an IBOR-based interest rate or a Prime Rate-based interest rate. No Portion will be converted to a different interest rate during the applicable interest period. 2.2 LIBOR Rate. The election of LIBOR Rates shall be subject to the following terms and requirements: (a) The interest period during which the LIBOR Rate will be in effect will be one week, or one, three or six months as selected by Borrower. The first day of the interest period must be a day other than a Saturday or a Sunday on which the Bank is open for business in New York and London and dealing in offshore dollars (a "LIBOR Banking Day"). The last day of the interest period and the actual number of days during the interest period will be determined by the Bank using the practices of the London inter-bank market. (b) Each LIB OR Rate Portion will be for an amount not less than Five Hundred Thousand Dollars ($500,000). (c) The "LIBOR Rate" means the interest rate determined by the following formula, rounded upward to the nearest 1/100 of one percent. (All amounts in the calculation will be determined by the Bank as of the first day of the interest period.) Where, LIBOR Rate= London Inter-Bank Offered Rate (1.00-Reserve Percentage) (i) "London Inter-Bank Offered Rate" means the average per annum interest rate at which U.S. dollar deposits would be offered for the applicable interest period by major banks in the London inter-bank market, as shown on the Telerate Page 3750 (or any successor page) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the interest period. If such rate does not appear on the Telerate Page 3750 (or any successor page), the rate for that interest period will be determined by such alternate method as reasonably selected by Bank. A "London Banking Day" is a day on which the Bank's London Banking Center is open for business and dealing in offshore dollars. (ii) "Reserve Percentage" means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages. -6-5/13/08 5.Q.d Packet Pg. 402 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (d) The Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon Los Angeles time on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate will be set, as specified above. For example, if there are no intervening holidays or weekend days in any of the relevant locations, the request must be made at least three days before the LIBOR Rate takes effect. (e) Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee as described below. A "prepayment" is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement. (f) The prepayment fee shall be equal to the amount (if any) by which: (i) The additional interest which would have been payable during the interest period on the amount prepaid had it not been prepaid, exceeds (ii) The interest which would have been recoverable by the Bank by placing the amount prepaid on deposit in the domestic certificate of deposit market, the Eurodollar deposit market, or other appropriate money market selected by the Bank and communicated to the Borrower, for a period starting on the date on which it was prepaid and ending on the last day of the interest period for such Portion (or the scheduled payment date for the amount prepaid, if earlier). (g) The Bank will have no obligation to accept an election for a LIBOR Rate Portion if any of the following described events has occurred and is continuing: (i) Dollar deposits in the principal amount, and for periods equal to the interest period, of a LIBOR Rate Portion are not available in the London inter- bank market; or (ii) The LIBOR Rate does not accurately reflect the cost of a LIBOR Rate Portion. 2.3 IBOR Rate. The election of IBOR Rates shall be subject to the following terms and requirements: (a) The interest period during which the IBOR Rate will be in effect will be from one to fourteen days, one week, or one, three or six months. The last day of the interest period will be determined by the Bank using the practices of the offshore dollar inter -bank market. (b) Each IBOR Rate Portion will be for an amount not less than One Hundred Thousand Dollars ($100,000). (c) The "IBOR Rate" means the interest rate determined by the following formula, rounded upward to the nearest 1/100 of one percent. (All amounts in the calculation will be determined by the Bank as of the first day of the interest period.) -7-5/13/08 5.Q.d Packet Pg. 403 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) IBOR Rate= IBOR Base Rate (1.00-Reserve Percentage) Where, (i) "IBOR Base Rate" means the interest rate at which the Bank's Grand Cayman Banking Center, Grand Cayman, British West Indies, would offer U.S. dollar deposits for the applicable interest period to other major banks in the offshore dollar inter-bank market. (ii) "Reserve Percentage" means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages. (d) Each prepayment of an IBOR Rate Portion, whether voluntary, by reason of acceleration or otheJWise, will be accompanied by the amount of accrued interest on the amount prepaid, and a prepayment fee as described below. A "prepayment" is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement. (e) The prepayment fee shall be equal to the amount (if any) by which: (i) The additional interest which would have been payable during the interest period on the amount prepaid had it not been prepaid, exceeds (ii) The interest which would have been recoverable by the Bank by placing the amount prepaid on deposit in the domestic certificate of deposit market, the Eurodollar deposit market, or other appropriate money market selected by the Bank and communicated to the Borrower for a period starting on the date on which it was prepaid and ending on the last day of the interest period for such Portion (or the scheduled payment date for the amount prepaid, if earlier). (f) The Bank will have no obligation to accept an election for an IBOR Rate Portion if any of the following described events has occurred and is continuing: (i) Dollar deposits in the principal amount, and for periods equal to the interest period, of an IBOR Rate Portion are not available in the offshore dollar inter-bank market; or (ii) The IBOR Rate does not accurately reflect the cost of an IBOR Rate Portion. 2.4 "Fed Funds Rate" shall mean the arithmetic average of the rates of interest asked by two (2) New York Federal funds traders for the purchase of Federal funds, multiplied by the quotient of 365 divided by 360, (a) plus 1.00% during the Availability Period, and (b) plus -8-5/13/08 5.Q.d Packet Pg. 404 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) 1.70% during the Term-Out Period. The rate will be determined by the Bank, and will be rounded to the nearest 1/100 of one percent. The Federal funds traders will be selected by the Bank at approximately 10:00 a.m., and will be of recognized standing. For days on which banks in New York (or any other location relevant to this Agreement) are required or permitted to be closed, the applicable interest rate will be the rate for the next preceding banking day. 3. FEES AND EXPENSES 3.1 Fees. (a) Loan Fee. The Borrower agrees to pay a loan fee of Twenty Five Thousand Dollars ($25,000) on the Effective Date, which fee shall be deemed earned by the Bank and shall be nonrefundable. If the Commitment is increased pursuant to Section 1.1 (b), Borrower shall pay an additional Joan fee equal to .05% of the amount of the increase to the Commitment as provided in Section 1.1 (b). (b) Unused Commitment Fee. During the availability period described in Section 1.2, the Borrower shall pay an annual fee on any difference between the amount of the Commitment and the aggregate amount of credit it actually uses, determined by the average of the daily amount of credit outstanding during the specified period, calculated at .30% per annum. Such fee shall be payable quarterly in arrears commencing on July 1 , 2008 with the final payment due on the Expiration Date, as such date may be extended. If Borrower elects to reduce the Commitment as provided in Section 1.1 (c), the unused Commitment fee shall be reduced to .30% of the unused Commitment as of the date of such reduction. The Bank shall provide written notice to the Borrower of amount due pursuant to this subsection at least 5 business days in advance of each payment date. In the event that the Borrower's long-term rating for the Senior Debt for the Project Area is reduced below BBB+ by Standard & Poor's Rating Service or BBB+/Baa1/BBB+ by any two of Standard & Poor's Rating Service, Moody's Investor Service or Fitch Ratings, respectively, the unused commitment fee will be calculated at .40% per annum; provided, however, the Borrower shall have the right to obtain from the above- referenced rating agencies, a rating with respect to the Pledged Revenues, which if rated BBB+ by Standard & Poor's Rating Service or BBB+/Baa1/BBB+ by any two of such rating agencies shall restore the unused Commitment fee to .30% per annum. (c) Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any terms of this Agreement, the Borrower will, at the Bank's option, pay the Bank a fee for each waiver or amendment in an amount advised by the Bank at the time the Borrower requests the waiver or amendment for Bank's reasonable legal and administrative costs in processing such waiver or amendment. Nothing in this paragraph shall imply that the Bank is obligated to agree to any waiver or amendment requested by the Borrower. The Bank may impose additional requirements as a condition to any waiver or amendment. (d) Late Fee. To the extent permitted by Jaw, the Borrower agrees to pay a late fee in an amount not to exceed four percent (4%) of any payment that is more than -9-5/13/08 5.Q.d Packet Pg. 405 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) five (5) days late. The imposition and payment of a late fee shall not constitute a waiver of the Bank's rights with respect to the default. 3.2 Expenses. In connection with the negotiation, execution and delivery of this Agreement, the Borrower shall pay to Kathleen Johnson, Esq., counsel for the Bank, $ __ . The Borrower shall also pay (a) all reasonable out-of-pocket expenses of the Bank, including reasonable fees and expenses of counsel retained by the Bank in connection with any waiver or consent hereunder or any amendment hereof or thereof, {b) if any Event of Default occurs or an event which with the passage of time, the giving of notice or both would constitute an Event of Default, all out-of-pocket expenses incurred by the Bank, including the fees and disbursements of counsel and experts retained by the Bank in connection with such event and collection and other enforcement proceedings resulting therefrom and (c) all costs associated with any performance of, or any payment made under, this Agreement, or any amendment hereto. 4. SECURITY FOR THE LINE OF CREDIT 4.1 Pledge of Revenues. The Borrower's obligation to make payments pursuant to the Line of Credit established pursuant to this Agreement is a special limited obligation of the Borrower payable from and secured solely by a pledge of and security interest in and to all of the Pledged Revenues, subordinate only to the first priority pledge of the tax increment revenues from the Project Area to secure the Senior Debt outstanding as of the date of this Agreement and any Senior Parity Debt issued pursuant to the terms of the Senior Indenture. Pursuant to Section 33671.5 of the Redevelopment Law, the pledge of the Pledged Revenues hereunder and the lien thereon shall be subject in all respects to the prior liens, claim and charge thereon of any Senior Debt now or hereafter issued or refunded in accordance with the terms hereof. The Bank acknowledges that to the extent Pledged Revenues constitute Tax Revenues, such monies are only available to the extent such Tax Revenues are released as surplus from the Special Fund established pursuant to the Senior Indenture. Except for the Pledged Revenues, no other funds or properties of the Borrower shall be pledged to or otherwise liable for payments with respect to the Line of Credit. The Borrower shall allocate Pledged Revenues FIRST, to the payment of the principal and interest or other payments then due with respect to the existing Senior Debt and Senior Parity Debt, SECOND, to the payment of the principal and interest or other payments then due with respect to the Line of Credit and any Subordinate Parity Debt on a pari passu basis, and, only after all principal and interest then due with respect to the Senior Debt and Senior Parity Debt, the Line of Credit and Subordinate Parity Debt have been paid, then to the payment of administrative expenses and other obligations of the Borrower. The pledge and allocation of Pledged Revenues hereunder is for the exclusive benefit of the Bank and shall be irrevocable until all principal, interest and other sums owed by the Borrower to the Bank have been paid in full. 4.2 Defined Terms. For purposes of this Agreement, unless otherwise defined in this Agreement, the following terms shall have the following meanings: "Low and Moderate Income Housing Fund" means the Low and Moderate Income Housing Fund maintained by the Borrower in accordance with Section 33334.3 of the Redevelopment Law. -10-5/13/08 5.Q.d Packet Pg. 406 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) "Low and Moderate Income Housing Tax Revenues" means the portion of Tax Revenues derived from the Redevelopment Plan required by Section 33334.2, 33334.3 and 33334.6 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund. "Pledged Revenues" means that portion of Low and Moderate Income Housing Tax Revenues derived from the Redevelopment Plan received by the Agency with respect to the Project Area, and, with respect to any portion thereof comprising Tax Revenues, subject to the prior lien of the Senior Debt. ""Redevelopment Law" means the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the California Health and Safety Code, and the acts amendatory thereof and supplemental thereto. "Redevelopment Plan" means the Redevelopment Plan for the project designated as the "Santa Monica Earthquake Recovery Redevelopment Project", approved by Ordinance No. 1747 of the City Council of the City of Santa Monica, adopted on June 21, 1994, together with any amendments thereof heretofore or hereafter duly enacted pursuant to the Redevelopment Law. "Senior Debt" means the Borrower's $49,945,000 2006 Tax Allocation Refunding Bonds, Series A and the Borrower's $14,775,000 2006 Taxable Tax Allocation Refunding Bonds, Series B, to the extent such obligations are outstanding as of the date of this Agreement and any other obligations under the Senior Indenture with respect thereto which are secured thereunder by the Tax Revenues, and any debt issued on a parity therewith in accordance with the provisions of the Senior Indenture or any refunding thereof. "Senior Indenture" means the Indenture of Trust dated as of April 1, 2006 between the Borrower and Union Bank of California, N.A., as trustee (the 'Trustee"), and the First Supplement to Indenture of Trust dated as of April 1, 2006 between the Borrower and the Trustee or, in the event the Senior Indenture is defeased, the instrument pursuant to which the Special Fund (as defined in the Senior Indenture for Senior Debt is maintained. "Subordinate Parity Debt" means any obligation of the Borrower payable from and secured by a lien on the Pledged Revenues on a parity herewith. "Tax Revenues" shall have the meaning set forth in the Senior Indenture. 5. DISBURSEMENTS. PAYMENTS AND COSTS 5.1 Disbursements and Payments. (a) Each payment by the Borrower will be made at the Bank's banking center (or other location) selected by the Bank from time to time; and will be made in immediately available funds, or such other type of funds selected by the Bank. -11-5/13108 5.Q.d Packet Pg. 407 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (b) Each request for an Advance shall be made in writing in the form of the requisition attached hereto as Exhibit "A" (an "Advance Request") signed by an individual identified in a certificate delivered to the Bank specifying the authorized representatives of the Borrower (each an "Authorized Representative"). Each disbursement by the Bank and each payment by the Borrower will be evidenced by records kept by the Bank. In addition, the Bank may, if required by any statute or regulation applicable to all national banks or a class of all national banks, require the Borrower to sign one or more promissory notes with terms consistent with this Agreement. 5.2 Telephone and Telefax Authorization for LIBOR-Based and IBOR-Based Portions. (a) In connection with the expiration of any LIBOR-based or IBOR-based Portion and the selection by the Borrower of the interest rate that will apply to such Portion following expiration, the Bank may honor telephone or telefax instructions for advances or repayments or for the designation of LIBOR-based or IBOR-based interests given, or purported to be given, by an Authorized Representative, or any other individual designated by any one of such authorized signers. Each request shall be confirmed in writing and shall confirm the information for the Advance required by Section 5.2(b ). (b) Any request for an Advance, including the initial Advance under this Agreement, received by Noon on a business day will be funded by the Bank by 11:00 a.m. on (i) the third Business Day thereafter if such Advance will bear interest at the LIBOR Rate or (ii) on the next succeeding Business Day if such Advance will bear interest at the Prime Rate or the IBOR Rate. Each Advance Request given pursuant to Section 5.1 and each instruction regarding the rollover of LIBOR-based or IBOR-based Portions must include the Borrower's election of the interest rate to apply to such Advance or LIBOR-based or IBOR-based Portion, but if no election is made, the Advance or LIBOR-based or IBOR-based Portion will bear interest at a rate based on the Prime Rate until another interest rate election is made by the Borrower. If the Borrower selects an interest rate based on the LIBOR Rate, the request for Advance must be made no later than the date the Borrower must make its interest rate election under Section 2.2(d). (c) Advances will be deposited in the account designated to the Bank by the Borrower in writing. (d) The Borrower will indemnify and hold the Bank harmless from all liability, loss, and costs in connection with any act resulting from telephone or telefax instructions the Bank reasonably believes are made by any individual authorized by the Borrower to give such instructions. This paragraph will survive this Agreement's termination, and will benefit the Bank and its officers, employees, and agents. (e) In connection with each Advance, the Borrower shall certify to the Bank that the amount of the Advance requested plus all amounts then outstanding under the Line of Credit are equal to or less than the Annual Principal Cap set forth in the certificate of Borrower delivered pursuant to Section 8.2(d) on the immediately preceding -12-5/13/08 5.Q.d Packet Pg. 408 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) March 15' or as then certified in accordance with Section 8.2(d) and accompanied by the most recent information available as described in Section 8.2(a). 5.3 Banking Days. Unless otherwise provided in this Agreement, 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, if such day relates to amounts bearing interest at an offshore rate (if any), means any such day on which dealings in dollar deposits are conducted among banks in the offshore dollar interbank market. All payments and disbursements which would be due on a day which is not a banking day will be due on the next banking day. All payments received on a day which is not a banking day will be applied to the credit on the next banking day. 5.4 Taxes. (a) Taxes. Any and all payment to the Bank by the Borrower hereunder shall be made free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges, withholdings or liabilities imposed thereon, excluding, however, taxes imposed thereon or measured by the net income or capital of the Bank by any jurisdiction or any political subdivision or taxing authority thereof or therein solely as a result of a connection between the Bank and such jurisdiction or political subdivision (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to withhold or deduct any Taxes imposed by the United States or any political subdivision thereof from or in respect of any sum payable hereunder to the Bank, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.4 ), the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. If the Borrower shall make any payment under this Section 5.4 to or for the benefit of the Bank with respect to Taxes and if the Bank shall claim any credit or deduction for such Taxes against any other taxes payable by the Bank to any taxing jurisdiction in the United States then the Bank shall pay to the Borrower an amount equal to the amount by which such other taxes are actually reduced; provided that the aggregate amount payable by the Bank pursuant to this sentence shall not exceed the aggregate amount previously paid by the Bank pursuant to this sentence shall not exceed the aggregate amount previously paid by the Borrower with respect to such Taxes. In addition, the Borrower agrees to pay any present or future stamp, recording or documentary taxes and any other excise or property taxes, charges or similar levies that arise under the laws of the United States of America or the State of New York from any payment made hereunder or from the execution or delivery or otherwise with respect to this Agreement (hereinafter referred to as "Other Taxes"). The Bank shall provide to the Borrower within a reasonable time a copy of any written notification it receives with respect to Other Taxes owing by the Borrower to the Bank hereunder provided that the Bank's failure to send such notice shall not relieve the Borrower of its obligation to pay such amounts hereunder. (b) Indemnity. The Borrower shall, to the fullest extent permitted by law, indemnify the Bank for the full amount of Taxes and Other Taxes including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 5.4 paid -13-5/13/08 5.Q.d Packet Pg. 409 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) by the Bank or any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted; provided that the Borrower shall not be obligated to indemnify the Bank for any penalties, interest or expenses relating to Taxes or Other Taxes arising from the Bank's gross negligence or willful misconduct. The Bank agrees to give notice to the Borrower of the assertion of any claim against the Bank relating to such Taxes or Other Taxes as promptly as is practicable after being notified of such assertion; provided that the Bank's failure to notify the Borrower promptly of such assertion shall not relieve the Borrower of its obligation under this Section 5.4. Payments by the Borrower pursuant to this indemnification shall be made within thirty (30) days from the date the Bank makes written demand thereof. The Bank agrees to repay to the Borrower any refund (including that portion of any interest that was included as part of such refund) with respect to Taxes or Other Taxes paid by the Borrower pursuant to this Section 5.4 received by the Bank for Taxes or Other Taxes that were paid by the Borrower pursuant to this Section 5.4 and to contest, with the cooperation and at the expense of the Borrower, any such Taxes or Other Taxes which the Bank or the Borrower reasonably believes not to have been proper assessed. (c) Notice. Within thirty (30) days after the date of any payment of Taxes by the Borrower, the Borrower shall furnish to the Bank, the original or a certified copy of a receipt evidencing payment thereof. (d) Survival of Obligations. The obligations of the Borrower under this Section 5.4 shall survive the termination of this Agreement. 5.5 Additional Costs (a) If the Bank shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in the interpretation or administration thereof by any court, central bank or other administrative or governmental authority (in each case, whether or not having the force of law), or compliance by the Bank with any request or directive of any such court, central bank or other administrative or governmental authority (whether or not having the force of law), shall (A) change the basis of taxation of payments to the Bank of any amounts payable hereunder (except for taxes on the overall net income of the Bank), (B) impose, modify or deem applicable any reserve, special deposit or similar requirement against making or maintaining its obligations under this Agreement or assets held by, or deposit with or for the account of, the Bank or (C) impose on the Bank any other condition regarding this Agreement, and the result of any event referred to in clause (A), (B) or (C) above shall be to increase the cost to the Bank of making or maintaining its obligations hereunder, or to reduce the amount of any sum received or receivable by the Bank hereunder, then, the Borrower shall pay to the Bank, at such time and in such amount as is set forth in paragraph (c) of this Section 5.5, such additional amount or amounts as will compensate the Bank for such increased costs or reductions in amount. (b) If the Bank shall have determined that the adoption or implementation of, or any change in, any law, rule or regulation, or any policy, guideline or directive of, or any change in the interpretation or administration thereof, by, any court, central bank or other administrative or governmental authority, or compliance by the Bank with any -14-5/13/08 5.Q.d Packet Pg. 410 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) directive of or compliance by the Bank with any directive of or guidance from any central bank or other authority (in each case, whether or not having the force of law), shall impose, modify or deem applicable any capital adequacy or similar requirement (including, without limitation, a request or requirement that affects the manner in which the Bank allocates capital resources to its commitments, including its obligations under lines of credit) that either (A) affects or would affect the amount of capital to be maintained by the Bank or (B) reduces or would reduce the rate of return on the Bank's capital to a level below that which the Bank could have achieved but for such circumstances (taking into consideration the Bank's policies with respect to capital adequacy) then, the Borrower shall pay to the Bank, at such time and in such amount as is set forth in paragraph {c) of this Section, such additional amount or amounts as will compensate the Bank for such cost of maintaining such increased capital or such reduction the rate of return on the Bank's capital. (c) All payments of amounts referred to in paragraphs (a) and (b) of this Section shall be due and payable thirty (30) days following the Borrower's receipt of notice thereof. Interest on the sums due as described in paragraphs (a) and (b) of this Section, and in the preceding sentence, shall begin to accrue from the date when the payments were first due and shall otherwise be payable in accordance with Section 1.6 hereof; provided, that from and after the required date of payment, interest shall begin to accrue on such obligations at a rate per annum equal to the Default Rate until such delinquent payments have been paid in full. A certificate as to such increased cost, increased capital or reduction in return incurred by the Bank as a result of any event mentioned in paragraphs (a) or {b) of this Section setting forth, in reasonable detail, the basis for calculation and the amount of such calculation shall be submitted by the Bank to the Borrower and shall be conclusive (absent manifest error) as to the amount thereof. In making the determinations contemplated by the above referenced certificate, the Bank may make such reasonable estimates, assumptions, allocations and the like that the Bank in good faith determines to be appropriate. Notwithstanding anything contained in paragraphs (a) or (b) of this Section, above, the Borrower shall have no liability to the Bank for any increased costs, increased capital or reduction in return to the extent incurred by the Bank more than sixty (60) days prior to the date the above-described certificate is given to the Borrower. (d) Notwithstanding the foregoing, on any date following receipt of notice pursuant to subsection (c) above, the Borrower shall have the right to repay all amounts outstanding, including accrued interest to the date of repayment, on the Line of Credit upon 10 days' notice to the Bank, without penalty other than any prepayment fee due pursuant to Section 2.2(f) or 2.3(e) above and without further liability for any Additional Costs identified in subsections (a) and (b) above. 5.6 Interest Calculation. Except as otherwise stated in this Agreement, all interest and fees, if any, will be computed on the basis of a 360-day year and the actual number of days elapsed. This calculation results in more interest or a higher fee than if a 365-day year is used. Installments of principal which are not paid when due under this Agreement shall continue to bear interest until paid. 5.7 Default Rate. -15-5/13/08 5.Q.d Packet Pg. 411 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (a) Borrower Defaults. Upon the occurrence of any default under this Agreement, principal amounts outstanding under this Agreement will at the option of the Bank bear interest at a rate which is 2.0 percentage point(s) higher than the rate of interest otherwise provided under this Agreement; provided, that such rate shall not exceed 12% per annum or the maximum rate then permitted by applicable law. (b) The Bank's election to apply the default rate as provided in this Section 5. 7 will not constitute a waiver of any default. 6. CONDITIONS The Bank must receive the following items, in form and content acceptable to the Bank, before it is required to extend any credit to the Borrower under this Agreement: 6.1 Authorizations. Evidence that the execution, delivery and performance by the Borrower of this Agreement and any instrument or agreement required under this Agreement has been duly authorized. 6.2 Documents. Fully executed and, where required, acknowledged copies of this Agreement. 6.3 Legal Opinions. Written opinions from bond counsel and the Borrower's legal counsel, covering such matters as the Bank may require, including without limitation an opinion that the Borrower is authorized under California law to enter into this loan agreement, that this agreement is enforceable against the Borrower in accordance with its terms. The legal counsel and the terms of the opinion must be acceptable to the Bank. 6.4 Payment of Fees. Payment of all accrued and unpaid expenses incurred by the Bank as required by Section 3.3 entitled "Reimbursement of Closing Costs." 6.5 Resolution of Board. Copies of resolutions of the Governing Board of the Borrower, certified as of the execution date by the Secretary of the Board, authorizing, among other things, the execution, delivery and performance by the Borrower of this Agreement. 6.6 Authoritv; Incumbency. A certificate of an authorized representative of the Borrower dated the execution date certifying as to the authority, incumbency and specimen signatures of the representative of the Borrower authorized to sign this Agreement and any other documents to be delivered by it hereunder and who will be authorized to represent the Borrower in connection with this Agreement, upon which the Bank may rely until it receives a new such certificate. 6. 7 Governmental Approvals. Except for state "blue sky" laws, true and correct copies of any and all governmental approvals necessary for the Borrower to enter into this Agreement and such approvals necessary at the Closing Date for the transactions contemplated thereby and hereby, or if no governmental approvals are required, a certificate of an Authorized Representative of the Borrower to the effect that no such approvals are necessary. 6.8 Financial Statements and Other Information. Borrower's most recent audited financial statements, fiscal consultant reports, analysis of composition of redevelopment project areas, values and collection trends and any other financial information reasonably requested by -16-5/13/08 5.Q.d Packet Pg. 412 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Bank. 6.9 Additional Bonds Test. Documents for Senior Debt, and any other debt of Borrower that is senior to or on a parity with this Agreement confirming that execution, delivery and performance of Borrower's obligations under this Agreement will not constitute a default under any such documents. 7. REPRESENTATIONS AND WARRANTIES When the Borrower signs this Agreement, and until the Bank is repaid in full, the Borrower makes the following representations and warranties. Each request for an Advance constitutes a renewal of these representations and warranties as of the date of the request: 7.1 Legal Status. Borrower is a redevelopment agency and public body corporate and politic, duly and validly created under Part 1 of Division 24 of the California Health and Safety Code (the "Law") and has all requisite power and authority to carry on its business as now conducted. 7.2 Authorization. This Agreement, and any instrument or agreement required hereunder, are within the Borrower's powers, have been duly authorized, and do not conflict with any of its organizational papers. 7.3 Business Operations. The Borrower has all powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 7.4 Approvals. No further approval, authorization, consent, order, notice to or filing or registration with any governmental authority or any public board or body (other than in connection or in compliance with the provisions of the securities or "blue sky" laws of any jurisdiction which were not required on or prior to the Closing Date) is legally required with respect to the Borrower's obligations under this Agreement. 7.5 Disclosure of Information. The statements and information provided to the Bank in connection with this Agreement which consists solely of the materials identified on Exhibit E hereto, are accurate in all material respects as of the date of such materials, except as otherwise disclosed to the Bank in writing. 7.6 Enforceable Agreement. Subject to fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against redevelopment agencies in the State of California, this Agreement is a legal, valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms, and any instrument or agreement required hereunder, when executed and delivered, will be similarly legal, valid, binding and enforceable. 7.7 No Conflicts. This Agreement does not conflict with any law, agreement, or obligation by which the Borrower is bound, including without limitation any provisions of the loan agreements, indentures or fiscal agent agreements relating to the Senior Debt. 7.8 Financial Information. To the actual knowledge of the Borrower, all financial and other information that has been supplied to the Bank is sufficiently complete to give the Bank -17-5/13/08 5.Q.d Packet Pg. 413 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) accurate knowledge of the Borrower's financial condition, including all material contingent liabilities which could have a Material Adverse Effect. Since the date of the most recent financial statement provided to the Bank, there has been no Material Adverse Change in the business condition (financial or otherwise), operations, properties or prospects of the Borrower. 7.9 Lawsuits. There is no lawsuit, tax claim or other dispute pending or threatened against the Borrower which, if lost, would have a Material Adverse Effect, except as have been disclosed in writing to the Bank. 7.10 Other Obligations. The Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation, except as have been disclosed in writing to the Bank. 7.11 No Event of Default. There is no event which is, or with notice or lapse of time or both would be, a default under this Agreement. 7.12 Location of Borrower. The Borrower's place of business (or, if the Bqrrower has more than one place of business, its chief executive office) is located at the address listed under the Borrower's signature on this Agreement. 7.13 Changes in Law. To the best of the Borrower's knowledge, there is not pending any change of law, which, if enacted or adopted, could have a Material Adverse Effect on the Borrower's ability to perform its obligations under this Agreement. 7.14 Immunity from Jurisdiction. Borrower is not entitled under California law to claim immunity on sovereign or other similar grounds with respect to itself in relation to this Agreement or the Pledged Revenues from (i) suit, (ii) jurisdiction of any court, or (iii) relief by way of injunction, order for specific performance or order for recovery of property; provided, that no representation is made with respect to the waiver of immunity under the XI Amendment of the United States Constitution; and provided further, that any claim made hereunder shall be made in accordance with and pursuant to the procedures provided by the laws of the State of California. 7.15 Redevelopment Plan. The Redevelopment Plan has been duly authorized and adopted by the Borrower, remains in full force and effect and, except as disclosed to the Bank in writing, has not been amended, superseded or replaced. The Borrower is permitted to enter into this Agreement by the terms of the Redevelopment Plan. 8. COVENANTS The Borrower agrees, so long as credit is available under this Agreement and until the Bank is repaid in full: 8.1 Use of Proceeds. To use the proceeds of the Line of Credit only for the purposes permitted by Section 1.1. 8.2 Financial Information. To provide the following financial information and statements in form and content acceptable to the Bank, and such additional information as requested by the Bank from time to time: -18-5/13/08 5.Q.d Packet Pg. 414 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (a) By March 1 of each year, commencing with March 1, 2009, an annual statement of estimated tax increment revenue of the Borrower for the current fiscal year based on information provided by the County tax collector, certified and dated by an authorized financial officer of the Borrower and a statement of actual tax increment revenues for the preceding fiscal year. (b) Within 180 days after the Borrower's fiscal year end, commencing with the fiscal year ended June 30, 2007, the Borrower's annual financial statements, certified and dated by an authorized financial officer of the Borrower. These financial statements must be audited (with an unqualified opinion) by a firm of independent certified public accountants of recognized national or regional standing. (c) By March 1 of each year, commencing with March 1, 2009, the Annual Report and any other disclosure provided by the Borrower pursuant to the Continuing Disclosure Certificate for the current fiscal year with respect to the Borrower's Senior Debt. (d) By March 1 of each year, commencing with March 1, 2009, a certificate of an authorized financial officer that states the Debt Service Coverage Ratio (as defined in Section 8.9) as of March 1 of such year and demonstrates on a pro forma basis for the current and each fiscal year thereafter (taking into account all financial limitations imposed pursuant to the Redevelopment Plan or the Redevelopment Law and other factors which would cause a reduction in Pledged Revenues in any future year) the maximum amount of Advances that may be outstanding during such period in order for Borrower to maintain a Debt Service Coverage Ratio of at least 1.25: 1 (the "Annual Principal Cap"). (e) Within the periods provided in (a), (b), (c) and (d) above, a compliance certificate of the Borrower signed by an authorized financial officer of the Borrower setting forth whether there existed as of the date of such statements and whether there exists as of the date of the certificate, any default under this Agreement and, if any such default exists, specifying the nature thereof and the action the Borrower is taking and proposes to take with respect thereto. (f) Any official statement or similar disclosure document circulated by the Borrower in connection with the offering of any bonds, notes or other evidence of indebtedness of the Project Area, or issued by or on behalf of, the Borrower. (g) The Borrower shall give prompt notice in writing to the Bank of any litigation or administrative proceeding which may have a Material Adverse Effect, and shall in all events give prompt notice of any such litigation or proceeding involving a claim in excess of $5,000,000. (h) Such other information regarding the business, affairs and condition of the Borrower as the Bank may from time to time reasonably request. 8.3 Books and Records. To maintain adequate books and records. 8.4 Inspection Rights. The Borrower shall, at any reasonable time and from time to time, upon reasonable notice, permit the Bank or any agents or representatives thereof, at the Bank's expense, to examine and make copies of the records and books of account related to -19-5/13/08 5.Q.d Packet Pg. 415 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) the transactions contemplated by this Agreement, to visit its properties and to discuss its affairs, finances and accounts with any of its officers and independent accountants. The Borrower will not unreasonably withhold its authorization for its independent accountants to discuss its affairs, finances and accounts with the Bank. 8.5 Compliance with Laws. To comply with the laws, regulations and orders of any government body with authority over the Borrower's business or activities. 8.6 Maintenance of Approvals. Etc. The Borrower shall at all times maintain in effect, renew and comply with all the terms and conditions of all approvals and authorizations as may be necessary or appropriate under any applicable law or regulation for its execution, delivery and performance of this Agreement. 8.7 Cooperation. To take any action reasonably requested by the Bank to carry out the intent of this Agreement. 8.8 Payment of Obligations. The Borrower will pay and discharge all of its obligations and liabilities when due. 8.9 Additional Debt; Against Encumbrances. · (a) The Borrower covenants and agrees that it will not issue any additional Senior Debt payable from Pledged Revenues unless prior to issuing such Senior Debt, Borrower delivers to the Bank a certificate of an authorized financial officer that demonstrates on a pro forma basis for the current fiscal year and each fiscal year during the proposed term thereof (taking into account all financial limitations imposed pursuant to the Redevelopment Plan or the Redevelopment Law and other factors which would cause a reduction in Pledged Revenues in any future year) that the Debt Service Coverage Ratio calculated as if such additional Senior Debt were issued and outstanding during such term is at least 1.25:1. (b) The Borrower covenants and agrees that it will not issue or enter into any Subordinate Parity Debt payable from the Pledged Revenues unless prior to issuing such Subordinate Parity Debt, Borrower delivers to the Bank a certificate of an authorized financial officer that demonstrates on a pro forma basis for the current fiscal year and each fiscal year during the proposed term thereof (taking into account all financial limitations imposed pursuant to the Redevelopment Plan or the Redevelopment Law and other factors which would cause a reduction in Pledged Revenues in any future year) that the Debt Service Coverage Ratio as if such additional obligations were issued and outstanding during such term is at least 1.25:1. "Debt Service Coverage Ratio" means the total amount of Pledged Revenues for the period divided by Required Payments for the same period. The term "Required Payments" means, for any period of calculation, the sum of: (1) principal and interest due with respect to any outstanding Term Loans, assuming interest calculated at (i) for any Term Loans that bear interest at a fixed rate, the fixed rate then applicable to such Term Loans or (ii) for Term Loans that bear interest at variable rates, 30-day LIBOR Rate currently in effect plus 4.25% or for Term -20-5/13/08 5.Q.d Packet Pg. 416 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Loans bearing interest at a tax-exempt rate, 62.347% of the 30-day LIBOR Rate currently in effect plus 4.91 %, (2) principal and interest on any principal outstanding under the Line of Credit that has not been converted to a Term Loan, assuming a 15-year amortization from the date of calculation and equal semiannual payments of principal and interest calculated at the 30-day LIBOR Rate currently in effect plus 4.25% or for principal bearing interest at a tax-exempt rate, 62.347% of the 30-day LIBOR Rate currently in effect plus 4.47%, (3) the interest accrued during such period on all outstanding Senior Debt secured by Pledged Revenues and Subordinate Parity Debt (collectively, the "Other Project Area Debt") during such period, assuming that all outstanding serial Other Project Area Debt is retired as scheduled and that all outstanding term Other Project Area Debt is prepaid or paid from sinking fund payments as scheduled (except to the extent that such interest is capitalized), (4) those portions of the principal amount of all outstanding serial Other Project Area Debt maturing in such period or the next succeeding period, (5) those portions of the principal amount of all outstanding term Other Project Area Debt required to be prepaid or paid in such period or the next succeeding period, and (6) those portions of payments under any subordinate obligations of the Borrower secured by Pledged Revenues, but subordinate to the Borrower's obligations hereunder and under any Subordinate Parity Debt (exclusive of the Borrower's obligation to fund the Low and Moderate Income Housing Fund) ("Subordinate Debt") required to be made during such period, or the next succeeding period, in each case accruing during such period and computed as if such Subordinate Debt was deemed to accrue daily during such period in equal amounts (except to the extent the interest evidenced and represented thereby is capitalized); but less the earnings to be derived from the investment of moneys on deposit in debt service reserve funds established for any Other Project Area Debt or Subordinate Debt; provided that, as to any such Other Project Area Debt bearing or comprising interest at other than a fixed rate, the rate of interest used to calculate Required Payments shall, for all purposes be assumed to bear interest at 30-day LIBOR currently in effect plus 4.25%; and provided, further, that if any series or issue of such Other Project Area Debt has twenty- five percent (25%) or more of the aggregate principal amount of such series or issue due in any one year, Required Payments shall be determined for the period of determination as if the principal of and interest on such series or issue of such Other Project Area Debt were being paid from the date of incurrence thereof in substantially equal annual amounts over a period of fifteen (15) years from the date of calculation; and provided, further, that, as to any such Other Project Area Debt or portions thereof bearing no interest but which are sold at a discount and which discount accretes with -21-5/13/08 5.Q.d Packet Pg. 417 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) respect to such Other Project Area Debt or portions thereof, such accreted discount shall be treated as interest in the calculation of Required Payments; and provided, further, that, if the interest rate with respect to Other Project Area Debt has been effectively fixed pursuant to an interest rate swap or other derivative agreement, the interest rate on such Other Project Area Debt shall be the resulting linked rate or the effective fixed interest rate to be paid by the Borrower in connection with the interest rate swap or derivative agreement; and provided, further, that the amount on deposit in a debt service reserve fund on any date of calculation of Required Payments shall be deducted from the amount of principal due at the final maturity of the Other Project Area Debt for which such debt service reserve fund was established and to the extent the amount in such debt service reserve fund is in excess of such amount of principal, such excess shall be applied to the full amount of principal due, in each preceding year, in descending order, until such amount is exhausted. 8.10 Payments of Taxes and Other Charges. The Borrower will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Borrower or the properties then owned by the Borrower in the Earthquake Recovery Redevelopment Project Area, or upon the revenues therefrom, when the same shall become due. Nothing contained in this Agreement shall require the Borrower to make any such payment so long as the Borrower in good faith shall contest the validity of said taxes, assessments or charges. The Borrower will duly observe and confomn with all valid requirements of any governmental authority relative to the Redevelopment Plan, the projects undertaken pursuant to the Redevelopment Plan (collectively, the "Redevelopment Project") or any part thereof. 8.11 Taxation of Leased Property. Whenever any property in the Project Area has been redeveloped and thereafter is leased by the Borrower to any person or persons, or whenever the Borrower leases real property in the Project Area to any person or persons for redevelopment, the Borrower will provide Los Angeles County with the information and cooperation needed to establish a possessory interest in property leased by the Borrower as provided in Section 33673.1 of the Redevelopment Law. 8.12 Tax Revenues. The Borrower shall comply with all requirements of the Law to ensure the allocation and payment to it of the Pledged Tax Revenues including, without limitation, the timely filing of any necessary statements of indebtedness with appropriate officials of the County of Los Angeles. 8.13 Amendment of Redevelopment Plan. The Borrower shall not amend the Redevelopment Plan, or enter into any agreement with the County of Los Angeles or any other governmental unit, which would have the effect of materially reducing the amount of Pledged Tax Revenues available to the Borrower for payment of the principal and interest with respect to the Line of Credit, unless the Borrower delivers a certificate of an authorized financial officer to the effect that, following such amendment, the Debt Service Coverage Ratio shall be at least 1.25:1 throughout the Availability Period and the Term-Out Period. -22-5/13/08 5.Q.d Packet Pg. 418 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) 9. DEFAULT If any of the following events (each an "Event of Default") occurs, the Bank may do one or more of the following: declare the Borrower in default, stop making any Advances available to the Borrower, and require the Borrower to repay its entire debt immediately and without prior notice. If an event of default occurs under the paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the entire debt outstanding under this Agreement will automatically be due immediately. 9.1 Failure to Pay. Any principal or interest owed to the Bank under this Agreement shall not be paid when due and shall remain unpaid for five (5) business days after written notice of such failure has been given to the Borrower, or the Borrower fails to pay any amount owing under Section 3.1 within fifteen (15) after the date when due. 9.2 False Information. Any representation or warranty made by or on behalf of the Borrower under this Agreement or in any certificate or statement of the Borrower delivered pursuant to Section 6 shall be incorrect or untrue in any materiaLrespect when made or deemed to have been made. 9.3 Bankruotcv. The Borrower files a bankruptcy petition, a bankruptcy petition is filed against the Borrower or the Borrower makes a general assignment for the benefit of creditors. The default will be deemed cured if any bankruptcy petition filed against the Borrower is dismissed within a period of 60 days after the filing; provided, however, that the Bank will not be obligated to extend any additional credit to the Borrower during that period; and provided further that such cure opportunity will be terminated upon the entry of an order for relief in any bankruptcy case arising from such a petition. 9.4 Receivers. A receiver or similar official is appointed for a substantial portion of the Borrower's business, or the business is terminated. 9.5 Judgments. Any uninsured judgments or arbitration awards are entered against the Borrower, or the Borrower enters into any settlement agreements with respect to any litigation or arbitration, in an aggregate amount of Five Million Dollars ($5,000,000) or more and any such judgment or award shall not have been satisfied, stayed or bonded pending appeal within a period of sixty (60) days from the date it was required to be paid. 9.6 Material Adverse Change. A Material Adverse Change occurs. 9. 7 Cross-default. Any default occurs under any agreement in connection with any other credit which Borrower has obtained from Bank, or which Borrower has obtained from anyone else, or which Borrower has guaranteed and any cure period with respect to such default has expired. 9.8 Lien Priority. The Bank fails to have an enforceable first lien (subject to Senior Debt, Subordinate Parity Debt and any prior liens to which the Bank has consented in writing) on or security interest in any property given as security for this Agreement (or any guaranty). 9.9 Other Breach under Agreement. The Borrower fails to meet the conditions of, or fails to perform any obligation under, any term of this Agreement not specifically referred to in this Article. This includes any failure or anticipated failure by the Borrower to comply with any -23-5/13/08 5.Q.d Packet Pg. 419 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) financial covenants set forth in this Agreement, whether such failure is evidenced by financial statements delivered to the Bank or is otherwise known to the Borrower. If, in the Bank's opinion, the breach is capable of being remedied, the breach will not be considered an event of default under this Agreement for a period of thirty (30) days after the date on which the Bank gives written notice of the breach to the Borrower, which period may be extended to ninety (90) days if Borrower demonstrates to the Bank that it is diligently pursuing a cure; provided, however, that the Bank will not be obligated to extend any additional credit to the Borrower during that period. 10. ENFORCING THIS AGREEMENT: MISCELLANEOUS 10.1 GAAP. Except as otherwise stated in this Agreement, all financial information provided to the Bank and all financial covenants will be made under generally accepted accounting principles, consistently applied. 10.2 Successors and Assigns. This Agreement is binding on the Borrower's and the Bank's successors and assignees. The Borrower agrees that it may not assign this Agreement without the Bank's prior consent. The Bank may sell participations in or assign this loan, and may exchange financial information about the Borrower with actual or potential participants or assignees. If participation is sold or the loan is assigned, the purchaser will have the right of set-off against the Borrower. If the Bank delivers any information to a potential participant or assignee other than its loan history with respect to this Agreement or information concerning the Borrower that is publicly available, the Bank shall give the Borrower the opportunity to review and approve such information for accuracy prior to its delivery to the potential participant or assignee. 10.3 Severability; Waivers. If any part of this Agreement is not enforceable, the rest of the Agreement may be enforced. The Bank retains all rights, even if it makes a loan after default. If the Bank waives a default, it may enforce a later default. Any consent or waiver under this Agreement must be in writing. 10.4 Attorneys' Fees. In the event of a lawsuit or arbitration proceeding, the prevailing party is entitled to recover costs and reasonable attorneys' fees incurred in connection with the lawsuit or arbitration proceeding, as determined by the court or arbitrator. In the event that any case is commenced by or against the Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute, the Bank is entitled to recover costs and reasonable attorneys' fees incurred by the Bank related to the preservation, protection, or enforcement of any rights of the Bank in such a case. As used in this paragraph, "attorneys' fees" includes the allocated costs of the Bank's in-house counsel and the allocated costs of the Borrower's in-house counsel. 10.5 One Agreement. This Agreement and any related security or other agreements required by this Agreement, collectively: (a) represent the sum of the understandings and agreements between the Bank and the Borrower concerning this credit; (b) replace any prior oral or written agreements between the Bank and the Borrower concerning this credit; and -24-5/13/08 5.Q.d Packet Pg. 420 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (c) are intended by the Bank and the Borrower as the final, complete and exclusive statement of the terms agreed to by them. In the event of any conflict between this Agreement and any other agreements required by this Agreement, this Agreement will prevail. 10.6 Indemnification. In addition to any and all rights of reimbursement, indemnification, subrogation or any other rights pursuant hereto or under law or equity, the Borrower hereby agrees to indemnify and hold harmless each of the Bank and its respective officers, directors, employees and agents (each an "Indemnified Party") from and against any and all claims, damages, losses, liabilities, reasonable costs or expenses whatsoever (including reasonable attorneys' fees) that an Indemnified Party may incur (or which may be claimed against an Indemnified Party by any person whatsoever) that arises out of the transactions contemplated by this Agreement other than any such claim, damage, losses, liabilities, costs or expenses caused by the gross negligence or willful misconduct of the Bank. This indemnity will survive repayment of the Borrower's obligations to the Bank. All sums due to the Bank hereunder shall be obligations of the Borrower, due and payable immediately without demand. 10.7 Notices. Unless otherwise provided in this Agreement or in another agreement between the Bank and the Borrower, all notices required under this Agreement shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of this Agreement, or sent by facsimile to the fax numbers listed on the signature page, or to such other addresses as the Bank and the Borrower may specify from time to time in writing. Notices and other communications sent by (a) first class mail shall be deemed delivered on the earlier of actual receipt or on the fourth business day after deposit in the U.S. mail, postage prepaid, (b) overnight courier shall be deemed delivered on the next business day, and (c) telecopy shall be deemed delivered when transmitted. 10.8 Headings. Article and paragraph headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Agreement. 10.9 Counterparts. This Agreement may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same agreement. -25-5/13/08 5.Q.d Packet Pg. 421 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) 10.10 Transfer; Assignment of Credit Agreement. This Agreement is binding on the Borrower's and the Bank's successors and assignees. The Borrower agrees that it may not assign this Agreement without the Bank's prior consent. If the Bank sells participations in the Line of Credit and this Agreement, it agrees that it will have the exclusive right to service the Line of Credit and the Borrower shall deal solely with the Bank with respect to this Agreement. The parties agree that this Line of Credit will not in any case be securitized. 10.11 Notices. Unless otherwise provided in this Agreement or in another agreement between the Bank and the Borrower, all notices required under this Agreement shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of this Agreement, or sent by facsimile to the fax nurnbers set forth below, or to such other addresses as the Bank and the Borrower rnay specify frorn time to time in writing. Notices and other communications shall be effective (i) if mailed, upon the earlier of receipt or five (5) days after deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or (iii) if hand-delivered, by courier or otherwise (including telegram, lettergram or mailgram), when delivered. Bank of America CA9-193-13-17 333 South Hope Street, 131h Floor Los Angeles, California 90071 Facsimile: 213-621-3606 Redevelopment Agency of the City of Santa Monica 1717 Fourth Street, Ste. 250 Santa Monica, California 90401 Attn: Facsimile: 310-394-0647 With copy to: -26- 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 5/13/08 5.Q.d Packet Pg. 422 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) This Agreement is executed as of the date stated at the top of the first page. BANK OF AMERICA, N.A. By __ ~--~~~~~~------Typed Name: Paul F. Sutherlen Title: Senior Vice President -27- REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By_·~~--~~--~~~------ Typed Name: P. Lamont Ewell Title: Executive Director 5/13/08 5.Q.d Packet Pg. 423 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) EXHIBIT "A" ADVANCE REQUEST Bank of America, N.A. Loan Servicing, California 101 South Marengo Ave, 5th floor Pasadena, CA 91101 Attention: Linda Escamilla Or Telephone No.: (626) 666-8456 Facsimile No.: (626) 666-2241 Michael Towman Telephone No.: (626) 666-2238 Facsimile No.: (626) 666-2241 With a copy to: Paul F. Sutherlen Telephone No.: (213) 621-7134 Facsimile No.: (213) 621-3606/3607 Re: Credit Agreement dated as of May 1, 2008 between the Redevelopment Agency of the City of Santa Monica and Bank of America, N.A. Ladies and Gentlemen: The undersigned, Redevelopment Agency of the City of Santa Monica (the "Borrower''), refers to the Credit Agreement, dated as of May 1, 2008 (as amended frorn time to time, the "Agreement"; the terms defined therein being used herein as therein defined}, between the undersigned and Bank of America, N.A. ("Bank"}, and hereby gives you notice, pursuant to Sections 5.1 (b) and 5.2 of the Agreement, that the undersigned hereby desires an Advance under the Credit Agreement as follows: (i) The date of the Advance is , 200_ [insert a date that is (x) no earlier the third Business Day following the date of this notice if the Advance is to bear interest initially calculated by reference to the LIBOR Rate or (y) no earlier than the next Business Day following the date of this notice if such Advance is to bear interest initially at the Prime Rate or IBOR Rate]. (ii) The principal amount of the Advance is $ [insert an amount not less than $500,000 if the Advance is to bear interest with reference to the L/BOR Rate]. (iii) The Advance shall initially bear interest calculated by reference to [insert one of the following rates: Prime Rate, IBOR Rate or LIBOR Rate]. -28-5/13/08 5.Q.d Packet Pg. 424 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (iv) If the Advance is to bear interest initially calculated by reference to the LIBOR Rate, the initial Interest Period is months [insert one of the following: one week, one month, three months or six months. (v). If the Advance is to bear interest initially calculated by reference to the IBOR Rate, the initial Interest Period is months [insert one of the following: one day, one week, one month, three months or six months. The Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Advance before and after giving effect to the requested Advance: (A} The purpose of this Advance is _____________ _ which constitutes a part of the Project. (B) All representations and warranties contained in the Agreement and the other related documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof or the date of the Advance, as the case may be; and (C) No Event of Default or event which with the passage of time, the giving of notice, or both, would constitute an Event of Default has occurred and is continuing. (D) The amount of the Advance requested plus all amounts currently outstanding under the Line of Credit are equal to or less than the Annual Principal Cap set forth in the certificate of Borrower delivered pursuant to Section 8.2(d} on the March 15 ' immediately preceding the date of this request. Very truly yours, REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: _________ _ Name:. ___________________ __ Title:. ____________________ _ By:. __________ ___ Name: ____________________ __ Title: ____________________ __ -29-5/13/08 5.Q.d Packet Pg. 425 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) EXHIBIT "8" REQUEST FOR INCREASE TO COMMITMENT Bank of America, N.A. CA9-193-13-17 333 South Hope Street, 13'h Floor Los Angeles, California 90071 Attention: Paul F. Sutherlen Telephone No.: (213) 621-7134 Facsimile No.: (213) 621-3606/3607 Re: Credit Agreement dated as of May 1, 2008 between the Redevelopment Agency of the City of Santa Monica and Bank of America, N.A. Ladies and Gentlemen: The undersigned, Redevelopment Agency of the City of Santa Monica (the "Borrower"), refers to the Credit Agreement, dated as of May 1, 2008 (as amended from time to time, the "Agreement"; the terms defined therein being used herein as therein defined), between the undersigned and Bank of America, N.A. ("Bank"). Borrower hereby requests that the Commitment be increased to$[ insert amount not to exceed $75,000,000 ]. Borrower has delivered or is delivering with this request Borrower's most recent audited financial statements and monthly cash flow projections for the Borrower for the next succeeding 12-month period. Borrower understands that the Bank may request additional information prior to making a decision regarding this request. Borrower hereby represents and warrants as follows: (i) There exists no Event of Default as defined in the Credit Agreement, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default; (ii) No Material Adverse Change has occurred with respect to the Borrower; and -30-5/13/08 5.Q.d Packet Pg. 426 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (iii) No litigation or governmental action that could have a Material Adverse Effect on the Borrower or any transaction contemplated by the Credit Agreement or the ability of Borrower to perform its obligations under the Credit Agreement has occurred and is continuing. Very truly yours, REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: Nam __ e_: ____________________ _ Title: ____________________ _ By: Nam __ e_: --------------------- Title: ________________ _ -31-5/13/08 5.Q.d Packet Pg. 427 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) EXHIBIT "C" FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of --::---:-:-::=-:-:-=-:--:-:-::-:' 200_, by and between the REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA, a public body corporate and politic (the "Borrower") and BANK OF AMERICA, N.A., a national banking association (the "Bank"). RECITALS AGREEMENT For good and valuable consideration, receipt of which is hereby acknowledged, the Borrower, the Authority and the Bank agree as follows: 1. Commitment Amount. Upon the execution of this Amendment and satisfaction of the conditions to the Effective Date set forth below, the Commitment shall be increased to $ , and from and after the Effective Date, all references to the "Commitment" in the Credit Agreement shall mean the Commitment, as increased pursuant to this Amendment. 2. Miscellaneous. (a) Effective Date. This Amendment shall be effective and the Effective Date shall occur on the date on which all of the following conditions have been satisfied by Borrower or waived by Lender: (i) Execution of Documents. This Amendment shall be fully executed and delivered to the Bank; (ii) Additional Loan Fee. Borrower shall have paid an additional loan fee equal to .05% of the amount of the increase to the Commitment; and (ii) Costs and Expenses. Borrower shall have paid all costs and expenses incurred by the Bank in connection with this transaction, including without limitation reasonable attorneys' fees in the amount of$ ___ _ (b) Effect of Amendment. Except as specifically provided herein, all terms and conditions of the Original Credit Agreement remain in full force and effect, without waiver or modification. This Amendment and the Original Credit Agreement shall be read together, as one document. (c) Representations and Warranties. The Borrower hereby remakes all representations and warranties contained in the Original Credit Agreement and reaffirms all covenants set forth therein. The Borrower further certifies that as of the date of this Amendment: -32-5/13/08 5.Q.d Packet Pg. 428 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) (i) There exists no Event of Default as defined in the Original Credit Agreement, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default; (ii) No Material Adverse Change has occurred with respect to the Borrower; and (iii) No litigation or governmental action that could have a Material Adverse Effect on the Borrower or any transaction contemplated by the Original Credit Agreement, as amended by this Amendment, or the ability of Borrower to perform its obligations under the Original Credit Agreement, as amended by this Amendment, has occurred and is continuing. (d) Successors. This Amendment shall inure to the benefit of the parties hereto and their respective successors and assigns. (e) Amendments. No modification, waiver, amendment, discharge or change of this Amendment shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver or amendment, discharge or change is or may be sought. (f) Counterparts. This Amendment may be simultaneously executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. -33-5/13/08 5.Q.d Packet Pg. 429 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) IN WITNESS WHEREOF. this Amendment has been executed as of the date first set forth above. -34- REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: ____________ _ Name: ___________ __ Title: ___________ _ By: Nam_e_: _________ __ Title: __________ __ BANK OF AMERICA, N.A. By: 7N~a_m_e_:~P~a-u71~F-.S~u~t~he-r71e_n ____ _ Title: Senior Vice President 5/13/08 5.Q.d Packet Pg. 430 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) EXHIBIT "D" CONVERSION NOTICE Bank of America, N.A. Loan Servicing, California 101 South Marengo Ave, 51h floor Pasadena, CA 91101 Attention: Linda Escamilla Or Telephone No.: (626) 666-8456 Facsimile No.: (626) 666-2241 Michael Towman Telephone No.: (626) 666-2238 Facsimile No.: (626) 666-2241 With a copy to: Paul F. Sutherlen Telephone No.: (213) 621-7134 Facsimile No.: (213) 621-3606/3607 Re: Credit Agreement dated as of May 1, 2008 between the Redevelopment Agency of the City of Santa Monica and Bank of America, N.A. Ladies and Gentlemen: The undersigned, Redevelopment Agency of the City of Santa Monica (the "Borrower''), refers to the Credit Agreement, dated as of May 1, 2008 (as amended from time to time, the "Agreement"; the terms defined therein being used herein as therein defined), between the undersigned and Bank of America, N.A. ("Bank"), hereby gives you notice, pursuant to Section 1.5(b)(ii)(C) of the Agreement, that the undersigned desires to convert a portion of the outstanding principal of the Line of Credit to a Term Loan as follows: (i) The principal amount to be converted is $. ________ _ [[insert an amount equal to at least $5,000, 000]. (ii) The Conversion Date is , 20_jif any of the principal to be converted then bears interest at the LIBOR Rate or the IBOR, the Conversion Date must be the last day of the Interest Period(s) applicable to such Portion(s) or the principal must bear interest at the Prime Rate on the Conversion Date]. Interest Rates: (a) Borrower hereby requests a quote from the Bank for a tax-exempt interest rate and agrees that if such interest rate is accepted, Borrower will deliver an opinion of bond counsel in form and substance satisfactory to Bank regarding the tax-exempt status of the Term Loan that bears interest at the tax-exempt rate. -35-5/13/08 5.Q.d Packet Pg. 431 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) OR {b) The Advance shall initially bear interest calculated by reference to [insert one of the following rates: Prime Rate, IBOR or LIB OR Rate]. (i) If the Advance is to bear interest initially calculated by reference to the LIBOR Rate, the initial Interest Period is months [insert one of the following: one week, one month, three months or six months. (ii) If the Advance is to bear interest initially calculated by reference to the IBOR Rate, the initial Interest Period is months [insert one of the following: one day, one week, one month, three months or six months. The Borrower hereby certifies that the following statements are true on the date hereof, and will be true as of the Conversion Date: {A) All representations and warranties contained in the Agreement and the other related documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date hereof or the Conversion Date, as the case may be; and (B) No Event of Default or event which with the passage of time, the giving of notice, or both, would constitute an Event of Default has occurred and is continuing. Very truly yours, REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA By: _________ _ Name: Title: ---------- By: Nam __ e_: ____________ _ Title: ______________ _ -36-5/13/08 5.Q.d Packet Pg. 432 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) EXHIBIT"E" LIST OF DUE DILIGENCE MATERIALS PROVIDED TO BANK -37-5/13/08 5.Q.d Packet Pg. 433 Attachment: SA Attachment D - Credit Agreement (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) Attachment E April 26, 2022 Letter from Bank of America 5.Q.e Packet Pg. 434 Attachment: SA Attachment E - BofA Letter [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS)) April 26, 2022 Gigi Decavalles Director of Finance City of Santa Monica E-Mail: gigi.decavalles@santamonica.gov Dear Ms. Decavalles: In light of the LIBOR transition, Bank of America, N.A. is providing this courtesy letter to the City of Santa Monica (the “City”) relating to the Credit Agreement dated May 1, 2008 between the Redevelopment Agency of the City of Santa Monica and Bank of America, N.A. and the related Conversion Notice dated January 30, 2012 (collectively, the “Credit Agreement”). Certain USD LIBOR tenors and many global IBORs ceased publication on 12/31/2021, with the remaining USD LIBOR tenors to cease publication after June 30, 2023, including the 6-month USD LIBOR tenor currently utilized to set interest payments in the Credit Agreement. As such, per Sections 1.4(d) and 2.4 of the Credit Agreement, effective July 1, 2023 and thereafter, interest on the City’s term loan will reset at Fed Funds + 1.70%, following the USD LIBOR cessation expected on June 30, 2023. This discussion reflects Bank of America’s understanding of benchmark reform matters as of today. The content is subject to change without notice, and Bank of America accepts no obligation to update or correct the information and accepts no liability for the impact of reliance on, or any decisions made based upon, the information, views or opinion expressed herein. Clients should consult their financial, legal, accounting, tax or other professional advisors on matters relating to the possible implications of a change or discontinuation of LIBOR or benchmark interest rates. Please do not hesitate to reach out, should you have any questions or concerns. Thank you, Stephanie Apsey Vice President Public Sector Banking Bank of America, N.A. ––––––– cc: David Carr Susan Cola Melissa Lindley City of Santa Monica david.carr@santamonica.gov City of Santa Monica susan.cola@santamonica.gov City of Santa Monica melissa.lindley@santamonica.gov Louis M. Choi Wes Hough Public Resources Advisory Group LChoi@pragadvisors.com Public Resources Advisory Group WHough@pragadvisors.com 5.Q.e Packet Pg. 435 Attachment: SA Attachment E - BofA Letter [Revision 1] (5331 : Approval of Annual Recognized Obligation Payment Schedule (ROPS))