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HomeMy Public PortalAbout02 February 9, 2005 Commission• RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEETING AGENDA TIME: 9:00 a.m. RECORDS DATE: Wednesday, February 9, 2005 LOCATION: BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside Commissioners Chairman: Robin Lowe 1' Vice Chairman: Marion Ashley 2nd Vice Chairman: Terry Henderson Bob Buster, County of Riverside John F. Tavaglione, County of Riverside Jeff Stone, County of Riverside Roy Wilson, County of Riverside Marion Ashley, County of Riverside Barbara Hanna / Art Welch, City of Banning Roger Berg / Jeff Fox, City of Beaumont Robert Crain / George Thomas, City of Blythe Shenna Moqeet / John Chlebnik / Jon Winningham, City of Calimesa Mary Craton / John Zaitz, City of Canyon Lake Gregory S. Pettis / Paul Marchand, City of Cathedral City Juan M. DeLara / Richard Macknicki, City of Coachella Jeff Miller / Karen Spiegel, City of Corona Matt Weyuker / Henry "Hank" Hohenstein, City of Desert Hot Springs Robin Lowe / Lori Van Arsdale, City of Hemet Percy L. Byrd / Robert A. Bernheimer / Mary Roche, City of Indian Wells Michael H. Wilson / Gene Gilbert, City of Indio Terry Henderson / Don Adolph, City of La Quinta Bob Magee / Robert L. Schiffner, City of Lake Elsinore Frank West / Charles White, City of Moreno Valley Kelly Seyarto / Jack van Haaster, City of Murrieta Frank Hall / Harvey Sullivan, City of Norco Dick Kelly / Robert Spiegel, City of Palm Desert Ronald Oden / Ginny Foat, City of Palm Springs Daryl Busch / Mark Yarbrough, City of Perris Ron Meepos / Harvey Gerber, City of Rancho Mirage Ameal Moore / Steve Adams, City of Riverside Chris Buydos / Jim Conner, City of San Jacinto Ron Roberts / Jeff Comerchero, City of Temecula Anne Mayer, Director, Caltrans District 8, Governor's Appointee Eric Haley, Executive Director Hideo Sugita, Deputy Executive Director Comments are welcomed by the Commission. If you wish to provide comments to the Commission, please complete and submit a Testimony Card to the Clerk of the Commission. I -3(0 00 RIVERSIDE COUNTY TRANSPORTA TION COMMISSION www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:00 a.m. Wednesday, February 9, 2005 BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if special assistance is needed to participate in a Commission meeting, please contact the Clerk of the Commission at (951) 787-7141. Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be made to provide accessibility at the meeting. 1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC COMMENTS (Public Comment Section is for items not listed on the agenda. Comments relating to an item listed on the agenda will be taken at the time that the item is discussed.) 4. APPROVAL OF MINUTES - January 12, 2005 5. ADDITIONS/REVISIONS (The Commission may add an item to the Agenda after making a finding that there is a need to take immediate action on the item and that the item came to the attention of the Commission subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Commission. If there are less than 2/3 of the Commission members present, adding an item to the agenda requires a unanimous vote. Added items will be placed for discussion at the end of the agenda.) 6. CONSENT CALENDAR - All matters on the Consent Calendar will be approved in a single motion unless a Commissioner(s) requests separate action on specific item(s). Items pulled from the Consent Calendar will be placed for discussion at the end of the agenda. • • Riverside County Transportation Commission Agenda February 9, 2005 Page 2 • 6A. ADOPTION OF RESOLUTION NO. 05-002, "RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION AUTHORIZING EMPLOYMENT OF NONVOTING BOARD MEMBERS IMMEDIA TEL Y FOLL O WING END OF SERVICE ON COMMISSION" Page 1 Overview This item is for the Commission to adopt Resolution No. 05-002, "Resolution of the Riverside County Transportation Commission Authorizing Employment of Nonvoting Board Members Immediately Following End of Service on Commission". 6B. MID -YEAR BUDGET ADJUSTMENTS O vervie w This item is for the Commission to approve an increase of: Page 3 1) $589,300 in Measure "A" Coachella Valley Specialized Transit appropriations for transit operations; 2) $3,993,216 in Transportation Uniform Mitigation Fee (TUMF) appropriations for right -of way acquisition; 3) $85,500 in administration appropriations for furniture, office equipment, and leasehold improvements; and, 4) $20,000 in administration appropriations for additional liability insurance. 6C. QUARTERLY FINANCIAL STATEMENTS Page 6 Overview This item is for the Commission to receive and file the Quarterly Financial Statements for the six-month period ended December 31, 2004. • Riverside County Transportation Commission Agenda February 9, 2005 Page 3 6D. MID -YEAR REVENUE PROJECTIONS Overview This item is for the Commission to approve the: Page 10 1) Mid -Year Revenue Projections; 2) Budget adjustments to reflect the revised Measure "A" revenues of $10,400,000 and expenditures of $5,141,000; and, 3) Budget adjustments to reflect the revised Local Transportation Fund (LTF) Planning revenues of $210,480 and expenditures of $210,480. 6E. FISCAL YEAR 2005-2006 LOCAL TRANSPORTATION FUND AND MEASURE "A" REVENUE PROJECTIONS Overview This item is for the Commission to approve the: Page 15 1) Projections of the Local Transportation Fund apportionment for the Western Riverside County, Coachella Valley, and Palo Verde Valley areas; and, 2) Projections for Measure "A" and the related allocations. 6F. SINGLE SIGNATURE AUTHORITY REPORT Page 20 Overview This item is for the Commission to receive and file the Single Signature Authority Report for the second quarter ended December 31, 2004. • • • • • Riverside County Transportation Commission Agenda February 9, 2005 Page 4 6G. 2005 STATE TRANSPORTATION IMPROVEMENT PROGRAM (STIP) INTRA-COUNTY FORMULA ADJUSTMENT Page 22 Overview This item is for the Commission to approve the STIP Intra-County Formula adjustment per the STIP Intra-County Memorandum of Understanding. 6H. CALTRANS COOPERATIVE AGREEMENT NO. 8-1259 (RCTC AGREEMENT NO. 05-31-538) FOR RIGHT-OF-WAY ACQUISITION FOR THE GREEN RIVER DRIVE INTERCHANGE BRIDGE ON STATE ROUTE 91 Page 24 Overview This item is for the Commission to authorize the Executive Director, pursuant to Legal Counsel review, to execute Cooperative Agreement No. 8-1259 (RCTC Agreement No. 05-31-538) with the Department of Transportation to perform right-of-way acquisition for the Green River Drive Interchange Bridge on State Route 91. 61. MODEL TRANSPORTATION UNIFORM MITIGATION FEE (TUMF) REGIONAL ARTERIAL FUNDING AGREEMENT Overview This item is for the Commission to: Page 31 1) Approve a Model TUMF Regional Arterial Funding Agreement between the Commission and local jurisdictions; and, 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute said agreements as they are finalized over time provided that they do not contain any substantive changes to the model agreement terms and conditions. Riverside County Transportation Commission Agenda February 9, 2005 Page 5 6J. MEASURE "A" SPECIALIZED TRANSIT TAXI DEMONSTRATION PROGRAM Overview This item is for the Commission to: Page 56 1) Approve up to $400,000 in Western Riverside County Measure "A" Specialized Transit funds for continuation of the taxi demonstration program; 2) Approve Memorandum of Understanding (MOU) No. M24-010, Amendment No. 2 to MOU No. M23-010, with the Riverside Transit Agency (RTA) to cover the cost of the taxi services; 3) Approve Agreement No. 05-26-539, Amendment No. 2 to Agreement No. 05-26-506, with Diversified Paratransit, Inc. (DPI) for oversight and administration of the program; 4) Authorize the Chairman, pursuant to Legal Counsel review, to execute the MOU and agreement on behalf of the Commission; and, 5) Direct staff to work with RTA and DPI to develop a draft taxi coordination/transition plan (for submission to RCTC staff by April 11, 2005) to be effective with the start of FY 2005-06. 6K. RIVERSIDE TRANSIT AGENCY'S REQUEST FOR LOCAL TRANSPORTATION FUNDS PENDING RECEIPT OF FISCAL YEAR 2004-2005 FTA SECTION 5307 FUNDS Page 59 Overview This item is for the Commission to allocate $5,830,000 in Local Transportation Funds (LTF) to the Riverside Transit Agency (RTA) pending receipt of FY 2004-05 Federal Transit Administration (FTA) Section 5307 funds. • • • Riverside County Transportation Commission Agenda February 9, 2005 Page 6 6L. AWARD AGREEMENT NO. 05-45-537 FOR DIGITAL UPGRADE CONTRACT TO COMARCO WIRELESS TECHNOLOGIES Overview This item is for the Commission to: Page 61 1) Award Agreement No. 05-45-537 to Comarco Wireless Technologies to upgrade the call box system to digital technology in the amount of $ 1,302,400; and, 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission. 6M. COMMUTER RAIL PROGRAM UPDATE Page 64 Overview This item is for the Commission to receive and file the Commuter Rail Program Update as an information item. 6N. STATE AND FEDERAL LEGISLATIVE UPDATE Overview This item is for the Commission to receive and file the State and Federal Legislative Update as an information item. Page 83 Riverside County Transportation Commission Agenda February 9, 2005 Page 7 7. ESTABLISHMENT OF COMMERCIAL PAPER PROGRAM FOR THE NEW MEASURE "A" AND ADOPTION OF RESOLUTION NO. 05-001, "RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION AUTHORIZING THE ISSUANCE AND SALE OF COMMERCIAL PAPER NOTES" Page 84 Overview This item is for the Commission to: 1) Receive and file the overview presentation regarding the commercial paper program for the new Measure "A"; 2) Adopt Resolution No. 05-001, "Resolution of the Riverside County Transportation Commission Authorizing the Issuance and Sale of Commercial Paper Notes"; 3) Approve the draft Indenture between the Riverside County Transportation Commission and U.S. Bank Trust National Association, as Trustee, and authorize the Executive Director to execute the final Indenture; 4) Approve the draft Offering Memorandum for the issuance of $ 185,000,000 in commercial paper notes and authorize the Executive Director to approve the issuance of the final Offering Memorandum; 5) Approve the draft Commercial Paper Dealer Agreement between the Riverside County Transportation Commission and Lehman Brothers, as CP Dealer, and authorize the Executive Director to execute the final Dealer Agreement; 6) Approve the draft Commercial Paper Dealer Agreement between the Riverside County Transportation Commission and Banc of America Securities LLC , as CP Dealer, and authorize the Executive Director to execute the final Dealer Agreement; 7) Approve the draft Issuing and Paying Agent Agreement between the Riverside County Transportation Commission and U.S. Bank Trust National Association, as Issuing and Paying Agent, and authorize the Executive Director to execute the final Issuing and Paying Agent Agreement; and, 8) Approve the draft Reimbursement Agreement by and between the Riverside County Transportation Commission and Bank of America, N.A. for a direct draw letter of credit relating to $ 185,000,000 in Commercial Paper Notes and authorize the Executive Director to execute the final Reimbursement Agreement. • • • • • Riverside County Transportation Commission Agenda February 9, 2005 Page 8 8. PRESENTATION — MARCH REUSE AND VAN BUREN INTERCHANGE Overview This item is for the Commission to receive a presentation from Phil Rizzo on the March Reuse and the Van Buren Interchange project. 9. PRESENTATION — DEMONSTRATION OF COMMUTESMART.INFO WEBSITE Page 325 Overview This item is for the Commission to receive and file the demonstration of a new website, CommuteSmart.info, recently launched to serve commuters and employers throughout a five county region. 10. ITEMS PULLED FROM CONSENT CALENDAR AGENDA 11. COMMISSIONERS / EXECUTIVE DIRECTOR'S REPORT Overview This item provides the opportunity for the Commissioners and the Executive Director to report on attended and upcoming meetings/conferences and issues related to Commission activities, including a proposal to change the Commission's March meeting date. 12. CLOSED SESSION ITEM A. CONFERENCE WITH LEGAL COUNSEL: EXISTING LITIGATION Pursuant to Government Code Section 54956.9 (a) B. CONFERENCE WITH LEGAL COUNSEL: ANTICIPATED LITIGATION Significant exposure to litigation to subdivision (b) of Section 54956.9 Number of potential cases: 1 Initiation of litigation pursuant to subdivision (c) of Section 54956.9 Number of potential cases: 1 Riverside County Transportation Commission Agenda February 9, 2005 Page 9 C. CONFERENCE WITH REAL PROPERTY NEGOTIATOR Pursuant to Government Code Section 54956.8 Negotiating Parties: RCTC — Executive Director or Designee Property Owner: Riverside Clark APNs: 413-140-028 and 029, 473-200-002 and 003, 473-200-005 through 008, 473-220-020 and 473-220-024 through 026. 13. ADJOURNMENT The next Commission meeting is scheduled to be held at 9:00 a.m., Wednesday, March 9, 2005, Board Room, County of Riverside Administrative Center, 4080 Lemon Street, Riverside. • DETACH AND SUBMIT TO THE CLERK OF THE BOARD Speakers shall co mplete the fo llowing: PUBLIC COMMENTS: p AGENDA ITEM NO. : {AS LISTED ON THE AG ENDA) SUBJECT OF PUBLIC COMMENTS: NAME: (' ap f.,'}Z• ADDRESS: SUBJECT OF AGENDA ITEM: DATE: . 77/A/ TEL. NO. : REPRESENTING: Street City Zip Code BUSINESS ADDRESS: RCTCInk 10103 Name of Gro up TEL. NO. : FQ_,b¢,vuok..( 9 , 2co5 rnJw-ing • AGENDA ITEM 4 • Minutes • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION MINUTES Wednesday, January 12, 2005 1. CALL TO ORDER The Riverside County Transportation Commission was called to order by Chair Robin Lowe at 9:07 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, Riverside, California, 92501. 2. ROLL CALL Commissioners/Alternates Present Commissioners Absent • • Marion Ashley Roger Berg Daryl Busch Bob Buster Mary Craton Juan DeLara Frank Hall Terry Henderson Hank Hohenstein Dick Kelly Robin Lowe Bob Magee Anne Mayer Jeff Miller Ronald Oden Gregory S. Pettis Ron Roberts Kelly Seyarto John F. Tavaglione Jeff Stone Art Welch Frank West Michael H. Wilson Roy Wilson Jon Winningham Chris Buydos Percy Byrd Robert Crain Ron Meepos Ameal Moore Riverside County Transportation Commission Minutes January 12, 2005 Page 2 At this time, Commissioner John Tavaglione led the Commission in a flag salute. 3. PUBLIC COMMENTS A. R.A. "Barney" Barnett, resident of Highgrove, suggested the Commission consider a Metrolink stop in Highgrove to meet the needs of the local community. He also expressed support of a rail under or over crossing on Main Street in Highgrove. B. Chair Lowe presented Commissioner Roy Wilson, Past Chairman of the Commission, with a plaque to commemorate his tenure as Chairman, expressing appreciation for his distinguished and devoted service and recognizing his outstanding leadership. Commissioner Roy Wilson expressed his pleasure and honor serving the Commission's Chair. Eric Haley, Executive Director, extended appreciation on behalf of staff for Commissioner Wilson's statesmanship and leadership over the past year. 4. APPROVAL OF MINUTES M/S/C (Miller/M. Wilson) to approve of the December 8, 2004 minutes as submitted. 5. ADDITIONS/REVISIONS Eric Haley, Executive Director, noted revisions to the following agenda item: • Agenda Item 8, "Award of Agreement No. 05-25-535 for the Western Riverside County Commuter Rail Feasibility Study". 6. CONSENT CALENDAR There were no items pulled from the Consent Calendar. M/S/C (Tavaglione/Hohenstein) to approve the following Consent Calendar items: • • • • Riverside County Transportation Commission Minutes January 12, 2005 Page 3 6A. STATUS REPORT ON THE COMMERCIAL PAPER PROGRAM Receive and file the status report on the Commercial Paper program. 6B. INTERFUND LOAN ACTIVITY REPORT Receive and file the Interfund Loan Activity Report for the month ended November 30, 2004 and December 31, 2004. 6C. CONTRACTS COST AND SCHEDULE REPORT Receive and file the Quarterly Contracts Cost and Schedule Report the months of September, October, and November 2004. 6D. REQUEST FOR PROPOSAL TO CONDUCT PRELIMINARY ENGINEERING AND PREPARE A PROJECT REPORT AND ENVIRONMENTAL DOCUMENT FOR THE I-215/SR 74/"G" STREET INTERCHANGE IN PERRIS 1) Direct staff to prepare and advertise a Request for Proposal (RFP) for consultant services to provide preliminary engineering services and preparation of a Caltrans Project Report (PR) and NEPA/CEQA Environmental Document (ED) for the development of the I-215/SR 74/"G" Street Interchange in Perris; 2) Form a selection committee, comprised of representatives from RCTC, Caltrans, and City of Perris staffs, to review, evaluate, and rank all RFP's received; and, 3) Authorize staff to negotiate a contract with the top ranked consultant and bring back a recommendation to the Commission for contract award. 6E. APPROVE AGREEMENT NO. 05-31-532 WITH CH2M HILL FOR THE PRELIMINARY ENGINEERING SERVICES FOR THE PREPARATION OF A PROJECT REPORT AND ENVIRONMENTAL DOCUMENT FOR THE STATE ROUTE 79 REALIGNMENT PROJECT 1) Approve Agreement No. 05-31-532, Amendment No. 1 to Agreement No. 02-31-043, with CH2M Hill based on the negotiated project scope, schedule, and cost for a not to exceed amount of $ 10,937,728 for the realignment of SR 79 in the vicinity of the Cities of San Jacinto and Hemet for the development of a Project Report and Environmental Document; Riverside County Transportation Commission Minutes January 12, 2005 Page 4 2) Authorize the Executive Director, pursuant to Legal Counsel review, to execute amendments for non cardinal changes to the scope of work up to a maximum contingency amount of $2,220,926 for a not to exceed total contract amount of $15,153,151 (includes original contract value of $1,994,497); 3) Authorize up to $13,158,654 of Western County Regional TUMF funds to the contract recognizing the Commission's commitment to deliver a future six lane facility on the realigned portion of State Route 79 for $132,000,000 of future Measure "A" and $83,293,000 of TUMF, inclusive of this action; and, 4) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission. 6F. APPROVE AGREEMENT NO. 05-31-533 WITH SC ENGINEERING TO PROVIDE ADDITIONAL ENGINEERING AND ENVIRONMENTAL STUDIES FOR PROPOSED IMPROVEMENTS TO STATE ROUTE 91 FROM MARY STREET TO 7T" STREET 1) Approve Agreement No. 05-31-533, Amendment No. 1 to Agreement No. 02-31-009, with SC Engineering to extend the limits of the SR 91 HOV widening project to finalize the Project Approval and Environmental Document (PA/ED) based on the negotiated project scope, schedule, and cost for a total amount of $306,216; and, 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission. 6G. AWARD AGREEMENT NO. 05-33-523 FOR THE CONSTRUCTION OF THE RIVERSIDE -DOWNTOWN METROLINK STATION PARKING LOT IMPROVEMENT 1) Award Agreement No. 05-33-523 to Hillcrest Contracting, Inc. for the construction of the Riverside -Downtown Metrolink Station parking lot improvement for the amount of $388,445.50 plus a contingency amount of $50,000, to cover unknown potential change orders encountered during construction, for a total not to exceed amount of $438,445.50; 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission; and, 3) Amend the Commuter Rail capital budget by $188,500 and Commuter Rail Short Range Transit Plan to reflect changes. • • • Riverside County Transportation Commission Minutes January 12, 2005 Page 5 6H. RESERVE POLICY FOR LOCAL TRANSPORTATION FUNDS 1) Establish a transit operators' reserve policy of 10% for Coachella Valley and Palo Verde Valley apportionment areas; 2) Establish a transit operators' reserve policy of 10% for each of the transit operators (public bus and commuter rail) in the western Riverside County apportionment area; and, 3) Revise the Funding Disbursement Policy so that 100% of the operating funds are allocated and disbursed with two -twelfths of the 100% disbursed the first month and the remainder (ten - twelfths) disbursed over the next eleven months. 61. CITIZENS ADVISORY COMMITTEE/SOCIAL SERVICES TRANSPORTATION ADVISORY COMMITTEE Approve the membership roster for the Citizens Advisory Committee/Social Services Transportation Advisory Committee (CAC/SSTAC) effective January 2005. 6J. AWARD OF AGREEMENT NO. 05-45-531 FOR CALL BOX SUPPORT SERVICES 1) Award Agreement No. 05-45-531 to Bernard J. Arroyo for Call Box Consultant services for a one-year period from January 3, 2005 through December 31, 2005 with four (4) one-year options; and, 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission. 6K. AMENDMENT TO FISCAL YEAR 2005 MEASURE "A" CAPITAL IMPROVEMENT PLAN FOR LOCAL STREETS AND ROADS FOR THE CITY OF PALM SPRINGS Approve the amendment to the FY 2005 Measure "A" Capital Improvement Plan for Local Streets and Roads for the City of Palm Springs. • Riverside County Transportation Commission Minutes January 12, 2005 Page 6 6L. APPROVE FUNDING AGREEMENT NO. 05-25-536 WITH LACMTA, OCTA, SANBAG, VCTC, SCAG, AND CALTRANS FOR THE MULTI - COUNTY GOODS MOVEMENT ACTION PLAN 1) Approve Agreement No. 05-25-536 with LACMTA, OCTA, SANBAG, VCTC, SCAG, and Caltrans for the Multi -County Goods Movement Action Plan in the amount of $125,000; 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission; 3) Allocate an additional $125,000 of re -allocated LTF funds and increase the FY 2004-05 rail operating budget to accommodate the allocation; and, 4) Amend the FY 2004-05 Commuter Rail Short Range Transit Plan to reflect these changes. 6M. COMMUTER RAIL PROGRAM UPDATE Receive and file the Commuter Rail Program Update as an information item. 6N. RCTC POLICY PROHIBITING EMPLOYMENT OF EX -OFFICIO, NON- VOTING BOARD MEMBERS Amend the RCTC Personnel Policies and Procedures to allow the ex - officio member of RCTC to be eligible for employment following resignation from the Commission. At this time, Commissioners Marion Ashley, Jeff Stone, John Tavaglione, and Roy Wilson stated that they will abstain from participation in the discussion and action on Agenda Item No. 7 because of possible conflict of interest. 7. AWARD OF AGREEMENT NO. 05-31-530 TO JACOBS CIVIL INC. TO PROVIDE PHASE II OF ENGINEERING SERVICES RELATED TO THE MID COUNTY PARKWAY PROJECT FOR THE PREPARATION OF A PROJECT REPORT AND ENVIRONMENTAL DOCUMENT Cathy Bechtel, Director of Transportation Planning and Policy Development, provided an overview of the Mid County Parkway project background, scope, and funding. Commissioner Bob Buster said that an evaluation of potential litigation needs to be done for this project. He also asked about assurances for fair and competitive costs and performance. • • Riverside County Transportation Commission Minutes January 12, 2005 Page 7 Cathy Bechtel responded that with regard to potential litigation, staff is working very closely with the federal agencies due to the complexity of the project and the preserves involved. She then explained that the project cost was compared on a per mile basis and is in line with other projects. Phased notices to proceed are issued to complete each task. Commissioner Buster requested that a monthly status report be provided to the Commission on this project. Cathy Bechtel confirmed the request. Commissioner Buster then asked if the County could improve the facility any quicker than the Commission and Cathy Bechtel responded that the County would also be required to follow the same environmental process, noting that this project has been designated for environmental streamlining and is therefore receiving additional cooperation from the federal agencies for necessary approvals. Commissioner Buster requested a written statement from the Commission, Jacobs Engineering, and County staff reflecting the response for the benefit of the constituents. At Commissioner Terry Henderson's request, Cathy Bechtel explained the requirement for developing and completing a project report and environmental document. M/S/C (Henderson/Seyarto) to: 1) Approve Agreement No. 05-31-530, Agreement No. 04-31-018, with Jacobs Civil Inc. for the Mid County Parkway Project to develop a Project Report and Environmental Document based on the negotiated project scope, schedule and cost that is attached to this agenda item for a not to exceed amount of $22,025,928; 2) Authorize the Executive Director, pursuant to Legal Counsel review, to execute amendments for non cardinal changes to the scope of work up to a maximum contingency amount of $4,108,456 for a not to exceed total contract amount of $26,134,384; Riverside County Transportation Commission Minutes January 12, 2005 Page 8 3) Authorize the commitment of $8,303,000 of Western County Regional/CETAP TUMF funds and $17,831,384 of commercial paper funds to the contract, and authorize interfund borrowing, if necessary, to support the project's short term cash flow needs; and, 4) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission. Abstain: Ashley, Stone, Tavaglione, R. Wilson. 8. AWARD OF AGREEMENT NO. 05-25-535 FOR THE WESTERN RIVERSIDE COUNTY COMMUTER RAIL FEASIBILITY STUDY Stephanie Wiggins, Rail Department Manager, reviewed the purpose of the feasibility study and the selection of R.L. Banks & Associates. Henry Tappata, representing the Banning Chamber of Commerce, commented against allocation of funds for a feasibility study, believing that RCTC staff is capable of conducting such a study. He suggested the funds be used for identifying a station location in the Pass area. The City of Banning and the Morongo Indian Reservation are interested in supporting the construction of a rail and park and ride station and bus terminal in the area. At Commissioner Buster's request, Stephanie Wiggins explained that the results of the study will allow the Commission to include the extensions as consideration for larger strategic efforts. It is also necessary to determine the feasibility of the service alternatives to prepare financial plans. It is anticipated with the service alternatives being studied that a technical advisory committee and stakeholder committee will be formed. Commissioner Roger Berg expressed his concurrence to conduct the feasibility study. Commissioner Ron Roberts expressed a need for improved communication with San Diego County to develop transportation alternatives for southwestern Riverside County. At Commissioner Henderson's request, Stephanie Wiggins explained the results that will be attained by the feasibility study will include data and information related to capital and operating costs to determine feasibility of extending Metrolink service and how it relates to plans for increased freight movement and passenger service along the service alternatives. It is anticipated that with this information, population and job growth statistics, • • • • • • Riverside County Transportation Commission Minutes January 12, 2005 Page 9 and land use and development plans, staff will be able to accurately represent to the Commission whether extension of service is feasible and at what level it should be planned for and integrated. Commissioner Michael Wilson expressed his concurrence to conduct the feasibility study and the need to extend rail service to the Coachella Valley. Eric Haley noted that in addition to information related to capital and operating costs, the feasibility study should also provide the basis for sequencing and priorities. Also, rail service to the Pass area and Coachella Valley is dependent on resolution of freight conflicts. Over the next year, the key issue for the Commission to address will be to determine the proper split for the first ten years of Measure "A" funds between intercity/intercounty bus and rail service support systems and extension of rail lines. M/S/C (Busch/M. Wilson) to: 1) Award Agreement No. 05-25-535 to R.L. Banks & Associates for the Western Riverside County Commuter Rail Feasibility Study for a not to exceed amount of $150,000; 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission; 3) Allocate an additional $150,000 of re -allocated LTF funds and increase the FY 2004-05 rail operating budget to accommodate the allocation; and, 4) Amend the FY 2004-05 Commuter Rail Short Range Transit Plan to reflect these changes. 9. STATE AND FEDERAL LEGISLATIVE STATUS REPORT John Standiford, Director of Public Information, updated the Commission on State budget highlighting the continued suspension of Proposition 42 and ACA 4, which proposes to delete the provision authorizing the Governor and the Legislature to suspend Proposition 42. He also provided a brief overview of a new program "Go California", status of the federal transportation bill, the Commission's FY 2005-06 state and federal legislative program and transportation project federal funding list. Commissioner Buster asked for the status of the Bay Bridge cost share issue. John Standiford responded that while a new design has reduced the cost of the bridge, funding has not been determined. Riverside County Transportation Commission Minutes January 12, 2005 Page 10 M/S/C (R. Wilson/Buster) to: 1) Approve the Proposed 2005-2006 State and Federal Legislative Programs; 2) Adopt the following bill positions and associated policy positions: SUPPORT — ACA 4 (Plescia, R -San Diego); and, 3) Receive and file the State and Federal Legislative Status Report as an information item. 10. ITEMS PULLED FROM CONSENT CALENDAR AGENDA There were no items pulled from the Consent Calendar. 11. COMMISSIONERS/EXECUTIVE DIRECTOR'S REPORT A. Chair Lowe announced: • The formation of the Communications and Legislation Ad Hoc Committee comprised of Commissioners John Tavaglione, Bob Buster, Roy Wilson, Terry Henderson, Jeff Miller, Art Welch, and herself. • The March Commission meeting has been rescheduled to 9:00 a.m., Friday, March 18tH • The appointment of Bob Magee to the Mid County Parkway Ad Hoc Committee. B. Eric Haley reported: • TUMF revenues have reached $ 106 million as of January 3`d • Sales tax revenues are up 14%. • A Letter of Credit was received from the Bank of America for $ 185 million. C. Commissioner Dick Kelly inquired about developing a program for the beautification of soundwalls, noting the soundwalls on SR 60. Eric Haley responded that while this is at the Commission's discretion to develop such a program, he noted that there is not a dedicated source of funding for retrofit soundwalls. Commissioner Anne Mayer indicated that Caltrans has done a significant work in this area. • • • Riverside County Transportation Commission Minutes January 12, 2005 Page 11 At Commissioner Kelly's request, Chair Lowe asked staff to coordinate a presentation by Caltrans at a future meeting accompanied by an action plan for soundwall beautification. 12. CLOSED SESSION ITEMS There were no items to be discussed under Closed Session. 13. ADJOURNMENT There being no further business for consideration by the Riverside County Transportation Commission, the meeting adjourned at 10:32 a.m. The next Commission meeting is scheduled to be held at 9:00 a.m., on Friday, March 18, 2005, at the County of Riverside Administrative Center, 4080 Lemon Street, Board Room, Riverside, California, 92501. Respectfully submitted, QJ 0-1_— N at y Kopenhaver Clerk of the Commission AGENDA ITEM 6A • • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Naty Kopenhaver, Director of Administrative Services THROUGH: Eric Haley, Executive Director SUBJECT: Adoption of Resolution No. 05-002, "Resolution of the Riverside County Transportation Commission Authorizing Employment of Nonvoting Board Members Immediately Following End of Service on Commission" STAFF RECOMMENDATION: This item is for the Commission to adopt Resolution No. 05-002, "Resolution of the Riverside County Transportation Commission Authorizing Employment of Nonvoting Board Members Immediately Following End of Service on Commission". BACKGROUND INFORMATION: At its January 12, 2005 meeting, the Commission approved a proposal to amend the RCTC Personnel Policies and Procedures to allow the Governor's appointee, ex -officio member of RCTC, to be eligible for employment following resignation from the Commission. The Governor's representative on the Commission is non- voting, is ineligible to serve on the Executive Committee, does not serve on policy committees, and does not receive per diem, mileage, and expense reimbursement. Prohibiting the members of the Commission Board from employment until after one year of separation is an RCTC policy and a local discretionary policy. A review of major transportation organizations in the region, including the San Diego Association of Governments (SANDAG), indicate that they have hired individuals who have served as the Governor's ex -officio, non -voting representative. This action is to encourage the best available candidates to seek employment at RCTC. Resolution No. 05-002 will formalize the Commission's action on January 12, 2005 and amend its Personnel Policies and Procedures. Attachment: Resolution No. 05-002 Agenda Item 6A • • RESOLUTION NO. 05-002 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION AUTHORIZING EMPLOYMENT OF NONVOTING BOARD MEMBERS IMMEDIATELY FOLLOWING END OF SERVICE ON COMMISSION WHEREAS, the Riverside County Transportation Commission (the "Commission") currently prohibits members of the Commission from employment with the Commission while serving on the Commission and for one year after their service on the Commission ends; and WHEREAS, the Commission desires to clarify that this prohibition does not apply to nonvoting members of the commission appointed by the Governor, thereby, allowing such members to be employed by the commission immediately after leaving his or her position as a Commissioner. BE IT RESOLVED by the Riverside County Transportation Commission, that: A. Section 3.10(2) of the Commission's Personnel Policies and Procedures Manual is hereby amended to read as follows: "Members of the Commission Board are ineligible for employment with the Commission while serving on the Commission and for one year after their service on the Commission ends. This section shall not apply to a nonvoting board member appointed by the Governor after his or her service on the Commission ends." APPROVED AND ADOPTED this 9th day of February, 2005. ATTEST: By: C. Robin Lowe, Chair Riverside County Transportation Commission • By: Naty Kopenhaver, Clerk of the Board Riverside County Transportation Commission Agenda Item 6A AGENDA ITEM 6B • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Michele Cisneros, Accounting Manager Theresia Trevino, Chief Financial Officer THROUGH: Eric Haley, Executive Director SUBJECT: Mid -Year Budget Adjustments BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to approve an increase of: 1) $589,300 in Measure "A" Coachella Valley Specialized Transit appropriations for transit operations; 2) $3,993,216 in Transportation Uniform Mitigation Fee (TUMF) appropriations for right -of way acquisition; 3) $85,500 in administration appropriations for furniture, office equipment, and leasehold improvements; and, 4) $20,000 in administration appropriations for additional liability insurance. BACKGROUND INFORMATION: Staff performed a review of expenditures for the six months ended December 31, 2004 and an estimate of expenditures for the remaining six months of the fiscal year ending June 30, 2005. As a result of the review, the following mid -year budget adjustments are proposed. Adjustment 1 - Specialized Transit During the development and approval of the FY 2004-05 budget, the Short Range Transit Plan (SRTP) for Sunline Transit Agency was in the draft stages. At that time, it was estimated that $2,713,000 in Measure "A" funds was available for the Coachella Valley Specialized Transit Program. However, the approved SRTP identified a funding commitment of $3,302,300. *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6B Accordingly, staff is requesting a budget adjustment to increase the Coachella Valley Specialized Transit Operating budget by $589,300. Sufficient Measure "A" Coachella Valley —Specialized Transit fund balance is available to accommodate this budget adjustment. Adjustment 2 - TUMF On September 8, 2004 the Commission approved the purchase of the QBH property for the Mid -County Parkway Project (Project). The purchase price of this property was $2,006,906. Additionally, on October 13, 2004, the Commission approved the purchase of five parcels for the Project. The five parcels were purchased from the County of Riverside (County) for $986,310. During the development of the 2004-2005 budget, staff was not aware of the specific property needs for the Project. Staff anticipates additional costs for right - of way acquisition relating to the Project. The estimated cost for additional right -of way is $1,000,000. Staff is requesting a budget adjustment to increase the TUMF right -of way acquisition budget by $3,993,216 for actual and estimated right -of way acquisitions. Sufficient TUMF fund balance is available to accommodate this budget adjustment. Adjustment 3 - Administration (Furniture, Office Equipment, and Leasehold Improvements) On January 12, 2005 the Executive Committee approved the recruitment of three new positions: a Deputy Executive Director of Programming and Administration and two Staff Analysts. In order to accommodate the three new staff positions, the Commission must add and/or redesign office systems and construct additional office space. Additionally, an additional computer server is required to accommodate the increased staff and software programs, as the capacity of existing servers is substantially utilized. Staff estimates the cost for the work stations and server at $47,000. The cost to construct additional office space has been quoted by the County at $38,500. Adequate General Fund fund balance exists to accommodate this budget adjustment of $85,500. • Agenda Item 6B 4 • • • Adjustment 4 — Administration (Liability Insurance) The Commission recently purchased property for the Project (Adjustment 2) and anticipates additional right -of way for the Project in the near future. As a result, staff will be working with consultants to perform various studies on the property. Additionally, staff will be working with consultants to perform studies at the Perris multimodal facility. Additional liability insurance will be required to cover any potential liability as a result of studies being performed by outside consultants on the various properties owned by the Commission. Staff is requesting a budget adjustment of $20,000 to cover the additional liability insurance costs. Adequate General Fund balance exists to accommodate this budget adjustment. Financial Information In Fiscal Year Budget: N Year: FY2004-05 Amount: $4,688,016 Measure "A" Coachella Valley $589,300 Source of Funds: TUMF $3,993,216 Budget Y Measure "A"/LTF Administration $85,500 Adjustment: Measure "A"/LTF Administration $20,000 252-26-86101 $589,300 Measure "A" CV Specialized Transit 210-72-81401 P2302 $1,971,608 TUMF Regional Arterial 210-73-81401 P2302 $2,021,608 TUMF CETAP GLA No.: S-12-73130 $2,000 Measure "A"/LTF Administration S-12-90101 $5,000 Measure "A"/LTF Administration S-12-90301 $40,000 Measure "A"/LTF Administration S-12-90501 $38,500 Measure "A"/LTF Administration S-12-73401 $20,000 Measure "A"/LTF Administration Fiscal Procedures Approved: \1414,,d2.4,14,24 Date: 01/24/2005 Agenda Item 6B 5 AGENDA ITEM 6C • CORRECTION TO AGENDA ITEM 6C PAGES 6A AND 9A WERE INADVERTENTLY LEFT OUT OF THE AGENDA PACKET PAGES 6A AND 9A WERE INADVERTENTLY LEFT OUT OF THE AGENDA PACKET RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Michele Cisneros, Accounting Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Quarterly Financial Statements BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to receive and file the Quarterly Financial Statements for the six-month period ended December 31, 2004. BACKGROUND INFORMATION: During the last six months of the fiscal year, staff has monitored the revenues and expenditures of the Commission. The attached financial statements present the revenues and expenditures for the first six months of the fiscal year. Period closing accrual adjustments are not included for revenues earned but not billed and expenditures incurred for goods and services received but not yet invoiced, as such adjustments are normally made during year end closing activities. The operating statement shows the sales tax revenues for the second quarter at 35% of the budget. This is a result of the Governmental Accounting Standards Board (GASB) Statement No. 33. GASB 33 requires sales tax revenue to be accrued for the period in which it is collected at the point of sale. The State Board of Equalization collects the Measure "A" funds and remits them to the Commission after the reporting period for the businesses. This creates a two -month lag in the receipt of revenues by the Commission and related disbursement of local streets and roads allocations. Accordingly, these financial statements reflect the Measure "A" sales tax revenues and related local streets and roads expenditures related to sales tax collections through October 2004. On a cash basis, the Measure "A" and Local Transportation Fund (LTF) sales tax revenues are 15% and 13% higher respectively, than the same period six month period last fiscal year. *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6C 6 Federal, state and local government reimbursements and other revenues are on a reimbursement basis, and the Commission will receive these revenues as the project activities occur and are invoiced usually quarterly to the respective agencies. Transportation Uniform Mitigation Fee (TUMF) revenues are remitted to the Commission by Western Riverside Council of Governments (WRCOG) the 10t" of each month. During the second quarter, WRCOG remitted approximately $5,960,000 to the Commission. The Administration expenditure categories are in line as budgeted. General administrative expenditures are higher due to a one-time payment in July for the Commission's general business insurance for FY 2004-05 and the one-time payment in November for the maintenance contract on the Commission's financial software. Intergovernmental distributions are higher than budgeted due to the annual LTF administrative payments made to the Coachella Valley Association of Governments (CVAG) and WRCOG during the first two quarters of the fiscal year. Debt service interest expenditures are made in December and June, while principal payments are made in June. The Programs/Projects expenditure categories are in line overall with the expectations of the budget with the exception of TUMF right-of-way. In November 2004 the Commission purchased various parcels of property for the Mid -County Parkway Project approximating $2,993,000. Staff is seeking a budget adjustment in a separate agenda item. Listed below are the capital related projects that have significant variances and their status: Highway Engineering/Right-of-Way • State Route 91 Van Buren Interchange ($7,600,000) — The City of Riverside is the lead agency and has experienced delays related to environmental issues. The environmental process is expected to be completed by June 2005 with right-of-way acquisition commencing in FY 2005-06. • State Route 74 from 1-15 to 7th Street ($2,000,000) — Expenditures related to right-of-way acquisitions are offset by reimbursements of condemnation deposits from Caltrans upon final settlement of purchases. An accounting change for such reimbursements was made at the beginning of the fiscal Agenda Item 6C 6A year to properly account for actual right-of-way costs. Such reimbursements were previously reported as revenues. • Project invoices related to work performed during all or a portion of the second quarter for highway engineering and right-of-way have not been received from consultants and other agencies. Highway Construction • State Route 86 ($188,400) — The traffic signal project has not been awarded by the County. Contract award and commencement of construction is expected by June 2005. • State Route 111 ($1,411,600) — The widening projects in the city of La Quinta was recently awarded. Additionally, per an agreement with CVAG related to the completed project in Rancho Mirage, a payment of $1,000,000 will be made in June 2005. • 1-15 Galena Interchange ($2,700,000) — The project award has not been made by the County. County is awaiting final approvals from Caltrans. Award and construction are expected to commence by June 2005. Rail Engineering/Right-of-Way • North Main Corona Station Parking Structure ($1,050,000) — The CEQA environmental document was recently approved, and the NEPA environmental document is being prepared for approval by the Federal Transit Administration. Final design will not start until all appropriate approvals have been granted and funding is in place. Funding required to complete the project is currently not available. • Riverside Downtown Parking Lot ($275,000) — Start of final design was delayed until the fourth quarter of FY 2004/05 due to the requirements for preparation and submittal of the engineering/planning application to the City of Riverside for approval. • Perris Valley Line ($5,807,000) — The preliminary engineering contract was awarded in November 2004. Additionally, appraisals are currently being performed for right-of-way, and property acquisition is anticipated in the third quarter of the fiscal year. Agenda Item 6C 7 Rail Construction • Riverside Downtown Parking Lot ($1,200,000) - Delays in the final design due to the requirements for preparation and submittal of the engineering/planning application to the City has pushed the construction into the first quarter of FY 2005-06. TUMF Engineering/Right-of-Way • Mid -County Parkway Project ($4,030,000) - During the development of the FY 2004/05 budget, staff was not aware of the specific property needs for the project. During this fiscal year, opportunities to purchase available property for the project were presented and approved by the Commission. Staff has requested a mid -year budget adjustment in a separate agenda item. Attachment: Quarterly Financial Statements - December 31, 2004 Agenda Item 6C 8 RIVERSIDE COUNTY TRANSPORTATION COMMISSION QUARTERLY BUDGET VS ACTUAL 2ND QUARTER FOR SIX MONTHS ENDED 12/31/04 DESCRIPTION REMAINING PERCENT BUDGET ACTUAL BALANCE UTILIZATION Revenues Sales tax $ 122,479,100 $ 43,082,938 $ (79,396,162) 35% Federal, state & local government reimbursements 21,954,100 5,403,330 (16,550,770) 25% Transportation Uniform Mitigation Fee (TUMF) 28,000,000 11,218,490 (16,781,510) 40% Other revenues 4,727,000 1,287,482 (3,439,518) 27% Interest 3,030,700 1,219,842 (1,810,858) 40% Total revenues 180,190,900 62,212,082 (117,978,818) 35% Expenditures Administration Salaries & benefits 1,358,400 577,810 780,590 43% General legal services 108,500 37,261 71,239 34% Professional services 1,022,500 375,150 647,350 37% Office lease & utilities 363,000 183,481 179,519 51% General administrative expenses 880,700 558,224 322,476 63% Total administration 3,733,100 1,731,926 2,001,173 46% Programs/projects Salaries 8, benefits 1,816,700 826,522 990,178 45% General legal services 1,050,000 516,595 533,405 49% Professional services 1,636,620 493,582 1,143,038 30% General projects 1,997,000 550,078 1,446,922 28% Highway engineering 2,985,000 236,156 2,748,844 8% Highway construction 35,104,388 12,777,236 22,327,152 36% Highway right of way 9,853,000 303,812 9,549,188 3% Rail engineering 1,880,950 114,217 1,766,733 6% Rail construction 2,280,000 237,093 2,042,907 10% Rail right of way 4,857,000 - 4,857,000 0% TUMF engineering 4,000,000 1,710,415 2,289,585 43% TUMF construction - 500 (500) 0% TUMF right of way 30,000 2,993,216 (2,963,216) 9977% Local streets & roads 42,545,000 15,534,537 27,010,463 37% Regional arterial 9,000,000 3,913,923 5,086,077 43% Special studies 1,963,800 81,682 1,882,118 4% FSP towing 1,483,600 609,045 874,555 41% Commuter assistance 2,522,540 923,219 1,599,321 37% Property management 97,200 29,565 67,635 30% Motorist assistance 1,464,500 183,729 1,280,771 13% Rail operations & maintenance 4,736,800 2,177,715 2,559,085 46% STA distributions 2,848;628 502,418 2,346,210 18% Specialized transit 5,295,900 2,336,382 2,959,518 44% Planning & programming services 53,400 24,560 28,840 46% Total programs/projects 139,502,026 47,076,197 92,425,829 34% Intergovernmental distribution Capital outlay 788,400 685,236 103,164 87% 363,000 68,473 294,527 19% Debt service Principal 27,200,000 - 27,200,000 0% Interest 8,286,000 4,142,765 4,143,235 50% Total debt service 35,486,000 4,142,765 31,343,235 12% Total expenditures 179,872,526 53,704,597 126,167,929 30% Excess of revenues over (under) expenditures 318,374 8,507,485 (8,189,111) 2672% Other financing sources/uses Operating transfer in 35,766,300 17,260,246 18,506,054 48% Operating transfer out (35,766,300) (17,260,246) (18,506,054) 48% Bond proceeds - - 0% Payment to escrow agent - 0% Cost of issuance 0% Total financing sources/uses - - 0% Net change in fund balances 318,374 8,507,485 (8,189,111) 2672% Fund balance July 1, 2004 177,506,700 202,781,114 25,274,414 114% Fund balance December 31, 2004 $ 177,825,074 $ 211,288,599 $ 33,463,525 119% 9 RIVE RSIDE C OUNTY TR ANSPORT ATION CO MMISSI ON QUARTERLY ACTUALS BY FUND 2ND QUARTER FOR SIX MONTHS ENDED 12/31/04 ME ASURE"A" P AL O STATE TRANSPORTATION UNIFORM WESTERN GENERAL FSP/ WESTERN VERDE COACHELLA TRANSIT MITIGATION FEE COUNTY DEBT CO MBINED DESCRIPTION FUND SAFE COUNTY V ALLEY VALLEY ASSISTANCE TU MF CONSTRUCTI ON SERVICE TOT AL Revenues Sales tax $ 3,487,319 $ - $ 29,479,972 $ 310 ,880 $ 9,804,767 $ - $ - $ - $ $ 43,082,938 Federal, state & local govemment reimbursements 102,970 909,739 4,390,621 - - - - 5,403,330 Transpo rtation Un iform Mitigation F ee (TUMF) - - - - 11,218,490 - 11,218,490 Othe r revenues 277,160 3,104 2,010 - 173,361 831,847 - - - 1,287,482 Inte rest 19,442 14,308 348,787 228 13,325 13,168 123,241 9,003 678,340 1,219,842 Total revenues 3,886,891 927,151 34,221,390 311,108 9,991 ,453 845,015 11,341,731 9,003 678,340 62,212,082 Expenditures Administration Sa laries & ben efits 550,775 27,035 - - 577,810 G eneral legal services 35,461 1 ,800 - - - - 37,261 Professional service s 357,015 18,135 - - - - - 375,150 O ffice le ase & utilities 174,619 8,862 - - - - 183,481 General administrative e xpe nses 531,279 26,945 - - - 558,224 Total administra tion 1,649,149 82,777 - - - - - 1,731,926 Programs/projects Salaries & benefits General legal serv ices Profes sional se rvices General projects Highway e ngine ering Highway construction Highway right of way Rail engineering Rail constru ctio n Rail right of way TUMF engineering TUM F con struction TUMF right of way Local stre ets & roa ds Regional arterial Spe cial studies FSP towing Commu ter assistance Property management M oto rist ass ista nce Rail operations & maintenance STA distribu tio ns Specialized transit Planning & programming se rvic es Total programs/projects Inte rgove rnmental distribution Capital outlay Debt service Principal Interest Total debt se rv ice Total expenditures Excess revenues o ve r (unde r) ex penditu res 440,815 49,687 260,855 7,575 67,590 - 826,522 117,988 1,774 336,694 1,115 - 59,024 516,595 141,463 14 ,986 299,453 180 37,500 493,582 - - 495,752 8,453 45,873 - 550,078 - 236,156 - - - - 236,156 - 12,777,236 - - 12,777,236 303,812 - - 303,812 114,217 - - 114,217 237,093 - - 237,093 1,710,415 - 1,710,415 500 500 - - 2,993,216 2,993,216 - 11,791,989 310,880 3,431,868 - 15.534,537 - - 3,913,923 - 3,913,923 69,712 - 11,970 81,682 609,045 - - - - 609,045 - - 923,219 - - - 923,219 29,565 - - 29 ,565 - 183,729 - 183,729 2,177,715 - - - 2,177 ,715 502,418 502,418 685,254 1 ,651,128 - - 2,336,382 24,560 - - 24,560 3,001,818 859,221 28,473,700 310,880 9,013,862 502,598 4,914,118 47,076,197 685,236 - - - - 685,236 19,124 970 48,379 68,473 5,355,327 942,968 28,522,079 310,880 9,013,862 502,598 (1,468,436) (15,817) 5,699,311 228 977,591 342,417 Other financing sources/uses O pe rating tran sfer in 254,100 - - - Operating transfer out - 254,100 13,056,656 3,949,490 Bo nd pro ceeds - - Payment to escrow agent C ost of issuance - Total financing sources/uses - 13,056,656 3,949,490 - (17,006,146) Net change In fund balances (1,468,436) (15,817) (7,357,345) 228 (2,971,899) 342,417 6,427,613 9,003 13,541,721 8,507,485 Fund balance July 1, 2004 7,352,174 3,559,966 115,098,845 47,727 7,253,630 2,566,624 34,439 ,947 2,208,202 30,253,999 202,781,114 Fund balance December 31, 2004 $ 5,883, 738 $ 3,544,149 $ 107,741,500 $ 47,955 $ 4,281,731 $ 2,909,041 $ 40,867,560 $ 2.217,205 $ 43,795,720 $ 211,288,599 4,914,118 6,427,613 4,142,765 4,142,765 4,142,765 4,142,765 4,142,765 53,704,597 9,003 (3,464,425) 8,507,485 17,006,146 17,260,246 17,260,246 V,/USERSNGENDA12005102 Fe bn ,ary6C. A1. MC.2n d Qtr Financials Attachment.As RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Michele Cisneros, Accounting Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Quarterly Financial Statements BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to receive and file the Quarterly Financial Statements for the six-month period ended December 31, 2004. BACKGROUND INFORMATION: During the last six months of the fiscal year, staff has monitored the revenues and expenditures of the Commission. The attached financial statements present the revenues and expenditures for the first six months of the fiscal year. Period closing accrual adjustments are not included for revenues earned but not billed and expenditures incurred for goods and services received but not yet invoiced, as such adjustments are normally made during year end closing activities. The operating statement shows the sales tax revenues for the second quarter at 35% of the budget. This is a result of the Governmental Accounting Standards Board (GASB) Statement No. 33. GASB 33 requires sales tax revenue to be accrued for the period in which it is collected at the point of sale. The State Board of Equalization collects the Measure "A" funds and remits them to the Commission after the reporting period for the businesses. This creates a two -month lag in the receipt of revenues by the Commission and related disbursement of local streets and roads allocations. Accordingly, these financial statements reflect the Measure "A" sales tax revenues and related local streets and roads expenditures related to sales tax collections through October 2004. On a cash basis, the Measure "A" and Local Transportation Fund (LTF) sales tax revenues are 15% and 13% higher respectively, than the same period six month period last fiscal year. *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6C 6 year to properly account for actual right-of-way costs. Such reimbursements were previously reported as revenues. • Project invoices related to work performed during all or a portion of the second quarter for highway engineering and right-of-way have not been received from consultants and other agencies. Highway Construction • State Route 86 ($188,400) - The traffic signal project has not been awarded by the County. Contract award and commencement of construction is expected by June 2005. • State Route 1 1 1 ($1,411,600) - The widening projects in the city of La Quinta was recently awarded. Additionally, per an agreement with CVAG related to the completed project in Rancho Mirage, a payment of $1,000,000 will be made in June 2005. • 1-15 Galena Interchange ($2,700,000) - The project award has not been made by the County. County is awaiting final approvals from Caltrans. Award and construction are expected to commence by June 2005. Rail Engineering/Right-of-Way • North Main Corona Station Parking Structure ($1,050,000) - The CEQA environmental document was recently approved, and the NEPA environmental document is being prepared for approval by the Federal Transit Administration. Final design will not start until all appropriate approvals have been granted and funding is in place. Funding required to complete the project is currently not available. • Riverside Downtown Parking Lot ($275,000) - Start of final design was delayed until the fourth quarter of FY 2004/05 due to the requirements for preparation and submittal of the engineering/planning application to the City of Riverside for approval. • Perris Valley Line ($5,807,000) - The preliminary engineering contract was awarded in November 2004. Additionally, appraisals are currently being performed for right-of-way, and property acquisition is anticipated in the third quarter of the fiscal year. • • Agenda Item 6C 7 • • • Rail Construction • Riverside Downtown Parking Lot ($1,200,000) — Delays in the final design due to the requirements for preparation and submittal of the engineering/planning application to the City has pushed the construction into the first quarter of FY 2005-06. TUMF Engineering/Right-of-Way • Mid -County Parkway Project ($4,030,000) — During the development of the FY 2004/05 budget, staff was not aware of the specific property needs for the project. During this fiscal year, opportunities to purchase available property for the project were presented and approved by the Commission. Staff has requested a mid -year budget adjustment in a separate agenda item. Attachment: Quarterly Financial Statements — December 31, 2004 Agenda Item 6C RIVERSIDE COUNTY TRANSPORTATION COMMISSION QUARTERLY BUDGET VS ACTUAL 2ND QUARTER FOR SIX MONTHS ENDED 12/31/04 DESCRIPTION REMAINING PERCENT BUDGET ACTUAL BALANCE UTILIZATION Revenues Sales tax $ 122,479,100 $ 43,082,938 $ (79,396,162) 35% Federal, state & local govemment reimbursements 21,954,100 5,403,330 (16,550,770) 25% Transportation Uniform Mitigation Fee (TUMF) 28,000,000 11,218,490 (16,781,510) 40% Other revenues 4,727,000 1,287,482 (3,439,518) 27% Interest 3,030,700 1,219,842 (1,810,858) 40% Total revenues 180,190,900 62,212,082 (117,978,818) 35% Expenditures Administration Salaries & benefits 1,358,400 577,810 780,590 43% General legal services 108,500 37,261 71,239 34% Professional services 1,022,500 375,150 647,350 37% Office lease & utilities 363,000 183,481 179,519 51% General administrative expenses 880,700 558,224 322,476 63% Total administration 3,733,100 1,731,926 2,001,173 46% Programs/projects Salaries & benefits 1,816,700 826,522 990,178 45% General legal services 1,050,000 516,595 533,405 49% Professional services 1,636,620 493,582 1,143,038 30% General projects 1,997,000 550,078 1,446,922 28% Highway engineering 2,985,000 236,156 2,748,844 8% Highway construction 35,104,388 12,777,236 22,327,152 36% Highway right of way 9,853,000 303,812 9,549,188 3% Rail engineering 1,880,950 114,217 1,766,733 6% Rail construction 2,280,000 237,093 2,042,907 10% Rail right of way 4,857,000 4,857,000 0% TUMF engineering 4,000,000 1,710,415 2,289,585 43% TUMF construction - 500 (500) 0% TUMF right of way 30,000 2,993,216 (2,963,216) 9977% Local streets & roads 42,545,000 15,534,537 27,010,463 37% Regional arterial 9,000,000 3,913,923 5,086,077 43% Special studies 1,963,800 81,682 1,882,118 4% FSP towing 1,483,600 609,045 874,555 41% Commuter assistance 2,522,540 923,219 1,599,321 37% Property management 97,200 29,565 67,635 30% Motorist assistance 1,464,500 183,729 1,280,771 13% Rail operations & maintenance 4,736,800 2,177,715 2,559,085 46% STA distributions 2,848,628 502,418 2,346,210 18% Specialized transit 5,295,900 2,336,382 2,959,518 44% Planning & programming services 53,400 24,560 28,840 46% Total programs/projects 139,502,026 47,076,197 92,425,829 34% Intergovernmental distribution Capital outlay 788,400 685,236 103,164 87% 363,000 68,473 294,527 19% Debt service Principal 27,200,000 27,200,000 Interest 8,286,000 4,142,765 4,143,235 Total debt service 35,486,000 4,142,765 31,343,235 Total expenditures 179,872,526 53,704,597 126,167,929 Excess of revenues over (under) expenditures 318,374 8,507,485 (8,189,111) 0% 50% 12% 30% 2672% Other financing sources/uses Operating transfer in 35,766,300 17,260,246 18,506,054 48% Operating transfer out (35,766,300) (17,260,246) (18,506,054) 48% Bond proceeds - - 0% Payment to escrow agent - - 0% Cost of issuance - - 0% Total financing sources/uses - 0% Net change in fund balances 318,374 8,507,485 (8,189,111) 2672% Fund balance July 1, 2004 177,506,700 202,781,114 25,274,414 114% Fund balance December 31, 2004 $ 177,825,074 $ 211,288,599 $ 33,463,525 119% 9 AGENDA ITEM 6D • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Theresia Trevino, Chief Financial Officer THROUGH: Eric Haley, Executive Director SUBJECT: Mid -Year Revenue Projections BUDGET AND IMPLEMENTA TION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Committee to approve the: 1) Mid -Year Revenue Projections; 2) Budget adjustments to reflect the revised Measure "A" revenues of $10,400,000 and expenditures of $5,141,000; and, 3) Budget adjustments to reflect the revised Local Transportation Fund (LTF) Planning revenues of $210,480 and expenditures of $210,480. BACKGROUND INFORMATION: Prior to the beginning of the fiscal year, staff made projections regarding the revenue received from Measure "A" and LTF funds for budget and apportionment purposes, respectively. Staff has tracked these revenues on a monthly basis. Current trends indicate that Measure "A" and LTF receipts are about 14.6% and 12.7% higher, respectively, for the six months ended December 31, 2004 compared to the same period last year. For FY 2003-2004, Measure "A" and LTF receipts were about 14.4% and 13.8% higher, respectively, than the prior year. The Inland Empire's local economy and in particular, Riverside County has continued to perform better than the rest of the State of California. The local economy's strength appears to be attributable to continued growth in population, taxable retail sales and home sales. The local economists are cautious and continue to project moderate growth in Riverside County. Based on the economic data and an emphasis on the trends of sales tax receipts for the last six months and FY 2003-2004, staff is recommending that the Commission increase the current year revenue projections as follows: *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6D 10 FY 2004-05 Revenue Projections Original (January 2004) Revised for FY 2004-05 Budget Revised for Mid -Year Adjustment Increase from Budget Measure "A" LTF $109,078,000 $53,744,000 $1 15,000,000 $53,744,000 $125,400,000 $60,760,000 $10,400,000 $7,016,000 For reference purposes, audited Measure "A" and LTF revenues for FY 2003-04 were $120,564,890 and $58,421,527, respectively. The FY 2004-05 mid -year projections reflect a 4% increase over the FY 2003-04 actual revenues. The increase in Measure "A" revenues has a direct effect on the distributions to the geographic areas and related programs, especially local streets and roads (LSR). Accordingly, in addition to the revenue budget adjustments, budget adjustments are required for the local streets and roads aggregating $4,087,000 as well as regional arterial expenditures of $1,054,000 related to Measure "A." The LTF audit was completed and financial statements were issued in November 2004. Staff has revised the original projections to include the carryover that is now available to the local governments and transit agencies. The revised projections include a budget adjustment to RCTC Planning, for $210,480, which is entitled to 3% of revenues. The increase for SB 821 bicycle and pedestrian projects, for $245,917, which is entitled to 2% of the available balance, does not require a budget adjustment as such expenditures are made from the Local Transportation Fund, which is an unbudgeted fund of the Commission. Upon Commission approval of this item, staff will provide this updated information to the necessary local governments and transit agencies. Financial Information In Fiscal Year Budget: N Year: FY 2004-05 Amount: $210,480 sales tax $210,480 planning Source of Funds: Local Transportation Fund Budget Ad ustment: Y GLA No.: 106-65-40101 $210,480 106-65-86205 $210,480 LTF Planning sales tax revenues LTF Planning expenditures Fiscal Procedures Approved: \i/u,v4av`t Date: 01/24/2005 • Agenda Item 6D 11 • • • Financial Information In Fiscal Year Budget: N Year: FY 2004-05 Amount: $10,400,000 sales tax $5,141,000 LSR & regional arterials Source of Funds: Measure "A" Budget Ad ustment: Y GLA No.: Revenues: 227-71-40100 $3,067,000 221-33-40100 1,265,000 222-31-40100 2,952,000 225-26-40100 192,000 226-41-40100 192,000 254-71-40100 921,000 252-26-40100 263,000 253-31-40100 395,000 255-72-40100 1,054,000 233-71-40100 99,000 Western County LSR sales tax Western County Rail sales tax Western County Highway sales tax Western County Special Transit sales tax Western County Commuter Assistance sales tax Coachella Valley LSR sales tax Coachella Valley Special Transit sales tax Coachella Valley Highway sales tax Coachella Valley Regional Arterial sales tax Palo Verde Valley LSR sales tax Western County LSR Coachella Valley LSR Palo Verde Valley LSR Coachella Valley Regional Arterials $10,400,00 Appropriations: 227-71-86104 $3,067,000 254-71-86104 921,000 233-71-86104 99,000 255-72-86405 1,054,000 $5,141,000 Fiscal Procedures Approved: \lite,uo ` 14 Date: 01/24/2005 Attachment: FY 2004-05 Mid -Year Revenue Projections for Measure "A" and LTF Agenda Item 6D 12 • • • MEASURE "A" PROJECTION LESS: ADMINISTRATION TOTAL PROJECTION CITIES WESTERN COUNTY PORTION BANNING BEAUMONT CALIMESA CANYON LAKES CORONA HEMET LAKE ELSINORE MORENO VALLEY MURRIETA NORCO PERRIS RIVERSIDE SAN JACINTO TEMECULA RIVERSIDE COUNTY AREA TOTAL EASTERN COUNTY PORTION CATHEDRAL CITY COACHELLA DESERT HOT SPRINGS INDIAN WELLS INDIO LA QUINTA PALM SPRINGS PALM DESERT RANCHO MIRAGE RIVERSIDE COUNT) CVAG AREA TOTAL PALO VERDE PORTION BLYTHE RIVERSIDE COUNT) AREA TOTAL RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEASURE "A" DISTRIBUTION REVISED PROJECTION (12/29/04) FY 2004/2005 FY 2004/2005 Revised Projections $125,400,000 3,000,000 $122,400,000 udget Original 5,000,000: -- 109,078,000 3,000,000 3,000,000: 2, 000, 000 106.078, 000 Local Streets Commuter Special & Roads Highway Rail Assistance Transportation 40.00% 38.50% 16.50% 2.50% 2.50% $ 90,238,000 $ 36,095,000 $ 34,742,000 $ 14,889,000 $ 2,256,000 $ 2,256,000 $ 648,000 345,000 172,000 223,000 4,294,000 1,775,000 977,000 3,684,000 1,540, 000 824,000 1,042,000 8,144,000 588,000 2,823,000 9,015,000 $ 36,094,000 $ 34,742,000 $ 14,889,000 $ 2,256,000 $ 2,256,000 Local Streets Roads 35% $ 31,002,000 $ 10,851,000 $ 1,520,000 386,000 289,000 198,000 1,242,000 1,650,000 2,354,000 777,000 1,492,000 943,000 Regional Highway Arterial 15% 40% $ 4,650,000 $ 12,401,000 $ 10,851,000 $ 4,650,000 $ 12,401,000 Local Streets Roads 100% $ 1,160,000 $ 1,160,000 $ 929,000 231,000 $ 1,160,000 NOTES: Estimate for Planning Purposes, subject to change and rounding differences Special Transportation 10% $ 3,100,000 $ 3,100,000 • • • RIVERSIDE COUNTY LOCAL TRANSPORTATION FUND FY 2004/2005 APPORTIONMENT Budget FY 2004/2005 Projection Estimated Carryover (Unapportioned) $5,490,333 Est. Receipts 60,760,000 TOTAL 66,250,333 Less: Auditor 12,000 Less: RCTC Administration 675,000 Less: RCTC Planning (3% of revenues) 1,822,800 Less: SCAG Planning 106,300 BALANCE 63,634,233 Less: SB 821 (2% of balance) 1,272,685 BALANCE AVAILABLE $62,361,548 Revised Budget Original Population FY 2004/2005 FY 2004/2005 Population % of Total Apportionment Apportionment Increase Western 1,322,192 77.52% $48,344,856 $39,003,324 $9,341,532 Coachella Valley 355,287 20.83% 12,990,775 10,480,606 2,510,169 Palo Verde Valley 28,058 1.65% 1,025,918 827,683 198,235 1,705,537 100.00% $62,361,548 $50,311,612 $12,049,936 NOTES: Estimate for Planning Purposes, subject to change and rounding differences Population Source: California Department of Finance, Demographic Research Unit as of January 1, 2003 AGENDA ITEM 6E • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Theresia Trevino, Chief Financial Officer THROUGH: Eric Haley, Executive Director SUBJECT: Fiscal Year 2005-2006 Local Transportation Measure "A" Revenue Projections Fund and BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to approve the: 1) Projections of the Local Transportation Fund apportionment for the Western Riverside County, Coachella Valley, and Palo Verde Valley areas; and, 2) Projections for Measure "A" and the related allocations. BACKGROUND INFORMATION: Local Transportation Fund (LTF) The LTF projection consists of revenues generated from a quarter cent of the statewide sales tax. These LTF funds are principally used to fund transit requirements within the County. The Transportation Development Act legislation that created LTF requires the County Auditor Controller to annually estimate the amount of revenues expected to be generated from the sales tax. That estimate then becomes the basis for geographic apportionment and for claimant allocation through the Short Range Transit Plan process, which commences in January for the next fiscal year. While the County is the taxing authority and maintains custodial responsibility over the LTF revenues, the Commission by statute is charged with administration of the LTF funding process. The practice has therefore been for the Commission staff to develop the revenue estimate and then submit it to the County Auditor Controller for concurrence. Once the Commission and the County have agreed on a revenue *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6E 15 amount, staff prepares the statutorily required apportionment. Apportionment is the process that assigns revenues to the three major geographic areas (as defined by TDA law) within the County. They are Western Riverside, Coachella Valley, and Palo Verde Valley. The revenues are divided based on their respective populations. The apportionment occurs after off -the -top allocations for administration (distributed to the County, Commission and SCAG) and set asides for planning activities (3%) and bicycle and pedestrian projects (2%). Attached is the FY 2005-06 LTF apportionment based on a revenue estimate of $63,190,000. The County has reviewed the estimate and concurs with it. The estimate is based on a revised projection for FY 2004-05 of $60,760,000 plus an increase of 4%. After the deductions for administration of $828,300 and set - asides of $3,105,020, the amount available for apportionment is $59,256,680. (Since the Budget and Implementation Committee Meeting, additional information was received from SCAG regarding its administrative allocation which has been revised from $110,000 to $116,300. This resulted in a decrease in SB 821 of $126 and in the amount available for apportionment of $6,174.) The balance available for apportionment is as follows: Apportionment Area Amount Western County Coachella Valley Palo Verde Valley Total $ 46,010,020 12, 280,107 966,553 $ 59,256,680 In accordance with the Reserve Policy adopted by the Commission on January 12, 2005, a reserve of 10% for each apportionment area will be established and set aside for FY 2005-06 for unforeseen cost increases or other emergency. For the Western County apportionment area, a portion of the reserve will be allocated to each of the transit operators. For public bus transit operators, the allocation of the reserve is based on each operator's proportionate share of FY 2003-04 LTF operating allocations. Operators may access reserve funds by amending their Short Range Transit Plans through the established amendment process. Measure "A" The Measure "A" projection consists of revenues generated from the local half -cent sales tax approved by the voters in November 1988. These Measure "A" funds are principally used to fund highway, commuter rail, regional arterial, local streets and roads, commuter assistance and specialized transportation projects needs in the three geographic areas of Riverside County. • • • Agenda Item 6E 16 • • The Measure "A" projection for FY 2005-06 is $130,416,000. This projection will become the basis for the preparation of the FY 2005-06 budget. The budget process for FY 2005-06 typically commences in February of each year following the development of the Measure "A" revenue projections. Additionally, the amounts for the local streets and roads and regional arterial programs are usually provided to the local jurisdictions for planning purposes. Upon Commission approval of this item, staff will provide this information to the appropriate local jurisdictions. The attached Measure "A" estimate is based on a revised projection for FY 2004-05 of $125,400,000 plus an increase of 4%. After the deduction for administration of $3,090,000, the amount available for distribution to the three geographic areas is $127,326,000, which is allocated as follows: Geographic Area Amount Western County Coachella Valley Palo Verde Valley Total Attachments: 1) Local Transportation Fund FY 2005-06 Apportionment 2) Measure "A" Distribution Projection FY 2005-06 $ 94,797,000 31, 529,000 1,000,000 $ 127,326,000 Agenda Item 6E 17 • • RIVERSIDE COUNTY LOCAL TRANSPORTATION FUND FY 2005-2006 APPORTIONMENT Budget FY 2005/2006 Projection Estimated Carryover (Unapportioned) $0 Est. Receipts 63,190,000 TOTAL 63,190, 000 Less: Auditor 12,000 Less: RCTC Administration 700,000 Less: RCTC Planning (3% of revenues) 1,895,700 Less: SCAG Planning 116,300 BALANCE 60,466,000 Less: SB 821 (2% of balance) 1,209,320 BALANCE AVAILABLE BEFORE RESERVES 59,256,680 Less: 10% Transit Reserves 5,925,668 BALANCE AVAILABLE FOR APPORTIONMENT $53,331,012 APPORTIONMENT Budget Population FY 2005/2006 Rail Transit Population % of Total Apportionment 22% 78% Western 1,379,558 77.65% $41,409,018 $9,109,984 $32,299,034 Coachella Valley 368,205 20.72% 11,052,096 Palo Verde Valley 28,981 1.63% 869,898 1,776,744 100.00% $53,331,012 ALLOCATION OF TRANSIT RESERVES (in accordance with Reserve Policy adopted January 12, 2005) Western: Rail $1,012,220 Transit: RTA $3,077,942 Banning 87,965 Beaumont 94,598 Corona 128,543 Riverside 199,733 Subtotal Transit $3,588,782 3,588,782 Subtotal Western 4,601,002 Coachella Valley 1,228,011 Palo Verde Valley 96,655 Total Reserves $5,925,668 NOTES: Estimate for Planning Purposes, subject to change and rounding differences Population Source: California Department of Finance, Demographic Research Unit as of January 1, 2004 • • MEASURE "A" PROJECTION LESS: ADMINISTRATION TOTAL PROJECTION CITIES WESTERN COUNTY PORTION BANNING BEAUMONT CALIMESA CANYON LAKES CORONA HEMET LAKE ELSINORE MORENO VALLEY MURRIETA NORCO PERRIS RIVERSIDE SAN JACINTO TEMECULA RIVERSIDE COUNTY AREA TOTAL • EASTERN COUNTY PORTION CATHEDRAL CITY COACHELLA DESERT HOT SPRINGS INDIAN WELLS INDIO LA QUINTA PALM SPRINGS PALM DESERT RANCHO MIRAGE RIVERSIDE COUNTY CVAG AREA TOTAL PALO VERDE PORTION BLYTHE RIVERSIDE COUNTY AREA TOTAL RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEASURE "A" DISTRIBUTION PROJECTION FY 2005/2006 FY 2005/2006 Original Projection $130,416,000 3,090,000 $127,326,000 Local Streets & Roads 40.00% $ 94,797,000 $ 37,918,000 $ 680,000 407,000 174,000 227,000 4,539,000 1,820,000 1,018,000 3,857,000 2,055,000 835,000 1,132,000 8,269,000 610,000 2,989,000 9,306,000 Highway 38.50% $ 36,497,000 Rail 16.50% $ 15,642,000 Commuter Assistance 2.50% $ 2,370,000 Special Transportation 2.50% $ 2,370,000 $ 37,918,000 $ 36,497,000 $ 15,642,000 $ 2,370,000 $ 2,370,000 Local Streets Roads 35% $ 31,529,000 $ 11,035,000 $ 1,527,000 404,000 313,000 203,000 1,284,000 1,603,000 2,357,000 835,000 1,512,000 997,000 Regional Highway Arterial 15% 40% $ 4,729,000 $ 12,612,000 $ 11,035,000 $ 4,729,000 $ 12,612,000 Local Streets Roads 100% $ 1,000,000 $ 1,000,000 $ 798,000 202,000 $ 1,000,000 NOTES: Estimate for Planning Purposes, subject to change and rounding differences • Special Transportation 10% $ 3,153,000 $ 3,153,000 AGENDA ITEM 6F • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Theresia Trevino, Chief Financial Officer THROUGH: Eric Haley, Executive Director SUBJECT: Single Signature Authority Report BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to receive and file the Single Signature Authority Report for the second quarter ended December 31, 2004. BACKGROUND INFORMATION: The attached report details all professional services and administrative contracts that have been executed for the second quarter ended December 31, 2004 under the Single Signature Authority granted to the Executive Director by the Commission. The unused capacity at December 31, 2004 is $390,155. Attachment: Single Signature Authority Report as of December 31, 2004 *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6F 20 • • SINGLE SIGNATURE AUTHORITY AS OF DECEMBER 31, 2004 ORIGINAL REMAINING CONTRACT CONTRACT CONSULTANT DESCRIPTION OF SERVICES AMOUNT PAID AMOUNT AMOUNT AMOUNT AVAILABLE July 1, 2004 David Taussig and Associates TU MF program cash flow projection $500,000.00 37,500 .00 37,500 .00 • 0.00 Moore lacofano Galtsman,' Inc. WRCOG Consumer resear Com er Assistance up effort for', nmaintenance. 47,345..00 12,639.35 34,705.65 109,845.00 53,501 .03 56,343 .97 21,638 .32 AMOUNT USED AMOUNT REM AINING THROUGH December 31, 2004 Donna Polmounter Michele Cisneros Prepared by Reviewed by No te: Shaded area represents new contracts listed in the second quarter. $390,155 .00 21 AGENDA ITEM 6G • • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Shirley Medina, Program Manager THROUGH: Eric Haley, Executive Director SUBJECT; 2005 State Transportation Improvement Intra-County Formula Adjustment Program (STIP) PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to approve the STIP Intra-County Formula adjustment per the STIP Intra-County Memorandum of Understanding. BACKGROUND INFORMATION: In June 1998, a Memorandum of Understanding (MOU) among the Riverside County Transportation Commission (RCTC), Western Riverside Council of Governments (WRCOG), and the Coachella Valley Association of Governments (CVAG) was developed to establish a formula allocation by which RCTC would disperse State Transportation Improvement Program (STIP) Regional Improvement Program (RIP) funds as authorized by SB 45. It was agreed to disperse 75.8% of the RIP funds using the current apportionment of Measure "A" funds to these three subregions. In addition, the STIP Intra-County MOU requires that in February of every odd year the percentages shall be adjusted to remain consistent with subsequent adjustments made to the Measure "A" apportionments. The current and adjusted percentage splits are as follows: Subregion Current % Split 2005 Adjusted Split Western Riverside County 73.28% 74.45% Coachella Valley 25.81 % 24.76% Palo Verde Valley 00.91 % 00.79% The adjustment is reflective of additional growth in the Western Riverside County subregion in relation to the total growth countywide. Agenda Item 6G 22 State statute requires the 2006 STIP cycle to commence this summer with the release of the Draft STIP Fund Estimate by July 15, 2005 followed by the California Transportation Commission's (CTC) adoption of the Final STIP Fund Estimate by August 15, 2005. Regional agencies are then required to submit their program of projects to the CTC by December 15, 2005. Should the 2006 STIP Fund Estimate identify available Regional Improvement Program (RIP) funds for programming, the above formula will be applied to allocate these funds among the three subregions in Riverside County. • Agenda Item 6G 23 AGENDA ITEM 6H • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Shirley Medina, Program Manager THROUGH: Eric Haley, Executive Director SUBJECT: Caltrans Cooperative Agreement No. 8-1259 (RCTC Agreement No. 05-31-538) for Right -of -Way Acquisition for the Green River Drive Interchange Bridge on State Route 91 BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to authorize the Executive Director, pursuant to Legal Counsel review, to execute Cooperative Agreement No. 8-1259 (RCTC Agreement No. 05-31-538) with the Department of Transportation to perform right-of-way acquisition for the Green River Drive Interchange Bridge on State Route 91. BACKGROUND INFORMATION: The Department of Transportation (Caltrans) is ready to begin right-of-way acquisition for the Green River Drive Interchange on State Route 91. The 2004 STIP identifies $52,600 of Regional Improvement Program (RIP) funds programmed for right-of-way capital. Therefore, a cooperative agreement is required to authorize Caltrans to proceed with right-of-way acquisition using the programmed RIP funds. The acquisition of right-of-way is expected to be completed in six to twelve months. Upon completion, construction of the interchange improvement project will commence. As a reminder, at the May 2004 Commission retreat, the Commission approved the advancement of the Green River Drive Interchange project from fiscal year 2007-08 (as programmed in the STIP) to fiscal year 2005-06 by loaning up to $13.4 million of local Transportation Uniform Mitigation Program (TUMF) fees. This loan will be repaid, with interest, from anticipated Federal Surface Transportation Program funds. Attachment: Cooperative Agreement No. 05-31-538 *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6H 24 RCTC Agreement No. 05-31-538 • • • 08-Riv-91-KP 0.0/3.5 (PM 0.0/2.2) Replace Green River Drive OC In Riverside County near Corona from Orange County line 71/91 IC 08303 - EA 456610 District Agreement No. 08-1259 COOPERATIVE AGREEMENT THIS AGREEMENT, ENTERED INTO EFFECTIVE ON , is between the STATE OF CALIFORNIA, acting by and through its Department of Transportation, referred to herein as "STATE", and the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity, referred to herein as "COMMISSION" RECITALS 1. STATE and COMMISSION, pursuant to the Streets and Highways Code and Government Code Sections 114 and 130, are authorized to enter into a Cooperative Agreement for improvements to State highways within the County of Riverside. 2. STATE is authorized to do all acts necessary, convenient or proper for the construction or improvement of all highways under its jurisdiction, possession or control. 3. STATE and COMMISSION contemplate the purchase of Right of Way for the replacement of the Green River Drive Interchange (IC) bridge on State Highway 91 (SH-91) between the Orange County/Riverside County Line and the 91/71 Interchange in the County of Riverside, near Corona, referred to herein as "PROJECT". 4. STATE and COMMISSION mutually desire that STATE perform the Right of Way acquisition of the improvements as set forth in the forgoing Articles 2 and 3 for PROJECT. 5. COMMISSION is willing to pay 100% of the total actual Right of Way capital costs for PROJECT estimated to be $52,600, including acquisition, utility relocation, and condemnation, by direct billing. 6. STATE will provide Right of Way support at no cost to COMMISSION. District Agreement No. 8-1259 7. The parties hereto intend to define herein the terms and conditions under which Right of Way for PROJECT will be financed. SECTION I STATE AGREES 1. To perform all right of way activities including preparation of right of way maps and legal descriptions. Said right of way activities shall include but not limited to the following: a. Make fair market value appraisals and relocation valuation. b. Acquire property in STATE's name. c. Provide required relocation assistance payments and service. d. Open escrow, obtain title reports, and make arrangements to convey title and close escrow. e. Complete acquisition through condemnation. f. Provide all property management services. g. Administer excess land program. h. Identify and Locate utilities. 2. To perform all right of way support for acquisition activities of properties as may be necessary for the construction of PROJECT at no cost to COMMISSION. 3. To provide legal services in connection with eminent domain actions. All eminent domain proceedings are dependent upon the adoption of a resolution of public use and necessity by the California Transportation Commission (CTC). STATE shall pursue such actions according to current STATE procedures under the passage of a condemnation resolution by the CTC. 4. To certify legal and physical control of right of way acquired in accordance with applicable State and Federal laws and regulations, prior to advertisement for bids for construction of PROJECT. 5. To identify and locate all utility facilities within the area of PROJECT as part of the Right of Way responsibility for PROJECT. All utility facilities not relocated or removed in advance of construction shall be identified on the PS&E for PROJECT. 6. To identify and locate all high and low risk underground facilities within the area of PROJECT and to protect or otherwise provide for such facilities, all in accordance with STATE's "Policy on High and Low Risk Underground Facilities Within Highway Rights of Way". 7. If any existing public and/or private utility facilities conflict with the construction of PROJECT or violate STATE's encroachment policy, STATE shall make all necessary arrangements with the owners of such facilities for their protection, relocation, or removal in accordance with STATE's policy and procedure for those facilities located • 2 26 District Agreement No. 8-1259 • • • within the limits of work included in the improvement to the State highway and in accordance with local jurisdiction's policy for those facilities which are or will be located outside of the limits of the State highway. The total costs to PROJECT of such protection, relocation, or removal within the present or future State highway right of way shall be determined in accordance with STATE'S policies and procedures. 8. To establish separate PROJECT accounts to accumulate charges for all costs to be paid by COMMISSION pursuant to this Agreement. 9. To prepare and submit to COMMISSION a request for payment for the capital costs of right of way to be paid by COMMISSION as required for right of way acquisition as described in Section II, Article 1 as PROJECT proceeds. A request for payment should be on a mutually agreed to form. 10. To submit to COMMISSION each month a progress report that describes the work performed and completed during the reporting period. 11. Upon completion of the right of way activities for PROJECT and all work incidental thereto, to furnish COMMISSION with a detailed statement of the total actual Right of Way acquisition Capital costs for PROJECT. 12. To inform COMMISSION of any issues that could have the potential to increase the actual Right of Way cost for PROJECT beyond the authorized cost. 13. To retain, or cause to be retained for audit by COMMISSION auditors, for a period of three (3) years from date of processing the final detailed statement of PROJECT, all records and accounts relating to Right of Way for PROJECT, and make such materials available if requested by COMMISSION. SECTION II COMMISSION AGREES: 1. To pay one hundred percent (100%) of the total actual Right of Way capital costs for PROJECT, estimated to be $52,600, including acquisition, utility relocation, and condemnation. If it becomes apparent that the total cost for Right of Way for PROJECT will exceed the estimated amount programmed for expenditure, COMMISSION shall work promptly and in cooperation with STATE to determine necessary additional costs and the source of the additional funds. 2. To deposit into an escrow account, mutually agreeable to STATE, within 10 working days of receipt of request for payment, the capital cost of right of way to be paid by COMMISSION as required for right of way activities as described in Section I, Article 1 as PROJECT proceeds. District Agreement No. 8-1259 3. To provide STATE with a certificate of funding which shall be attached hereto and made a part of this Agreement. This certificate shall indicate that funds are available and budgeted for payment to STATE and shall be executed by the designated responsible fiscal officer of COMMISSION. 4. To be responsible, at no cost to STATE, for remediation of hazardous waste located inside and outside of existing State right of way that would impact PROJECT. SECTION III IT IS MUTUALLY AGREED: 1. All obligations of STATE under the terms of this Agreement are subject to the appropriation of resources by the Legislature and the allocation of resources by the California Transportation Commission. 2. Should any portion of PROJECT be financed with Federal funds or STATE funds, all applicable laws, rules and policies relating to the use of such funds shall apply notwithstanding other provisions of this Agreement. 3. (a). In the acquisition of right of way pursuant to this Agreement, STATE may acquire at COMMISSION's expense an entire parcel, or a greater portion of a parcel than that required for PROJECT, of real property to avoid payment of high severance damages. Any such acquired excess properties shall be disposed of in accordance with STATE's standard operating procedures. All net proceeds received from the disposal of said excess properties shall be transferred to COMMISSION. (b). Notwithstanding Paragraphs 3 (a) and 3 (b) of this section, the existing SR 91 state-owned right of way will be incorporated as necessary into the projects' right of way at no cost to COMMISSION. Existing state-owned right of way, which becomes excess as a result of PROJECT will, subject to California Transportation Commission (CTC) approval, be exchanged if appropriate for private -owned required property. (c). Excess existing State-owned property within PROJECT limits not exchanged and/or incorporated shall be, subject to CTC approval, conveyed or sold by the State with the transfer or credit of said property to STATE. The disposal of said excess property will be in accordance with the provisions of this Agreement. 4. Nothing in the provisions of this Agreement is intended to create duties or obligations to or rights in third parties not parties to this Agreement or affect the legal liability of either party to the Agreement by imposing any standard of care with respect to the construction of State highways different from the standard of care imposed by law. 5. Neither STATE nor any officer or employee thereof is responsible for any damage or liability occurring by reason of anything done or omitted to be done by COMMISSION under this Agreement. It is understood and agreed that, pursuant to Government Code section 895.4, COMMISSION shall fully defend, indemnify and save harmless the State of California, all officers and employees from all claims, suits or actions of every • • • 4 28 District Agreement No. 8-1259 • • • name, kind and description brought for or on account of injury (as defined in Government Code section 810.8) occurring by reason of anything done or omitted to be done by COMMISSION under or in connection with any work, COMMISSION or jurisdiction delegated to COMMISSION under this Agreement. 6. Neither COMMISSION nor any officer or employee thereof is responsible for any damage or liability occurring by reasons of anything done or omitted to be done by STATE under or in connection with any work, COMMISSION or jurisdiction delegated to STATE under this Agreement. It is understood and agreed that, pursuant to Government Code Section 895.4, STATE shall fully defend, indemnify and save harmless COMMISSION from all claims, suits or actions of every name, kind and description brought for or on account of injury (as defined in Government Code section 810.8) occurring by reason of anything done or omitted to be done by STATE under or in connection with any work, COMMISSION or jurisdiction delegated to STATE under this Agreement. 7. No alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by the parties hereto and no oral understanding or agreement not incorporated herein shall be binding on any of the parties hereto. 8. This Agreement shall terminate upon the completion of the R/W acquisition for PROJECT and reimbursement of funds from excess property sales to COMMISSION or on June 30, 2008, whichever is earlier in time. SIGNATURES ARE ON THE FOLLOWING PAGE. District Agreement No. 8-1259 STATE OF CALIFORNIA Riverside County Transportation Department of Transportation COMMISSION By: ERIC HALEY WILL KEMPTON Executive Director Director By: Anne Mayer District 08 Director CERTIFIED AS TO FUNDS: By: District Budget Manager Approved as to form and procedure: By: Attorney Department of Transportation Certified as to procedure: By: Accounting Administrator, Local Assistance • • • 6 30 AGENDA ITEM 61 • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Marilyn Williams, Director of Regional Programs and Public Affairs THROUGH: Eric Haley, Executive Director SUBJECT: Model Transportation Uniform Mitigation Fee (TUMF) Regional Arterial Funding Agreement BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve a Model TUMF Regional Arterial Funding Agreement between the Commission and local jurisdictions; and, 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute said agreements as they are finalized over time provided that they do not contain any substantive changes to the model agreement terms and conditions. BACKGROUND INFORMATION: At its September 2004, the Commission took action to establish a five-year Traffic Uniform Mitigation Fee (TUMF) Regional Arterial Program from FY 2005 to FY 2009. In response to the Commissions' Regional Arterial Improvements CaII for Projects process, twenty-four local jurisdiction projects totaling $46.7 million have been approved as eligible to receive funding. TUMF regional funds totaling $25 million was also set aside for the Mid County Parkway and SR 79 realignment projects. In addition, staff was directed to develop a Model TUMF Regional Arterial funding agreement between local jurisdictions and the Commission to ensure consistency in agreement terms and conditions. To that end, staff met with representatives from the Western County members of the Technical Advisory Committee over a three month period to develop the attached Model Agreement that: *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 61 31 • Delineates eligible and non -eligible work costs to be reimbursed; e.g. local jurisdictions' administrative overhead costs are not eligible but staff time directly related to coordination of the approved work is eligible. • Specifies the maximum eligible TUMF funds to be paid for the work may not exceed the then -current dollar amount as defined by the TUMF Nexus Study and any subsequent updates. • Restricts TUMF funding from being used for temporary improvements except those needed for staged construction of the approved work. • Requires that the local jurisdiction repay any TUMF funds it receives for work performed if, for any reason, they do not complete the work pursuant to an executed agreement for design, right of way or construction phases of work. The provision does not apply to the PA&ED phase of work (project approvals and environmental document). • Provides for the reimbursement of eligible work costs incurred by a local jurisdiction prior to the execution of an agreement. • Details the process for reimbursement of eligible work costs incurred by the local jurisdiction including samples of required documentation by the jurisdiction and its contractors. Reimbursement shall be made by the Commission within 30 days of receipt of invoice. Based on the Model TUMF Agreement and assuming no substantive changes to its language, staff recommends that the Chairman be authorized to sign the agreements upon finalization by the local jurisdiction and Commission staff. If substantive changes are negotiated to the Model Agreement, staff will present that individual agreement to the Commission for its review and approval. As a basic practice, staff will not forward any TUMF agreement for execution by the Chairman until the local jurisdiction has taken formal policy action to approve entering into the agreement. Attachment: TUMF Model Funding Agreement • Agenda Item 61 32 • AGREEMENT FOR THE FUNDING OF TUMF REGIONAL ARTERIAL IMPROVEMENTS WITH THE CITY OF [NOTE: If using this model agreement for a County project, globally replace the term "City" with "County".] 1. Parties and Date. 1.1 This Agreement is executed and entered into this day of , 2004, by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION ("RCTC") and [Name of local jurisdiction] ("City"). RCTC and City are sometimes collectively referred to herein as the "Parties". 2. Recitals. 2.1 RCTC is a county transportation commission created and existing pursuant to California Public Utilities Code Sections 130053 and 130053.5. • • 2.2 On November 5, 2002 the voters of Riverside County approved Measure A authorizing the collection of a one-half percent (1/2%) retail transactions and use tax to fund transportation programs and improvements within the County of Riverside, and adopting the Riverside County Transportation Improvement Plan (the "Plan"). 2.3 The Plan requires cities and the County in western Riverside County to participate in a Transportation Uniform Mitigation Fee (TUMF) Program to be eligible to receive Local Streets and Roads funds generated by Measure A. 2.4 The Plan further requires that the first $400 million in revenues from TUMF be made available to RCTC to fund equally the Regional Arterial System and development of New Transportation Corridors identified through the Community and Environmental Transportation Acceptability Process (CETAP). To receive TUMF funding, CETAP corridors must also be designated on the Regional System of Highways and Arterials as established in the October 2002 TUMF Nexus Study, amended in March 2004, and as may be amended in the future. 2.5 The Western Riverside Council of Governments (WRCOG) has been selected to administer the overall TUMF Program pursuant to applicable state laws including Government Code Sections 66000 et seq. and has entered into a Memorandum of Understanding (MOU) with RCTC dated July 10, 2003 regarding the allocation of the $400 million in TUMF Regional Funds to be made available to RCTC for programming. 2.6 RCTC issued to the cities and the County a "Call for Projects" to be funded with TUMF Regional funds, and in response to the Project Nomination Forms, took action on September 8, 2004 to adopt a five year TUMF Regional Arterial Program which identifies the projects and the maximum funding commitments awarded for specific phases of work. RCTC's TUMF Regional Arterial Program may be updated from time to time. 2.7 RCTC intends, by this Agreement, to distribute TUMF Regional Funds, subject to the conditions provided herein, and to participate in the joint development of the Project, as defined herein. 3. Terms. 3.1 Description of Work. This Agreement is intended to distribute TUMF Regional Funds to the City for [insert general description of work], ("the Work"). The Work, including a timetable and a detailed scope of work, is more fully described in Exhibit "A" attached hereto and, pursuant to Section 3.15 below, is subject to modification as requested by the City and approved by RCTC. The Work shall be consistent with one or more of the defined RCTC Call for Projects phases detailed herein as follows: 1) PA&ED — Project Approvals & Environmental Document 2) PS&E — Plans, Specifications and Estimates 3) R/W — Right of Way Acquisition and Utility Relocation 4) CONS — Construction The Work phase(s) funded pursuant to this Agreement shall be consistent with the City's Call for Projects Nomination Form submitted to the RCTC ("the Project") and as approved by the RCTC on September 8, 2004. The Project is more fully described in Exhibit "B" attached hereto. It is understood and agreed that the City shall expend TUMF Regional Funds only as set forth in this Agreement and only for the Work. To this end, any use of funds provided pursuant to this Agreement shall be subject to the review and approval of RCTC. 3.2 RCTC Funding Amount. RCTC hereby agrees to distribute to the City, on the terms and conditions set forth herein, a sum not to exceed [Insert dollars in text form] ($ [Insert dollars in number form]), to be used exclusively for reimbursing the City for eligible Work expenses as described herein ("Funding Amount"). The City acknowledges and agrees that the Funding Amount may be less than the actual cost of the Work, and that RCTC shall not contribute TUMF Regional Funds in excess of the maximum TUMF share for the phase/project identified in Appendix F of the TUMF Nexus Study. 3.2.1 Eligible Work Costs. The total Work costs ("Total Work Cost") may include the following items, provided that such items are included in the scope of work attached as Exhibit "A": (1) City and/or consultant costs associated with direct Work coordination and support; (2) funds expended in preparation of preliminary engineering studies; (3) funds expended for preparation of environmental review documentation for the Work; (4) all costs associated with right- of-way acquisition, including right-of-way engineering, appraisal, acquisition, legal costs for condemnation procedures if authorized by the City, and costs of reviewing appraisals and offers for property acquisition; (5) costs reasonably incurred if condemnation proceeds; (6) costs incurred in the preparation of plans, specifications, and estimates by City or consultants; (7) City costs • 34 • • • associated with bidding, advertising and awarding of the Work contracts; (8) construction costs, including change orders to construction contract approved by the City; and (9) construction management, field inspection and material testing costs. 3.2.2 Ineligible Work Costs. The Total Work Cost shall not include the following items which shall be borne solely by the City without reimbursement: (1) City administrative costs; (2) City costs attributed to the preparation of invoices, billings and payments; (3) any City fees attributed to the processing of the Work; and (4) expenses for items of work not included within the scope of work in Exhibit "A". 3.2.3 Increases in Work Funding. The Funding Amount may, in RCTC's sole discretion, be augmented with additional TUMF Regional Funds if the TUMF Nexus Study is amended to increase the maximum eligible TUMF share for the Work. Any such increase in the Funding Amount must be approved in writing by RCTC's Executive Director. In no case shall the amount of TUMF Regional Funds allocated to the City exceed the then -current maximum eligible TUMF share for the Work. No such increased funding shall be expended to pay for any Work already completed. For purposes of this Agreement, the Work or any portion thereof shall be deemed complete upon its acceptance by RCTC's Executive Director. 3.2.4 No Funding for Temporary Improvements. Only segments or components of the Work that are intended to form part of or be integrated into the Work may be funded by TUMF Regional Funds. No improvement which is temporary in nature, including but not limited to temporary roads, curbs, or drainage facilities, shall be funded with TUMF Regional Funds except as needed for staged construction of the Work. 3.3 City's Funding Obligation to Complete the Work. In the event that the TUMF Regional Funds allocated to the Work represent less than the total cost of the Work, the City shall provide such additional funds as may be required to complete the Work as described in Exhibit "A". 3.3.1 City's Obligation to Repay TUMF Regional Funds to RCTC. In the event that: (i) the City, for any reason, determines not to proceed with or complete the Work; or (ii) the Work is not timely completed, subject to any extension of time granted by RCTC pursuant to Section 3.15; the City agrees that any TUMF Regional Funds that were distributed to the City for the Work shall be repaid in full to RCTC. The Parties shall enter into good faith negotiations to establish a reasonable repayment schedule and repayment mechanism which may include, but is not limited to, withholding of Measure A Local Streets and Roads revenues. The City acknowledges and agrees that RCTC shall have the right to withhold any Measure A Local Streets and Roads revenues due the City, in an amount not to exceed the total of the funds distributed to the City, and/or initiate legal action to compel repayment, if the City fails to repay RCTC within a reasonable time period not to exceed 180 days from receipt of written notification from RCTC that repayment is required. (Note: For Phase 1— PA&ED agreements, delete this Repayment Section.) 3.3.2 City's Local Match Contribution. The City shall provide at least dollars ($ ) of funding toward the Work, as shown in Exhibit "A" and as called out in the City's Project Nomination Form submitted to RCTC in response to its Ca11 date thereof. The written notice shall provide a 30 day period to cure any alleged breach. During the 30 day cure period, the Parties shall discuss, in good faith, the manner in which the breach can be cured. 3.9.2 Effect of Termination. In the event that the City terminates this Agreement, the City shall, within 180 days, repay to RCTC in full all TUMF Regional Funds provided to the City under this Agreement. In the event that RCTC terminates this Agreement, RCTC shall, within 90 days, distribute to the City TUMF Regional Funds in an amount equal to the aggregate total of all unpaid invoices which have been received from the City regarding the Work at the time of the notice of termination; provided, however, that RCTC shall be entitled to exercise its rights under Section 3.14.2, including but not limited to conducting a review of the invoices and requesting additional information. This Agreement shall terminate upon receipt by the non -terminating Party of the amounts due it under this Section 3.9.2. 3.9.3 Cumulative Remedies. The rights and remedies of the Parties provided in this Section are in addition to any other rights and remedies provided by law or under this Agreement. 3.10 Prevailing Wages. The City and any other person or entity hired to perform services on the Work are alerted to the requirements of California Labor Code Sections 1770 et seq., which would require the payment of prevailing wages were the services or any portion thereof determined to be a public work, as defined therein. The City shall ensure compliance with these prevailing wage requirements by any person or entity hired to perform the Work. The City shall defend, indemnify, and hold harmless RCTC, its officers, employees, consultants, and agents from any claim or liability, including without limitation attorneys, fees, arising from its failure or alleged failure to comply with California Labor Code Sections 1770 et semc . 3.11 Progress Reports. RCTC may request the City to provide RCTC with progress reports concerning the status of the Work. 3.12 Indemnification. 3.12.1 City Responsibilities. In addition to the indemnification required under Section 3.10, the City agrees to indemnify and hold harmless RCTC, its officers, agents, consultants, and employees from any and all claims, demands, costs or liability arising from or connected with all activities governed by this Agreement including all design and construction activities, due to negligent acts, errors or omissions or willful misconduct of the City or its subcontractors. The City will reimburse RCTC for any expenditures, including reasonable attorneys' fees, incurred by RCTC, in defending against claims ultimately determined to be due to negligent acts, errors or omissions or willful misconduct of the City. 3.12.2 RCTC Responsibilities. RCTC agrees to indemnify and hold harmless the City, its officers, agents, consultants, and employees from any and all claims, demands, costs or liability arising from or connected with all activities governed by this Agreement including all design and construction activities, due to negligent acts, errors or omissions or willful misconduct of RCTC or its sub -consultants. RCTC will reimburse the City for any expenditures, including • 36 • • • reasonable attorneys' fees, incurred by the City, in defending against claims ultimately determined to be due to negligent acts, errors or omissions or willful misconduct of RCTC. 3.12.3 Effect of Acceptance. The City shall be responsible for the professional quality, technical accuracy and the coordination of any services provided to complete the Work. RCTC's review, acceptance or funding of any services performed by the City or any other person or entity under this agreement shall not be construed to operate as a waiver of any rights RCTC may hold under this Agreement or of any cause of action arising out of this Agreement. Further, the City shall be and remain liable to RCTC, in accordance with applicable law, for all damages to RCTC caused by the City's negligent performance of this Agreement or supervision of any services provided to complete the Work. 3.13 Insurance. The City shall require, at a minimum, all persons or entities hired to perform the Work to obtain, and require their subcontractors to obtain, insurance of the types and in the amounts described below and satisfactory to the City and RCTC. Such insurance shall be maintained throughout the term of this Agreement, or until completion of the Work, whichever occurs last. 3.13.1 Commercial General Liability Insurance. Occurrence version commercial general liability insurance or equivalent form with a combined single limit of not less than $1,000,000.00 per occurrence. If such insurance contains a general aggregate limit, it shall apply separately to the Work or be no less than two times the occurrence limit. Such insurance shall: 3.13.1.1 Name RCTC and City, and their respective officials, officers, employees, agents, and consultants as insured with respect to performance of the services on the Work and shall contain no special limitations on the scope of coverage or the protection afforded to these insured; 3.13.1.2 Be primary with respect to any insurance or self insurance programs covering RCTC and City, and/or their respective officials, officers, employees, agents, and consultants; and 3.13.1.3 Contain standard separation of insured provisions. 3.13.2 Business Automobile Liability Insurance. Business automobile liability insurance or equivalent form with a combined single limit of not less than $1,000,000.00 per occurrence. Such insurance shall include coverage for owned, hired and non -owned automobiles. 3.13.3 Professional Liability Insurance. Errors and omissions liability insurance with a limit of not less than $1,000,000.00 Professional liability insurance shall only be required of design or engineering professionals. 3.13.4 Workers' Compensation Insurance. Workers' compensation insurance with statutory limits and employers' liability insurance with limits of not less than $1,000,000.00 each accident. 3.14 Procedures for Distribution of TUMF Regional Funds to City. 3.14.1 Initial Payment by the City. The City shall be responsible for initial payment of all the Work costs as they are incurred. Following payment of such Work costs, the City shall submit invoices to RCTC requesting reimbursement of eligible Work costs. Each invoice shall be accompanied by detailed contractor invoices, or other demands for payment addressed to the City, and documents evidencing the City's payment of the invoices or demands for payment. The City shall submit invoices not more often than monthly and not less often than quarterly. 3.14.2 Review and Reimbursement by RCTC. Upon receipt of an invoice from the City, RCTC may request additional documentation or explanation of the Work costs for which reimbursement is sought. Undisputed amounts shall be paid by RCTC to the City within thirty (30) days. In the event that RCTC disputes the eligibility of the City for reimbursement of all or a portion of an invoiced amount, the Parties shall meet and confer in an attempt to resolve the dispute. If the meet and confer process is unsuccessful in resolving the dispute, the City may appeal RCTC's decision as to the eligibility of one or more invoices to RCTC's Executive Director. The City may appeal the decision of the Executive Director to the full RCTC Board, the decision of which shall be final. Additional details concerning the procedure for the City's submittal of invoices to RCTC and RCTC's consideration and payment of submitted invoices are set forth in Exhibit "C", attached hereto. 3.14.3 Funding Amount/Adjustment. If a post Work audit or review indicates that RCTC has provided reimbursement to the City in an amount in excess of the maximum eligible TUMF share of the Work, as determined by the TUMF Nexus Study, or has provided reimbursement of ineligible Work costs, the City shall reimburse RCTC for the excess or ineligible payments within 30 days of notification by RCTC. 3.15 Work Amendments. Changes to the characteristics of the Work, including the deadline for Work completion, and any responsibilities of the City or RCTC may be requested in writing by the City and are subject to the approval of RCTC's Representative, which approval will not be unreasonably withheld, provided that extensions of time for completion of the Work shall be approved in the sole discretion of RCTC's Representative. Nothing in this Agreement shall be construed to require or allow completion of the Work without full compliance with the California Environmental Quality Act (Public Resources Code Section 21000 et seq.; "CEQA") and the National Environmental Policy Act of 1969 (42 USC 4231 et seq.), but the necessity of compliance with CEQA and NEPA shall not justify, excuse, or permit a delay in completion of the Work. 3.16 Conflict of Interest. For the term ofthis Agreement, no member, officer or employee of the City or RCTC, during the term of his or her service with the City or RCTC, as the case may be, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom. 3.17 Limited Scope of Duties. RCTC's and the City's duties and obligations under this Agreement are limited to those described herein. RCTC has no obligation with respect to the safety of any Work performed at a job site. In addition, RCTC shall not be liable for any action of City or • • 38 • • • its contractors relating to the condemnation of property undertaken by City or construction related to the Work. 3.18 Books and Records. Each party shall maintain complete, accurate, and clearly identifiable records with respect to costs incurred for the Work under this Agreement. They shall make available for examination by the other party, its authorized agents, officers or employees any and all ledgers and books of account, invoices, vouchers, canceled checks, and other records or documents evidencing or related to the expenditures and disbursements charged to the other party pursuant to this disbursements charged to the other party pursuant to this Agreement. Further, each party shall furnish to the other party, its agents or employees such other evidence or information as they may require with respect to any such expense or disbursement charged by them. All such information shall be retained by the Parties for at least three (3) years following termination of this Agreement, and they shall have access to such information during the three-year period for the purposes of examination or audit. 3.19 Equal Opportunity Employment. The Parties represent that they are equal opportunity employers and they shall not discriminate against any employee or applicant of reemployment because of race, religion, color, national origin, ancestry, sex or age. Such non- discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. 3.20 Governing Law. This Agreement shall be governed by and construed with the laws of the State of California. 3.21 Attorneys' Fees. If either party commences an action against the other parry arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorneys' fees and costs of suit. 3.22 Time of Essence. Time is of the essence for each and every provision of this Agreement. 3.23 Headings. Article and Section Headings, paragraph captions or marginal headings contained in this Agreement are for convenience only and shall have no effect in the construction or interpretation of any provision herein. 3.24 Notification. All notices hereunder and communications regarding interpretation of the terms of the Agreement or changes thereto shall be provided by the mailing thereof by registered or certified mail, return receipt requested, postage prepaid and addressed as follows: (Name of local jurisdiction) (address) ATTN: RCTC Riverside County Transportation Commission 4080 Lemon, 3rd Floor Riverside, CA 92501 ATTN: Executive Director Any notice so given shall be considered served on the other party three (3) days after deposit in the U.S. mail, first class postage prepaid, return receipt requested, and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred regardless of the method of service. 3.25 Conflicting Provisions. In the event that provisions of any attached appendices or exhibits conflict in any way with the provisions set forth in this Agreement, the language, terms and conditions contained in this Agreement shall control the actions and obligations of the Parties and the interpretation of the Parties' understanding concerning the performance of the Services. 3.26 Contract Amendment. In the event that the Parties determine that the provisions of this Agreement should be altered, the Parties may execute a contract amendment to add any provision to this Agreement, or delete or amend any provision of this Agreement. All such contract amendments must be in the form of a written instrument signed by the original signatories to this Agreement, or their successors or designees. 3.27 Entire Agreement. This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof and supersedes any previous agreements or understandings. 3.28 Validity of Agreement. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement. 3.29 Independent Contractors. Any person or entities retained by the City or any contractor shall be retained on an independent contractor basis and shall not be employees of RCTC. Any personnel performing services on the Work shall at all times be under the exclusive direction and control of the City or contractor, whichever is applicable. The City or contractor shall pay all wages, salaries and other amounts due such personnel in connection with their performance of services on the Work and as required by law. The City or consultant shall be responsible for all reports and obligations respecting such personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance and workers' compensation insurance. • • • 40 • RIVERSIDE COUNTY (Name of local jurisdiction) TRANSPORTATION COMMISSION By: By: (Name, Title) (Name, Title) APPROVED AS TO FORM: APPROVED AS TO FORM: By: By: Best, Best & Krieger Counsel to the Riverside County Transportation Commission • • (Name, Title) • • • EXHIBIT "A WORK DESCRIPTION, SCOPE OF WORK, TIMETABLE AND CITY FUNDING • • • EXHIBIT "B" PROJECT DESCRIPTION AND MILESTONES • EXHIBIT "C" PROCEDURES FOR SUBMITTAL, CONSIDERATION AND PAYMENT OF INVOICES 1. RCTC recommends that the City incorporate Exhibit "C-1" into its contracts with any subcontractors to establish a standard method for preparation of invoices by contractors to the City and ultimately to RCTC for reimbursement of City contractor costs. 2. Each month the City shall submit an invoice for eligible Work costs incurred during the preceding month. The original invoice shall be submitted to RCTC's Executive Director with a copy to RCTC's Project Coordinator. Each invoice shall be accompanied by a cover letter in a format substantially similar to that of Exhibit "C-2". 3. Each invoice shall include documentation from each contractor used by the City for the Work, listing labor costs, subcontractor costs, and other expenses. Each invoice shall also include a monthly progress report and spreadsheets showing the hours or amounts expended by each contractor or consultant for the month and for the entire Work to date. Samples of acceptable task level documentation and progress reports are attached as Exhibits "C-4" and "C-5". All documentation from the City's contractors should be accompanied by a cover letter in a format substantially similar to that of Exhibit "C-3". • 4. If the City is seeking reimbursement for direct expenses incurred by City staff for eligible Work costs, the City shall detail the same level of information for its labor and any expenses in the same level of detail as required of contractors pursuant to Exhibit "C" and its attachments. 5. Charges for each task and milestone listed in Exhibit "A" shall be listed separately in the invoice. 6. Each invoice shall include a certification signed by the City Representative or his or her designee which reads as follows: "I hereby certify that the hours and salary rates submitted for reimbursement in this invoice are the actual hours and rates worked and paid to the consultants or contractors listed. Signed Title Date Invoice No. • 7. RCTC will pay the City within 30 days after receipt by the Commission of an invoice. If RCTC disputes any portion of an invoice, payment for that portion will be withheld, without interest, pending resolution of the dispute, but the uncontested balance will be paid. 8. The final payment under this Agreement will be made only after: (i) the City has obtained a Release and Certificate of Final Payment from each contractor or consultant used on theWork; (ii) the City has executed a Release and Certificate of Final Payment; and (iii) the City has provided copies of each such Release to RCTC. • • • 45 • • • EXHIBIT C-1 Elements of Compensation For the satisfactory performance and completion of the Services under this Agreement, the Commission will pay the Consultant compensation as set forth herein. The total compensation for this service shall not exceed ( INSERT WRITTEN DOLLAR AMOUNT ) ($ INSERT NUMERICAL DOLLAR AMOUNT ) without written approval of the Commission's Executive Director ("Total Compensation"). 1. ELEMENTS OF COMPENSATION. Compensation for the Services will be comprised of the following elements: 1.1 Direct Labor Costs; 1.2 Fixed Fee; 'and 1.3 Additional Direct Costs. 1.1 DIRECT LABOR COSTS. Direct Labor costs shall be paid in an amount equal to the product of the Direct Salary Costs and the Multiplier which are defined as follows: 1.1.1 DIRECT SALARY COSTS Direct Salary Costs are the base salaries and wages actually paid to the Consultant's personnel directly engaged in performance of the Services under the Agreement. (The range of hourly rates paid to the Consultant's personnel appears in Section 2 below.) 1.1.2 MULTIPLIER The Multiplier to be applied to the Direct Salary Costs to determine the Direct Labor Costs is , and is the sum of the following components: 1.1.2.1 Direct Salary Costs 1.1.2.2 Payroll Additives The Decimal Ratio of Payroll Additives to Direct Salary Costs. Payroll Additives include all employee benefits, allowances for vacation, sick leave, and holidays, and company portion of employee insurance and social and retirement benefits, all federal and state payroll taxes, premiums for insurance which are measured by payroll costs, and other contributions and benefits imposed by applicable laws and regulations. 1.1.2.3 Overhead Costs The Decimal Rratio of Allowable Overhead Costs to the Consultant Firm's Total Direct Salary Costs. Allowable Overhead Costs include general, administrative and overhead costs of maintaining and operating established offices, and consistent with established firm policies, and as defined in the Federal Acquisitions Regulations, Part 31.2. Total Multiplier (sum of 1.1.2.1, 1.1.2.2, and 1.1.2.3) 1.2 FIXED FEE. 1.2.1 The fixed fee is $ 1.2.2 A pro -rata share of the Fixed Fee shall be applied to the total Direct Labor Costs expended for services each month, and shall be included on each monthly invoice. 1.3 ADDITIONAL DIRECT COSTS. Additional Direct Costs directly identifiable to the performance of the services of this Agreement shall be reimbursed at the rates below, or at actual invoiced cost. Rates for identified Additional Direct Costs are as follows: ITEM REIMBURSEMENT RATE [ insert charges J Per Diem $ /day Car mileage $ /mile Travel $ /trip Computer Charges $ /hour Photocopies $ /copy Blueline $ /sheet LD Telephone $ /call Fax $ /sheet Photographs $ /sheet Travel by air and travel in excess of 100 miles from the Consultant's office nearest to the Commission's office must have the Commission's prior written approval to be reimbursed under this Agreement. • • • • • 2. DIRECT SALARY RATES Direct Salary Rates, which are the range of hourly rates to be used in determining Direct Salary Costs in Section 1.1.1 above, are given below and are subject to the following: 2.1 Direct Salary Rates shall be applicable to both straight time and overtime work, unless payment of a premium for overtime work is required by law, regulation or craft agreement, or is otherwise specified in this Agreement. In such event, the premium portion of Direct Salary Costs will not be subject to the Multiplier defined in Paragraph 1.1.2 above. 2.2 Direct Salary Rates shown herein are in effect for one year following the effective date of the Agreement. Thereafter, they may be adjusted annually to reflect the Consultant's adjustments to individual compensation. The Consultant shall notify the Commission in writing prior to a change in the range of rates included herein, and prior to each subsequent change. POSITION OR CLASSIFICATION RANGE OF HOURLY RATES [ sample_] Principal $ .00 - $ .00/hour Project Manager $ .00 - $ .00/hour Sr. Engineer/Planner $ .00 - $ .00/hour Project Engineer/Planner $ .00 - $ .00/hour Assoc. Engineer/Planner $ .00 - $ .00/hour Technician $ .00 - $ .00/hour Drafter/CADD Operator $ .00 - $ .00/hour Word Processor $ .00 - $ .00/hour 2.3 The above rates are for the Consultant only. All rates for subconsultants to the Consultant will be in accordance with the Consultant's cost proposal. 3. INVOICING. • 3.1 Each month the Consultant shall submit an invoice for Services performed during the preceding month. The original invoice shall be submitted to the Commission's Executive Director with two (2) copies to the Commission's Project Coordinator. 3.2 Charges shall be billed in accordance with the terms and rates included herein, unless otherwise agreed in writing by the Commission's Representative. 3.3 Base Work and Extra Work shall be charged separately, and the charges for each task and Milestone listed in the Scope of Services, shall be listed separately. The charges for each individual assigned by the Consultant under this Agreement shall be listed separately on an attachment to the invoice. 3.4 A charge of $500 or more for any one item of Additional Direct Costs shall be accompanied by substantiating documentation satisfactory to the Commission such as invoices, telephone logs, etc. 3.5 Each copy of each invoice shall be accompanied by a Monthly Progress Report and spreadsheets showing hours expended by task for each month and total project to date. 3.6 Each invoice shall indicate payments to DBE subconsultants or supplies by dollar amount and as a percentage of the total invoice. 3.7 Each invoice shall include a certification signed by the Consultant's Representative or an officer of the firm which reads as follows: I hereby certify that the hours and salary rates charged in this invoice are the actual hours and rates worked and paid to the employees listed. Signed Title Date Invoice No. 4. PAYMENT 4.1 The Commission shall pay the Consultant within four to six weeks after receipt by the Commission of an original invoice. Should the Commission contest any portion of an invoice, that portion shall be held for resolution, without interest, but the uncontested balance shall be paid. 4.2 The final payment for Services under this Agreement will be made only after the Consultant has executed a Release and Certificate of Final Payment. • • • 4 49 • • EXHIBIT C-2 Sample Cover Letter to RCTC Date Mr. Eric Haley Executive Director Riverside County Transportation Commission 4080 Lemon Street, 3rd Floor Riverside, CA 92501 ATTN: Accounts Payable Re: Project Title - Invoice # Enclosed for your review and payment approval is the City's invoice for professional and technical services that was rendered by our consultants in connection with the TUMF Regional Arterial Improvements per Agreement No. effective (Month/Day/Year) . The required support documentation received from each consultant is included as backup to the invoice. Invoice period covered is from Month/Date/Year to Month/Date/Year . Total Authorized Agreement Amount: Total Invoiced to Date: Total Previously Invoiced: Balance Remaining: $0,000,000.00 $0,000,000.00 $0,000,000.00 $0,000,000.00 Amount due this Invoice: $0,000,000.00 I certify that the hours and salary rates charged in this invoice are the actual hours and rates worked and paid to the consultants listed. By: cc: Name Title • • • EXHIBIT C-3 Sample Letter. from Contractor to City/County Month/Date/Year Mr. Eric Haley Executive Director Riverside County Transportation Commission P.O. Box 12008 Riverside, CA 92502-2208 Attn: Accounts Payable Invoice # For professional and technical services rendered by the County of Riverside Bldg Services in connection with Right of Way support, Acquisition, Appraisals and title search for projects on specific State Routes as indicated on the attached. This is per agreement No. XX-XX-XXX effective Month/Date/Year . Invoice period covered is from Month/Date/Year to Total Base Contract Amount: Authorized Extra Work (if Applicable) TOTAL AUTHORIZED CONTRACT AMOUNT: Total Invoice to Date: Total Previously Billed: Balance Remaining: Amount Due this Invoice: Month/Date/Year $000,000.00 $000,000.00 $000,000.00 $000,000.00 $000,000.00 $000,000.00 $000,000.00 I certify that the hours and salary rates charged in this invoice are the actual hours and rates worked and paid to the employees listed, By: Name Title • • • EXHIBIT C-4 Sample A - Task Summary and Detail Schedule SCHEDULE TO SUPPORT INVOICE NO. , DATED (Month/Day/Year) Project Name: Period Ending: (Month/Day/Year) LABOR NAME POSITION RATE HOURS AMOUNT TOTAL Doe, John Project Mgr 30.00 80 $2,400.00 Smith, John Project Engr 25.00 40 $1,000.00 EXPENSE Travel 4/13/90 Travel 4/15/90 Wordprocessing Communications Communications SUB -CONSULTANTS Sub -Total Labor Overhead @ 1.XXX Fee @ x% (DL and 01-1) PAYEE J. Doe J. Smith In-house (Jan -Mar) Fed Ex 2/28/90 GTE 4/13/90 AMOUNT 22.90 22.90 XXX.XX XXX.XX XXX.XX Sub -Total Expenses $XXX.XX (With detailed breakdown on following page in same format as above.) Sub -Consultant Labor Sub -Consultant Overhead @ x % Sub -Consultant Fee @ x % Sub -Consultant Expenses Sub -Total of Sub -consultant Costs Processing Fee @ x % AMOUNT XXX.XX XXX.XX XXX.XX XXX.XX $XXX.XX $XXX.XX TOTAL TASK COSTS: $XXX.XX 52 • EXHIBIT C-4 Sample B 1 - Task Summary Schedule SCHEDULE TO SUPPORT INVOICE NO. , DATED (Month/Day/Year) Project Name: Period Ending: (Month/Day/Year) TASK SUMMARY Current Period Cumulative Original Balance Rate Hours Dollars Hours Dollars Contract (+1-) I LABOR NAME POSITION Project Engineer Project Engineer Engineer CADD Project Engineer Engineer SUBTOTAL LABOR $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 0 0 0 0 0 0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 0 0 0 0 0 0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 OVERHEAD (1.50) •IXED FEE ACTUAL % COMPLETE THIS PERIOD: 1.20% PREVIOUS TO DATE: 89.60% SEGMENT TO DATE: 90.80% 4 EXPENSES Mileage/Bluelines/Deliveries Traff Counts Expenses Subtotal TOTAL 5SUBCONSULTANTS Subconsultants Total TOTAL TASK COSTS ttach individual Task Schedules - See Exhibit C-4, B2 53 EXHIBIT C-4 Sample B 2 - Task Detail Schedule SCHEDULE TO SUPPORT INVOICE NO. , DATED (Month/Day/Year) Project Name: Task No.: Task Description: Period Ending: (Month/Day/Year) • TASK NO. - DESCRIPTION Current Period Cumulative Original Contract Balance (+/-) Rate Hours Dollars Hours Dollars 1 LABOR NAME POSITION Project Engineer Project Engineer Engineer CADD Project Engineer Engineer SUBTOTAL LABOR $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 0 0 0 0 0 0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 0 0 0 0 0 0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 OVERHEAD (1.50) II 3 FIXED FEE ACTUAL % COMPLETE THIS PERIOD: 4.00% PREVIOUS TO DATE: 67.00% SEGMENT TO DATE: 71.00% 4 EXPENSES MileageBluelines/Del iveries Traff Counts Expenses Subtotal TOTAL 5 SUBCONSULTANTS Subconsultants Total TOTAL COST THIS TASK 54 • • • EXHIBIT C-5 Sample Progress Report REPORTING PERIOD: Month/Date/Year to Month/Date/Year PROGRESS REPORT: #1 A. Activities and Work Completed during Current Work Periods TASK 01-100% PS&E SUBMITTAL 1. Responded to Segment 1 comments from Department of Transportation 2. Completed and submitted Segment 1 final PS&E B. Current/Potential Problems Encountered & Corrective Action Problems None C. Work Planned Next Period Corrective Action None TASK 01-100% PS&E SUBMITTAL 1. Completing and to submit Traffic Signal and Electrical Design plans 2. Responding to review comments AGENDA ITEM 6J • • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Tanya Love, Program Manager THROUGH: Eric Haley, Executive Director SUBJECT: Measure "A" Specialized Transit Taxi Demonstration Program PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Approve up to $400,000 in Western Riverside County Measure "A" Specialized Transit funds for continuation of the taxi demonstration program; 2) Approve Memorandum of Understanding (MOU) No. M24-010, Amendment No. 2 to MOU No. M23-010, with the Riverside Transit Agency (RTA) to cover the cost of the taxi services; 3) Approve Agreement No. 05-26-539, Amendment No. 2 to Agreement No. 05-26-506, with Diversified Paratransit, Inc. (DPI) for oversight and administration of the program; 4) Authorize the Chairman, pursuant to Legal Counsel review, to execute the MOU and agreement on behalf of the Commission; and, 5) Direct staff to work with RTA and DPI to develop a draft taxi coordination/transition plan (for submission to ROTC staff by April 11, 2005) to be effective with the start of FY 2005-06. BACKGROUND INFORMATION: In October 2003, the Commission, working in partnership with RTA, implemented a western Riverside County taxi demonstration program utilizing Measure "A" Specialized Transit funds. The demonstration program utilizes taxicabs to transport senior citizens and/or persons with disabilities who would otherwise be denied service because of resource and system capacity constraints. The program has been successful, providing an average of 2,400 trips per month to senior citizens and persons with disabilities. In addition, since its inception no senior passengers have been denied transportation and the need to move equipment (from one city to another) to handle changing passenger demands has been minimal. Agenda Item 6J 56 To date, RTA and the Cities of Corona and Riverside have utilized the taxi demonstration program. RTA's most recent fully allocated average cost per passenger trip for the taxi is reported as $23.63 and the DAR van is reported as $25.12 (RTA's annual ridership report: 7/1/2003-6/30/2004). Given escalating operating costs, the lack of meeting the state mandated farebox regulations in prior years and the continued increased demand for paratransit services, staff was surprised that the use of taxi services utilizing Transportation Development Act (TDA) funds was not identified through the FY 2004-05 thru 2006-07 Short Range Transit Plans (SRTP). Staff identified this as a concern at the June 2004 Commission meeting and was directed to seek policy direction at the July 2004 Transit Policy Committee (TPC) meeting. In the interim, Measure "A" Specialized Transit funding was approved at the July Commission meeting to continue the demonstration program pending further discussions with the western Riverside County transit operators. Cost Analysis Based on results of the taxi demonstration program and policy direction, several meetings were held with staff from the municipal transit operators, RTA, MV (RTA's contracted service provider), DPI (RCTC's taxi consultant) and RCTC staff to determine the future direction of the program. Through this process, it was agreed that distribution of rides to taxi providers should be made as follows: 1) During peak times when there are not enough dial -a -ride vehicles to accommodate demand and ensure zero denials; 2) During non -peak times when it is more cost effective to use a taxi for specific trips rather than a traditional dial -a -ride vehicle; and, 3) During unexpected circumstances (traffic congestion, accidents, break -downs, etc.). Using the above criteria, MV/DPI projects an efficiency savings of approximately $16,631 per month on the current paratransit contract; this equates to an estimated cost savings of $133,048 over traditional paratransit services for eight months of service. More importantly, however, is the fact that senior trips are no longer being cancelled due to capacity constraints. Service Improvements/Enhancements As part of the cost analysis discussion, staff also identified several areas of concern that should be considered as part of continuing the program: 1) Improved coordination between reservation staff and taxi providers to ensure timely pick-up of passengers; • Agenda Item 6J 57 • • • 2) Performance compliance should be improved/implemented including sensitivity training towards passengers; background checks and drug/alcohol adherence; as well as the establishment of vehicle standards and overall passenger safety programs; and, 3) Review of billing including fare collection processes. Program Funding - Fiscal Year 2004-2005 RTA is requesting additional Measure "A" Specialized Transit funding in the amount of $317,227 to continue the program through the end of June, 2005. Staff is in support of this request, however, recommends that funding be increased to an amount "not to exceed" $350,000 so that the municipal transit operators can continue to utilize the program. Additionally, staff recommends that an additional allocation of up to $50,000 be allocated to Diversified Paratransit, Inc. (DPI) to continue providing program administration and oversight. Taxi Coordination/Transition Plan As stated previously, staff is in support of RTA's request to continue the program through the end of FY 2004-05 utilizing Measure "A" Specialized Transit funding. Given the projected cost savings as well as the trip efficiencies, staff recommends that RTA and DPI develop a coordination/transition plan to include the use of taxi services in its FY 2005-06 SRTP within 60 days of Commission approval (April 11, 2005). If approved, the transition plan should include, at a minimum, the recommended service improvements/enhancements identified above. Financial Information In Fiscal Year Budget: N Year: FY 2004-05 Amount: $400,000 Source of Funds: Measure "A" Funds — Western Riverside County Specialized Transit Budget Adjustment: Y GLA No.: 225-26-86101 Fiscal Procedures Approved: \J4q dca�jle,i Date: 01/14/2005 Agenda Item 6J 58 AGENDA ITEM 6K • • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Tanya Love, Program Manager THROUGH: Eric Haley, Executive Director SUBJECT: Riverside Transit Agency's Request for Local Transportation Funds Pending Receipt of Fiscal Year 2004-2005 FTA Section 5307 Funds PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to allocate $5,830,000 in Local Transportation Funds (LTF) to the Riverside Transit Agency (RTA) pending receipt of FY 2004-05 Federal Transit Administration (FTA) Section 5307 funds. BACKGROUND INFORMATION: At its July 2004 meeting, the Commission approved a total of $10,948,312 in FTA Section 5307 funds for RTA through the FY 2004-05 SRTP allocation process. Of that amount, $6,675,861 was approved for operating and capitalized preventive maintenance costs. Unfortunately, approval of the FY 2004-05 federal funding programs has been delayed due to the pending reauthorization of the federal transportation act. Due to the non -receipt of the federal operating funds, RTA is projecting an operating shortfall of $5,830,000 from March 18, 2005 to July 1, 2005. To maintain current operating levels, RTA has requested an advance of LTF funds. Staff is in support of this request. Assisting transit operators with cash flow has been done in the past; in FY 2003-04, LTF funds were advanced to both RTA and SunLine Transit Agency pending receipt of that year's federal funding. There are adequate LTF funds available to cover this request. If approved, staff further recommends that upon receipt of the federal funding, LTF payments to RTA be decreased by the same dollar amount until the $5,830,000 is reimbursed. Agenda Item 6K 59 Financial Information In Fiscal Year Budget: N/A Year: N/A Amount: N/A Source of Funds: Local Transportation Funds Budget Adjustment: N GLA No.: N/A Fiscal Procedures Approved: IVIX ` 12u Date: 01/14/2005 • Agenda Item 6K 60 AGENDA ITEM 6L • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* Jerry Rivera, Program Manager THROUGH: Eric Haley, Executive Director SUBJECT: Award Agreement No. 05-45-537 for Digital Upgrade Contract to Comarco Wireless Technologies BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to: 1) Award Agreement No. 05-45-537 to Comarco Wireless Technologies to upgrade the call box system to digital technology in the amount of $ 1,302,400; and, 2) Authorize the Chairman, pursuant to Legal Counsel review, to execute the agreement on behalf of the Commission. BACKGROUND INFORMATION: The Riverside County Transportation Commission, through its capacity as the Service Authority for Freeway Emergencies (SAFE), operates approximately 1,150 call boxes on freeways and highways in Riverside County. The call box system allows motorists to call for assistance in the event of an accident or mechanical problem. Each call box is a battery powered solar charged roadside terminal with a microprocessor and built-in cellular telephone. On December 13, 2000, the Commission entered into an agreement with Comarco Wireless Technologies (CWT) to upgrade 930 of the call boxes in the system as certain components were no longer manufactured or available. CWT replaced the radio transceivers, controller boards, solar regulators, all worn harnesses, removed any corrosion, replaced all bulbs, replaced all batteries, and painted all the housings and back plates. The upgrade expanded the useful life of the call box equipment for an additional ten years. *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6L 61 At its February 11, 2004 meeting, the Commission approved the Riverside County SAFE Call Box Program Five -Year Strategic and Financial Plan (Plan). One of the recommendations included in the Plan was the conversion from analog to digital cellular service. As noted in the Plan, a recent Federal Communications Commission ruling will allow analog cellular service providers to phase out their analog network. Therefore, AT&T Wireless Services, our current cellular provider, has been removing increasingly more analog cell sites from its system, which has caused individual call box locations to experience dropped calls or no connection, especially in more rural areas of the county. Other SAFEs throughout the state have also seen a degradation in call box cellular service and realize that it is inevitable that all call boxes will have to transition to another form of cellular service in the near future. The Commission authorized staff to join SAFE staff from San Bernardino and San Diego counties to release a tri-county Request for Proposal (RFP) for digital cellular service in an attempt to generate the best rates possible. The RFP was released on May 14, 2004, and proposals were due on June 28, 2004. Five proposals were received, and the three SAFE agencies interviewed all five vendors at the San Diego offices on July 7, 2004. At the conclusion of the interview process, each of the SAFEs was to proceed on their own and select the vendor of their choice. On October 13, 2004, the Commission entered into a five-year agreement with AT&T Wireless Service, Inc., for digital cellular service for the call box program. It provides 60 minutes of airtime at $6.35 per box per month (a savings of $1.15 per box per month). The next step in the process of converting from analog to digital service is to upgrade the call box equipment to digital technology. As mentioned previously, this recommendation was included in the Plan, and funds were included in the FY 04-05 Motorist Assistance Program budget. Commission staff is proposing to "piggy -back" on an RFP issued by the San Bernardino County SAFE on July 7, 2004, for similar work. San Bernardino received only two (2) proposals, and the RCTC call box program manager participated in the review and evaluation of the proposals along with call box program managers from San Bernardino, San Diego and Los Angeles counties. San Bernardino County awarded the digital upgrade contract to CWT, our current maintenance provider, at the unit cost of $1,520 per box. CWT is offering RCTC a unit cost of $1,184, including tax, for a total cost of $1,302,400 to upgrade approximately 1,100 call boxes. RCTC is receiving a $300 credit for each digital upgrade kit purchased because RCTC chose to upgrade its call box system to the latest analog technology in FY 2000-01. In addition, all of RCTC's call boxes already have the call connect light which flashes to notify the caller the call has been answered, so RCTC will not incur that extra cost. • Agenda Item 6L 62 • • • It is staff's intention to implement the recommendation to increase spacing between call boxes to a minimum of 1/2 mile and reduce the number of boxes by fifty (50) prior to upgrading to digital technology. The digital upgrade would be conducted over two fiscal years (FY 04-05 and FY 05-06), and there are sufficient funds in the current year budget to meet the FY 04-05 obligation. Financial Information In Fiscal Year Budget: Y Year: FY 2004-05 Amount: $434,000 Source of Funds: SAFE DMV Fees Budget Ad ustment: N GLA No.: 202-45-73301 Fiscal Procedures Approved: \)Utii,,,i,.4.2, Date: 01/24/2005 Agenda Item 6L 63 AGENDA ITEM 6M • • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Plans and Programs Committee Sheldon Peterson, Staff Analyst Stephanie Wiggins, Rail Department Manager THROUGH: Eric Haley, Executive Director SUBJECT: Commuter Rail Program Update PLANS AND PROGRAMS COMMITTEE AND STAFF RECOMMENDATION: This item is for the Commission to receive and file the Commuter Rail Program Update as an information item. BACKGROUND INFORMATION: Riverside Line Passenger trips on Metrolink's Riverside Line for the month of December averaged 4,417 which is down 479 (-10%) from the month of November. The line has averaged an overall increase of 2% from a year ago December 2003. The month of December always has a seasonal drop in ridership due to the holidays and vacation time. December on -time performance averaged 87% inbound (-2% from November) and 87% outbound (+4% from November). There were 34 delays greater than 5 minutes during the month of December, a 1 point decrease from the month of November. Union Pacific continues to be the primary cause of delays; Metrolink staff is working directly with the railroad to try to improve performance. The following were the primary causes: Signals/Track/MOW Dispatching Mechanical Other TOTAL 13 13 1 7 38% 38% 3% 21% Agenda Item 6M 64 Inland Empire -Orange County Line Passenger trips on Metrolink's Inland Empire -Orange County (IEOC) Line for the month of December averaged 3,160, a decrease of 489 riders or (-13%) from the month of November. The line has averaged a decrease of -9% from a year ago December 2003. The month of December always has a seasonal drop in ridership due to the holidays and vacation time. RCTC Staff is working with Metrolink to develop a specific marketing plan to attract new riders to the IEOC and 91 Lines from Riverside. Over the past few months, ridership has dropped and there is sufficient station and rail car capacity to increase ridership on these lines through a directed marketing effort. December on -time performance averaged 93% inbound (+ 1% from November) and 94% outbound (+3% from November). There were 17 delays greater than five minutes during the month of December, a decrease of 4 from the previous month. The primary causes were: Signals/MOW/Track Dispatching Mechanical Other TOTAL 6 7 0 4 35% 41% 0% 24% 91 Line Passenger trips on Metrolink's 91 Line for the month of December averaged 1,651, down 211 riders or a decrease of 11%, from the month of November. The line has averaged an increase of 1% from a year ago December 2003. The month of December always has a seasonal drop in ridership due to the holidays and vacation time. December on -time performance averaged 95% inbound (+1% from November) and 97% outbound (+5% from November). There were 7 delays greater than five minutes during the month of December, down 6 from November. The primary causes were: 4 Track Dispatching Mechanical Other TOTAL 2 0 1 57% 29% 0% 14% 1" • • • Agenda Item 6M 65 • Metrolink January Weather Related Service Disruptions There were significant disruptions due to the storms in early January. From the onset of the storms, track inspection by Metrolink staff and contractors continued around the clock. Several localized areas of mud and rock falling near the track occurred on the Ventura, Antelope Valley, and the San Clemente portion of the Orange Subdivisions. As a result of these events, there were three train sets trapped in Montalvo, Ventura County, unable to be moved North or South due to track outages on the Union Pacific. The Metrolink staff and Bombardier contractor worked diligently to get as much equipment as is safely possible, available for service. Due to equipment issues and weather related slow orders there were delays on the Riverside and 91 Lines. The IEOC was limited to operations north of San Clemente during the slide and cleanup. Even with the disruptions, system -wide Metrolink ridership is up to record levels with over 40,000 daily riders on some of the busiest days. Below is a photo of one of the most severely damaged sections of track on the Ventura County Line near Moorpark. Riverside Line Link Event - December 14-16, 2004 Metrolink management walked through peak pm trains on the Riverside Line to ride with commuters and listen to their feedback about service. Over 1000 comment cards were collected from riders on trains 404, 406, 408, and 410. Seventy-eight percent of the input collected was from riders who travel five or more days every week and 392 cards (or 37%) were from long-time riders who have commuted more than five years. One hundred and seventy-nine (179) callbacks were made to Agenda Item 6M 66 customers at their request. The two most requested issues were improved on time performance and more midday service. Station Daily Activity Update Daily activities are recorded by station security guards and submitted to RCTC on a weekly basis. For the entire year of 2004, there were twenty criminal incidents down from twenty one the previous year. The criminal incidents are primarily in two categories Burglary/Theft/Vandalism and Vagrants/Trespassing. Overall there has been a dramatic decrease in events over the past five years from 139 in 2000 to 20 in 2004. This shows the effective job the security guards are doing to deter crime at the stations. In addition, there was only one report of a Critical Incident at the stations this year a trespasser/BNSF train accident near the North Main Corona station. Please see the charts and graph below to see trends in station activity. Attached is the 2004 Activity Detail Report. TATIONS 2A - Burglary/TheftNandalism 2B - Vagrants/Trespassing 2C - Suspicious Behavior 2D - Criminal Behavior 2E — Graffiti Total # of Incidents 20 19 75 22 3 20 139 2001..:'. 21 63 11 4 10 109 200: 13 22 4 3 3 45 0i 8 5 1 6 1 21 2001 8 8 2 1 1 20 Criminal Incidents -All Stations 2000 2001 2002 2003 2004 Attachments: 1) Metrolink Performance Summaries (December 2004) 2) Station Activity Detail Report 2004 Agenda Item 6M 67 69 173 40 17 35 334 • • • METROLINK PERFORMANCE SUMM ARIES December 2004 /10)11 METROLINK 40 000 38,000 — 36,000 — 33,727 34,000 — 32,000 — 30,000 — 28,000 — 26,000 — 24,000 — 22,000 — 20,000 Dec -03 36,399 Jan -04 37,399 Feb -04 • METROLINK AVERAGE WEEKDAY PASSENGER TRIPS 37,806 Mar -0 4 38,099 Apr -04 38,198 May -04 37,751 Jun -04 37,237 Jul -04 37,086 Aug -04 37,982 Sep -04 38,636 Oct -04 38,849 Nov -04 • Dec -04 1333S1Holiday AdJ--=UnadJAvg 100.0% 95.0% — 90.0% — 85.0% — 3 Dec 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov ' Dec 04 • Within 5 -Minutes Of Schedule Includes Weekend Serv ice 0 Passenger OTP% Train OTP% RId•r O1P • •70 A AT 4flhI ..A1 ..... • • UPRR 19% TRK-Contractor 1% SIG -Contractor 20% Includes Weekend Service % of Train Delays By Responsibility D ecember 2004 Vandalism 5% SCRRA 7% Mechanical 9% Passenger 5°/a BNSF Other 13% 18% Improv (SCRRA) 0% Law-Enf 2% OP Agree 1% TRK-Contractor 2% SIG -Contractor 9% SCRRA 12% Includes Weekend Service UPRR 13% % of Train Delays By Responsibility 12 Month Period Ending December 2004 Passenger 5% Vandalism 4% Mechanical 11% Improv (SCRRA) law-Enf 5% Other OP Agree 0% 12% 2% BNSF 25 % 71 PERFORMANCE CH ARTS -BACK-UP 11 11 METROLINK • METROLINK AVERAGE WEEKDAY PASSENGER TRIPS THIRTEEN MONTH WINDOW - HOLIDAY ADJUSTED l Dec 03 Jan 04 3,516 4,001 5,230 5,665 9,983 10,690 549 581 4,321 4,639 5,031 5,482 3,467 3,701 1,630 1,640 Feb 04 4,095 5,990 10,630 588 4,655 5,845 3,812 1,784 Mar 04 4,153 5,885 10,978 612 4,745 5,876 3,804 1,753 Apr 04 May 04 Jun 04 4,107 3,970 3,868 6,262 6,180 6,258 11,046 11,213 11,013 599 645 645 4,639 4,745 4,629 5,959 5,966 5,876 3,713 3,696 3,619 1,774 1,783 1,862 Jul 04 3,829 6,384 10,674 615 4,606 5,900 3,427 1,802 Aug 04 Sep 04 Oct 04 3,822 3,954 4,143 6,327 6,370 6,540 10,456 10,913 11,221 613 632 644 4,676 4,829 4,575 5,943 5,755 5,973 3,468 3,555 3,647 1,781 1,974 1,893 Nov 04 Dec 04 4,099 3,465 6,769 6,187 10,902 10,062 671 595 4.896 4,417 6,001 5,208 Raa 3,160 1 R R') 1,651 33,727 -7 % 36,399 37,399 37,806 38,099 38,198 37,770 37,237 37,086 37,982 38,636 38,849 34,745 8% 3% 1% 1% 0% -1% -1% 0% 2% 2% 1% % Change Dec 04 vs Nov 04 -15% -9% -8% - -11% -10% -13% -13% -11 % -11 % Change Dec 04 vs Dec 03 -1% 18% 1% 8% 2% 4% -9% 1% 3% 73 7 AVERAGE DAILY METROLINK MONTHLY PASSHOLDERS ON AMTRAK THIRTEEN MONTH WINDOW Jan -04 (6) 1,060 189 135 110 27 20 1,170 216 155 11% 21% -26% 107 YEN IlA'VOW?'t 947 Feb 04 1,117 360 201 119 55 28 1,236 415 229 6% 92 % 48% 99 Mar 04 1,113 242 228 128 51 44 1,241 293 272 0% -29% 19 % 94 Apr 04 1,132 186 225 133 48 48 1,265 234 273 2% -20% 0% 116 M ay 04 (7) 1,123 278 265 120 34 35 1,243 312 300 -2% 33% 10% 104 Jun 04 1,112 269 220 119 47 26 1,231 316 246 -1% • 1% -18% 90 Jul 04 (8) 1,110 247 230 128 37 26 1,238 284 256 1% -10% 4% 118 Aug 04 Sep -04 (9) Oct -04 (10) 1,110 1,106 1,222 244 210 255 275 199 237 128 135 137 86 21 43 34 25 19 1,238 1,241 1,359 330 231 298 309 224 256 0% 0% 10 % 16% -30% 29 % 21 % -28% 14% Nov -04 (4) 1,246 296 270 152 27 26 1,398 323 296 3% 8% 16% 99 93 85 83 48 Dec -04 (5) 1,123 251 197 212 13 24 1,335 264 221 -5% -18% -25 % 85 49 o ange Dec 04 vs No v 04 -10% 1 -15% -27% 39% -52% -8% -5% -18% -25% % Change Dec 04 vs Dec 03 19% 1 61% 1 10% 104% -43% -18% 27% 48% 6% (1) Prior to Rail Rail, Amtrak Step-Up/No Step -Up program was only good on Amtrak weekday trains. (2) Rail 2 Rail program started September 1, 2002. (3) Missing data has been adjusted by using the lowest ridership count for the respective train, day of week and month. (4) Average of first 3 weeks of mo nth only as black -out In place for the Thanksgiving week. NOTE: Started Code Share trains north of LA 11/17/04, monthly passholders Included in RaII 2 R ail counts (5) Average excluding Christmas and New Year's Day holidays. NOTE in 2004 - Coaster #s higher due to derailment on 12/17 (6) Average excluding Janu ary 1 (7) Average excluding May 31 (8) Average excluding July 5 (9) Average excluding Labor Day (10) Average excluding Columbus Day • •74 2% 2% -23 % pert sumo -Rail 2 Rlik005 • • • 40,000 38,000 36,000 34,000 32,000 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 X 14,000 12,000 10,000 8,000 METROLINK AVERAGE WEEKDAY PASSENGER TRIPS - HOLIDAY ADJUSTED INCEPTION TO DATE XC Fy 04/05 • X +StiC •JNNCiYJ. S'� R: F� J+;i?::'y:y.X+{ •Y.w.55:.•:st•i:u FY 02/03 01/02 FY 00/01 .:FY 99/00 FY 98/99 ''FY 97/98 FY 96/97 FY 95/96 • FY 94/95 FY 93/94 Jun 75 a Avg Daily Riders 3500 3000- 2500- 2000- 1500 1000 500 Dec -03 Note: Sept Include s L. A. County Fair Riders San Bernardino Line Saturday Service Average Daily Passenger Trips Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -04 San Bernardino Line Sunday Ser vice Average Daily Passenger Trips Avg Daily Riders No te: Sunday Service Began 06125/00 76 in Avg Daily Ride rs • Dec -03 Antelope Valley Line Saturday Service Average Daily Passenger Trips Jan Feb Mar Apr May' Jun Jul Aug Sep Oct Nov Dec -04 77 11 METROLINK SCHEDULE ADHERENCE SUMMARY Percentage of Trains Arri ving Within 5 Minutes of Scheduled Time LATEST 13 MONTHS cute .. .:.V ertu a C r n . .....nec� .::::: ::::::.::: : ¢u.. �. ... ...... ........ .. .: .: ; >::::: n.. , ,... .. Otzt .e. afl�.San .;..... .... ... .. ... .�.. .. ...... <:>:: ...:uC::::::. .ln. :: :. .. :: . .. .. ma : E . o �: i of :;:,:..: .::.lt - ,:. �.ur:#�ank Turns.;:.::.::::..;<:: ..... ; Oui . .. ... ., u . R VOW .e:: •..::.:.;bran 1n :fist::;, .:: art.:, ;;::: :.�c�u . .. .....lt� C i:::.: >: ; :::>:. .: � �>:::; ... .. .... ... ... .. . ...;> .. . .. ;.>.:::. . ......... .. ... .. ... 'fiotal Dec 03 98% 98% 98% 98% 98% 99% 100% 98% 98 % 93 % 91 % 90% 95% 96% 95% 89 % 97 % 96 % 96 % Jan 04 99% 96% 97% 95% 96 % 96 % 100 % 99 % 98% 91 % 90% 97% 91 % 98% 90 % 91 % 96 % 96% 96% Feb 04 99% 98% 97% 90% 96% 96% 98% 100% 93% 95% 91% 95% 93 % 86% 93 % 91% 95% 94% 95% Mar04 100% 98% 97% 95% 97% 97% 99 % 99% 95% 89% 95% 96% 88% 86% 97 % 95% 96% 95% 96% Apr 04 98% 97% 96% 96% 96% 95% 100% 99% 89 % 86% 96% 94% 92% 86% 89 % 90% 95% 94 % 95 % May 04 99% 97% 98% 98% 99% 98% 100% 100% 98% 95% 96% 97% 95% 93% 96% 98% 98 % 97% 97% Jun 04 100% 98% 97% 95% 93% 93% 100% 100% 92% 91 % 95 % 94% 97% 94% 97% 99% 96% 95% 96% Jill 04 100o4, 98% :.o 96% 92% 90° � 890/ ° 100°/ � vv io 100% i vv io 96ar au i° 95 ni �� io 9e nr aff is 07% 90% 86% 9470 91% 9470 93% 94% Aug 04 99% 99% 98% 93% 91% 90% 97% 99% 93 % 92% 91 % 91% 95% 89% 92% 94% 94 % 93 % 94% Sep 04 99% 98% 98% 95% 94% 91% 98% 100% 86% 89% 89% 91% 91% 87 % 93% 89% 94% 93% 93 % Oct 04 99% 98% 95% 93% 94% 89% 98% 98% 85% 82% 91% 94% 90 % 93 % 90 % 94% 93% 92% 93 % Nov04 96% 97% 94% 96% 96% 95% 98% 98% 89% 83% 90% 91% 92% 91% 94% 92% 94% 94% 94% Dec 04 99% 96% 94% 93% 95% 97% 99% 99% 87% 87% 92% 96% 93% 94 % 95% 97% 94% 95% 95% Peak Period Trains Arriving Within 5 Minutes of Scheduled Time Dec 04 Peak Period Trains UEN ROUte'::: 100% 95% :A V Rtiute:: ; 96% 99% Shll3>Fdaute ': 93% 95% BtJR filirtts:::> ; 99% 100% 88% 88% 93% 96% No adjustments have bee n made for relievable delays. Terminated trains are considered OT if they were on -time at point of termination. Annulled trains are not included in the on -time calculation. • • 78 1t1E:EtYi C)ty Raiita. 89 % 97 % 98 % 95 % df itit bt aTO DDiitkid 94% 96% Tat 95% 12 • • CAUSES OF METROLINK DELAYS December 2004 PRIMARY CAUSE OF TRAIN DELAYS GREATER THAN 5 MINUTES CAUSE: VEN AVL SNB BUR RIV OC INL/OC 91 -LA TOTAL % of TOT Signals/Detectors 0 4 4 1 4 5 6 0 24 15% Slow Orders/MOW 2 6 7 1 6 6 0 3 31 19% Track/Switch 0 0 0 0 3 0 0 1 4 2% Dispatching 1 1 4 0 13 9 7 2 37 23% M echanical 2 7 3 0 1 2 0 0 15 9% Freight Train 1 0 0 0 0 0 0 0 1 1% Amtrak Train 1 1 0 0 0 0 0 0 2 1 Metrofink Meet/Turn 0 0 0 0 0 0 0 0 0 0% Vandalism 0 0 6 0 2 0 0 0 8 5% Passenger(s) 0 2 4 0 1 0 1 0 8 5% SCRRA Hold Policy 0 3 1 0 1 0 0 0 5 3% Other 2 9 5 0 3 3 3 1 26 16% TOTAL 9 33 34 2 34 25 17 7 161 100 % Saturday SNB 0 0 0 1 0 0 0 0 0 1 0 1 3 • Saturday AVL 0 0 0 0 0 0 0 0 0 0 0 0 0 Sunday SNB 0 0 0 0 0 0 0 0 0 0 0 0 0 13 79 0405C AUS FREQUENCY OF TRAIN DELAYS BY DURATION December 2004 MINUTES LATE: VEN AVL SNB BUR RIV OC IE/OC RIV/FUL TOTAL % of TOT NO DELAY 329 393 671 233 181 325 217 174 2523 82 .2 % 1 MIN - 5 MIN 39 94 125 17 37 48 18 8 386 12 .6% 6 MIN - 10 MIN 4 9 18 1 7 11 7 4 61 2.0% 11 MIN - 20 MIN 3 16 11 1 12 10 4 3 60 2.0 % 21 MIN -30 MIN 0 5 4 0 11 2 4 0 26 0.8 % GREATER THAN 30 MIN 2 3 1 0 4 2 2 0 14 0.5 % ANNULLED 1 1 0 0 0 1 0 0 3 0.1% TOTAL TRAINS OPTD 377 520 830 252 252 398 252 189 3070 100% TRAINS DELAYED >0 min 48 127 159 19 71 73 35 15 547 17 .8% TRAINS DELAYED > 5 mir 9 33 34 2 34 25 17 7 161 5.2% • 080 14 • 0405FRF Q Activity Detail Report Generated from 1/01/2004 to 12/31/2004 Riverside - Downtown Date Time Activity Log # Descripti on Activity Type 3/11/2004 3/31/2004 6/17/2004 3:00pm 6/21/2004 5:40pm 2/7/2004 9:45 p.m. 3/30/2004 7:30 a.m. 5/19/2004 10:30 a.m. 7/20/2004 2:10pm 3/17/2004 11:40 a. m. Pedley 76128 76592 78381 78452 75347 76620 78040 79202 76494 Property damage- report given to Claudia Chase 2 - Criminal Incidents Police on scene - Grand Theft Auto (P Rpt#04-009) 2 - Criminal Incidents Homeless man trespassing and breaking into vehicle 2 - Criminal Incidents Vehicle was broken into and radio taken. RPD Male adult dumping out trash cans Police called male asked to leave & wouldn't RPD called & had 2 males clean up bottle mess Security caught a transient defacing property Security informed Male not to film station 2 - Criminal Incidents 2 - Criminal Incidents 2 - Criminal Incidents 2 - Criminal Incidents 2 - Criminal Incidents 2 - Criminal Incidents Activity Subtype 2A - Burglary / Theft / Vandalis 2A - Burglary / Theft / Vandalis 2A - Burglary / Theft / Vandalis 2A - Burglary / Theft / Vandalis 2B - Vagrants / Trespassing 2B - Vagrants / Trespassing 2B - Vagrants / Trespassing 2B - Vagrants / Trespassing 2C - Suspicious Behavior # Vehicles 0 0 0 0 0 0 0 0 0 Date Time Activity Log # D escriptio n 2/5/2004 10:00 p. m. 75424 Couple caught in compromising position La Sierra Activity Type 2 - Criminal Incidents Acti vity Subtype 2B - Vagrants / Trespassing # Vehicles 0 Date Time Activity Log # D escription Activity Type 6/2/2004 8:pm 6/13/2004 9:05pm 2/9/2004 12:00 p.m. 6/21/2004 9:00am West Co ro na 78174 Male Adult tried to steal gas from car 78331 Vandals paintballed the porta-potty 2 - Criminal Incidents 2 - Criminal Incidents 75698 RPD called &spoke with Intoxicated male RPD let go 2 - Criminal Incidents 78455 Police escorted male hispanic off the station 2 - Criminal Incidents Activity Subtype 2A - Burglary / Theft / V andalis 2A - Burglary / Theft / Vandalis 2B - Vagrants / Trespassing 2B - Vagrants / Trespassing # Vehicles 0 0 0 0 Date Time Activity Log # D escription 5/18/2004 9:00 p.m. 78084 Corona PD on site for public Intoxication off RTA No rth Main Corona A ctivity Type 2 - Criminal Incidents Activity Subtype 2B - Vagrants / Trespassing # Vehicles D ate Time Activ ity Log # Desc ription A ctivity Type Activity S ubtype # Vehicles 6/18/2004 78420 Boy stealing gas from truck parked in parking lot. 7/22/2004 9.40pm 79275 Window broken on vehicle, called Corona PD. 2 - Criminal Incidents 2A - Burglary / Theft / Vandalis 0 2 - Criminal Incidents 2A - Burglary / Theft / Vandalis 0 Tue sday, Janu ary 18, 2005 Page 1 of 2 81 North Main Cor ona Date Time Activity L og # Description Acti vity Type Activity Subtype # Vehicles 4/16/2004 10:00 a.m. 77295 Mtlk Sheriff onsite to take person into custody 2 - Criminal Incidents 2C - Suspicious Behavior 0 6/11/2004 9:20pm 78362 16 juveniles fighting in parking area. Corona PD 2 - Criminal Incidents 2D - Criminal Behavior 0 7/29/2004 79473 Graffiti in south elevator, security cleaned it 2 - Criminal Incidents 2E - Grafitti 0 Tu. Janu ary 18, 2005 • 82 Page 20 AGENDA ITEM 6N • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Budget and Implementation "Committee as a Whole"* John Standiford, Director of Public Information THROUGH: Eric Haley, Executive Director SUBJECT: State and Federal Legislative Update BUDGET AND IMPLEMENTATION "COMMITTEE AS A WHOLE" AND STAFF RECOMMENDATION: This item is for the Commission to receive and file the State and Federal Legislative Update as an information item. BACKGROUND INFORMATION: On January 14, Commission Chair Robin Lowe had the opportunity to participate in a briefing with House Transportation and Infrastructure Chairman Don Young. The meeting took place in Newport Beach and included presentations from RCTC; the Orange County Transportation Authority; Los Angeles County Metro; Southern California Association of Governments; the Cities of Ontario, Anaheim and Placentia and representatives from the private sector. The briefing provided the Congressman with the opportunity to share his views on transportation and the upcoming reauthorization of the Federal Transportation bill. Congressman Young indicated that he hopes to pass a bill out of the House by the end of March and intends to be Chairman of the Conference Committee that will reconcile the House and Senate versions of the bill. His optimistic viewpoint is that this can be accomplished by early June. During the briefing, there was an emphasis on the cooperative working relationship among transportation agencies throughout the Southern California region. Of special importance mentioned by many was the impact of goods movement on the area's transportation system. The need for grade separations in Riverside County was eloquently pointed out by RCTC Chair Lowe and was duly noted by Chairman Young and his Chief of Staff. The meeting proved to be an excellent opportunity to bolster communication channels with Congressman Young and can be built on in February and March when a number of Commissioners and staff visit Washington D.C. *The Committees may function as a "Committee as a Whole" and forward their recommendations to the Commission if a quorum is not attained. Agenda Item 6N 83 AGENDA ITEM 7 • • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISSION DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Theresia Trevino, Chief Financial Officer THROUGH: Eric Haley, Executive Director SUBJECT: Establishment of Commercial Paper Program for the New Measure "A" and Adoption of Resolution No. 05-001, "Resolution of the Riverside County Transportation Commission Authorizing the Issuance and Sale of Commercial Paper Notes" STAFF RECOMMENDATION: This item is for the Commission to: 1) Receive and file the overview presentation regarding the commercial paper program for the new Measure "A"; 2) Adopt Resolution No. 05-001, "Resolution of the Riverside County Transportation Commission Authorizing the Issuance and Sale of Commercial Paper Notes"; 3) Approve the draft Indenture between the Riverside County Transportation Commission and U.S. Bank Trust National Association, as Trustee, and authorize the Executive Director to execute the final Indenture; 4) Approve the draft Offering Memorandum for the issuance of $ 185,000,000 in commercial paper notes and authorize the Executive Director to approve the issuance of the final Offering Memorandum; 5) Approve the draft Commercial Paper Dealer Agreement between the Riverside County Transportation Commission and Lehman Brothers, as CP Dealer, and authorize the Executive Director to execute the final Dealer Agreement; 6) Approve the draft Commercial Paper Dealer Agreement between the Riverside County Transportation Commission and Banc of America Securities LLC , as CP Dealer, and authorize the Executive Director to execute the final Dealer Agreement; 7) Approve the draft Issuing and Paying Agent Agreement between the Riverside County Transportation Commission and U.S. Bank Trust National Association, as Issuing and Paying Agent, and authorize the Executive Director to execute the final Issuing and Paying Agent Agreement; and, Agenda Item 7 84 8) Approve the draft Reimbursement Agreement by and between the Riverside County Transportation Commission and Bank of America, N.A. for a direct draw letter of credit relating to $185,000,000 in Commercial Paper Notes and authorize the Executive Director to execute the final Reimbursement Agreement. BACKGROUND INFORMATION: Although the sales tax under the new Measure "A" commences on April 1, 2009 with payments to the Commission from the State Board of Equalization beginning in June 2009, the Commission desires to start work on some of the projects included in the 2002 Transportation Improvement Plan. As a result of several months of planning, the Commission's financing team has substantially completed the steps necessary for the establishment of a commercial paper program as an interim financing vehicle for projects included in the new Measure "A." Commercial paper will be issued as needed, similar to a line of credit, at short-term interest rates with maturities of less than 270 days. As the commercial paper matures, the principal and accrued interest amounts will be paid from the proceeds of a new issuance of commercial paper. Essentially, it will be rolled over into a new issuance which may also include amounts for capital project needs and related issuance costs, since the new sales tax will not yet be available to pay these amounts. It is expected that a long-term debt issuance within two years will refund all or a portion of the outstanding commercial paper. Capital needs have been identified for right of way acquisition, environmental mitigation, and project development in the Western County and Coachella Valley. Based on the capital needs that have been identified, staff is seeking authorization for a $200,000,000 commercial paper program with the Commission's adoption of Resolution No. 05-001. Under the new Measure "A," the Commission is authorized to issue debt and have outstanding debt at any time of no more than $500,000,000. A third party liquidity facility such as a direct pay letter of credit is traditionally used to support commercial paper programs in the rare event that the commercial paper cannot be rolled over by the commercial paper dealers. Although the commercial paper program is being established at a maximum of $200,000,000, it is expected that $150,000,000 will be available for capital needs (Project Component) and $35,000,000 for accrued interest and fees (Expense Component). Accordingly a request for proposals for a $185,000,000 direct pay letter of credit was issued in December 2004. Six (6) proposals were received in January 2005 and reviewed by the Chief Financial Officer, the Financial Advisor, and one representative from each of the commercial paper dealers. Based on the evaluations of the proposals and final negotiations, it was determined that the Bank of America, N.A. proposal was most responsive and provided the best terms for a • • • Agenda Item 7 85 • • • five year direct pay letter of credit (annual fee of 21 basis points for the utilized portion of the letter of credit and an annual fee of 16 basis points for the unutilized portion). Additionally, Bank of America indicated a willingness to increase the letter of credit amount, if necessary, and to extend the agreement one year. Bank counsel has prepared a reimbursement agreement between the Commission and Bank of America related to the $185,000,000 direct pay letter of credit. At the September 8, 2004 meeting, the Commission approved the selections of Orrick, Herrington & Sutcliffe LLP, as bond counsel, and Lehman Brothers and Banc of America Securities LLC, as the commercial paper dealers. Nossaman, Guthner, Knox & Elliott was selected as disclosure counsel using single signature authority. A trust indenture between the Commission and the trustee has been prepared by bond counsel that provides for the structure of the commercial paper issued by the Commission and the application of sales tax receipts to repay the commercial paper. Separate dealer agreements between the Commission and the commercial paper dealers have been prepared by disclosure counsel to specify the ongoing relationship between the Commission, as the issuer of commercial paper, and the commercial paper dealers, as the marketers of the commercial paper to the financial community. Disclosure counsel has also prepared the offering memorandum for the commercial paper notes. The offering memorandum provides information regarding the Commission and a summary of the commercial paper program. The issuance of commercial paper requires the services of an issuing and paying agent to act as the Commission's agent for the safekeeping, completion, authentication and payment of the Commission's securities which the Commission may deliver to it from time to time. A request for proposals for an issuing and paying agent was issued in December 2004. Two proposals were received in January 2005 and reviewed by the Chief Financial Officer, the Financial Advisor, and one representative from each of the commercial paper dealers. Based on the evaluations of the proposals, it was determined that U.S. Bank Trust National Association was most responsive and provided the best terms ($1,250 annual administration fee per series and certain transaction fees). Bond counsel has prepared an agreement between the Commission and the issuing and paying agent. These documents discussed above are in draft form and are presented for the Commission's approval. While several drafts of each document have been circulated to, reviewed by, and discussed among the members of the financing team since December 2004, there may be a need to make some additional revisions after the Commission's approval and prior to the execution of the documents; however, such changes are not expected to significantly modify the basic structure and terms of the commercial paper program. Staff is seeking authorization for the Executive Director to execute the final agreements. Agenda Item 7 86 These draft documents are being distributed to the rating agencies (Moody's Investors Service and Standard & Poor's). Ratings are expected approximately February 17, 2005. The closing of the transaction is expected on February 22, 2005. Staff is currently analyzing the Western County and Coachella Valley capital needs and related cash flows to determine the initial commercial paper issuance amount. The initial issuance is expected to occur during March 2005. Attachments: 1) Resolution No. 05-001 2) Indenture 3) Offering Memorandum 4) Series A Dealer Agreement (Lehman) 5) Series B Dealer Agreement (Banc of America Securities) 6) Issuing and Paying Agent Agreement 7► Reimbursement Agreement • Agenda Item 7 87 • • • RESOLUTION NO. 05-001 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION AUTHORIZING THE ISSUANCE AND SALE OF COMMERCIAL PAPER NOTES IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $200 MILLION OUTSTANDING AT ANY ONE TIME, THE EXECUTION AND DELIVERY OF AN INDENTURE, AN ISSUING AND PAYING AGENT AGREEMENT, A CREDIT AGREEMENT, DEALER AGREEMENTS, AND AN OFFERING MEMORANDUM, AND THE TAKING OF ALL OTHER ACTIONS NECESSARY IN CONNECTION THEREWITH WHEREAS, the Riverside County Transportation Commission (the "Commission") is a county transportation commission duly organized and existing pursuant to the County Transportation Commissions Act, being Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq.); WHEREAS, the Commission is authorized pursuant to the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.) (the "Act"), to, among other things, and with voter approval, levy a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") and to issue limited tax bonds payable from the proceeds of such tax; WHEREAS, the Commission adopted Ordinance No. 88-1, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" ("Ordinance No. 88-1"), on July 6, 1988, pursuant to the provisions of the Act, which Ordinance provided for the imposition of a retail transactions and use tax (the "1988 Sales Tax") applicable in the incorporated and unincorporated territory of the County of Riverside (the "County") in accordance with the Sales Tax Law at the rate of one-half of one percent (1/2%) for a period not to exceed twenty (20) years; WHEREAS, by its terms, Ordinance No. 88-1 became effective at the close of the polls on November 8, 1988, the day of the election at which the proposition imposing the 1988 Sales Tax was approved by a majority vote of the electors voting on the measure, and the collection of the 1988 Sales Tax commenced on April 1, 1989; WHEREAS, the Commission adopted Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" (the "Ordinance") on May 8, 2002, pursuant to the provisions of the Act, which Ordinance provides for the imposition of a retail transactions and use tax (the "Sales Tax") applicable in the incorporated and unincorporated territory of the County in accordance with the provisions of the Sales Tax Law at the rate of zero percent (0%) until the expiration of the 1988 Sales Tax on March 31, 2009, and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed thirty (30) years; WHEREAS, by its terms, the Ordinance became effective at the close of the polls on November 5, 2002, the day of the election at which the proposition imposing the Sales Tax was approved by more than two-thirds of the electors voting on the measure; WHEREAS, the Ordinance empowers the Commission to sell or issue, from time to time, on or before the collection of the Sales Tax, bonds, or other evidences of indebtedness, in the aggregate principal amount at any one time outstanding not to exceed $500 million for capital expenditures for various purposes, including to carry out the transportation projects described in the Riverside County Transportation Improvement Plan, adopted as part of the Ordinance, including any future amendments thereto (the "Expenditure Plan"); WHEREAS, the Commission is authorized by Section 240309 of the California Public Utilities Code to issue from time to time limited tax bonds (defined to include indebtedness and securities of any kind or class, including commercial paper), secured and payable in whole or in part from revenues of the Sales Tax ("Sales Tax Revenues"); WHEREAS, in order to finance: (i) the costs of the transportation improvements and facilities outlined in the Expenditure Plan (the "Project"), including all costs and estimated costs incidental to, or connected with, the Project, including, without limitation, engineering, planning, inspection costs and land acquisition related thereto; (ii) principal and interest on maturing commercial paper notes and credit and liquidity and other fees for the commercial paper program; and (iii) expenses of all proceedings for the authorization, issuance, sale and maintenance of the notes, including legal, fiscal agent, trustee, dealer, financial consultant and other fees, the Commission proposes to authorize the issuance of certain commercial paper notes (the "Notes"), such Notes to be issued in one or more series from time to time, in an aggregate principal amount not to exceed two hundred million dollars ($200,000,000) outstanding at any one time, pursuant to the provisions of the Act and the Ordinance; WHEREAS, the Notes will be issued pursuant to an Indenture (the "Indenture"), which is proposed to be entered into between the Commission and U.S. Bank Trust National Association, as trustee; • 89 WHEREAS, there has been prepared and presented to the Board a proposed form of Indenture; WHEREAS, the Notes will be authenticated and delivered pursuant to an Issuing and Paying Agent Agreement (the "Issuing and Paying Agent Agreement"), which is proposed to be entered into between the Commission and U.S. Bank Trust National Association, as issuing and paying agent; WHEREAS, there has been prepared and presented to the Board a proposed form of Issuing and Paying Agent Agreement; WHEREAS, the Board proposes to issue a series of Notes, such Notes to be designated the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series A (the "Series A Notes"), in an aggregate principal amount not to exceed one hundred twenty million dollars ($120,000,000). outstanding at any one time, and a series of Notes, such Notes to be designated the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series B (the "Series B Notes," and, together with the Series A Notes, hereinafter collectively referred to as the "Initial Series of Notes"), in an aggregate principal amount not to exceed eighty million dollars ($80,000,000) outstanding at any one time, pursuant to the provisions of the Act and the Ordinance; WHEREAS, the proceeds of the Initial Series of Notes will be applied pursuant to the provisions of the Indenture as finally executed and delivered to provide funds to finance certain costs of the Projects and to pay certain costs incurred in connection with the issuance of the Initial Series of Notes; WHEREAS, credit and liquidity support will be provided for the Initial Series of Notes pursuant to a reimbursement agreement (the "Credit Agreement"), which is proposed to be entered into between the Commission and Bank of America, N.A. (the "Credit Provider"); WHEREAS, there has been prepared and presented to the Board the form of the Credit Agreement; WHEREAS, the Series A Notes will be offered and sold by Lehman Brothers ("Lehman"), pursuant to a Dealer Agreement (the "Series A Dealer Agreement"), which is proposed to be entered into between the Commission and Lehman; WHEREAS, there has been prepared and presented to the Board a proposed form of Series A Dealer Agreement; 90 WHEREAS, the Series B Notes will be offered and sold by Banc of America Securities LLC ("Banc of America" and, together with Lehman, hereinafter collectively referred to as the "Dealers") pursuant to a Dealer Agreement (the "Series B Dealer Agreement"), which is proposed to be entered into between the Commission and Banc of America; WHEREAS, there has been prepared and presented to the Board a proposed form of Series B Dealer Agreement; WHEREAS, in order to facilitate the offering of the Initial Series of Notes by the Dealers, the Commission proposes to approve, execute and deliver an Offering Memorandum (including all appendices thereto, the "Offering Memorandum") describing the Initial Series of Notes and certain related matters; WHEREAS, there has been prepared and presented to the Board a proposed form of Offering Memorandum; WHEREAS, in order to accomplish the foregoing, it will be necessary for the Commission to enter into and deliver the following documents, instruments and agreements, forms of which have been prepared and presented to this meeting: (1) Indenture; (2) Issuing and Paying Agent Agreement; (3) Credit Agreement; (4) Series A Dealer Agreement; (5) Series B Dealer Agreement; and (6) Offering Memorandum; WHEREAS, the Board desires to authorize the issuance of the Notes in an aggregate principal amount not to exceed two hundred million dollars ($200,000,000) outstanding at any one time, to issue the Series A Notes in an aggregate principal amount not to exceed one hundred twenty million dollars ($120,000,000) outstanding at any one time, to issue the Series B Notes in an aggregate principal amount not to exceed eighty million dollars ($80,000,000) outstanding at any one time, to authorize and direct the execution and delivery of each of the above -identified documents, instruments and agreements and the issuance and sale of the Initial Series of Notes pursuant thereto, and to authorize the taking of such other actions as shall be necessary to consummate the financing program described in the above -identified documents, instruments and agreements and herein (the "Financing"); and • 91 • • WHEREAS, Orrick, Herrington & Sutcliffe LLP is serving as bond counsel ("Bond Counsel") to the Commission in connection with the financing; WHEREAS, the Commission has full legal right, power and authority under the laws of the State of California to enter into the transactions hereinafter authorized; WHEREAS, the Commission expects to finance the Project on a tax- exempt basis; NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION DECLARES: Section 1. Recitals. The Commission finds and determines that the foregoing recitals are true and correct. Section 2. Approval of the Notes. The issuance by the Commission of the Notes, in accordance with the provisions set forth in the Indenture and the Issuing and Paying Agent Agreement, in one or more series, in an aggregate principal amount not to exceed two hundred million dollars ($200,000,000) outstanding at any one time, including the issuance by the Commission of the Series A Notes, in accordance with the provisions set forth in the Indenture and the Issuing and Paying Agent Agreement, in an aggregate principal amount not to exceed one hundred twenty million dollars ($120,000,000) outstanding at any one time, and the issuance by the Commission of the Series B Notes, in accordance with the provisions set forth in the Indenture and the Issuing and Paying Agent Agreement, in an aggregate principal amount not to exceed eighty million dollars ($80,000,000) outstanding at any one time, is hereby authorized and approved; provided, however, that all Notes shall be retired or redeemed before the date of termination of the Sales Tax. Section 3. Approval of the Indenture. The proposed form of Indenture presented to this meeting and the terms and conditions thereof are hereby approved. The date, maturity dates, interest rate or rates (not to exceed twelve percent (12%) per annum), denominations (which shall not be less than $5,000), forms, registration and exchange privileges, place or places of payment, terms of redemption, if any, offering price and other terms of the Notes shall be as provided in said Indenture, as finally executed and delivered. The Executive Director of the Commission (the "Executive Director") is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver an Indenture, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 4. Approval of the Issuing and Paying Agent Agreement. The proposed form of Issuing and Paying Agent Agreement presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver an Issuing and Paying Agent Agreement, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. Approval of the Credit Agreement. The proposed form of Credit Agreement presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver a Credit Agreement, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 6. Approval of the Series A Dealer Agreement. The proposed form of Series A Dealer Agreement presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver a Series A Dealer Agreement, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. Approval of the Series B Dealer Agreement. The proposed form of Series B Dealer Agreement presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver a Series B Dealer Agreement, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 8. Approval of the Offering Memorandum. The proposed form of Offering Memorandum presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver to the Dealers an Offering Memorandum, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. The Executive Director is hereby further authorized and directed, for and in the name and on behalf of the Commission, to supplement, amend, revise, update and/or restate the Offering Memorandum from time to time as deemed necessary or advisable by the Executive Director, and the Offering Memorandum, as so supplemented, amended, revised, • • • 93 updated and/or restated, shall be filed with the members of the Commission. The Dealers are hereby authorized to distribute copies of said Offering Memorandum to persons who may be interested in the purchase of the Initial Series of Notes and are hereby directed to deliver copies to all actual purchasers of the Initial Series of Notes. Section 9. Delegation to Authorized Representative. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, including, without limitation, any of the foregoing which may be necessary or desirable in connection with any investment of proceeds of Notes, the refunding or defeasance of any Notes, the extension or replacement of the Credit Agreement, the removal or replacement of the Trustee or any Dealer or any similar action may be given or taken by an Authorized Representative (as such term is defined in the Indenture), without further authorization or direction by this Board, and each Authorized Representative is hereby authorized and directed to give any such approval, consent, direction, notice, order, request or other action and to take any such action which such Authorized Representative may deem necessary or desirable to further the purposes of this resolution. All consents, approvals, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, whether before or after the issuance of the Notes, which may be necessary or desirable in connection with any default under or amendment of such documents, settlements or revisions, may be taken or given by the Authorized Representative, without further authorization by this Board, and the Authorized Representative is hereby authorized and directed to give such consent, approval, notice, order or request and to take any such action which such officer may deem necessary or desirable to further the purposes of this resolution and the transactions contemplated hereby. Section 10. Ratification of Actions; Completion of Financing. All actions heretofore taken by the officers and agents of the Commission with respect to the Financing and the issuance and sale of the Initial Series of Notes are hereby ratified, confirmed and approved. If at the time of execution of any of the documents authorized herein, the Executive Director is unavailable, such documents may be executed by the Deputy Executive Director of the Commission in lieu of the Executive Director. The Clerk of the Board of the Commission is hereby authorized to attest to the execution by the Executive Director or the Deputy Executive Director of any of such documents as said officers deem appropriate. 94 The proper officers and agents of the Commission are hereby authorized and directed, jointly and severally, for and in the name and on behalf of the Commission, to do any and all things and to take any and all actions and to execute and deliver any and all agreements, certificates and documents, including, without limitation, any tax certificates or agreements, any agreements for depository services, and any agreements for rebate compliance services, which they, or any of them, may deem necessary or advisable in order to consummate the Financing and the issuance and sale of the Initial Series of Notes and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, this Resolution, the Initial Series of Notes and the documents approved hereby. Section 11. Effective Date. This Resolution shall take effect immediately upon its adoption and approval. APPROVED AND ADOPTED this 9th day of February, 2005. By: C. Robin Lowe, Chair Riverside County Transportation Commission ATTEST: By: Naty Kopenhaver, Clerk of the Board Riverside County Transportation Commission • 95 ATTACHMENT 2 • • • OH&S DRAFT 1/26/2005 INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee Dated as of March 1, 2005 RELATING TO THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMERCIAL PAPER NOTES (LIMITED TAX BONDS) Table of Contents Page • • ARTICLE I DEFINITIONS: EQUALITY OF SECURITY; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01. Definitions 2 SECTION 1.02. Equality of Security 20 SECTION 1.03. Content of Certificates and Opinions 20 ARTICLE II THE NOTES SECTION 2.01. Authorization of Notes 21 SECTION 2.02. Terms of the Notes 21 SECTION 2.03. Form of Notes 22 SECTION 2.04. Execution of Notes 23 SECTION 2.05. Authentication of Notes 23 SECTION 2.06. Transfer of Notes 23 SECTION 2.07. Exchange of Notes 24 SECTION 2.08. Registration of Notes 24 SECTION 2.09. Notes Mutilated, Lost, Destroyed or Stolen 24 SECTION 2.10. Special Provisions Regarding Book -Entry Only System for Notes 24 ARTICLE III ISSUE AND SALE OF NOTES; APPLICATION OF PROCEEDS; ADDITIONAL NOTES; PARITY DEBT SECTION 3.01. Issuance and Sale of Notes 26 SECTION 3.02. Proceeds of Sale of a Series of Notes 27 SECTION 3.03. Issuance of Additional Series of Notes 28 SECTION 3.04. Proceedings for Issuance of Additional Series of Notes 29 SECTION 3.05. Issuance of Refunding Debt 30 SECTION 3.06. Limitations on the Issuance of Obligations Payable from Sales Tax Revenues 31 ARTICLE IV CONSTRUCTION FUNDS SECTION 4.01. Establishment and Application of Proceeds Funds 33 ARTICLE V REVENUES • SECTION 5.01. Pledge of Sales Tax Revenues; Sales Tax Revenue Fund 34 SECTION 5.02. Pledge of Certain Funds and Accounts 35 97 i Table of Contents Page SECTION 5.03. Establishment and Application of Interest Fund 36 SECTION 5.04. Establishment and Application of Principal Fund 37 SECTION 5.05. Establishment and Application of the Subordinate Obligations Fund 38 SECTION 5.06. Investment by the Issuer and the Issuing and Paying Agent 38 SECTION 5.07. Investment by the Trustee 38 ARTICLE VI COVENANTS OF THE ISSUER SECTION 6.01. Punctual Payment 39 SECTION 6.02. Extension of Payment of Notes 39 SECTION 6.03. Against Encumbrances 40 SECTION 6.04. Accounting Records and Financial Statements 40 SECTION 6.05. Collection of Sales Tax Revenues 40 SECTION 6.06. Rebate Fund 41 SECTION 6.07. Tax Covenants 42 SECTION 6.08. Maintenance of Issuing and Paying Agent 42 SECTION 6.09. Credit Facility; Alternate Credit Facility 42 SECTION 6.10. Appointment of Dealers 43 SECTION 6.11. Waiver of Laws 43 SECTION 6.12. Further Assurances 43 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES SECTION 7.01. Events of Default 43 SECTION 7.02. Application of the Revenues and Other Funds After Default 44 SECTION 7.03. Trustee to Represent Noteholders 45 SECTION 7.04. Noteholders' Direction of Proceedings 45 SECTION 7.05. Limitation on Noteholders' Right to Sue 46 SECTION 7.06. Absolute Obligation of the Issuer 46 SECTION 7.07. Termination of Proceedings 46 SECTION 7.08. Remedies Not Exclusive 47 SECTION 7.09. Waivers of Events of Default 47 SECTION 7.10. Control of Remedies and Waivers by Credit Provider 47 98 ii Table of Contents Page • • • ARTICLE VIII THE TRUSTEE SECTION 8.01. Appointment: Duties, Immunities and Liabilities of Trustee 47 SECTION 8.02. Merger or Consolidation 49 SECTION 8.03. Liability of Trustee 49 SECTION 8.04. Right of Trustee to Rely on Documents 51 SECTION 8.05. Compensation and Indemnification of Trustee 51 ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE SECTION 9.01. Amendments Permitted 52 SECTION 9.02. Effect of Supplemental Indenture 54 SECTION 9.03. Amendment of Particular Notes 54 ARTICLE X DEFEASANCE SECTION 10.01. Payment of Notes 54 SECTION 10.02. Discharge of Liability on Notes 55 SECTION 10.03. Deposit of Money or Securities 55 SECTION 10.04. Payment of Notes After Discharge of Indenture 56 ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of Issuer Limited to Revenues 56 SECTION 11.02. Successor Is Deemed Included in All References to Predecessor 56 SECTION 11.03. Limitation of Rights to Issuer, Trustee, Issuing and Paying Agent, Credit Provider and Noteholders 56 SECTION 11.04. Waiver of Notice 57 SECTION 11.05. Destruction or Delivery of Canceled Notes 57 SECTION 11.06. Severability of Invalid Provisions 57 SECTION 11.07. Notices 57 SECTION 11.08. Notice to Rating Agencies 58 SECTION 11.09. Evidence of Rights of Noteholders 59 SECTION 11.10. Disqualified Notes 59 SECTION 11.11. Money Held for Particular Notes 60 SECTION 11.12. Funds and Accounts 60 SECTION 11.13. Article and Section Headings and References 60 99 iii Table of Contents Page SECTION 11.14. Waiver of Personal Liability 60 SECTION 11.15. Credit Provider 60 SECTION 11.16. Governing Law 61 SECTION 11.17. Business Day 61 SECTION 11.18. Effective Date of Indenture 61 SECTION 11.19. Execution in Counterparts 61 Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Form of Series A and Series B Note Form of Master Note Form of Issuance Request Form of Requisition — Proceeds Fund Form of Notice of Expiration Date 100 iv • • • INDENTURE This INDENTURE, dated as of March 1, 2005 (the "Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly organized and existing under and by virtue of the laws of the State of California (the "Commission" or the "Issuer"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the "Trustee"); WITNESSETH: WHEREAS, the Commission is a county transportation commission duly organized and existing pursuant to the County Transportation Commissions Act, being Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq.); WHEREAS, the Commission is authorized pursuant to the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.) (the "Act"), to, among other things, and with voter approval, levy a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") and to issue limited tax bonds payable from the proceeds of such tax; WHEREAS, the Commission adopted Ordinance No. 88-1, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" ("Ordinance No. 88-1"), on July 6, 1988, pursuant to the provisions of the Act, which Ordinance provided for the imposition of a retail transactions and use tax (the "1988 Sales Tax") applicable in the incorporated and unincorporated territory of the County of Riverside (the "County") in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") at the rate of one-half of one percent (1/2%) for a period not to exceed twenty (20) years; WHEREAS, by its terms, Ordinance No. 88-1 became effective at the close of the polls on November 8, 1988, the day of the election at which the proposition imposing the 1988 Sales Tax was approved by a majority vote of the electors voting on the measure, and the collection of the 1988 Sales Tax commenced on April 1, 1989; WHEREAS, the Commission adopted Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" (the "Ordinance") on May 8, 2002, pursuant to the provisions of the Act, which Ordinance provides for the imposition of a retail transactions and use tax (the "Sales Tax") applicable in the incorporated and unincorporated territory of the County in accordance with the provisions of the Sales Tax Law at the rate of zero percent (0%) until the expiration of the 1988 Sales Tax on March 31, 2009, and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed thirty (30) years; 101 WHEREAS, by its terms, the Ordinance became effective at the close of the polls on November 5, 2002, the day of the election at which the proposition imposing the Sales Tax was approved by more than two-thirds of the electors voting on the measure; WHEREAS, the Ordinance empowers the Commission to sell or issue, from time to time, on or before the collection of the Sales Tax, bonds, or other evidences of indebtedness, in the aggregate principal amount at any one time outstanding not to exceed $500 million for capital expenditures for various purposes, including to carry out the transportation projects described in the Expenditure Plan (as defined herein); WHEREAS, the Commission is authorized by Section 240309 of the California Public Utilities Code to issue from time to time limited tax bonds (defined to include indebtedness and securities of any kind or class, including commercial paper notes), secured and payable in whole or in part from revenues of the Sales Tax ("Sales Tax Revenues"); WHEREAS, the Commission has determined to enter into this Indenture in order to provide for the issuance of certain commercial paper notes (the "Notes"), to establish and declare the terms and conditions upon which the Notes shall be issued and secured and to secure the payment of the principal thereof and premium (if any) and interest thereon; WHEREAS, it is intended by the Commission that principal and interest payable on the Notes will be obtained from the proceeds of Notes issued for such purpose until Sales Tax Revenues are available or bonds are issued to retire the Commission's commercial paper program; WHEREAS, the Notes will be secured by and payable from the Sales Tax Revenues on a parity basis with other Parity Debt, and on a subordinate basis with any Senior Lien Debt, issued from time to time in accordance with the terms hereof; WHEREAS, the execution and delivery of this Indenture has in all respects been duly and validly authorized by resolutions duly passed and approved by the Commission; and WHEREAS, the Commission has determined that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and the entering into of this Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Indenture; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest on all Notes at any time issued, authenticated and delivered hereunder, according to their tenor, and the payment of all amounts owing to any Credit Provider, and to secure the performance and observance of all of the covenants and conditions therein and herein set forth, to declare the terms and conditions upon and subject to which the Notes are to be issued and received, and in consideration of the premises and of the material covenants herein contained and of the purchase and acceptance of the Notes by the holders thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the Issuer does hereby agree and covenant with the Trustee, for the • • • 102 2 • • • benefit of the respective holders from time to time of the Notes and any Credit Provider as follows: ARTICLE I DEFINITIONS: EQUALITY OF SECURITY; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Indenture and of any Supplemental Indenture and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Act means the Riverside County Transportation Sales Tax Act, Division 25 (Section 240000 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented. Advance means each advance of funds from a Credit Facility in accordance with the terms of such Credit Facility. Advice means a notice or a written instrument executed by the Issuing and Paying Agent for a Series of Notes and delivered to the Depository for such Series of Notes which specifies the amount by which the indebtedness evidenced by the Master Note delivered in connection with such Series of Notes is to be increased or decreased on any particular date, and which includes such other information as may be required pursuant to the systems and procedures of the Depository applicable to implementation of its book -entry program for obligations of the character of such Series of Notes. Alternate Credit Facility means a replacement Credit Facility provided pursuant to the provisions of Section 6.09 hereof. Annual Debt Service means, for any Fiscal Year, the aggregate amount of principal and interest on, as applicable, the Notes, Parity Debt and Senior Lien Debt becoming due and payable during such Fiscal Year. For purposes of calculating Annual Debt Service, the following assumptions shall be utilized to calculate the principal and interest becoming due in any Fiscal Year: (i) in determining the principal amount due on Notes in each Fiscal Year, payment of principal and interest shall be assumed to be made in accordance with subsection (v) as if the Notes were Variable Rate Indebtedness with a maturity of the lesser of thirty (30) years or, if earlier, the Sales Tax Expiration Date; (ii) in determining the principal amount due in each Fiscal Year on all debt other than Notes, payment shall (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with any amortization schedule established for such debt, including any mandatory sinking account payments or any scheduled redemption or payment on the basis of accreted 103 3 value (as such term is defined in the document pursuant to which such debt was issued or incurred), and for such purpose, the redemption payment or payment of accreted value shall be deemed a principal payment and interest that is compounded and paid as accreted value shall be deemed due on the scheduled redemption or payment date of such debt; (iii) if any debt constitutes Variable Rate Indebtedness (except to the extent subsection (v) applies), the interest rate on such debt shall be calculated at the greater of: (a) the average of the BMA Municipal Swap Index for the ten years preceding the date of calculation plus two percent (2%), (b) the actual rate of interest payable on such Variable Rate Indebtedness as of the date of calculation, and (c) five and one-half percent (5.5%); provided that if such Variable Rate Indebtedness has been issued in connection with an interest rate swap agreement, the interest rate for computing Annual Debt Service shall be determined by (x) calculating the annualized net amount paid by the Issuer under such Variable Rate Indebtedness and interest rate swap agreement (after giving effect to payments made under the Variable Rate Indebtedness and made and received by the Issuer under such interest rate swap agreement) during the twelve (12) months ending with the month preceding the date of calculation or such shorter period as such interest rate swap agreement shall have been in effect, and (y) dividing the amount calculated in clause (x) by the average daily balance of the related debt during the period contemplated by clause (x); (iv) if any debt proposed to be issued constitutes Variable Rate Indebtedness (except to the extent subsection (v) applies), then such debt shall be assumed to bear interest at an interest rate equal to the greater of: (a) the average of the BMA Municipal Swap Index for the ten years preceding the date of calculation plus two percent (2%), (b) the most recently - determined BMA Municipal Swap Index as of the date of calculation, and (c) five and one-half percent (5.5%); provided that if such Variable Rate Indebtedness will be issued in connection with an interest rate swap agreement, the interest rate for computing Annual Debt Service shall be determined by (x) calculating the net amount to be paid by the Issuer under such Variable Rate Indebtedness and interest rate swap agreement (after giving effect to payments made under the Variable Rate Indebtedness and made and received by the Issuer under such interest rate swap agreement) and for purposes of this proviso to subsection (iv) any variable rate of interest agreed to be paid under the interest rate swap agreement shall be deemed to be the rate at which the related debt shall be assumed to bear interest, and (y) dividing the amount calculated in clause (x) by the average principal amount of the related debt to be outstanding during the first year after issuance of such debt; (v) if any debt features an option, on the part of the owners thereof or an obligation under the terms of such debt, to tender all or a portion of such debt to the Issuer, the Trustee, or other fiduciary or agent and requires that such debt or portion thereof be purchased if properly presented, then for purposes of determining the amounts of principal and interest due in any Fiscal Year on such debt, in determining the principal amount due in each Fiscal Year, payment shall (unless a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with the amortization schedule set forth in such debt or in the letter of credit or standby bond purchase agreement or standby note purchase agreement or line of credit entered into in connection with such debt, or if no such amortization schedule is set forth, then such debt shall be deemed to be amortized in substantially equal annual installments of principal and interest over a term of thirty (30) years • e • 104 4 • • or, if less, the remaining term of the Sales Tax, commencing in the year in which such debt was first subject to tender, interest to be calculated at an assumed interest rate equal to the average of The Bond Buyer Revenue Bond Index during the twelve (12) months ending with the month preceding the date of calculation. (vi) if any fixed to floating interest rate swap agreement is in effect with respect to, and is payable on a parity with the debt to which such interest rate swap agreement relates (which debt is not Variable Rate Indebtedness), the interest rate of such debt shall be calculated as follows: (a) if such interest rate swap is in effect on the date of calculation, the interest rate shall be calculated in the same manner as is specified in subsection (iii) above; and (b) if such interest rate swap agreement is not in effect on the date of such calculation, the interest rate shall be calculated in the same manner as is specified above in subsection (iv) above. (vii) principal and interest payments shall be excluded to the extent such payments are to be paid from amounts then currently on deposit with the Trustee or other fiduciary in escrow specifically and irrevocably pledged therefor and to the extent that such interest payments are to be paid from the proceeds of Notes or Parity Debt held by the Trustee or other fiduciary as capitalized interest specifically to pay such interest by the Trustee or other fiduciary. Auditor -Controller means the Chief Financial Officer of the Issuer. Authorized Representative means the Executive Director of the Issuer, its Deputy Executive Director, its Chief Financial Officer, its Accounting Manager or any other person designated by the Executive Director of the Issuer and who has been identified in a Certificate of the Issuer delivered to the Issuing and Paying Agent and the Trustee and whose signature has likewise been certified to the Issuing and Paying Agent and the Trustee. BMA Municipal Swap Index means the index based upon the weekly interest rates of tax-exempt variable rate issues included in a database maintained by Municipal Market Data or any successor indexing agent which meets the specific criteria established by the Bond Market Association. Board means the Board of Commissioners of the Issuer. BOE means the State Board of Equalization of the State of California. Bond Counsel means such firm or firms of national standing in the field of public finance as is selected by the Issuer. Business Day means, for so long as DTC shall be the Depository for any Series of Notes, any day on which DTC is scheduled to be open for money market instrument settlement services, and is other than: (i) a Saturday, Sunday or day upon which banking institutions in the State or the State of New York are authorized or obligated by law or executive order to be closed; (ii) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed; and (iii) for purposes of payments and other actions relating to a Series of Notes secured by a Credit Facility or Alternate Credit Facility, a day upon which commercial banks are authorized or obligated by law or executive order to be closed in the city 105 5 in which demands for payment are to be presented pursuant to such Credit Facility or Alternate Credit Facility. Certificate, Statement, Request, Requisition and Order of the Issuer mean, respectively, a written certificate, statement, request, requisition or order signed in the name of the Issuer by its Executive Director, its Deputy Executive Director, its Chief Financial Officer, its Accounting Manager or any other person designated by the Executive Director of the Issuer to execute such instruments. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.03, each such instrument shall include the statements provided for in Section 1.03. Certificate Agreement means the Money Market Certificate Agreement, dated as of , between the Issuing and Paying Agent and DTC. Code means the Internal Revenue Code of 1986 and the regulations issued thereunder, or any successor to the Internal Revenue Code of 1986. Reference to any particular Code section shall, in the event of such a successor Code, be deemed to be reference to the successor to such Code section. Commission means the Riverside County Transportation Commission, a public entity of the State, duly organized and existing under the Act. Corporate Trust Office or corporate trust office means, with respect to the Trustee, the corporate trust office of the Trustee at , or such other or additional offices as may be designated in writing by the Trustee to the Issuer, and means, with respect to the Issuing and Paying Agent, the corporate trust office of the Issuing and Paying Agent at , or such other or additional offices as may be designated in writing by the Issuing and Paying Agent to the Issuer. Costs of Issuance means all items of expense directly or indirectly payable by or reimbursable to the Issuer and related to the authorization, issuance, sale and delivery of a Series of Notes, including but not limited to advertising and printing costs, costs of preparation and reproduction of documents, filing and recording fees, travel expenses and costs relating to rating agency meetings and other meetings concerning a Series of Notes, the initial fees, expenses and charges of the Trustee and the Issuing and Paying Agent with respect to such Series of Notes, Bond Counsel and other legal fees and charges, fees and disbursements of consultants and professionals, including fees of the Dealer with respect to such Series of Notes, financial advisor fees and expenses, rating agency fees, fees and charges for preparation, execution, transportation and safekeeping of Notes, surety, insurance, liquidity and credit enhancements costs, and any other cost, charge or fee in connection with the issuance of a Series of Notes. Costs of Issuance Account means an account by that name established and held by the Issuer within a Proceeds Fund pursuant to Section 4.02 hereof. County means the County of Riverside, California. • 106 6 • • Credit Agreement means an agreement relating to a Credit Facility provided in connection with a Series of Notes, between the Issuer and a Credit Provider, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, and any similar agreement entered into in connection with an Alternate Credit Facility for such Series of Notes. Credit Facility means any letter of credit, surety bond, loan agreement or other credit agreement, facility, insurance or guarantee arrangement issued by a financial institution, insurance company or association pursuant to which the Issuing and Paying Agent and/or the Trustee, as the case may be, on behalf of the Issuer, is entitled to obtain funds to pay the principal of and interest on any Series of Notes or any Alternate Credit Facility substituted therefor in accordance with the provisions hereof. Credit Facility Fund means any fund by that name established and held by an Issuing and Paying Agent pursuant to an Issuing and Paying Agent Agreement entered into by the Issuer in connection with a Series of Notes. Credit Facility Expiration Date means the stated expiration date of a Credit Facility, taking into account any extensions of such stated expiration date. Credit Provider means any issuer of a Credit Facility or, as applicable, any agent for the issuer or issuers thereof. Credit Provider Loan means each loan of funds made by a Credit Provider to repay an Advance made in accordance with the terms of a Credit Agreement. Dealer means any dealer for a Series of Notes which has been appointed by the Issuer and which has entered into a Dealer Agreement with the Issuer with respect to such Series of Notes. Dealer Agreement means any agreement entered into by the Issuer with a Dealer in connection with a Series of Notes, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms. Dealer Note Principal Account means an account by that name established and held by an Issuing and Paying Agent pursuant to an Issuing and Paying Agent Agreement entered into in connection with a Series of Notes. Dealer Series A Note Principal Account means the account by that name established and held by the Initial Series Issuing and Paying Agent pursuant to Section 6 of the Initial Series Issuing and Paying Agent Agreement. Dealer Series B Note Principal Account means the account by that name established and held by the Initial Series Issuing and Paying Agent pursuant to Section 6 of the Initial Series Issuing and Paying Agent Agreement. Depository means DTC or any other qualified securities depository selected as set forth in Section 2.10 hereof. 107 7 DTC means The Depository Trust Company, New York, New York, and its successors and assigns. Event of Default means any of the events specified in Section 7.01. Expenditure Plan means the Riverside County Transportation Improvement Plan, adopted as part of the Ordinance, including any future amendments thereto. Fiscal Year means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal year period of the Issuer, which designation shall be provided to the Trustee in a Certificate of the Issuer. Fitch means Fitch, Inc., and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, the term "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Issuer. Holder or Owner or Noteholder or Noteowner means, whenever used herein with respect to a Note, the person in whose name such Note is registered. Indenture means this Indenture, dated as of March 1, 2005, between the Issuer and the Trustee, as originally executed and as it may from time to time be amended or supplemented by any Supplemental Indenture delivered pursuant to the provisions of Section 9.01 hereof. Initial Series Proceeds Fund means the fund by that name established and held by the Issuer pursuant to Section 4.01 hereof. Initial Series Costs of Issuance Account means the account by that name within the Initial Series Proceeds Fund established and held by the Issuer pursuant to Section 4.02 hereof. Initial Series Credit Agreement means, as of the date of execution and delivery of this Indenture, the [Reimbursement Agreement], dated as of March 1, 2005, between the Issuer and the Initial Series Credit Provider, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, and any similar agreement entered into in connection with the delivery of an Alternate Credit Facility for the Initial Series of Notes. Initial Series Credit Facility means, as of the date of execution and delivery of this Indenture, Irrevocable Letter of Credit No. , dated , 2005, issued and delivered by the Initial Series Credit Provider, or any Alternate Credit Facility substituted therefor in accordance with the provisions set forth in Section 6.09 hereof. • • Initial Series Credit Facility Expiration Date means the stated expiration date • of the Initial Series Credit Facility, taking into account any extensions thereof. 108 8 • • • Initial Series Credit Provider means Bank of America, N.A., or the issuer or issuers of any Alternate Credit Facility for the Initial Series of Notes. Initial Series Credit Provider Loan means each loan of funds made by the Initial Series Credit Provider to repay an Initial Series Advance in accordance with the terms of the Initial Series Credit Agreement. Initial Series Dealer means Lehman Brothers, Inc. and Banc of America Securities LLC, or any successors or assigns permitted under the Initial Series Dealer Agreement, or any other Dealer for the Initial Series of Notes which has entered into a Dealer Agreement with the Issuer. Initial Series Dealer Agreement means, as of the date of execution and delivery of this Indenture, the Dealer Agreement, dated as of March 1, 2005, between the Commission and the Initial Series Dealers, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, or any other Initial Series Dealer Agreement entered into by the Commission with an Initial Series Dealer with respect to the Initial Series of Notes. Initial Series Issuing and Paying Agent means, as of the date of execution and delivery of this Indenture, U.S. Bank Trust National Association, or any successor or assigns permitted under the Initial Series Issuing and Paying Agent Agreement, or any other Issuing and Paying Agent for the Initial Series of Notes which has entered into an Issuing and Paying Agent Agreement with the Issuer. Initial Series Issuing and Paying Agent Agreement means, as of the date of execution and delivery of this Indenture, the Issuing and Paying Agent Agreement, dated as of March 1, 2005, between the Issuer and the Initial Series Issuing and Paying Agent, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, or any other Initial Series Issuing and Paying Agent Agreement entered into by the Issuer with an Initial Series Issuing and Paying Agent with respect to the Initial Series of Notes. Initial Series of Notes means the Series A Notes and the Series B Notes. Interest Fund means the fund by that name established pursuant to Section 5.03. Investment Securities means the following: (i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any of the federal agencies and federally sponsored entities set forth in clause (iii) below to the extent unconditionally guaranteed by the United States of America and including interest strips of bonds issued by the Resolution Funding Corporation and held in book -entry form by the Federal Reserve Bank of New York; (ii) any certificates, receipts, securities or other obligations evidencing ownership of, or the right to receive, a specified portion of one or more interest payments or principal payments, or any combination thereof, to be made on any bond, note, or other obligation described above in clause (i); 109 9 (iii) obligations issued by Banks for Cooperatives, Federal Land Banks, Federal Intermediate Credit Banks, Federal Farm Credit Banks, Federal Home Loan Banks, the Federal Home Loan Bank Board, the Federal Home Loan Mortgage Corporation, the Resolution Funding Corporation, or in obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association, or in guaranteed portions of Small Business administration notes or in obligations, participations, or other instruments of, or issued by, a federal agency or a United States government -sponsored enterprise; (iv) housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America; or project bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (v) obligations of any state, territory or commonwealth of the United States of America or any political subdivision thereof or any agency or department of the foregoing; provided that such obligations are rated in either of the two highest Rating Categories by Standard & Poor's; (vi) any bonds or other obligations of any state of the United States of America or any political subdivision thereof (a) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds or other obligations for redemption on the date or dates specified in such instructions, (b) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described above in clause (i) or (ii), which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the interest payment dates and the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, (c) as to which the principal of and interest on the bonds and obligations of the character described above in clause (i) or (ii) which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay the principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (vi) on the interest payment dates and the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (a) of this clause (vi), as appropriate, and (d) which are rated in one of the two highest long-term Rating Categories by Standard & Poor's; (vii) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by any corporation which are rated by Standard & Poor's in their highest short-term Rating Category, or, if the term of such indebtedness is longer than three (3) years, rated by Standard & Poor's in one of their two highest long-term Rating Categories, for comparable types of debt obligations; (viii) demand or time deposits or certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of any state of the • 110 10 • • • United States of America or any national banking association (including the Trustee or any of its affiliates) or by a state licensed branch of any foreign bank, provided that such certificates of deposit shall be purchased directly from such a bank, trust company, national banking association or branch and shall be either (1) continuously and fully insured by the Federal Deposit Insurance Corporation, (2) continuously and fully secured by such securities and obligations as are described above in clauses (i) through (v), inclusive, which shall have a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit and shall be lodged with the Trustee or third -party agent, as custodian, by the bank, trust company, national banking association or branch issuing such certificates of deposit, and the bank, trust company, national banking association or branch issuing each such certificate of deposit required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such certificate of deposit will at all times be an amount equal to the principal amount of each such certificate of deposit and the Trustee shall be entitled to rely on each such undertaking, or (3) be issued by an institution the senior debt obligations of which are rated "AA" or better by Standard & Poor's; (ix) taxable commercial paper or tax-exempt commercial paper rated in the highest Rating Category by Standard & Poor's; (x) variable rate obligations required to be purchased by the obligor or its agent or designee upon demand of the holder thereof secured as to such purchase requirement by a liquidity agreement with a corporation and as to the payment of interest and principal either upon maturity or redemption thereof by an unconditional credit facility of a corporation, provided that the variable rate obligations themselves are rated by Standard & Poor's in the highest Rating Category with respect to short-term ratings, if any, and in either of the two highest Rating Categories with respect to long-term ratings, if any, and that the corporations providing the liquidity agreement and credit facility have, at the date of acquisition of the variable rate obligation by the Trustee, an outstanding issue of unsecured, uninsured and unguaranteed debt obligations rated in either of the two highest long-term Rating Categories by Standard & Poor's; (xi) [any repurchase agreement with any bank or trust company organized under the laws of any state of the United States or any national banking association (including the Trustee or any of its affiliates) having a minimum permanent capital of seventy-five million dollars ($75,000,000) or with a government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities and obligations described in clauses (i), (ii), (iii) or (iv) above, which shall have a market value (exclusive of accrued interest and valued at least monthly) at least equal to one hundred and three percent (103%) of the amount of such investment and which shall be lodged with the Trustee or other fiduciary, as custodian, by the bank, trust company, national banking association or bond dealer executing such repurchase agreement, and the entity executing each such repurchase agreement required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such repurchase agreement (as valued at least monthly) will be an amount equal to one hundred three percent (103%) of the principal and interest amount of each such repurchase agreement and the Trustee shall be entitled to rely on each such undertaking;] 111 11 (xii) any cash sweep or similar account arrangement of or available to the Trustee, the investments of which are limited to investments described in clauses (i), (ii), (iii), (iv), (v) and (x) of this definition of Investment Securities and any money market fund including money market funds from which the Trustee or its affiliates derive a fee for investment advisory or other services to the fund, the entire investments of which are limited to investments described in clauses (i), (ii), (iii), (iv), (v) and (x) of this definition of Investment Securities; provided that as used in this clause (xii) investments will be deemed to satisfy the requirements of clause (x) if they meet the requirements set forth in clause (x) ending with the words "clauses (i), (ii), (iii) or (iv) above" and without regard to the remainder of such clause (x); (xiii) any investment agreement with a financial institution or insurance company which has at the date of execution thereof an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims paying ability rated (or the parent company of which is rated) in either of the two highest long-term Rating Categories by Standard & Poor's; (xiv) shares of beneficial interest in diversified management companies investing exclusively in securities and obligations described in clauses (i) through (xiii) of this definition of Investment Securities and which companies have either the highest rating by Standard & Poor' s or have an investment advisor registered with the Securities and Exchange Commission with not less than five (5) years experience investing in such securities and obligations and with assets under management in excess of $500,000,000; (xv) [shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State of California, as it may be amended from time to time;] (xvi) obligations of the Resolution Trust Corporation and interest obligations of the Resolution Funding Corporation; (xvii) financial futures or financial option contracts with an entity the debt securities of which are rated in the highest short-term or one of the two highest long-term rating categories by Fitch, Moody's and Standard & Poor's; and (xviii) any investment approved by the Board and consented to by each Credit Provider. Issuance Request means a written request made by the Issuer, acting through an Authorized Representative, to the Issuing and Paying Agent for the authentication and delivery of a Note or Notes. Issuer means the Riverside County Transportation Commission, a public entity of the State, duly organized and existing under the Act. Issuer Note Interest Account means an account by that name established by the Issuing and Paying Agent in a Note Fund pursuant to Section 6 of the Issuing and Paying Agent Agreement. • 112 12 • • Issuer Series A Note Interest Account means an account by that name established within the Series A Note Fund and held by the Issuing and Paying Agent pursuant to Section 6 of the Issuing and Paying Agent Agreement. Issuer Series B Note Interest Account means an account by that name established within the Series B Note Fund and held by the Issuing and Paying Agent pursuant to Section 6 of the Issuing and Paying Agent Agreement. Issuer Note Principal Account means an account by that name established within a Note Fund and held by the Issuing and Paying Agent pursuant to Section 6 of the Issuing and Paying Agent Agreement. Issuer Series A Note Principal Account means an account by that name established within the Series A Note Fund and held by the Issuing and Paying Agent pursuant to Section 6 of the Issuing and Paying Agent Agreement. Issuer Series B Note Principal Account means an account by that name established within the Series B Note Fund and held by the Issuing and Paying Agent pursuant to Section 6 of the Issuing and Paying Agent Agreement. Issuing and Paying Agent means any issuing and paying agent for a Series of Notes which has been appointed by the Issuer and has entered into an Issuing and Paying Agent Agreement with the Issuer with respect to such Series of Notes. Issuing and Paying Agent Agreement means any agreement entered into by the Issuer with an Issuing and Paying Agent in connection with a Series of Notes, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms. Letter of Representations means, with respect to the Series A Notes, the Certificate Agreement and the Letter of Representations, dated , 2005, executed by the Issuer and the Trustee and delivered to DTC, as initial Depository for the Series A Notes, or any replacement thereof or substitute therefor; means, with respect to the Series B Notes, the Certificate Agreement and the Letter of Representations, dated , 2005, executed by the Issuer and the Trustee and delivered to DTC, as initial Depository for the Series B Notes, or any replacement thereof or substitute therefor; and means with respect to any other Series of Notes, the documentation delivered to a Depository in connection with such Series of Notes. Master Note means a Note substantially in the form attached hereto as Exhibit B. Maximum Annual Debt Service means the greatest amount of principal and interest becoming due and payable on all Senior Lien Debt, Notes and Parity Debt, as appropriate, in the Fiscal Year in which the calculation is made or any subsequent Fiscal Year, calculated using the principles and assumptions set forth under the definition of Annual Debt Service. Moody's means Moody's Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the 113 13 functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Issuer. 1988 Sales Tax means the sales tax imposed by the Issuer pursuant to Ordinance No. 88-1 from April 1, 1989 to March 31, 2009. 1988 Sales Tax Revenues means 100% of the amounts collected by the BOE on behalf of the Issuer pursuant to the Act relating to the 1988 Sales Tax. Noteholder or Owner or Holder or Noteowner means, whenever used herein with respect to a Note or any Parity Debt, the person in whose name such Note or Parity Debt, as applicable, is registered. Noteowner or Owner or Holder or Noteholder means, whenever used herein with respect to a Note or Parity Debt, the person in whose name such Note or Parity Debt, as applicable, is registered. Note Fund means a fund by that name established and held by the Issuing and Paying Agent pursuant to Section 6 of the Issuing and Paying Agent Agreement to pay principal of and interest on Notes when due. Note Program means the Issuer's program of issuing Notes from time to time pursuant to this Indenture. Note Reimbursement Fund means a fund by that name established and held by the Issuing and Paying Agent pursuant to Section 7 of the Issuing and Paying Agent Agreement. Notes means the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) authorized by, and at any time Outstanding pursuant to, this Indenture. Notice of No Issuance means a notice issued with respect to a Series of Notes pursuant to the provisions of the Credit Agreement entered into in connection with such Series of Notes, which notifies the Issuer and the Issuing and Paying Agent that no additional Notes of such Series may be issued. Opinion of Bond Counsel means a written opinion of Bond Counsel. Ordinance means the Riverside County Transportation Commission Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on May 8, 2002, and approved by the voters as Measure A at the November 5, 2002 election. Outstanding means, when used as of any particular time with reference to Notes, (subject to the provisions of Section 11.10), all Notes theretofore, or thereupon being, authenticated and delivered by the Issuing and Paying Agent under this Indenture and the Issuing and Paying Agent Agreement except: (i) Notes theretofore canceled by the Issuing and Paying Agent or surrendered to the Issuing and Paying Agent for cancellation; (ii) Notes with respect to • 114 14 • • • which all liability of the Issuer shall have been discharged in accordance with Section 10.02, including Notes (or portions of Notes) referred to in Section 11.10; and (iii) Notes for the transfer or exchange of or in lieu of or in substitution for which other Notes shall have been authenticated and delivered by the Issuing and Paying Agent pursuant to this Indenture. Owner or Holder or Noteholder or Noteowner means, whenever used herein with respect to a Note or Parity Debt, the person in whose name such Note or Parity Debt, as applicable, is registered. Parity Debt means all amounts owing under any Credit Agreement and all indebtedness or other obligations of the Issuer for borrowed money or any interest rate swap agreement having an equal lien upon the Sales Tax Revenues and therefore payable on a parity with the Notes (whether or not any Notes are Outstanding); provided, however, that any payments with respect to an interest rate swap agreement which represent termination payments or unwinding payments shall be Subordinate Obligations. Participant means any participant in a Securities Depository's book -entry system. Person means a corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. Principal Fund means the fund by that name established pursuant to Section 5.04. Proceeds Fund means a fund by that name established and held by the Issuer pursuant to Section 4.01 hereof. Project means the improvement, construction, maintenance, operation, development or planning of any transportation projects, facilities or programs permitted by the Ordinance. Rating Agency means Fitch, Moody's and Standard & Poor's, but, in each instance, only so long as each such Rating Agency then maintains a rating on the Notes or a Series of Notes, as applicable. Rating Category means: (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier; and (ii) with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier. Rebate Fund means the fund by that name established pursuant to Section 6.06. Rebate Requirement means the Rebate Requirement defined in the Tax Certificate delivered in connection with a Series of Notes. 115 15 Revenues means during any fiscal period the sum of the following amounts for such fiscal period: (1) all Sales Tax Revenues; and (2) all investment earnings on amounts held by the Trustee in the funds and accounts hereunder other than amounts deposited to the Rebate Fund. Sales Tax means the retail transactions and use tax levied pursuant to the Ordinance and applicable in the County in accordance with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code at the rate, commencing April 1, 2009, of one-half of one percent (1 /2%). Sales Tax Debt means all outstanding Notes, Parity Debt and Senior Lien Debt secured by the Sales Tax. Sales Tax Expiration Date means the date the Sales Tax is scheduled to expire. As of the date of this Indenture, the Sales Tax Expiration Date is [March 31, 2039]. Sales Tax Revenue Fund means the fund of that name established pursuant to Section 5.01(b). Sales Tax Revenues means 100% of the amounts collected by the BOE on behalf of the Issuer pursuant to the Act relating to the Sales Tax and distributed to the Trustee pursuant to a written direction of the Issuer to the BOE. Securities Depository means The Depository Trust Company, or, in accordance with then -current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depository, or no such depositories, as the Issuer may designate in a Request of the Issuer delivered to the Trustee. Senior Lien Debt means all indebtedness or other obligations of the Issuer having a lien upon the Sales Tax Revenues that is senior to that of the Notes and any Parity Debt. Series means, whenever used herein with respect to Notes, all of the Notes designated as being of the same series, regardless of variations in maturity, interest rate and other provisions. Series A Advance each advance of funds from the Series A Credit Facility in accordance with the terms thereof for the payment of the Series A Notes. Series A Credit Agreement means, as of the date of execution and delivery of this Indenture, the Initial Series Credit Agreement, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, and any similar agreement entered into in connection with delivery of an Alternate Credit Facility for the Series A Notes. • • • 116 16 • • • Series A Credit Facility means, as of the date of execution and delivery of this Indenture, the Initial Series Credit Facility, and any Alternate Credit Facility for the Series A Notes substituted therefor in accordance with the provisions set forth in Section 6.09 hereof. Series A Credit Facility Fund means the fund by that name established and held by the Initial Series Issuing and Paying Agent pursuant to Section 7 of the Initial Series Issuing and Paying Agent Agreement. Series A Credit Provider means the Initial Series Credit Provider, or the issuer or issuers of any Alternate Credit Facility for the Series A Notes. Series A Credit Provider Loan means each loan of funds made by the Series A Credit Provider to repay a Series A Advance in accordance with the terms of the Series A Credit Agreement. Series A Dealer means Lehman Brothers, Inc., or any successor or assign, permitted under the Series A Dealer Agreement, or any other Dealer for the Series A Notes which has entered into a Dealer Agreement with the Issuer. Series A Dealer Agreement means, as of the date of execution and delivery of this Indenture, the Dealer Agreement, dated as of March 1, 2005, between the Issuer and the Series A Dealer, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, or any other Series A Dealer Agreement entered into by the Issuer with a Series A Dealer with respect to the Series A Notes. Series A Issuing and Paying Agent means, as of the date of execution and delivery of this Indenture, the Initial Series Issuing and Paying Agent or any successor or assigns permitted under the Initial Series Issuing and Paying Agent Agreement, or any other Issuing and Paying Agent for the Series A Notes which has entered into an Issuing and Paying Agent Agreement with the Issuer. Series A Issuing and Paying Agent Agreement means, as of the date of execution and delivery of this Indenture, the Initial Series Issuing and Paying Agent Agreement, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, or any other Series A Issuing and Paying Agent Agreement entered into by the Issuer with a Series A Issuing and Paying Agent with respect to the Series A Notes. Series A Master Note means the Master Note delivered in connection with the Series A Notes. Series A Note Fund means the fund by that name established and held by the Series A Issuing and Paying Agent pursuant to the Series A Issuing and Paying Agent Agreement. Series A Note Interest Account means the account by that name established and held within the Series A Note Fund. 117 17 Series A Notes means the Riverside County Transportation Commission Commercial Paper Notes, Series A, authorized by, and at any time Outstanding pursuant hereto. Series B Advance means each advance of funds from the Series B Credit Facility in accordance with the terms thereof for the payment of the Series B Notes. Series B Credit Agreement means, as of the date of execution and delivery of this Indenture, the Initial Series Credit Agreement, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, and any similar agreement entered into in connection with delivery of an Alternate Credit Facility for the Series B Notes. Series B Credit Facility means, as of the date of execution and delivery of this Indenture, the Initial Series Credit Facility, and any Alternate Credit Facility for the Series B Notes substituted therefor in accordance with the provisions set forth in Section 6.09 hereof. Series B Credit Facility Fund means the fund by that name established and held by the Initial Series Issuing and Paying Agent pursuant to Section 7 of the Initial Series Issuing and Paying Agent Agreement. Series B Credit Provider means the Initial Series Credit Provider, or the issuer or issuers of any Alternate Credit Facility for the Series B Notes. Series B Credit Provider Loan means each loan of funds made by the Series B Credit Provider to repay a Series B Advance in accordance with the terms of the Series B Credit Agreement. Series B Dealer means Banc of America Securities LLC, or any successor or assign, permitted under the Series B Dealer Agreement, or any other Dealer for the Series B Notes which has entered into a Dealer Agreement with the Issuer. Series B Dealer Agreement means, as of the date of execution and delivery of this Indenture, the Dealer Agreement, dated as of March 1, 2005, between the Issuer and the Series B Dealer, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, or any other Series B Dealer Agreement entered into by the Issuer with a Series B Dealer with respect to the Series B Notes. Series B Issuing and Paying Agent means, as of the date of execution and delivery of this Indenture, the Initial Series Issuing and Paying Agent or any successor or assigns permitted under the Initial Series Issuing and Paying Agent Agreement, or any other Issuing and Paying Agent for the Series B Notes which has entered into an Issuing and Paying Agent Agreement with the Issuer. Series B Issuing and Paying Agent Agreement means, as of the date of execution and delivery of this Indenture, the Initial Series Issuing and Paying Agent Agreement, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, or any other Series B Issuing and Paying Agent Agreement entered into by the Issuer with a Series B Issuing and Paying Agent with respect to the Series B Notes. • • • 118 18 • Series B Master Note means the Master Note delivered in connection with the Series B Notes. Series B Note Fund means the fund by that name established and held by the Series B Issuing and Paying Agent pursuant to the Series B Issuing and Paying Agent Agreement. Series B Note Interest Account means the account by that name established and held within the Series B Note Fund. Series B Notes means the Riverside County Transportation Commission Commercial Paper Notes, Series B, authorized by, and at any time Outstanding pursuant hereto. Standard & Poor's means Standard & Poor's Ratings Services, a Division of The McGraw Hill Companies, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Standard & Poor's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Issuer. State means the State of California. Stated Amount means the initial amount available to be drawn on a Credit Facility as set forth in such Credit Facility, as such amount may from time to time be reduced and/or reinstated pursuant to the terms of such Credit Facility. Subordinate Obligations means any obligations of the Issuer secured by and payable from Revenue on a basis which is subordinate to the Notes and Parity Debt, including, without limitation, Credit Provider fees, Dealer fees, and fees, expenses and termination payments on swaps. Subordinate Obligations Fund means the fund by that name to be established and held by the Trustee pursuant to Section 5.05. Supplemental Indenture means any supplement to this Indenture hereafter duly authorized, executed and delivered by the Issuer and the Trustee, supplementing, modifying or amending this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. Tax Certificate means the Master Tax Certificate delivered by the Issuer in connection with the Initial Series of Notes, as originally executed and as it may from time to time be amended or supplemented pursuant to its terms, including, without limitation, as amended or supplemented in connection with a new commercial paper program as described therein, or the Master Tax Certificate delivered by the Issuer in connection with the issuance of any additional Series of Notes. 119 19 Trustee means U.S. Bank Trust National Association, a national banking association duly organized and existing under the laws of the United States of America, or its successor, as Trustee, as provided in Section 8.01. Variable Rate Indebtedness means any indebtedness the interest rate on which is not fixed at the time of incurrence of such indebtedness, and has not at some subsequent date been fixed, at a single numerical rate for the entire term of the indebtedness. SECTION 1.02. Equality of Security. In consideration of the acceptance of the Notes by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Issuer, the Trustee, and the Owners from time to time of all Notes authorized, issued and delivered hereunder and then Outstanding to secure the full and final payment of the interest on and principal of all Notes which may from time to time be authorized, issued and delivered hereunder and to secure all Parity Debt owed to any Credit Provider, subject to the agreements, conditions, covenants and provisions contained herein, and all agreements and covenants set forth herein to be performed by or on behalf of the Issuer or the Trustee shall be for the equal and proportionate benefit, protection and security of all Owners of the Notes, without distinction, preference, priority as to security or otherwise of any of the Notes over any of the other Notes by reason of the number or date thereof or the time of authorization, sale, issuance or delivery thereof or for any cause whatsoever, except as expressly provided therein or herein. SECTION 1.03. Content of Certificates and Opinions. Every Certificate of the Issuer or opinion provided for in this Indenture with respect to compliance with any provision hereof shall include: (1) a statement that the person making or giving such Certificate of the Issuer or opinion has read such provision and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the Certificate of the Issuer or opinion is based; (3) a statement that, in the opinion of such person, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion with respect to the subject matter referred to in the Certificate of the Issuer or opinion to which his signature is affixed; and (4) a statement as to whether, in the opinion of such person, such provision has been complied with. Any such Certificate of the Issuer or opinion made or given by an Authorized Representative of the Issuer may be based, insofar as it relates to legal or accounting matters, upon a certificate or opinion of or representation by counsel, an accountant, a financial advisor, an investment banker or an independent consultant, unless such Authorized Representative of the Issuer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an accountant, a financial advisor, an investment banker or an independent consultant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the Issuer) upon a certificate or opinion of or representation by an officer of the Issuer, unless such counsel, accountant, financial advisor, investment banker or independent consultant knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which such person's certificate or opinion or representation may be based, as aforesaid, is erroneous. The same Authorized Representative of the Issuer, or the same counsel or accountant or financial advisor or investment • • • 120 20 • banker or independent consultant, as the case may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different officers, counsel, accountants, financial advisors, investment bankers or independent consultants may certify to different matters, respectively. ARTICLE II THE NOTES SECTION 2.01. Authorization of Notes. (a) Notes may be issued hereunder, in registered form, from time to time in order to obtain moneys to carry out the purposes authorized by this Indenture. The maximum principal amount of Notes which may be issued hereunder is not limited; however the aggregate principal amount of Notes which may be issued or Outstanding at any one time hereunder shall not exceed $500,000,000. The Notes authorized to be issued under this Indenture are designated generally as the "Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds)," each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Notes. (b) A Series of Notes entitled "Series A" is hereby authorized to be issued. The Series A Notes shall be issued from time to time as provided herein to finance and refinance the costs of the Project and Costs of Issuance incurred in connection therewith. Proceeds of the Series A Notes may be used to pay principal of and interest on maturing Series A Notes, to reimburse each Series A Credit Provider for Series A Advances and Series A Credit Provider Loans used to pay maturing Series A Notes [and, until the commencement of the collection of the Sales Tax, to pay fees and expenses related to the Notes]. Such authorization specifically includes the authorization to issue and reissue Series A Notes for such purposes. The aggregate principal amount of Series A Notes that may be Outstanding hereunder at any one time shall not exceed one hundred twenty million dollars ($120,000,000). (c) A Series of Notes entitled "Series B" is hereby authorized to be issued. The Series B Notes shall be issued from time to time as provided herein to finance and refinance the costs of the Project and Costs of Issuance incurred in connection therewith. Proceeds of the Series B Notes may be used to pay principal of and interest on maturing Series B Notes, to reimburse the Series B Credit Provider for Series B Advances and Series B Credit Provider Loans used to pay maturing Series B Notes [and, until the commencement of the collection of the Sales Tax, to pay fees and expenses related to the Notes]. Such authorization specifically includes the authorization to issue and reissue Series B Notes for such purposes. The aggregate principal amount of Series B Notes that may be Outstanding hereunder at any one time shall not exceed eighty million dollars ($80,000,000). SECTION 2.02. Terms of the Notes. (a) The Notes shall be dated the date of their respective authentication and issuance; shall be issued in registered form, registered as designated by the Dealer, subject to the provisions regarding delivery of Notes in book -entry form set forth in Section 2.10 hereof; shall be issued in denominations of $100,000 and in integral multiples of $1,000 in excess thereof; and interest on the Notes shall be separately stated 121 21 by rate and amount on the face of each Note. Notes shall bear interest from their respective dates, payable on their respective maturity dates. (b) The Notes: (i) shall bear interest payable at maturity at a rate not to exceed twelve percent (12%) per annum calculated on the basis of a year consisting of 365/366 days and actual number of days elapsed; (ii) shall mature on a Business Day not more than two hundred seventy (270) days after their respective dates, but in no event later than five (5) days prior to the applicable Credit Facility Expiration Date, or beyond the Sales Tax Expiration Date, or beyond thirty (30) years from the date of initial issuance of Notes of such Series (as provided in the Tax Certificate); and (iii) shall be sold at a price of not less than one hundred percent (100%) of the principal amount thereof. The stated interest rate, maturity date and other terms of each Note, so long as not inconsistent with the terms of this Indenture, shall be as set forth in the Issuance Request required to be delivered pursuant to Section 3.01 hereof directing the issuance of such Note. (c) The Notes shall not be subject to prepayment or redemption prior to maturity. (d) Within each Series, Notes shall be numbered consecutively from No. 1 upward. The Issuing and Paying Agent may make additional provisions for numbering, including additional prefixes and suffixes, as it may deem appropriate. (e) The principal of and the interest on the Notes shall be paid in federal or other immediately available funds in such coin or currency of the United States of America as, at the respective times of payment, is legal tender for the payment of public and private debts. The principal of and the interest on the Notes, if any, shall be payable at the Corporate Trust Office of the applicable Issuing and Paying Agent on or before the close of business on any Business Day upon which such Notes have become due and payable, provided that such Notes are presented and surrendered on a timely basis. Upon presentation of such a Note to the Issuing and Paying Agent no later than 2:00 p.m. New York City time on a Business Day, payment for such Note shall be made by the Issuing and Paying Agent in immediately available funds on such Business Day. If a Note is presented for payment after 2:00 p.m. New York City time on a Business Day, payment therefor shall be made by the Issuing and Paying Agent on the next succeeding Business Day without the accrual of additional interest thereon. Notwithstanding the provisions set forth in this Section 2.02: (i) in the event that the Issuer determines to issue a taxable Series of Notes, the terms of such taxable Series of Notes shall be set forth in the Supplemental Indenture creating such taxable Series of Notes; and (ii) in the event that a Series of Notes is issued in the form of a Master Note or Master Notes in book - entry form, such Notes shall be payable at maturity without the necessity of physical presentation or surrender in accordance with the procedures of the Depository for such Series of Notes. SECTION 2.03. Form of Notes. The Series A Notes and the Series B Notes shall be in the form set forth in Exhibit A hereto. The Notes of any other Series shall be in such form or forms as may be specified in the Supplemental Indenture creating such Series. • 122 22 • • Notwithstanding the foregoing, the Issuer may deliver the Notes of any Series, including the Series A Notes and the Series B Notes, in the form of a Master Note, representing all Notes of such Series to be issued from time to time, each maturing no later than the date calculated pursuant to Section 2.02(b)(ii). Each Master Note may be replaced by a new Master Note having a later maturity date so long as the maturity date thereof does not extend beyond the date calculated pursuant to Section 2.02(b)(ii), as the same may be extended from time to time. Each Master Note shall evidence indebtedness of the Issuer as set forth in the Advices. Each Advice shall comply with the limitations on Notes set forth in Section 2.01 and Section 2.02. The aggregate indebtedness evidenced by any Master Note shall at all times equal or be less than the Stated Amount of the Credit Facility then in effect with respect to the Series of Notes to which the Master Note relates. References herein to Notes when a Master Note has been issued therefor shall refer to the indebtedness under the Master Note or the Advices issued with respect thereto. SECTION 2.04. Execution of Notes. The Notes shall be executed in the name and on behalf of the Issuer by the facsimile or manual signature of the Chairperson of the Board or the Vice Chairperson of the Board and shall be countersigned by the facsimile or manual signature of the Auditor -Controller of the Issuer, and shall have the official seal of the Issuer attached or affixed thereon in manual or facsimile form. In case any of the officers who shall have signed or countersigned any of the Notes shall cease to be such officer or officers of the Issuer before the Notes so signed or countersigned shall have been authenticated or delivered by the Issuing and Paying Agent or issued by the Issuer, such Notes may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Issuer as though those who signed and countersigned the same had continued to be such officers of the Issuer. SECTION 2.05. Authentication of Notes. (a) Each Note shall be authenticated by manual signature of the applicable Issuing and Paying Agent who shall, pursuant to the provisions hereof, authenticate and deliver Notes in accordance with the terms of an Issuance Request delivered pursuant to Section 3.01 hereof. (b) Notwithstanding anything contained herein or in the Issuing and Paying Agent Agreement to the contrary, the Issuing and Paying Agent shall not authenticate: (i) any Series A Note except in compliance with the provisions set forth in Section 5(e) and Section 5(0 of the Issuing and Paying Agent Agreement; and (ii) any Series B Note except in compliance with the provisions set forth in Section 5(g) and Section 5(h) of the Issuing and Paying Agent Agreement. (c) Notwithstanding anything contained herein or in the Issuing and Paying Agent Agreement to the contrary, the Issuing and Paying Agent shall not: (i) authenticate any Note of any other Series unless the requirements regarding authentication of such Series of Notes set forth in the Supplemental Indenture creating such Series of Notes shall have been met; and (ii) except in compliance with the provisions set forth in Section 5(i) and Section 5(j) of the Issuing and Paying Agent Agreement. (d) Only such of the Notes as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit A hereto or as set forth in the Supplemental 123 23 Indenture creating such Series of Notes, manually executed by the Issuing and Paying Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of authentication when manually executed by the Issuing and Paying Agent shall be conclusive evidence that the Notes so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. SECTION 2.06. Transfer of Notes. Any Note may, in accordance with its terms, be transferred, upon the register required to be kept pursuant to the provisions of Section 2.08, by the person in whose name it is registered, in person or by such person's duly authorized attorney, upon surrender of such Note for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Issuing and Paying Agent. Whenever any Note or Notes shall be surrendered for transfer, the Issuer shall execute and the Issuing and Paying Agent shall authenticate and deliver a new Note or Notes, of the same Series, maturity and interest rate and for a like aggregate principal amount. The Issuing and Paying Agent shall require the Owner of the Note requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. SECTION 2.07. Exchange of Notes. Notes may be exchanged at the Corporate Trust Office of the Issuing and Paying Agent for a like aggregate principal amount of Notes of other authorized denominations of the same Series, maturity and interest rate. The Issuing and Paying Agent shall require the Owner of the Note requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. SECTION 2.08. Registration of Notes. The Issuing and Paying Agent will keep or cause to be kept at its Corporate Trust Office sufficient books for the registration and transfer of Notes, which shall at all times be open to inspection during normal business hours by the Issuer upon reasonable prior notice, and upon presentation for such purpose, the Issuing and Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such books, the Notes, as hereinbefore provided. SECTION 2.09. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become mutilated, the Issuer, at the expense of the Holder of said Note, shall execute and deliver a new Note of like tenor, Series and number in exchange and substitution for the Note so mutilated, but only upon surrender to the Issuing and Paying Agent of the Note so mutilated. If any Note shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Issuer and the Issuing and Paying Agent and, if such evidence be satisfactory to the Issuer and the Issuing and Paying Agent and indemnity satisfactory to the Issuer and the Issuing and Paying Agent shall be given, the Issuer, at the expense of the Owner, shall execute and deliver a new Note of like tenor and Series in lieu of and in substitution for the Note so lost, destroyed or stolen. Neither the Issuer nor the Issuing and Paying Agent shall be required to treat both the original Note and any replacement Note as being Outstanding for the purpose of determining the principal amount of Notes which may be issued hereunder, but both the original and the replacement Note shall be treated as one and the same. SECTION 2.10. Special Provisions Regarding Book -Entry Only System for Notes. (a) Except as may otherwise be provided in a Supplemental Indenture establishing the terms and provisions of an additional Series of Notes, and except as otherwise provided in • 124 24 • subsections (b) and (c) of this Section 2.10, each Series of Notes shall be initially issued in book - entry form and shall be registered in the name of Cede & Co., as nominee for DTC, or in the name of such other nominee as the Depository for such Series of Notes shall request pursuant to the Letter of Representations delivered in connection with such Series of Notes. Payment of the interest on any Note registered in the name of Cede & Co. or any other nominee (hereinafter referred to as a "Nominee") shall be made in the manner and at the address indicated in or pursuant to the Letter of Representations delivered in connection with such Series of Notes. (b) Each Series of Notes shall be initially issued in the form of a separate single authenticated fully registered Master Note. Upon initial issuance, except as otherwise provided in subsection (a) of this Section 2.10, the ownership of Notes of all Series shall be registered in the registration records maintained by the Issuing and Paying Agent pursuant to Section 2.08 hereof in the name of the Nominee for such Series of Notes. The Issuer and the Issuing and Paying Agent may treat each Depository as the sole and exclusive owner of the Notes registered in its name or the name of its Nominee for the purposes of payment of the principal of and interest on the Series of Notes to which such Note belongs, giving any notice permitted or required to be given to Owners hereunder, registering the transfer of Notes, obtaining any consent or other action to be taken by Owners of the Notes and for all other purposes whatsoever; and neither the Issuer nor the Issuing and Paying Agent shall be affected by any notice to the contrary. Neither the Issuer nor the Issuing and Paying Agent shall have any responsibility or obligation to any participant in a Depository (hereinafter referred to as a "Participant"), any person claiming a beneficial ownership interest in the Notes under or through a Depository or any Participant, or any other person which is not shown on the registration records as being an Owner, including, but not limited to, any responsibility or obligation with respect to (i) the accuracy of any records maintained by any Depository or any Participant, (ii) the payment by any Depository or any Participant of any amount in respect of the principal of, or interest on the Notes, (iii) the delivery of any notice which is permitted or required to be given to Owners of Notes hereunder, (iv) any consent given or other action taken by any Depository as Owner of Notes, or (v) any other purpose. The Issuing and Paying Agent shall pay all principal of, and interest on the Notes only at the times, to the accounts, at the addresses and otherwise in accordance with the Letter of Representations, and all such payments shall be valid and effective to satisfy fully and discharge the Issuer's obligations with respect to the principal of, and interest on the Notes to the extent of the sum or sums so paid. Upon delivery by any Depository to the Issuing and Paying Agent of written notice to the effect that any Depository has determined to substitute a new nominee in place of its then existing Nominee, the Notes will be transferable to such new nominee in accordance with subsection (e) of this Section 2.10. (c) In the event that the Issuer determines that it is in the best interests of the beneficial owners of the Notes of any Series that they be able to obtain note certificates, the Issuing and Paying Agent shall, upon the Request of the Issuer, so notify each Depository, whereupon pursuant to the Letter of Representations, each Depository shall notify the Participants of the availability of note certificates. In such event, the Notes will be transferable in accordance with subsection (e) of this Section 2.10. Any Depository may determine to discontinue providing its services with respect to the Notes at any time by giving written notice of such discontinuance to the Issuer and the Issuing and Paying Agent and discharging its responsibilities with respect thereto under applicable law. In such event, the Notes will be 125 25 transferable in accordance with subsection (e) of this Section 2.10. Whenever any Depository requests the Issuer and any Issuing and Paying Agent to do so, the Issuing and Paying Agent and the Issuer will cooperate with such Depository in taking appropriate action after reasonable notice to arrange for another depository to maintain custody of all certificates evidencing the Notes then Outstanding. In such event, the Notes will be transferable to such depository in accordance with subsection (e) of this Section 2.10, and thereafter, all references in this Indenture to such depository or its Nominee shall be deemed to refer to such securities depository and its nominee, as appropriate. (d) In connection with any successor nominee for DTC or any other Depository or any successor to DTC or any other Depository, the Issuing and Paying Agent is hereby authorized and requested to enter into arrangements comparable to those entered into with DTC in connection with the Initial Series of Notes, and the Issuing and Paying Agent shall have the same rights and immunities with respect to its actions thereunder as it has with respect to its actions under this Indenture. (e) In the event that any transfer or exchange of Notes is authorized under subsection (b) or (c) of this Section 2.10, such transfer or exchange shall be accomplished upon receipt by the Issuing and Paying Agent from the registered owner thereof of the Notes to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.06 and 2.07 hereof. In the event note certificates are issued to Owners other than Cede & Co., its successor as nominee for DTC as holder of all the Notes, another securities depository as holder of all the Notes, or the nominee of such successor securities depository, the provisions of Sections 2.02, 2.06 and 2.07 hereof shall also apply to, among other things, the registration, exchange and transfer of the Notes and the method of payment of principal of and interest on the Notes. (f) Notwithstanding any other provision of this Indenture to the contrary, so long as any Series of Notes are issued in the form of a Master Note, all payments with respect to principal of and interest on such Notes and all notices with respect to such Notes shall be made and given, respectively, as provided in the Letter of Representations delivered in connection with such Series of Notes or as otherwise instructed in writing by the Depository. ARTICLE III ISSUE AND SALE OF NOTES; APPLICATION OF PROCEEDS; ADDITIONAL NOTES; PARITY DEBT SECTION 3.01. Issuance and Sale of Notes. (a) Except as otherwise provided in Section 2.10 with respect to issuance of a Series of Notes in book -entry form, whenever an Authorized Representative determines that the Issuer shall sell or issue Notes, such Authorized Representative shall deliver an Issuance Request to the Issuing and Paying Agent and the Trustee prescribing the terms of such Notes and the sale or issuance thereof in accordance with Section 2.02, and representing: (i) that all action on the part of the Issuer necessary for the valid issuance of the Notes then to be issued has been taken and has not been rescinded or revoked; (ii) that all provisions of State and federal law necessary for the valid issuance of such Notes and (except in the case of a Series of Notes, the interest with respect to which is not expected to be • 126 26 • • • excluded from gross income for federal income tax purposes) necessary to provide that interest thereon is excludable from gross income for purposes of federal income taxes and is exempt from State of California personal income taxes have been complied with; (iii) that interest on the Notes is excludable from gross income for purposes of federal income taxes and is exempt from State of California personal income taxes; and (iv) that such Notes in the hands of the Owners thereof will be valid and binding limited obligations of the Issuer enforceable according to their terms. Each such Issuance Request shall also certify or constitute a representation and warranty that as of the date of such Issuance Request: (1) no Event of Default under Section 7.01 has occurred and is continuing as of the date of such Issuance Request; (2) the Issuer is in compliance with the covenants set forth in Article VI hereof, including, without limitation, the tax covenants contained in Section 6.06 and 6.07, and is in compliance with the covenants set forth in Section 1.8.2 of the Tax Certificate, as of the date of such Issuance Request, except in the case of a Series of Notes the interest with respect to which is not expected to be excluded from gross income for federal income tax purposes under the Code; and (3) Provider. no Notice of No Issuance has been received from the Credit Upon receipt of an Issuance Request, the Issuing and Paying Agent shall authenticate and deliver the Notes to the applicable Dealer for the consideration and in the manner hereinafter and in the Issuing and Paying Agent Agreement provided, but only if the Issuing and Paying Agent shall have received such Issuance Request no later than 12:30 p.m. New York City time on the Business Day on which such Notes are to be delivered. If an Issuance Request is received after 12:30 p.m. New York City time on a given day, the Issuing and Paying Agent shall not be obligated to deliver the requested Notes until the next succeeding Business Day. (b) Upon receipt of an Issuance Request which shall be transmitted by the Issuer in accordance with the provisions set forth in the Issuing and Paying Agent Agreement, the Issuing and Paying Agent shall, by 2:00 p.m. New York City time on such day, complete each Note then to be delivered as to principal amount, date of issue, registered owner (which shall be registered in accordance with the instructions for registration provided by the applicable Dealer), maturity date, interest rate and interest amount specified in such Issuance Request, authenticate each such Note and deliver it to the applicable Dealer. Such Dealer shall, by 2:15 p.m. New York City time on such day, pursuant to the provisions set forth in the Dealer Agreement, pay to the Issuing and Paying Agent, in immediately available funds, the aggregate purchase price for such Notes. (c) Notwithstanding any other provision of this Indenture or the Issuing and Paying Agent Agreement to the contrary, no such Notes shall be delivered by the Issuing and Paying Agent if the delivery of such Notes would result in violation of any of the prohibitions respecting authentication of Notes set forth in Section 2.05. If the Issuing and Paying Agent is unable to comply with an Issuance Request due to a failure to comply with the conditions set 127 27 forth in Section 2.05, the Issuing and Paying Agent shall promptly notify the Issuer, the Trustee and the applicable Dealer of the circumstances prohibiting the issuance of Notes. (d) So long as any Series of Notes is issued in book -entry form as provided in Section 2.10, the Issuing and Paying Agent shall deliver Notes of such Series in accordance with the terms of the Letter of Representations delivered in connection with such Series of Notes. SECTION 3.02. Proceeds of Sale of a Series of Notes. (a) Upon receipt from a Dealer of the proceeds of issuance and sale of a Series of Notes, the Issuing and Paying Agent shall: (1) deposit such proceeds to the credit of the Dealer Note Principal Account in the Note Fund created pursuant to the Issuing and Paying Agent Agreement entered into in connection with a Series of Notes, to the extent necessary for the reimbursement of Advances under the Credit Facility delivered in connection with such Series of Notes or for the reimbursement of Credit Provider Loans or for the payment of the principal of and interest on Notes then due and payable or becoming due and payable on the day of receipt of such proceeds, provided, however, that such proceeds shall be applied to the payment of the principal of and interest on the Notes then due and payable or becoming due and payable on the day of receipt of such proceeds only to the extent that amounts held on deposit in the applicable Credit Facility Fund are insufficient to pay such principal or interest; and (2) transfer the balance of such proceeds to the Trustee for application in accordance with the written directions of the Issuer set forth in the Issuance Request delivered by the Issuer in connection with such Notes. (b) Upon receipt from the Issuing and Paying Agent of proceeds of issuance and sale of a Series of Notes, the Trustee shall apply such proceeds in accordance with the written directions of the Issuer set forth in the Issuance Request delivered by the Issuer in connection with such Series of Notes. SECTION 3.03. Issuance of Additional Series of Notes. The Issuer may by Supplemental Indenture establish one or more additional Series of Notes, payable from the Sales Tax Revenues and secured by the pledge made under the Act and this Indenture equally and ratably with the Initial Series of Notes and any other Series of Notes previously issued, and the Issuer may issue, and the Issuing and Paying Agent may authenticate and deliver to the Dealer thereof, Notes of any Series so established, in such principal amount as shall be determined by the Issuer, but only, with respect to each such additional Series of Notes issued hereunder after the Initial Series of Notes, upon compliance by the Issuer with the provisions of Section 3.04 and Section 3.05 and any additional requirements set forth in said Supplemental Indenture, and subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such additional Series of Notes: (a) No Event of Default shall have occurred and then be continuing. • 128 28 (b) The aggregate principal amount of Notes authorized to be issued hereunder, together with all outstanding Parity Debt, shall not in combination exceed any limitation imposed by the Ordinance or the Act or by any Supplemental Indenture. (c) The Issuer shall have placed on file with the Trustee and each Credit Provider a Certificate of the Issuer certifying that the amount of Sales Tax Revenues or 1988 Sales Tax Revenues, as applicable, for any period, selected by the Issuer, of twelve (12) consecutive months during the eighteen (18) months immediately preceding the date of the proposed issuance will be at least equal to one and fifteen hundredths (1.15) times the Maximum Annual Debt Service on all Notes, Parity Debt and Senior Lien Debt then Outstanding, including the additional Series of Notes then proposed to be issued. (d) The aggregate principal amount of Notes issued hereunder, together with interest thereon to maturity, shall not exceed the Stated Amount of the Initial Series Credit Facility or Alternate Credit Facility then providing credit and liquidity support for the Notes. (e) No Notice of No -Issuance shall have been delivered by the Credit Provider. Nothing in this Section or in this Indenture shall prevent or be construed to prevent the Supplemental Indenture providing for the issuance of an additional Series of Notes from pledging or otherwise providing, in addition to the security given or intended to be given by this Indenture, additional security for the benefit of such additional Series of Notes or any portion thereof. SECTION 3.04. Proceedings for Issuance of Additional Series of Notes. Whenever the Issuer shall determine to issue an additional Series of Notes pursuant to Section 3.03, the Issuer shall authorize the execution of a Supplemental Indenture which shall specify the aggregate principal amount of such Series of Notes, which shall prescribe the terms and conditions of such Series of Notes, including the Series designation, forms, authorized denominations and the liquidity or credit facility to be provided with respect to such Series of Notes and which shall include such other provisions as are necessary or appropriate and not inconsistent with the terms of this Indenture. Before such additional Series of Notes shall be issued and delivered, the Issuer shall file the following documents with the Trustee, the Issuing and Paying Agent and each Credit Provider: (a) An executed copy of the Supplemental Indenture authorizing the issuance of such additional Series of Notes; (b) An executed copy of the Credit Facility, the Issuing and Paying Agent Agreement, the Credit Agreement and the Dealer Agreement executed in connection with the issuance and delivery of such additional Series of Notes; (c) A Certificate of the Issuer stating that no Event of Default has occurred and is then continuing; and that upon the delivery of such Series of Notes the aggregate principal 129 29 amount of Notes then Outstanding will not exceed the amount permitted by law or by this Indenture; (d) An Opinion of Bond Counsel to the effect that the execution of the Supplemental Indenture has been duly authorized by the Issuer and that such Series of Notes, when duly executed by the Issuer and authenticated and delivered by the Issuing and Paying Agent in accordance with this Indenture and the Issuing and Paying Agent Agreement, will be valid and binding limited obligations of the Issuer; (e) The Certificate of the Issuer required to be delivered pursuant to Section 3.03(c) hereof; (f) A Certificate of the Issuer containing such statements as may be reasonably necessary to show compliance with the conditions for the issuance of such additional Series of Notes as are contained herein; and (g) Such further documents, money or securities as are required by the provisions of the Supplemental Indenture providing for the issuance of such additional Series of Notes. A copy of all documents provided to the Trustee and the Issuing and Paying Agent pursuant to this Section shall also be provided to each Credit Provider. SECTION 3.05. Issuance of Refunding Debt. (a) Refunding debt may be authorized and issued by the Issuer without compliance with the provisions set forth in Section 3.03 and Section 3.04 hereof; provided that no Note, Advance or Credit Provider Loan shall be deemed to constitute refunding debt or be subject to the provisions of this section. Such refunding debt may be issued as Parity Debt in accordance with the provisions set forth herein, in an aggregate principal amount sufficient (together with any additional funds available or to become available) to provide funds for payment of all of the following: (1) The principal or redemption price, if applicable, of the outstanding Notes or Parity Debt or Senior Lien Debt to be refunded. (2) All expenses incident to the calling, retiring or paying of such outstanding Notes or Parity Debt or Senior Lien Debt and the costs of issuance of such refunding debt. (3) Interest on all outstanding Notes or Parity Debt or Senior Lien Debt to be refunded to the date such Notes or Parity Debt or Senior Lien Debt will be called for redemption or paid at maturity, as applicable. (4) Interest on the refunding debt from the date thereof to the date of payment or redemption of the Notes or Parity Debt or Senior Lien Debt to be refunded. (b) Before such refunding debt shall be issued and delivered, the Issuer shall file the following documents with the Trustee: 0 130 30 (1) refunding debt. A transcript of the proceedings providing for the issuance of such (2) An Opinion of Bond Counsel to the effect that (i) such refunding debt has been duly authorized by the Issuer in accordance with this Indenture and that such refunding debt constitutes a valid and binding obligation of the Issuer, and (ii) that the refunded debt is deemed to be paid or defeased and to be no longer outstanding or, if such refunding debt is issued pursuant to a crossover refunding, that such refunding debt shall not be Parity Debt until the refunded debt is redeemed. (3) If any of the debt to be refunded is to be redeemed prior to its stated maturity date, irrevocable instructions to the trustee for such debt to give the applicable notice of redemption or a waiver of the notice of redemption signed by the owners of all or the portion of such debt to be redeemed, or proof that such notice has been given by the Issuer; provided, however, that in lieu of such instructions or waiver or proof of notice of redemption, the Issuer may cause to be deposited with the trustee for such debt all of the debt proposed to be redeemed (whether cancelled or uncancelled) with irrevocable instructions to the trustee for such debt to cancel said debt so to be redeemed upon the exchange and delivery of said refunding debt; and provided further that no provision of this Indenture shall be construed to require the redemption of such debt prior to the maturity date thereof due to the refunding thereof. A copy of such documents shall also be provided to each Credit Provider. (c) The proceeds of the sale of the refunding debt shall be applied according to the Request of the Issuer to the retirement of the outstanding Notes or Parity Debt or Senior Lien Debt for the refunding of which said refunding debt is being issued. All Notes or Parity Debt or Senior Lien Debt purchased, redeemed or retired by use of funds received from the sale of refunding debt, and all Notes or Parity Debt or Senior Lien Debt surrendered to the trustee for such debt against the issuance of refunding debt, shall be forthwith cancelled and shall not be reissued. No Note of any Series nor any Advance nor any Credit Provider Loan shall be deemed to constitute refunding debt. SECTION 3.06. Limitations on the Issuance of Obligations Payable from Sales Tax Revenues. The Issuer will not, so long as any of the Notes, Parity Debt or Senior Lien Debt are outstanding, issue any obligations or securities, howsoever denominated, payable in whole or in part from or secured by Sales Tax Revenues, except the following: (a) Notes of any additional Series authorized pursuant to Sections 3.03 and 3.04. (b) Refunding debt authorized pursuant to Section 3.05. (c) Parity Debt, provided that the following conditions to the issuance of such Parity Debt are satisfied: 131 31 (1) Such Parity Debt has been duly and legally authorized for any lawful purpose of the Issuer; (2) No Event of Default shall have occurred and then be continuing, as evidenced in a Certificate of the Issuer filed with the Trustee; (3) Unless such Parity Debt is being issued for purposes of refunding in accordance with the provisions set forth in Section 3.05, the Issuer shall have placed on file with the Trustee and each Credit Provider, a Certificate of the Issuer, upon which the Trustee and each Credit Provider may conclusively rely, demonstrating and certifying (on the basis of calculations as of the date of sale of such Parity Debt, which calculations shall be set forth in such Certificate) that the requirements described in Section 3.03(c) with respect to the issuance of an additional Series of Notes have been met with respect to such Parity Debt; (4) The Issuer shall have filed with the Trustee an Opinion of Bond Counsel to the effect that such Parity Debt has been duly authorized in accordance with this Indenture and that such Parity Debt constitutes a valid and binding obligation of the Issuer; and (5) The Issuer shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Parity Debt. (d) Senior Lien Debt, provided the following conditions to the issuance of such Senior Lien Debt are satisfied: (1) Such Senior Lien Debt has been duly and legally authorized for any lawful purpose of the Issuer; (2) No Event of Default shall have occurred and then be continuing, as evidenced in a Certificate of the Issuer filed with the Trustee; (3) Unless such Senior Lien Debt is being issued for purposes of refunding in accordance with the provisions set forth in Section 3.05, the Issuer shall have placed on file with the Trustee and each Credit Provider, (i) a Certificate of the Issuer, upon which the Trustee and each Credit Provider may conclusively rely, demonstrating and certifying (on the basis of calculations as of the date of sale of such Senior Lien Debt, which calculations shall be set forth in such Certificate) that the requirements described in Section 3.03(c) with respect to the issuance of an additional Series of Notes have been met with respect to such Senior Lien Debt, and (ii) a Certificate of the Issuer certifying that the amount of Sales Tax Revenues or 1988 Sales Tax Revenues, as applicable, for any period, selected by the Issuer, of twelve (12) consecutive months during the eighteen (18) months immediately preceding the date of calculations will be at least equal to one and one-half (1.5) times the Maximum Annual Debt Service on all Senior Lien Debt then Outstanding, including the additional Senior Lien Debt then proposed to be issued; • • • 132 32 • • • (4) The Issuer shall have filed with the Trustee an Opinion of Bond Counsel to the effect that such Senior Lien Debt has been duly authorized in accordance with this Indenture and that such Senior Lien Debt constitutes a valid and binding obligation of the Issuer; and (5) The Issuer shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Senior Lien Debt. (e) Obligations which are junior and fully subordinate to the payment of the principal, premium, if any, interest and reserve fund requirements, if any, for the Notes and all Parity Debt, and which junior and subordinate obligations are payable as to principal, premium, if any, interest and reserve fund requirements, if any, only out of the Sales Tax Revenues after the prior payment of all amounts then required to be paid hereunder from the Sales Tax Revenues for principal, premium, if any, interest and reserve fund requirements, if any, for the Notes and all Parity Debt, as the same become due and payable and at the times and in the manner as required in this Indenture. Notwithstanding anything herein to the contrary, the issuance of Notes or the making of an Advance or a Credit Provider Loan with respect to Notes of any Series shall not be considered the issuance of additional debt within the provisions of Sections 3.03 through 3.06, inclusive, and no limitation contained in such Sections shall apply to the issuance of the Initial Series of Notes or the making of Advances or Credit Provider Loans with respect thereto. ARTICLE IV PROCEEDS FUNDS SECTION 4.01. Establishment and Application of Proceeds Funds. Upon the issuance of the Initial Series of Notes, the Trustee is hereby directed, on behalf of the Issuer, to establish, maintain and hold in trust a separate fund designated as the "Initial Series Proceeds Fund." Unless otherwise instructed in a Supplemental Indenture providing for the terms and provisions of an additional Series of Notes, upon the issuance of each additional Series of Notes, the Trustee is hereby directed, on behalf of the Issuer, to establish, maintain and hold in trust a separate fund designated as the " Proceeds Fund" (inserting therein the Series designation of such Proceeds Fund). Amounts from the proceeds of a Series of Notes in accordance with the instructions of the Issuer delivered pursuant to Section 3.02 shall be deposited by the Trustee in the applicable Proceeds Fund. The moneys in each Proceeds Fund shall be disbursed, upon a Requisition of the Issuer, to pay costs incurred in connection with the portion of the Project financed with the proceeds of the Series of Notes deposited in such Proceeds Fund (or to make reimbursements to the Issuer for such costs), to pay costs of issuance of such Series of Notes, or to pay interest on the Notes issued with respect to the Project. Such Requisition of the Issuer shall be substantially in the form attached as Exhibit D hereto and shall set forth the name of the person or persons to whom said amounts are to be disbursed and shall state that the amounts to be disbursed are for costs properly chargeable to such Proceeds Fund and that such amounts have not been the subject of any previous Requisition of the Issuer. 133 33 When the Issuer determines that the portion of the Project to be financed with the proceeds of a Series of Notes has been completed, a Certificate of the Issuer shall be delivered to the Trustee stating (i) the fact and date of such completion, (ii) that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims which are subject to dispute and for which a retention in the applicable Proceeds Fund is to be maintained in the full amount of such claims until such dispute is resolved) and (iii) that the Trustee is to transfer the remaining balance, if any, in such Proceeds Fund, less the amount of any such retention, for deposit in the Note Fund established in connection with such Series of Notes and the Issuing and Paying Agent shall apply such funds as soon as practicable to the payment first, to the payment at maturity of Notes of such Series, and second, of amounts owing to the Credit Provider to reimburse the Credit Provider for draws to pay principal and interest for such Series of Notes. ARTICLE V REVENUES SECTION 5.01. Pledge of Sales Tax Revenues; Sales Tax Revenue Fund. (a) The Notes, all other obligations of the Issuer payable hereunder, and all obligations of the Issuer payable in connection with Parity Debt, including, without limitation, all obligations of the Issuer payable under each Credit Agreement, are limited obligations of the Issuer and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from the Sales Tax Revenues and other funds pledged hereunder. All Sales Tax Revenues are hereby irrevocably pledged by the Issuer to secure the punctual payment of the principal of and interest on the Notes and any Parity Debt in accordance with their terms; and the Sales Tax Revenues shall not be used for any other purpose while any of the Notes, Parity Debt or such other amounts remain outstanding except as permitted by the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein and therein. There are hereby pledged to secure the payment of the principal of and interest on the Notes in accordance with their terms all amounts (including proceeds of the Notes) held by the Trustee hereunder (except for amounts held in the Rebate Fund) or held by an Issuing and Paying Agent in any fund or account established under an Issuing and Paying Agent Agreement (other than any Credit Facility Fund), subject only to the provisions of this Indenture and of the applicable Issuing and Paying Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein and therein. Said pledge of Sales Tax Revenues shall constitute a first lien on the Sales Tax Revenues and the pledge on the amounts in such funds shall be valid and binding from and after delivery by the Issuing and Paying Agent or Issuer, as the case may be, of the Notes or Parity Debt, without any physical delivery thereof or further act; provided that in the event the Issuer determines to issue Senior Lien Debt, such Senior Lien Debt, when issued in compliance with the provisions of Section 3.06 hereof, shall be entitled to payment from Sales Tax Revenues prior to the payment of the Notes or Parity Debt. The Sales Tax Revenues hereby pledged to the payment of Notes and Parity Debt shall be applied without priority or distinction of one over the other and the Sales Tax Revenues shall constitute a trust fund for the security and payment of the Notes and Parity Debt; but • 134 34 • • • nevertheless out of Sales Tax Revenues certain amounts may be applied for other purposes as provided herein. Out of Sales Tax Revenues there shall be applied as hereinafter set forth all sums required for the payment of the principal of and interest on the Notes and all Parity Debt and, upon the Issuer's written request, payments on Subordinate Obligations. All remaining Sales Tax Revenues, after making the foregoing allocations, shall be available to the Issuer for all lawful Issuer purposes and the Trustee shall, to the full extent practicable, transfer the remaining Sales Tax Revenues to the Issuer on the same day as the receipt thereof. The pledge of Sales Tax Revenues herein made shall be irrevocable until all of the Notes and all Parity Debt are no longer Outstanding. (b) The Sales Tax Revenues shall be received and held in trust by the Trustee for the benefit of the Holders of the Notes and the Parity Debt and shall be disbursed, allocated and applied solely for the uses and purposes set forth in Article V hereof. As long as any Notes are Outstanding or any Parity Debt remains unpaid, the Issuer hereby assigns and shall cause Sales Tax Revenues to be transmitted by the BOE directly to the Trustee. The Trustee shall forthwith deposit in a trust fund, designated as the "Sales Tax Revenue Fund," which fund the Trustee shall designate and maintain, all Sales Tax Revenues, when and as received by the Trustee. All moneys at any time held in the Sales Tax Revenue Fund shall be held in trust for the benefit of the Holders of the Notes and Parity Debt and shall be disbursed, allocated and applied solely for the uses and purposes set forth in Article V, provided that on a parity with the application of such amounts, the Trustee may set aside or transfer amounts with respect to outstanding Parity Debt as provided in the proceedings for such Parity Debt delivered to the Trustee pursuant to Section 3.04 hereof (which shall be proportionate in the event such amounts are insufficient to provide for all deposits required as of any date to be made with respect to the Notes and such Parity Debt), and further provided that proceeds of each Credit Agreement shall only be used to pay principal and interest on the Notes secured by such Credit Agreement; and provided further, in the event the Issuer determines to issue Senior Lien Debt in compliance with the provisions of Section 3.06 hereof, the Issuer may provide for the trustee of such Senior Lien Debt to receive the transmittal of the Sales Tax Revenues from the BOE and agrees to direct such trustee to transfer such Sales Tax Revenue after compliance with the provisions of the Senior Lien Debt to the Trustee. SECTION 5.02. Pledge of Certain Funds and Accounts. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all amounts (including proceeds of the sale of Notes) held by the Trustee in any fund or account established hereunder (other than the Rebate Fund) are hereby irrevocably pledged and assigned to the Trustee to secure the payment of the principal of and interest on the Notes and any Parity Debt. Said pledge of such amounts shall constitute a first lien on such amounts and shall be valid and binding from and after delivery of Notes of the initial Series by the Initial Series Issuing and Paying Agent or the incurrence by the Issuer of Parity Debt, without any physical delivery thereof or further act. Subject only to the provisions of the Issuing and Paying Agent Agreement entered into in connection with a Series of Notes permitting the application thereof for the purposes and on the terms and conditions set forth therein, all amounts (including proceeds of the sale of such 135 35 Series of Notes) held by an Issuing and Paying Agent in any fund or account established under such Issuing and Paying Agent Agreement (other than a Credit Facility Fund) are hereby irrevocably pledged and assigned to the Trustee to secure payment of the principal of and interest on the Series of Notes to which the Issuing and Paying Agent Agreement relates and the obligations of the Issuer payable with respect to the Credit Agreement entered into in connection with such Series of Notes. Said pledge of such amounts shall constitute a first lien on such amounts and shall be valid and binding from and after delivery of such Series of Notes, without any physical delivery thereof or further act. SECTION 5.03. Establishment and Application of Interest Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Interest Fund." All amounts in the Interest Fund shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Notes as it shall become due and payable and making payments on interest rate swap agreements related to any Notes. Upon the receipt of Sales Tax Revenues, commencing in [June] 2009 (and upon the issuance of Notes that causes an increase in the aggregate principal amount of Notes Outstanding), the Issuer shall cause to be transferred to the Trustee, for deposit in the Interest Fund, an amount equal to the amount of interest which will accrue through the last day of the month (or the following month in the event such issuance is after the receipt of Sales Tax Revenues for such month), calculated at an assumed interest rate equal to the BMA Municipal Swap Index (or, if amounts are owed to the Credit Provider, at the rate projected to be payable pursuant to the applicable Credit Agreement). Thereafter, upon the receipt of Sales Tax Revenues each month, the Trustee shall deposit in the Interest Fund an amount sufficient to cause the amount on deposit in the Interest Fund on the last Business Day of such month to equal the sum of (i) the accrued and unpaid interest, if any, on the Notes Outstanding on the last Business Day of such month, and (ii) the interest which will accrue on Notes expected to be Outstanding through the last day of the month immediately following such month, such interest to be calculated (x) at the actual rate of interest on the Notes for any day interest is to accrue at a rate known on the date such deposit is made, and (y) at an assumed interest rate equal to the BMA Municipal Swap Index for any day interest is to accrue at a rate unknown on the date such deposit is made (or, if amounts are owed to the Credit Provider, at the rate projected to be payable pursuant to the applicable Credit Agreement). In the event that the Trustee shall fail to receive an amount sufficient to equal the amount required to be deposited pursuant to this Section 5.03 by the close of business on the last Business Day of any month, the Trustee shall promptly notify the Issuer in writing of the amount of such insufficiency by fax, receipt of which fax by the Issuer shall be confirmed by the Trustee. In addition, in the event that the Trustee shall fail to have an amount sufficient to equal the amount required to be transferred by the Trustee to the Issuing and Paying Agent by 11:30 a.m. New York City time on each date interest is due and payable on any Note, the Trustee shall notify the Issuer in writing of the amount of such insufficiency by fax, receipt of which fax by the Issuer shall be confirmed by the Trustee, such notice to be provided prior to 10:30 a.m. New York City time/7:30 a.m. California time on each date interest is due and payable on any Note.] • 136 36 • • • Amounts deposited in the Interest Fund shall be transferred by the Trustee to the Issuing and Paying Agent by 11:30 a.m. New York City time on each date interest is due and payable on any Note. Any amounts remaining on deposit in the Interest Fund on the Business Day preceding the receipt of Sales Tax Revenues from the BOE in June of each year in excess of amounts needed to pay interest due in June on Notes or Parity Debt that is to be paid from Sales Tax Revenues, commencing June 2009, shall, upon the Issuer's written request, be transferred to the Issuer and may be used for any lawful purpose of the Issuer, provided, however, that such moneys shall, upon the Issuer' s written request issued pursuant to Section 5.05, be transferred to and deposited in the Subordinate Obligations Fund. SECTION 5.04. Establishment and Application of Principal Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Principal Fund." All amounts in the Principal Fund shall be used and withdrawn by the Trustee solely for the purpose of paying principal on the Notes as it shall become due and payable. Upon the initial issuance of the Initial Series of Notes, and upon the subsequent issuance of Notes that causes an increase in the aggregate amount of Notes Outstanding (above the amount needed to pay principal of and interest on maturing Notes), the Issuer shall transfer to the Trustee, for deposit in the Principal Fund, an amount equal to the principal amount of Notes, maturing in the month such Notes are issued, which the Issuer intends to retire from Sales Tax Revenues during such month. Subsequent to the month of initial issuance of the Initial Series of Notes, after the required deposit of Sales Tax Revenues to the Interest Fund, the Trustee shall deposit in the Principal Fund, an amount equal to the principal amount of Notes maturing in the month immediately following the month such deposit is made which the Issuer intends to retire from Revenues during such month. Unless otherwise notified in writing by the Issuer, the Trustee shall assume that no principal of maturing Notes is intended to be retired from Revenues, but is to be paid from the proceeds of issuance of Notes. In the event that the Trustee shall fail to receive an amount sufficient to equal the amount required to be deposited pursuant to this Section 5.04 by the close of business on the last Business Day of any month, the Trustee shall promptly notify the Issuer in writing of the amount of such insufficiency by fax or other means acceptable to the Issuer, receipt of which by the Issuer shall be confirmed by the Trustee. Amounts deposited in the Principal Fund shall be transferred by the Trustee to the Issuing and Paying Agent by 11:30 a.m. New York City time on each date principal is due and payable on any Note which the Issuer intends to retire from Revenues. Any amounts remaining on deposit in the Principal Fund on the Business Day preceding the receipt of Sales Tax Revenues from the BOE in June of each year in excess of amounts needed to pay principal due in June on Notes or Parity Debt that is to be paid from Sales Tax Revenues, commencing June 2009, shall, upon the Issuer's written request, be transferred to the Issuer and may be used for any lawful purpose of the Issuer, provided, however, that such moneys shall, upon the Issuer's written request issued pursuant to Section 5.05, be transferred to and deposited in the Subordinate Obligations Fund. 137 37 SECTION 5.05. Establishment and Application of the Subordinate Obligations Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Subordinate Obligations Fund." After the other transfers required pursuant to Sections 5.03 and 5.04 have been made and all other amounts due with respect to any Parity Debt have been paid, the Trustee shall transfer to the Subordinate Obligations Fund an amount necessary to be applied to the payment of Subordinate Obligations in accordance with, and upon the written direction of, the Issuer, such written direction to be provided by the Issuer prior to or concurrently with any transfer of Revenues to the Trustee pursuant to Section 5.01. Upon the payment of Subordinate Obligations as directed by and in accordance with the written direction of the Issuer, remaining Revenues, if any, shall be transferred to the Issuer and may be used for any lawful purpose of the Issuer. SECTION 5.06. Investment by the Issuer and the Issuing and Paving Agent. All moneys in any of the funds or accounts established and held by the Issuer pursuant to this Indenture shall be invested by the Issuer in Investment Securities or in any other investments permitted for the investment of funds of the Issuer under the Act. All moneys in any of the funds or accounts established and held by the Issuing and Paying Agent pursuant to the Issuing and Paying Agent Agreement shall be invested in accordance with the provisions set forth in the Issuing and Paying Agent Agreement. SECTION 5.07. Investment by the Trustee. All moneys in any of the funds or accounts established and held by the Trustee pursuant to this Indenture shall be invested, as directed in writing by the Issuer, solely in Investment Securities. All Investment Securities shall, as directed by the Issuer in writing, be acquired by the Trustee subject to the limitations set forth in Section 6.07, the limitations as to maturities hereinafter in this Section set forth and such additional limitations or requirements consistent with the foregoing as may be established by Request of the Issuer and not inconsistent with the duties of the Trustee hereunder. If and to the extent the Trustee does not receive investment instructions from the Issuer with respect to the moneys in the funds and accounts held by the Trustee pursuant to this Indenture, such moneys shall be invested in Investment Securities described in clause (xii) of the definition thereof, and the Trustee shall thereupon promptly request written investment instructions from the Issuer for such moneys. Moneys in the remaining funds and accounts shall be invested in Investment Securities maturing or available on demand not later than the date on which it is estimated that such moneys will be required by the Trustee. Unless otherwise provided in a Supplemental Indenture, all interest, profits and other income received from the investment of moneys in any fund or account, other than the Rebate Fund and the Proceeds Fund, shall be transferred to the Interest Fund when received. All interest, profits and other income received from the investment of moneys in the Rebate Fund or the Proceeds Fund shall be deposited in such respective fund, except as provided in Section 6.08. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Investment Security equal to the amount of accrued interest, if any, paid as part of the purchase price of such Investment Security shall be credited to the fund or account from which such accrued interest was paid. • • • 138 38 • • • The Trustee may commingle any of the funds or accounts established pursuant to this Indenture (other than the Rebate Fund) into a separate fund or funds for investment purposes only, provided that all funds or accounts held by the Trustee hereunder shall be accounted for separately as required by this Indenture. The Trustee or any of its affiliates may act as principal or agent in the making or disposing of any investment and may impose its customary charge therefor. The Trustee may sell upon consultation with the Issuer, or present for redemption, any Investment Securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Security is credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment or redemption. The Issuer may, and the Trustee shall, upon the Request of the Issuer, enter into a financial futures or financial option contract or swap with an entity the debt securities of which are rated not less than the [second highest long-term rating categories] by Moody's or Standard & Poor's. The Issuer shall provide written notice to the Credit Provider, Standard & Poor's and Moody's before filing such a Request, and the Trustee shall provide notice of the closing of any such financial futures or financial option contract or swap to the Credit Provider, Standard & Poor's and Moody's on the closing date thereof. The Trustee will furnish the Issuer periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. The Trustee shall not be responsible for any losses resulting from investments made under this Indenture. The Trustee shall keep proper books of record and accounts containing complete and correct entries of all transactions made by it relating to the receipt, disbursement, allocation and application of the moneys related to the Notes, including moneys derived from, pledged to, or to be used to make payments on the Notes. Such records shall specify the account or fund to which such moneys are to be allocated. ARTICLE VI COVENANTS OF THE ISSUER SECTION 6.01. Punctual Payment. The Issuer will punctually pay or cause to be paid the principal of and interest on all the Notes, in strict conformity with the terms of the Notes and of this Indenture, according to the true intent and meaning thereof. SECTION 6.02. Extension of Payment of Notes. The Issuer will not directly or indirectly extend or assent to the extension of the maturity of any of the Notes or the time of payment of any Notes or claims for interest by the purchase or funding of such Notes or claims for interest or by any other arrangement and in case the maturity of any of the Notes or the time of payment of any such claims for interest shall be extended, such Notes or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Notes then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall 139 39 be deemed to limit the right of the Issuer to issue debt for the purpose of refunding any Outstanding Notes, and such issuance shall not be deemed to constitute an extension of maturity of Notes. SECTION 6.03. Against Encumbrances. Except only as permitted in Section 3.06, the Issuer will not issue any obligations payable from, or secured by, the Sales Tax Revenues or any other amounts pledged under this Indenture, and will not create any pledge, lien or charge upon any of the Sales Tax Revenues or any other amounts pledged under this Indenture prior to or on a parity with the Notes or Parity Debt, except only as permitted in Section 3.06. SECTION 6.04. Accounting Records and Financial Statements. (a) The Issuer will at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with generally accepted accounting principles, in which complete and accurate entries shall be made of all transactions relating to the Sales Tax Revenues. Such books of record and account shall be available for inspection by the Trustee and each Credit Provider at reasonable hours and under reasonable circumstances. (b) The Issuer will furnish the Trustee, each Dealer and each Credit Provider within two hundred ten (210) days after the end of each Fiscal Year, the financial statements of the Issuer for such Fiscal Year, together with the report and opinion of an independent certified public accountant stating that the financial statements have been prepared in accordance with generally accepted accounting principles and that such accountant's examination of the financial statements was performed in accordance with generally accepted auditing standards and a Certificate of the Issuer stating that no event which constitutes an Event of Default or which with the giving of notice or the passage of time or both would constitute an Event of Default has occurred and is continuing as of the end of such Fiscal Year, or specifying the nature of such event and the actions taken and proposed to be taken by the Issuer to cure such default. SECTION 6.05. Collection of Sales Tax Revenues. (a) The Issuer covenants and agrees that it has duly levied the Sales Tax in accordance with the Act, pursuant to and in accordance with the Ordinance, duly passed and adopted by the Issuer and the electorate of the County. Said Ordinance will not be amended, modified or altered so long as any of the Notes are Outstanding or any Parity Debt remains unpaid in any manner which would reduce the amount of or timing of receipt of Sales Tax Revenues, and the Issuer will continue to levy and collect the Sales Tax to the full amount permitted by law. The Issuer further covenants that on or before April 1, 2009, it will take such actions as required to cause the BOE to process and supervise collection of said transactions and use taxes and to transmit Sales Tax Revenues directly to the Trustee. Said agreement will be continued in effect so long as any of the Notes are Outstanding or any Parity Debt remains unpaid and shall not be amended, modified or altered without the written consent of the Trustee and the Credit Provider so long as any of the Notes are Outstanding or any Parity Debt remains unpaid. The Issuer will receive and hold in trust for (and remit immediately to) the Trustee any Sales Tax Revenues paid to the Issuer by the BOE. (b) Sales Tax Revenues received by the Trustee shall be transmitted to the Issuer under the terms and conditions set forth in Article V; provided that, during the continuance of an Event of Default, any Sales Tax Revenues received by the Trustee shall be applied first to the payment of the costs and expenses of the Trustee in declaring such Event of • • • 140 40 • • • Default and pursuing remedies, including reasonable compensation of its agents, attorneys and counsel, which costs and expenses shall be paid from the Sales Tax Revenue Fund, and second, to deposit into the Interest Fund and Principal Fund and to the payment of Notes and Parity Debt as more fully set forth in Section 7.02. (c) The Issuer covenants and agrees to separately account for all Revenues and to provide to the Trustee access to such accounting records at reasonable hours and under reasonable circumstances. (d) The Issuer covenants that so long as the Notes are Outstanding or any Parity Debt remains unpaid, it will comply with the Act and the Ordinance and will not, to the best of its ability, suffer or permit any change, modification or alteration to be made to the Act which would materially and adversely affect the rights of Noteholders, any Credit Provider or the owners of any Parity Debt. SECTION 6.06. Rebate Fund. (a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the "Rebate Fund." Within the Rebate Fund, the Trustee shall maintain such accounts as the Issuer shall direct in writing to comply with the terms and requirements of each Tax Certificate. Subject to the transfer provisions provided in subsection (c) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee for the account of the Issuer in trust, to the extent required to satisfy the Rebate Requirement (as defined in the applicable Tax Certificate), for payment to the federal government of the United States of America, and neither the Trustee nor the Owner of any Notes nor any Credit Provider shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Indenture and by each Tax Certificate (which are incorporated herein by reference). The Issuer hereby covenants to comply with the directions contained in each Tax Certificate and the Trustee hereby covenants to comply with all written instructions of the Issuer delivered to the Trustee pursuant to each Tax Certificate (which instructions shall state the actual amounts to be deposited in or withdrawn from the Rebate Fund and shall not require the Trustee to make any calculations with respect thereto). The Trustee shall be deemed conclusively to have complied with the provisions of this Section 6.06(a) if it follows such written instructions of the Issuer, and the Trustee shall have no liability or responsibility to enforce compliance by the Issuer with the terms of any Tax Certificate nor to make computations in connection therewith. (b) The Trustee shall invest all amounts held in the Rebate Fund, as directed by the Issuer in writing, solely in Investment Securities, subject to the restrictions set forth in each Tax Certificate. (c) Upon receipt of the written instructions of the Issuer, the Trustee shall remit part or all of the balances in the Rebate Fund to the federal govermnent of the United States of America, as directed. In addition, if such instructions so direct, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds (other than a Note Reimbursement Fund) as directed. Any funds remaining in the Rebate Fund after payment of all of the Notes and payment and satisfaction of any Rebate Requirement, shall be withdrawn and remitted to the Issuer in accordance with a Request of the Issuer. 141 41 (d) Notwithstanding any other provision of this Indenture, including in particular Article X hereof, the obligation to remit the Rebate Requirement to the federal government of the United States of America and to comply with all other requirements of this Section and each Tax Certificate shall survive the defeasance or payment in full of the Notes. SECTION 6.07. Tax Covenants. The Issuer covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Notes under Section 103 of the Code; provided that, prior to the issuance of any Series of Notes, the Issuer may exclude the application of the covenants contained in this Section 6.07 and Section 6.06 to such Series of Notes. Without limiting the generality of the foregoing, the Issuer shall comply with all requirements and covenants contained in each Tax Certificate. In the event that at any time the Issuer is of the opinion that for purposes of this Section 6.07 it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under this Indenture, the Issuer shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. Notwithstanding any provision of this Section 6.07 and Section 6.06 hereof, if the Issuer shall receive an Opinion of Bond Counsel to the effect that any action required under any Tax Certificate or this Section 6.07 or Section 6.06 hereof is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Notes pursuant to Section 103 of the Code, the Issuer and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent. SECTION 6.08. Maintenance of Issuing and Paying Agent. The Issuer will at all times maintain an Issuing and Paying Agent for each Series of Notes in New York, New York. SECTION 6.09. Credit Facilit'; Alternate Credit Facility. The Issuer will at all times maintain in effect a Credit Facility enabling it to borrow an amount equal to the principal amount of each Series of Notes then issued pursuant to this Indenture and the Issuing and Paying Agent Agreement, plus accrued interest thereon. The Issuer may deliver a substitute credit facility (an "Alternate Credit Facility") to replace any existing Credit Facility if, on or prior to the date of the delivery of an Alternate Credit Facility to the Issuing and Paying Agent or Trustee, as applicable, the Issuer shall furnish to the Issuing and Paying Agent or Trustee, as applicable, written evidence from Moody's, if the Notes are rated by Moody's, from Fitch, if the Notes are rated by Fitch, and from Standard & Poor's, if the Notes are rated by Standard & Poor's, in each case to the effect that such rating agency has reviewed the proposed Alternate Credit Facility and that the substitution of the proposed Alternate Credit Facility for the Credit Facility then in effect, will not, by itself, result in a reduction or withdrawal of its rating of the Notes to be secured thereby from the rating which then prevails. The Issuer shall provide advance notice of the proposed delivery of an Alternate Facility to the Issuing and Paying Agent, such notice to be provided, to the extent practicable, at least forty-five (45) days in advance of the proposed delivery of an Alternate Credit Facility to the Trustee, the Issuing and Paying Agent and each Dealer. The Issuing and Paying Agent shall provide thirty (30) days' advance written notice of the acceptance of such Alternate Credit Facility to the Owners of the Notes by first • • • 142 42 • class mail, postage prepaid, to the addresses appearing on the registration books, if any, maintained by the Issuing and Paying Agent, and to the Depository. Following the substitution of the Alternate Credit Facility for the Credit Facility then in effect, references to the Credit Facility replaced thereby will refer to such Alternate Credit Facility. SECTION 6.10. Appointment of Dealers. The Issuer covenants and agrees to take all reasonable steps necessary to ensure that, at all times, there shall be one or more Dealers for each Series of Notes, and to that end shall from time to time enter into a Dealer Agreement or Agreements with one or more Dealers, providing for the services specified in such Dealer Agreements to be performed by such Dealers, in connection with the offering, sale and issuance of Notes. The Issuer hereby appoints Lehman Brothers, Inc. and Banc of America Securities LLC as the initial Dealers for the Initial Series of Notes. SECTION 6.11. Waiver of Laws. The Issuer will not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Notes, and all benefit or advantage of any such law or laws is hereby expressly waived by the Issuer to the extent permitted by law. SECTION 6.12. Further Assurances. The Issuer will make, execute and deliver any and all such instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Notes of the rights and benefits provided in this Indenture. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES SECTION 7.01. Events of Default. The following events shall be Events of Default: (a) default in the due and punctual payment of the principal of any Note when and as the same shall become due and payable, whether at maturity as therein expressed or by declaration; (b) default in the due and punctual payment of any installment of interest on any Note when and as such interest installment shall become due and payable; (c) if the Issuer shall fail to observe or perform any covenant, condition, agreement or provision in this Indenture on its part to be observed or performed, other than as referred to in subsection (a) or (b) of this Section, for a period of sixty (60) days after written notice, specifying such failure and requesting that it be remedied, has been given to the Issuer by the Trustee; except that, if such failure can be remedied but not within such sixty (60) day period and if the Issuer has taken all action reasonably possible to remedy such failure within such sixty (60) day period, such failure shall not become an Event of Default for so long as the Issuer shall diligently proceed to remedy the same in accordance with and subject to any directions or limitations of time established by the Trustee or the Credit Provider, as provided herein; 143 43 (d) if any default shall exist under any agreement governing any Parity Debt and such default shall continue beyond the grace period, if any, provided for with respect to such default or if the holder of any Parity Debt exercises a right under the Parity Debt or the corresponding instruments pursuant to which such Parity Debt was issued to declare the principal thereof to be accelerated and payable immediately; (e) if any event of default shall exist under any Credit Agreement and such event of default shall continue beyond the grace period, if any, provided for with respect to such event of default; (f) if the Issuer files a petition in voluntary bankruptcy, for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself; (g) if a court of competent jurisdiction shall enter an order, judgment or decree declaring the Issuer insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the Issuer, or approving a petition filed against the Issuer seeking reorganization of the Issuer under any applicable law or statute of the United States of America or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of the entry thereof; or (h) if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Issuer or of the Revenues, and such custody or control shall not be terminated within sixty (60) days from the date of assumption of such custody or control. SECTION 7.02. Application of the Revenues and Other Funds After Default. If an Event of Default shall occur and be continuing, to the fullest extent permitted by law, the Issuer shall immediately transfer all Revenues held by it to the Trustee, and the Trustee shall apply all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of this Indenture (except as otherwise provided in this Indenture) as follows and in the following order: (1) To the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners of the Notes and each Credit Provider, including the costs and expenses of the Trustee, each Credit Provider and the Noteholders in declaring such Event of Default, and payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its counsel and other agents) incurred in and about the performance of its powers and duties under this Indenture, provided that no funds on deposit in any Credit Facility Fund may be applied to the payment of the costs and expenses of the Trustee and the Trustee shall not have a lien on any Credit Facility Fund for the payment of its fees, costs and expenses; and (2) To the payment to the persons entitled thereto of all installments of interest then due and the unpaid principal of any Notes and any Parity Debt which shall • 144 44 • • have become due, whether at maturity or by call for redemption, in the order of their due dates, with interest on the overdue principal at the rate or rates borne by the respective Notes, subject to the provisions of this Indenture; and, if the amount available shall not be sufficient to pay in full all the Notes and any Parity Debt due or to become due, together with such interest, then to the payment thereof ratably, according to the amounts of principal or interest due or to become due to the persons entitled thereto, without any discrimination or preference, provided, that, notwithstanding any other provision herein, the payment of principal and interest on a Series of Notes shall have priority over the payment of any amounts owing to the Credit Provider of any Credit Facility with respect to such Series of Notes. SECTION 7.03. Trustee to Represent Noteholders. Subject to Section 7.10, upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Noteholders, the Trustee in its discretion may, and upon the written request of the Owners of not less than twenty-five percent (25%) in aggregate amount of Notes then Outstanding or any Credit Provider, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings, as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under this Indenture, the Act or any other law, and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture and the Act, pending such proceedings. All rights of action under this Indenture or the Notes or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Notes, subject to the provisions of this Indenture (including Section 7.05). SECTION 7.04. Noteholders' Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding (except provisions relating to the rights of a Credit Provider to direct proceedings with respect to a Series of Notes for which such Credit Provider is providing a Credit Facility as set forth in Section 7.10 hereof), the Owners of a majority in aggregate principal amount of the Notes then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Noteholders or holders of Parity Debt not parties to such direction; provided that in the event of a conflict in the written directions given the Trustee, the directions represented by such person holding a majority in aggregate principal amount of Notes shall control. 145 45 SECTION 7.05. Limitation on Noteholders' Right to Sue. No Owner of any Note shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture or any applicable law with respect to such Note, unless: (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Notes then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted; (3) such Owner or said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (5) the Trustee shall not have received contrary directions from the Owners of a majority in aggregate principal amount of the Notes then Outstanding. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Notes of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Notes shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners of Notes or any Credit Provider, or to enforce any right under this Indenture, or under applicable law with respect to the Notes, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Notes and each Credit Provider, subject to the provisions of this Indenture. SECTION 7.06. Absolute Obligation of the Issuer.. Nothing in Section 7.05 or in any other provision of this Indenture, or in the Notes, contained shall affect or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on the Notes to the respective Owners of the Notes at their respective dates of maturity, except as is provided in Section 7.10, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Notes. SECTION 7.07. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Noteholders or any Credit Provider on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Noteholders or any Credit Provider, then in every such case the Issuer, the Trustee, the Noteholders and each Credit Provider, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Issuer, the Trustee, the Noteholders and each Credit Provider shall continue as though no such proceedings had been taken. SECTION 7.08. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners of the Notes or any Credit Provider is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent • 146 46 • • • permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. SECTION 7.09. Waivers of Events of Default. Except as otherwise provided herein, the Trustee in its discretion, may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of all Notes Outstanding shall, waive any Event of Default hereunder and rescind its consequences; provided, however, that no Event of Default may be waived unless the Credit Facility delivered in connection with such Series of Notes shall have been reinstated in full. In the case of any such waiver and rescission, the Issuer, each Credit Provider then providing a Credit Facility in connection with a Series of Notes, each Issuing and Paying Agent, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respectively, but no such waiver and rescission shall extend to any subsequent or other default, or impair any right consequent thereon. All waivers under this Indenture shall be in writing and a copy thereof shall be delivered to the Issuer. SECTION 7.10. Control of Remedies and Waivers by Credit Provider. Anything in this Indenture to the contrary notwithstanding, provided that a Credit Facility is in full force and effect with respect to a Series of Notes and the Credit Provider providing such Credit Facility has not failed to honor a drawing as required in connection therewith, the Credit Provider shall have the right, at any time during the continuance of an Event of Default, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the time, method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture with respect to such Series of Notes, including, without limitation, the right to approve all waivers of any Event of Default with respect to such Series of Notes, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that no Event of Default may be waived unless the Credit Facility provided by such Credit Provider shall have been reinstated, and no remedy or right may be exercised under this Indenture and 110 Event of Default may be waived with respect to such Series of Notes without the prior written consent of the Credit Provider for such Series of Notes. ARTICLE VIII THE TRUSTEE SECTION 8.01. Appointment: Duties. Immunities and Liabilities of Trustee. (a) U.S. Bank Trust National Association is hereby appointed as Trustee under this Indenture and hereby accepts the duties imposed upon it as Trustee hereunder and hereby agrees to perform all the functions and duties of the Trustee hereunder, subject to the terms and conditions set forth in this Indenture. The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants shall be read into this Indenture against the Trustee. The Trustee shall, during the existence of an Event of Default (which had not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct or his or her own affairs. 147 47 (b) The Issuer may remove the Trustee at any time, unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by any Credit Provider or the Owners of not less than a majority in aggregate amount of principal of the Notes then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee, and thereupon shall appoint a successor Trustee by an instrument in writing. (c) The Trustee may at any time resign by giving written notice of such resignation to the Issuer, the Issuing and Paying Agent, each Dealer and each Credit Provider. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor Trustee by an instrument in writing. (d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within sixty (60) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Noteholder (on behalf of himself and all other Noteholders) or any Credit Provider may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, shall signify its acceptance of such appointment by executing and delivering to the Issuer and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Request of the Issuer or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Issuer shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Issuer shall give notice of the succession of such Trustee to the trusts hereunder by mail to the Issuing and Paying Agent, each Dealer and each Credit Provider. (e) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a bank having the powers of a trust company or a trust company, having a combined capital and surplus of at least one hundred million dollars ($100,000,000), subject to supervision or examination by federal or state authority. If such bank or trust company publishes • ' 148 48 • • • a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign promptly in the manner and with the effect specified in this Section. SECTION 8.02. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under subsection (e) of Section 8.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. SECTION 8.03. Liability of Trustee. (a) The recitals of facts herein and in the Notes contained shall be taken as statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same, and makes no representations as to the validity or sufficiency of this Indenture or of the Notes as to the sufficiency of the Revenues or the priority of the lien of this Indenture thereon, or as to the financial or technical feasibility of any portion of the Project and shall not incur any responsibility in respect of any such matter, other than in connection with the duties or obligations expressly herein or in the Notes assigned to or imposed upon it. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in any of the Notes and may join in any action which any Owner of a Note may be entitled to take, with like effect as if the Trustee was not the Trustee under this Indenture. The Trustee may in good faith hold any other form of indebtedness of the Issuer, own, accept or negotiate any drafts, bills of exchange, acceptances or obligations of the Issuer and make disbursements for the Issuer and enter into any commercial or business arrangement therewith, without limitation. (b) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, but the Trustee shall be liable for the negligence or misconduct of any such attorney, agent, or receiver selected by it. (c) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Credit Provider or the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Notes at the time Outstanding (or such other percentage in aggregate principal amount of Notes at the time Outstanding as shall be provided herein) relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. 149 49 (d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Noteholders pursuant to the provisions of this Indenture, including, without limitation, the provisions of Article VII hereof, unless such Noteholders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers, if repayment of such funds or adequate indemnity against such risk or liability is not assured to its satisfaction. (f) The Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to, any Event of Default (other than an Event of Default described in subsections (a) or (b) of Section 7.01) or event which would, with the giving of notice, the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified of such event by the Issuer, the Credit Provider or the Owners of 25% of the principal amount of the Notes at the time Outstanding. Without limiting the generality of the foregoing, the Trustee shall not be required to ascertain, monitor or inquire as to the performance or observance by the Issuer of the terms, conditions, covenants or agreements set forth in Article VI hereof (including, without limitation, the covenants of the Issuer set forth in Sections 6.06 or 6.07 hereof), other than the covenants of the Issuer to make payments with respect to the Notes when due as set forth in Section 6.01 and to file with the Trustee when due, such reports and certifications as the Issuer is required to file with the Trustee hereunder. (g) No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy. (h) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, coupon or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney. (i) The Trustee shall not be responsible for: (1) the application or handling by the Issuer of any moneys transferred to the Issuer, pursuant to Request of the Issuer or otherwise, in accordance with the terms and conditions hereof; (2) the application and handling by the Issuer of any fund or account designated to be held by the Issuer hereunder; (3) any error or omission by the Issuer in making any computation or giving any instruction pursuant to Sections 6.06 and 6.07 hereof and may rely • 150 50 • • • conclusively on any computations or instructions furnished to it by the Issuer in connection with the requirements of Sections 6.06, 6.07 and the Tax Certificate; or (4) the construction, operation or maintenance of any portion of the Project. (j) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article VIII. SECTION 8.04. Right of Trustee to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, including, without limitation, counsel of or to the Issuer, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the Issuer, and such Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. The Trustee may also rely conclusively on any report or certification of any certified public accountant, investment banker, financial consultant, or other expert selected by the Issuer or selected by the Trustee with due care in connection with matters required to be proven or ascertained in connection with its administration of the trusts created hereby. SECTION 8.05. Compensation and Indemnification of Trustee. The Issuer covenants to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Issuer will pay or reimburse the Trustee upon its request for all expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, default or willful misconduct. The Issuer, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee against any loss, damages, liability or expense incurred without negligence or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of the trusts created hereby, including costs and expenses (including reasonable attorneys' fees and expenses) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder. The rights of the Trustee and the obligations of the Issuer under this Section 8.05 shall survive the discharge of the Notes and this Indenture and the resignation or removal of the Trustee. 151 51 ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE SECTION 9.01. Amendments Permitted. (a) (1) This Indenture and the rights and obligations of the Issuer, the Owners of the Notes and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Issuer and the Trustee may enter into with the written consent of the Owners of a majority in aggregate principal amount of the Notes (or, if such Supplemental Indenture is only applicable to a Series of Notes, such Series of Notes) then Outstanding, as well as each Credit Provider, which written consent shall have been filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Notes of any particular maturity remain Outstanding, the consent of the Owners of such Notes shall not be required and such Notes shall not be deemed to be Outstanding for the purpose of any calculation of Notes Outstanding under this Section. If the amendment is proposed prior to the issuance of Notes, the owners of such Notes shall be deemed to have consented to such amendment by the purchase of such Notes and no formal consent shall be required of such Owners. (2) While all Outstanding Notes shall be payable under a Credit Facility or have credit or liquidity support pursuant to a Credit Agreement, the provider of which shall be a Credit Provider having unsecured debt obligations rated, or insuring or securing other debt obligations rated on the basis of such Credit Provider's rating, in one of the two (2) highest Rating Categories of each Rating Agency, this Indenture and the rights and obligations of the Issuer, the Owners of the Notes and the Trustee may be modified or amended without the consent of any Owners of the Notes from time to time and at any time by a Supplemental Indenture, which the Issuer and the Trustee may enter into which shall become binding when the written consent of each Credit Provider shall have been filed with the Trustee. (3) No such modification or amendment shall (1) extend the fixed maturity of any Note, or reduce the amount of principal thereof, or extend the time of payment provided for any Note, or reduce the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the Owner of each Note so affected, or (2) reduce the aforesaid percentage of principal the consent of the Owners of which is required to effect any such modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture, or deprive the Owners of the Notes of the lien created by this Indenture on such Revenues and other assets (in each case, except as expressly provided in this Indenture), without the consent of the Owners of all of the Notes then Outstanding. It shall not be necessary for the consent of the Noteholders to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. (b) This Indenture and the rights and obligations of the Issuer, of the Trustee and of the Owners of the Notes may also be modified or amended at any time by a Supplemental Indenture, which the Issuer may adopt without the consent of any Noteholders but only to the extent permitted by law and only for any one or more of the following purposes: • 152 52 • • • (1) to add to the covenants and agreements of the Issuer in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Notes (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Issuer; (2) to make provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture; (3) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially and adversely affect the interests of the Owners of the Notes; (4) to make modifications or adjustments necessary, appropriate or desirable to provide for the issuance of Parity Debt with such interest rate, payment, maturity and other terms as the Issuer may deem desirable; subject to the provisions of Sections 3.04, 3.05, and 3.06. (5) to facilitate the issuance of Notes in book -entry form, provided that no such provision shall materially and adversely affect the interests of the Owners of the Notes; (6) to make modifications or adjustments necessary, appropriate or desirable to accommodate credit enhancements and liquidity facilities, including any Alternate Credit Facility, provided that no such provision shall materially and adversely affect the interests of the Owners of the Notes; (7) to make modifications or adjustments necessary to provide for or to maintain the exclusion of interest on a Series of Notes from gross income for purposes of federal income taxation; (8) to provide for the issuance of an additional Series of Notes pursuant to provisions of Section 3.04 or Section 3.05; and (9) for any other purpose that does not materially and adversely affect the interests of the Owners of the Notes, including, without limitation, to provide for changes requested by a Rating Agency in order to obtain or maintain a credit rating for any Series of Notes. Notwithstanding any provision hereof, no modification or amendment hereto shall affect the rights, remedies or security of any Credit Provider hereunder without the prior written consent of such Credit Provider. The Trustee may, but shall not be obligated to, enter into any such Supplemental Indenture which affects the Trustee's own rights, duties or immunities under this Indenture or the Notes. 153 53 SECTION 9.02. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Issuer, each Credit Provider, the Trustee, and all Owners of Notes Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.03. Amendment of Particular Notes. The provisions of this Article shall not prevent any Noteholder from accepting any amendment as to the particular Notes held by him, provided that due notation thereof is made on such Notes. ARTICLE X DEFEASANCE SECTION 10.01. Payment of Notes. Notes of any Series or a portion thereof may be paid by the Issuer in any of the following ways: (a) by paying or causing to be paid the principal of and interest on such Outstanding Notes, as and when the same become due and payable; (b) by depositing with the Trustee, an escrow agent or other fiduciary, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03) to pay such Outstanding Notes; or (c) by delivering to the Trustee, for cancellation by it, such Outstanding Notes. If the Issuer shall pay all Series for which any Notes are Outstanding and also pay or cause to be paid all other sums payable hereunder by the Issuer, including any fees, costs and expenses of the Trustee, and shall pay all Advances and Credit Provider Loans and all other amounts owing to the Credit Provider, then and in that case, at the election of the Issuer (evidenced by a Certificate of the Issuer, filed with the Trustee and each Issuing and Paying Agent, signifying the intention of the Issuer to discharge all such indebtedness and this Indenture), and notwithstanding that any Notes shall not have been surrendered for payment, this Indenture and the pledge of Revenues and other assets made under this Indenture and, except as provided in Section 6.06 and Section 6.07, all covenants, agreements and other obligations of the Issuer under this Indenture shall cease, terminate, become void and be completely discharged and satisfied. In such event, upon Request of the Issuer, the Trustee and each Issuing and Paying Agent shall cause an accounting for such period or periods as may be requested by the Issuer to be prepared and filed with the Issuer and shall execute and deliver to the Issuer all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee and each Issuing and Paying Agent shall pay over, transfer, assign or deliver to the Issuer all moneys (other than those held in the Rebate Fund or any Credit Facility Fund) or securities or other property held by it pursuant to this Indenture which, as evidenced by a verification report, • 154 54 • upon which the Trustee and each Issuing and Paying Agent may conclusively rely, from a firm of independent certified public accountants, or other firm acceptable to the Trustee and each Issuing and Paying Agent, are not required for the payment of Notes not theretofore surrendered for such payment. SECTION 10.02. Dischaic,e of Liability on Notes. Upon the deposit with the Issuing and Paying Agent for Notes of such Series, escrow agent or other fiduciary, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03) to pay any Outstanding Note, then (provided that the Credit Provider providing a Credit Facility in connection with such Note has been paid in full all amounts then owing under its Credit Agreement) all liability of the Issuer in respect of such Note shall cease, terminate and be completely discharged, provided that the Owner thereof shall thereafter be entitled to the payment of the principal of and interest on such Note, and the Issuer shall remain liable for such payment, but only out of such money or securities deposited as aforesaid for their payment, subject, however, to the provisions of Section 10.04 and the continuing duties of the Trustee and the applicable Issuing and Paying Agent hereunder. The Issuer may at any time surrender to the Issuing and Paying Agent for cancellation by it any Notes previously issued and delivered, which the Issuer may have acquired in any manner whatsoever, and such Notes, upon such surrender and cancellation, shall be deemed to be paid and retired. SECTION 10.03. Deposit of Money or Securities. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust money or securities in the necessary amount to pay any Notes, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts (other than the Rebate Fund) established pursuant to this Indenture and any money or securities held by any Issuing and Paying Agent in the funds and accounts (other than any Credit Facility Fund) established pursuant to any Issuing and Paying Agent Agreement and shall be: (a) lawful money of the United States of America in an amount equal to the principal amount of such Notes and all unpaid interest thereon to maturity; or (b) noncallable and non -prepayable investment securities consisting of (i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed as to full and timely payment by, the United States of America, [add Agencies?] (ii) any certificates, receipts, securities or other obligations (excluding mutual funds and unit investment trusts) evidencing ownership of, or the right to receive, a specified portion of one or more interest payments or principal payments, or any combination thereof, to be made on any bond, note, or other obligation described above in clause (i), the principal of and interest on which when due will, in the opinion of an independent certified public accountant delivered to the Trustee and any applicable Issuing and Paying Agent (upon which opinion the Trustee and any applicable Issuing and Paying Agent may conclusively rely), provide money sufficient to pay the principal of and all unpaid interest to maturity, on the Notes to be paid, as such principal and interest become due; 155 55 provided, in each case, that the applicable Issuing and Paying Agent, escrow agent or other fiduciary shall have been irrevocably instructed (by the terms of the Issuing and Paying Agent Agreement or by Request of the Issuer) to apply such money to the payment of such principal and interest with respect to such Notes. SECTION 10.04. Payment of Notes After Discharge of Indenture. Any moneys (other than those held in the Rebate Fund) held by the Trustee in trust for the payment of the principal of, or interest on, any Notes and remaining unclaimed for one (1) year after the principal of all of the Notes has become due and payable, if such moneys were so held at such date, or one (1) year after the date of deposit of such moneys if deposited after said date when all of the Notes became due and payable, shall, upon Request of the Issuer, be repaid to the Issuer free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease. All moneys held by or on behalf of the Trustee for the payment of principal of or interest on Notes shall be held uninvested, in trust for the account of the Owners thereof, and the Trustee shall not be required to pay Owners any interest on, or be liable to the Owners or any other person (other than the Issuer) for any interest earned on, moneys so held. Any interest earned thereon (other than on funds held in the Rebate Fund) shall belong to the Issuer and shall be deposited monthly by the Trustee into the Interest Fund. ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of Issuer Limited to Revenues. Notwithstanding anything in this Indenture or in the Notes contained, the Issuer shall not be required to advance any moneys derived from any source of income other than the Revenues and other assets pledged hereunder for any of the purposes in this Indenture mentioned, whether for the payment of the principal of or interest on the Notes or for any other purpose of this Indenture. The Issuer may, however, advance funds for any such purpose, provided such funds are derived from a source legally available for such purpose. SECTION 11.02. Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Issuer or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Issuer or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. SECTION 11.03. Limitation of Rights to Issuer, Trustee, Issuing and Paying Agent, Credit Provider and Noteholders. Nothing in this Indenture or in the Notes expressed or implied is intended or shall be construed to give to any person other than the Issuer, the Trustee, the Issuing and Paying Agent, the Credit Provider and the Owners of the Notes and the holders of any Parity Debt, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Issuer, the Trustee, the Issuing and Paying Agent, the Credit Provider and the Owners of the Notes and the holders of any Parity Debt. • 156 56 • • • SECTION 11.04. Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 11.05. Destruction or Delivery of Canceled Notes. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Issuer of any Notes, the Trustee may, in its sole discretion, in lieu of such cancellation and delivery, destroy such Notes, and deliver a certificate of such destruction to the Issuer. SECTION 11.06. Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Issuer hereby declares that it would have adopted this Indenture and each and every other Section, subsection, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Notes pursuant thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. SECTION 11.07. Notices. Except as otherwise provided herein or in the Indenture, the Issuing and Paying Agent Agreement, any Credit Agreement or any Dealer Agreement, for the purposes of this Indenture each such agreement, respectively, any notice to or demand may be served or presented, and such demand may be made and shall be deemed to have been sufficiently given or served for all purposes by being deposited, first-class mail postage prepaid, in a post office letter box, addressed, as the case may be, to the parties as follows: Issuer: Issuing and Paying Agent: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Executive Director Telephone: (951) 787-7141 Fax: (951) 787-7920 (i) concerning the daily issuance of Notes: U.S. Bank Trust National Association Attention: Phone: ( ) Fax: ( ) 157 57 (ii) with a copy to: Attention: Phone: ( ) Fax: ( ) Initial Series Credit Provider (credit matters): Bank of America, N.A. 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, CA 90017-1466 Attention: Standby Letter of Credit Deposit Fund Phone: (213) 345-5231 Fax: (213) 345-0265 Initial Series Credit Provider (operations/ money transfers): Bank of America, N.A. 333 South Hope Street, 13th Floor Mailcode: CA9-703-19-23 Los Angeles, CA 90071 Attention: Credit Products, California Government & Institutional Banking Phone: (213) 621-7142 Fax: (213) 621-3607 Series A Dealer: Lehman Brothers, Inc. 745 7th Avenue, 3rd Floor New York, NY 10019 Attention: Short -Term Desk Phone: (212) 528-1011 Fax: (646) 758-1904 Series B Dealer: Banc of America Securities LLC New York, NY Attention: Phone: ( ) Fax: ( ) SECTION 11.08. Notice to Rating Agencies. The Trustee shall give notice to each Rating Agency of any supplements or amendments to this Indenture, any changes to, or expiration, substitution, termination or extension of the term of, any Credit Facility and any • 158 58 • • • Alternate Credit Facility, any substitution of any Dealer, the appointment of a successor Trustee and the appointment of a successor Issuing and Paying Agent, and of when there are no longer any Notes outstanding under the Issuing and Paying Agreement, initially at each respective address given below, or at such other address as may be furnished to the Issuer from time to time by each Rating Agency: Standard & Poor's Ratings Services 55 Water Street, 38th Floor New York, New York 10041 Attention: Municipal Structured Surveillance Moody's Investors Service 99 Church Street New York, NY 10007-2796 Attention: Fitch, Inc. One State Street Plaza New York, New York 10004 Attention: Municipal Structured Finance SECTION 11.09. Evidence of Rights of Noteholders. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Noteholders may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Noteholders in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Notes transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Issuer if made in the manner provided in this Section. The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of Notes shall be proved by the Note registration books held by the Issuing and Paying Agent. The Trustee may establish a record date as of which to measure consent of the Noteowners in order to determine whether the requisite consents are received. Any request, consent, or other instrument or writing of the Owner of any Note shall bind every future Owner of the same Note and the Owner of every Note issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Issuer in accordance therewith or reliance thereon. SECTION 11.10. Disqualified Notes. In determining whether the Owners of the requisite aggregate principal amount of Notes have concurred in any demand, request, direction, 159 59 consent or waiver under this Indenture, Notes which are owned or held by or for the account of the Issuer, or by any other obligor on the Notes, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Issuer or any other obligor on the Notes, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Notes so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Notes and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Issuer or any other obligor on the Notes. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. SECTION 11.11. Money Fleid for Particular Notes. The money held by the Issuing and Paying Agent or the Trustee for the payment of the interest or principal due on any date with respect to particular Notes or Parity Debt shall, on and after such date and pending such payment, be set aside on books of the Issuing and Paying Agent or the Trustee, as applicable, and held in trust by the Issuing and Paying Agent or Trustee for the Owners of the Notes or Parity Debt entitled thereto, subject, however, to the provisions of Section 10.04. SECTION 11.12. Funds and Accounts. Any fund required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds shall at all times be maintained in accordance with customary standards of the industry, to the extent practicable, and with due regard for the protection of the security of the Notes and Parity Debt and the rights of every Holder thereof. SECTION 11.13. Article and Section Headings and References. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Indenture. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders. SECTION 11.14. Waiver of Personal Liability. No Board member, officer, agent or employee of the Issuer or the Trustee shall be individually or personally liable for the payment of the principal of or interest on the Notes or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such Board member, officer, agent or employee of the Issuer or the Trustee from the performance of any official duty provided by law or by this Indenture. • 160 60 • • • SECTION 11.15. Credit Provider. All provisions hereof regarding consents, approvals, directions, appointments or requests by any Credit Provider shall be deemed not to require or permit such consents, approvals, directions, appointments or requests by such Credit Provider and shall be read as if such Credit Provider were not mentioned therein and as if its Credit Facility were not in effect during any time in which such Credit Provider has failed to honor a draft presented to it in strict conformance with the applicable provisions of such Credit Facility, or after such Credit Facility shall at any time for any reason cease to be valid and binding on such Credit Provider, or shall be declared to be null and void, or while such Credit Provider is denying further liability or obligation under such Credit Facility (unless such Credit Facility has been fully drawn or to the extent that the conditions to drawing thereunder have not been fully satisfied) or after such Credit Provider has rescinded or repudiated such Credit Facility. All provisions herein relating to any Credit Provider shall be of no force and effect with respect to such Credit Provider if its Credit Facility and Credit Agreement are not in effect and all amounts owing to such Credit Provider under its Credit Agreement have been paid. SECTION 11.16. Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. SECTION 11.17. Business Day. Except as specifically set forth in a Supplemental Indenture, any payments or transfers which would otherwise become due on any day which is not a Business Day shall become due or shall be made on the next succeeding Business Day. SECTION 11.18. Effective Date of Indenture. This Indenture shall take effect upon its execution and delivery. SECTION 11.19. Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 161 61 IN WITNESS WHEREOF, the parties hereto have executed this Indenture by their officers thereunto duly authorized as of the day and year first written above. (Seal) ATTEST: Clerk of the Riverside County Transportation Commission Approved as to form: General Counsel to the Riverside County Transportation Commission RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: Authorized Officer • 162 62 • • • Exhibit A Form of Series A and Series B Note UNITED STATES OF AMERICA STATE OF CALIFORNIA RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMERCIAL PAPER NOTE (LIMITED TAX BOND) Principal Amount Note Number: Registered Owner: Date of Issue: Maturity Date: SERIES Interest Rate: Interest Amount: $ The Riverside County Transportation Commission (the "Issuer"), for value received, hereby promises to pay to the Registered Owner designated above (herein called the "Holder"), on the Maturity Date identified above, but solely from the Revenues, income and other moneys hereinafter mentioned, the Principal Amount identified above, together with interest on said Principal Amount at the Interest Rate per annum (calculated on the basis of a year containing 365/366 days) identified above, upon the presentation and surrender hereof at the Corporate Trust Office of U.S. Bank Trust National Association (together with any successor, the "Issuing and Paying Agent"). For payment of this Note on the Maturity Date hereof, this Note must be presented to the Issuing and Paying Agent no later than 2:00 p.m. New York City time on such day. If a Note is presented for payment after 2:00 p.m. New York City time, payment therefor shall be made by the Issuing and Paying Agent on the next succeeding business day without the accrual of additional interest thereon. The principal of and interest on this Note shall be payable in lawful money of the United States of America. This Note may be transferred or exchanged in accordance with the terms and conditions and upon payment of the charges set forth in the Indenture, dated as of March 1, 2005 (as amended and supplemented, the "Indenture"), between the Issuer and U.S. Bank Trust National Association, as trustee (together with any successor, the "Trustee"). The Indenture provides that the Issuer may issue additional notes and incur other indebtedness under the terms and conditions set forth in the Indenture. All notes issued thereunder and secured thereby are collectively referred to herein as "Notes." All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Indenture. 163 A-1 This Note is one of a duly authorized issue of the Riverside County Transportation Commission Commercial Paper Notes issued under, and secured by, the Indenture. The Notes of such issue will, at the time of issuance, be designated as Series _ (the "Series _ Notes"). The Indenture also provides for the incurrence of additional debt, including the issuance of additional Notes, to be secured equally and ratably with the Notes and the issuance of Senior Lien Debt. The Notes and the interest thereon (to the extent set forth in the Indenture), together with any Parity Debt issued by the Issuer, and the interest thereon, are payable from, and are secured by a pledge of the revenues of the Issuer, as more particularly described in the Indenture, the "Revenues." All of the Notes and Parity Debt are equally secured by a pledge of the Revenues. The Notes are limited obligations of the Issuer and are payable, both as to principal and interest, solely from the Sales Tax Revenues, and the Issuer is not obligated to pay the Notes except from such amounts. Neither the State of California nor any of its political subdivisions (except the Issuer to the extent of the pledge of the Sales Tax Revenues) is liable on the Notes, nor in any event shall the Notes be payable out of any funds other than those of the Issuer as specified in the Indenture. This Note shall not be entitled to any security or benefit under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been signed by the Issuing and Paying Agent. It is hereby certified and recited that all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Note and in the issuing of this Note, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California, and that this Note, together with all other indebtedness of the Issuer pertaining to the Revenues, is within every debt and other limit prescribed by the Constitution and the statutes of the State of California, and is not in excess of the amount of Notes permitted to be issued under the Indenture or the laws of the State. • • 164 A-2 • • • IN WITNESS WHEREOF, the RIVERSIDE COUNTY TRANSPORTATION COMMISSION has caused this Note to be executed in its name and on its behalf by the facsimile signature of the Chairperson of the Board of Directors of the Issuer and countersigned by the facsimile signature of the Auditor -Controller of the Issuer, and to be dated the date set forth above. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By Chairperson of the Board of Commissioners (Seal) Countersigned: By Auditor -Controller CERTIFICATE OF AUTHENTICATION This Note is one of an issue described in the Indenture mentioned herein. Date of Authentication: U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By Authorized Officer 165 A-3 • • • Exhibit B Form of Master Note (Date of Issuance) Riverside County Transportation Commission ("Issuer"), for value received, hereby promises to pay to Cede & Co., as nominee of The Depository Trust Company, or to registered assigns: (i) the principal amount, together with unpaid accrued interest thereon, if any, on the maturity date of each obligation identified on the records of Issuer (the "Underlying Records") as being evidenced by this Master Note, which Underlying Records are maintained by U.S. Bank Trust National Association ("Paying Agent"); (ii) interest on the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records; and (iii) the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records. Interest shall be calculated at the rate and according to the calculation convention specified on the Underlying Records. Payments shall be made solely from the sources stated on the Underlying Records by wire transfer to the registered owner from Paying Agent without the necessity of presentation and surrender of this Master Note. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF. This Master Note is a valid and binding obligation of Issuer. Not Valid Unless Countersigned for Authentication by Paying Agent. Riverside County Transportation U.S. Bank Trust National Association Commission (Paying Agent) (Issuer) By: By: (Authorized Countersignature) Chairperson of the Board of Commissioners By: Auditor -Controller (Seal) 166 B-1 (Reverse Side of Master Note) At the request of the registered owner, Issuer shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Master Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall no longer be evidenced by this Master Note. FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (Name, Address, and Taxpayer Identification Number of Assignee) the Master Note and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Master Note on the books of Issuer with full power of substitution in the premises. Dated: Signature(s) Guaranteed: (Signature) NOTICE: The signature on this assignment must correspond with name as written upon the face of this Master Note, in every particular, without alteration or enlargement or any change whatsoever. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. • 167 B-2 • • • Exhibit C Form of Issuance Request ISSUANCE REQUEST AND DIRECTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION The undersigned, an Authorized Representative of the Riverside County Transportation Commission, a public entity duly organized and existing under and by virtue of the laws of the State of California (the "Issuer") does hereby request U.S. Bank Trust National Association, as Issuing and Paying Agent (the "Issuing and Paying Agent") under the Issuing and Paying Agent Agreement, dated as of February 1, 2005 (the "Agreement") between the Issuer and the Issuing and Paying Agent, to issue Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), as follows: 1. Date of Issuance: 2. Terms of the Notes [expand as needed]: Series A: B: Renewal (Roll -Over) Notes: Original Issue Notes: Maturity Principal Interest Date Amount Rate $ % Subtotal: Renewal (Roll -Over) Notes: $ Original Issue Notes: Subtotal: $ Total: $ 3. Total principal and interest amount for all Outstanding Series A Notes and Series B Notes (including the new Notes described herein): $ [cross-check: cannot exceed Stated Amount of the Credit Facility for such Series of Notes] 168 C-1 Pursuant to Section 3.01 of the Indenture, the undersigned hereby makes all of the certifications set forth in Exhibit D attached to the Indenture. All capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Indenture. IN WITNESS WHEREOF, this Issuance Request is executed and delivered this day of Riverside County Transportation Commission By: Authorized Representative • • • 169 C-2 • • • Exhibit D Certifications and Representations of the Riverside County Transportation Commission Made With Each Issuance Request Pursuant to Section 3.01 of the Indenture, the Riverside County Transportation Commission certifies the following with each executed and delivered Issuance Request: (i) the Initial Series Credit Facility is in full force and effect; (ii) after the issuance of Notes as requested hereby and the application of proceeds thereof, the aggregate principal amount of Notes Outstanding will not exceed $200,000,000, the aggregate principal amount of Series A Notes Outstanding will not exceed $120,000,000, the aggregate principal amount of Series B Notes Outstanding will not exceed $80,000,000, and the aggregate principal amount of Notes Outstanding, together with the interest due at maturity of such Notes, will not exceed the Stated Amount of the applicable Credit Facility; (iii) the issuance of Series A Notes requested hereby will be applied to pay Series A Notes maturing on the date hereof and will not be used to pay any Series B Notes; (iv) the issuance of Series B Notes requested hereby will be applied to pay Series B Notes maturing on the date hereof and will not be used to pay any Series A Notes; (v) the interest rates borne by the Notes to be delivered do not exceed twelve percent (12%) per annum; (vi) the terms to maturity of the Notes do not exceed 270 days, the maturity dates of Notes set forth herein do not extend beyond five (5) days prior to the applicable Credit Facility Expiration Date, or beyond the Sales Tax Expiration Date, or beyond thirty (30) years from the date of initial issuance of Notes of such Series (as provided in the Tax Certificate); (vii) no Event of Default has occurred and is now continuing; (viii) all action on the part of the Issuer necessary for the valid issuance of the Notes then to be issued has been taken and has not been rescinded or revoked; (ix) all provisions of State and federal law necessary for the valid issuance of such Notes and necessary to provide that interest thereon is excludable from gross income for purposes of federal income taxes and is exempt from State of California personal income taxes have been complied with; (x) interest on the Notes is excludable from gross income for purposes of federal income taxes and is exempt from State of California personal income taxes; (xi) such Notes in the hands of the Owners thereof will be valid and binding limited obligations of the Issuer enforceable according to their terms; 170 D-1 (xii) the Issuer is in compliance with the covenants set forth in Article VI of the Indenture, including, without limitation, the tax covenants contained in Section 6.06 and 6.07, and is in compliance with the covenants set forth in Section 1.8.2 of the Tax Certificate; (xiii) no Notice of No Issuance has been received from the Credit Provider. • 171 D-2 • • Exhibit E Form of Requisition — Proceeds Fund REQUISITION NO. Initial Series/Series Proceeds Fund The undersigned, , hereby certifies as follows: 1. I am the of the Riverside County Transportation Commission, a public entity duly organized and existing under and by virtue of the laws of the State of California (the "Issuer"). 2. Pursuant to the provisions of that certain Indenture, dated as of February 2004 (the "Indenture"), between the Issuer and U.S. Bank Trust National Association, as trustee (the "Trustee"), I am an Authorized Representative (as such term is defined in the Indenture) of the Issuer and I am delivering this Requisition on behalf of the Issuer. 3. The undersigned, acting on behalf of the Issuer, does hereby authorize disbursement of funds from the Initial Series/Series Proceeds Fund (the "Proceeds Fund") created pursuant to Section 4.01 of the Indenture in connection with the payment of the costs of the Project (as such term is defined in the Indenture) being financed with the proceeds of the Riverside County Transportation Commission Commercial Paper Notes, Series (the "Notes") or the payment of interest due on the Notes. TOTAL DISBURSEMENT AMOUNT AUTHORIZED: $ 4. The undersigned, acting on behalf of the Issuer, hereby certifies that: (a) the costs of the Project or interest on the Notes in the amount set forth herein have been incurred by the Issuer and are presently due and payable; and (b) that each item is a proper charge against the Proceeds Fund and has not been previously paid from the Proceeds Fund. 5. The undersigned, acting on behalf of the Issuer, hereby certifies that there has not been filed with or served upon the Issuer notice of any lien, right to lien, or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the parties identified on Exhibit A to this Requisition, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanics' liens accruing by mere operation of law. Dated: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Authorized Representative 172 E-1 EXHIBIT A Initial Series/Series Proceeds Fund Party Payment To Be Paid Amount Nature of Expenditure Payment Instructions • • s 173 • • • Exhibit F Form of Notice of Expiration Date To: Riverside County Transportation Commission Pursuant to Section 6.09 of the Indenture, dated as of February 1, 2004 (the "Indenture"), between the Riverside County Transportation Commission and U.S. Bank Trust National Association, as trustee, you are hereby notified that the Credit Facility* currently in effect with respect to the Series Notes is scheduled to expire pursuant to its terms on Pursuant to the Credit Agreement, you may request an extension of such expiration date not more than 120 days prior thereto. Dated: U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: Authorized Officer *All capitalized terms used but not defined in this Notice shall have the meanings set forth in the Indenture. 174 F-1 ATTACHMENT 3 • • Ratings: Moody's: S&P: (See "Ratings" herein) In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Notes, when issued in accordance with the Indenture, the Tax Certificate and the Issuing and Paying Agent Agreement, is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. The amount treated as interest on the Notes and excluded from gross income may depend upon the taxpayer's election under Internal Revenue Service Notice 94-84. In the further opinion of Bond Counsel, interest on the Notes is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of or the accrual or receipt of interest on, the Notes. See "TAX MATTERS." $185,000,000 RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMERCIAL PAPER NOTES (LIMITED TAX BONDS) $110,000,000 Series A $75,000,000 Series B This cover page contains certain information for quick reference only. It is not a summary of the Notes. Investors must read the entire Offering Memorandum to obtain information essential to the making of an informed investment decision. The Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) (the "Notes") are deliverable in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases of the Notes will be made in principal amounts of $100,000 and in integral multiples of $1,000 in excess thereof and will be in book -entry form only. Purchasers of the Notes will not receive instruments representing their beneficial ownership in the Notes purchased but will receive a credit balance on the books of their respective DTC Participants or DTC Indirect Participants. See Appendix C —"Book -Entry Only System" herein. The Notes are limited obligations of the Riverside County Transportation Commission (the "Commission") payable from the receipts of a one-half of one percent (1/2%) retail transactions and use tax (the "Sales Tax") imposed in the County of Riverside (the "County") for transportation purposes. Collection of the Sales Tax commences April, 2009; the Commission expects to receive the Sales Tax from the State Board of Equalization commencing June, 2009. Subject to certain financial covenants described herein, the Commission may incur obligations secured by the Sales Tax on a senior basis to the Notes. See "Security and Source of Payment for the Notes" herein. Payment of the principal of and interest on the Notes will be secured by amounts drawn under an irrevocable, direct pay letter of credit to be issued by BANK OF AMERICA, N.A. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THE COMMISSION TO THE EXTENT OF THE PLEDGE OF REVENUES DESCRIBED HEREIN, IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF OR INTEREST ON THE NOTES. The Notes are offered when, as and if issued and delivered subject to the approval of validity by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, and certain other conditions. Certain legal matters will be passed on for the Commission by Nossaman, Guthner, Knox & Elliott, LLP, Los Angeles, California, Disclosure Counsel, and by Best, Best & Krieger LLP, Riverside, Califomia, the Commission's general counsel. Dated: February , 2005. Lehman Brothers Banc of America Securities LLC Dealer for the Series A Notes Dealer for the Series B Notes 175 No dealer, broker, salesperson or other person has been authorized by the Commission, Bank of America, N.A. or the Financial Advisor to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing. This Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer, solicitation or sale of any Notes by any person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Offering Memorandum is not to be construed as a contract with the purchasers of the Notes. Statements contained in this Offering Memorandum which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The information set forth herein has been obtained from the Commission, The Depository Trust Company, and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by any Dealers of the Notes. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Offering Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change since the date hereof in the affairs of the Commission, or in any other matters which are material to the full and punctual payment of any Notes. All summaries of statutes and documents are made subject to the provisions of such statutes and documents, respectively, and do not purport to be complete statements of any or all of such provisions. This Offering Memorandum is submitted in connection with the sale of the Notes referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The Notes have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption contained therein, and have not been registered or qualified under the securities laws of any state. • • • 176 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Robin Lowe, Chairman Marion Ashley, ls` Vice Chairman Terry Henderson , 2nd Vice Chairman Art Welch Roger Berg Robert Crain Shenna Mogeet Mary Craton Gregory S. Pettis Juan M. DeLara Jeff Miller Matt Weyuker Percy L. Byrd Michael H. Wilson Bob Magee Frank West Kelly Seyarto Frank Hall Dick Kelly Ronald Oden Daryl Busch Ron Meepos Ameal Moore Chris Buydos Ron Roberts Bob Buster John F. Tavagilone Jeff Stone Roy Wilson Anne Mayer MANAGEMENT • • Executive Director Eric Haley Deputy Executive Director Hideo Sugita Chief Financial Officer Theresia Trevino GENERAL COUNSEL TO COMMISSION Best, Best & Krieger LLP Riverside, California FINANCIAL ADVISOR Fieldman, Rolapp & Associates Irvine, California BOND COUNSEL Orrick, Herrington & Sutcliffe LLP San Francisco, California TRUSTEE / ISSUING AND PAYING AGENT U.S. Bank Trust, National Association New York, New York 177 • • TABLE OF CONTENTS Page INTRODUCTION 1 General 1 The Notes 1 Security and Source of Payment for the Notes 1 References 2 DESCRIPTION OF THE NOTES 2 General 2 SECURITY AND SOURCE OF PAYMENT FOR THE NOTES 3 Pledge of Sales Tax Revenues 3 Allocation of Revenues 3 Additional Indebtedness; Refunding Notes; Limitation on the Issuance of Obligations Payable from Sales Tax 4 The Sales Tax 6 Prior Sales Tax 6 Collection of Sales Tax Revenues and Local Revenues 7 Provisions Affecting Expenditures of Sales Tax Revenues 7 Proposition 218 7 Proposition 42 8 Further Initiatives 8 THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT 8 The Letter of Credit 8 THE BANK 11 THE COMMISSION 12 General 12 Commissioners 13 Executive Staff 13 Historical Taxable Sales 14 Historical Prior Sales Tax Revenues 14 Projected Sales Tax Revenues 15 THE TRANSPORTATION EXPENDITURE PLAN 15 COMMISSION LITIGATION 16 SALES TAX LITIGATION IN CALIFORNIA 16 TAX MATTERS 17 RATINGS 19 LEGALITY FOR INVESTMENT IN CALIFORNIA 19 THE DEALERS 19 FINANCIAL ADVISOR 19 OTHER MATTERS 20 Appendix A -- The Economy of the County of Riverside A-1 Appendix B Audited Financial Statements of the Riverside County Transportation Commission for Fiscal Year Ended June 30, 2004 B-1 Appendix C Book -Entry Only System C-1 Appendix D Definitions and Summary of the Indenture D-1 Appendix E Form of Proposed Opinion of Bond Counsel E-1 • • • OFFERING MEMORANDUM $185,000,000 Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) $110,000,000 Series A $75,000,000 Series B INTRODUCTION This introduction is not a summary of the Offering Memorandum. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Offering Memorandum and the documents summarized or described herein. A full review should be made of the entire Offering Memorandum. General This Offering Memorandum, which includes the cover page and appendices hereto, sets forth certain information in connection with the offering of $185,000,000 aggregate principal amount of Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) (the "Notes") to be issued by the Riverside County Transportation Commission (the "Commission"). Pursuant to the Riverside County Transportation Sales Tax Act, being Division 25 of the California Public Utilities Code (Sections 240000 et seq.) (the "Act"), the Commission is authorized to issue indebtedness payable in whole or in part from revenues of the Sales Tax (more fully described herein). The Commission's debt issuing capacity and authority is separate and distinct from the County of Riverside (the "County"). The Notes are being issued pursuant to the Act and an Indenture, dated as of March 1, 2005 (the "Indenture"), between the Commission and U.S. Bank Trust N.A., as trustee (the "Trustee"). The Notes The Notes are being issued pursuant to authority granted under the Act, Resolution No. 05-001 adopted by the Board of the Commission on February 9, 2005, and under Measure "A" — Riverside County Transportation Commission Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance (the "Ordinance"), approved by more than two-thirds of the voters of the County on November 5, 2002, and are issued pursuant to the Indenture and an Issuing and Paying Agent Agreement dated as of March 1, 2005 (the "Issuing and Paying Agent Agreement"), by and between the Commission and U.S. Bank Trust National Association as issuing and paying agent (the "Issuing and Paying Agent"). See "Description of the Notes" herein. Proceeds of the Notes will be used: (i) to finance a portion of the projects described in the Transportation Expenditure Plan (more fully described herein), (ii) to pay the principal of and interest on the maturing Notes and to reimburse the Bank for loans and advances made pursuant to the Letter of Credit, as well as to pay the fees and expenses related to the Notes until the Commission begins receiving Sales Taxes in June, 2009 and (iii) to pay the costs of issuance of the Notes. See "The Transportation Expenditure Plan" herein. Security and Source of Payment for the Notes The Notes are limited obligations of the Commission payable from certain revenues (as more fully defined herein, the "Sales Tax Revenues") to be received from the collection of a one-half of one percent (1/2%) retail transactions and use tax (the "Sales Tax") imposed in the County. The Sales Tax was approved on November 5, 2002, by more than two-thirds of the voters of the County; collection of the Sales Tax will commence in April, 2009 and will be remitted to the Commission by the State Board of Equalization commencing in June, 2009, and will continue for a thirty-year period. See "SECURITY AND SOURCE OF PAYMENT FOR THE NOTES - Pledge of Revenues" and "The Sales Tax" herein. 179 The Notes are also secured by amounts drawn under an irrevocable, direct pay letter of credit (the "Letter of Credit") issued by Bank of America, N.A. (the "Bank"), pursuant to a reimbursement agreement dated as of March 1, 2005 (the "Reimbursement Agreement"), by and between the Commission and the Bank. See "THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT." NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THE COMMISSION TO THE EXTENT OF THE PLEDGE OF REVENUES (AS DEFINED IN THE INDENTURE), IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF AND INTEREST ON THE NOTES. References Brief descriptions of the Notes, the security and sources of payment for the Notes, the Ordinance, the Commission and its financial status and the pledge of Sales Tax Revenues are presented herein. Such references and descriptions do not purport to be comprehensive or definitive. All references herein to various documents are qualified in their entirety by reference to the forms thereof. Such documents pertaining to the Notes are available at the offices of the Commission. All capitalized terms used herein and not otherwise defined shall have the meanings given such terms in Appendix D hereto or in the Indenture. DESCRIPTION OF THE NOTES General The Notes are authorized to be issued pursuant to the Act and the Indenture. The Notes will be dated the date of their respective authentication and issuance; will be issued in book -entry form only in denominations of $100,000 and in integral multiples of $1,000 in excess thereof; and will bear interest at a separately stated interest rate and amount on the face of each Note. The Notes will bear interest from their respective dates, payable on their respective maturity dates. The Notes: (i) will bear interest payable at maturity at a rate not to exceed twelve percent (12%) per annum calculated on the basis of a year consisting of 365/366 days and actual number of days elapsed; (ii) will mature on a Business Day not more than two hundred seventy (270) days after their respective dates, but in no event later than five (5) days prior to the Letter of Credit Expiration Date or beyond thirty (30) years from the date of initial issuance of Notes of such Series; and (iii) will be sold at a price of not less than one hundred percent (100%) of the principal amount thereof. The Notes, when issued, will be registered in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ("DTC" and together with any successor securities depository, the "Securities Depository"). DTC will act as Securities Depository for the Notes so purchased. Individual purchases will be made in book -entry only form. Purchasers will not receive a certificate representing their beneficial ownership interest in Notes. So long as Cede & Co. is the registered owner of the Notes, as nominee of DTC, references herein to the Noteholders, holders or registered owners shall mean Cede & Co. as aforesaid, and shall not mean the Beneficial Owners of Notes. In this Offering Memorandum, the term "Beneficial Owner of Notes" shall mean the person for whom a Participant (as such term is defined in Appendix C) acquires an interest in the Notes. So long as Cede & Co. is the registered owner of the Notes, principal of and interest on the Notes are payable by wire transfer of same day funds by the Trustee to Cede & Co., as nominee for DTC. DTC is obligated, in turn, to remit such amounts to the DTC Participants for subsequent disbursement to Beneficial Owners of the Notes. See APPENDIX C - "BOOK -ENTRY -ONLY SYSTEM" herein. • • • 180 2 • • • SECURITY AND SOURCE OF PAYM ENT FOR THE NOTES Pledge of Sales Tax Revenues The Notes are limited obligations of the Commission and are payable as to principal and interest from Sales Tax Revenues received by the Trustee and any other funds pledged under the Indenture (collectively, the "Revenues"). "Sales Tax Revenues" means one hundred percent (100%) of the amounts collected by the State Board of Equalization relating to the Sales Tax and distributed to the Trustee which is net of the fee payable to the State Board of Equalization for collection of the Sales Tax. The collection of the Sales Tax is expected to commence in April, 2009. For a general discussion of the Sales Tax, see "The Sales Tax" herein. For a discussion of projected Sales Tax Revenues, see "THE COMMISSION — Projected Sales Tax Revenues." The Indenture provides that the pledge of Revenues for the payment of the Notes, and any debt issued on a parity with the Notes (such debt being hereinafter referred to as "Parity Debt"), shall constitute a first priority lien on the Revenues and shall be valid and binding from and after initial delivery by the Issuing and Paying Agent of the Notes or Parity Debt, without any physical delivery thereof or further act; provided that the Commission may determine to issue indebtedness or other obligations having a lien upon the Sales Tax Revenues that is senior to that of the Notes ("Senior Lien Debt") upon compliance with certain conditions required under the Indenture. See "Additional Indebtedness; Refunding Notes; Limitation on the Issuance of Obligations payable from Sales Tax." Under the Indenture, the Commission assigns and has covenanted to cause the Sales Tax Revenues to be transmitted by the State Board of Equalization directly to the Trustee upon the commencement of the collection of the Sales Tax. The Trustee is directed to deposit all Sales Tax Revenues in the Revenue Fund established under the Indenture. After making the monthly deposits of Sales Tax Revenues to the Interest Fund and the Principal Fund as described herein below, the Trustee shall transmit any excess Sales Tax Revenues to the Commission. All moneys at any time held in the Revenue Fund established under the Indenture shall be held in trust for the benefit of the registered owners of the Notes and Parity Debt and shall be disbursed, allocated and applied solely for the uses and purposes set forth in the Indenture. See "Allocation of Revenues" and APPENDIX D - "DEFINITIONS AND SUMMARY OF THE INDENTURE - Pledge of Revenues; Sales Tax Revenues" and "- Allocation of Revenues." NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THE COMMISSION TO THE EXTENT OF THE PLEDGE OF REVENUES, IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF OR INTEREST ON THE NOTES. Allocation of Revenues Pursuant to the provisions of the Indenture, the Trustee is directed to deposit all Sales Tax Revenues in the Revenue Fund. So long as any Notes are outstanding, the Trustee will set aside in each month following receipt of the Sales Tax Revenues the moneys in the Revenue Fund in the following respective funds in the following order of priority, the requirements of each such fund at the time of deposit to be satisfied before any deposit is made to any fund subsequent in priority; provided that on a parity with such deposits the Trustee may set aside or transfer amounts with respect to outstanding Parity Debt pursuant to the Indenture. Interest Fund. Upon the receipt of Sales Tax Revenues in each month commencing June 2009, the Trustee will deposit in the Interest Fund, an amount sufficient to cause the amount on deposit in the Interest Fund on the last Business Day of each month to equal the accrued and unpaid interest, if any, on the Notes Outstanding on such date, plus the interest which will accrue on Notes expected to be Outstanding through the last day of the month immediately following the month such deposit is made, calculated (i) at the actual rate of interest on the Notes for any day interest is to accrue at a rate known on the date such deposit is made and (ii) at an assumed interest rate equal to the BMA Municipal Swap Index for any day interest is to accrue at a rate unknown on the date such deposit is made. Any amounts remaining on deposit in the Interest Fund on the Business Day preceding the receipt of Sales Tax Revenues from the State Board of Equalization of the State of California (the "BOE") in June of each year, 181 3 commencing June 2010, shall be transferred to the Commission and may be used for any lawful purpose of the Commission. Principal Fund. Upon receipt of the Sales Tax Revenues in each month commencing June 2009, the Trustee will deposit in the Principal Fund an amount equal to the principal amount of Notes maturing in the month such Notes are issued which the Commission intends to retire from Sales Tax Revenues during such month. Subsequent to initial issuance of the Notes, the Trustee will deposit in the Principal Fund, an amount equal to the principal amount of Notes maturing in the month immediately following the month such deposit is made which the Commission intends to retire from Revenues during such month. See APPENDIX D - "DEFINITIONS AND SUMMARY OF THE INDENTURE - Allocation of Revenues." Any amounts remaining on deposit in the Principal Fund on the Business Day preceding the receipt of Sales Tax Revenues from the BOE in June of each year, commencing June 2010, will be transferred to the Commission and may be used for any lawful purpose of the Commission. Additional Indebtedness; Refunding Notes; Limitation on the Issuance of Obligations Payable from Sales Tax Additional Notes. The Commission may by Supplemental Indenture establish one or more additional Series of Notes, payable from the Sales Tax Revenues and secured by the pledge made under the Act and the Indenture equally and ratably with the Notes and any other Series of Notes previously issued, in such principal amount as the Commission determines, but only upon compliance by the Commission with the provisions of the Indenture and any additional requirements set forth in said Supplemental Indenture, and subject to the following specific conditions: (a) no Event of Default shall have occurred and then be continuing; (b) the aggregate principal amount of Notes authorized to be issued under the Indenture, together with all outstanding Parity Debt, shall not in combination exceed any limitation imposed by the Ordinance or the Act or by any Supplemental Indenture; (c) the Commission shall have placed on file with the Trustee, the Issuing and Paying Agent and the Bank, a Certificate of the Commission certifying that either (i) the amount of Sales Tax Revenues or Prior Sales Tax Revenues, as applicable, for any period of 12 consecutive months during the eighteen months immediately preceding the date of the proposed issuance, or (ii) the estimated Sales Tax Revenues for the fiscal year in which the additional series of Notes are to be issued, will be at least equal to 1.15 times the Maximum Annual Debt Service on all Notes, Parity Debt and Senior Lien Debt then outstanding, including the additional series of Notes then proposed to be issued. The amounts specified in clause (ii) shall be based on the Base Year Sales Tax Revenues, increased in each subsequent year by 2% per year; (d) the aggregate principal amount of the Notes, together with interest thereon to maturity, shall not exceed the maximum stated amount of the credit facility then providing credit and liquidity support for the Notes; and (e) no Notice of No -Issuance shall have been delivered by the credit provider. Refunding Notes. The Commission may authorize and issue refunding debt as Parity Debt in accordance with the provisions set forth in the Indenture, in an aggregate principal amount sufficient (together with any additional funds available or to become available) to provide funds for payment of all of the following: (a) the principal or redemption price, if applicable, of the outstanding Notes or Parity Debt to be refunded; • • 182 4 • • • (b) all expenses incident to the calling, retiring or paying of such outstanding Notes or Parity Debt or Senior Lien Debt and the costs of issuance of such refunding debt; (c) interest on all outstanding Notes or Parity Debt or Senior Lien Debt to be refunded to the date such Notes or Parity Debt or Senior Lien Debt will be called for redemption or paid at maturity, as applicable; and (d) interest on the refunding debt from the date thereof to the date of payment or redemption of the Notes or Parity Debt or Senior Lien Debt to be refunded. Limitations on the Issuance of Obligations Payable from Sales Tax Revenues. The Commission will not, so long as any of the Notes, Advances, Bank Loans, Parity Debt or Senior Lien Debt are outstanding, issue any obligations or securities, however denominated, payable in whole or in part from or secured by Sales Tax Revenues, except the following: (a) notes of any additional Series authorized pursuant to the Indenture described above under the caption "Additional Notes;" (b) refunding debt authorized pursuant to the Indenture described above under the caption "Refunding Notes;" (c) Parity Debt, provided that certain conditions precedent to the issuance of such Parity Debt specified in the Indenture are satisfied; and (d) Senior Lien Debt, provided that: (i) such Senior Lien Debt has been duly and legally authorized for any lawful purpose of the Commission; (ii) no Event of Default shall have occurred and then be continuing, as evidenced in a Certificate of the Commission filed with the Trustee; (iii) unless such Senior Lien Debt is being issued for purposes of refunding in accordance with the provisions set forth in the Indenture, the Commission shall have placed on file with the Trustee, (A) a Certificate of the Commission, demonstrating and certifying that the requirements described in the Indenture with respect to the issuance of an additional Series of Notes have been met with respect to such Senior Lien Debt and (B) a certificate of the Commission certifying that either (x) the amount of Sales Tax Revenues or Prior Sales Tax Revenues, as applicable, for any period of 12 consecutive months during the 18 months immediately preceding the date of calculations, or (y) the estimated Sales Tax Revenues for the fiscal year in which the additional Senior Lien Debt is to be issued, will be at least equal to 1.5 times the Maximum Annual Debt Service on all Senior Lien Debt then outstanding, including the additional Senior Lien Debt then proposed to be issued (the amounts specified in clause (y) shall be based on the Base Year Sales Tax Revenues, increased in each subsequent year by 2% per year); (iv) the Commission shall have filed with the Trustee an Opinion of Bond Counsel to the effect that such Senior Lien Debt has been duly authorized in accordance with the Indenture and that such Senior Lien Debt constitutes a valid and binding obligation of the Commission; and (v) the Commission shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Senior Lien Debt. 183 5 The Sales Tax The Act, among other things, authorizes the Commission to develop a countywide consensus on a proposed transaction expenditure plan to be submitted to the voters as part of an ordinance imposing a retail transactions and use tax in the County in accordance with the provisions of the California Transactions and Use Tax Law (Revenue and Taxation Code Section 7251, et. seq.). In accordance with the Act, on November 5, 2002, more than two-thirds of the voters of the County approved Measure "A" which authorized the imposition of the Sales Tax in the County commencing in April, 2009. The Sales Tax will be collected for a thirty year period. The Sales Tax consists of a one-half of one percent (1/2%) sales tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use or other consumption in the County of such property purchased from any retailer for storage, use or other consumption in the County, subject to certain limited exceptions described below. The one-half of one percent sales tax imposed in the County for transportation purposes and administered by the Commission, is in addition to a seven and one -quarter percent sales tax levied statewide by the State of California. In general, the statewide sales tax applies to the gross receipts of retailers from the sale of tangible personal property. The statewide use tax is imposed on the storage, use or other consumption in the State of property purchased from a retailer for such storage, use or other consumption. Since the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the State for use within the State. The Sales Tax is generally imposed upon the same transactions and items subject to the sales and use tax levied statewide by the State (hereinafter collectively referred to as the "State Sales Tax"), with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Sales Tax. The most important of these exemptions are: sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity and water when delivering to consumers through mains, lines and pipes. In addition, "occasional sales" (i.e., sales of property not held or used by a seller in the course of activities for which he or she is required to hold a seller's permit) are generally exempt from the State Sales Tax and from the Sales Tax; however, the "occasional sales" exemption does not apply to the sale of an entire business and other sales of machinery and equipment used in a business. Sales of property to be used outside the County which are shipped to a point outside the County, pursuant to the contract of sale, by delivery to such point by the retailer, or by delivery by the retailer to a carrier for shipment to a consignee at such point, are exempt from the State Sales Tax and from the Sales Tax. Action by the State legislature or by voter initiative could change the transactions and items upon which the State Sales Tax and the Sales Tax are imposed. The State legislature could further change the transactions and items upon which the State Sales Tax and the Sales Tax are imposed. In addition, other voter initiative measures could be adopted, further affecting the receipt of Sales Tax Revenues. Such changes or amendments could have either an adverse or beneficial effect on the Sales Tax Revenues. The Commission is not currently aware of any proposed legislative change which would have a material adverse effect on Sales Tax Revenues. See also "Proposition 218" below. Prior Sales Tax This tax represents an additional source of revenue to the Commission, is a separate tax from the Sales Tax and does not secure the Notes. On November 8, 1988, more than two-thirds of the voters approved the Riverside County Transportation Commission Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance (the "Prior Ordinance") which authorized the imposition of a retail transactions and use tax of one-half of one percent (0.5%) of the gross receipts of retailers from the sale of all tangible personal property sold at retail in the County and a use tax at the same rate upon the storage, use or other consumption in the County of such property purchased from any retailer for storage, use or other consumption in the County, subject to certain limited exceptions (the "Prior Sales Tax"). The Prior Sales Tax ceases to be effective on March 31, 2009 with all Prior Sales Taxes received by the Commission no later than June 30, 2009. • • • 184 6 • • • The Commission has issued indebtedness secured by the Prior Sales Tax and expects all outstanding principal and interest on these obligations to be fully paid on or before June 1, 2009. The Sales Tax securing the Notes does not serve as security for the repayment of the obligations secured by the Prior Sales Tax. Collection of Sales Tax Revenues and Local Revenues Collection of the Sales Tax is administered by the California State Board of Equalization (the "BOE" or the "State Board of Equalization"). The Commission and the State Board of Equalization have entered into an Agreement for State Administration of District Transactions and Use Taxes to authorize payment of Sales Tax Revenues directly to the Trustee. The State Board of Equalization, after deducting amounts payable to itself, is required to remit the balance of amounts received from the Sales Tax directly to the Trustee. The Trustee is required to apply the Sales Tax Revenues to make deposits to the funds and accounts established under the Indenture and to transfer the remaining amounts to U.S. Bank Trust, N.A., as issuing and paying agent for the Notes (the "Issuing and Paying Agent"). The remaining unapplied Sales Tax Revenues, if any, are transferred to the Commission for use for any purpose contemplated by the Ordinance. The fee charged by the BOE to the Commission for Fiscal Year 2003- 04 for collection of the Prior Tax was $1,603,000. The fee that the BOE is authorized to charge for collection of the Sales Tax is determined by state legislation; there can be no assurances that the amount of this fee or the method for determining the amount of the fee will be the same in April, 2009, when collection of the Sales Tax commences. Provisions Affecting Expenditures of Sales Tax Revenues An initiative constitutional amendment entitled "Limitations of Government Appropriations," approved by California voters on November 6, 1979, added Article XIIIB to the California Constitution. Article XIIIB provides that state and local government agencies are subject to an annual limitation on certain appropriations. Appropriations subject to limitation consist of tax revenues, state subventions and certain other funds. The Commission's appropriation limit for Fiscal Year 2003-04 was $212,121,630. The Commission believes it is presently fulfilling, and will continue to fulfill in the future, all of its obligations under Article XIIIB and that it will be in compliance with Article XIIIB in connection with the expenditure of the Sales Tax Revenues to pay debt service on the Notes. Proposition 111, entitled the Traffic Congestion Relief and Spending Act of 1990, was approved by California voters on June 5, 1990. Proposition 111 changes the formula which allows for adjustments in the appropriation limit under Article XIIIB. Rather than adjusting the appropriation limit by the percentage change in the California Consumer Price Index, Proposition 111 adjusts it by the percentage change in California personal income per capita. Local governments are given the option of using personal income per capita or the change in local assessment rolls for new, nonresidential construction as the basis of readjusting their appropriation limits. This change allows appropriation limits to reflect economic growth particularly in rapidly growing communities. Furthermore, Proposition 111 allows the averaging of two years' tax revenues before requiring action regarding excess tax revenues. Proposition 218 On November 5, 1996, California voters approved an initiative known as the Right to Vote on Taxes Act ("Proposition 218"). Proposition 218 added Articles XIIIC and XIIID to the California Constitution. Article XIIIC requires majority voter approval for the imposition, extension or increase of general taxes and two-thirds voter approval for the imposition, extension or increase of special taxes by a local government, which is defined to include local or regional governmental agencies such as the Commission. The Commission satisfied the voter approval requirements of Article XIIIC since the Sales Tax was approved by more than 2/3rds of the voters. Article XIIIC also removes limitations that may have applied to the voter initiative power with regard to reducing or repealing previously authorized local taxes, even previously voter -approved taxes like the Sales Tax. In the view of the Commission, however, any attempt by the voters to use the initiative provisions of Proposition 218 to rescind or reduce the levy and collection of the Sales Tax in a manner which would prevent the payment of debt service on the Notes, would violate the Impairment Clause of the United States Constitution and, accordingly, would be precluded. However, it is likely that the interpretation and application of Proposition 218 will ultimately be determined by the courts. 185 7 Proposition 42 Proposition 42 was approved by the voters of California on March 5, 2002 and is now codified as Article XIXB of the California Constitution. Proposition 42 relates to the allocation of State revenues derived from the sale, storage, use or other consumption in California of motor vehicle fuel (the "Motor Vehicle Sale and Use Tax Revenues"). Proposition 42 requires, effective July 1, 2003 and each fiscal year thereafter, that all Motor Vehicle Sale and Use Tax Revenues received by the State each fiscal year be deposited into a Transportation Investment Fund created in the State Treasury. Prior to Fiscal Year 2007-08, the funds are proposed to be allocated to local transportation projects that comprise the State's Traffic Congestion Relief Plan (the "TCRP"). After Fiscal Year 2007-08, Proposition 42 requires the State to allocate the Motor Vehicle Sale and Use Tax Revenues to cities and counties for various repairs and new construction in accordance with the apportionment formulas set forth in Section 7104 of the Revenue and Taxation Code. Certain projects of the Commission, are TCRP projects and have been allocated certain Motor Vehicle Sale and Use Tax Revenues pursuant to Proposition 42. On January 10, 2005, the Governor introduced the proposed 2005-06 State Budget (the "Proposed 2005-06 Budget"). The Proposed 2005-06 Budget proposes to close a projected $8 billion in operating deficits through a combination of major and wide-ranging spending reductions, additional borrowing, and a diversion of local property taxes from local government for the benefit of the State. The Proposed 2005-06 Budget includes a $1.3 billion savings to the State's General Fund through the suspension of Proposition 42 and TCRP payments to localities. The Commission is unable to predict the amount of State transportation funds, if any, that will be unavailable if there is a suspension of payments as part of the final 2005-06 State Budget; however, any such action should have no impact on the receipt of Sales Tax Revenues commencing in June, 2009. Further information regarding the State of California budget may be obtained at www.dof.ca.gov; however, the Commission makes no representation with respect to and has not reviewed or verified the accuracy or completeness of such information. Further Initiatives Article XIIIB and Proposition 218 were each adopted as measures that qualified for the ballot pursuant to California's initiative process. From time to time other initiative measures could be adopted, which may affect the Commission's ability to levy and collect the Sales Tax. See also, "Sales Tax Litigation in California." THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT The Letter of Credit The following is a summary of certain provisions of the Letter of Credit. This summary is not to be considered a full statement of the terms of the Letter of Credit and accordingly is qualified by reference thereto and is subject to the full text thereof Except as otherwise defined herein, capitalized terms used in this Offering Memorandum without definition have the respective meanings set forth in the Letter of Credit. At the request and for the account of the Commission, the Bank will issue the Letter of Credit in favor of the Issuing and Paying Agent, on or prior to the date of initial issuance of the Notes in a stated amount equal to $ . The Commission may request the Bank to increase the stated amount of the Letter of Credit from time to time by an amount not to exceed the unutilized commitment under the Reimbursement Agreement prior to the Letter of Credit Expiration Date (defined below) or such earlier date on which the Bank or the Commission may permanently reduce the unutilized commitment under the Reimbursement Agreement to zero. Upon satisfaction of certain conditions precedent, the Bank will execute and deliver a specified Notice of Increase in Stated Amount to the Issuing and Paying Agent, thereby increasing the stated amount of the Letter of Credit. The stated amount of the Letter of Credit in effect from time to time shall be subject to reductions and reinstatements as set forth in the Letter of Credit. The Issuing and Paying Agent will draw moneys under the Letter of Credit to the extent necessary to pay principal of and interest on Notes. Drawings by the Issuing and Paying Agent under the Letter of Credit will reduce • • • 186 8 • • • the amounts available for subsequent drawings under the Letter of Credit, subject to reinstatement as provided in the Letter of Credit. The Bank will use only its own funds in honoring a drawing on the Letter of Credit. The Letter of Credit shall expire on the earliest of the following (the "Letter of Credit Expiration Date") (i) , 2010, as such date may be extended by the Bank upon delivery of a Notice of Extension substantially in the form' set forth in the Letter of Credit (the "Stated Expiration Date"), (ii) the date on which the Bank honors a draw request accompanied by the Issuing and Paying Agent's certification in the form set forth in the Letter of Credit for payment of Notes which will reduce the Stated Amount to $0.00, (iii) the date of the Bank's receipt of notice from the Issuing and Paying Agent to the effect that an Alternate Credit Facility (as defined in the Indenture) in full and complete substitution for the Letter of Credit has been issued and is in effect, which notice shall be substantially in the form of the certificate attached to the Letter of Credit, or (iv) the date which is five days after the date of the Bank's receipt of notice from the Issuing and Paying Agent to the effect that no Notes (other than Notes with respect to which an Alternate Credit Facility has been issued and is in effect) remain outstanding under the Indenture and the Commission does not contemplate any further issuance of Notes, which notice shall be substantially in the form of the certificate attached to the Letter of Credit. The Commission has the right to deliver to the Issuing and Paying Agent an Alternate Credit Facility for the Letter of Credit upon satisfaction of certain conditions set forth in the Indenture. The Issuing and Paying Agent will provide thirty (30) days' advance written notice of the acceptance of any Alternate Credit Facility to the owners of the Notes. The Reimbursement AgreementGeneral. The Commission and the Bank have entered into a Reimbursement Agreement (the "Reimbursement Agreement"), pursuant to which the Letter of Credit will be issued. Among other things, the Reimbursement Agreement provides for (a) the repayment to the Bank of all draws made under the Letter of Credit, together with specified interest thereon; (b) the payment or reimbursement to the Bank of certain specified fees, costs and expenses; (c) affirmative and negative covenants to be observed on the part of the Commission; and (d) certain indemnification obligations on the part of the Commission. Events of Default and Remedies. If any of the following Events of Default shall occur and be continuing: (a) The Commission shall fail to pay, or cause to be paid, when due any of its obligations under the Reimbursement Agreement or any Notes; or (b) The issuance of any Notes shall result in a violation by the Commission of any law, rule or regulation, or any order of any court, governmental agency or regulatory body, or any indenture or loan or credit agreement (including the Reimbursement Agreement), or any other agreement or instrument, applicable to the Commission or to such issuance; or (c) An "event of default" shall occur and be continuing under any other Financing Documents or any Senior Lien Bond Indenture and the expiration of any applicable grace period shall have occurred; or (d) The Commission shall default in the performance of certain affirmative covenants or any negative covenants of the Commission; or (e) The Commission shall default in the performance of any other covenant or agreement contained in the Reimbursement Agreement and such default shall continue for 30 days after written notice of such default shall have been given to the Commission by the Bank; or (f) Any representation or warranty on the part of the Commission contained in the Reimbursement Agreement or in any other Financing Document or in any certificate, letter or other writing or instrument furnished or delivered by the Commission to the Bank pursuant thereto or in connection therewith, shall at any time prove to have been incorrect or incomplete in any material respect when made or when effective or when reaffirmed, as the case may be; or 187 9 (g) Any provision of the Reimbursement Agreement or any of the other Financing Documents shall at any time for any reason cease to be valid and binding on the related Commission thereunder or shall be declared to be null and void by any court or governmental authority or agency having jurisdiction over the Commission, or the validity or the enforceability thereof shall be contested by the Commission in a judicial or administrative proceeding; or (h) The Commission shall default in the payment of principal of or interest on any Sales Tax Debt or any debt secured by the Prior Sales Tax outstanding in a principal amount of $500,000 or more, and the continuance of such default beyond any applicable grace period; or (i) Any event or condition shall occur which results in the acceleration of the maturity of mandatory tender or redemption of any Sales Tax Debt or any debt secured by the Prior Sales Tax or guarantee thereof of the Commission outstanding in a principal amount of $500,000 or more, or enables the holder of such Sales Tax Debt or any debt secured by the Prior Sales Tax or guarantee thereof or any person acting on such holder's behalf to accelerate the maturity thereof or demand purchase or redemption thereof or with the giving of notice or lapse of time or both would enable the holder of such Sales Tax Debt or any debt secured by the Prior Sales Tax or guarantee thereof or any person acting on such holder's behalf to accelerate the maturity thereof or require the purchase or redemption thereof; or (j) Any funds on deposit in, or otherwise to the credit of, any funds or accounts established under the Indenture shall become subject to any writ, judgment, warrant or attachment, execution or similar process; or (k) (i) The Commission shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it or seeking to adjudicate it insolvent or a bankrupt or seeking reorganization, arrangement, adjustment, winding -up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for itself or for any substantial part of its property, or the Commission shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Commission any case, proceeding or other action of a nature referred to in clause (i) and the same shall remain undismissed for a period of 30 days; or (iii) there shall be commenced against the Commission any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal, within 60 days from the entry thereof; or (iv) the Commission shall take action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Commission shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due or shall repudiate or declare a moratorium on the payment of its debts; or (1) A final non -appealable judgment or order by a court of competent jurisdiction shall be rendered against the Commission for the payment of money in excess of $500,000 not covered by insurance, and such judgment shall not be satisfied for a period of thirty (30) days; or (m) S&P shall have assigned a rating to any long-term unenhanced Sales Tax Debt of the Commission below "BBB-" or Moody's shall have assigned a rating to any long-term Sales Tax Debt of the Commission below "Baa-3," or S&P or Moody's shall have assigned a rating to any short-term unenhanced Sales Tax Debt of the Commission below "A-3" with respect to S&P, or "MIG 3" or "Prime 3," with respect to Moody's; or (n) The Commission shall fail to preserve the pledge made in the Reimbursement Agreement or any legislation is enacted, repealed, reenacted, amended or otherwise modified, and such repeal, reenactment, amendment, modification or enactment, in the sole opinion of the Bank, dilutes or eliminates the pledge of or security interest of the Bank granted in such pledge; or (o) A change occurs in the financial or operating conditions of the Commission, the ratings on the Commission, or in the rules or regulations to which the Commission is subject (or in the interpretation or administration thereof), that, in the Bank's reasonable judgment, has a materially adverse effect on the ability of the Commission to perform its obligations under the Reimbursement Agreement or under the Financing Documents, and • 188 10 • • • the Commission fails to cure such condition within six (6) months after receipt by the Commission of written notice thereof from the Bank; or (p) Any rescission of or amendment to or any other action under or in connection with the Sales Tax Revenues (including, without limitation, any modification of the Law) which would or could materially reduce the amount of the Sales Tax Revenues or the allocation of the Available Revenues to the payment of the Notes or the obligations of the Commission under the Reimbursement Agreement or which would or could in any manner materially impair or adversely affect the rights of the Commission to any or all of the Revenues or to the security of the Bank; then, and in any such event, the Bank may, at the same or different times, so long as such Event of Default shall not have been remedied to the sole satisfaction of the Bank, take one or more of the following actions: (i) exercise all of the rights and remedies available to the Bank under the Reimbursement Agreement, any other Financing Document, any applicable law or at equity; (ii) reduce the Stated Amount of the Letter of Credit to the principal amount of Notes Outstanding (and, if applicable, interest on the Notes to their stated maturity dates) and instruct the Commission and the Issuing and Paying Agent to immediately cease issuing, delivering and selling additional Notes by delivering to the Commission and the Issuing and Paying Agent a Notice of No Issuance in form set forth in the Letter of Credit; and (iii) by notice to the Commission, declare all obligations payable by the Commission under the Revolving Note (as defined in the Reimbursement Agreement) and the Reimbursement Agreement including, without limitation, any and all unpaid advances under the Letter of Credit or term loans under the Reimbursement Agreement to be immediately due and payable (and the same shall upon such notice become immediately due and payable); provided, however, that if any event specified in clause (k) above occurs, the consequences of the Bank's notice described in clauses (ii) and (iii) above shall result automatically upon the occurrence of such event without notice from the Bank. No remedy conferred or reserved to the Bank in the Reimbursement Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Reimbursement Agreement or any Financing Document, or now or hereafter existing at law or in equity or by statute. "Financing Documents" means, collectively, the Reimbursement Agreement, the Revolving Note (as defined in the Reimbursement Agreement), the resolution of the Commission authorizing the execution and delivery of the Reimbursement Agreement, the Indenture, the Notes, the Letter of Credit, the Issuing and Paying Agent Agreement, the Series A Dealer Agreement and the Series B Dealer Agreement. "Senior Lien Bonds" means any unpaid bonds issued and outstanding pursuant to a Senior Lien Bond Indenture, and any reserve fund surety bonds or other reserve facilities issued on behalf of or entered into by the Commission in connection therewith. "Senior Lien Bond Indenture" shall mean an indenture or indentures entered into after the date of the Indenture between the Commission and a trustee for such bonds, as amended, providing for the issuance of bonds or other obligations of the Commission payable from Revenues on a senior priority to the obligation of the Commission to pay the Notes. THE BANK Bank of America, N.A. (the "Bank"), is a national banking association organized under the laws of the United States, with its principal executive offices located in Charlotte, North Carolina. The Bank is a wholly -owned indirect subsidiary of Bank of America Corporation (the "Corporation") and is engaged in general consumer banking, commercial banking and trust business, offering a wide range of commercial, corporate, international, financial market, retail and fiduciary banking services. As of September 30, 2004, the Bank had consolidated assets of $741 billion, consolidated deposits of $507 billion and stockholders' equity of $52 billion based on regulatory accounting principles. 189 11 The Corporation is a bank holding company and a financial holding company, with its principal executive offices located in Charlotte, North Carolina. Additional information regarding the Corporation is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2003, together with any subsequent documents it filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities and Exchange Act of 1934, as amended (the `Exchange Act'). Recent Developments: On April 1, 2004 the Corporation completed its merger with FleetBoston Financial Corporation ("FleetBoston"). As a result of the merger, FleetBoston stockholders received .5553 shares of Bank of America Corporation common stock for each of their FleetBoston shares. The Letter of Credit has been issued by the Bank. Moody's Investors Service, Inc. ("Moody's) currently rates the Bank's long-term certificates of deposit as "Aal" and short-term certificates of deposit as "P-1." Standard & Poor's rates the Bank's long-term certificates of deposit as "AA-" and its short-term certificates of deposit as "A- 1+". Fitch Ratings, Inc. ("Fitch') rates long-term certificates of deposit of the Bank as "AA" and short-term certificates of deposit as "Fl+." Further information with respect to such ratings may be obtained from Moody's, Standard & Poor's and Fitch, respectively. No assurances can be given that the current ratings of the Bank's instruments will be maintained. The Bank will provide copies of the most recent Bank of America Corporation Annual Report on Form 10- K, any subsequent reports on Form 10-Q, and any required reports on Form 8-K (in each case as filed with the Commission pursuant to the Exchange Act), and the publicly available portions of the most recent quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to: Bank of America Corporate Communications 100 North Tryon Street, 18th Floor Charlotte, North Carolina 28255 Attention: Corporate Communications PAYMENTS OF PRINCIPAL AND INTEREST ON THE NOTES WILL BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT. ALTHOUGH THE LETTER OF CREDIT IS A BINDING OBLIGATION OF THE BANK, THE NOTES ARE NOT DEPOSITS OR OBLIGATIONS OF THE CORPORATION OR ANY OF ITS AFFILIATED BANKS AND ARE NOT GUARANTEED BY ANY OF THESE ENTITIES. THE NOTES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY AND ARE SUBJECT TO CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. The information contained under this caption "THE BANK" relates to and has been obtained from the Bank. The information concerning the Corporation and the Bank contained herein is furnished solely to provide limited introductory information regarding the Corporation and the Bank and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced above. The delivery hereof shall not create any implication that there has been no change in the affairs of the Corporation or the Bank since the date hereof, or that the information contained or referred to in this Offering Memorandum under the caption "THE BANK" is correct as of any time subsequent to its date. THE COMMISSION General The Commission is charged with a number of important responsibilities in serving the residents of the County. Administering the Measure A sales tax program is by far the most prominent of these responsibilities since the Measure has raised more than $1 billion. The Commission, which has the responsibility of placing future • 190 12 • • • transportation ballot measures before the public, was successful in November of 2002 in obtaining more than 2/3rds voter approval of a 30 year extension to Measure A. In addition to the Commission's Measure A responsibilities, the Commission has also been designated as the Congestion Management Agency (the "CMA") for the County. As the CMA, the Commission has developed a Congestion Management Program that more effectively utilizes transportation funds by linking land use, transportation and air quality efforts. The Commission serves as the Service Authority for Freeway Emergencies and operates the Freeway Service Patrol (the "FSP") for Riverside County. The results of these programs — 1,084 call boxes along the County roadways and fifteen FSP tow trucks providing assistance to more than 55,000 motorists annually — are among the most visible of the Commission's programs. More recently, the State Legislature gave new authority to the Commission by changing the way funding is distributed from the State Transportation Improvement Program, which is funded through state and federal gas taxes. In simple terms, counties no longer apply to the State for funding their most urgent transportation needs. Instead, state transportation dollars are given directly as an entitlement, leaving the decision -making about transportation spending up to the designated county transportation commission like the Commission. While this gives the Commission greater control over how transportation dollars are spent, it also requires a much higher level of local communication and participation to determine how these dollars are spent throughout a county with so many transportation needs. In order to enhance County -wide participation and improve its decision -making, the Commission made a major change in its structure in 1999 by expanding the Board from eight members to thirty. The expanded Commission ensures better representation throughout the County and provides the participatory framework for continued success among these responsibilities. Commissioners Section 130053 of the California Public Utilities Code specifies that the Commission consists of five members of the Riverside County Board of Supervisors, one member from each incorporated city in Riverside County (each of whom must be a mayor or member of the city council) and one non -voting member appointed by the Governor of the State of California. The role of the Commission is to act as the policy -making board for Riverside County transportation activities. Executive Staff The Commission's key staff members, the position held by each and a brief statement of the background of each staff member is set forth below. Eric Haley, Executive Director. Mr. Haley serves as the chief executive officer of the Commission. He is responsible for overall management of the Commission including execution of operational policies and procedures and all personnel decisions. Mr. Haley joined the Commission in 1998 as the Executive Director. Prior to joining the Commission, he served as the head of legislative affairs for the San Bernardino Associated Governments (SANBAG). With 27 years of transportation experience, Mr. Haley has distinguished himself as one of Califomia's preeminent authorities and leaders on transportation policy issues. Mr. Haley also has direct experience in local government serving as a City Council member in the City of Riverside from 1973 to 1978. He has a bachelor's degree in history from the University of California, Riverside. Hideo Sugita, Deputy Executive Director. As Deputy Executive Director for the past five years, Mr. Sugita often serves in the lead role in the development and shaping of Commission activities. Mr. Sugita has worked for the Commission since 1988 and provides management oversight on the Commission's highway and rail project development and related funding issues. Mr. Sugita's other accomplishments while at the Commission include the establishment of a freeway call box system, implementation of Metrolink commuter rail service between Riverside and Los Angeles and delivery of four major highway projects, in partnership with Caltrans and local 191 13 governments, to construction in the past five years. Mr. Sugita began his transportation career in 1977 at the Southern California Association of Governments. Mr. Sugita received a Bachelor of Arts degree in public administration from the University of Southern California. Theresia Trevino, Chief Financial Officer. Ms. Trevino joined the Commission as the Chief Financial Officer in January 2004, which continues a distinguished career in government finance. Ms. Trevino previously worked as Manager of Accounting and Financial Reporting for the Orange County Transportation Authority. She also served as an adjunct professor for governmental accounting and reporting at the University of Redlands. Ms. Trevino's 19 -year public accounting career included 16 years with Ernst & Young LLP. As senior manager in its assurance and advisory business services practice serving government clients, she led the development of the Southern California practice and served as a national technical resource. She is a Certified Public Accountant in California and completed the Executive Management Program at the University of California, Riverside. Ms. Trevino received a Bachelor of Science Degree in Accounting from Loyola Marymount University with Magna Cum Laude honors. Historical Taxable Sales For information concerning historical taxable sales in the County, see Appendix A — "The Economy of the County of Riverside — Table Taxable Transactions." Historical Prior Sales Tax Revenues The Commission began receiving distributions of the Prior Sales Tax from the State Board of Equalization in September 1989. The following table shows the Prior Sales Tax remitted to the Commission during the fiscal years ended June 30, 1994 through June 30, 2004 are reflected below. RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL PRIOR SALES TAX REVENUES Fiscal Year Net Sales % Change Ended June 30 Tax Receipts(I) From Prior Fiscal Year 1994 $48,671,671 0.77% 1995 50,785,971 4.34 1996 55,413,939 9.11 1997 57,888,147 4.46 1998 63,496,222 9.68 1999 70,396,828 10.86 2000 81,543,732 15.83 2001 89,464,634 9.71 2002 94,400,890 5.52 2003 102,817,607 8.92 2004 117,632,722 14.41 (1) Net of State Board of Equalization administrative fee. Source: Riverside County Transportation Commission. The Notes are not secured by the Prior Sales Tax revenues. • 192 14 • • • Projected Sales Tax Revenues The table below represents a 10 year projection of the Prior Sales Tax Revenues which are no longer collected after March 31, 2009 and the Sales Tax revenues, collection of which commences April 1, 2009: RIVERSIDE COUNTY TRANSPORTATION COMMISSION PROJECTED SALES TAX REVENUES Fiscal Year Net Sales % Change Ending June 30 Tax Receipts(t) From Prior Fiscal Year 2005 $125,400,000 6.60% 2006 130,416,000 4.00 2007 132,242,000 1.40 2008 134,093,000 1.40 2009 135,971.000 1.40 2010 137,874,000 1.40 2011 139,804,000 1.40 2012 141,762,000 1.40 2013 143,746,000 1.40 2014 145,758,000 1.40 (2) Net of State Board of Equalization administrative fee. Source: Riverside County Transportation Commission. THE TRANSPORTATION EXPENDITURE PLAN On November 5, 2002, 69.2 percent of the voters of the County approved Measure "A" — The Riverside County Transportation Commission Transportation Expenditure Plan (the "Plan") and Retail Transaction and Use Tax Ordinance which expressed the following concerns in its preamble: The transportation system in Riverside County is rapidly deteriorating and our population and economy are growing rapidly. Maintenance and repairs of existing roadways and improvements to relieve congestion cannot be accomplished with available funds. Without additional funds, the system will bog down and pavement will crumble into permanent disrepair... Local governments must either generate revenues to expand our system and maintain our investments or watch the system collapse and endanger the health, welfare and safety of all Riverside County residents. The goals of the Plan are as follows: (1) Maintain and improve the quality of life in Riverside County by supplementing existing funds for transportation; (2) Provide for accountability in the expenditure of taxpayer funds; (3) Provide for equity in the distribution of Measure "A" revenues; and (4) Provide for local control of the transportation improvement program. To address the concerns as expressed in the preamble, and to accomplish its goals and policies, the Ordinance provided that Sales Tax Revenues be distributed to the specific geographic areas of Riverside County (i.e., Western County, Coachella Valley, and Palo Verde Valley) based on their proportionate share of revenues generated in the County, and that funds be allocated for highway and regional arterial projects, local streets and 193 15 roads, transit and commuter rail, new corridors and economic development. In the Western County, eleven percent is to be used for new corridor projects, thirty-nine percent for highway and regional arterial projects, twelve percent for transit and commuter rail, twenty-nine percent for local street and road improvements, eight percent for bond financing costs, and the remaining one percent for economic development projects. In the Coachella Valley, fifty percent is to be earmarked for its highway and regional arterial system, thirty-five percent for local streets and roads, and the remaining fifteen percent for transit. All Palo Verde Valley funds are designated for the maintenance of local streets and roads. COMMISSION LITIGATION No litigation is pending, or to the best knowledge of the Commission, threatened, against the Commission concerning the validity of the Notes. The Commission is not aware of any litigation pending or threatened against the Commission questioning the existence of the Commission or contesting the Commission's ability to impose and collect the Sales Tax. SALES TAX LITIGATION IN CALIFORNIA On December 19, 1991, the California Supreme Court rendered its opinion in Rider v. County of San Diego. The Rider decision invalidated a one-half percent retail transactions and use tax similar in some respects to the Sales Tax. In Rider, the California Supreme Court held that taxes levied by "special districts" require two-thirds voter approval; "special districts" are government entities created to circumvent the limitations on taxation embodied in Article XIIIA of the California Constitution; and an entity may be deemed a "special district" if it was created after the adoption of Article XIIIA and it is "essentially controlled" by an entity with the power to levy property taxes. On September 28, 1995, the California Supreme Court rendered its opinion in Santa Clara County Local Transportation Authority v. Carl Guardino. The Santa Clara decision held invalid a half -cent sales tax to be levied by the Santa Clara County Local Transportation Authority because it was approved by a majority but not two-thirds of the voters in Santa Clara County voting on the tax. The California Supreme Court decided the tax was invalid under Proposition 62, a statutory initiative adopted at the November 4, 1986 election that requires (among other matters) that any new taxes for general governmental purposes imposed by local governmental entities be approved by a two-thirds vote of the governmental entity's legislative body and by a majority vote of the voters of the governmental entity voting in an election on the tax, and requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax. In deciding Santa Clara on Proposition 62 grounds, the Court rejected the decision in County of Woodlake v. Logan, 230 Cal.App.3d 1058 (1991), where the Court of Appeal had held portions of Proposition 62 unconstitutional as a referendum on taxes prohibited by the California Constitution. The California Supreme Court determined that the voter approval requirement of Proposition 62 is a condition precedent to the enactment of each tax statute to which it applies, while referendum refers to a process invoked only after a statute has been enacted. Following the Santa Clara decision, several actions were filed challenging taxes imposed by public agencies after the adoption of Proposition 62. In January 1997, Coleman v. County of Santa Clara (Case No. CV763224), was filed challenging the validity of a half -cent sales tax for general county purposes. On May 14, 1997, the Superior Court in the County granted the County's Motion for Summary Judgment in the Coleman lawsuit and upheld the validity of the sales tax. The Court of Appeal also upheld the validity of the sales tax by unanimous vote on June 8, 1998 and the California Supreme Court denied plaintiffs' request for review on August 26, 1998. State law requires that during the pendency of any lawsuit challenging the validity of a tax the County place the proceeds of the tax in an interest bearing escrow account until the legality of the tax is finally resolved by a fmal and nonappealable decision. While the Rider, Santa Clara and Coleman decisions will not directly affect the • • • 194 16 • • • ability of the Commission to levy and collect the Sales Tax, there can be no guarantee that future lawsuits challenging the legality of the Sales Tax will not be filed. On June 4, 2001, the California Supreme Court rendered its opinion in Howard Jarvis Taxpayers Association v. County of La Habra, et al., 25 Cal. 4a' 809 ("La Habra"). In La Habra, the California Supreme Court held that an action brought in 1996 challenging the imposition of a 1992 utility users tax imposed for general purposes, without voter approval, was not barred by a three-year statute of limitations period. The Court held that the continued imposition and collection of the tax was an ongoing violation upon which the statute of limitations period began anew with each collection. On December 17, 2001, the California Supreme Court delivered its opinion in Utility Cost Management v. Indian Wells Valley Water District ("Indian Wells'). The Indian Wells decision held that the statute of limitations applicable to an ordinance adopted by the Water District imposing certain capital facilities fees ran from the date of enactment of the ordinance imposing such capital fees and not from the date such fees were actually charged to the customer. In Indian Wells, the California Supreme Court relied upon the express language in the applicable statute of limitations, which stated that the statute of limitations runs from the "effective date of the fee legislation" and distinguished such language from the language set forth in the statute applicable in La Habra. Any legal challenge to the imposition of the Sales Tax was required by the California Public Utilities Code Section 240322 to be brought within six months after the election. No such challenge to the Sales Tax was brought within the statute of limitations period nor at any time thereafter. The Ordinance was passed by the required two- thirds vote of the electorate on November 5, 2002 and accordingly should not be subject to any challenge on that basis. Furthermore, the Commission has entered into agreements and made significant commitments for transportation projects in reliance on the validity of the Sales Tax. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Notes, when issued in accordance with the Indenture, the Issuing and Paying Agent Agreement and the Master Tax Certificate of the Commission, dated the date of the Bond Counsel opinion (the "Tax Certificate"), is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Notes is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expects to deliver an opinion at the time of issuance of the Notes substantially in the form set forth in Appendix E hereto, subject to the matters discussed below. Notice 94-84, 1994-2 C.B. 559, states that the Internal Revenue Service (the "IRS") is studying whether the amount of the payment at maturity on short-term debt obligations (i.e., debt obligations with a stated fixed rate of interest which mature not more than one year from the date of issue) that is excluded from gross income for federal income tax purposes is (i) the stated interest payable at maturity or (ii) the difference between the issue price of the short-term debt obligations and the aggregate amount to be paid at maturity of the short-term debt obligations (the "original issue discount"). For this purpose, the issue price of the short-term debt obligations is the first price at which a substantial amount of the short-term debt obligations is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of Dealers, placement agents or wholesalers). Until the IRS provides further guidance with respect to tax-exempt short-term debt obligations, taxpayers may treat either the stated interest payable at maturity or the original issue discount as interest that is excluded from gross income for federal income tax purposes. However, taxpayers must treat the amount to be paid at maturity on all tax-exempt short-term debt obligations in a consistent manner. Taxpayers should consult their own tax advisors with respect to the tax consequences of ownership of Notes if the taxpayer elects original issue discount treatment. 195 17 Notes purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Notes") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of notes, like the Premium Notes, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Holder's basis in a Premium Note, will be reduced by the amount of amortizable bond premium properly allocable to such Holder. Holders of Premium Notes should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Notes. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Notes will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Notes being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Notes. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Notes may adversely affect the value of, or the tax status of interest on, the Notes. Certain requirements and procedures contained or referred to in the Indenture, the Issuing and Paying Agent Agreement, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Notes) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Note or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of Bond Counsel other than Orrick, Herrington & Sutcliffe LLP. Although Bond Counsel is of the opinion that interest on the Notes is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Notes may otherwise affect a Holder's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Holder or the Holder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. The opinion of Bond Counsel described herein shall be deemed delivered and in effect by Bond Counsel as to any Note issued after the date of such opinion, to the extent that, at the date of issuance of such Note: (i) there is no change in applicable existing federal or State of California law; (ii) the provisions of the Indenture, in so far as such provisions affect the terms and conditions pursuant to which Notes are issued and held, have not been materially amended or supplemented; (iii) the representations and covenants of the parties contained in the Indenture, the Issuing and Paying Agent Agreement, the Tax Certificate and certain certificates dated the date of the opinion of Bond Counsel and delivered by authorized officers of the Commission remain true and accurate and are complied with in all material respects; and (iv) no litigation affecting the issuance or validity of the Notes is pending at the time of delivery of any such Notes. Future legislation, if enacted into law, or clarification of the Code may cause interest on the Notes to be subject, directly or indirectly, to federal income taxation, or otherwise prevent Holders from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may also affect the market price for, or marketability of, the Notes. Prospective purchasers of the Notes should consult their own tax advisors regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Notes for federal income tax purposes. It is not binding on the IRS or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Commission, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Commission has covenanted, however, to comply with the requirements of the Code. • • • 196 18 • • • Bond Counsel's engagement with respect to the Notes ends with the issuance of the Notes, and, unless separately engaged, Bond Counsel is not obligated to defend the Commission or the Holders regarding the tax- exempt status of the Notes in the event of an audit examination by the IRS. Under current procedures, parties other than the Commission and their appointed counsel, including the Holders, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt notes is difficult, obtaining an independent review of IRS positions with which the Commission legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Notes for audit, or the course or result of such audit, or an audit of notes presenting similar tax issues may affect the market price for, or the marketability of, the Notes, and may cause the Commission or the Holders to incur significant expense. RATINGS The Notes have been assigned ratings of " " and " " by Moody's Investors Service and Standard & Poor's Ratings Services, respectively. Certain information was supplied by the Commission to Moody's Investors Service and Standard & Poor's Ratings Services to be considered in evaluating the Notes. The ratings reflect only the views of such rating agencies and any explanation of the significance of such ratings should be obtained from the rating agencies. There is no assurance that any rating will be retained for any given period of time or that the same will not be revised downward or withdrawn entirely by either rating agency if in its judgment, circumstances so warrant. The Commission undertakes no responsibility to oppose any such revision or withdrawal. Any such downward revision or withdrawal of the ratings may have an adverse effect on the market price of the Notes. LEGALITY FOR INVESTMENT IN CALIFORNIA Under provisions of the Act, the Notes are legal investments in California for all trust funds, funds of insurance companies, commercial and savings banks, trust companies and State school funds and are eligible to secure deposits of public moneys. THE DEALERS The Commission has appointed Lehman Brothers as Series A dealers (the "Series A Dealers") with respect to the offering and sale of the Series A Notes pursuant to the Series A Dealer Agreement and Banc of America Securities LLC, as Series B dealers (the "Series B Dealers," and together with the Series A Dealers, the "Dealers") with respect to the offering and sale of the Series B Notes pursuant to the Series B Dealer Agreement (the "Series B Dealer Agreement" and together with the Series A Dealer Agreement, the "Dealer Agreements"). The Dealer Agreements, among other things, do not require the Dealers to purchase the Notes. Furthermore, pursuant to the Dealer Agreements, the Dealers may resign or be replaced by the Commission. FINANCIAL ADVISOR Fieldman Rolapp & Associates, Irvine, California, serves as Financial Advisor to the Commission with respect to the sale of the Notes. The Financial Advisor has not conducted a detailed investigation of the affairs of the Commission to determine the completeness or accuracy of this Offering Memorandum. Because of its limited participation, the Financial Advisor has not independently verified any of the data contained herein and has no responsibility for the accuracy or completeness thereof. The compensation of the Financial Advisor is contingent upon the issuance of the Notes. 197 19 OTHER MATTERS This Offering Memorandum is not to be construed as a contract or agreement between the Commission and the purchasers, holders or Beneficial Owners of any of the Notes. Any statements made in this Offering Memorandum involving matters of opinion, whether or not expressly so stated, are intended merely as an opinion and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Offering Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission since the date hereof. The execution and delivery of this Offering Memorandum have been duly authorized by the Commission. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director • • • 198 20 • • APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION FOR FISCAL YEAR ENDED JUNE 30, 2004 200 B-1 • • • APPENDIX C BOOK -ENTRY ONLY SYSTEM Portions of the following information concerning DTC and DTC's book -entry system have been obtained from DTC. The Board and the Dealer make no representation as to the accuracy or completeness of such information. Initially, DTC will act as Securities Depository for the Commercial Paper Notes. The Commercial Paper Notes initially will be issued solely in book -entry form to be held under DTC's book -entry system, registered in the name of Cede & Co. (DTC's partnership nominee). Initially, one fully -registered Note certificate will be issued for each Series of the Commercial Paper Notes, in the aggregate principal amount thereof, and will be deposited with DTC. DTC is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants ("Direct Participants") include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (such others being "Indirect Participants"). The rules applicable to DTC and Participants are on file with the Securities and Exchange Commission. So long as the Commercial Paper Notes are maintained in book -entry form with DTC, the following procedures will be applicable with respect to the Commercial Paper Notes. Purchases of Commercial Paper Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Commercial Paper Notes on DTC's records. The ownership interest of each actual purchaser of each Commercial Paper Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Commercial Paper Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Commercial Paper Notes, except in the event that use of the book -entry system for the Commercial Paper Notes is discontinued. To facilitate subsequent transfers, all Commercial Paper Notes deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Commercial Paper Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Commercial Paper Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Commercial Paper Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 201 C-1 As long as the book -entry system is used for the Commercial Paper Notes, redemption notices will be sent to Cede & Co. If less than all of the Commercial Paper Notes within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. As long as the book -entry system is used for the Commercial Paper Notes, principal, purchase price, premium, if any, and interest payments on the Commercial Paper Notes will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee, or the Board, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, purchase price, premium, if any, and interest to DTC is the responsibility of the Board or the Trustee, and disbursement of such payments to the Participants or the Beneficial Owners will be the responsibility of Direct and Indirect Participants. Neither DTC nor Cede & Co. will consent or vote with respect to the Commercial Paper Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Commercial Paper Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy). As long as the book -entry system is used for the Commercial Paper Notes, a Beneficial Owner, through a Direct Participant or an Indirect Participant acting on behalf of such Beneficial Owner, will give notice to the Issuing and Paying Agent to elect to have its Commercial Paper Notes purchased, through its Participant, and will effect delivery of such Commercial Paper Notes by causing the Direct Participant to transfer the Participant's interest in the Commercial Paper Notes, on DTC's records, to the Issuing and Paying Agent. The requirement for physical delivery of Commercial Paper Notes in connection with an optional or a mandatory tender will be deemed satisfied when the ownership rights in the Commercial Paper Notes are transferred by Direct Participants on DTC's records. DTC may discontinue providing its services as Securities Depository with respect to the Commercial Paper Notes at any time by giving notice to the Board, the Trustee and the Issuing and Paying Agent. In addition, the Board may decide to discontinue use of the system of book -entry transfers through DTC (or a successor Securities Depository). Under either of such circumstances, in the event that a successor Securities Depository is not obtained, Commercial Paper Note certificates are required to be printed and delivered. The Board, the Trustee and the Issuing and Paying Agent will have no responsibility or obligation to any Securities Depository, any Participants in the book -entry system, or the Beneficial Owners with respect to (a) the accuracy of any records maintained by the Securities Depository or any Participant, (b) the payment by the Securities Depository or by any Participant of any amount due to any Participant or Beneficial Owner, respectively, in respect of the principal amount or redemption or purchase price of, or interest on, any Commercial Paper Notes, (c) the delivery of any notice by the Securities Depository or any Participant, (d) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Commercial Paper Notes, or (e) any other action taken by the Securities Depository or any Participant. In the event of the discontinuance of the book -entry system for the Commercial Paper Notes, Commercial Paper Note certificates will be printed and delivered and the following provisions of the Commercial Paper Indenture will apply: (a) principal of the Commercial Paper Notes will be payable upon surrender of the Commercial Paper Notes at the principal office of the Paying Agent, (b) Commercial Paper Notes may be transferred or exchanged for other Commercial Paper Notes of authorized denominations at the designated office of the Registrar, without cost to the owner thereof except for any tax or other governmental charge, and (c) Commercial Paper Notes will be issued in denominations as described above under "General." According to DTC, the foregoing information with respect to DTC has been provided to the Industry for informational purposes only and is not intended to serve as a representation, warranty, or contract modification of any kind. • • • 202 C-2 • • • APPENDIX D DEFINITIONS AND SUMMARY OF THE INDENTURE 203 D- I • • • APPENDIX E FORM OF PROPOSED OPINION OF BOND COUNSEL 204 E-1 ATTACHMENT 4 COMMERCIAL PAPER DEALER AGREEMENT Between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and LEHMAN BROTHERS CP DEALER Dated March 1, 2005 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMERCIAL PAPER NOTES (LIMITED TAX BONDS) SERIES A 205 • • • This COMMERCIAL PAPER DEALER AGREEMENT, dated March 1, 2005 (the "Agreement"), between RIVERSIDE COUNTY TRANSPORTATION COMMISSION (the "Issuer") and LEHMAN BROTHERS ("Lehman Brothers" or the "CP Dealer"). For and in consideration of the mutual covenants made herein and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Background and Definitions. (a) The Issuer has authorized the issuance and reissuance from time -to -time of its tax-exempt Commercial Paper Notes (Limited Tax Bonds) Series A (the "Notes") in the aggregate principal amount not to exceed $110,000,000 outstanding at any time. (b) The issuer has authorized the issuance of the Notes pursuant to its Resolution No. 05-001 and an Indenture dated as of March 1, 2005 (the "Indenture") between the Issuer and U.S. Bank Trust National Association, as trustee (the "Trustee") and any supplements or amendments thereto and the dates thereof (collectively, the "Authorizing Document"). (c) Bank of America, N.A. (the "Facility Issuing Party") has delivered an irrevocable, direct draw letter of credit (the "Facility") with respect to the Notes in accordance with the terms of a Reimbursement Agreement (the "Facility Agreement") between the Issuer and the Facility Issuing Party. (d) The Authorizing Document provides for the appointment of one or more commercial paper dealers to perform certain duties, including the offering and sale from time -to - time of the Notes on behalf of the Issuer. (e) Lehman Brothers has agreed to accept the duties and responsibilities of the CP Dealer with respect to the Notes under the Authorizing Document and this Agreement. (f) Unless otherwise defined herein, all capitalized terms shall have the meanings ascribed to them in the Authorizing Document or the Issuing and Paying Agent Agreement. Section 2. Appointment of CP Dealer. (a) Subject to the terms and conditions contained herein, the Issuer hereby appoints Lehman Brothers as a CP Dealer for the Notes, and Lehman Brothers hereby accepts such appointment. (b) The Dealer shall act as non-exclusive dealer with respect to the Notes. The CP Dealer acknowledges that the Issuer may enter into agreements with other dealers in connection with the offering and sale of the Notes on behalf of the Issuer. Section 3. Responsibilities of CP Dealer. (a) Subject to the terms and conditions set forth in this Agreement, Lehman Brothers agrees to perform the duties of CP Dealer set forth in this Agreement. It is understood that in undertaking to perform such duties, and in the performance thereof, it is the intention of the parties that the CP Dealer will act solely as an agent and not as a principal, except as expressly provided in this Agreement. The CP Dealer shall use its best efforts to solicit and arrange sales of the Notes on behalf of the Issuer at such 206 1 rates and maturities as may prevail from time to time in the market. The CP Dealer and the Issuer agree that any Notes which the Dealer may arrange the sale of or which, in the Dealer's sole discretion, it may elect to purchase, will be purchased or sold on the terms and conditions and in the manner provided in the Authorizing Document, the Issuing and Paying Agent Agreement and this Agreement. Anything herein to the contrary notwithstanding, to the extent of any conflict between the provisions hereof and of the Authorizing Document or the Issuing and Paying Agent Agreement, the provisions of the Authorizing Document and the Issuing and Paying Agent Agreement shall be controlling. (b) Notwithstanding anything to the contrary contained herein, the CP Dealer: (i) will suspend its efforts with respect to the offer or sale of the Notes on behalf of the Issuer upon the receipt of notice of the occurrence of an event of default under the Notes, the Authorizing Document, the Facility, the Facility Agreement or the Issuing and Paying Agent Agreement; and (ii) may, in its sole discretion, suspend its efforts with respect to the offer or sale of the Notes on behalf of the Issuer immediately upon the occurrence of any of the following events, which suspension will continue so long as, in the CP Dealer's reasonable judgment, such event continues to exist as to the Notes: (1) suspension or material limitation in trading in securities generally on the New York Stock Exchange; (2) a general moratorium on commercial banking activities in New York is declared by either federal or New York State authorities; (3) the engagement by the United States in hostilities if the effect of such engagement, in the CP Dealer's judgment, makes it impractical or inadvisable to proceed with the solicitation of offers to purchase the Notes; (4) legislation shall be introduced by committee, by amendment or otherwise, in, or be enacted by, the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the United States Notes and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the offering or sale of obligations of the general character of the Notes, as contemplated hereby, is or would be in violation of any provision of the Securities Act of 1933, as amended (the "Securities Act") as then in effect, or the Securities Exchange Act of 1934, as amended (the "Exchange Act") as then in effect, or with the purpose or effect of otherwise prohibiting the offering or sale of obligations of the general character of the Notes, or the Notes themselves, as contemplated hereby; • • • 207 2 • (5) any event shall occur or information shall become known, which, in the CP Dealer's reasonable opinion, makes untrue, incorrect or misleading in any material respect any statement or information contained in any disclosure documents provided to the CP Dealer in connection with the performance of its duties hereunder, whether provided pursuant to Section 5 hereof or otherwise, or causes such documents to contain an untrue, incorrect or misleading statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (6) any governmental authority shall impose, as to the Notes, or obligations of the general character of the Notes, any material restrictions not now in force, or increase materially those now in force; (7) any of the representations and warranties of the Issuer made hereunder shall not have been true and correct on the date made; (8) the Issuer fails to observe any of the covenants or agreements made herein; (9) any of the rating agencies then rating the Notes or the Facility Issuing Party shall either (i) downgrade the ratings assigned to either the Notes or the Facility Issuing Party so that such Notes are not "Eligible Notes" as defined under Rule 2a-7 of the Investment Company Act of 1940, as amended or (ii) suspend or withdraw the then current ratings assigned to either the Notes or the Facility Issuing Party; or (10) an actual or imminent default or a moratorium in respect of payment of any U.S. Treasury bills, bonds or notes the effect of which in the CP Dealer's judgment makes it impractical to market the Notes or to enforce contracts for the sale of the Notes. Section 4. Transactions in Notes. All transactions in Notes between the CP Dealer and the Issuer shall be in accordance with the Authorizing Document, the Issuing and Paying Agent Agreement, this Agreement, the Facility Agreement and with the customs and practices in the commercial paper market regarding settlement and delivery formally adopted in writing from time to time by the New York Clearinghouse, to the extent not inconsistent with the Authorizing Document. As early as possible, but not later than 12:30 p.m. (New York City time) on the day on which any Notes are to be issued, the CP Dealer shall notify the Issuer of the proposed final maturities, prices and interest rates (which interest rates shall not exceed 12% per annum) at which the CP Dealer will purchase or cause the purchase of the Notes, and provide the Issuer with any other information as required for delivery of such Notes. Except as described below, the CP Dealer shall not be obligated to purchase or cause the purchase of any Notes unless and until agreement has been reached in each case on the foregoing points and the CP Dealer has agreed to such purchase. Not later than 12:30 p.m. (New York City time) on the date of each transaction the CP Dealer shall either (a) confirm each transaction made with or arranged by it or 208 3 (b) notify the Issuer and the Issuing and Paying Agent of the difference, if any, between the amount of maturing Notes and the amount of Notes which the CP Dealer has arranged to sell or has agreed to purchase. Such confirmation or notification shall be given by telephone (or by other telecommunications medium acceptable to the Issuer) and in writing to the Issuer and the Issuing and Paying Agent. Section 5. Payment for Notes. The CP Dealer shall pay for the Notes sold by the CP Dealer (or purchased by the CP Dealer for its own account) in immediately available funds by 2:15 p.m. (New York City time) on the Business Day such Notes are delivered to the CP Dealer (provided that such Notes are so delivered to the CP Dealer by 2:15 p.m. on such Business Day). All Notes will be sold at par, and will be evidenced either by (i) a global note immobilized with The Depository Trust Company of New York or (ii) if not, will be executed in the manner provided for in the Authorizing Document. Section 6. Designated Representative. Note transactions with the Issuer, pursuant to Section 4 hereof, shall be with any one of the officers or employees of the Issuer who are designated as a Designated Representative by certificate signed by the Executive Director of the Issuer. The initial written designation of the Designated Representatives is appended hereto as Appendix A. The Issuer agrees to provide the CP Dealer with revised written designations in the form of Appendix A when and as required by changes in the Designated Representatives. The CP Dealer may rely upon such designation unless and until otherwise notified in writing by the Issuer. Section 7. Resignation and Removal of CP Dealer. The CP Dealer may at any time resign and be discharged of its duties and obligations hereunder upon providing the Issuer and the Issuing and Paying Agent with seven (7) days' prior written notice. The CP Dealer may be removed at any time, at the direction of the Issuer upon seven (7) days' prior written notice to the CP Dealer and the Issuing and Paying Agent. Upon removal or resignation of the CP Dealer, the Issuer shall promptly cause the Issuing and Paying Agent to give notice thereof by mail to all owners of the Notes and to any rating agency which has assigned a rating to the Notes. The CP Dealer shall assign and deliver this Agreement to its successor if requested by the Issuer. Section 8. Furnishing of Disclosure Materials. (a) The Issuer agrees to furnish the CP Dealer with as many copies as the CP Dealer may reasonably request of the offering memorandum dated February _, 2005 of the Issuer relating to the Notes (the "Offering Memorandum"), and such other information with respect to the Issuer and the Notes as the CP Dealer shall reasonably request from time to time. (b) The Issuer agrees to cooperate with the CP Dealer in the preparation from time -to -time of a new Offering Memorandum of the Issuer for the Notes in the event the CP Dealer determines that the preparation and distribution of such Offering Memorandum is necessary or desirable in connection with offering and sale on behalf of the Issuer of the Notes, and to furnish or to cause to be furnished to the CP Dealer as many copies of such new Offering Memorandum as the CP Dealer shall request. (c) If, at any time during the term of this Agreement, any event shall occur or facts become known to either party that might affect the correctness or completeness of any 0 • • 209 4 • • • statement of a material fact contained in the then current Offering Memorandum, such party shall promptly notify the other in writing of the circumstances and details of such event. The Issuer agrees to promptly furnish to the CP Dealer a copy of each filing or notice made to anyone (whether in connection with the Notes or not) pursuant to any undertaking or other agreement of the Issuer made under any provision of Rule 15c2-12 promulgated by the Securities and Exchange Commission. Section 9. Indemnification and Contribution. (a) The Issuer will indemnify and hold harmless the CP Dealer and each of its directors, officers and employees and each person who controls the CP Dealer within the meaning of Section 15 of the Securities Act, against any and all losses, claims, damages or liabilities, joint or several, to which any such indemnified party may become subject under any statute or at law or in equity or otherwise, and will reimburse any such indemnified party for any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) an allegation or determination that the Notes should have been registered under the Securities Act, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any disclosure documents furnished pursuant to the provisions of this Agreement or the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but the Issuer will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the document in reliance upon and in conformity with written information furnished to the Issuer by the CP Dealer or the Facility Issuing Party specifically for use in connection with the preparation of the documents. This indemnity agreement will not limit any other liability to any such indemnified party the Issuer otherwise may have; provided that in no event will the Issuer be obligated for double indemnification. (b) An indemnified party shall, promptly after receipt of notice of the commencement of any action against such indemnified party in respect of which indemnification may be sought against an indemnifying party, notify the indemnifying party in writing of the commencement of the action. Failure of the indemnified party to give such notice will not relieve the indemnifying party from any liability it may have to such indemnified party. If such an action is brought against an indemnified party and such indemnified party notifies the indemnifying party of its commencement, the indemnifying party may, or if so requested by such indemnified party will, participate in or assume its defense, with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to such indemnified party of an election to assume the defense, the indemnifying party will not be liable to the indemnified party under this Section for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense other than reasonable costs of investigation. Until the indemnifying party assumes the defense of any such action at the request of such indemnified party, the indemnified party may participate at its own expense in the defense of such action. If the indemnifying party does not retain counsel to take charge of the defense or if the indemnified party reasonably concludes that there may be defenses available to it different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to assume the defense of such action on behalf of such indemnified party), legal and other expenses reasonably incurred by the indemnified party shall be borne by the indemnifying party. Any obligation under this Section of an indemnifying party to reimburse an indemnified 210 5 party for expenses shall be payable in reasonable amounts and at reasonable periodic intervals not more often than monthly as required by the indemnified party, but if the indemnified party is later determined not to be entitled to indemnification under this Section or otherwise, the indemnified party will promptly return any moneys paid pursuant to this sentence. No party will be liable with respect to any settlement effected without its consent. (c) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in subsection (a) of this Section hereof is due in accordance with its terms but, for any reason, is held by a court to be unavailable on grounds of policy or otherwise, the Issuer and the CP Dealer will contribute to the total losses, claims, damages and liabilities (including legal or other expenses of investigation or defense) to which the Issuer and the CP Dealer may be subject in such proportion so that the CP Dealer is responsible for that portion represented by the percentage that the fee to be paid to the CP Dealer pursuant to this Agreement bears to the principal amount of the [maximum principal of the Notes that may be outstanding, and the Issuer is responsible for the balance. In no case, however, will the CP Dealer be responsible for any amount in excess of the fee applicable to the Notes remarketed by the CP Dealer under this Agreement and no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph, each person who controls the CP Dealer within the meaning of the Securities Act shall have the same rights to contribution as the CP Dealer, and each person who controls the Issuer within the meaning of the Securities Act and each officer and each director of the Issuer will have the same rights to contribution as the Issuer, subject to the foregoing sentence. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph, notify each party from whom contribution may be sought, but the failure to give such notice will not relieve the party from whom contribution may be sought from any obligation it may have to the party entitled to contribution. Section 10. Fees and Expenses. For the CP Dealer's services under this Agreement, the Issuer will pay the CP Dealer a fee of 4.5 basis points (.045%) per annum of the weighted average of the principal amount of Notes outstanding during each three month period. The Issuer will pay the fee quarterly in arrears commencing June 1, 2005, and each September 1, December 1 and March 1 thereafter. Section 11. Representations, Warranties, Covenants and Agreements of the Issuer. The Issuer, by its acceptance hereof, represents, warrants, covenants, and agrees with the CP Dealer that: (a) it is a county transportation commission formed under and pursuant to the provisions of the laws of the State of California; (b) it has full power and authority to take all actions required or permitted to be taken by the Issuer by or under, and to perform and observe the covenants and agreements on its part contained in, this Agreement and any other instrument or agreement relating thereto to which the Issuer is a party; • • 211 6 (c) it has, on or before the date hereof, duly taken all action necessary to be taken by it prior to such date to authorize (i) the execution, delivery and performance of this Agreement, the Authorizing Document, the Facility Agreement and any other instrument or agreement to which the Issuer is a party and which has been or will be executed in connection with the transactions contemplated by the foregoing documents; and (ii) the carrying out, giving effect to, consummation and performance of the transactions and obligations contemplated by the foregoing agreements and by the current Offering Memorandum; (d) it will provide the CP Dealer at its address set forth below, (i) within 45 days of the end of each of its first three fiscal quarters, with copies of its quarterly operating statements for all budgeted funds, (ii) within 210 days of the end of each fiscal year, with a copy of its annual audited financial statements for that fiscal year, and (iii) upon the issuance of any indebtedness or other obligations secured by or payable from sales tax revenues other than the Notes, with copies of any official statement, offering memorandum or other disclosure document relating to such indebtedness or obligation; and (e) it will promptly notify the CP Dealer by Electronic Means of any material adverse changes that may affect the offering and sale on behalf of the Issuer of the Notes or any fact or circumstance which may constitute, or with the passage of time will constitute, an event of default under the Notes, the Authorizing Document, the Facility or the Facility Agreement or the Issuing and Paying Agent Agreement. (f) Investor Memoranda and supplements, amendments and updates to any thereof, furnished by the Issuer and used by the CP Dealer (including amendments, supplements and replacements thereof), until such time as they shall have been subsequently amended, updated or replaced, shall not contain any untrue, incorrect or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Section 12. Term of Agreement. This Agreement shall become effective on the date hereof and shall continue in full force and effect until the cessation of the Notes program, subject to the right of suspension and termination as provided herein. Section 13. Governing Law. To the greatest extent permitted by law, this Agreement shall be governed by and construed in accordance with the laws of the State of New York; provided, however, that the existence, capacity and authority of the Issuer shall be governed by the laws of the State of California. Section 14. Dealing in Notes by the CP Dealer; No Obligation to Purchase Notes. (a) The CP Dealer, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Notes, including, without limitation, any Notes offered and sold by the CP Dealer pursuant to this Agreement, and may join in any action which any Owner may be entitled to take with like effect as if it did not act in any capacity hereunder. The CP Dealer, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Issuer and may act as depositary, Account Party, or agent for any committee 212 7 or body of owners of the Notes or other obligations of the Issuer as freely as if it did not act in any capacity hereunder. (b) Nothing in this Agreement shall be deemed to constitute the CP Dealer an underwriter of the Notes or to obligate the CP Dealer to purchase any Notes for its own account at any time. Section 15. Miscellaneous. (a) Except as otherwise specifically provided in this Agreement, all notices, demands and formal actions under this Agreement shall be in writing and either (i) hand -delivered, (ii) sent by electronic means, or (iii) mailed by registered or certified mail, return receipt requested, postage prepaid, to: The CP Dealer: Lehman Brothers 399 Park Avenue New York, NY 10022 Attention: Tax Exempt Money Market Group Telephone: (212) 526-2093 Telecopy: (212) 526-2292 The Issuer: Riverside County Transportation Commission 4080 Lemon Street, 3rd Floor Riverside, CA 92501 Mailing Address: P.O. Box 12008 Riverside, CA 92502-2208 Attention: Chief Financial Officer Telephone: (951) 787-7141 Telecopy: (951) 787-7920 E-mail: ttrevino@rctc.org The Issuing and Paying Agent: U.S. Bank Trust National Association Attention: Telephone: Telecopy: E-mail: Each party hereto may, by notice given under this Agreement to the other parties described above, designate other addresses to which subsequent notices, requests, reports or other communications shall be directed. (b) This Agreement shall inure to the benefit of and be binding only upon the parties hereto and their respective successors and assigns. The terms "successors" and "assigns" • 213 8 • shall not include any purchaser of any of the Notes merely because of such purchase. Neither the Facility Issuing Party nor any owner of the Notes or other third party shall have any rights or privileges hereunder. (c) All of the representations and warranties of the Issuer and the CP Dealer in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of the CP Dealer or the Issuer, (ii) the offering and sale of and any payment for any Notes hereunder, or (iii) suspension, termination or cancellation of this Agreement. (d) This Agreement and each provision hereof may be amended, changed, waived, discharged or terminated only by an instrument in writing signed by the parties hereto. (e) Nothing herein shall be construed to make any party an employee of the other or to establish any fiduciary relationship between the parties except as expressly provided herein. (f) If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever. (g) This Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: LEHMAN BROTHERS By: Name: Title: 214 9 • • • APPENDIX A CERTIFICATE OF DESIGNATED REPRESENTATIVE I am the Executive Director of the Riverside County Transportation Commission (the "Issuer") duly authorized pursuant to an Indenture dated as of March 1, 2005, between the Issuer and U.S. Bank Trust National Association, as trustee (the "Authorizing Document") to appoint Designated Representatives of the Issuer in connection with the issuance, from time to time, by the Issuer of tax-exempt commercial paper (the "Notes") in accordance with the Authorizing Document. I hereby designate the following persons to act on my behalf in accordance with the Authorizing Document and specimen signatures of such persons are set forth beside their names. Designated Persons Eric Haley, Executive Director Hideo Sugita, Deputy Executive Director Theresia Trevino, Chief Financial Officer Michele Cisneros, Accounting Manager Executed this day of Specimen Signature Name: Eric Haley Title: Executive Director 215 A-1 ATTACHMENT 5 • COMMERCIAL PAPER DEALER AGREEMENT • • Between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and BANC OF AMERICA SECURITIES LLC CP DEALER Dated March 1, 2005 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMERCIAL PAPER NOTES (LIMITED TAX BONDS) SERIES B • • • This COMMERCIAL PAPER DEALER AGREEMENT, dated March 1, 2005 (the "Agreement"), between RIVERSIDE COUNTY TRANSPORTATION COMMISSION (the "Issuer") and BANC OF AMERICA SECURITIES LLC ("Banc of America" or the "CP Dealer"). For and in consideration of the mutual covenants made herein and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Background and Definitions. (a) The Issuer has authorized the issuance and reissuance from time -to -time of its tax-exempt Commercial Paper Notes (Limited Tax Bonds) Series B (the "Notes") in the aggregate principal amount not to exceed $75,000,000 outstanding at any time. (b) The issuer has authorized the issuance of the Notes pursuant to its Resolution No. 05-001 and an Indenture dated as of March 1, 2005 (the "Indenture") between the Issuer and U.S. Bank Trust National Association, as trustee (the "Trustee") and any supplements or amendments thereto and the dates thereof (collectively, the "Authorizing Document"). (c) Bank of America, N.A. (the "Facility Issuing Party") has delivered an irrevocable, direct draw letter of credit (the "Facility") with respect to the Notes in accordance with the terms of a Reimbursement Agreement (the "Facility Agreement") between the Issuer and the Facility Issuing Party. (d) The Authorizing Document provides for the appointment of one or more commercial paper dealers to perform certain duties, including the offering and sale from time -to - time of the Notes on behalf of the Issuer. (e) Banc of America has agreed to accept the duties and responsibilities of the CP Dealer with respect to the Notes under the Authorizing Document and this Agreement. (f) Unless otherwise defined herein, all capitalized terms shall have the meanings ascribed to them in the Authorizing Document or the Issuing and Paying Agent Agreement. Section 2. Appointment of CP Dealer. (a) Subject to the terms and conditions contained herein, the Issuer hereby appoints Banc of America as a CP Dealer for the Notes, and Banc of America hereby accepts such appointment. (b) The Dealer shall act as non-exclusive dealer with respect to the Notes. The CP Dealer acknowledges that the Issuer may enter into agreements with other dealers in connection with the offering and sale of the Notes on behalf of the Issuer. Section 3. Responsibilities of CP Dealer. (a) Subject to the terms and conditions set forth in this Agreement, Banc of America agrees to perform the duties of CP Dealer set forth in this Agreement. It is understood that in undertaking to perform such duties, and in the performance thereof, it is the intention of the parties that the CP Dealer will act solely as an agent and not as a principal, except as expressly provided in this Agreement. The CP Dealer 217 1 shall use its best efforts to solicit and arrange sales of the Notes on behalf of the Issuer at such rates and maturities as may prevail from time to time in the market. The CP Dealer and the Issuer agree that any Notes which the Dealer may arrange the sale of or which, in the Dealer's sole discretion, it may elect to purchase, will be purchased or sold on the terms and conditions and in the manner provided in the Authorizing Document, the Issuing and Paying Agent Agreement and this Agreement. Anything herein to the contrary notwithstanding, to the extent of any conflict between the provisions hereof and of the Authorizing Document or the Issuing and Paying Agent Agreement, the provisions of the Authorizing Document and the Issuing and Paying Agent Agreement shall be controlling. (b) Notwithstanding anything to the contrary contained herein, the CP Dealer: (i) will suspend its efforts with respect to the offer or sale of the Notes on behalf of the Issuer upon the receipt of notice of the occurrence of an event of default under the Notes, the Authorizing Document, the Facility, the Facility Agreement or the Issuing and Paying Agent Agreement; and (ii) may, in its sole discretion, suspend its efforts with respect to the offer or sale of the Notes on behalf of the Issuer immediately upon the occurrence of any of the following events, which suspension will continue so long as, in the CP Dealer's reasonable judgment, such event continues to exist as to the Notes: (1) suspension or material limitation in trading in securities generally on the New York Stock Exchange; (2) a general moratorium on commercial banking activities in New York is declared by either federal or New York State authorities; (3) the engagement by the United States in hostilities if the effect of such engagement, in the CP Dealer's judgment, makes it impractical or inadvisable to proceed with the solicitation of offers to purchase the Notes; (4) legislation shall be introduced by committee, by amendment or otherwise, in, or be enacted by, the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the United States Notes and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the offering or sale of obligations of the general character of the Notes, as contemplated hereby, is or would be in violation of any provision of the Securities Act of 1933, as amended (the "Securities Act") as then in effect, or the Securities Exchange Act of 1934, as amended (the "Exchange Act") as then in effect, or with the purpose or effect of otherwise prohibiting the offering or sale of obligations of the general character of the Notes, or the Notes themselves, as contemplated hereby; • • • 218 2 • • • (5) any event shall occur or information shall become known, which, in the CP Dealer's reasonable opinion, makes untrue, incorrect or misleading in any material respect any statement or information contained in any disclosure documents provided to the CP Dealer in connection with the performance of its duties hereunder, whether provided pursuant to Section 5 hereof or otherwise, or causes such documents to contain an untrue, incorrect or misleading statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (6) any governmental authority shall impose, as to the Notes, or obligations of the general character of the Notes, any material restrictions not now in force, or increase materially those now in force; (7) any of the representations and warranties of the Issuer made hereunder shall not have been true and correct on the date made; (8) the Issuer fails to observe any of the covenants or agreements made herein; (9) any of the rating agencies then rating the Notes or the Facility Issuing Party shall either (i) downgrade the ratings assigned to either the Notes or the Facility Issuing Party so that such Notes are not "Eligible Notes" as defined under Rule 2a-7 of the Investment Company Act of 1940, as amended or (ii) suspend or withdraw the then current ratings assigned to either the Notes or the Facility Issuing Party; or (10) an actual or imminent default or a moratorium in respect of payment of any U.S. Treasury bills, bonds or notes the effect of which in the CP Dealer's judgment makes it impractical to market the Notes or to enforce contracts for the sale of the Notes. Section 4. Transactions in Notes. All transactions in Notes between the CP Dealer and the Issuer shall be in accordance with the Authorizing Document, the Issuing and Paying Agent Agreement, this Agreement, the Facility Agreement and with the customs and practices in the commercial paper market regarding settlement and delivery formally adopted in writing from time to time by the New York Clearinghouse, to the extent not inconsistent with the Authorizing Document. As early as possible, but not later than 12:30 p.m. (New York City time) on the day on which any Notes are to be issued, the CP Dealer shall notify the Issuer of the proposed final maturities, prices and interest rates (which interest rates shall not exceed 12% per annum) at which the CP Dealer will purchase or cause the purchase of the Notes, and provide the Issuer with any other information as required for delivery of such Notes. Except as described below, the CP Dealer shall not be obligated to purchase or cause the purchase of any Notes unless and until agreement has been reached in each case on the foregoing points and the CP Dealer has agreed to such purchase. Not later than 12:30 p.m. (New York City time) on the date of each transaction the CP Dealer shall either (a) confirm each transaction made with or arranged by it or 219 3 (b) notify the Issuer and the Issuing and Paying Agent of the difference, if any, between the amount of maturing Notes and the amount of Notes which the CP Dealer has arranged to sell or has agreed to purchase. Such confirmation or notification shall be given by telephone (or by other telecommunications medium acceptable to the Issuer) and in writing to the Issuer and the Issuing and Paying Agent. Section 5. Payment for Notes. The CP Dealer shall pay for the Notes sold by the CP Dealer (or purchased by the CP Dealer for its own account) in immediately available funds by 2:15 p.m. (New York City time) on the Business Day such Notes are delivered to the CP Dealer (provided that such Notes are so delivered to the CP Dealer by 2:15 p.m. on such Business Day). All Notes will be sold at par, and will be evidenced either by (i) a global note immobilized with The Depository Trust Company of New York or (ii) if not, will be executed in the manner provided for in the Authorizing Document. Section 6. Designated Representative. Note transactions with the Issuer, pursuant to Section 4 hereof, shall be with any one of the officers or employees of the Issuer who are designated as a Designated Representative by certificate signed by the Executive Director of the Issuer. The initial written designation of the Designated Representatives is appended hereto as Appendix A. The Issuer agrees to provide the CP Dealer with revised written designations in the form of Appendix A when and as required by changes in the Designated Representatives. The CP Dealer may rely upon such designation unless and until otherwise notified in writing by the Issuer. Section 7. Resignation and Removal of CP Dealer. The CP Dealer may at any time resign and be discharged of its duties and obligations hereunder upon providing the Issuer and the Issuing and Paying Agent with seven (7) days' prior written notice. The CP Dealer may be removed at any time, at the direction of the Issuer upon seven (7) days' prior written notice to the CP Dealer and the Issuing and Paying Agent. Upon removal or resignation of the CP Dealer, the Issuer shall promptly cause the Issuing and Paying Agent to give notice thereof by mail to all owners of the Notes and to any rating agency which has assigned a rating to the Notes. The CP Dealer shall assign and deliver this Agreement to its successor if requested by the Issuer. Section 8. Furnishing of Disclosure Materials. (a) The Issuer agrees to furnish the CP Dealer with as many copies as the CP Dealer may reasonably request of the offering memorandum dated February _, 2005 of the Issuer relating to the Notes (the "Offering Memorandum"), and such other information with respect to the Issuer and the Notes as the CP Dealer shall reasonably request from time to time. (b) The Issuer agrees to cooperate with the CP Dealer in the preparation from time -to -time of a new Offering Memorandum of the Issuer for the Notes in the event the CP Dealer determines that the preparation and distribution of such Offering Memorandum is necessary or desirable in connection with offering and sale on behalf of the Issuer of the Notes, and to furnish or to cause to be furnished to the CP Dealer as many copies of such new Offering Memorandum as the CP Dealer shall request. (c) If, at any time during the term of this Agreement, any event shall occur or facts become known to either party that might affect the correctness or completeness of any • • • 220 4 • • • statement of a material fact contained in the then current Offering Memorandum, such party shall promptly notify the other in writing of the circumstances and details of such event. The Issuer agrees to promptly furnish to the CP Dealer a copy of each filing or notice made to anyone (whether in connection with the Notes or not) pursuant to any undertaking or other agreement of the Issuer made under any provision of Rule 15c2-12 promulgated by the Securities and Exchange Commission. Section 9. Indemnification and Contribution. (a) The Issuer will indemnify and hold harmless the CP Dealer and each of its directors, officers and employees and each person who controls the CP Dealer within the meaning of Section 15 of the Securities Act, against any and all losses, claims, damages or liabilities, joint or several, to which any such indemnified party may become subject under any statute or at law or in equity or otherwise, and will reimburse any such indemnified party for any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) an allegation or determination that the Notes should have been registered under the Securities Act, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any disclosure documents furnished pursuant to the provisions of this Agreement or the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but the Issuer will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the document in reliance upon and in conformity with written information furnished to the Issuer by the CP Dealer or the Facility Issuing Party specifically for use in connection with the preparation of the documents. This indemnity agreement will not limit any other liability to any such indemnified party the Issuer otherwise may have; provided that in no event will the Issuer be obligated for double indemnification. (b) An indemnified party shall, promptly after receipt of notice of the commencement of any action against such indemnified party in respect of which indemnification may be sought against an indemnifying party, notify the indemnifying party in writing of the commencement of the action. Failure of the indemnified party to give such notice will not relieve the indemnifying party from any liability it may have to such indemnified party. If such an action is brought against an indemnified party and such indemnified party notifies the indemnifying party of its commencement, the indemnifying party may, or if so requested by such indemnified party will, participate in or assume its defense, with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to such indemnified party of an election to assume the defense, the indemnifying party will not be liable to the indemnified party under this Section for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense other than reasonable costs of investigation. Until the indemnifying party assumes the defense of any such action at the request of such indemnified party, the indemnified party may participate at its own expense in the defense of such action. If the indemnifying party does not retain counsel to take charge of the defense or if the indemnified party reasonably concludes that there may be defenses available to it different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to assume the defense of such action on behalf of such indemnified party), legal and other expenses reasonably incurred by the indemnified party shall be borne by the indemnifying party. Any obligation under this Section of an indemnifying party to reimburse an indemnified 221 5 party for expenses shall be payable in reasonable amounts and at reasonable periodic intervals not more often than monthly as required by the indemnified party, but if the indemnified party is later determined not to be entitled to indemnification under this Section or otherwise, the indemnified party will promptly return any moneys paid pursuant to this sentence. No party will be liable with respect to any settlement effected without its consent. (c) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in subsection (a) of this Section hereof is due in accordance with its terms but, for any reason, is held by a court to be unavailable on grounds of policy or otherwise, the Issuer and the CP Dealer will contribute to the total losses, claims, damages and liabilities (including legal or other expenses of investigation or defense) to which the Issuer and the CP Dealer may be subject in such proportion so that the CP Dealer is responsible for that portion represented by the percentage that the fee to be paid to the CP Dealer pursuant to this Agreement bears to the principal amount of the [maximum principal of the Notes that may be outstanding, and the Issuer is responsible for the balance. In no case, however, will the CP Dealer be responsible for any amount in excess of the fee applicable to the Notes remarketed by the CP Dealer under this Agreement and no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph, each person who controls the CP Dealer within the meaning of the Securities Act shall have the same rights to contribution as the CP Dealer, and each person who controls the Issuer within the meaning of the Securities Act and each officer and each director of the Issuer will have the same rights to contribution as the Issuer, subject to the foregoing sentence. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph, notify each party from whom contribution may be sought, but the failure to give such notice will not relieve the party from whom contribution may be sought from any obligation it may have to the party entitled to contribution. Section 10. Fees and Expenses. For the CP Dealer's services under this Agreement, the Issuer will pay the CP Dealer a fee of 4.5 basis points (.045%) per annum of the weighted average of the principal amount of Notes outstanding during each three month period. The Issuer will pay the fee quarterly in arrears commencing June 1, 2005, and each September 1, December 1 and March 1 thereafter. Section 11. Representations, Warranties, Covenants and Agreements of the Issuer. The Issuer, by its acceptance hereof, represents, warrants, covenants, and agrees with the CP Dealer that: (a) it is a county transportation commission formed under and pursuant to the provisions of the laws of the State of California; (b) it has full power and authority to take all actions required or permitted to be taken by the Issuer by or under, and to perform and observe the covenants and agreements on its part contained in, this Agreement and any other instrument or agreement relating thereto to which the Issuer is a party; • • • 222 6 • • • (c) it has, on or before the date hereof, duly taken all action necessary to be taken by it prior to such date to authorize (i) the execution, delivery and performance of this Agreement, the Authorizing Document, the Facility Agreement and any other instrument or agreement to which the Issuer is a party and which has been or will be executed in connection with the transactions contemplated by the foregoing documents; and (ii) the carrying out, giving effect to, consummation and performance of the transactions and obligations contemplated by the foregoing agreements and by the current Offering Memorandum; (d) it will provide the CP Dealer at its address set forth below, (i) within 45 days of the end of each of its first three fiscal quarters, with copies of its quarterly operating statements for all budgeted funds, (ii) within 210 days of the end of each fiscal year, with a copy of its annual audited financial statements for that fiscal year, and (iii) upon the issuance of any indebtedness or other obligations secured by or payable from sales tax revenues other than the Notes, with copies of any official statement, offering memorandum or other disclosure document relating to such indebtedness or obligation; and (e) it will promptly notify the CP Dealer by Electronic Means of any material adverse changes that may affect the offering and sale on behalf of the Issuer of the Notes or any fact or circumstance which may constitute, or with the passage of time will constitute, an event of default under the Notes, the Authorizing Document, the Facility or the Facility Agreement or the Issuing and Paying Agent Agreement. (f) Investor Memoranda and supplements, amendments and updates to any thereof, furnished by the Issuer and used by the CP Dealer (including amendments, supplements and replacements thereof), until such time as they shall have been subsequently amended, updated or replaced, shall not contain any untrue, incorrect or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Section 12. Term of Agreement. This Agreement shall become effective on the date hereof and shall continue in full force and effect until the cessation of the Notes program, subject to the right of suspension and termination as provided herein. Section 13. Governing Law. To the greatest extent permitted by law, this Agreement shall be governed by and construed in accordance with the laws of the State of New York; provided, however, that the existence, capacity and authority of the Issuer shall be governed by the laws of the State of California. Section 14. Dealing in Notes by the CP Dealer; No Obligation to Purchase Notes. (a) The CP Dealer, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Notes, including, without limitation, any Notes offered and sold by the CP Dealer pursuant to this Agreement, and may join in any action which any Owner may be entitled to take with like effect as if it did not act in any capacity hereunder. The CP Dealer, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Issuer and may act as depositary, Account Party, or agent for any committee 223 7 or body of owners of the Notes or other obligations of the Issuer as freely as if it did not act in any capacity hereunder. (b) Nothing in this Agreement shall be deemed to constitute the CP Dealer an underwriter of the Notes or to obligate the CP Dealer to purchase any Notes for its own account at any time. Section 15. Miscellaneous. (a) Except as otherwise specifically provided in this Agreement, all notices, demands and formal actions under this Agreement shall be in writing and either (i) hand -delivered, (ii) sent by electronic means, or (iii) mailed by registered or certified mail, return receipt requested, postage prepaid, to: The CP Dealer: Banc of America Securities 121 West Trade Street NC 1-005-12-03 Charlotte, NC 28288-0001 Attn: Kenny Rogers Telephone: (704) 386-9028 Telecopy: (704) 388-0393 The Issuer: Riverside County Transportation Commission 4080 Lemon Street, 3rd Floor Riverside, CA 92501 Mailing Address: P.O. Box 12008 Riverside, CA 92502-2208 Attention: Chief Financial Officer Telephone: (951) 787-7141 Telecopy: (951) 787-7920 E-mail: ttrevino@rctc.org The Issuing and Paying Agent: U.S. Bank Trust National Association Attention: Telephone: Telecopy: E-mail: Each party hereto may, by notice given under this Agreement to the other parties described above, designate other addresses to which subsequent notices, requests, reports or other communications shall be directed. • 224 8 • • • (b) This Agreement shall inure to the benefit of and be binding only upon the parties hereto and their respective successors and assigns. The terms "successors" and "assigns" shall not include any purchaser of any of the Notes merely because of such purchase. Neither the Facility Issuing Party nor any owner of the Notes or other third party shall have any rights or privileges hereunder. (c) All of the representations and warranties of the Issuer and the CP Dealer in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of the CP Dealer or the Issuer, (ii) the offering and sale of and any payment for any Notes hereunder, or (iii) suspension, termination or cancellation of this Agreement. (d) This Agreement and each provision hereof may be amended, changed, waived, discharged or terminated only by an instrument in writing signed by the parties hereto. (e) Nothing herein shall be construed to make any party an employee of the other or to establish any fiduciary relationship between the parties except as expressly provided herein. (f) If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever. (g) This Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: BANC OF AMERICA SECURITIES LLC By: Name: Title: 225 9 • • • APPENDIX A CERTIFICATE OF DESIGNATED REPRESENTATIVE I am the Executive Director of the Riverside County Transportation Commission (the "Issuer") duly authorized pursuant to an Indenture dated as of March 1, 2005, between the Issuer and U.S. Bank Trust National Association, as trustee (the "Authorizing Document") to appoint Designated Representatives of the Issuer in connection with the issuance, from time to time, by the Issuer of tax-exempt commercial paper (the "Notes") in accordance with the Authorizing Document. I hereby designate the following persons to act on my behalf in accordance with the Authorizing Document and specimen signatures of such persons are set forth beside their names. Designated Persons Eric Haley, Executive Director Hideo Sugita, Deputy Executive Director Theresia Trevino, Chief Financial Officer Michele Cisneros, Accounting Manager Executed this day of Specimen Signature Name: Eric Haley Title: Executive Director 226 A-1 ATTACHMENT 6 • • • OH&S DRAFT 1/26/2005 RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent ISSUING AND PAYING AGENT AGREEMENT Dated as of March 1, 2005 Relating to the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) 227 TABLE OF CONTENTS • • • Page SECTION 1. DEFINITIONS 3 SECTION 2. APPOINTMENT OF ISSUING AND PAYING AGENT 3 SECTION 3. SUPPLY OF NOTES 3 SECTION 4. AUTHORIZED REPRESENTATIVES OF THE COMMISSION 3 SECTION 5. COMPLETION, AUTHENTICATION AND DELIVERY OF NOTES 4 SECTION 6. ESTABLISHMENT AND APPLICATION OF NOTE FUNDS AND ACCOUNTS 8 SECTION 7. DRAWS UNDER THE INITIAL SERIES CREDIT FACILITY; PAYMENT OF PRINCIPAL AND INTEREST; ENFORCEMENT 11 SECTION 8. PAYMENT OF MATURED NOTES 12 SECTION 9. RELIANCE ON INSTRUCTIONS 12 SECTION 10. CANCELLATION OF NOTES 13 SECTION 11. REPRESENTATIONS AND WARRANTIES OF THE COMMISSION 14 SECTION 12. COMPLIANCE WITH INDENTURE 14 SECTION 13. NOTICES; ADDRESSES 14 SECTION 14. ADDITIONAL INFORMATION 17 SECTION 15. AMENDMENTS 17 SECTION 16. TERMINATION 17 SECTION 17. SUCCESSOR IN INTEREST TO ISSUING AND PAYING AGENT 17 SECTION 18. COMPENSATION 17 SECTION 19. LIABILITY AND INDEMNITY 17 SECTION 20. LIMITED OBLIGATION OF THE ISSUER 18 SECTION 21. BENEFIT OF AGREEMENT 18 SECTION 22. PARTIAL INVALIDITY 18 SECTION 23. SECTION HEADINGS AND REFERENCES 18 SECTION 24. EXECUTION IN COUNTERPARTS 18 SECTION 25. GOVERNING LAW 18 228 -i- • • • ISSUING AND PAYING AGENT AGREEMENT THIS ISSUING AND PAYING AGENT AGREEMENT, dated as of March 1, 2005 (this "Agreement"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly organized and existing under and by virtue of the laws of the State of California (the "Commission" or the "Issuer"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association duly organized and existing under the laws of the United States of America, as issuing and paying agent (the "Issuing and Paying Agent"); WHEREAS, the Commission is a county transportation commission duly organized and existing pursuant to the County Transportation Commissions Act, being Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq.); WHEREAS, the Commission is authorized pursuant to the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.) (the "Act"), to, among other things, and with voter approval, levy a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") and to issue limited tax bonds payable from the proceeds of such tax; WHEREAS, the Commission adopted Ordinance No. 88-1, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" ("Ordinance No. 88-1"), on July 6, 1988, pursuant to the provisions of the Act, which Ordinance provided for the imposition of a retail transactions and use tax (the "Existing Sales Tax") applicable in the incorporated and unincorporated territory of the County of Riverside (the "County") in accordance with the Sales Tax Law at the rate of one-half of one percent (1/2%) for a period not to exceed twenty (20) years; WHEREAS, by its terms, Ordinance No. 88-1 became effective at the close of the polls on November 8, 1988, the day of the election at which the proposition imposing the Existing Sales Tax was approved by a majority vote of the electors voting on the measure, and the collection of the Existing Sales Tax commenced on April 1, 1989; WHEREAS, the Commission adopted Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" (the "Ordinance") on May 8, 2002, pursuant to the provisions of the Act, which Ordinance provides for the imposition of a retail transactions and use tax (the "Sales Tax") applicable in the incorporated and unincorporated territory of the County in accordance with the provisions of the Sales Tax Law at the rate of zero percent (0%) until the expiration of the Existing Sales Tax on March 31, 2009, and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed thirty (30) years; WHEREAS, by its terms, the Ordinance became effective at the close of the polls on November 5, 2002, the day of the election at which the proposition imposing the Sales Tax was approved by more than two-thirds of the electors voting on the measure; 229 1 WHEREAS, the Ordinance empowers the Commission to sell or issue, from time to time, on or before the collection of the Sales Tax, bonds, or other evidences of indebtedness, in the aggregate principal amount at any one time outstanding not to exceed $500 million for capital expenditures for various purposes, including to carry out the transportation projects described in the Expenditure Plan (as defined herein); WHEREAS, the Commission is authorized by Section 240309 of the California Public Utilities Code to issue from time to time limited tax bonds (defined to include indebtedness and securities of any kind or class, including commercial paper notes), secured and payable in whole or in part from revenues of the Sales Tax ("Sales Tax Revenues"); WHEREAS, concurrently with the execution and delivery of this Agreement, pursuant to Section 240309 of the Act and the Ordinance, the Commission has determined to authorize the issuance of: (i) a series of Notes to be initially designated as the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series A (the "Series A Notes"); and (ii) a series of Notes to be initially designated as the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series B (the "Series B Notes," and, together with the Series A Notes, hereinafter collectively referred to as the "Initial Series of Notes"); in an aggregate principal amount not to exceed two hundred million dollars ($200,000,000) outstanding at any one time; WHEREAS, in order to provide credit support and liquidity for the payment of the Notes, the Commission has determined to enter into a Reimbursement Agreement, dated as of March 1, 2005 (as more fully defined in Section 1.01 of the Indenture, the "Initial Series Credit Agreement"), between the Commission and Bank of America N.A. (the "Initial Series Credit Provider"), pursuant to which the Initial Series Credit Provider will deliver Irrevocable Letter of Credit No. (as more fully defined in Section 1.01 of the Indenture, the "Initial Series Credit Facility") to the Issuing and Paying Agent, which Initial Series Credit Facility may be drawn upon by the Issuing and Paying Agent to pay principal of, and interest on, the Series A Notes and the Series B Notes; WHEREAS, in order to provide for the offering and sale of the Series A Notes, the Commission has determined to enter into a Dealer Agreement, dated as of March 1, 2005 (as more fully defined in Section 1.01 of the Indenture, the "Series A Dealer Agreement"), between the Commission and Lehman Brothers, Inc., as dealer thereunder (as more fully defined in Section 1.01 of the Indenture, the "Series A Dealer"); WHEREAS, in order to provide for the offering and sale of the Series B Notes, the Commission has determined to enter into a Dealer Agreement, dated as of March 1, 2005 (as more fully defined in Section 1.01 of the Indenture, the "Series B Dealer Agreement"), between the Commission and Banc of America Securities LLC, as dealer thereunder (as more fully defined in Section 1.01 of the Indenture, the "Series B Dealer"); and WHEREAS, in order to facilitate the issuance and sale of the Initial Series of Notes and such other series of commercial paper notes as the Commission may from time to time authorize to be authenticated and delivered pursuant to the provisions of the Indenture (each, a "Series of Notes," and, together with the Initial Series of Notes, hereinafter collectively referred • • • 230 2 • • • to as the "Notes"), the Commission and the Issuing and Paying Agent desire to enter in this Agreement; NOW, THEREFORE, the parties hereto agree as follows: Section 1. Definitions. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings assigned to such terms in the Indenture. Section 2. Appointment of Issuing and Paying Agent. The Commission hereby appoints U.S. Bank Trust National Association, as issuing and paying agent for the Initial Series of Notes and such other Series of Notes as the Commission shall authorize to be authenticated and delivered pursuant to the Indenture, in each case on the terms and conditions specified herein and in the Indenture, which Notes the Commission shall from time to time deliver or cause to be delivered to the Issuing and Paying Agent. The Notes shall be substantially in the form set forth in the Indenture. Each other Series of Notes shall be in such form as shall be specified in the Supplemental Indenture setting forth the terms and provisions of such Series of Notes. At no time will the aggregate Outstanding principal amount of the Series A Notes and the Series B Notes exceed the lesser of: (i) two hundred million dollars ($200,000,000), or (ii) the Stated Amount of the Initial Series Credit Facility. Section 3. Supply of Notes. The Commission agrees from time to time to furnish the Issuing and Paying Agent with an adequate supply of Notes of each Series, which will be serially numbered and which will have been executed in accordance with the provisions of Section 2.04 of the Indenture, with the principal amount, date of issue, registered owner, maturity date, interest rate and amount of interest left blank. Pending receipt of an Issuance Request, the Issuing and Paying Agent agrees to hold the Notes in safekeeping for the account of the Commission in accordance with the customary practice of the Issuing and Paying Agent. Notwithstanding the foregoing, pursuant to Section 2.03 of the Indenture, the Commission may deliver Notes of any Series, including the Series A Notes and the Series B Notes, in the form of a Master Note, representing all Notes of such Series to be issued from time to time, each maturing no later than the date which is five (5) days prior to the expiration date of the applicable Credit Facility. Each Master Note may be replaced by a new Master Note having a later maturity date so long as the maturity date thereof does not extend beyond the fifth (5th) day prior to the expiration date of the applicable Credit Facility, as the same may be extended from time to time. Each Master Note shall evidence indebtedness of the Commission as set forth in the Advices. Each Advice shall comply with the limitations on Notes set forth in Section 2.01 and Section 2.02 of the Indenture and Section 5 hereof. References herein to Notes when a Master Note has been issued therefor shall refer to the indebtedness under the Master Note or the Advances issued with respect thereto. Section 4. Authorized Representatives of the Commission. From time to time the Commission agrees to furnish the Issuing and Paying Agent with a certificate certifying the incumbency and specimen signatures of officers or agents of the Commission authorized to execute Issuance Requests on behalf of the Commission and/or authorized to take other action hereunder on behalf of the Commission (each an "Authorized Representative"). Until the Issuing and Paying Agent receives a subsequent incumbency certificate of the Commission, the 231 3 Issuing and Paying Agent is entitled to rely on the last such certificate delivered to it for purposes of determining the Authorized Representatives. The Commission agrees that the Issuing and Paying Agent shall not have any responsibility to the Commission to determine by whom or what means a facsimile signature or seal may have been affixed on the Notes. Any Note bearing the manual or facsimile seal of the Commission and the manual or facsimile signature of the officers of the Commission identified in Section 2 hereof on the date the signature of such officer of the Commission is affixed shall bind the Commission after the completion of such Note by the Issuing and Paying Agent, notwithstanding that such officer of the Commission shall have died or shall have otherwise ceased to hold such office on the date such Note is authenticated or delivered by the Issuing and Paying Agent. Section 5. Completion, Authentication and Delivery of Notes. (a) An Issuance Request will be given by an Authorized Representative by telephone, promptly confirmed in writing (which writing may be transmitted by telecopier) in the form attached to the Indenture as Exhibit C. (b) Upon receipt of an Issuance Request as described in Section 5(a), the Issuing and Paying Agent agrees to withdraw the necessary Note(s) from safekeeping and, in accordance with such Issuance Request, agrees to: (i) complete each Note as to principal amount (which principal amount shall be $100,000 or an integral multiple of $1,000 in excess thereof), date of issue, maturity date (which shall not be more than two hundred seventy (270) days from the date of issuance), interest rate and amount of interest thereon and to register such Note as directed by the applicable Dealer; (ii) manually authenticate each Note by any officer or employee duly authorized and designated for such purpose; (iii) deliver the Note(s) to the applicable Dealer or its agent within the Borough of Manhattan, South of Chambers Street, City and State of New York, which delivery shall be against receipt for payment as herein provided or as otherwise provided in such Issuance Request (if such Issuance Request does not provide for such receipt, such Dealer shall nevertheless pay the purchase price for the Note(s) in accordance with Section 6 hereof); and (iv) retain one (1) of the nonnegotiable copies of each Note for its records and promptly forward one (1) nonnegotiable copy of each Note to the Commission, the Trustee and the applicable Credit Provider, pursuant to the provisions of the applicable Credit Agreement. (c) An Issuance Request by telephone must be received by the Issuing and Paying Agent by 12:30 p.m. New York City time, if the Note(s) are to be delivered the same day. Telephone transmission of an Issuance Request shall be confirmed in writing (which writing may be transmitted by telecopier) the same day. • 232 4 • • • (d) The Commission understands that although the Issuing and Paying Agent has been instructed and has agreed to deliver the Notes against payment, delivery of the Notes will, in accordance with the custom prevailing in the commercial paper market, be made before receipt of payment in immediately available funds. Therefore, once the Issuing and Paying Agent has delivered a Note to the applicable Dealer, or its agent, as provided in Section 5(b)(iii), the Commission agrees to bear the risk that the applicable Dealer or its agent shall fail to remit payment for the Note to the Issuing and Paying Agent. It is understood that each delivery of Notes hereunder shall be subject to the rules of the New York Clearing House in effect at the time of such delivery and, in accordance therewith, Notes are to be delivered by 2:00 p.m. New York City time. (e) Notwithstanding any other provision of this Agreement or the Indenture to the contrary, no Series A Notes shall be authenticated or delivered by the Issuing and Paying Agent if: (i) such delivery would result in the aggregate principal amount of Series A Notes Outstanding being in excess of $120,000,000; or (ii) such delivery would result in the aggregate principal amount of Notes Outstanding together with interest to accrue thereon to maturity to be in excess of the Stated Amount under the Initial Series Credit Facility; or (iii) such delivery would result in the delivery of Series A Notes bearing interest at an average rate per annum (calculated on the principal amount of the Series A Notes on the basis of a 365/366 day year and actual days elapsed) to the maturity date of such Series B Notes in excess of twelve percent (12%) per annum; or (iv) the maturity date specified in the Issuance Request for such Series A Notes extends beyond two hundred seventy (270) days from the respective dates of authentication and issuance of such Series A Notes, or beyond the Sales Tax Expiration Date, or beyond five (5) days prior to the Initial Series Credit Facility Expiration Date, or beyond thirty (30) years from the date of initial issuance of the Series A Notes (as provided in the Tax Certificate); or (v) a Notice of No Issuance or a Notice of Termination, each in such form as is set forth as an annex to the Initial Series Credit Facility, shall have been delivered to the Issuing and Paying Agent by the Initial Series Credit Provider, and such Notice shall not have been withdrawn or revoked by the Initial Series Credit Provider; or (vi) the Issuing and Paying Agent shall have actual knowledge that an Event of Default under the Indenture shall have occurred and is continuing; or (vii) the Issuing and Paying Agent shall have received written notice that the Opinion of Bond Counsel delivered regarding the exclusion of interest on the Series A Notes from the gross income of the Holders thereof for federal income tax purposes has been or is being withdrawn, which notice shall be delivered by such Bond Counsel to the Commission and the Issuing and Paying Agent. 233 5 If the Issuing and Paying Agent is unable to comply with an Issuance Request because of the existence of any of the above conditions, the Issuing and Paying Agent shall immediately notify the Commission, the Series A Dealer and the Trustee in writing of the circumstances prohibiting the issuance of the Series A Notes. (f) Notwithstanding Section 2.01(d) of the Indenture and Section 5(e)(i), in the event a Series A Advance or a Series A Credit Provider Loan is outstanding, the Issuing and Paying Agent may authenticate and deliver a principal amount of Series A Notes which, together with interest to accrue thereon with maturity, would exceed the Stated Amount if, upon receipt of the proceeds of such Series A Notes, the Issuing and Paying Agent shall have sufficient funds immediately available to reimburse the Initial Series Credit Provider for a Series A Advance or a Series A Credit Provider Loan equal to such principal amount and the Issuing and Paying Agent shall have delivered a request for reinstatement in such form as is set forth as an annex to the Initial Series Credit Facility, to the Initial Series Credit Provider in accordance with the provisions set forth in the Initial Series Credit Facility. (g) Notwithstanding any other provision of this Agreement or the Indenture to the contrary, no Series B Notes shall be authenticated or delivered by the Issuing and Paying Agent if: (i) such delivery would result in the aggregate principal amount of Series B Notes Outstanding being in excess of $80,000,000; or (ii) such delivery would result in the aggregate principal amount of Notes Outstanding together with interest to accrue thereon to maturity to be in excess of the Stated Amount under the Initial Series Credit Facility; or (iii) such delivery would result in the delivery of Series B Notes bearing interest at an average rate per annum (calculated on the principal amount of the Series B Notes on the basis of a 365/366 day year and actual days elapsed) to the maturity date of such Series B Notes in excess of twelve percent (12%) per annum; or (iv) the maturity date specified in the Issuance Request for such Series B Notes extends beyond two hundred seventy (270) days from the respective dates of authentication and issuance of such Series B Notes, or beyond the Sales Tax Expiration Date, or beyond five (5) days prior to the Initial Series Credit Facility Expiration Date, or beyond thirty (30) years from the date of initial issuance of the Series B Notes (as provided in the Tax Certificate); or (v) a Notice of No Issuance or a Notice of Termination, each in such form as is set forth as an annex to the Initial Series Credit Facility, shall have been delivered to the Issuing and Paying Agent by the Initial Series Credit Provider, and such Notice shall not have been withdrawn or revoked by the Initial Series Credit Provider; or (vi) the Issuing and Paying Agent shall have actual knowledge that an Event of Default under the Indenture shall have occurred and is continuing; or • 234 6 • • • (vii) the Issuing and Paying Agent shall have received written notice that the Opinion of Bond Counsel delivered regarding the exclusion of interest on the Series B Notes from the gross income of the Holders thereof for federal income tax purposes has been or is being withdrawn, which notice shall be delivered by such Bond Counsel to the Commission and the Issuing and Paying Agent. If the Issuing and Paying Agent is unable to comply with an Issuance Request because of the existence of any of the above conditions, the Issuing and Paying Agent shall immediately notify the Commission, the Series B Dealer and the Trustee in writing of the circumstances prohibiting the issuance of the Series B Notes. (h) Notwithstanding Section 2.01(d) of the Indenture and Section 5(g)(i), in the event a Series B Advance or a Series B Provider Loan is outstanding, the Issuing and Paying Agent may authenticate and deliver a principal amount of Series B Notes which, together with interest to accrue thereon with maturity, would exceed the Stated Amount if, upon receipt of the proceeds of such Series B Notes, the Issuing and Paying Agent shall have sufficient funds immediately available to reimburse the Initial Series Credit Provider for a Series B Advance or a Series B Credit Provider Loan equal to such principal amount and the Issuing and Paying Agent shall have delivered a request for reinstatement in such form as is set forth as an annex to the Initial Series Credit Facility, to the Initial Series Credit Provider in accordance with the provisions set forth in the Initial Series Credit Facility. (i) Notwithstanding any other provision of this Agreement or the Indenture to the contrary, no Notes of any other Series shall be authenticated or delivered by the Issuing and Paying Agent if: (i) such delivery would result in the aggregate principal amount of Notes of such Series Outstanding being in excess of the principal amount authorized pursuant to the Supplemental Indenture authorizing the authentication and delivery of such Series of Notes; or (ii) such delivery would result in the aggregate principal amount of Notes of such Series Outstanding together with interest to accrue thereon to maturity to be in excess of the Stated Amount under the Credit Facility for the payment of such Series of Notes; or (iii) such delivery would result in the delivery of Notes of such Series bearing interest at an average rate per annum (calculated on the principal amount of such Series of Notes on the basis of a 365/366 day year and actual days elapsed) to the maturity date of such Series of Notes in excess of twelve percent (12%) per annum; or (iv) the maturity date specified in the Issuance Request for Notes of such Series extends beyond two hundred seventy (270) days from the respective dates of authentication and issuance of such Series of Notes, or beyond five (5) days prior to the applicable Credit Facility Expiration Date, or beyond the Sales Tax Expiration Date, or beyond thirty (30) years from the date of initial issuance of the Notes of such Series (as 235 7 provided in the Tax Certificate) or beyond the date of expiration of the Commission's Expenditure Plan; or (v) a Notice of No Issuance shall have been delivered to the Issuing and Paying Agent by the Credit Provider for such Series of Notes and such Notice shall not have been withdrawn or revoked by such Credit Provider; or (vi) a Notice of Termination shall have been delivered to the Issuing and Paying Agent by the Credit Provider for such Series of Notes, and such Notice shall not have been withdrawn or revoked by such Credit Provider; or (vii) the Issuing and Paying Agent shall have actual knowledge or shall have received written notice that an Event of Default under the Indenture or under the Credit Agreement shall have occurred and is continuing; or (viii) the Issuing and Paying Agent shall have received notice that the Opinion of Bond Counsel delivered regarding the exclusion of interest on the Notes of such Series from the gross income of the Holders thereof for federal income tax purposes has been or is being withdrawn, which notice shall be delivered by such Bond Counsel to the Commission and the Issuing and Paying Agent. If the Issuing and Paying Agent is unable to comply with an Issuance Request because of the existence of any of the above conditions, the Issuing and Paying Agent shall immediately notify the Commission, the applicable Dealer and the Trustee of the circumstances prohibiting the issuance of the Notes of such Series. (j) Notwithstanding Section 2.01(d) of the Indenture and Section 5(i)(i), in the event an Advance or a Provider Loan is outstanding with respect to any Series of Notes other than the Series A Notes and the Series B Notes, the Issuing and Paying Agent may authenticate and deliver a principal amount of Notes of such Series which, together with interest to accrue thereon to maturity, would exceed the Stated Amount of the applicable Credit Facility if, upon receipt of the proceeds of the Notes of such Series, the Issuing and Paying Agent shall have sufficient funds immediately available to reimburse the applicable Credit Provider for an Advance or a Credit Provider Loan equal to such principal amount and the Issuing and Paying Agent shall have delivered a request for reinstatement in such form as is set forth as an annex to the applicable Credit Facility, to the applicable Credit Provider in accordance with the provisions set forth in the applicable Credit Facility. (k) Notwithstanding any other provision in the Indenture or this Agreement to the contrary, so long as the Series A Master Note and the Series B Master Note are held by DTC, the Issuing and Paying Agent shall deliver the Series A Notes and the Series B Notes in accordance with the terms of the applicable Representation Letter. Section 6. Establishment and Application of Note Funds and Accounts. Concurrently with the execution and delivery of this Agreement and for the purposes of this Agreement, the Indenture and the Initial Series Credit Agreement, the Issuing and Paying Agent shall establish and maintain: (i) a fund designated as the "Series A Note Fund," and within the Series A Note Fund shall establish and maintain the Series A Note Interest Account, the Issuer • • • 236 8 • • • Series A Note Principal Account and the Dealer Series A Note Principal Account, each in accordance with the provisions set forth herein; and (ii) a fund designated as the "Series B Note Fund," and within the Series B Note Fund shall establish and maintain the Series B Note Interest Account, the Issuer Series B Note Principal Account and the Dealer Series B Note Principal Account, each in accordance with the provisions set forth herein. By 2:00 p.m. (New York City time) on the date that any Notes are scheduled to mature, the Issuer agrees that the Issuer shall have provided, or caused to be provided, to the Issuing and Paying Agent, sufficient funds from which to pay the maturing Notes and the interest thereon which shall be paid from the funds provided as set forth in Section 6 and Section 7 of this Agreement. When any matured Note is presented to the Issuing and Paying Agent for payment by the Holder thereof, payment shall be made from funds held pursuant to the provisions set forth in the Indenture and in Section 6 and Section 7 of this Agreement and in accordance with the terms thereof and hereof. (a) On each day on which the Issuing and Paying Agent receives funds from the Trustee or the Issuer with respect to interest due or to become due on Notes of a Series, the Issuing and Paying Agent shall deposit all such amounts in the applicable Note Interest Account. (b) On each day on which the Issuing and Paying Agent receives funds from the Trustee or the Issuer with respect to principal due or to become due on Notes of a Series, the Issuing and Paying Agent shall deposit all such amounts in the applicable Issuer Note Principal Account. (c) On each day on which the Series A Dealer or its agent takes delivery of Series A Notes, the Series A Dealer or its agent shall pay the purchase price for such Series A Notes in immediately available funds to the Issuing and Paying Agent who shall deposit all amounts received from the Series A Dealer with respect to the principal of the Series A Notes in the Dealer Series A Note Principal Account. (d) On each day on which the Series B Dealer or its agent takes delivery of Series B Notes, the Series B Dealer or its agent shall pay the purchase price for such Series B Notes in immediately available funds to the Issuing and Paying Agent who shall deposit all amounts received from the Series B Dealer with respect to the principal of the Series B Notes in the Dealer Series B Note Principal Account. (e) On any date on which Series A Notes are maturing, the Issuing and Paying Agent shall draw on the Initial Series Credit Facility by the times and in accordance with the terms thereof, in amounts sufficient to pay the principal of, and interest on, such Series A Notes when due, solely from moneys drawn under the Initial Series Credit Facility and deposited in the Series A Credit Facility Fund as provided in Section 7 hereof. To the extent that principal of and interest on maturing Series A Notes are paid from amounts drawn under the Initial Series Credit Facility, the Issuing and Paying Agent shall apply amounts on deposit in the Series A Note Interest Account to reimburse the Initial Series Credit Provider for the interest portion of such draw and shall apply amounts on deposit in the Issuer Series A Note Principal Account and the Dealer Series A Note Principal Account, with amounts on deposit in the Dealer Series A Note Principal Account to be applied first, to reimburse the Initial Series Credit Provider for any remaining interest portion of such draw and the principal portion of such draw, each drawing to be reimbursed by 5:00 p.m. (New York City time) on the date of such drawing. In the event that 237 9 amounts held by the Issuing and Paying Agent on deposit in the Series A Note Interest Account are insufficient to reimburse the Initial Series Credit Provider for the interest portion of such draw or that amounts held by the Issuing and Paying Agent on deposit in the Issuer Series A Note Principal Account and the Dealer Series A Note Principal Account are insufficient to reimburse the Initial Series Credit Provider for any remaining interest portion of such draw and the principal portion of such draw, the Issuing and Paying Agent shall immediately notify the Issuer of the additional amount required to reimburse for the interest portion or principal portion of such draw, as applicable, which amounts shall constitute a Series A Advance. To the extent that Series A Advances or Series A Credit Provider Loans are outstanding, the Issuing and Paying Agent shall then apply remaining amounts on deposit in the Series A Note Interest Account to reimburse the Initial Series Credit Provider for the interest portion of such Series A Advances or Series A Credit Provider Loans and shall apply amounts on deposit in the Issuer Series A Note Principal Account and the Dealer Series A Note Principal Account, with amounts on deposit in the Dealer Series A Note Principal Account to be applied first, to reimburse the Initial Series Credit Provider for any remaining interest portion and the principal portion of such Series A Advances or Series A Credit Provider Loans, each payment to be made by 5:00 p.m. (New York City time) on such date. (f) On any date on which Series B Notes are maturing, the Issuing and Paying Agent shall draw on the Initial Series Credit Facility by the times and in accordance with the terms thereof, in amounts sufficient to pay the principal of, and interest on, such Series B Notes when due, solely from moneys drawn under the Initial Series Credit Facility and deposited in the Series B Credit Facility Fund as provided in Section 7 hereof. To the extent that principal of and interest on maturing Series B Notes are paid from amounts drawn under the Initial Series Credit Facility, the Issuing and Paying Agent shall apply amounts on deposit in the Series B Note Interest Account to reimburse the Initial Series Credit Provider for the interest portion of such draw and shall apply amounts on deposit in the Issuer Series B Note Principal Account and the Dealer Series B Note Principal Account, with amounts on deposit in the Dealer Series B Note Principal Account to be applied first, to reimburse the Initial Series Credit Provider for any remaining interest portion of such draw and the principal portion of such draw, each drawing to be reimbursed by 5:00 p.m. (New York City time) on the date of such drawing. In the event that amounts held by the Issuing and Paying Agent on deposit in the Series B Note Interest Account are insufficient to reimburse the Initial Series Credit Provider for the interest portion of such draw or that amounts held by the Issuing and Paying Agent on deposit in the Issuer Series B Note Principal Account and the Dealer Series B Note Principal Account are insufficient to reimburse the Initial Series Credit Provider for any remaining interest portion of such draw and the principal portion of such draw, the Issuing and Paying Agent shall immediately notify the Issuer of the additional amount required to reimburse for the interest portion or principal portion of such draw, as applicable, which amounts shall constitute a Series B Advance. To the extent that Series B Advances or Series B Credit Provider Loans are outstanding, the Issuing and Paying Agent shall then apply remaining amounts on deposit in the Series B Note Interest Account to reimburse the Initial Series Credit Provider for the interest portion of such Series B Advances or Series B Credit Provider Loans and shall apply amounts on deposit in the Issuer Series B Note Principal Account and the Dealer Series B Note Principal Account, with amounts on deposit in the Dealer Series B Note Principal Account to be applied first, to reimburse the Initial Series Credit Provider for any remaining interest portion and the principal portion of such • • • 238 10 • • • Series B Advances or Series B Credit Provider Loans, each payment to be made by 5:00 p.m. (New York City time) on such date. (g) On any date on which Notes of either Series are issued, subsequent to payment of principal of and interest on any maturing Notes, reimbursement of the Initial Series Credit Provider for the draws under the applicable Credit Facility, and payment to the Initial Series Credit Provider for any outstanding Advances and Bank Loans pursuant to the applicable Credit Facility, the Issuing and Paying Agent shall transfer amounts on deposit in the applicable Issuer Note Principal Account, if any, and the applicable Dealer Note Principal Account to the Trustee for deposit in the Proceeds Fund established pursuant to Section 4.01 of the Indenture in connection with such Series of Notes. The Issuing and Paying Agent shall hold the funds in each Note Fund for the benefit of the Holders of the related Series of Notes and the Initial Series Credit Provider, shall set such funds aside exclusively for the purposes hereinabove described, and shall apply such amounts as hereinabove described, provided, that, notwithstanding any other provision hereof, the payment of principal and interest on the Notes shall have priority over the payment of any amounts owing to any Credit Provider. The Issuing and Paying Agent shall not have a lien on either Note Fund for the payment of any fees or expenses or other obligations owing to the Issuing and Paying Agent hereunder. Moneys in each Note Fund shall be invested in Investment Securities at the Written Request of the Issuer in accordance with the provisions set forth in Section 5.08 of the Indenture. [In the absence of any such Written Request, the Issuing and Paying Agent shall invest in investments described in clause (xii) of the definition of Investment Securities.] All moneys held in a Note Fund and the accounts established thereunder shall be invested and reinvested in Investment Securities maturing or available on demand not later than the date on which it is established that such moneys will be required by the Issuing and Paying Agent. The Issuing and Paying Agent may act as a principal or agent in making or disposing of any investment. All interest, profits and other income received from the investment or moneys in a Note Fund shall be retained in the account within the Note Fund to which such investment relates. Section 7. Draws Under the Initial Series Credit Facility; Payment of Principal and Interest; Enforcement . The Issuing and Paying Agent shall draw upon the Initial Series Credit Facility by the times and in accordance with the terms thereof, in amounts sufficient to pay the interest on and principal of the related Series Notes when due solely from moneys drawn under such Credit Facility. (a) Pending application as aforesaid, moneys drawn under the Initial Series Credit Facility in order to pay principal and interest on the Series A Notes when due shall be deposited in a special fund designated as the "Series A Credit Facility Fund," which the Issuing and Paying Agent shall establish and maintain. The Issuing and Paying Agent shall hold the funds in the Series A Credit Facility Fund for the benefit of the Holders of the Series A Notes for which the draw on the Initial Series Credit Facility was made, shall set such funds aside exclusively for the payment of the principal of and interest on the Series A Notes for which the draw on the Initial Series Credit Facility was made, and shall apply such amounts to the payment of such principal 239 11 of and interest on such Series A Notes, upon presentation thereof for payment, in accordance with the terms of this Agreement. The Issuing and Paying Agent shall not have a lien on the Series A Credit Facility Fund for the payment of any fees or expenses or other obligations owing to the Issuing and Paying Agent hereunder. Moneys in the Series A Credit Facility Fund shall be held in cash, uninvested. Any moneys drawn under the Initial Series Credit Facility not needed to pay the interest on and principal of the Series A Notes shall be promptly remitted by the Issuing and Paying Agent to the Initial Series Credit Provider. (b) Pending application as aforesaid, moneys drawn under the Initial Series Credit Facility in order to pay principal and interest on the Series B Notes when due shall be deposited in a special fund designated as the "Series B Credit Facility Fund," which the Issuing and Paying Agent shall establish and maintain. The Issuing and Paying Agent shall hold the funds in the Series B Credit Facility Fund for the benefit of the Holders of the Series B Notes for which the draw on the Initial Series Credit Facility was made, shall set such funds aside exclusively for the payment of the principal of and interest on the Series B Notes for which the draw on the Initial Series Credit Facility was made, and shall apply such amounts to the payment of such principal of and interest on such Series B Notes, upon presentation thereof for payment, in accordance with the terms of this Agreement. The Issuing and Paying Agent shall not have a lien on the Series B Credit Facility Fund for the payment of any fees or expenses or other obligations owing to the Issuing and Paying Agent hereunder. Moneys in the Series B Credit Facility Fund shall be held in cash, uninvested. Any moneys drawn under the Initial Series Credit Facility not needed to pay the interest on and principal of the Series B Notes shall be promptly remitted by the Issuing and Paying Agent to the Initial Series Credit Provider. (c) The Issuer hereby directs the Issuing and Paying Agent to diligently enforce all terms, covenants and conditions of the Initial Series Credit Facility, including payment when due of any draws on the Initial Series Credit Facility, and the provisions thereof relating to the payment of draws on, and the increase or reinstatement of the Stated Amount that may be drawn under, the Initial Series Credit Facility, and to refrain from consenting to or agreeing to or permitting any amendment or modification thereof which would materially adversely affect the rights or security of the Holders of the Notes. If at any time during the term of the Initial Series Credit Facility any successor Issuing and Paying Agent shall be appointed and qualified under this Agreement, the resigning or removed Issuing and Paying Agent shall request that the Initial Series Credit Provider transfer the Initial Series Credit Facility to the successor Issuing and Paying Agent. If the resigning or removed Issuing and Paying Agent fails to make this request, the successor Issuing and Paying Agent shall do so before accepting appointment. When the Initial Series Credit Facility expires in accordance with its terms or is replaced by an Alternate Credit Facility in accordance with terms set forth in Section 6.08 of the Indenture, the Issuing and Paying Agent shall immediately surrender the Initial Series Credit Facility to the Initial Series Credit Provider. (d) In making draws upon the Initial Series Credit Facility, the Issuing and Paying Agent shall be acting as the agent solely of, and for the exclusive benefit of, the Holders of the Notes for which the draw is being made, and shall not be acting as the agent of the Issuer. The Issuer shall not have any right, title, or interest in or to the Series A Credit Facility Fund, the funds therein, the Series B Credit Facility Fund, the funds therein, or funds derived from a draw under the Initial Series Credit Facility. • 240 12 • • • Section 8. Payment of Matured Notes. By 3:00 p.m. New York City time on the date that any Notes are scheduled to mature, the Issuing and Paying Agent shall have received sufficient funds from drawings on the Initial Series Credit Facility to pay the maturing Notes and the interest thereon which shall be paid from the funds provided pursuant to Section 6 and Section 7 hereof When any matured Note is presented to the Issuing and Paying Agent for payment by the Holder thereof, payment shall be made from funds held pursuant to the provisions set forth in Section 6 and Section 7 hereof. Section 9. Reliance on Instructions. The Issuing and Paying Agent shall incur no liability to the Commission in acting hereunder upon the instructions received via such means as are contemplated hereby, which are consistent with this Agreement and which the recipient thereof believed in good faith to have been given by an Authorized Representative. In the event a discrepancy exists between any telephonic instructions given by the Commission and the written confirmation given by the Commission, or in the absence of receiving a written confirmation, the telephonic instructions as recorded and understood by the Issuing and Paying Agent will be deemed the controlling and proper instructions. It is understood that all telephonic instructions will be recorded by the Issuing and Paying Agent, and the Commission hereby consents to such recording. Section 10. Cancellation of Notes. The Issuing and Paying Agent agrees promptly to cancel the Note(s) presented for payment and return such Notes to the Commission, or the Issuing and Paying Agent may, in its sole discretion, in lieu of such cancellation and delivery, destroy such Notes and deliver a certificate evidencing such destruction to the Commission. Promptly upon receipt of a written request of the Commission, the Issuing and Paying Agent agrees to cancel and return to the Commission all unissued Notes in the possession of the Issuing and Paying Agent at the time of such request. Section 11. Representations and Warranties of the Commission. Each Issuance Request given to the Issuing and Paying Agent in accordance with Section 5 hereof shall constitute a representation and warranty by the Commission to the Issuing and Paying Agent and the Dealers to the effect that the representations and warranties set out in Section 3.01 of the Indenture are true and correct as of the date of such Issuance Request as if such representations and warranties were made on such date. Section 12. Compliance with Indenture. The Issuing and Paying Agent hereby agrees to accept, undertake and perform all of the duties and obligations set forth and imposed upon the Issuing and Paying Agent hereunder and under the Indenture and, in addition, the Issuing and Paying Agent agrees: (a) to hold all sums held by the Issuing and Paying Agent for the payment of the principal of or interest on the Notes in trust for the benefit of the Holders of the Notes until such sums shall be paid to such Holders or otherwise disposed of as provided herein and in the Indenture, including, without limitation, as provided in Sections 5.02 and 10.04 of the Indenture; (b) to hold all sums held by the Issuing and Paying Agent uninvested in accordance with the provisions set forth in Section 6 and Section 7 hereof; 241 13 (c) to comply with all provisions in each Letter of Representations; (d) to provide to each Credit Provider a monthly report, due on the fifth Business Day of each month, which report shall set forth such information regarding the authentication and delivery of Notes during the prior month, as each Credit Provider and the Issuing and Paying Agent shall have agreed upon; and (e) to keep such books and records, including, without limitation a complete record of all Issuance Requests, as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Commission, the Trustee and each Credit Provider, such books and records to be available on each Business Day during reasonable business hours and, if so requested, to send copies of such books and records to the Commission, the Trustee, or each Credit Provider, as applicable. Section 13. Notices; Addresses. (a) All communications by or on behalf of the Commission or a Dealer, by telephone or otherwise, relating to the completion, delivery or payment of the Note(s) are to be directed to the Commercial Paper Operations of the Issuing and Paying Agent (or to such other department or division which the Issuing and Paying Agent shall specify in writing to the Commission and each Dealer). The Commission agrees to send all Notes to be completed and delivered by the Issuing and Paying Agent to the attention of Commercial Paper Operations (or to such other department or division as the Issuing and Paying Agent shall specify in writing to the Commission). The Issuing and Paying Agent agrees to advise the Commission, each Credit Provider and each Dealer from time to time of the individuals generally responsible for the administration of this Agreement and agrees from time to time to certify incumbency and specimen signatures of officers or employees authorized to countersign the Notes and agrees to supply a list of employees authorized to receive telephone instructions. (b) Notices and other communications to be given hereunder shall (except to the extent otherwise expressly provided) be given in writing and shall be addressed as set forth below (or to such other address as the party receiving such notice shall have previously specified in writing, by notice given hereunder, to the party sending such notice): Commission: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Executive Director Phone: (951) 787-7141 Fax: (951) 787-7920 • • • 242 14 • • • Issuing and Paying Agent: U.S. Bank Trust National Association Attention: Phone: ( ) Fax: ( ) With a copy to: Attention: Phone: ( ) Fax: ( ) Trustee: U.S. Bank Trust National Association Attention: Phone: ( ) Fax: ( ) With a copy to: Attention: Phone: ( ) Fax: ( ) Initial Series Credit Provider, with respect to credit matters: Bank of America N.A. 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703 -19-23 Los Angeles, CA 90017-1466 Attention: Standby Letter of Credit Deposit Fund Phone: (213) 345-5231 Fax: (213) 345-0265 243 15 Initial Series Credit Provider, with respect to operations/money transfer issues: Bank of America N.A. 333 South Hope Street, 13th Floor Mailcode: CA9-703-19-23 Los Angeles, CA 90071 Attention: Credit Products, California Government & Institutional Banking Phone: (213) 621-7142 Fax: (213) 621-3607 Initial Series Dealers: Lehman Brothers 745 7th Avenue, 3rd Floor New York, NY 10019 Attention: Short -Term Desk Phone: (212) 528-1011 Fax: (646) 758-1904 Banc of America Securities LLC Attention: Phone:( ) Fax: ( ) Notices shall be deemed delivered when received at the address specified above. For purposes of this Section 13, "when received" shall mean actual receipt (x) of an electronic communication by a telex machine or telecopier; (y) of an oral communication by any person answering the telephone at the office of the Issuing and Paying Agent specified in Section 13(b) hereof and otherwise at the office of the individual or department specified in or pursuant to this Agreement; or (z) of a written communication hand delivered at the office specified in or pursuant to this Agreement, provided that any notices to any Credit Provider other than the Initial Series Credit Provider shall be made in accordance with the Credit Agreement entered into by the Commission with such Credit Provider. Section 14. Additional Information. Upon the reasonable request of the Commission, the Trustee, a Dealer or a Credit Provider, as applicable, given at any time and from time to time, the Issuing and Paying Agent agrees promptly to provide the Commission, the Trustee or such Credit Provider, as applicable, with information with respect to the Note(s) issued and paid hereunder. Such request shall be in written form and shall include the principal amount, date of issue, maturity date, interest rate and amount of interest of each Note which has been issued or paid by the Issuing and Paying Agent and for which the request is being made. The Issuing and Paying Agent and the Commission shall discuss from time to time the extent to which such information is reasonably available and the times at which the Issuing and Paying Agent can reasonably furnish such information. • 244 16 • • • Section 15. Amendments. This Agreement may be modified or amended from time to time and at any time, provided that such modification or amendment is in writing, is executed by the Commission and the Issuing and Paying Agent, and is approved in writing by each Credit Provider, and provided further that no modification or amendment shall materially and adversely affect the rights of the Holders of Notes Outstanding on the effective date of such amendment. Section 16. Termination. This Agreement may be terminated at any time by either the Commission or the Issuing and Paying Agent on the same terms and conditions as are provided for removal or resignation of the Trustee under the Indenture, which terms and conditions are set forth in Article VIII of the Indenture. No termination of this Agreement may take effect prior to: (i) the appointment by the Commission of a successor issuing and paying agent; and (ii) the assumption by such successor of the duties of the Issuing and Paying Agent under this Agreement and the Indenture; and (iii) the transfer of the Initial Series Credit Facility to such successor. Section 17. Successor in Interest to Issuing and Paying Agent. Any company into which the Issuing and Paying Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Issuing and Paying Agent may sell or transfer all or substantially all of its issuing and paying agent business, provided such company shall meet the requirements contained in Section 6.08 of the Indenture, shall be the successor to such Issuing and Paying Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. Section 18. Compensation. The Commission and the Issuing and Paying Agent agree that the fees for the services of the Issuing and Paying Agent hereunder shall be determined in accordance with Schedule A attached hereto. The Commission and the Issuing and Paying Agent agree that such fees may be amended from time to time by the Commission and the Issuing and Paying Agent in writing. Section 19. Liability and Indemnity. The Issuing and Paying Agent shall be entitled to the same rights, privileges, indemnities and obligations as the Trustee is entitled to pursuant to the Indenture, which rights, privileges and indemnities are set forth in Article VIII of the Indenture; provided, however, that notwithstanding any provision of the Indenture or this Agreement to the contrary, no indemnity shall be requested or required for the Issuing and Paying Agent to take the action necessary to obtain funds under the Initial Series Credit Facility for payment of the interest on and principal of the Notes when due. Section 20. Limited Obligation of the Issuer. The Issuer shall not be required to pay the principal of or interest on the Notes or any other amounts payable under or with respect to this Agreement from any source other than Sales Tax Revenues to the extent set forth in the Indenture. Section 21. Benefit of Agreement. This Agreement is solely for the benefit of the parties hereto, each Credit Provider and the Holders, and no other person shall acquire or have any right under or by virtue hereof. 245 17 Section 22. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Commission or the Issuing and Paying Agent shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or of the Notes, and the Holders and each Credit Provider shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law. The Commission and the Issuing and Paying Agent hereby declare that they would have executed and delivered this Agreement and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Notes pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 23. Section Headings and References. The headings or titles of the several sections hereof and the table of contents appended hereto are solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to "Sections" and other subdivisions or clauses are to the corresponding sections, subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular section, subdivision or clause hereof. Section 24. Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute the same instrument. Section 25. Governing Law. This Agreement is to delivered and performed in, and shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California; provided, however, to the extent not prohibited by the laws of the State of California, the rights and duties of the Issuing and Paying Agent shall be governed by and construed in accordance with the laws of the State of New York. • 246 18 • • • IN WITNESS WHEREOF, the Riverside County Transportation Commission and U.S. Bank Trust National Association have caused this Agreement to be executed in their respective names by their duly authorized representatives all as of the date and year first above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director (Seal) ATTEST: Clerk of the Board Riverside County Transportation Commission Approved as to form: General Counsel to the Riverside County Transportation Commission U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: Authorized Officer 247 19 • • • SCHEDULE A FEES OF THE ISSUING AND PAYING AGENT [See attached page.] 248 A-1 ATTACHMENT 7 • • • SAB&W Draft of 1/27/05 REIMBURSEMENT AGREEMENT Dated as of March 1, 2005 by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and BANK OF AMERICA, N.A. Relating to $[MAXIMUM PRINCIPAL AMOUNT] Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) • • TABLE OF CONTENTS Page SECTION 1. DEFINITIONS 1 1.1. Defined Terms. 1 1.2. Use of Defined Terms. 8 1.3. Rules of Construction. 8 SECTION 2. TERMS OF THE LETTER OF CREDIT 9 2.1. Issuance of Letter of Credit; Substitution or Termination of Letter of Credit 9 2.2. Advances under the Letter of Credit. 9 2.3. Interest on Advances. 9 2.4. Repayment of Advances; Letter of Credit Fees; and Other Payments. 10 2.5. Liability of Bank. 12 2.6. Obligations Absolute. 13 2.7. Increased Costs. 13 2.8. Taxes. 15 2.9. Payment on Non -Business Days. 16 2.10. Book Entries 17 2.11. Term of Agreement 17 2.12. Extension of Stated Expiration Date; Increase in Stated Amount; Reduction in Stated Amount; Increase in Stated Amount. 17 2.13. Revolving Note. 18 SECTION 3. CONDITIONS 18 3.1. Conditions Precedent to Issuance of the Letter of Credit. 18 SECTION 4. REPRESENTATIONS AND WARRANTIES 20 SECTION 5. SECURITY 23 5.1. Pledge of Available Revenues and Funds. 23 5.2. Additional Lien. 24 5.3. Nature of the Obligations 24 SECTION 6. COVENANTS OF THE OBLIGOR 25 6.1. Affirmative Covenants 25 6.2. Negative Covenants. 29 SECTION 7. EVENTS OF DEFAULT 31 SECTION 8. MISCELLANEOUS 34 8.1. Amendments, Etc.. 34 8.2. Addresses for Notices; Payments to the Bank. 34 8.3. No Waiver; Remedies. 35 8.4. Indemnification. 35 8.5. Survival of this Agreement. 36 i 250 8.6. Fees and Expenses. 36 8.7. Severability. 37 8.8. Governing Law; Other Matters. 37 8.9. Participants 37 8.10. Counterparts. 37 8.11. Certificates, Etc.. 37 8.12. Headings 37 8.13. Integration. 37 8.14. Waiver of Jury Trial. 37 8.15. Waiver of Rules of Construction 38 8.16. Successors and Assigns 38 EXHIBIT A — FORM OF IRREVOCABLE DIRECT DRAW LETTER OF CREDIT A-1 EXHIBIT B — FORM OF REVOLVING NOTE B-1 11 • 251 • • • REIMBURSEMENT AGREEMENT REIMBURSEMENT AGREEMENT, dated as of March 1, 2005, by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity organized and existing under the laws of the State of California (the "Obligor"), and BANK OF AMERICA, N.A., a national banking association organized under the laws of the Unites States of America (together with its successors and assigns, the "Bank"). PRELIMINARY STATEMENT A. The Obligor proposes to issue its Commercial Paper Notes (Limited Tax Bonds) Series A (the "Series A Notes") and its Commercial Paper Notes (Limited Tax Bonds) Series B (the "Series B Notes" and together with the Series A Notes, the "Notes") pursuant to Resolution No. 05-001 of the Obligor adopted on , 2005 (the "Resolution") and pursuant to Section 240309 of the California Public Utilities Code (the "Utilities Code"), the Indenture, dated as of March 1, 2005 (the "Indenture"), between the Commission and U.S. Bank National Association, as trustee (the "Trustee"), Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance" (the "Ordinance") adopted by the Obligor on May 8, 2002, pursuant to the provisions of the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Sections 240000 et seq.) (the "Act"), which Ordinance provides for the imposition of a retail transactions and use tax applicable in the incorporated and unincorporated territory of the County of Riverside (the "County") in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code (the "Sales Tax Law") at the rate of zero percent (0%) until the expiration of the 1988 Sales Tax (as hereinafter defined), and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed thirty (30) years. B. In order to assure timely payment of the principal and interest with respect to the Notes in accordance with their terms, the Obligor has requested that the Bank issue an irrevocable direct draw letter of credit for the Notes, in substantially the form of Exhibit A hereto (together with any amendments or supplements thereto, the "Letter of Credit"). The Bank is prepared to issue the Letter of Credit pursuant to and upon the terms and conditions stated in this Agreement. C. All obligations of the Obligor arising hereunder or as reimbursement to the Bank for payments made by the Bank under the Letter of Credit plus interest thereon at the rate specified herein (the "Reimbursement Obligations") and to pay all other amounts payable to the Bank under this Agreement (the "Payment Obligations," the Payment Obligations and the Reimbursement Obligations being hereinafter collectively referred to as the "Obligations") are created under and will be evidenced by this Agreement. SECTION 1. DEFINITIONS 1.1. Defined Terms. In addition to terms defined elsewhere in this Agreement, as used herein the following terms shall have the following meanings, unless the context otherwise 252 1 requires and such meanings shall be equally applicable to both singular and plural forms of the terms herein defined: "Act" shall have the meaning set forth in the Preliminary Statement hereof. "Additional Commercial Paper" shall mean any commercial paper (whether taxable or tax-exempt) issued pursuant to any supplement to the Indenture adopted in accordance with the Indenture, in addition to the Notes supported by the Letter of Credit on the Date of Issuance. "Advance" shall mean a drawing under the Letter of Credit in accordance with its terms to pay the principal of and interest on the Notes. "Agreement" shall mean this Reimbursement Agreement, as the same may from time to time be amended, supplemented or otherwise modified in accordance with its terms. "Alternate Credit Facility" shall mean a letter of credit or liquidity facility delivered by a financial institution other than the Bank in substitution for the Letter of Credit in accordance with Section 2.1(c) hereof. "Annual Payment Date" shall mean each "Authorized Representative" shall mean any person at the time designated to act on behalf of the Obligor, the Issuing and Paying Agent or either Dealer, as the case may be, for purposes of this Agreement by written certificate furnished to the Bank containing the specimen signature of such person. "Available Revenues" shall mean the Revenues remaining after payment to or deposit with a Senior Lien Trustee of such amount of Revenues as is required to be paid or deposited into funds or accounts pursuant to the terms of one or more Senior Lien Bond Indentures in connection with any obligations of the Obligor payable from Revenues under the terms of such Senior Lien Bond Indentures. "Bond Counsel" shall mean Orrick Herrington & Sutcliffe LLP or any other firm of recognized bond counsel familiar with the transactions contemplated under the Indenture and acceptable to the Obligor. "Business Day" shall mean, for so long as The Depository Trust Company ("DTC") shall be the depository for the Notes, any day on which DTC is scheduled to be open for money market instrument settlement services, and is other than: (i) a Saturday, Sunday or day upon which banking institutions in the State or the State of New York are authorized or obligated by law or executive order to be closed; (ii) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed; and (iii) for purposes of payments and other actions relating to a Notes, a day upon which commercial banks are authorized or obligated by law or executive order to be closed in the city in which demands for payment are to be presented pursuant to the Letter of Credit. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and all promulgated and temporary regulations thereunder. 2 e 253 • • • "Commitment Fee" shall have the meaning set forth therefor in Section 2.4(b) hereof. "County" shall mean the County of Riverside, California. "Credit Facility Fund" shall have the meaning set forth therefor in the Indenture. "Date of Issuance" shall mean the date on which the Bank delivers the initial Letter of Credit to the Issuing and Paying Agent. "Dealers" shall mean Lehman Brothers Inc. or any nationally recognized successor commercial paper dealer under the Series A Dealer Agreement or its substitute or successor in interest acting under the Series A Dealer Agreement and Banc of America Securities LLC or any nationally recognized successor commercial paper dealer under the Series B Dealer Agreement or its substitute or successor in interest acting under the Series B Dealer Agreement. "Debt" of any Person §hall mean at any date, without duplication, (i) all obligations of such Person for borrowed money and reimbursement obligations which are not contingent, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar debt instruments, (iii) obligations of such Person to pay the deferred purchase price of property or services which purchase price is due twelve months or more from the date of incurrence of the obligation in respect thereof and all obligations of such Person as lessee under financing leases, (iv) all Debt of others Guaranteed by such Person, and (v) all payment obligations of such Person, in addition to any obligations set forth in clauses (i) through (iv) above, arising under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate futures contract, interest rate option contract or other similar arrangement and under any foreign exchange contract, currency swap agreement, foreign exchange futures contract, foreign exchange option contract, synthetic cap or other similar agreement; provided that it is understood that Debt does not include contingent obligations of such Person to reimburse any other Person in respect of surety bonds or letters of credit to the extent that such surety bonds or letters of credit support Debt of such Person or payment obligations of such Person due in the future under any of the agreements described in clause (v) above which are not known with certainty. "Decrease Date" means each Decrease Date set forth in a Notice of Decrease in Stated Amount. "Default Rate" shall mean a rate of interest equal to the Federal Funds Rate plus 5.00% per annum. "Event of Default" shall mean any event specified in Section 7 of this Agreement. "Financing Documents" shall mean, collectively, this Agreement, the Revolving Note, the Resolution, the Indenture, the Notes, the Letter of Credit, the Issuing and Paying Agent Agreement, the Series A Dealer Agreement and the Series B Dealer Agreement. "Fiscal Year" shall have the meaning assigned thereto in the Indenture. "Fitch" shall mean Fitch Ratings, New York, New York. 3 254 "GAAP" shall mean generally accepted accounting principles in the United States of America from time to time as set forth in (a) the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and (b) statements and pronouncements of the Financial Accounting Standards Board, as modified by the opinions, statements and pronouncements of any similar accounting body of comparable standing having authority over accounting by governmental entities. "Guarantee" by any Person shall mean any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep -well, to purchase assets, securities, to take -or -pay, or to maintain financial statement conditions or otherwise), (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (iii) with respect to any letter of credit issued for the account of such other Person or as to which such other Person is otherwise liable for reimbursement of drawings, provided that the term Guarantee shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) performance or completion guarantees. The term "Guarantee" used as a verb has a corresponding meaning. "Increase Date" means each Increase Date set forth in a Notice of Increase in Stated Amount. "Investment Securities" shall have the meaning set forth thereto in the Indenture. "Issuing and Paying Agent" shall mean U.S. Bank Trust National Association, or its successor in interest acting under the Issuing and Paying Agent Agreement. "Issuing and Paying Agent Agreement" shall mean the Issuing and Paying Agent Agreement entered into by the Obligor with the Issuing and Paying Agent pursuant to the Indenture, as such Agreement may be amended, supplemented or otherwise modified from time to time or any issuing and paying agent agreement with a substitute or successor issuing and paying agent. "Law" shall mean the Act, the Utilities Code, the Sales Tax Law and the Ordinance, each as now in effect and as it may from time to time hereafter be amended or supplemented. "Letter of Credit" shall mean the irrevocable direct draw letter of credit to be issued by the Bank pursuant hereto for the account of the Obligor in favor of the Issuing and Paying Agent, as beneficiary, which shall be in substantially the form of Exhibit A to this Agreement. "Letter of Credit Expiration Date" shall mean the earlier of (i) the Stated Expiration Date and (ii) the date on which the Letter of Credit otherwise terminates in accordance with its terms. "Letter of Credit Fees" shall have the meaning set forth therefor in Section 2.4(b) hereof. 4 • • • 255 • • • "Lien" shall mean, with respect to any asset, (i) any lien, charge, claim, mortgage, security interest, pledge or assignment of revenues of any kind in respect of such asset or (ii) the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Liquidity Period" shall mean the period of time from and after an Advance under the Letter of Credit, to and including the later of (i) the date thirty (30) days from the date of such Advance and (ii) June 30, 2009. "Liquidity Rate" shall have the meaning set forth therefor in Section 2.3 hereof. "Maturity Date" shall mean the maturity date of any Term Loan, which date shall be the earlier of (i) the date which is five (5) years from the date of the Advance converted to such Term Loan and (ii) the Sales Tax Expiration Date. "Maximum Interest Rate" shall mean 12% per annum. "Moody's" shall mean Moody's Investors Service, Inc., New York, New York. "Note Fund" shall have the meaning set forth thereto in the Indenture. "Notes" shall have the meaning set forth in the Preliminary Statement hereof. "Notice of Decrease in Stated Amount" means a notice from the Bank to the Issuing and Paying Agent in the form of Annex L to the Letter of Credit. "Notice of Increase in Stated Amount" means a notice from the Bank to the Issuing and Paying Agent in the form of Annex K to the Letter of Credit. "Notice of No Issuance" shall mean a Notice of No Issuance in substantially the form of the certificate attached to the Letter of Credit as Annex F. "Obligor" shall mean the Riverside County Transportation Commission, a public entity organized under the laws of the State, and its permitted successors and assigns. "Obligations" shall have the meaning set forth in the Preliminary Statement hereof "Offering Memorandum" shall mean the Offering Memorandum of the Obligor relating to the Notes, including any supplement or amendment thereto. "Ordinance" shall have the meaning set forth in the Preliminary Statement hereof. "Other Taxes" shall have the meaning set forth in Section 2.8 hereof. "Parity Debt" shall mean the Notes, the Obligations and any Sales Tax Debt payable from and secured by Available Revenues on a parity basis with the Notes. 5 256 "Parity Annual Debt Service" shall mean, for any Fiscal Year, total principal becoming due in such period and total interest expenses (including that portion attributable to capital leases) of the Obligor in respect of all outstanding Notes and any other Parity Debt. "Participant" shall mean any Person participating in the Letter of Credit, the Revolving Note and/or this Agreement. "Participation Agreement" shall mean any Participation Agreement, between the Bank and the other Person purchasing a Participation and named therein. "Payment Obligations" shall have the meaning set forth in the Preliminary Statement hereof. "Payment Office" shall mean the office of the Bank located at the address set forth in Section 8.2 hereof or such other office as the Bank may from time to time designate. "Person" shall mean an individual, a corporation, a partnership, an association, a trust, a government, a political subdivision, a governmental agency or instrumentality or any other entity or organization. "Proceeds Fund" shall have the meaning set forth therefor in the Indenture. "Project" shall have the meaning set forth therefor in the Indenture. "Rating Agency" shall mean Moody's or S&P or Fitch and their successors and assigns; provided, however, that if any action or consent is required or referred to as coming from only one Rating Agency, "Rating Agency" shall mean either Moody's or S&P. "Reimbursement Obligations" shall have the meaning set forth in the Preliminary Statement hereof. "Request for Decrease in Stated Amount" means a notice from the Obligor to the Bank substantially in the form of Annex J to the Letter of Credit. "Request for Extension" means a notice from the Obligor to the Bank substantially in the form of Annex M to the Letter of Credit. "Request for Increase in Stated Amount" means a notice from the Obligor to the Bank substantially in the form of Annex I to the Letter of Credit. "Resolution" shall have the meaning set forth in the Preliminary Statement hereof. "Revenues" shall have the meaning set forth thereto in the Indenture. "Revolving Note" means the Obligor's revolving note, substantially in the form of Exhibit B attached hereto, issued to the Bank pursuant to Section 2.13 hereof, to evidence the indebtedness of the Obligor due and owing to the Bank under this Agreement with respect to amounts drawn on the Letter of Credit. 6 • 257 • • • "Sales Tax" shall have the meaning set forth thereto in the Indenture. "Sales Tax Debt" shall have the meaning set forth thereto in the Indenture. "Sales Tax Expiration Date" shall mean March 31, 2039 or such earlier date which the Sales Tax Law may be terminated or repealed. "Sales Tax Law" shall have the meaning set forth in the Preliminary Statement hereof. "Sales Tax Revenues" shall have the meaning set forth thereto in the Indenture. "Senior Lien Bond Indenture" shall mean an indenture or indentures entered into after the date of the Indenture between the Obligor and a Senior Lien Trustee, as amended by any Supplemental Indenture, providing for the issuance of bonds or other obligations of the Obligor payable from Revenues on a senior priority to the obligation of the Obligor to pay the Notes issued hereunder. "Senior Lien Bonds" shall mean any unpaid bonds issued and outstanding pursuant to a Senior Lien Bond Indenture, and any reserve fund surety bonds or other reserve facilities issued on behalf of or entered into by the Obligor in connection therewith. "Senior Lien Obligations" shall mean collectively any Senior Lien Bonds and any obligations of the Obligor on a parity therewith. "Senior Lien Trustee" shall mean a trustee or other fiduciary under any Senior Lien Bond Indenture. "Series A Dealer Agreement" shall mean the agreement between the Lehman Brothers Inc. and the Obligor relating to the sale of the Series A Notes, as it may be amended supplemented or otherwise modified from time to time or any dealer agreement with a substitute or successor dealer relating to the Series A Notes. "Series A Notes" shall have the meaning set forth in the Preliminary Statement hereof. "Series B Dealer Agreement" shall mean the agreement between the Banc of America Securities LLC and the Obligor relating to the sale of the Series B Notes, as it may be amended supplemented or otherwise modified from time to time or any dealer agreement with a substitute or successor dealer relating to the Series B Notes. hereof. "Series B Notes" shall have the meaning set forth in the Preliminary Statement hereof. "State" shall mean the State of California. "Stated Amount" shall have the meaning set forth therefor in Section 2.1(a) hereof. "Stated Expiration Date" shall have the meaning set forth therefor in Section 2.1(a) "Supplemental Indenture" shall have the meaning set forth thereto in the Indenture. 7 258 "S&P" shall mean Standard & Poor's Ratings Service, a division of McGraw-Hill, Inc., a New York corporation. "Taxes" shall have the meaning set forth in Section 2.8 hereof. "Term Loan" shall have the meaning set forth in Section 2.4 hereof. "Term Loan Rate" shall have the meaning set forth in clause (C) of Section 2.3 hereof. "Term -Out Date" shall have the meaning set forth in Section 2.4 hereof. "Trustee" shall have the meaning set forth in the Preliminary Statement hereof. "Utilities Code" shall have the meaning set forth in the Preliminary Statement hereof. "Unutilized Amount" means an amount equal to (a) $[MAXIMUM PRINCIPAL AMOUNT], minus (b) the sum of (i) the Stated Amount of the Letter of Credit determined (x) without regard to reductions in such Stated Amount subject to automatic reinstatement as provided in the Letter of Credit, but (y) after giving effect to any reductions in the Stated Amount of the Letter of Credit as contemplated by Annex L to the Letter of Credit and any increases in the Stated Amount of the Letter of Credit as contemplated by Annex K to the Letter of Credit, plus (ii) the amount of all drawings for which the Bank has not been reimbursed to the extent that the Stated Amount of the Letter of Credit will not be automatically reinstated upon the Bank's reimbursement for such drawing. 1.2. Use of Defined Terms. Terms defined in this Agreement shall have their defined meanings when used in any document, certificate, report or agreement furnished from time to time in connection with this Agreement unless the context otherwise requires. 1.3. Rules of Construction. When used in this Agreement: (i) the singular includes the plural and the plural includes the singular; (ii) "or" is not exclusive; (iii) a reference to a law includes any amendment or modification to such law; (iv) a reference to a person includes its permitted successors and permitted assigns; (v) a reference to an agreement, instrument, document, regulation, law, statute or act shall include such agreement, instrument, document, regulation, law, statute or act as the same may be amended, modified or supplemented from time to time in accordance, if an agreement, instrument or document, with its terms and as permitted hereby; and (vi) all references to time shall mean New York City time, unless otherwise specified. 8 • 259 • • • SECTION 2. TERMS OF THE LETTER OF CREDIT 2.1. Issuance of Letter of Credit; Substitution or Termination of Letter of Credit. (a) The Bank hereby agrees, on the terms and subject to the conditions hereinafter set forth, to issue to the Issuing and Paying Agent its Letter of Credit (substantially in the form of Exhibit A hereto), dated the Date of Issuance and completed in accordance with such form and the terms of this Section 2.1(a). The Stated Amount of the Letter of Credit on the Date of Issuance shall be $[STATED AMOUNT]. The Stated Amount may be from time to time reduced and/or reinstated in accordance with the terms of the Letter of Credit. The Bank will use only its own funds in honoring an Advance on the Letter of Credit. Unless otherwise terminated in accordance with its terms, the Letter of Credit shall expire on [EXPIRATION DATE], 2010 (the "Stated Expiration Date") as such date may be extended pursuant to Section 2.12(a) hereof. (b) Promptly following the appointment and qualification of any successor Issuing and Paying Agent, the Bank shall deliver to such successor Issuing and Paying Agent, against receipt of the Letter of Credit held by the predecessor Issuing and Paying Agent and payment of the fee set forth in Section 2.4(b)(iii) hereof, a substitute Letter of Credit substantially in the form of Exhibit A hereto, dated the date of issuance thereof and in favor of such successor Issuing and Paying Agent, but otherwise having terms substantially identical to the Letter of Credit theretofore outstanding. (c) The Obligor may at any time and at its option terminate the Letter of Credit. The Obligor hereby agrees to give the Bank 30 days' prior written notice of any such termination. Notwithstanding any such termination, so long as any obligations owing hereunder remain unpaid, this Agreement shall remain in full force and effect. 2.2. Advances under the Letter of Credit. All Advances to be made under the Letter of Credit shall be made by hand delivery or by telecopy, with an original to follow by mail, in the form of Annex A to the Letter of Credit, accompanied by a sight draft in the form of Annex H to the Letter of Credit, addressed to the Bank and submitted by the Issuing and Paying Agent at the time and place specified in the Letter of Credit, and no further presentation of documentation, including the original Letter of Credit, need be made; it being understood that the telecopy shall, in all events, be considered to be the sole operative instrument of drawing. The Bank may rely upon any such telecopy drawing which it, in good faith, believes to have been dispatched by the Issuing and Paying Agent or its authorized agent. 2.3. Interest on Advances. (a) So long as no Event of Default has occurred and is continuing, all Advances under the Letter of Credit not reimbursed on the Advance Date shall bear interest (computed on the basis of a 360 -day year and actual days elapsed) payable in arrears on the last day of the Liquidity Period at a rate per annum equal to (the "Liquidity Rate"): (A) from and including the Advance Date to and including the date 30 days from the Advance Date, the Federal Funds Rate plus 1.00%; and (B) from and including the date 31 days from the Advance Date to and including the last day of the Liquidity Period, the Federal Funds Rate plus 3.00%. 9 260 (b) All Term Loans shall bear interest at the Federal Funds Rate plus 4.00% (the "Term Loan Rate"). (c) Upon the occurrence of any Event of Default, the Obligor shall pay interest on all Obligations, including all outstanding Advances and any Term Loans, at the Default Rate. If the Obligor shall fail to pay any amount due and payable hereunder, each such unpaid amount shall bear interest for each day from and including the date it was so due until paid in full at a rate per annum equal to the Default Rate (computed on the basis of a year of a 360 -day year and actual days elapsed). Any amount of interest accruing hereunder at the Default Rate shall accrue each day and shall be payable on demand. (d) Notwithstanding anything herein or in the other Financing Documents to the contrary, to the extent permitted by law, if at any time the rate per annum payable hereunder exceeds any applicable statutory or constitutional interest rate limitation or restriction and the Bank shall not receive payment at such rate (such amount of interest not received by the Bank on the date due being herein referred to as the "Clawback Amount"), any subsequent reduction in such rate shall not reduce the rate of interest utilized for the calculation of amounts payable to the Bank under this Section 2.3 hereof until the total Clawback Amount has been paid to the Bank; provided, however, that if such Clawback Amount due to the Bank has not been paid to the Bank on or prior to the Expiration Date, such amounts due shall, to the extent permitted by law, convert to a termination fee due and payable on the Expiration Date; and provided, further, that any Clawback Amount shall, to the extent permitted by law, bear interest at the Term Loan Rate until paid in full. 2.4. Repayment of Advances; Letter of Credit Fees; and Other Payments. The Obligor agrees to reimburse the Bank, at the times, in the manner and otherwise in accordance with the terms of this Agreement, for any payment made under the Letter of Credit honoring a demand for payment made by the Issuing and Paying Agent thereunder and to pay all other amounts specified herein, together with interest thereon, pursuant to the terms hereof. (a) Repayment of Advances. Upon the making of an Advance, the Bank will be subrogated to the extent permissible by law to the rights of the Holders of the Notes to which an Advance related. The Obligor shall pay or cause to be paid to the Bank, by 5:00 p.m., New York City time, on the Advance Date the full amount of such Advance. Any payment received after 5:00 p.m., New York City time, shall be deemed received as of the next Business Day. Notwithstanding the above, so long as no Event Default has occurred and is continuing, any Advance made on an Advance Date may remain outstanding and unpaid during the Liquidity Period and, thereafter, may be converted to a term loan (a "Term Loan"), provided all conditions set forth in Section 2.4(e) below shall have been met. (b) Letter of Credit Fees. The Obligor hereby agrees to pay or cause to be paid to the Bank (from proceeds of the Notes or from Available Revenues) the following as nonrefundable letter of credit fees (collectively, the "Letter of Credit Fees"): (i) A fee (the "Commitment Fee") commencing with and including the Date of Issuance and ending on and including the Letter of Credit Expiration Date, equal to 0.21% per annum on the daily average Stated Amount in effect from time to time, plus 10 • 261 • • • 0.16% per annum on the daily average Unutilized Amount in effect from time to time, payable quarterly in arrears commencing June 1, 2005 and thereafter on the first Business Day of each [March, June, September and December] with final payment due on the Letter of Credit Expiration Date; provided, however, that in the event that any of S&P, Moody's or Fitch reduces to or maintains a long-term unenhanced rating on any Sales Tax Debt of the Obligor of A, A2 or A, respectively, such Commitment Fee shall be increased by 0.05% per annum above the Commitment Fee on the Date of Issuance; in the event that any of S&P, Moody's or Fitch reduces to or maintains a long-term unenhanced rating on any Sales Tax Debt of the Obligor of A-, A3 or A-, respectively, such Commitment Fee shall be increased by 0.10% per annum above the Commitment Fee on the Date of Issuance; and in the event that any of S&P, Moody's or Fitch reduces to or maintains a long-term unenhanced rating on any Sales Tax Debt of the Obligor of below A-, A3 or A-, respectively, or shall suspend or withdraw its long-term unenhanced rating, such Commitment Fee shall be increased by 0.40% per annum above the Commitment Fee on the Date of Issuance. Upon the occurrence of an Event of Default, the Commitment Fee shall be increased by 1.00% per annum above the Commitment Fee on the Date of Issuance, from and after the date of such Event of Default. The Bank and the Obligor acknowledge that as of the Date of Issuance, none of S&P, Moody's or Fitch maintains a long-term unenhanced rating on Sales Tax Debt. (ii) Upon each transfer of the Letter of Credit, or each amendment to the Letter of Credit, a fee of $3,000, plus reasonable legal fees and expenses. (iii) For each Advance equal to $250, up to a maximum aggregate amount of $2,000 per calendar year, payable quarterly in arrears on the first Business Day of each [March, June, September and December] with final payment due on the Letter of Credit Expiration Date. (iv) Any amounts specified in Section 2.7, 2.8 or 8.6 hereof. (c) Manner and Place of Payments; and Interest Calculation. (i) All payments to be made to the Bank hereunder or in connection herewith, whether by the Obligor, or the Issuing and Paying Agent or by the Issuing and Paying Agent on behalf of the Obligor, shall be made to the Bank at its Payment Office in U.S. Dollars in immediately available funds. Subject to Section 2.4(a), all such payments shall be made to the Bank as aforesaid not later than 1:00 P.M., New York City time, on the date due at its account specified in Section 8.2 below; and funds received after that hour shall be deemed to have been received on the next succeeding Business Day. All payments not received on the date due shall bear interest until payment in full thereof at a variable rate equal to the Default Rate accruing daily and payable on demand. (ii) Whenever a payment is due to the Bank under this Agreement, the Obligor shall be deemed to have made such payment at the time such payment is received by the Bank. 11 262 (iii) All Letter of Credit Fees shall be calculated on the basis of the actual days elapsed and a year of 365/366 days, and shall be payable from and including the Date of Issuance to the Letter of Credit Expiration Date. (d) Issuance of Commercial Paper During Liquidity Period. So long as no Event of Default has occurred and is continuing, the Issuing and Paying Agent may re -issue Notes during the Liquidity Period. (e) Term Loans. In the event the portion of any Advance used to pay the principal of or interest on any Notes on the maturity date thereof has not been repaid in full by the last day of the Liquidity Period (the "Term -Out Date"), then, provided (i) no event has occurred and is continuing which is or with the passage of time or giving of notice or both would be an Event of Default, and (ii) the sum of the Notes outstanding, plus, if applicable, interest on such Notes to their stated maturity dates, plus all unreimbursed Advances and all Term Loans then outstanding including the Term Loan then proposed to be made, shall not exceed the Stated Amount on such Term -Out Date, such Advance shall be converted to a Term Loan. Each Term Loan shall be for a maximum five (5) year term commencing on the Term -Out Date and ending not later than the Maturity Date. The Obligor shall pay the principal amount of each Term Loan in equal annual installments in arrears over the term of the applicable Term Loan (together with interest thereon in accordance with Section 2.3(b) hereof) to be made on each Annual Payment Date commencing with the first Annual Payment Date following the Term -Out Date until paid in full on or prior to the Maturity Date. The Obligor may prepay each Term Loan, in whole or in part, at any time, provided that such prepayment is accompanied by all interest accrued thereon. 2.5. Liability of Bank. As between the Obligor and the Bank, the Obligor assumes all risks of the acts, omissions, or misuse of the Letter of Credit by the Issuing and Paying Agent. Neither the Bank nor any of its officers and directors shall be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of the Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning, or purporting to transfer or assign, the Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for failure of the Issuing and Paying Agent to comply fully with conditions required in order to draw upon the Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, facsimile transmission or otherwise, whether or not they be in cipher; (v) for errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under the Letter of Credit or of the proceeds thereof; (vii) for the misapplication by the Issuing and Paying Agent or the Trustee of the proceeds of any drawing under the Letter of Credit; and (viii) for any consequences arising from causes beyond the control of the Bank; except that the Obligor shall have a claim against the Bank, and the Bank shall be liable to the Obligor, to the extent of any direct, as opposed to consequential, damages suffered by the Obligor that the Obligor proves were caused by the Bank's gross negligence or willful misconduct (x) in determining whether documents presented under the Letter of Credit comply strictly with the terms of the Letter of Credit or (y) in failing to make lawful payment under the Letter of Credit after the presentation to the Bank by the beneficiary thereof of a drawing strictly complying with the terms and 12 • 263 • • • conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; provided, that if the Bank shall receive prior written notification from both the Obligor and the beneficiary that sufficiently identifies, in the opinion of the Bank, documents to be presented to the Bank that are not to be honored, the Bank will not honor such documents. 2.6. Obligations Absolute. The payment obligations of the Obligor under this Agreement are primary, absolute, independent, irrevocable and unconditional, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances: (a) any lack of validity or enforceability of the Letter of Credit or any of the Financing Documents; (b) any amendment or waiver of or any consent or departure from the terms and conditions of all or any of the Financing Documents; (c) the existence of any claim, set-off, defense, or other right that the Obligor may have at any time, whether in connection with this Agreement, the transactions contemplated herein or in the other Financing Documents or any unrelated transaction, against the Trustee, the Issuing and Paying Agent or any other beneficiary or the Bank, or any transferee of the Letter of Credit (or any persons or entities for whom the Trustee, the Issuing and Paying Agent, any such beneficiary, or any such transferee may be acting), or any other person or entity; (d) any statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; provided, that this paragraph (d) shall not apply to any statement or document which the Bank knew to be forged or fraudulent on the date of the presentation thereof; (e) payment by the Bank to the Issuing and Paying Agent under the Letter of Credit against presentation of a draft or certificate which does not strictly comply with the terms of the Letter of Credit; or (f) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. No payment by the Obligor under any other agreement (whether voluntary, or involuntary or pursuant to court order or otherwise) shall constitute a defense to the various obligations hereunder except to the extent that the Bank has been indefeasibly paid in full. 2.7. Increased Costs. (a) If any change in applicable law, treaty, regulation, guideline or directive (including, without limitation, Regulation D promulgated by the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect) or any new law, treaty, regulation, guideline or directive, or any interpretation of any of the foregoing by any authority 13 264 charged with the administration or interpretation thereof or any central bank or other fiscal, monetary or other authority having jurisdiction over the Bank or any Participant or the transactions contemplated by this Agreement (whether or not having the force of law) shall: (i) subject the Bank or any Participant to any tax, charge, fee, deduction or withholding of any kind with respect to the Letter of Credit, the Revolving Note or this Agreement, or any amount paid or to be paid by the Bank as the issuer of the Letter of Credit or any Participant (other than any tax measured by or based upon the overall net income of the Bank or a Participant); (ii) impose, modify or deem applicable any reserve, premium, special deposit or similar requirements against any assets held by, deposits with or for the account of, or loans, letters of credit or commitments by, an office of the Bank or any Participant; (iii) change the basis of taxation of payments due the Bank or any Participant under the Revolving Note or this Agreement (other than a change in taxation of the overall net income of the Bank or a Participant); or (iv) impose upon the Bank or any Participant any other condition with respect to such amount paid or payable to or by the Bank or any Participant or with respect to this Agreement, the Revolving Note or the Letter of Credit; and the result of any of the foregoing is to increase the cost to the Bank or any Participant of agreeing to issue, issuing, making any payment under or maintaining the Letter of Credit, or to reduce the amount of any payment (whether of principal, interest or otherwise) receivable by the Bank or any Participant or to require the Bank or any Participant to make any payment on or calculated by reference to the gross amount of any sum received by it, in each case by an amount which the Bank or such Participant in its reasonable judgment deems material, then upon demand by the Bank, the Obligor shall immediately pay to the Bank, from time to time as specified by the Bank, such additional amounts as shall be, in the determination of the Bank, any parent, subsidiary or affiliate of the Bank or such Participant, as the case may be, sufficient to compensate the Bank, any parent, subsidiary or affiliate of the Bank or the Participant for such increased direct costs, together with interest on each such amount from the date 30 days after demand by the Bank until payment in full thereof at the Default Rate; provided that no interest shall be due on such amounts until 30 days after receipt of such demand by the Obligor. A certificate setting forth such increased costs incurred by the Bank, any parent, subsidiary or affiliate of the Bank or any such Participant as a result of any event specified in this paragraph, submitted by the Bank to the Obligor, shall be conclusive and binding, absent manifest error, as to the amount thereof and for each other purpose. In addition to the foregoing, if after the date hereof the Bank or any Participant shall have determined that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration of any existing or subsequently adopted applicable law, rule or regulation regarding capital adequacy, or any change therein, by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank or any Participant with any request or directive regarding capital adequacy (whether 14 • 265 • • • or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of the Bank or any Participant to a level below that which the Bank or such Participant could have achieved but for such adoption, change or compliance (taking into consideration the policies of the Bank or such Participant with respect to capital adequacy) by an amount deemed by the Bank or such Participant to be material, or affects or would affect the amount of capital required or expected to be maintained by the Bank or any Participant or any corporation controlling the Bank or any Participant by an amount deemed by the Bank or such Participant to be material, as a consequence of its obligations hereunder or under the Letter of Credit, then from time to time the Obligor shall be obligated to pay or cause to be paid to the Bank such additional amount or amounts as will compensate the Bank or such Participant for such reduction or capital increase with respect to any period for which such reduction or capital increase was incurred upon demand by the Bank, together with interest on such amount for each day from such date of demand until payment in full at the Default Rate. The Bank shall be required to deliver to the Obligor a certificate setting forth in reasonable detail any reduction in the rate of return on capital, or such capital increase, of the Bank or a Participant as a result of any event mentioned in this paragraph, which such certificate shall, in the absence of manifest error, be conclusive as to the amount thereof. Notwithstanding anything in this Section to the contrary, if such costs are to be incurred on a continuing basis and the Bank shall so notify the Obligor in writing as to the amount thereof, such costs shall be paid by the Obligor to the Bank monthly in arrears. The Bank shall use a reasonable method of allocation or attribution to equitably apportion any increased costs or reduction in the rate of return on capital among all of its customers so affected. The protections of this Section shall be available to the Bank and the Participants, regardless of any possible contention of invalidity or inapplicability of the law, regulation or condition which has been imposed; provided, however, that if it shall be later determined that any amount so paid by the Obligor pursuant to this Section is in excess of the amount payable under the provisions hereof, the Bank or such Participant, as the case may be, shall refund such excess amount to the Obligor, with any interest the Obligor may have paid on such amount. Notwithstanding the foregoing, in no event shall the Obligor be required to pay to the Bank on behalf of any Participant any increased cost required under this Agreement in excess of the amount the Obligor would have paid to the Bank if the Bank had not entered into a participation with such Participant. 2.8. Taxes. (a) To the extent permitted by law, any and all payments by the Obligor hereunder, under the Letter of Credit or under the Revolving Note shall be made, in accordance with Section 2.6 hereof, free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the overall net income of the Bank (and franchise taxes imposed in lieu of net income taxes) by the jurisdiction of the Bank's applicable lending office or any political subdivision thereof (all such non -excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). To the best of the Bank's 15 266 knowledge, there are no such Taxes currently imposed or required to be withheld or deducted. If the Obligor shall be required by law to withhold or deduct any Taxes from or in respect of any sum payable hereunder, under the Letter of Credit or under the Revolving Note, then, to the extent permitted by law, (i) the sum payable shall be increased as may be necessary so that after making all required withholdings or deductions (including those Taxes payable solely by reason of additional sums payable under this Section 2.8) the Bank receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (ii) the Obligor shall make such withholdings or deductions and (iii) the Obligor shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, to the extent permitted by law, the Obligor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise under the laws of the United States or the State from any payment made hereunder, under the Revolving Note or under the Letter of Credit or from the execution or delivery or otherwise with respect to this Agreement, the Revolving Note or the Letter of Credit (hereinafter referred to as "Other Taxes"). (c) If the Obligor fails to pay Taxes and/or Other Taxes (including Taxes imposed by any jurisdiction on amounts payable under this Section 2.8) required to be paid by the Obligor pursuant to clause (a) or (b) in accordance with applicable law, then the Obligor will indemnify and hold harmless the Bank, and reimburse the Bank, as applicable, for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.8) paid 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. Payments by the Obligor pursuant to this section shall be made within 30 days from the date the Bank makes written demand therefor which demand shall be accompanied by a certificate describing in reasonable detail the basis thereof. (d) Within 30 days after the date of any payment of Taxes by the Obligor, the Obligor shall furnish to the Bank with respect to which such payment was made, at its address referred to in Section 8.2 hereof, the original or a certified copy of a receipt evidencing payment thereof. The Obligor shall compensate the Bank for all reasonable losses and expenses sustained by the Bank as a result of any failure by such party to so furnish such copy of such receipt. (e) Any amounts paid by the Obligor to the Bank pursuant to this Section 2.8 which are subsequently recovered by the Bank from any taxing agency shall be repaid to the Obligor within 30 days of receipt thereof by the Bank. (f) Without prejudice to the survival of any other agreement of the Obligor hereunder, the agreements and obligations contained in this Section 2.8 shall survive the payment in full of fees, principal and interest hereunder, under the Letter of Credit and under the Revolving Note. 2.9. Payment on Non -Business Days. Whenever any payment to be made hereunder or under the Revolving Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day (and if so made, shall be deemed to 16 • 267 • • • have been made when due), and such extension of time shall in such case be included in the computation of the payment of interest due hereunder. 2.10. Book Entries. The Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Obligor resulting from Advances and the amounts of principal and interest payable and paid from time to time hereunder and under the Revolving Note. In any legal action or proceeding in respect of this Agreement or the Letter of Credit, the entries made in such account or accounts shall, in the absence of manifest error, be conclusive evidence of the existence and amounts of the obligations of the Obligor therein recorded. 2.11. Term of Agreement. The term of this Agreement shall be until the later of (x) the Letter of Credit Expiration Date and (y) the payment in full of the principal of and interest and all other amounts due hereunder and under the Letter of Credit and the Revolving Note. 2.12. Extension of Stated Expiration Date; Increase in Stated Amount; Reduction in Stated Amount; Increase in Stated Amount. (a) Extension of Stated Expiration Date. On the Date of Issuance, the Stated Expiration Date shall be [EXPIRATION DATE], 2010; provided that such date shall be subject to extension at any time following the then scheduled Stated Expiration Date, as set forth below and in the Letter of Credit or as the Obligor and the Bank may otherwise agree. [At least 90 days but not more than 120 days prior to the first anniversary of the Date of Issuance and each anniversary thereafter, the Obligor may request in writing that the Bank extend the Stated Expiration Date for an additional term of one year or such other period as the parties may agree by delivery to the Bank of a Request for Extension. Within 30 days of the date of any such Request for Extension, the Bank will notify the Obligor and the City in writing of the decision by the Bank in its absolute discretion whether to extend for such additional period, the Stated Expiration Date for purposes of this Agreement and the Letter of Credit, including in such notice the extended Stated Expiration Date and the conditions of such consent (including conditions relating to legal documentation and the consent of the Issuing and Paying Agent). If the Bank does so agree to extend, the Bank shall deliver an executed Notice of Extension to the Issuing and Paying Agent. If the Bank shall not so notify the Obligor, the Bank shall be deemed to have denied any such extension. (b) Increase in Stated Amount of the Letter of Credit. The Bank agrees, upon satisfaction of the conditions set forth in this Section 2.12(b), to increase the Stated Amount of the Letter of Credit from time to time prior to the Letter of Credit Expiration Date by an amount not to exceed the Unutilized Amount. Upon satisfaction of the conditions precedent set forth in this Section 2.12(b), the Bank shall execute and deliver a Notice of Increase in Stated Amount to the Issuing and Paying Agent with an Increase Date within five (5) days following receipt by the Bank of a Request for Increase in the Stated Amount, and upon such delivery, the Stated Amount of the Letter of Credit shall be increased on the Increase Date to the amount set forth in such Notice of Increase in Stated Amount. If for any reason the Bank fails to deliver a Notice of Increase in Stated Amount to the Issuing and Paying Agent with an Increase Date within five (5) days following receipt by the Bank of any Request for Increase in the Stated Amount, the conditions precedent set forth below shall be deemed to be unsatisfied and such request shall be 17 268 deemed to be denied by the Bank, absent manifest evidence to the contrary. As a condition precedent to any increase in the Stated Amount of the Letter of Credit, each of the following conditions shall be satisfied as determined by the Bank: (i) the Bank shall have received an executed original Request for Increase in the Stated Amount of the Letter of Credit at least five (5) days prior to the proposed Increase Date; (ii) the Letter of Credit Expiration Date shall not have occcurred; (iii) the amount of the requested increase in the Stated Amount of the Letter of Credit shall not exceed the Unutilized Amount; (iv) the representations and warranties made by the Obligor in Section 4 hereof shall be true and correct on and as of the Increase Date as if made on and as of the Increase Date; and (v) no Event of Default has occurred and is continuing and no event has occurred and is continuing which is or with the passage of time or giving of notice or both would be an Event of Default on and as of the Increase Date or shall occur as a result of the requested increase in the Stated Amount of the Letter of Credit. (c) Reduction in Stated Amount. The Obligor may elect to reduce the Stated Amount of the Letter of Credit from time to time prior to the Letter of Credit Expiration Date by delivery of a Request for Decrease in Stated Amount to the Bank, upon receipt of which the Bank will notify the Issuing and Paying Agent by means of a notice in the form attached to the Letter of Credit as Annex L, thereby reducing the Stated Amount, all as set forth in the Letter of Credit. Upon such reduction, the Stated Amount of the Letter of Credit shall not be less than the principal amount of all outstanding Notes plus, if applicable, interest on such Notes to their stated maturity dates. 2.13. Revolving Note. To evidence the indebtedness of the Obligor due and owing to the Bank under this Agreement with respect to amounts drawn under the Letter of Credit, the Obligor shall issue the Revolving Note, substantially in the form of Exhibit B attached hereto, to the Bank on the Date of Issuance. The Bank shall note on the grid attached to the Revolving Note principal amounts owing to the Bank, and the maturity schedule therefor pursuant to Sections 2.4(a) and 2.4(e) respecting outstanding Advances and Term Loans with interest until payment in full pursuant to the terms of the Revolving Note. SECTION 3. CONDITIONS 3.1. Conditions Precedent to Issuance of the Letter of Credit. The obligation of the Bank to issue the Letter of Credit shall be subject to the fulfillment of the following conditions precedent on or before the Date of Issuance thereof, in a manner satisfactory to the Bank and its counsel: (a) The Bank shall have received an opinion or opinions addressed to the Bank, or reliance letters addressed to the Bank, of Bond Counsel, each in form and 18 • 269 • • • substance satisfactory to the Bank and its counsel, dated the Date of Issuance, including an opinion as to the validity and enforceability of the Retail Transactions and Use Tax. (b) The Bank shall have received an opinion of Sidley Austin Brown & Wood LLP, counsel to the Bank, dated the Date of Issuance. (c) The Bank shall have received an opinion of Best, Best & Krieger, LLP, as counsel to the Obligor, addressed to the Bank, in form and substance satisfactory to the Bank and its counsel, dated the Date of Issuance. (d) The Bank shall have received an opinion of counsel to the`ssuing and Paying Agent, addressed to the Bank, in form and substance satisfactory to the Bank and its counsel, dated the Date of Issuance. (e) (i) The ratings assigned by Moody's and S&P to the Notes shall be not less than "P-1" and "A-1+," respectively, (ii) the Bank shall have received a copy of the rating letters or other documents evidencing such ratings, and (iii) such rating shall continue to be in effect on the Date of Issuance. (f) The Bank shall have received on the Date of Issuance the Revolving Note executed and delivered by the Obligor. (g) The Bank shall have received on the Date of Issuance, certified copies or executed originals, as the Bank may request, of the Ordinance and the Financing Documents, the Offering Memorandum and any other documents which the Bank may reasonably request evidencing that all such Financing Documents are in full force and effect and that all necessary actions required to be taken in connection with the authorization, execution, issuance, delivery and performance of this Agreement and the other Financing Documents, the Offering Memorandum and any other document required to be delivered pursuant to or in connection with this Agreement or the other Financing Documents, the Offering Memorandum, or the transactions contemplated hereby or thereby has been taken. (h) The Bank shall have received such certifications as to matters of fact,. evidence of corporate authority, including copies of any necessary resolutions authorizing the execution and delivery of the Financing Documents, and copies of all governmental consents, permits, licenses and approvals, and other documents as shall be reasonably requested by the Bank, and the form and substance of any order or other official action granting any consent, permit, license or approval shall be satisfactory to the Bank. (i) (i) The representations and warranties set forth in Section 4 of this Agreement, and in any other certificate, letter, writing or instrument delivered by the Obligor to the Bank pursuant hereto or in connection herewith, shall be true and correct as of the Date of Issuance; (ii) no material adverse change shall have occurred in the condition or operations (financial or otherwise) of the Obligor, including but not limited to the Obligor's ratings from any Rating Agency and any laws, rules, guidelines or regulations (or the interpretation or administration thereof) applicable to the Obligor, between the date of the financial statements received by the Bank pursuant to Section 30) 19 270 hereof and the Date of Issuance, (iii) on or prior to the Date of Issuance no material transactions or obligations (not in the ordinary course of business) shall have been entered into by the Obligor subsequent to such financial statements, except as disclosed in the Offering Memorandum or to the Bank in writing; and (iv) on the Date of Issuance no Event of Default, shall have occurred and be continuing, and the Obligor shall have delivered to the Bank a certificate dated the Date of Issuance certifying as to the accuracy of the representations and warranties set forth in Section 4 of this Agreement and with respect to clauses (ii), (iii) and (iv) immediately above. (j) satisfied. All conditions precedent to the issuance of the Notes shall have been (k) The appointments of the Issuing and Paying Agent and Dealers shall have been made and approved by the Bank. (1) The Bank shall have received (i) the three most recent audited financial statements of the Obligor, and (ii) the operating budget for the Obligor's Fiscal Year 2004-2005. (m) The Bank shall have received a certificate or certificates of one or more Authorized Representatives of the Obligor, the Issuing and Paying Agent and the Dealers dated the Date of Issuance certifying the name, incumbency and signature of each individual authorized to sign this Agreement, the other Financing Documents and the other documents or certificates to be delivered by the Obligor, the Issuing and Paying Agent or the Dealers pursuant hereto, thereto or the Letter of Credit, on which the Bank may conclusively rely until a revised certificate is similarly delivered. (n) All fees and expenses due and payable in accordance with the provisions of Sections 2.4 and 8.6 hereof shall have been paid. (o) The Bank shall have received a copy of the investment policy, guidelines and permitted investments of the Obligor, certified as of a recent date to the Date of Issuance, each of which shall be satisfactory to the Bank. (p) All other legal matters pertaining to the execution and delivery of this Agreement and the other Financing Documents, the Offering Memorandum, the issuance of the Notes and the Letter of Credit shall be satisfactory to the Bank and its counsel and the Bank shall have received such other statements, certificates, agreements, documents and information with respect to the Obligor and the matters contemplated by this Agreement as the Bank may request. SECTION 4. REPRESENTATIONS AND WARRANTIES In order to induce the Bank to enter into this Agreement and to issue the Letter of Credit, the Obligor represents and warrants as of the Date of Issuance and as of each Advance Date as follows: 20 • • 271 • • • (a) Corporate Existence and Power. The Obligor is a duly and validly created and existing public agency and has the requisite power to carry on its present and proposed activities, and has and had full power, right and authority to issue and sell the Notes, enter into and deliver or adopt this Agreement, the Financing Documents to which it is a party, and any and all instruments and documents required to be executed, adopted or delivered pursuant to or in connection herewith or therewith and to perform each and all of the matters and things herein and therein provided for and has the requisite power to carry on its business as now conducted and has, as of the Date of Issuance, full power, right and authority to deliver the Offering Memorandum . (b) Approvals. The Obligor has taken all requisite action to authorize or approve, as appropriate, the execution or adoption, issuance and delivery of, and the performance of its obligations under, this Agreement, the other Financing Documents to which it is a party, the Offering Memorandum and any and all instruments and documents required to be executed, adopted or delivered pursuant to or in connection herewith or therewith, and to pledge thereto the Available Revenues for the payment of the Notes and the Obligations. (c) Binding Effect. Each Financing Document to which the Obligor is a party has been duly executed and delivered or adopted by the Obligor and each constitutes the valid and legally binding obligation of the Obligor, which obligation is enforceable in accordance with its terms, subject to the limitations imposed by bankruptcy, insolvency, fraudulent conveyance, receivership, conservatorship, reorganization, arrangement, liquidation, moratorium or other similar laws affecting the enforcement of creditors' rights. (d) Contravention. The execution or adoption, delivery and performance by the Obligor of its obligations under this Agreement and the other Financing Documents to which it is a party, the Offering Memorandum and any and all instruments or documents required to be executed in connection herewith or therewith, were and are within the powers of the Obligor and will not violate any provision of any applicable law, regulation, decree or governmental authorization, and will not violate or cause a default under any provision of any contract, agreement, mortgage, indenture or other undertaking to which it is a party or which is binding upon it or any of its property or assets, and will not result in the imposition or creation of any Lien, charge, or encumbrance upon any of its properties or assets pursuant to the provisions of any such contract, agreement, mortgage, indenture or undertaking other than that imposed in the Financing Documents on the Available Revenues. (e) Compliance; No Event of Default. The Obligor is in compliance with the terms and conditions of (i) this Agreement, (ii) each of the other Financing Documents to which it is a party, (iii) any law or regulation relative to the issuance of Debt, (iv) each agreement or instrument relating to any Debt, and (v) any other applicable law, rule or regulation, including, but not limited to the Obligor's investment policy and guidelines, non-compliance with which could result in a material adverse effect on the condition or operations (financial or otherwise) of the Obligor; and no Event of Default has occurred and is continuing. 21 272 (f) Financial Information. The Obligor shall deliver or has delivered to the Bank a copy of the Obligor's audited basic financial statements as of June 30, 2004, including the government -wide statement of net assets and statement of activities and the fund financial statements consisting of a balance sheet, statement of revenues, expenditures and changes in fund balances, and reconciliations to the government -wide statements for the Fiscal Year then ended together with an opinion of an independent certified public accountants of recognized standing. The data on which such financial statements are based is true and correct. Such financial statements present fairly the government -wide net assets and the funds' financial position of the Obligor as of such date and the government -wide activities and funds' revenues, expenditures, and changes in fund balances for the period then ended. Such financial statements have been prepared in accordance with GAAP. Except as disclosed in writing to the Bank, since June 30, 2004 there has been no material adverse change in the financial position of the Obligor, operations undertaken by the Obligor or projections of financial performance of the Obligor. The Obligor has no material contingent liabilities or other material contracts or commitments which are not reflected in such financial statements or in the notes thereto or have otherwise been disclosed in writing by the Obligor to the Bank. (g) Litigation. Except as described in the Offering Memorandum or as otherwise disclosed in writing by the Obligor to the Bank, there is no action, suit, investigation or proceeding pending, or to the best knowledge of the Obligor, threatened, against or affecting the Obligor before any court, arbitrator or administrative or governmental body which (i) could result in any material adverse change in the financial position of the Obligor and its ability to repay the Notes, (ii) in any manner draws into question the validity or enforceability of this Agreement, any other Financing Document, the Law or any Lien created hereby or thereby, (iii) in any manner could affect the issuance of the Notes, (iv) in any way contests the existence, organization or powers of the Obligor, or (v) could materially adversely affect the ability of the Obligor to comply with its obligations under or in respect of this Agreement and each of the other Financing Documents. (h) Disclosure and Information Provided to the Bank. All information, documents, statements and certificates provided in writing to the Bank by or on behalf of the Obligor in connection with the transactions contemplated by the Financing Documents and the Offering Memorandum are true and correct as of the date thereof and were provided in expectation of the Bank's reliance thereon in issuing the Letter of Credit. (i) Tax Status of Interest on Notes. It is the intention of the Obligor and the Bank that the interest on the Notes be excluded from the gross income of the owners thereof for Federal income tax purposes by reason of the provisions of Section 103 of the Code, or any substantially similar successor provision hereinafter enacted. To that end, the Obligor represents to the Bank that it has not taken any action, and knows of no action that any other Person has taken, which would cause interest on the Notes to be includable in the gross income of the recipients thereof for Federal income tax purposes. 22 • • • 273 • • • (j) Immunity. The Obligor is not exempt from immunity from liability or suit in respect of its obligations under this Agreement; and the Obligor is subject to services of process and legal proceedings may be commenced and maintained against the Obligor for enforcement and collection in respect of any of the Obligor's obligations under this Agreement, recognizing, however, that the procedural requirements of the California civil and commercial law which apply to the Obligor are, in many respects, different from the procedural requirements which would apply to an individual, partnership, corporation or other private entity under similar circumstances. (k) Obligor for Incurrence of Obligations. The Obligor is authorized to enter into this Agreement and the transactions contemplated hereby by Law. The Obligations of the Obligor hereunder are not subject to any limitation as to maximum rate of interest. (1) Incorporation of Representations and Warranties by Reference. The Obligor hereby makes to the Bank the same representations and warranties made by the Obligor in the Dealer Agreement and the Issuing and Paying Agent Agreement, which representations and warranties, as well as the related defined terms contained therein, are hereby incorporated by reference for the benefit of the Bank with the same effect as if each and every such representation and warranty and defined term were set forth herein in its entirety. No amendment to such representations and warranties or defined terms made pursuant to any such Financing Document shall be effective to amend such representations and warranties and defined terms as incorporated by reference herein without the prior written consent of the Bank. (m) Liens. No filings, recordings, registrations or other actions are necessary to create and perfect the Liens provided for in the Indenture and herein; all Obligations of the Obligor hereunder are secured by the Lien provided for herein and such Lien constitutes a valid prior Lien subject to no other Liens other than the Lien of the Indenture; the Lien on the Available Revenues provided for in the Indenture in respect of the Notes constitutes a valid Lien subject to no other Liens other than the Lien provided for in the Indenture for the Senior Lien Obligations, if any. (n) No Proposed Legal Changes. There is no amendment, or to the knowledge of the Obligor, no proposed amendment certified for placement on a statewide or local ballot, to the Constitution of the State or any published administrative interpretation of the Constitution of the State, the Law or any other State law, or any legislation that has passed either house of the State legislature, or any published judicial decision interpreting any of the foregoing, the effect of which, if enacted or enforced, is (i) to materially adversely affect the Notes or any holder thereof, (ii) to materially adversely affect the ability of the Obligor to perform its obligations under the Notes, this Agreement or any other Financing Document or (iii) invalidate, eliminate or reduce the Sales Tax. SECTION 5. SECURITY 5.1. Pledge of Available Revenues and Funds. The Obligations of the Obligor under this Agreement, the Revolving Note and the Letter of Credit, including, without limitation, the 23 274 Obligor's obligations to make payments under Section 2 hereof, shall be secured by a Lien on and a pledge of (i) Available Revenues, on a basis junior and subordinate in all respects to the Lien and pledge of Revenues contained in the Indenture or to be contained in any Senior Lien Bond Indenture securing the payment of Senior Lien Obligations, (ii) amounts held in the Series A Note Fund and the Series B Note Fund and the accounts therein until the amounts deposited therein are used for authorized purposes, subject to the right of the holders of the Notes for such amounts to be used to pay the principal of and interest on the Notes, (iii) amounts held in the Credit Facility Fund until the amounts deposited therein are used for authorized purposes, provided, however, amounts in the Credit Facility Fund attributable to and derived from Advances shall be used first to pay the principal of and interest on the Notes in full, (iv) amounts held in the Proceeds Fund until such amounts are used to pay or otherwise encumbered to pay for the costs of the Project, (v) the proceeds from the sale of any Sales Tax Debt or other obligations issued for the purpose of repaying or refunding any of the obligations of the Obligor hereunder, and (vi) to the extent authorized by the Indenture, the proceeds of the Notes or amounts held in any of the funds or accounts established under the Indenture, and the Obligor by execution of this Agreement does hereby grant such pledge and Lien to secure the repayment of the Advances, Term Loans and any other amounts due to the Bank pursuant to this Agreement. All Obligations due to the Bank pursuant to this Agreement and the Revolving Note shall be and are hereby equally and ratably secured by and payable from a Lien on and pledge of the sources hereinabove identified in clauses (i) through (vi), subject only to the exceptions noted therein. Such rights of the Bank are to be on a parity or senior to the rights of the holders of the Notes, any Additional Commercial Paper and any provider of liquidity or credit support for such Additional Commercial Paper other than Senior Lien Obligations. The security described in clauses (i) through (vi) above shall be immediately subject to the Lien of the pledge made hereby without any further act, and the Lien of this pledge shall be valid and binding as against the Obligor, the Issuing and Paying Agent, the Dealers, the holders of any Notes or any Sales Tax Debt, irrespective of whether such parties have notice thereof. 5.2. Additional Lien. To the extent permitted by law, the Obligor hereby grants to the Bank a continuing Lien and right of set-off for all indebtedness of the Obligor to the Bank upon and against any and all moneys, securities or other property of the Obligor and the proceeds thereof now or hereafter held or received by or in transit to the Bank, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and any and all deposits (general or special) and credits and balances of the Obligor with, and any and all claims of the Obligor against the Bank, except money, securities and other property (a) held for safekeeping or otherwise for the benefit of other public agencies or districts or (b) pledged to others prior to the date of this Agreement. Upon the occurrence of any Event of Default, the Bank is hereby authorized at any time and from time to time, without notice to the Obligor, to set-off, appropriate and apply any or all items hereinabove referred to against all Obligations of the Obligor to the Bank, whether now existing or hereafter arising. 5.3. Nature of the Obligations. The obligations of the Obligor hereunder and under the Revolving Note are special limited obligations of the Obligor payable solely from the Available Revenues, the proceeds from the sale of any Sales Tax Debt or other obligations issued for the purpose of repaying or refunding any of the obligations of the Obligor hereunder and under the Revolving Note and, to the extent authorized by the Indenture, the proceeds of the Notes or amounts held in any of the funds or accounts established under the Indenture. 24 • 275 • • SECTION 6. COVENANTS OF THE OBLIGOR So long as the Letter of Credit is outstanding and until all Obligations of the Obligor shall have been paid in full, the Obligor shall do the following: 6.1. Affirmative Covenants. (a) Reports, Certificates and Other Information. The Obligor will furnish or cause to be furnished to the Bank: (i) As soon as available and in any event within 210 days after the end of each Fiscal Year of the Obligor, a copy of the comprehensive annual financial report for such Fiscal Year for the Obligor including therein the following basic financial statements: a copy of the government -wide statement of net assets as of the end of such Fiscal Year and statement of activities and the fund balance sheet(s), statement(s) of revenues, expenditures, and changes in fund balances, and reconciliations of the fund financial statements to the government -wide statements, certified by an opinion thereon of an independent public accountant of recognized standing selected by the Obligor (which certification shall contain no qualification unsatisfactory to the Bank), together with a certificate of such accountants stating that, in connection with such audit, nothing came to such accountant's attention that caused him/her to believe that the Commission failed to comply with the terms, covenants, provisions, or conditions of Section 6.2(g) or Section 6.2(1), insofar as they relate to accounting matters, or, if any such failure exists, specifying the nature and period of existence thereof; (ii) Promptly after adoption thereof, a copy of the final budget of the Obligor for each Fiscal Year during the term of this Agreement, including any revisions thereto adopted by the governing body of the Obligor; (iii) Within 60 days following a request by the Bank, any other relevant financial information as may be so requested by the Bank; (iv) Promptly upon completion thereof, a copy of any other non -routine, periodic or special reports relating to the financial condition of the Obligor and copies of any material adverse notice or other material adverse communications received by the Obligor from any governmental authority; (v) Promptly upon obtaining knowledge of any condition or event which constitutes an Event of Default, notice of such condition or event, and within five days thereafter, a certificate signed by an Authorized Representative of the Obligor specifying in reasonable detail the nature and period of existence thereof and what action the Obligor has taken or proposes to take with respect thereto; (vi) Copies of any preliminary or final offering memorandum or other disclosure documents prepared with respect to any Debt of the Obligor and, not less than ten days prior to the effective date of any such document, copies of any Senior Lien Bond Indenture or other document authorizing or providing for the issuance of any Parity Debt or Senior Lien Obligations; 25 276 (vii) As promptly as practicable, written notice to the Bank of all material litigation filed against the Obligor and all proceedings before any court or governmental authority which relate to the Sales Tax Revenues, the Ordinance, the Retail Transactions and Use Tax, this Agreement, the Letter of Credit, the Law, the Notes or any of the other Financing Documents, the Offering Memorandum or any Senior Lien Bond Indenture; (viii) Certified copies of any amendments or modifications to the Law or any other legislation which may adversely impact upon the Sales Tax Revenues or the Obligor's ability to perform its obligations under the Notes, the other Financing Documents, the Offering Memorandum or the Preliminary Offering Memorandum; (ix) Written notice as soon as possible after receiving the same (1) the filing of a complaint against the Obligor in any court or administrative agency, where the amount claimed is in excess of Dollars ($ ), (2) the filing of any action or the occurrence of any activity which would could lead to an initiative or referendum which could annul, amend, modify or replace the Law or which could lead to the diminution or reallocation of the Available Revenues, the Sales Tax Revenues or any portion thereof or (3) any other event which, in the reasonable judgment of the Obligor, is likely to have a material adverse effect on the financial condition or operations of the Obligor or affect the ability of the Obligor to perform its obligations under the Notes, this Agreement or under any other Financing Document; (x) Notice of any resignation of the Issuing and Paying Agent or either Dealer immediately upon receiving such resignation; and (xi) Such other information regarding the business, affairs and financial condition of the Obligor as the Bank may from time to time reasonably request. (b) Maintenance of Books and Records. The Obligor will keep proper books of records and accounts in which full, true and correct entries in accordance with GAAP will be made of all dealings or transactions in relation to its business and activities. (c) Access to Books and Records; Request for Additional Information. The Obligor will permit any representative designated by the Bank to visit any of the offices of the Obligor to examine the books and financial records, including minutes of meetings of the Board of the Obligor, or any relevant governmental committees or agencies, and make copies thereof or extracts therefrom, and to discuss the affairs, finances and accounts of the Obligor with its principal officials, and shall provide such additional information concerning the Notes or the Obligor as the Bank may reasonably request, all at such reasonable times and as often as the Bank may reasonably request. The Bank agrees to maintain the confidentiality of all such books, records and information regarding the Obligor; provided, however, that the Bank shall not be precluded from disclosing such information or the contents of such books and records to the extent required by statute, rule, regulation or judicial process or upon the lawful demand of any court or agency having jurisdiction over the Bank or any Participant. (d) Compliance with Documents. The Obligor agrees that it will perform and comply • with each and every covenant and agreement required to be performed or observed by it in the 26 • • 277 • • • other Financing Documents, which provisions, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety all of which shall be deemed to be made for the benefit of the Bank and shall be enforceable against the Obligor. To the extent that any such incorporated provision permits the Obligor, the Issuing and Paying Agent or the holders of one or more Notes to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the Obligor, the Issuing and Paying Agent or the holders of one or more Notes, for purposes of this Agreement, then such provision shall not be complied with only if it is specifically waived by the Bank in writing and such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Bank which shall only be evidenced by the Bank's written approval of the same. No termination or amendment to such covenants and agreements or defined terms or release of the Obligor with respect thereto made pursuant to the other Financing Documents shall be effective to terminate or amend such covenants and agreements and defined terms or release of the Obligor with respect thereto as incorporated by reference herein without the prior written consent of the Bank. Notwithstanding any termination or expiration of any such Financing Document, the Obligor shall continue to observe the covenants therein contained for the benefit of the Bank until the termination of this Agreement. All such incorporated covenants shall be in addition to the express covenants contained herein and shall not be limited by the express covenants contained herein nor shall such incorporated covenants be a limitation on the express covenants contained herein. (e) Further Assurances. From time to time hereafter, the Obligor will execute and deliver such additional instruments, certificates or documents, and will take all such actions as the Bank may reasonably request and are necessary for the purposes of implementing or effectuating the provisions of this Agreement and each of the other Financing Documents or for the purpose of more fully perfecting or renewing the Bank's rights with respect to the rights, properties or assets subject to such documents (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Obligor which may be deemed to be a part thereof) pursuant hereto or thereto. Upon the exercise by the Bank of any power, right, privilege or remedy pursuant to this Agreement and each of the other Financing Documents which requires any consent, approval, registration, qualification or authorization of any governmental authority or instrumentality, the Obligor will, to the extent permitted by law, execute and deliver all necessary applications, certifications, instruments and other documents and papers that the Bank may be required to obtain for such governmental consent, approval, registration, qualification or authorization. (f) Maintenance of Existence. The Obligor shall use its best efforts to preserve and maintain its existence as a public agency organized and existing under the laws of the State, and its rights, franchises and privileges material to the conduct of its business. (g) Licenses, Permits, Etc. The Obligor will take all necessary and appropriate action to ensure the continuance in force of all material consents, licenses, permits, orders, decrees, approvals, authorizations, registrations and filings obtained or made in connection with this Agreement, the Notes or the other Financing Documents or necessary to authorize the adoption or the execution, delivery and performance by the Obligor of this Agreement, the other Financing Documents and all other agreements to be delivered in connection with any thereof. 27 278 (h) Sources of Payments. The Obligor shall make, or cause to be made, such payments from the sources and in the manner provided in the Indenture as are necessary to provide for the payment of the principal and interest with respect to the Obligations and the Notes when due and to pay any and all other amounts when due hereunder. (i) Preservation of Pledge. The Obligor shall take any and all actions necessary or reasonably requested by the Bank to maintain the pledges and security interests described in Section 5 hereof. (j) Taxes and Liabilities. The Obligor shall pay all its Debt and other obligations promptly and in accordance with their terms and pay and discharge or cause to be paid and discharged promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits, or upon any of its property, real, personal or mixed, or upon any part thereof, before the same shall become in default, which default could have an adverse effect on the ability of the Obligor to perform its obligations under this Agreement or under any other Financing Document; provided that the Obligor shall have the right to defer payment or performance of obligations to Persons other than the Bank so long as it is contesting in good faith the validity of such obligations by appropriate legal action and no final order or judgment has been entered with respect to such obligations. (k) Invalidity. In the event this Agreement, the Letter of Credit, the Notes or the Indenture or any provision thereof is declared null and void or ceases to be valid and binding on the Obligor, as determined in a final judgment rendered by a court of competent jurisdiction, and such event, in the judgment of the Bank, would or could adversely affect or reduce the amount that otherwise would be paid to the Bank when due under this Agreement or otherwise affect the security of the Bank, the Obligor will immediately take all necessary actions, including, if required, the authorization, execution and delivery of any additional or substitute indentures, trust agreements, resolutions or other agreements and the appointment of any additional or substitute trustee, to ensure that all payments required to be paid under the Indenture and this Agreement are paid when due. (1) Compliance with Laws and Other Obligations. The Obligor will comply with all applicable laws, rules, regulations, orders and directions of any governmental authority, including, but not limited to, rules, regulations, orders and directions and the Obligor's investment policy and guidelines, and all agreements and obligations binding on the Obligor, noncompliance with which would have a material adverse effect on the Obligor, its financial condition, assets, or ability to perform its obligations under this Agreement and the other Financing Documents to which the Obligor is a party, provided that the Obligor may in good faith contest such laws, rules, regulations, orders and directions and the applicability thereof to the Obligor. (m) Replacement of Bank. In the event the Bank elects not to extend the Stated Expiration Date pursuant to Section 2.1(a) hereof, the Obligor agrees to substitute an Alternate Credit Facility for the Bank or refund, repay or otherwise defease all outstanding Notes and all Obligations hereunder and the Revolving Note, other than any Term Loan not otherwise then due and payable, on or prior to the Stated Expiration Date. In addition, the Obligor agrees to obtain an Alternate Credit Facility which provides for repayment to the Bank of any Term Loan, or to 28 • 279 • • • otherwise provide available funds to refund, repay or otherwise defease all installments of any Term Loan, on or prior to the date due and in accordance with Section 2.4(e) hereof, and to pay all other Obligations hereunder and under the Revolving Note on the date due. (n) Transfer of Available Revenues. The Obligor shall cause all Senior Lien Bond Indentures to provide, so long as the Letter of Credit is outstanding, that the Senior Lien Trustee shall forward any and all Available Revenues directly to the Trustee for disbursement pursuant to the Indenture. (o) Changes to Law. The Obligor shall vigorously oppose any rescission of or amendment to or any other action under or in connection with the Sales Tax Revenues (including, without limitation, any modification of the Law) which would or could materially reduce the amount of the Sales Tax Revenues or the allocation of the Available Revenues to the payment of the Notes or the Obligations of the Obligor hereunder or which would or could in any manner materially impair or adversely affect the rights of the Obligor to any or all of the Revenues or to the security of the Bank. (p) Senior Lien Ratings. On and after January 1, 2009, the Obligor shall acquire and maintain ratings from any two of Moody's, S&P or Fitch long term unenhanced ratings of the Senior Lien Obligations, if any, such ratings to be reviewed annually. 6.2. Negative Covenants. So long as the Letter of Credit is outstanding and until all of the Obligations of the Obligor to the Bank shall have been paid in full, the Obligor shall not do any of the following, without the prior written consent of the Bank: (a) Removal of Issuing and Paying Agent or Dealer. Cause the removal of the trustee, the Issuing and Paying Agent or either Dealer or the appointment of successors thereto; (b) Actions. Take any action, or cause the trustee, Issuing and Paying Agent or either Dealer to take any action, under the Financing Documents inconsistent with the rights of the Bank under this Agreement, subject to the provisions of the Indenture including, without limitation, its obligations to make payments to the Bank; (c) Income Tax Status. Take any action, or omit to take any action under present or future laws, rules, regulations or official interpretations thereof, including, without limitation, making payments to the United States, restricting yield on investments, and making necessary filings, which, if taken or omitted, would cause interest on the Notes to become includable in the gross income of the owners thereof for federal income tax purposes; (d) Violate Any Law. Violate any law, rule, regulation, or governmental order to which the Obligor is subject (including but not limited to any rule, regulation or governmental order to which the Obligor is subject, and the Obligor's investment policy and guidelines), which violation could materially and adversely affect its financial condition, business or results of operations or its ability to perform its obligations under this Agreement, the Notes or any other Financing Document; 29 280 (e) Offering Memorandum. Permit the marketing of the Notes pursuant to any Offering Memorandum unless the Bank shall have approved in writing of the description of the Bank contained in such Offering Memorandum; (f) Amendments. Consent or agree to or permit any rescission of or amendment to or otherwise take any action under or in connection with the Sales Tax Revenues (including, without limitation, consenting or agreeing to any modification of the Law) which would or could reduce the amount of the Sales Tax Revenues or the allocation of the Available Revenues to the payment of the Notes or the Obligations of the Obligor hereunder or which would or could in any manner materially impair or adversely affect the rights of the Obligor to any or all of the Revenues or to the security of the Bank or agree to any amendment or supplement of the Indenture whatsoever; provided, however, the foregoing covenant shall not prohibit the issuance of Senior Lien Bonds, Additional Commercial Paper or Parity Debt in accordance with the Indenture; (g) No Liens. Create or suffer to be created any pledge of or Lien on the Revenues or any of the funds pledged to the Bank pursuant to Section 5.1 hereof, other than the pledge and Lien provided for in any Senior Lien Bond Indenture, in the Indenture and in this Agreement, and the Obligor will take all actions and do all things necessary to maintain the pledge of and the Lien on the Revenues and such funds, provided that the Obligor may create or suffer to be created any pledge of or Lien on the Revenues and such funds as contemplated by such documents on the date hereof, provided that after giving effect to such pledge or Lien, the Obligor would not otherwise be in default of this Agreement. (h) Expenditure of Money. Expend or cause to be expended the proceeds of any Advance for any purpose other than that allowed under the Letter of Credit or expend or cause to be expended the proceeds of the Notes for any purpose other than for payment of the costs of the Project, the payment of amounts owed to the Bank under this Agreement or the payment of the principal of and interest on Notes; (i) Permitted Investments. Invest any moneys in any of the funds established under the Indenture or the Issuing and Paying Agent Agreement in any investments other than Permitted Investments; (j) Investment Practices. Deviate from the investment policies of the Obligor or from the provisions of the Government Code of the State, as in effect from time to time; (k) Issuance of Notes. Instruct the Issuing and Paying Agent not to authenticate or deliver any Note if, immediately after the authentication and delivery of, and receipt of payment for, such Note, the aggregate principal amount of Notes then to be Outstanding under the Indenture plus, if applicable, interest on such Notes to their stated maturity dates, would exceed the Stated Amount; or instruct the Issuing and Paying Agent to authenticate or deliver any Note if the Issuance and Paying Agent has received a No -Issuance Notice, unless and until such No -Issuance Notice is rescinded. 30 • 281 • • • (1) Additional Sales Tax Debt. Issue or incur any additional Sales Tax Debt other than in accordance with the Indenture. SECTION 7. EVENTS OF DEFAULT If any of the following Events of Default shall occur and be continuing: (a) The Obligor shall fail to pay, or cause to be paid, when due any Obligation or any Notes; or (b) The issuance of any Notes shall result in a violation by the Obligor of any law, rule or regulation, or any order of any court, governmental agency or regulatory body, or any indenture or loan or credit agreement (including this Agreement), or any other agreement or instrument, applicable to the Obligor or to such issuance; or (c) An "event of default" shall occur and be continuing under any other Financing Documents or any Senior Lien Bond Indenture and the expiration of any applicable grace period shall have occurred; or (d) The Obligor shall default in the performance of the covenants in Sections 6.1(f), (h), (i) and (n) or 6.2; or (e) The Obligor shall default in the performance of any other covenant or agreement contained in this Agreement and such default shall continue for 30 days after written notice of such default shall have been given to the Obligor by the Bank; or (f) Any representation or warranty on the part of the Obligor contained in this Agreement or in any other Financing Document or in any certificate, letter or other writing or instrument furnished or delivered by the Obligor to the Bank pursuant hereto or thereto or in connection herewith or therewith, shall at any time prove to have been incorrect or incomplete in any material respect when made or when effective or when reaffirmed, as the case may be; or (g) Any provision of this Agreement or any of the other Financing Documents shall at any time for any reason cease to be valid and binding on the related obligor thereunder or shall be declared to be null and void by any court or governmental authority or agency having jurisdiction over the Obligor, or the validity or the enforceability thereof shall be contested by the Obligor in a judicial or administrative proceeding; or (h) The Obligor shall default in the payment of principal of or interest on any Sales Tax Debt or any Debt secured by the 1988 Sales Tax outstanding in a principal amount of $500,000 or more, and the continuance of such default beyond any applicable grace period; or (i) Any event or condition shall occur which results in the acceleration of the maturity of mandatory tender or redemption of any Sales Tax Debt or any Debt secured by the 1988 Sales Tax or Guarantee thereof of the Obligor outstanding in a principal 31 282 amount of $500,000 or more, or enables the holder of such Sales Tax Debt or any Debt secured by the 1988 Sales Tax or Guarantee thereof or any Person acting on such holder's behalf to accelerate the maturity thereof or demand purchase or redemption thereof or with the giving of notice or lapse of time or both would enable the holder of such Sales Tax Debt or any Debt secured by the 1988 Sales Tax or Guarantee thereof or any Person acting on such holder's behalf to accelerate the maturity thereof or require the purchase or redemption thereof; or (j) Any funds on deposit in, or otherwise to the credit of, any funds or accounts established under the Indenture shall become subject to any writ, judgment, warrant or attachment, execution or similar process; or (k) (i) The Obligor shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it or seeking to adjudicate it insolvent or a bankrupt or seeking reorganization, arrangement, adjustment, winding -up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for itself or for any substantial part of its property, or the Obligor shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Obligor any case, proceeding or other action of a nature referred to in clause (i) and the same shall remain undismissed for a period of 30 days; or (iii) there shall be commenced against the Obligor any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal, within 60 days from the entry thereof; or (iv) the Obligor shall take action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Obligor shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due or shall repudiate or declare a moratorium on the payment of its debts; or (1) A final non -appealable judgment or order by a court of competent jurisdiction shall be rendered against the Obligor for the payment of money in excess of $500,000 not covered by insurance, and such judgment shall not be satisfied for a period of thirty (30) days; or (m) S&P shall have assigned a rating to any long-term unenhanced Sales Tax Debt of the Obligor below "BBB-" or Moody's shall have assigned a rating to any long- term Sales Tax Debt of the Obligor below "Baa-3," or S&P or Moody's shall have assigned a rating to any short-term unenhanced Sales Tax Debt of the Obligor below "A- 3" with respect to S&P, or "MIG 3" or "Prime 3," with respect to Moody's; or (n) The Obligor shall fail to preserve the pledge made in Section 5 hereof or any legislation is enacted, repealed, reenacted, amended or otherwise modified, and such repeal, reenactment, amendment, modification or enactment, in the sole opinion of the 32 • • • 283 • • • Bank, dilutes or eliminates the pledge of or security interest of the Bank granted in such Section 5 hereof; or (o) a change occurs in the financial or operating conditions of the Obligor, the ratings on the Obligor, or in the rules or regulations to which the Obligor is subject (or in the interpretation or administration thereof), that, in the Bank's reasonable judgment, has a materially adverse effect on the ability of the Obligor to perform its obligations hereunder or under the Financing Documents, and the Obligor fails to cure such condition within six (6) months after receipt by the Obligor of written notice thereof from the Bank; or (p) any rescission of or amendment to or any other action under or in connection with the Sales Tax Revenues (including, without limitation, any modification of the Law) which would or could materially reduce the amount of the Sales Tax Revenues or the allocation of the Available Revenues to the payment of the Notes or the Obligations of the Obligor hereunder or which would or could in any manner materially impair or adversely affect the rights of the Obligor to any or all of the Revenues or to the security of the Bank; then, and in any such event, the Bank may, at the same or different times, so long as such Event of Default shall not have been remedied to the sole satisfaction of the Bank, take one or more of the following actions: (i) exercise all of the rights and remedies available to the Bank under this Agreement, any other Financing Document, any applicable law or at equity; (ii) reduce the Stated Amount of the Letter of Credit to the principal amount of Notes Outstanding (and, if applicable, interest on the Notes to their stated maturity dates) and instruct the Obligor and the Issuing and Paying Agent to immediately cease issuing, delivering and selling additional Notes by delivering to the Obligor and the Issuing and Paying Agent a Notice of No Issuance; and (iii) by notice to the Obligor, declare all Obligations payable by the Obligor under the Revolving Note and this Agreement including, without limitation, any and all unpaid Advances or Term Loans to be immediately due and payable (and the same shall upon such notice become immediately due and payable), in each case without any presentment, demand, protest or other notice or formality of any kind (all of which are hereby expressly waived by the Obligor to the extent allowed by law); provided, however, that if any event specified in clause (k) of this Section 7 occurs, the consequences of the Bank's notice described in clauses (ii) and (iii) above shall result automatically upon the occurrence of such event without notice from the Bank. No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or any Financing Document, or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to exercise any remedy reserved to the Bank in this Agreement, it shall not be expressly required. In the event any provision contained in this Agreement should be breached by any party and thereafter duly waived in accordance herewith, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. No waiver, amendment, 33 284 relief or modification of this Agreement shall be established by conduct, custom or course of dealing, but solely by an instrument in writing duly executed by the parties thereto duly authorized by this Agreement. No notice to or demand on the Obligor in any case shall entitle the Obligor to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of the Bank to any other or further action in any circumstances without notice or demand. SECTION 8. MISCELLANEOUS 8.1. Amendments, Etc. No amendment, modification or waiver of any provision of this Agreement nor consent to any departure by the parties hereto shall in any event be effective unless the same shall be in writing and signed by such parties, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 8.2. Addresses for Notices; Payments to the Bank. All notices and other communications provided for hereunder shall be in writing and mailed or delivered to the applicable party at the addresses indicated below: If to the Obligor: If to the Bank, with respect to credit matters: If to the Bank, with respect to operations /money transfer issues: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Executive Director and Chief Financial Officer Telephone: (951) 787-7141 Facsimile: (951) 787-7920 Bank of America, N.A. 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Deposit Fund Telephone: (213) 345-5231 Facsimile: (213) 345-0265 Bank of America, N.A. 333 South Hope Street, 13th Floor Mailcode: CA9-193-13-17 Los Angeles, California 90071 Attention: Credit Products, California Government & Institutional Banking Telephone: (213) 621-7142 Facsimile: (213) 621-3607 34 • 285 • • • If to the Issuing and Paying Agent: If to the Series A Dealer: If to the Series B Dealer: U.S. Bank Trust National Association 100 Wall Street, 16th floor New York, NY 10005 Attention: Telephone: ( ) Facsimile: ( ) Lehman Brothers Inc. Attention: Telephone: ( ) Facsimile: ( ) Banc of America Securities LLC Attention: Telephone: or as to each party at such other address as shall be designated by such party in a written notice to the other party. All such notices and other communications shall, when mailed certified or registered mail, be effective three days after the date of deposit in the mail, addressed as aforesaid. Payments to the Bank under this Agreement shall be made to: The Chase Manhattan Bank, N.A., New York, New York, For credit to: Bank of America, N.A., ABA Number: 121000358, Further credit to Account Number 45358-83980, Attention: Standby Letter of Credit # , Ref. LC # , or to such other account as the Bank may from time to time designate in writing to the Obligor. 8.3. No Waiver; Remedies. No failure on the part of the Bank to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other further exercise thereof or the exercise of any other right. No notice to or demand on the Obligor in any case shall entitle the Obligor to any other or further notice or demand in the same, similar or other circumstances. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 8.4. Indemnification. To the extent permitted by law, the Obligor hereby indemnifies and holds harmless the Bank from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever (including, without limitation, the fees and expenses of counsel) which the Bank may incur or suffer (or which may be claimed against the Bank by any Person or entity whatsoever) by reason of or in connection with the offering and sale of the Notes (including, without limitation, by reason of any inaccuracy in any material respect, or any untrue statement or alleged untrue statement of any material fact, contained in the Offering Memorandum or any amendment or supplement thereto, or by reason of the omission or alleged omission to state therein a material fact necessary to make such statements, in the light of the 35 286 circumstances under which they were made, not misleading), the execution and delivery of this Agreement, the Letter of Credit, any other Financing Document or the transfer of the Letter of Credit, or payment or failure to pay under the Letter of Credit, or any impairment or potential impairment of the Sales Tax; provided, however, that the Obligor shall not be required to indemnify the Bank for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (a) the willful misconduct or gross negligence of the Bank in determining whether a certificate presented under the Letter of Credit complied with the terms of the Letter of Credit or (b) the Bank's willful failure or gross negligence in failing to pay under the Letter of Credit after the presentation to it by the Issuing and Paying Agent of a certificate strictly complying with the terms and conditions of the Letter of Credit; provided further, that in the case of any action or proceeding alleging an inaccuracy in a material respect, or an untrue statement, with respect to information supplied in writing by the Bank contained in the Offering Memorandum (the "Bank Information"), if, in any such action or proceeding, it is finally determined that the Bank was liable in providing Bank Information which contained an inaccuracy in any material respect or an untrue statement of a material fact, then the Obligor shall not be required to indemnify the Bank pursuant to this Section for any claims, damages, losses, liabilities, costs or expenses to the extent caused by such inaccuracy or untrue statement. Nothing in this Section 8.4 is intended to limit any other obligations of the Obligor contained in Section 2 hereof. The provisions of this Section 8.4 shall survive the termination of this Agreement and payment of the Obligations. 8.5. Survival of this Agreement. All covenants, agreements, representations and warranties made in this Agreement shall survive the issuance by the Bank of the Letter of Credit and shall continue in full force and effect so long as the Letter of Credit shall be unexpired or any sums drawn or due thereunder or any other Obligations shall be outstanding and unpaid, including but not limited to the Term Loan, regardless of any investigation made by any person and so long as any amount payable hereunder remains unpaid. Whenever in this Agreement the Bank is referred to, such reference shall be deemed to include the successors and assigns of the Bank and all covenants, promises and agreements by or on behalf of the Obligor which are contained in this Agreement shall inure to the benefit of the successors and assigns of the Bank. The rights and duties of the Obligor, however, may not be assigned or transferred, except as specifically provided in this Agreement or with the prior written consent of the Bank, and all obligations of the Obligor hereunder shall continue in full force and effect notwithstanding any assignment by the Obligor of any of its rights or obligations under any of the Financing Documents or this Agreement or any entering into, or consent by the Obligor to, any supplement or amendment to, or termination of, any of the Related Documents or this Agreement. 8.6. Fees and Expenses. The Obligor shall pay or cause to be paid, any and all fees and expenses, including taxes and recording costs or charges, if any, payable or incurred by the Bank in connection with the execution and delivery of the Financing Documents (including the fees and expenses of Sidley Austin Brown & Wood LLP, as counsel to the Bank as set forth in response dated January 7, 2005 of the Bank to request for proposals by the Obligor. In addition, the Obligor shall pay or cause to be paid, any and all fees and expenses, including taxes and recording costs or charges, if any, payable or incurred by the Bank subsequent to the Date of Issuance in connection with the performance, administration, interpretation and enforcement of the Financing Documents, and any amendments, modifications, supplements, consents and waivers with respect thereto, and agrees to save the Bank harmless from and against any and all 36 • 287 • • • liabilities with respect to or resulting from any delay in paying or omission to pay such fees, expenses, taxes, costs and charges, if any, provided that the Bank agrees promptly to notify the Obligor of any such fees, expenses and taxes, if any. 8.7. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non -authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. 8.8. Governing Law; Other Matters. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. The parties hereto further irrevocably consent to the service of process in any action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at its address set forth in Section 8.2 hereof, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of the parties hereto to serve process in any other manner permitted by law. 8.9. Participants. The Bank shall have the right to grant participations from time to time (to be evidenced by one or more Participation Agreements or certificates of participation) in this Agreement and the Letter of Credit to one or more other Persons, provided that the grant of any such participation shall not terminate or otherwise affect any obligation of the Bank hereunder. Each Person purchasing such a participation shall in the discretion of the Bank have all rights of the Bank hereunder to the extent of the participation purchased. In connection with the granting of participations, the Bank may disclose to any proposed Participant any information that the Obligor delivers or discloses pursuant to this Agreement. The Bank shall give notice to the Obligor of any Person that is granted a participation pursuant to this Section 8.9. 8.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but both or all of which, when taken together, shall constitute but one document, and shall become effective when copies hereof which, when taken together, bear the signatures of each of the parties hereto. 8.11. Certificates, Etc. In connection with the execution and delivery of this Agreement, the parties hereto may rely on any certificates delivered by or on behalf of each other respective party hereto as representations and warranties as to the matters therein certified. 8.12. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 8.13. Integration. This Agreement is intended to be the final agreement between the parties hereto relating to the subject matter hereof and this Agreement and any agreement, document or instrument attached hereto or referred to herein shall supersede all oral negotiations and prior writings with respect to the subject matter hereof. 8.14. Waiver of Jury Trial. To the extent permitted by law, the Obligor and the Bank hereby irrevocably and unconditionally waive any right either may have under the law of any 37 288 jurisdiction to any right to trial by jury in any legal action or proceeding relating to this Agreement or any Financing Document. 8.15. Waiver of Rules of Construction. The Obligor hereby waives any and all provisions of law (including, without limitation, California Civil Code Section 1654) to the effect that an ambiguity in a contract or agreement should be interpreted against the party responsible for its drafting. 8.16. Successors and Assigns. The Bank may assign and pledge all or any portion of the Obligations owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Obligations made by the Obligor to the Bank in accordance with the terms of this Agreement shall satisfy the Obligor's obligations hereunder in respect of such assigned obligation to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder. [REMAINDER OF PAGE LEFT BLANK] 38 • 289 • • • IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: BANK OF AMERICA, N.A. By: Name: Title: 39 290 • • • IRREVOCABLE DIRECT DRAW LETTER OF CREDIT BANK OF AMERICA, N.A. [LC DATE] Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Ladies and Gentlemen: EXHIBIT A At the request and for the account of our customer, the Riverside County Transportation Commission (the "Obligor"), we (the "Bank") hereby establish in your favor this Irrevocable Direct Draw Letter of Credit ("Letter of Credit") No. pursuant to a Reimbursement Agreement, dated as of March 1, 2005, by and between the Obligor and the Bank (the "Agreement"). This Letter of Credit is issued to you as Issuing and Paying Agent (the "Issuing and Paying Agent") for the benefit of the holders of the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds) (the "Notes") issued pursuant to the Indenture, dated as of March 1, 2005 (the "Indenture"), between the Obligor and U.S. Bank National Association, as trustee. Subject to the terms and conditions herein, this Letter of Credit authorizes you to draw on us in an amount not exceeding United States Dollars (US $[STATED AMOUNT]) (as such amount may be reduced and reinstated pursuant hereto, the "Stated Amount"). Subject to the other provisions of this Letter of Credit, you or any duly authorized successor Issuing and Paying Agent may obtain the funds available under this Letter of Credit by presentment to us of your sight draft or drafts drawn on Bank of America, N.A. mentioning thereon our Letter of Credit No. . Each draft presented to us must be accompanied by a certification in the form of one or more of the Annexes attached hereto as set forth below. Your sight draft in the form of Annex 11 hereto accompanied by a certification to us in the form of Annex A hereto and presented in full compliance with the terms and conditions of this Letter of Credit at or before 11:00 a.m. New York time, on a Business Day, will be honored by our payment to you of the draft amount in immediately available funds, no later than 3:00 p.m. New York time, on the same Business Day. If we receive your draft and the required Annex A hereto in full compliance with the terms and conditions of this Letter of Credit after 11:00 a.m. New York time, on a Business Day, we shall honor your demand for payment no later A-1 291 than 3:00 p.m. New York time, on the date specified, but no earlier than the following Business Day. All payments made by the Bank under this Letter of Credit shall be made with the Bank's own funds in immediately available funds to the account designated in the Annex delivered to the Bank in connection the request for payment hereunder. Each draft presented for payment against this Letter of Credit and each accompanying certification must be dated the date of their presentation to us, and may be presented only on a Business Day. As used in this Letter of Credit, "Business Day" shall mean any day other than (i) a Saturday, Sunday or a day on which banking institutions in the State of California or the State of New York are authorized or obligated by law or executive order to be closed, (ii) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to be closed and (iii) a day upon which commercial banks are authorized or obligated by law or executive order to be closed in the city in which demands for payment are to be presented under the Letter of Credit. Drafts must be marked conspicuously "Drawn under Bank of America, N.A. Irrevocable Direct Draw Letter of Credit No. ." Subject to the foregoing and the further provisions of this Letter of Credit, a demand for payment under this Letter of Credit shall be made by you at our office located at 333 South Beaudry Avenue, 19th Floor, Mailcode: CA9- 703-19-23, Los Angeles, California 90017-1466, Attention: Standby Letter of Credit Department or at any other office which may be designated by us by written notice delivered to you. Drafts and certificates may be presented to us in the form of a letter on your letterhead, signed by one of your authorized officers or transmitted by facsimile (facsimile number (213) 345-6694). As an accommodation to us, and not as a condition to drawing, we request that you confirm by telephone (telephone number (213) 345-6632) each such facsimile transmission of documents. If a demand for payment made by you hereunder does not, in any instance, conform to the terms and conditions of this Letter of Credit, we shall give you prompt notice that the purported negotiation was not effected in accordance with the terms and conditions of this Letter of Credit, stating the reasons therefor and that we are holding the relative documents at your disposal or are returning the same to you, as we may elect. Upon being notified that the purported negotiation was not effected in conformity with this Letter of Credit, you may attempt to correct any such nonconforming demand for payment if, and to the extent that, you as Issuing and Paying Agent are entitled (without regard to the provisions of this sentence) and able to do SO. Upon our honoring any draft, the Stated Amount and the amount available to be drawn hereunder by you by any subsequent draft shall be automatically decreased by an amount equal to the amount of such draft. However, in the event that the Bank receives from you or from the Obligor reimbursement of any drawing under this Letter of Credit, and provided that you have not received from the Bank a Notice of No Issuance in the manner described in the next paragraph, which Notice of No Issuance has not been rescinded, terminating or suspending our obligation to reinstate, the Stated Amount of this Letter of Credit will be reinstated (a) automatically without notice on any day when Notes are to be issued by an amount equal to the amount deposited into the Series A Note Fund and the Series B Note Fund held by the Trustee under the Indenture and (b) on any day by the amount of any reimbursement of any A-2 • • • 292 • • • drawing under this Letter of Credit received by the Bank (other than funds deposited into the Series A Note Fund or the Series B Note Fund pursuant to clause (a) above). In the event that the Bank receives reimbursement from the Obligor, the Bank will deliver to you a Notice of Reinstatement substantially in the form attached hereto as Annex N within 10 Business Days following the Bank's receipt of the reimbursement. In the event that the Bank Banks delivers to you a Notice of No Issuance substantially in the form of Annex F attached hereto to the effect that an Event of Default has occurred under the Reimbursement Agreement, you will use your best efforts to implement such Notice of No Issuance immediately but in any case no later than one hour following your receipt thereof. Such Notice of No Issuance may provide that, unless and until you are otherwise advised by the Bank: (a) no further Notes may be issued, (b) the Stated Amount of the Letter of Credit is reduced to an amount equal to the principal amount of (and, if applicable, interest on the Notes to their stated maturity dates) the Notes then outstanding and (c) the Letter of Credit will no longer be reinstated. In the event that the Bank on behalf of the Banks deliver to you a Rescission of Notice of No Issuance substantially in the form of Annex 0 attached hereto, the Letter of Credit will be reinstated to the amount specified therein and Notes may be issued thereafter. The Stated Amount of this Letter of Credit shall also be increased from time to time on each Increase Date specified in, and in the amounts set forth, in a notice from us to you in the form attached hereto as Annex K. The Stated Amount of this Letter of Credit shall also be reduced from time to time on each Decrease Date specified in, and in the amounts set forth in, a notice from us to you in the form attached hereto as Annex L (each, a "Decrease Notice"). As of the applicable Decrease Date and upon such reduction, the Stated Amount shall not be less than your certification in the applicable Decrease Notice of the sum of the principal amount of all outstanding Notes plus, if applicable, interest on such Notes to their stated maturity dates. By paying you an amount demanded in accordance with this Letter of Credit, we make no representation as to the correctness of the amount demanded or your calculations and representations on the certificates required of you by this Letter of Credit. This Letter of Credit shall expire on the earliest of the following (the "Expiration Date") (i) [EXPIRATION DATE], 2010, as such date may be extended by us upon delivery of a Notice of Extension substantially in the form of Annex G hereto (the "Stated Expiration Date"), (ii) the date on which we honor a draw request accompanied by your certification in the form of Annex B hereto for payment of Notes which will reduce the Stated Amount to $0.00, (iii) the date of our receipt of notice from you to the effect that an Alternate Credit Facility (as defined in the Indenture) in full and complete substitution for the Letter of Credit has been issued and is in effect, which notice shall be substantially in the form of the certificate attached hereto as Annex C, or (iv) the date which is five days after the date of our receipt of notice from you to the effect that no Notes (other than Notes with respect to which an Alternate Credit Facility has been issued and is in effect) remain outstanding under the Indenture and the Obligor does not A-3 293 contemplate any further issuance of Notes, which notice shall be substantially in the form of the certificate attached hereto as Annex D. This Letter of Credit shall be governed by and construed in accordance with the Uniform Customs and Practice for Documentary Credits (1993 Revisions), International Chamber of Commerce Publication 500 (the "UCP"), and, to the extent not inconsistent therewith, the laws of the State of New York; provided, however, that notwithstanding the provisions of Article 17 of the UCP, if this Letter of Credit expires during an interruption of business (as described in Article 17 of the UCP), the Bank agrees to effect payment under this Letter of Credit if a drawing which strictly conforms to the terms and conditions of this Letter of Credit is made within five (5) days after the resumption of business. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Notes), except only the Annexes and drafts referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except for such Annexes and drafts. Anything to the contrary in Article 48 of the UCP notwithstanding, this Letter of Credit is transferable any number of times, but only in the amount of the full unutilized balance hereof and not in part. Transfer may be made only to any person or entity whom you or any transferee hereunder advise us has been designated as a successor Issuing and Paying Agent under the Indenture. Transfer of the available drawing under this Letter of Credit to such transferee shall be effected by the presentation to us of this Letter of Credit accompanied by a request designating your successor in the form of Annex E hereto (Transfer Demand) attached hereto, with the signature of the appropriate officer signing on your behalf guaranteed by another one of your officers. Upon presentation, we shall forthwith effect a transfer of this Letter of Credit to your designated transferee. A-4 • • • 294 • • • We hereby agree, for the benefit of the beneficiary hereof, that all drafts and/or documents drawn and presented in accordance with the terms of this Letter of Credit will be duly honored upon presentation, as set forth herein. Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: By: Name: Title: A-5 295 • • • Annex A Payment of Principal of and Interest on Notes Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: We refer to your Letter of Credit No. (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. A. We hereby make demand under the Letter of Credit, by our presentment of the sight draft accompanying this Certificate, for payment of $ from the Letter of Credit to pay the principal amount of Notes in the amount of $ when due and interest accrued thereon in the amount of $ when due. B. Following your payment of the amount demanded hereunder, the Stated Amount of the Letter of Credit will be reduced by such amount. We hereby request that, following your payment of the amount set forth in Paragraph A, you reinstate the Letter of Credit in accordance with the terms thereof. The undersigned, a duly authorized officer of U.S. Bank Trust National Association or "We," hereby certifies to you that: 1. We are the Issuing and Paying Agent or a successor issuing and paying agent under the Indenture for the holders of the Obligor's Notes. 2. The amount of the draft accompanying this Certificate does not exceed the amount available on the date hereof to be drawn under the Letter of Credit. This amount was computed in accordance with the terms and conditions of the Notes and Indenture. This Letter of Credit has not terminated prior to the time of delivery of this Certificate and the accompanying draft. 3. The payment hereby demanded is requested to be made no later than 3:00 p.m. New York time, on [if this certificate and accompanying draft are presented at or before 11:00 a.m. New York time, on a Business Day, then insert a date which is the same Business Day on which those documents are delivered; if this certificate and an accompanying draft are delivered after 11:00 a.m. New York time, on a Business Day, then insert a date which is the next following Business Day on which those documents are delivered.] Unless otherwise agreed to in a writing signed by you and us, please [deposit/wire transfer] the amount hereby demanded Annex A-1 296 to our account number [insert account number] with [insert name and address of banking institution to receive funds]. 4. The principal amount of outstanding Notes plus the amount of accrued interest from the date of issuance until the maturity of the outstanding Notes does not exceed the Stated Amount of the Letter of Credit on the date hereof. IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] Annex A-2 • 297 • • • Annex B Final Payment of Principal of and Interest on Notes Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: We refer to your Letter of Credit No. (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. We hereby make demand under the Letter of Credit, by our presentment of the sight draft accompanying this Certificate, for payment of $ from the Letter of Credit to pay Notes in the amount of $ and interest accrued thereon in the amount of $ when due. The undersigned, a duly authorized officer of U.S. Bank Trust National Association or "We," hereby certifies to you that: 1. We are the Issuing and Paying Agent or a successor issuing and paying agent under the Indenture for the holders of the Obligor's Notes. 2. The amount of the draft accompanying this Certificate does not exceed the amount available on the date hereof to be drawn under the Letter of Credit. This amount was computed in accordance with the terms and conditions of the Notes and the Indenture. This Letter of Credit has not terminated prior to the time of delivery of this Certificate and the accompanying draft. 3. The payment hereby demanded is requested to be made no later than 3:00 p.m. New York time, on [if this certificate and accompanying draft are presented at or before 11:00 a.m. New York time, on a Business Day, then insert a date which is the next following Business Day on which those documents are delivered; if this certificate and an accompanying draft are delivered after 11:00 a.m. New York time, on a Business Day, then insert a date which is a Business Day and which is no earlier than the second Business Day immediately following the date those documents are delivered.] Unless otherwise agreed to in a writing signed by you and us, please [deposit/wire transfer] the amount hereby demanded to our account number [insert account number] with [insert name and address of banking institution to receive funds]. Annex B-1 298 4. Immediately following your payment of this draw under the Letter of Credit, the Stated Amount will be reduced to $0.00 and the Letter of Credit will be terminated automatically. 5. Following payment of the principal of and interest on all outstanding Notes with the proceeds of this drawing, no Notes will remain outstanding under the Indenture nor does the Obligor intend to issue any additional Notes under the Indenture. IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] • 299 Annex B-2 • • • Annex C Notice of Alternate Credit Facility Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: We refer to your Letter of Credit No. (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. The undersigned, a duly authorized officer of U.S. Bank Trust National Association or ("We"), hereby certifies to you that: 1. We are the Issuing and Paying Agent or a successor issuing and paying agent under the Indenture for the holders of the Obligor's Notes. 2. The conditions precedent to the acceptance of an Alternate Credit Facility set forth in the Indenture have been satisfied. 3. An Alternate Credit Facility in full and complete substitution for the Letter of Credit has been accepted by the Issuing and Paying Agent and is in effect. 4. There will be no further Advances requested from the Bank under the Letter of Credit. 5. Upon receipt by the Bank of this Certificate the Letter of Credit shall terminate with respect to all outstanding Notes, and the Letter of Credit is returned to you herewith for cancellation. 6. No payment is demanded of you in connection with this notice. Annex C-1 300 IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] 301 Annex C-2 • • • Annex D Notice re: No Outstanding Notes Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: We refer to your Letter of Credit No. (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. 1. We are the Issuing and Paying Agent or a successor issuing and paying agent under the Indenture for the holders of the Obligor's Notes. 2. No Notes (other than Notes with respect to which an Alternate Credit Facility is in effect) remain outstanding under the Indenture nor does the Obligor intend to issue any additional Notes under the Indenture. 3. There will be no further Advances requested from the Bank under the Letter of Credit, and the Letter of Credit is terminated and returned to you herewith for cancellation. 4. No payment is demanded of you in connection with this notice. 302 Annex D-1 IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] Annex D-2 • 303 • • • Annex E Transfer Demand Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Re: Instruction to Transfer Letter of Credit No. Ladies and Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee and Address] all rights of the undersigned beneficiary to draw under the above -referenced Letter of Credit in the amount of the full unutilized balance thereof. Said transferee has succeeded the undersigned as Issuing and Paying Agent under that certain Indenture, dated as of March 1, 2005 (the "Indenture") between the Riverside County Transportation Commission and U.S. Bank National Association, as trustee, with respect to the Riverside Transportation Commission Commercial Paper Notes (Limited Tax Bonds). By transfer, all rights of the undersigned beneficiary in such Letter of Credit are transferred to the transferee and the transferee shall have the sole rights as beneficiary thereof, including sole rights relating to any amendments, whether increases or extensions or other amendments and whether now existing, or hereafter made. All amendments are to be advised directly to the transferee without necessity of any consent of or notice to the undersigned beneficiary. By its signature below, the undersigned transferee acknowledges that it has duly succeeded to U.S. Bank Trust National Association, as Issuing and Paying Agent under the Indenture, and agrees to be bound by the terms of the Indenture as if it were the Issuing and Paying Agent originally appointed thereunder. Annex E-1 304 The advice of such Letter of Credit is returned herewith, and we ask you to endorse the Letter of Credit on the reverse thereof, and forward it directly to the transferee with your customary notice of transfer. Very truly yours, U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] Signature of the Above Party, Duly Authorized to Act on Behalf of U.S. BANK TRUST NATIONAL ASSOCIATION Authenticated By: [Name and Title] Acknowledged by [insert name of Transferee] as successor Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] Annex E-2 • 305 • STATE OF COUNTY OF • • ) ss. On [insert date] before me, the undersigned, a Notary Public in and for said State, personally appeared [insert name], known to me to be the [insert title] and [insert name], known to me to be the [insert title] of the corporation that executed the within instrument, on behalf of the corporation therein named, and acknowledged to me that such corporation executed the within instrument pursuant to its bylaws or a resolution of its board of directors. WITNESS my hand and official seal. [SEAL] [Notary Public's Signature] Acknowledged: Transferee By: Title: Annex E-3 306 • • • Annex F Notice of No Issuance Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Re: Notice of No Issuance Ladies and Gentlemen: We refer to our Letter of Credit No. (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. We hereby notify you that an Event of Default has occurred under the Reimbursement Agreement and is continuing. As a result, unless and until you have been advised otherwise by us: [Check the applicable boxes] ❑ No additional Notes may be issued pursuant to the terms of the Indenture; ❑ The Stated Amount of the Letter of Credit is reduced to $ [an amount equal to the principal amount of the outstanding Notes together with interest which will accrue thereon to the maturity date thereof]; ❑ The Letter of Credit will 110 longer be reinstated. IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: Annex F-1 307 • • • Annex G Notice of Extension Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Re: Notice of Extension Ladies and Gentlemen: Pursuant to Section 2.1(a) of the Reimbursement Agreement dated as of March 1, 2005 (the "Reimbursement Agreement"), by and between the Riverside County Transportation Commission (the "Obligor") and Bank of America, N.A. (the "Bank"), the Bank has approved an extension of Letter of Credit No. (the "Letter of Credit"), dated [LC DATE], effective as of (the "Effective Date"). The new Stated Expiration Date is . You are hereby authorized to attach this Notice of Extension to the Letter of Credit and to treat this Notice of Extension as an amendment to the Letter of Credit. The Obligor's acknowledgment hereof shall be deemed to be the Obligor's representation and warranty that all its representations and warranties contained in Section 4 of the Reimbursement Agreement are true and correct and will be true and correct as of the Effective Date and that no Event of Default has occurred and is continuing. Annex G-1 308 IN WITNESS WHEREOF, we have executed and delivered this certificate to the Issuing and Paying Agent as of the day of , • Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: By: Name: Title: Acknowledged as of , by RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Title: Acknowledged as of , by U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: Title: Annex G-2 • 309 • Annex H Sight Draft Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: This sight draft is presented to you for the amount of $ for the purposes set forth in the accompanying Certificate. Pay to U.S. Bank Trust National Association, on , , U.S. $ ( United States Dollars). Drawn under Bank of America, N.A., Irrevocable Direct Draw Letter of Credit No. Very truly yours, U.S. BANK TRUST NATIONAL ASSOCIATION, as Issuing and Paying Agent By: [Insert Name and Title of Authorized Officer] Drawn -on Party: Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Annex H-1 310 • • • Annex I Request for Increase of Stated Amount Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: The undersigned, a duly authorized representative of the undersigned Riverside County Transportation Commission (the "Obligor"), hereby certify to Bank of America, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit," the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows: 1. Pursuant to Section 2.12(b) of the Reimbursement Agreement dated as of March 1, 2005 (the "Reimbursement Agreement", to which reference is made for the definition of capitalized terms not otherwise defined herein), by and between the Obligor and the Bank, the Obligor hereby requests an increase in the Stated Amount of the Letter of Credit, in the amount of $ 2. The amount of the increase in the Stated Amount set forth in Paragraph 1 above does not exceed the Unutilized Amount. 3. Once so increased, the Stated Amount of the Letter of Credit shall equal $ The aggregate principal amount of Notes Outstanding under the Indenture (and, if applicable, interest on the Notes to their stated maturity dates), will not exceed the new Stated Amount of the Letter of Credit. 4. The Increase Date for which such increase is requested is , which is not more than five (5) days after the date the Bank receives this Request for Increase in Stated Amount. 5. All representations and warranties contained in Section 4 of the Reimbursement Agreement are true and correct and will be true and correct as of the Increase Date as if made on and as of the Increase Date and no Event of Default has occurred and is continuing and no event has occurred and is continuing which is or with the passage of time or giving of notice or both would be an Event of Default on and as of the Increase Date or will occur as a result of the increase in the Stated Amount of the Letter of Credit. Annex I-1 311 IN WITNESS WHEREOF, the undersigned has executed and delivered this certificate as of the day of cc: U.S. Bank Trust National Association, as Issuing and Paying Agent Very truly yours, RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: Annex I-2 • • • 312 • • • Annex J Request for Decrease of Stated Amount Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: The undersigned, a duly authorized representative of the undersigned Riverside County Transportation Commission (the "Obligor"), hereby certify to Bank of America, N.A. (the "Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit," the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows: 1. Pursuant to Section 2.12(c) of the Letter of Credit and Reimbursement Agreement dated as of March 1, 2005 (the "Reimbursement Agreement", to which reference is made for the definition of capitalized terms not otherwise defined herein), by and between the Obligor and the Bank, MICLA and the City hereby elect to reduce the Stated Amount of the Letter of Credit in the amount of $ , effective as of (the "Decrease Date"). 2. The Decrease Date for which such decrease is requested is , which is not more than five (5) days after the date the Bank receives this Request for Decrease in Stated Amount. 3. The new Stated Amount of the Letter of Credit will be $ . The aggregate principal amount of Notes Outstanding under the Indenture (and, if applicable, interest on the Notes to their stated maturity dates), will not exceed the new Stated Amount of the Letter of Credit. As of the Decrease Date and upon such reduction, the Stated Amount will not be less than the aggregate principal amount of all outstanding Notes (and, if applicable, interest on the Notes to their stated maturity dates). Annex J-1 313 IN WITNESS WHEREOF, the undersigned has executed and delivered this certificate as of the day of cc: U.S. Bank Trust National Association, as Issuing and Paying Agent Very truly yours, RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: Annex J-2 • 314 • • • Annex K Notice of Increase in Stated Amount Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Re: Notice of Increase in Stated Amount Ladies and Gentlemen: The undersigned, duly authorized signatories of Bank of America, N.A. (the `Bank"), hereby certify to U.S. Bank Trust National Association, (the "Issuing and Paying Agent"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit," the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, that pursuant to Section 2.12(b) of the Reimbursement Agreement dated as of March 1, 2005 (the "Reimbursement Agreement", to which reference is made for the definition of capitalized terms not otherwise defined herein), by and between the Riverside County Transportation Commission (the "Obligor") and the Bank, the Bank has approved an increase in the Stated Amount of Letter of Credit No. (the "Letter of Credit"), dated [LC DATE], in the amount of $ , effective as of (the "Increase Date"). The new Stated Amount of the Letter of Credit is $ . You are hereby authorized to attach this Notice of Increase in Stated Amount to the Letter of Credit and to treat this Notice of Increase in Stated Amount as an amendment to the Letter of Credit. IN WITNESS WHEREOF, we have executed and delivered this certificate to the Issuing and Paying Agent as of the day of Annex K-1 315 Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: By: Name: Title: Annex K-2 • 316 • • Annex L Notice of Decrease in Stated Amount Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Re: Notice of Decrease in Stated Amount. Ladies and Gentlemen: The undersigned, duly authorized signatories of Bank of America, N.A. (the "Bank"), hereby certify to U.S. Bank Trust National Association (the "Issuing and Paying Agent"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit," the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, that the Stated Amount of the Letter of Credit shall be decreased in the amount of $ , effective as of (the "Decrease Date"). The new Stated Amount of the Letter of Credit is $ . You are hereby authorized to attach this Notice of Decrease in Stated Amount to the Letter of Credit and to treat this Notice of Decrease in Stated Amount as an amendment to the Letter of Credit. IN WITNESS WHEREOF, we have executed and delivered this certificate to the Issuing and Paying Agent as of the day of Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: By: Name: Title: Annex L-1 317 • Annex M Request for Extension Irrevocable Direct Draw Letter of Credit No. Bank of America, N.A., 333 South Beaudry Avenue, 19th Floor Mailcode: CA9-703-19-23 Los Angeles, California 90017-1466 Attention: Standby Letter of Credit Department Ladies and Gentlemen: The undersigned, a duly authorized representative of the undersigned Riverside County Transportation Commission (the "Obligor"), hereby certify to Bank of America, N.A. (the `Bank"), with reference to Irrevocable Letter of Credit No. (the "Letter of Credit," the terms defined therein and not otherwise defined herein being used herein as therein defined) issued by the Bank in favor of the Issuing and Paying Agent, as follows: 1. Pursuant to Section 2.12(a) of the Reimbursement Agreement dated as of March 1, 2005 (the "Reimbursement Agreement", to which reference is made for the definition of capitalized terms not otherwise defined herein), by and between the Obligor and the Bank, the Obligor hereby requests an extension of the Stated Expiration Date to 2. All representations and warranties contained in Section 4 of the Reimbursement Agreement are true and correct and will be true and correct as of the date of this Certificate as if made on and as of the date hereof and no Event of Default has occurred and is continuing and no event has occurred and is continuing which is or with the passage of time or giving of notice or both would be an Event of Default on and as of the date hereof or will occur as a result of the extension of the Stated Expiration Date of the Letter of Credit. IN WITNESS WHEREOF, the undersigned has executed and delivered this certificate as of the day of , • cc: U.S. Bank Trust National Association, as Issuing and Paying Agent Very truly yours, RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: Annex M-2 • 319 • • • Annex N Notice of Reinstatement Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Re: Notice of Reinstatement Ladies and Gentlemen: We refer to our Letter of Credit No. dated [LC DATE], 2005 (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. We hereby notify you that the Riverside County Transportation Commission has reimbursed us for a draw or draws under our Letter of Credit No. in the amount of $ . As a result, the Letter of Credit was reinstated on to a Stated Amount of $ IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: Annex N-1 320 • • • Annex 0 Rescission of Notice of No Issuance Irrevocable Direct Draw Letter of Credit No. Beneficiary: U.S. Bank Trust National Association, as Issuing and Paying Agent Re: Rescission of Notice of No Issuance Ladies and Gentlemen: We refer to our Letter of Credit No. (the "Letter of Credit"). Any term below which is defined in the Letter of Credit shall have the same meaning when used herein. We hereby notify you that the Notice of No Issuance dated and delivered by us to you is hereby rescinded. As a result: [Check the applicable boxes] 1. Further Notes may be issued pursuant to the terms of the Indenture which may be supported by the Letter of Credit; to $ 2. The Stated Amount of the Letter of Credit is reinstated to an amount equal 3. The Letter of Credit will continue to be reinstated in accordance with its terms. IN WITNESS WHEREOF, we have executed and delivered this certificate as Issuing and Paying Agent as of the day of Very truly yours, BANK OF AMERICA, N.A. By: Name: Title: Annex 0-1 321 • • • EXHIBIT B [FORM OF REVOLVING NOTE] REVOLVING NOTE RIVERSIDE COUNTY TRANSPORTATION COMMISSION (the "Obligor"), for value received, hereby promises to pay to BANK OF AMERICA, N.A. (the "Bank"), or registered assigns, under the Reimbursement Agreement hereinafter referred to, at the principal office of the Bank in Los Angeles, California, the sum of DOLLARS or, if less, the aggregate principal amount of all drawings paid by the Bank under the Letter of Credit and all Advances and Term Loans made by the Bank pursuant to the Reimbursement Agreement, together with accrued and unpaid interest thereon. The unpaid principal amount hereof from time to time outstanding shall bear interest at the rate or rates and be payable as provided in and calculated in the manner set forth in the Reimbursement Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America. Annexed hereto and made a part hereof is a grid (the "Grid") on which shall be shown all drawings paid by the Bank and all Advances and Term Loans outstanding from time to time under the Reimbursement Agreement and the amounts of principal and interest payable and paid from time to time under the Reimbursement Agreement. The Obligor hereby appoints the Bank as its agent to endorse the principal amounts owing to the Bank and the maturity schedule therefor pursuant to Section 2.4(a) and 2.4(e) of the Reimbursement Agreement respecting outstanding Advances and Term Loans with interest until payment in full pursuant to the terms of this Note, and the date and the amount of each such drawing, Advance or Term Loan or principal or interest repayment made hereunder. In any legal action or proceeding in respect of this Note, the entries made in such accounts shall be prima facie evidence of the existence and the amounts of the obligations of the Obligor recorded therein. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, a Reimbursement Agreement dated as of March 1, 2005 (the "Reimbursement Agreement"), as the same may at any time be amended or modified and in effect, by and between the Obligor and the Bank, to which reference is hereby made for a statement of said terms and provisions, including those under which this Note may be paid prior to its due date or its due date accelerated. The Obligor hereby agrees to pay or cause to be paid all expenses, including reasonable attorneys' fees and legal expenses, incurred by the holder of this Note in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise. Exhibit B-1 322 This Note is made under the laws of the State of California, and for all purposes shall be governed by and construed in accordance with the laws of said State, without regard to principles of conflicts of law. Capitalized terms not otherwise defined herein have the meaning set forth in the Reimbursement Agreement. It is hereby certified that all conditions, acts and things required to exist, happen and be performed under the Reimbursement Agreement precedent to and in the issuance of this Note, exist, have happened and have been performed, and that the issuance, authentication and delivery of this Note have been duly authorized by resolution of the Obligor duly adopted. The Obligor hereby waives presentment for payment, demand, protest, notice of protest, notice of dishonor and all other notices and demands whatsoever. IN WITNESS WHEREOF, the RIVERSIDE COUNTY TRANSPORTATION COMMISSION has caused this Note to be duly executed in its name by the manual or facsimile signature of an Authorized Officer as of March [ 1, 2005. RIVERSIDE COUNTY TRANSPORTATION COMMISSION ATTEST: By: Title: By: Title: Exhibit B-2 • 323 • • • Date REVOLVING NOTE GRID DRAWINGS, ADVANCES AND TERM LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST Drawing, Advance or Term Loan Amount of Drawing, Advance or Term Loan Principal Amount of Advances or Term Loans Repaid Amount of Interest on Advances or Term Loans Repaid Aggregate Advance Notation Balance Made By Note: Additional pages of this Revolving Note and Revolving Note Grid may be attached to the Revolving Note as may be necessary to record certain information regarding each drawing, Advance or Term Loan. Exhibit B-3 324 rtou`? 'Ira it 2o at o n . COMMERCIAL PAPER PROGRAM Theresia Trevino Chief Financial Officer Fe bruary 9, 2005 NEW MEASURE A PROJECT NEEDS • New Measure A project list differs from Existing Measure A project list • Some New Measure A projects require initial investment prior to 2009 • Land and right of way acquisition • Initial engineering and other project development • Estimated gross project costs of $192,000,000 • Existing Measure A limits the availability of revenues to support additional borrowing today • Existing Measure A authorization amount is $525,000,000 • New Measure A authorizes $500,000,000 outstanding at any time • Today's financing relies on receipt of New Measure A taxes not collected until 2009 • But, . .. the community needs the assets being financed now — and all of those assets have significant costs that increase as time passes • Commission needs liquidity to enable other financial arrangements with the State Fe bruary 9, 2005 RCTC Commercial Paper Program Page 1 FINANCING STRUCTURE CONSIDERATIONS ♦ Effective permanent project finance requires a high level of certainty regarding: • What the projects will cost ♦ When the funds will be spent Permanent Financing - Kno wn amounts and timing Long-term Fix ed-rate Bo nds T Fix ed Payments February 9, 2005 VS. Pr oject (Construction) Financing - Unknown amounts and timing y Commercial Paper (Line of Credit) V Flexibility/Variable Payments RCTC Commercial Paper Program Page 2 COMMERCIAL PAPER IS BEST OPTION • The use of commercial paper as interim financing allows: • Flexible issuance timing: issue what you need, when you need it ♦ Much lower rate than fixed interest bonds • Currently 1.9% for approximately 30 days versus 5.0 % fixed for 30 years ♦ Ability to "roll over" and include carrying costs (interest and fees) until New Measure A funds are available in June 2009 or long term refinancing is a viable option • Long term financing would require Capital Appreciation (zero coupon) debt that would result in higher interest rates over the entire debt term February 9, 2005 RCTC Commercial Paper Program Page 3 CP PROGRAM PLAN OF FINANCING ♦ CP Program initially sized at $185,000,000 • Authorization for $200,000,000 in CP Notes • Construction Financing (similar to line of credit): ♦ Short term • Relies on periodic "rollover " over an interim period $185,000,000 CP Program l � $150,000,000 Pro ject Compo nent - Interim Funding for capital n eeds February 9, 2005 $35,000,000 Expense Comp onent - A ccrued interest - Fees RCTC Comme rcial Paper Program Page 4 CP PROGRAM PLAN OF FINANCING ♦ CP issued at short-term interest rates • CP maturity of up to 270 days ♦ Third party liquidity and credit facility (Direct Pay Letter of Credit) used to support the CP program • When each CP issue matures, paper refinanced by issuance of new CP in the amount of the maturing principal plus accrued interest and fees • Subsequent take out of CP with long term fixed rate debt • Expected within four years • Refund all or a portion of the outstanding CP February 9, 2005 RCTC Commercial Paper Pro gram Page 5 CP PROGRAM PARTICIPANTS ♦ CP Program Financing Team RCTC Eric Haley Executive Director Theresia Tre vin o Chief Fina ncial Officer Consultants General Counsel Bond Counsel Disclosure Counsel Financial Adviso r Commercial Paper Dealers February 9, 2005 Best, Best & Krieger Orrick, Herrington & Sutcliffe Nossaman, Guth ner, Kn ox & Elli ott Fieldma n, Rolapp & Associates Lehman Brothers Banc of America Securities RCTC Commercial Paper Program Page 6 CP PROGRAM PLAN OF FINANCING • Direct Pay Letter of Credit • Bank of America (Aa1/AA rated) • 5 -year term, subject to annual 1 year extensions • Annual Fee: 21 bps (utilized portion), 16 bps (unutilized portion) • $185,000,000 commitment could be increased with Bank approval ♦ Issuing and Paying Agent • U.S. Bank Trust National Association • $1,250 annual administration fee/series ♦ CP Dealers • Lehman Brothers and Banc of America Securities • 4.5 basis point annual remarketing fee February 9, 2005 RCTC Commercial Paper Program Page 7 NEXT STEPS: CP FINANCING SCHEDULE • Subject to Board approval, RCTC contemplates the following financing schedule: ♦ February 17, 2005 —Receive Ratings from Moody's and S&P + Closing — March 2005 (or as funds needed) • Initial CP Issuance — March 2005 (or as funds needed) • Initial and subsequent CP issuance amounts will be determined by ongoing capital needs and related cash flows • Issuance amounts need to be sized to allow for cost- effective marketing of CP February 9, 2005 RCTC Commercial Paper Program Page 8 AGENDA ITEM 8 PRESENTATION AGENDA ITEM 9 • PRESENTATION • • • RIVERSIDE COUNTY TRANSPORTA TION COMMISS/ON DATE: February 9, 2005 TO: Riverside County Transportation Commission FROM: Robert Yates, Program Manager Brian Cunanan, Staff Analyst THROUGH: Marilyn Williams, Director of Regional Programs and Public Affairs SUBJECT: Demonstration of CommuteSmart.info Website STAFF RECOMMENDATION: This item is for the Commission to receive and file the demonstration of a new website, CommuteSmart.info, recently launched to serve commuters and employers throughout a five county region. BACKGROUND INFORMATION: In recognition of the growing congestion levels within Riverside County and the Southern California region, on -going efforts to educate drivers regarding the benefits of ridesharing play an important role in reducing trips on freeways and local streets. The Commission's Commuter Assistance Program provides a number of incentives and support services to Riverside County residents and employers in support of ridesharing options including carpooling and vanpooling, commuter rail, public bus, walking, bicycling and telecommuting. In addition, commuter services are coordinated at the regional level between the county transportation commissions (OTC's) in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. The five county partnership has affected a number of rideshare services that are delivered locally but funded and developed at the regional level to better serve commuters whether they live two miles from work or eighty-two miles from work. Recognizing the value of the internet in providing resources cost effectively to a broad audience base, the CTC's recently launched a new full service website, www.CommuteSmart.info, to serve both commuters and employers who are seeking information related to rideshare options, traffic conditions, and program assistance. Once the CTC's made the decision to move forward, RCTC staff took the lead role in the development and implementation of the website. From concept to reality, the website took under four months to design and code. The short timeframe is a reflection of the high level of commitment and coordination by the Agenda Item 9 325 staffs' of the five CTC's. RCTC was able to move the project forward quickly based on its annual contract with Geographics, a Riverside based firm, who performs a broad array of communication services for the Commission. Staff will demonstrate the features and functionality of the website for Commissioners highlighting how the website brings together several important products developed by public and public/private partnerships. Attachment: Press Enterprise Article on CommuteSmart.info • Agenda Item 9 326 • Web site offering freeway updates TRAFFIC: Drivers can get real-time information on roadway conditions in the Inland area. 11:34 PM PST on Sunday, January 23, 2005 By BRADLEY WEAVER J The Press -Enterprise Inland commuters have a new ally in their battle against gridlock. Transportation leaders from five counties, including Riverside and San Bernardino, launched a Web site today that gives Southern California commuters real-time roadway conditions through color -coded maps and cameras mounted above freeways. The Web site, www.commutesmart.info, lets drivers browse live video snapshots to help decide which routes they want to take, avoiding problem spots. Drivers can also get estimated freeway speeds and travel times. • • "We are starting the service with a great deal of information, but I'm confident that it will continue to grow as an important resource for commuters throughout the region," Riverside County Transportation Commission Chairwoman Robin Lowe said. "I expect this to become the best free resource on transportation in Southern California." Commuters say the resource couldn't come at a better time. Inland traffic has deteriorated more quickly than anywhere else in the nation and drivers spend an average of 57 hours stuck in gridlock each year, compared with nine hours two decades ago, according to a recent national study. "We'll take any help we can get," said Redlands commuter Paul Graham. "I'm skeptical that a Web site will solve any of our traffic problems, but it could tell me what to expect or what freeways to avoid." Traffic is mounting in the Inland area as more people move to Riverside and San Bernardino counties in search of affordable homes. Road improvements have been slow due to state budget cuts. Gov. Schwarzenegger's latest budget proposal calls for the suspension of $1.2 billion in transportation money to help pull the state out of its financial woes. For the Inland Agenda Item 9 327 RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMISSION MEETING COMMISSIONER SIGN -IN SHEET February 9, 2005 NAME AGENCY CONTACT NUMBER �7, - / < . tf r (7_1(- lic-t v� 95 / 9' 2 - Ot e kvvi ,// x % d,/-- eP j//e - .$-/ z//3 3oeg %-,,,vi, 744.a., Alo rr) 4.967 ) 735--2190 h o u .r v- - ' / - _ _ •� -/ ass =iiv �H'�O NI1��'' ‘D+35-o-c7Gl �?� 44, 7/e`i c2.2 e.2-4--4____ 9S-7-2,5"--3.5-co ('r /2/ Ai& ()(7Xrevs 0-jc`1 - VOS:3 -/w.cr1 % -2-, „ /--e- -;oa,.J 9� -46'6--/4 a 2---_/)62-.G /A' .45--r ,j),/ OZ y GTo c. q5-/ ' 7g7 -. /Ll 11.--;:t- .1 5;a yLc AIL- 7-s- l3 / Ii -62 t o,',1 f S l I (--- ---1 /2_,( (plc/ J - - L 17 a/i � - 1-- is r , i•sJ---(°s--- r gel., et e,2 s o ,J LA e?0 / ��0 7G o -,5'6 t/ -02? —\c L ) �/ ��� Ls.c��-�. C o 0 Nr-C ii -1 - 5 [3 -(c 017.5 :6,4 .44¢5 // ja- i/L 'SY p1 - e.c%c- Or 0t31-�2is l�l,J�c�(-4 4 YS/) C ?5/.G i(e) • to � o a -e ✓4-- ' 15 c r - (3 cb v r/, o �� ` 1- 767- 5526 i\i\c- �� a�,v e v_ Sia0i.o%3 /4/ti - P zei R i ?a,,G. 76o'//3 Q a 11 y ,/e,,p7-,m) Ati/ it) 1-4,-/ (--, 7',v - 2-Vv-i es, /ltx, cAhs c'A ,_ fAE1 --Rae) $35'- 37 A J . re._. - 0 -398= 35'02 tt�7L�. �Ir /u. /_�`. �/ / (i , o. ; 9, %7 /4 RIVERSIDE COUNTY TRANSPORTATION ROLL CALL February 9, 2005 COMMISSION Present Absent ,I: 0 County of Riverside, District D County of Riverside, District II 0 County of Riverside, District I I I O County of Riverside, District IV 171 0 County of Riverside, District V 0/ 0 City of Banning O 0 City of Beaumont O 0 City of Blythe 0. 0 City of Calimesa O City of Canyon Lake O City of Cathedral City O City of Coachella -I; 0 City of Corona 0 — 0 City of Desert Hot Springs O City of Hemet O City of Indian Wells O City of Indio .© 0 City of La Quinta .� a City of Lake Elsinore ria 0 City of Moreno Valley E 0 City of Murrieta .-7 0 City of Norco •-0"' 0 City of Palm Desert ,17i 0 City of Palm Springs _0' 0 City of Perris O 0 City of Rancho Mirage O 0 City of Riverside .©% 0 City of San Jacinto E" 0 City of Temecula _171 0 Governor's Appointee, Caltrans District 8