Loading...
03 March 24, 2008 Budget & Implementation83616 RECORDS TIME: DATE: LOCATION: • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE MEETING AGENDA 9:30 a.m. Monday, March 24, 2008 BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside ***COMMITTEE MEMBERS*** Steve Adams, Chair / Andy Melendrez, City of Riverside Roger Berg, Vice -Chair / Jeff Fox, City of Beaumont Joseph DeConinck / Robert Crain, City of Blythe John Chlebnik / Ray Quint°, City of Calimesa Mary Craton / John Zaitz, City of Canyon Lake Gregory S. Pettis / Kathleen DeRosa, City of Cathedral City Eduardo Garcia / Steven Hernandez, City of Coachella Yvonne Parks / Scott Matas, City of Desert Hot Springs Terry Henderson / Don Adolph, City of La Quinta Bob Magee / Robert L. Schiffner, City of Lake Elsinore Rick Gibbs / Kelly Bennett, City of Murrieta Gordon Moller / Alan Seman, City of Rancho Mirage Ron Roberts / Jeff Comerchero, City of Temecula Jdhn F. Tavaglione, County of Riverside, District II ***STAFF*** Anne Mayer, Executive Director Theresia Trevino, Chief Financial Officer ***AREAS OF RESPONSIBILITY*** Annual Budget Development and Oversight Countywide Strategic Plan Legislation Measure A Implementation and Capital Programs Public Communications and Outreach Programs Competitive Grant Programs: TEA 21-CMAQ & STP, Transportation Enhancement and SB 821-Bicycle & Pedestrian SAFE/Freeway Service Patrol TUMF Program Comments are welcomed by the Committee. If you wish to provide comments to the Committee, please complete and submit a Speaker Card to the Clerk of the Board. 11.36.06 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:30 a.m. Monday, March 24, 2008 BOARD ROOM County Administrative Center 4080 Lemon Street, First Floor Riverside, California /n compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if you need special assistance to participate in a Committee meeting, please contact the Clerk of the Board 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. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. PUBLIC COMMENTS - Each individual speaker is limited to speak three (3) continuous minutes or less. The Committee may, either at the direction of the Chair or by majority vote of the Committee, waive this three minute time limitation. Depending on the number of items on the Agenda and the number of speakers, the Chair may, at his/her discretion, reduce the time of each speaker to two (2) continuous minutes. Also, the Committee may terminate public comments if such comments become repetitious. in addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Committee shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Under the Brown Act, .the Board should not take action on or discuss matters raised during public comment portion of the agenda which are not listed on the agenda. Board members may refer such matters to staff for factual information or to be placed on the subsequent agenda for consideration. Budget and Implementation Committee March 24, 2008 Page 2 5. APPROVAL OF MINUTES - FEBRUARY 25, 2008 6. ADDITIONS/REVISIONS (The Committee 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 Committee subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Committee. if there are less than 2/3 of the Committee 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.) 7. 8. 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. 7A. ANNUAL INVESTMENT POLICY REVIEW Overview This item is for the Committee to: 1) Adopt the Annual Investment Policy; and 2) Forward to the Commission for final action. PROPOSED DEBT ISSUANCE Overview This item is for the Committee to: Page 1 Page 13 1) Direct staff to continue efforts to develop a plan to refinance the outstanding commercial paper; and 2) Forward to the Commission for final action. • Budget and Implementation Committee March 24, 2008 Page 3 9. POLICY REGARDING INDIRECT COST REIMBURSEMENTS Overview This item is for the Committee to: Page 206 1) Approve the policy regarding the disposition of indirect cost reimbursements; 2) Adopt Resolution No. 08-01 1, "Resolution of the Riverside County Transportation Commission Authorizing the Disposition of Indirect Cost Reimbursements"; and 3) Forward to the Commission for final action. 10. FISCAL YEAR 2007/08 MEASURE A CAPITAL IMPROVEMENT PLAN AMENDMENT FOR LOCAL STREETS AND ROADS FOR THE CITY OF PALM SPRINGS Page 211 Overview This item is for the Committee to: 1) Approve the amendment to the FY 2007/08 Measure A Capital Improvement Plan (CIP) for local streets and roads for the city of Palm Springs (Palm Springs) as submitted; and 2) Forward to the Commission for final action. 11. AGREEMENTS RELATED TO THE CONSTRUCTION OF THE STATE ROUTE 74 WIDENING PROJECT BETWEEN DEXTER AVENUE IN THE CITY OF LAKE ELSINORE AND 7' STREET IN THE CITY OF PERRIS Page 215 Overview This item is for the Committee to: 1) Approve Agreement No. 99-31-302-07; Amendment No. 7 to Agreement No. RO-9954, with SC Engineering for additional engineering design and survey services for State Route 74 widening project between Dexter Avenue in the city of Lake Elsinore (Lake Elsinore) and 7th Street in the city of Perris (Perris), for a base amount of $354,636 and a contingency amount of $45,364 for a total amendment not to exceed amount of $400,000; Budget and Implementation Committee March 24, 2008 Page 4 2) Approve Agreement No. 08-31-092-00 to Southern California Edison (SCE) with a revised not to exceed Commission cost of $701,260 and a revised cost share, for the cost to relocate the SCE facilities, between the Commission (51 %) and SCE (49%), which was required to allow for construction of the SR-74 widening and realignment projects; 3) Approve Agreement No. 04-51-030-04, Amendment No. 4 to Agreement No. 04-51-030, with Epic Land Solutions (Epic) for property management support services for .Commission -owned parcels for a not to exceed amount of $70,000 and contingency amount of $10,000 for a total amendment not to exceed amount of ,$80,000; 4) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission; and 5) Forward to the Commission for final action. 12. STATE AND FEDERAL LEGISLATIVE UPDATE Page 224 Overview This item is for the Committee to: 1) Receive and file the State and Federal Legislative Update; and 2) Forward to the Commission for final action. 13. ITEM(S) PULLED FROM CONSENT CALENDAR AGENDA 14. COMMISSIONERS / STAFF REPORT Overview This item provides the opportunity for the Commissioners and staff to report on attended and upcoming meeting/conferences and issues related to Commission activities. 15. ADJOURNMENT AND NEXT MEETING The next Budget and Implementation Committee meeting is scheduled to be held at 9:30 a.m., Monday, April 28, 2008, Board Chambers, First Floor, County Administrative Center, 4080 .Lemon Street, Riverside. Absent County of Riverside, District II City of Beaumont City of Blythe City of Calimesa. City of Canyon Lake City of Cathedral City City of Coachella City of Desert Hot Springs City of La Quinta City of Lake Elsinore. City of Murrieta City of Rancho Mirage ,y O City of Riverside ,® City of Temecula 0 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE ROLL CALL MARCH 24, 2008 Present BUDGET AND IMPLEMENTATION COMMITTEE COMMISSIONER SIGN -IN SHEET MARCH 24, 2008 AGENCY E MAIL ADDRESS NAME '-eL rcE:. 6 G` --C_r---. C'j�Y a C.�e,_ c�z_ (C, e--,-Qi a-�uF-% c.—dfra t , Ore--C,91f —)�..Coc_J,04)C -��3c,j 6,2_ a+-% 062, '3 ` ic v[� CT.6�� t-,' &.� It- 5 a.(,„ /ZI u k/C � /4 l na4/1/0- � ) / Aiel,�DnJ LA DU,i+/11-4 ,e(-62dj()T '1".7f' 4110 Mk= Pigs • • • AGENDA ITEM 5 MINUTES • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE Monday, February 25, 2008 MINUTES CALL TO ORDER Chair Steve Adams called the meeting of the, Budget and Implementation Committee to order by at 9.31 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside, California, 92501. 2. PLEDGE OF ALLEGIANCE At this time, Commissioner Bob Magee led the Budget and Implementation Committee in a flag salute. 3. ROLL CALL Members/Alternates Present Steve Adams Roger Berg John Chlebnik Mary Craton Rick Gibbs Terry Henderson Bob Magee Yvonne Parks Ron Roberts John Tavaglione 4. PUBLIC COMMENTS Members Absent Joseph DeConinck Eduardo Garcia Gordon Moller Gregory Pettis There were no requests to speak from the public. Budget and Implementation Committee Minutes February 25, 2008 Page 2 5. APPROVAL OF MINUTES JANUARY 28, 2008 M/SIC (Henderson/Berg) to approve the minutes of January 28, 2008, as submitted. 6. ADDITIONS / REVISIONS There was additional information on: • Agenda Item 7B, "Quarterly Financial Statements • Agenda item 10, "Measure A Western County Regional Arterial Cafl for Projects" and • Agenda Item 12, "State Legislative Update". 7. 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. M/S/C (Henderson/Craton) to approve the following Consent Calendar item(s): 7A. MID -YEAR BUDGET ADJUSTMENTS 1) Approve a $122,000 increase in FY 2007/08 expenditures for mid -year budget adjustments; and 2) Forward to the Commission for final action. 7B. QUARTERLY FINANCIAL STATEMENTS 1) Receive and file the Quarterly Financial Statements for the period ended December 31, 2007; and 2) Forward to the Commission for final action. 7C. SINGLE SIGNATURE AUTHORITY REPORT 1) Receive and file the Single Signature Authority Report for the second quarter ended December 31, 2007; and 2) Forward to the Commission for final action. • • • Budget and Implementation Committee Minutes February 25, 2008 Page 3 7D. QUARTERLY INVESTMENT REPORT 1► Receive and file the Quarterly Investment Report for the quarter ended December'31, 2007; and 2) Forward to the Commission for final action. 8. PROPOSED POLICY GOALS AND OBJECTIVES FOR FISCAL YEAR 2008/09 BUDGET Theresia Trevino, Chief Financial Officer, provided an overview of the proposed policy goals and objectives for FY 2008/09 budget and highlighted the following areas: • Goals and objectives — Establishes strategic direction, articulates upcoming goals, and incorporated into budget; • Changes — Promote mobility, mitigate and address the impact of goods movement, foster environmental stewardship, support transportation choices through intermodalism and accessibility, prioritize public and agency communications, and encourage economic development; • Mobility — Complete 1989 Measure A programs, implement environmental process on key delivery plan projects, obtain toll and design -build authority, circulate draft State Route 79 environmental document, and include ROCA participation regarding SR-91 improvements; • Goods movement — Remain committed to regional approach, work closely with other agencies regarding environmental justice analysis and Multi -County Goods Movement Action Plan (MCGMAP) outreach; • Environmental stewardship — Consider greenhouse gas emissions mandates; • Economic development — This section was deleted as this is not one of the Commission's primary responsibilities. The Commission will continue to support economic development through interaction with local agencies; • Transportation choices — Promote TRIP program, pursue goals and objectives of Public Transit -Human Services Transportation Coordination Plan; • Communications — Develop strategy for reauthorization of Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); Budget and Implementation Committee Minutes February 25, 2008 Page 4 • Other — Minor changes to indicate new stage of implementation related to programs and projects, revised target dates for certain project activities; include use of other short-term financing vehicles for 2009 Measure A projects as part of debt management policies; and • Next steps - April 28 Budget and Implementation Committee review of executive summary for proposed budget, May 14 Commission to open public hearing for proposed budget, and June 11 Commission to adopt final budget. At Commissioner Terry Henderson's request, Theresia Trevino read the economic development section that is proposed to be deleted. Commissioner Henderson concurred that this section could be deleted as economic development is automatically taken into consideration. M/S/C (Craton/Gibbs) to: 1) Approve the proposed Commission Policy Goals and Objectives for the Fiscal Year 2008/09 Budget; and 2) Forward to the Commission for final action. 9. AGREEMENTS TO MCGLADREY AND PULLEN, LLP AND MAYER HOFFMAN MCCANN P.C. FOR AUDIT SERVICES FOR THE COMMISSION AND FOR THE MEASURE A RECIPIENTS/TRANSPORTATION DEVELOPMENT ACT CLAIMANTS Theresia Trevino provided an overview of the agreements with McGladrey and Pullen, LLP and Mayer Hoffman McCann P.C. for audit services for the Commission and for the Measure A recipients/Transportation Development Act claimants. M/S/C (Henderson/Craton) to: 1) Award Agreement No. 08-19-075-00 to McGladrey and Pullen, LLP to perform audit services related to the Commission for the amount of $363,950, plus a contingency amount of $36,050 for additional services that may be required in connection with debt offerings and other transactions, for a total award of $400,000; • • • Budget and implementation Committee Minutes February 25, 2008 Page 5 2) Award Agreement No. 08-19-074-00 to. Mayer Hoffman McCann P.C. to perform audit services related to the Commission's Measure A recipients/Transportation Development Act (TDA) claimants for the amount of $589,218, plus a contingency amount of $50,782 for additional services that may be required due to additional recipients or claimants to be audited, for a total award of $640,000; 3) Authorize the Chair, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; 4) Forward to the Commission for final action. 10. MEASURE A WESTERN COUNTY REGIONAL ARTERIAL CALL FOR PROJECTS Shirley Medina, Program Manager, provided an overview of the Measure A Western County Regional Arterial call for projects. A threshold has been established of 2015 for projects to begin construction. She explained that staff wanted to gage the •needs of regional arterials along with the 10-year Western Riverside Highway Delivery Plan in order to develop a cash flow forecast and look at the possibility of bonding for projects to commence at an earlier date. A total of 35 projects were submitted and the total amount of the request is $650 million, which is more than double the amount available. She provided an update on the status of the revenue forecasts and priorities that were discussed with the Western County Public Works Directors. Staff has requested the cities and the county review their schedules and provide an updated schedule as Commission staff has concerns with some of the project schedules. The revised project recommendations will be submitted at the May Commission meeting for approval. In response to Commissioner Rick Gibbs' questions regarding funding, Technical Advisory Committee (TAC) review, and submission to the Commission for approval, Shirley Medina clarified the projects approved for TUMF regional funding on the list of projects submitted. Additionally, there is a possibility of using bonds along with the 10-year Western Riverside Highway Delivery Plan to assist in fund the projects. Staff is working with the TAC to develop the program and receive input for staff's consideration and bring a recommendation to the Commission for approval at its May meeting. Anne Mayer, Executive Director, discussed the areas that need to be addressed should the Commission decide to move forward with bonding for these projects. Budget and Implementation Committee Minutes February 25, 2008 Page 6 In response to Commissioner Mary Craton's question regarding project priority, Shirley Medina replied that the projects are listed in random order, not priority order. Commissioner Ron Roberts asked for clarification as to why the city of Banning was on the list and no funds are being requested. Shirley Medina apologized for the omission and will provide a revised list to the Commissioners. In response to Commissioner Roger Berg's request, Shirley Medina confirmed that staff will verify that the right-of-way has been secured for the Ramsey Street extension project for the city of Banning. M/S/C (Gibbs/Craton) to: 1) Receive and file the status of Measure A Western County Regional Arterial call for projects; and 2) Forward to the Commission for final action. 11. CITY OF CORONA TRANSPORTATION UNIFORM MITIGATION FEE PROGRAMMING REQUEST FOR ADDITIONAL FUNDING FOR THE FOOTHILL PARKWAY EXTENSION PROJECT FROM PASEO GRANDE TO LINCOLN AVENUE Shirley Medina provided an overview of the city of Corona Transportation Uniform Mitigation Fee (TUMF) programming request for additional funding for the Foothill Parkway extension project from Paseo Grande to Lincoln Avenue. M/S/C (Henderson/Gibbs) to: 1) Approve the city of Corona's request to increase the Transportation Uniform Mitigation fee (TUMF) Regional Arterial funds for the right-of-way phase on the Foothill Parkway extension project from $2 million to $12 million; 2) Approve an increase for expenditures of $10 million in the FY 2007/08 budget; 3) Amend the TUMF agreement; and 4) Forward to the Commission for final action. Budget and Implementation Committee Minutes February 25, 2008 Page 7 12. STATE LEGISLATIVE UPDATE Aaron Hake, Government Relations Manager, provided an update on AB 1954 (Jeffries) and SB 1316 (Correa) and noted that a federal legislative update will be provided at the 2008 Commission Workshop. Commissioner Terry Henderson asked for clarification on AB 1954 and the two slots available in Southern California for high occupancy toll (HOT) lane authority. Aaron Hake replied that the applicant agency submits an application to the California Transportation Commission (CTC) for a project and there are parameters in the existing program that state the project must be consistent with other HOT lanes in the state, other limitations, and public protections that are in place. The CTC has to determine that the Commission is eligible under the criteria and then the program requires that the applicant pursue legislation to enact the statute that memorializes the Commission's place as one of those slots in the HOT pilot program. Commissioner Henderson expressed concern for the program and asked about the carpool lanes on SR-60 through Moreno Valley. Anne Mayer replied that the carpool lanes on SR-60 went through a two-year process with Caltrans as the lead agency with the Commission's support in the effort to convert the carpool lanes to part-time use and was denied by the Federal Highway Administration (FHWA). FHWA stated that California needs to become consistent in the application of carpool lane practices and policies and the request would not be approved until that happened. She noted that Orange County is working towards having carpool lanes converted to continuous ingress and egress, which would allow vehicles to enter and exit at anytime. There is considerable discussion for Southern California to convert to this method if appropriate by project, however the challenge will be funding. She stated that staff will stay engaged in the discussion with other regional agencies. Commissioner Magee asked if staff is comfortable with the language on SB 1316. Aaron Hake replied that there are a couple of minor changes that staff will propose be made to the legislation pursuant to discussions with Orange County Transportation Authority. One of the changes will be the addition that the cost of operating the committee will not be born by the state and that the agencies Budget and Implementation Committee Minutes February 25, 2008 Page 8 will be taking care of the costs. The other change relates to the statement in the legislation that currently reads that the Commission will be pursuing authority on SR-91 to toll between the county line and 1-215. It needs to read 1-15 and omit 1-215. Commissioner Magee requested staff remain extremely vigilant and to the greatest extent possible, the Commission does not end up in a subordinate position as Orange County and Riverside County are partners. M/S/C (Tavaglione/Craton) to: 1) Receive and file the State Legislative Update; and 2) Forward to the Commission for final action. 13. ITEMS PULLED FROM CONSENT CALENDAR There were no items pulled from the Consent Calendar. 14. COMMENTS BY COMMISSIONERS/STAFF There were no comments by Commissioners or staff. 15. ADJOURNMENT There being no further business for consideration by the Budget and Implementation Committee, the meeting was adjourned at 10:06 a.m. The next meeting of the Budget and Implementation Committee is scheduled for March 24, 2008 at 9:30 a.m. Respectfully submitted, Jennifer Harmon Clerk of the Board • • • AGENDA ITEM 7A 11 • RIVERS/DE COUNTY TRANSPORTATION COMM/SS/ON DATE: March 24, 2008 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: John Standiford, Deputy Executive Director SUBJECT: Annual Investment Policy Review STAFF RECOMMENDATION: This item is for the Committee to: 1) Adopt the Annual Investment Policy; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: Section XIV of the Investment Policy requires an annual investment policy review and specifically states that the "Chief Financial Officer shall annually render to the Board a statement of investment policy, which the Board must consider at a public meeting. Any changes to the policy shall also be considered by the Board at a public meeting." Based on a review of the Investment Policy approved by the Commission on April 11, 2007, and consideration of changes to the California Government Code (Code) as of January 1, 2008, staff in consultation with the County of Riverside Treasury staff has determined that no technical changes are required. Staff is recommending adoption of the attached Investment Policy. Attachment: Investment Policy Agenda Item 7A 1 • • • L ersid CfMnty rarrnsporialinn Commission INVESTMENT POLICY I. Introduction The purpose of this document is to identify policies and procedures that enhance opportunities for a prudent and systematic investment program and to organize and formalize investment -related activities. II. Scope It is intended that this Policy cover all funds (except retirement funds) and investment activities under the direction of the Commission. III. Delegation of Authority Pursuant to the Commission's Administrative Code, the Board's management responsibility for the investment program is hereby delegated for a one-year period to the Executive Director who shall monitor and review all investments for consistency with this investment policy. Subject to review, the Board may renew the delegation of authority pursuant to this section each year. The Executive Director may delegate these duties to his designee ("Chief Financial Officer"). The Commission may delegate its investment decision making and execution authority to an investment advisor. The advisor shall follow this Policy and such other written instructions as are provided. IV. Prudence All persons authorized to make investment decisions on behalf of the Commission are subject to the prudent investor standard. Investments shall be made with care, skill, prudence and diligence under circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the Commission that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the Commission. Authorized individuals acting in accordance with this Policy and written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion. V. Objective The Commission's primary investment objectives, in priority order, shall be: 1. Safety. Safety of principal is the foremost objective of the investment program. Investments of the Commission shall be undertaken in a manner that seeks to ensure preservation of capital in the portfolio. 2. Liquidity. The investment portfolio of the Commission will remain sufficiently liquid to enable the Commission to meet its cash flow requirements. 3. Return on Investment. The investment portfolio of the Commission shall be designed with the objective of maximizing return on its investments, but only after ensuring safety and liquidity. In order to maximize return on its investments, the Commission seeks an active rather than passive management of portfolio assets. The Commission may from time to time sell securities that it owns in order to better reposition its portfolio assets in accordance with updated cash flow schedules, yield curve optimizations, yield opportunities existing between market sectors, or simply market timing. VI. Investments California Government Code Section 53601 governs the investments permitted for purchase by the Commission. Within the investments permitted by Code, the Commission seeks to further restrict eligible investments to the investments listed in Section VI.1 below. Percentage limitations, where indicated, apply at the time of purchase. Percentage holdings with any one non -governmental issuer are further restricted to a maximum of 10%. Rating requirements where indicated, apply at the time of purchase. In the event a security held by the Commission is subject to a rating change that brings it below the minimum specified rating requirement, the Chief Financial Officer shall notify the Board of the change. The course of action to be followed will then be decided on a case -by -case basis, 3 • • • considering such factors as the reason for the rate drop, prognosis for recovery or further rate drops, andthe, market price of the security. 1. Eligible Investments A. U.S. Government Issues. United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. B. Federal Agency Securities. Federal agency or United States government -sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government -sponsored enterprises. C. Repurchase Agreements. Repurchase agreements are to be used solely as short-term investments not to exceed 30 days. The Commission may enter into repurchase agreements with primary government securities dealers rated "A" or better by two nationally recognized rating services. Counterparties should also have (i) a short-term credit rating of at least A-1 /P- 1; (ii) minimum assets and capital size of $25 billion in assets and $350 million in capital; (iii) five years of acceptable audited financial results; and (iv) a strong reputation among market participants. The following collateral restrictions will be observed: Only U.S. Treasury securities or Federal Agency securities, as described in V.1 A and B, will be acceptable collateral. All securities underlying repurchase agreements must be delivered to the Commission's custodian bank versus payment or be handled under a properly executed tri-party repurchase agreement. The total market value of all collateral for each repurchase agreement must equal or exceed 102 percent of the total dollar value of the money invested by the Commission for the term of the investment. For any repurchase agreement with a term of more than one day, the value of the underlying securities must be reviewed on an on -going basis according to market conditions. Market value must be calculated each time there is a substitution of collateral. 4 The Commission or its trustee shall have a perfected first security interest under the Uniform Commercial Code in all securities subject to repurchase agreement. The Commission shall have properly executed a PSA agreement with each counterparty with which it enters into repurchase agreements. U.S. Corporate Debt. Medium -term notes, defined as all corporate and depository institution securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or depository institutions licensed by the United States or any state and operating within the United States. Eligible investment shall be rated "AA" or better by one or more nationally recognized rating service. Investments in U.S. Corporate Debt are further limited to 30% of surplus funds. E. Commercial Paper. Commercial paper rated in the highest category by one or more nationally recognized statistical rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or paragraph (2): (1) The entity meets the following criteria: (A) Is organized and operating in the United States as a general corporation. (B) Has total assets in excess of five hundred million dollars ($500,000,000). (C) Has debt other than commercial paper, if any, that is rated "A" or higher by a NRSRO. (2) The entity meets the following criteria: (A) Is organized within the United States as a special purpose corporation, trust, or limited liability company. (B) Has program -wide credit enhancements, including, but not limited to, over collateralization, letters of credit, or surety bond. (C) Has commercial paper that is rated "A-1" or higher, or the equivalent, by a NRSRO. Purchases of eligible commercial paper may not exceed 270 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation. Investments in commercial paper are limited to a maximum of 25% of surplus funds. F. Banker's Acceptances. Banker's acceptances issued by domestic or foreign banks, which are eligible for purchase by • 5 • • the Federal Reserve System. Purchases of banker's acceptances may not exceed 180• days maturity. Eligible banker's acceptances are restricted to issuing financial institutions with short-term paper rated in the highest category by one or more nationally recognized rating service. Investments in banker's acceptances are further limited to 40% of surplus funds with no more than 30% of surplus invested in the banker's acceptances of any one commercial bank. G. Money Market Mutual Funds. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.) and that invest solely in U.S. treasuries, obligations of the U.S. Treasury, and repurchase agreements relating to such treasury obligations. The Commission may invest in shares of beneficial interest issued by accompany shall have met either of the following criteria: (1) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized rating services. (2) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge. Investments in Money Market Mutual Funds are further limited to 20% of surplus funds. H. Riverside County Pooled Investment Fund ("RCPIF"). The Commission may invest in the Riverside County Pooled Investment Fund. As on -going due diligence, the Chief Financial Officer shall obtain the information listed below: • A description of eligible investment securities and a written statement of investment policy. • A description of the interest calculation, the frequency of interest distributions, and the treatment of gains and losses in the portfolio. 6 • A description of how often the securities are priced, how the securities are safeguarded, and the audit arrangements. • A description of who may invest in the program, how often they may invest, and what size deposits and withdrawals are allowed. • A schedule for receiving statements and portfolio listings. • A fee schedule, and when and how fees are assessed. • . The composition of the investment fund for each reporting period. 1. State of California Local Agency Investment Fund("LAIF"). The Commission may invest in LAIF. As on -going due diligence, the Chief Financial Officer shall obtain the information listed below: • A description of eligible investment securities and a written statement of investment policy. • A description of the interest calculation, the frequency of interest distributions, and the treatment of gains and losses in the portfolio. • A description of how often the securities are priced, how the securities are safeguarded, and the audit arrangements. • A description of who may invest in the program, how often they may invest, and what size deposits and withdrawals are allowed. • A schedule for receiving statements and portfolio listings. • A fee schedule, and when and how fees are assessed. • The composition of the investment fund for each reporting period. J. Certificates of Deposit. Federal Deposit Insurance Corporation (FDIC) insured or fully collateralized time certificates of deposit in financial institutions located in California. Eligible investments are restricted to those issuing institutions that have been in business of least five years and whose senior debt obligations are rated "AA" or better by one or more nationally `recognized rating service. The maximum term for deposits shall be one year. Investments in certificates of deposit are further limited, to 20% of surplus funds. All time deposits must be collateralized in accordance with California Government Code section 53561. The Commission, at its discretion, may waive • • the collateralization requirements for any portion of the deposit that is covered by federalinsurance. 2. Eligible Investments for Bond Proceeds Bond proceeds shall be invested in securities permitted by the applicable bond documents. If the bond documents are silent as to permitted investments, bond proceeds will be invested in securities permitted by this Policy. With respect to maximum maturities, the Policy authorizes investing bond reserve fund proceeds beyond the five years if prudent in the opinion of the Chief Financial Officer. 3. Ineligible Investments As provided in California Government Code Section 53601.6, the Commission shall not invest any funds in inverse floaters, range notes, mortgage derived interest -only strips or in any security that could result in zero interest accrual if held to maturity. The purchase of any security not listed in Section VI.1 above, but permitted by the California Government Code, is prohibited unless the Board approves the investment either specifically or as a part of an investment program approved by the Board. VII. Maximum Maturities Maturities of investments will be selected to provide necessary liquidity, minimize interest rate risk, and maximize earnings. Current and expected yield curve analysis will be monitored and the portfolio will be invested accordingly. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds. Where this Policy does not specify a maximum remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the Board has granted express authority to make that investment either specifically or as a part of an investment program approved by the Board no less than three months prior to the investment. 8 VIII. Performance Standards • The Chief financial Officer shall continually monitor and evaluate the portfolio's performance. A comparison of the portfolios performance against a performance benchmark shall be included in the Chief Financial Officer's quarterly report. The Chief Financial Officer shall select an appropriate, readily available market index to use as a performance benchmark. IX. Reporting The Chief Financial Officer shall prepare and provide to the Board and the Executive Director, within 30 days following the end of the quarter, a portfolio report, which includes the following information: • Type of investment • Name of issuer • Date of maturity • Date of purchase • Par value • Original purchase cost • Call date (if applicable) • Current market value of securities • Unrealized market value gain/loss • Coupon rate, if applicable • Yield to maturity • Credit quality, as determined by one or more nationally recognized credit rating services, of each investment • Average duration of portfolio • Listing of all investment transactions during the quarter • A statement that the portfolio complies with the investment policy, or the manner in which the portfolio is not in compliance • A statement denoting the ability of the Commission to meet its liquidity requirements for the next six months, or provide an explanation as to why sufficient money shall, or may not be, available: X. Investment Procedures The Chief Financial Officer, as the Board's designee, is responsible for ensuring compliance .with the Commission's investment policies and establishing written procedures and internal controls for the operation of the investment program. 9 • • No person may engage in investment transactions except as provided under the terms of this Policy and the written procedures established by the Chief Financial Officer. The written procedures should address: delegation of authority to subordinate staff members, control of collusion, separation of transaction authority from accounting and record keeping, written confirmations of transactions, reconciliation of custody statements, and wire transfer procedures and agreements. An independent analysis by an external auditor shall be conducted annually to review internal control, account activity, and compliance with policies and procedures. XI. Authorized Broker Dealers and Financial Institutions The Chief Financial Officer shall maintain a list of authorized broker/dealers and financial institutions which are approved for investment purposes. It shall be the Commission's policy to purchase securities only from those authorized institutions and firms. Separate lists shall be maintained for broker/dealers and financial institutions approved for repurchase agreements and those approved for the purchase of other securities. If an investment advisor is used, they may use their own list of approved broker/dealers and financial institutions for investment purposes. To be eligible, a firm must meet the following minimum criteria: (i) an institution licensed by the state as a broker -dealer, or from a member of a federally regulated securities exchange, from a national or state -chartered bank, from a federal or state association or from a brokerage firm designated as a primary government dealer by the Federal Reserve bank; and (ii) all broker/dealer firms and individuals must be properly registered with the NASD and/or SEC to transact business in the relevant geographic locations and product sectors. In addition, counterparties for Repurchase Agreements shall be limited to primary government securities dealers rated "A" or better by two nationally recognized rating services. Counterparties shall also have (i) a short-term credit rating of at least A-1/P-1; (ii) minimum assets and capital size of $25 billion in assets and $350 million in capital; (Hi) five years of acceptable audited financial results; and (iv) a strong reputation among market participants. The Chief Financial Officer shall select broker/dealers and other financial institutions on the basis of the firm's expertise and credit worthiness. The Commission shall annually send a copy of the current investment policy to all dealers approved to do business with the Commission. Each broker dealer or financial institution that has been authorized by the Commission shall be required to submit and annually update a Broker/Dealer Questionnaire which includes the firm's most recent financial statements. The Chief Financial 10 Officer shall maintain a file for each firm approved for investment purposes, which includes the most recent Broker/Dealer Questionnaire. XII. Safekeeping and Custody To protect the Commission's assets, all securities owned by the Commission shall be held in safekeeping in the Commission's name by a third party bank trust department, acting as agent for the Commission under the terms of a custody agreement executed by the bank and the Commission. All securities will be received and delivered using standard delivery versus payment (DVP) procedures; the Commission's safekeeping agent will only release payment for a security after the security has been properly delivered. Physical delivery securities shall be avoided whenever possible, as book entry securities are much easier to transfer and account for since actual delivery of a document never takes place. In addition, delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss. increases with physically delivered securities. XIII. Ethics and Conflicts of Interest The Commission adopts the following policy concerning conflicts of interest: Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program or which could impair their ability to make impartial investment decisions. 2. Officers and employees involved in the investment process shall disclose any material financial interest in any financial institution that conducts business with the Commission, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the Commission's portfolio. 3. Officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Commission. 11 • XIV. Investment Policy Review The Chief Financial Officer shall annually render to the Board a statement of investment policy, which the Board must consider at a public meeting. Any changes to the policy shall also be considered by the Board at a public meeting. 12 • • • AGENDA ITEM 8 i� i r� u II i p • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 24, 2008 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: John Standiford, Deputy Executive Director SUBJECT: Proposed Debt Issuance STAFF RECOMMENDATION: This item is for the Committee to: 1) Direct staff to continue efforts to develop a plan to refinance the outstanding commercial paper; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: In March 2005, the Commission launched its $185 million commercial paper program to provide advance funding for projects included in the 2009 Measure A expenditure plan. The 2009 Measure A commences on July 1, 2009, and the first sales tax receipt is not anticipated until September 2009. As of March 14, 2008, the Commission has issued $110 million of commercial paper and has expended approximately $88 million of the commercial paper proceeds; however, the available balance of specific funding commitments made by the Commission is approximately $54 million. Additionally, the Commission is using commercial paper during FY 2007/08 to fund the significant engineering contracts related to the 10-Year Western County Highway Delivery Plan projects. Accordingly, there is little remaining capacity in the commercial paper program to commit to funding additional project efforts in FY 2008/09 and beyond, such as the Perris Valley Line (PVL) extension. Short-term financing will be required for the PVL project, now that it has received the Federal Transit Administration (FTA) rating that allows the Commission to commence preliminary engineering activities. Although the President's FY 2008/09 budget includes $50 million for the PVL project under the FTA New Starts program and the remaining $25 million is expected in the following year, the Commission should plan to use available Commission funds until reimbursements can be requested at a later date. Staff has communicated this preliminary plan of Agenda Item 8 13 financing to the FTA oversight team, as this is an aspect of its oversight of the project. Plan of Finance Based on this need for additional financing capacity; staff has prepared a preliminary plan of finance with the assistance of its financing team to issue approximately $100 to $115 million of sales tax revenue bonds (2008 Bonds) to refinance a portion of the outstanding commercial paper; fund capitalized interest on the bonds through October 1, 2009, since sales tax receipts will not commence until September 2009; establish a reserve fund; and pay costs of issuance of the 2008 Bonds. The combination of the commercial paper program maximum debt capacity of $185 million and the proposed 2008 Bonds will not exceed the $500 million debt limitation specified in the 2009 Measure A. The proposed 2008 Bonds are long-term bonds due in June 2029. The general terms include an initial interest rate period through October 1, 2009, at which time the 2008 Bonds would be remarketed and a new long-term rate period would be established. In the unlikely event that the Commission does not have access to the capital markets on October 1, 2009, the existing bond holders would continue to own the 2008 Bonds and those bonds will bear an interest rate of 11 % until such time as the bonds can be remarketed. Considering the Commission's strong underlying credit ratings, at present there are no plans to obtain a liquidity facility, e.g., letter of credit; or credit enhancement, e.g., bond insurance, to support the 2008 Bonds. It will be repaid solely from 2009 Measure A sales tax receipts. The initial interest rate period coincides with the October 1, 2009, effective date of the Commission's forward -starting interest rate swaps aggregating a notional amount of $185 million. The financing team that has participated in the development of this proposed plan of finance is similar to the team for the commercial paper program and includes the following key members: • Financial Advisor: Fieldman, Rolapp & Associates; • Bond Counsel• Orrick Herrington & Sutcliffe LLP; • Disclosure Counsel: Nossaman; Guthner, Knox & Elliott LLP; • General Counsel: Best, Best & Krieger LLP; and • Underwriters/Remarketing Agents: Lehman Brothers and Banc of America Securities LLC. Agenda Item 8 14 • Arrangements have been made to present this plan of finance to the rating agencies. Chair Jeff Stone, Executive Director Anne Mayer, Chief Financial Officer Theresia Trevino, and certain members of the finance team will participate in these presentations to confirm the strong credit ratings on the Commission's outstanding bonds and to seek ratings on the 2008 Bonds in light of the recent decline in sales tax revenues. Meetings with Standard & Poors as well as Fitch Ratings are scheduled on April 21, 2008 in New York and with Moody's Investors Service on April 30, 2008 in San Francisco. Credit ratings are expected to be received by May 8, 2008. The proposed documents for this transaction will continue to be revised for any matters that arise as a resultof these rating meetings and any other matters. Final documents will be presented for approval at the May 14, 2008 Commission meeting. Drafts of the documents for the proposed 2008 Bonds are included as attachments to this staff report for preliminary consideration and consist of the following: • Preliminary official statement (draft); • Resolution No. 08-010 (draft) authorizing the issuance and sale of a not to exceed amount of sales tax revenue bonds; the execution and delivery of an indenture, supplemental indenture, purchase contract, and official statement; and the taking of all other actions necessary in connection with this transaction; • Indenture between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of sales tax revenue bonds; and • First supplemental indenture between the Commission and- the trustee (draft) regarding the terms and conditions of the issuance of the 2008 Bonds. As part of the action that is expected to occur on May 14, 2008, to authorize the issuance of the 2008 Bonds, the Commission will be approving the form of the Preliminary Official Statement and authorizing its distribution in connection with the sale of the 2008 Bonds, as well as the preparation of a final Official Statement once the 2008 Bonds have been priced. These offering documents are required under state and federal securities laws prohibiting the offer and sale of securities such as the 2008 Bonds unless all matters that would be material to an investor in the 2008 Bonds have been adequately disclosedand that there is no omission of material facts. Furthermore, under rules of the Securities and Exchange Commission, the underwriters cannot purchase the 2008 Bonds unless they have received a "substantially final" offering document which discloses all material information that they reasonably believe to be true and correct. Agenda Item 8 15 The Commissioners serving on the Board as the governing body of the issuer of the 2008 Bonds are expected to read and be familiar with the information described in the draft Preliminary Official Statement included with this staff report. The Commissioners may employ the services of experts to take the lead in the drafting and review of the official statement, but the Commissioners have the duty to review the information and bringto the attention of those responsible for the preparation of the offering document any misstatements or omissions in the draft and to ask questions if they are unclear about the information or their role. The financing team will be available at the Budget and Implementation Committee and Commission meetings to respond to the identification of any misstatements or omissions or to such questions. Anticipating Commission approval for this transaction on May 14, 2008, the pricing activities related to the 2008 Bonds are expected to occur through the end of May 2008 with a closing date of June 10, 2008 for the issuance of the 2008 Bonds. Current Credit Market Environment Recent events in the credit market and the related impacts on municipal bond insurers and large banking institutions cannot be overlooked as part of the proposed transaction. Accordingly, staff has obtained the attached memorandum from its financial advisor regarding the Commission's situation and risks as contemplated in the structure of the proposed transaction and recent challenges in the market. In order to proceed with the proposed plan of finance for the 2008 Bonds, staff is requesting that the Committee provide conceptual approval and direct staff to continue its efforts with the development of the proposed financing for the 2008 Bonds, including the required documents. Financial Information In Fiscal Year Budget: No Year: FY 2007/08 Amount: $115,000,000 bond Proceeds; $950,000 costs of issuance Source of Funds: Sales tax revenue bonds Budget Adjustment: Yes (pending) GLA No.: 303 31 59102 $115,000,000 Estimated Bond Proceeds 303 31 96103 $ 950,000 Estimated Costs of Issuance Fiscal Procedures Approved: \fibiad ,jtom Date: 03/17/2008 Agenda Item 8 16 • Attachments: 1) Financial Advisor. Memorandum Dated March 14, 2008 2) Preliminary Official Statement (Draft) 3) Resolution No. 08-010 (Draft) 4) Indenture (Draft) 5) First Supplemental Indenture (Draft) Agenda Item 8 17 FTELDMAN I ROLAPP T & ASSOCIATES To: Theresia Trevino Chief Financial Officer Riverside County Transportation Commission From: Daniel L. Wiles, Principal and General Counsel . Anna V. Racheva, Vice President Fieldman, Rolapp & Associates Re: Impact of Recent Market Events Date: Iblarch 14, 2008 ATTACHMENT 1 MEMORANDUM The Commission's Situation As noted in Ms. Trevino's memorandum, the Commission is considering the issuance of debt (the "2008 Bonds") to refinance approximately $100 million of its outstanding Commercial Paper obligations. As currently envisioned, the new bonds will be sold with a fixed rate until October 1, 2009. On that date, the Commission will need to remarket those bonds, that is, resell them to new investors. In addition, the Commission will also intend to market additional bonds on a similar basis to refinance the remaining $85 million of its original Commercial Paper program. In October 2009, when the Commission markets its bonds, the Commission will have a broad variety of options for the terms of the bonds, including the mode of interest sate (fixed or variable) and the type of security fox the bonds (enhanced with a bank letter of credit/bond insurance or based solely on sales tax revenues). Like any issuer of bonds, the Commission will face the types of risks that come with access to the capital markets. Interest rates can change, markets have greater and lesser demand, and certain types of features have greater or lesser value in the eyes of bond owners. The terms of the Commission's upcoming bond issue provide for a "penalty' rate —estimated to be 11 %. The penalty rate would be in effect for any period for which the Commission can not successfully remarket bonds, requiring the original holders to continue to retain them. The fast possibility of that occurrence is October 1, 2009, the date on which the original 2008 Bonds must be remarketed. If those bonds were not successfully remarketed on that date, the Commission would pay the 11% penalty rate until the 2008 Bonds can be remarketed or refinanced successfully. Recent Challenges to the Municipal Credit Matkets. Over the past 6-8 months, the markets for municipal bonds in the United States have been challenged on a number of fronts. The overall "credit crisis" and the reliance on "sub -prime" mortgages for the US housing market have winnowed the ranks of the municipal bond insurers. The uncertainty as to credit quality of insured paper is reflected in the drastically weakened demand for auction rate securities —bonds with a variable interest rate for which the current holder bears the risk of the unavailability of liquidity in the market for resale. In tum, the stress on large banking institutions has reduced the availability of traditional bank liquidity to support public finance transactions, and significantly raised the cost of that liquidity. 8.A1.TT.Comm.Fieldman Memo.Debt Issuance.doc 18 MEMORANDUM The Commission's Risks You have asked if the current transaction exposes the Commission to the risks highlighted by the market's recent troubles. We believe while the Commission will be exposed to some market risk by needing to remarket the 2008 Bonds and market additional bonds in 2009, we believe that the level of that risk is very low. Moreover, the Commission has such wide latitude in structuring its future financings that troubles in any specific market sector, Ile those seen in the past few months, generally can be avoided by the judicious selection of debt structure and the choice of the related market segment into which the bonds will be sold. Relating the Commission's Debt Structure to the Market The Commission's sales tax based debt is highly rated in the high AA category by both Moody's Investors Service and Standard & Poor's Rating Services. We anticipate a similar rating by FitchRatings. The most recent troubles in the municipal market stem from the impact of rating downgrades of the primary bond insurers. The exposure of the major AAA rated insurers to the risks from collateralized debt obligations and sub -prime mortgages has clouded the perceived financial strength of three of the four primary insurers. Only FSA has avoided significant credit impacts. Each other insurer has received at least one downgrade by one of the three major rating agencies. Moreover, Assured Guaranty, formerly a minor and new bond insurer, has seen its value rise significantly. In sum, the environment for municipal bond insurance, measured by the number of the participants, the cost of municipal bond insurance and the value of that insurance has changed dramatically. The effects of these changes in the bond insurance market tend to fall most heavily on issuers having underlying ratings in the A and BBB categories, the categories for which bond insurance has the most value. While well rated issuers, including the Commission, have issued insured debt, the primary rationale for the use of insurance has been to broaden market access, not specifically to enhance credit Well rated issuers of fixed rate debt have continued to have good market access to long term debt financing. Much of the market focus on troubles in municipal securities has centered on auction rate securities. Auction rate securities ("ARS") are variable rate securities used by a number of sophisticated issuers. The primary structural feature of ARS is that the holler of ARS takes the risk of remarketing at the time of each rate reset When an interest rate period, generally 7 days, ends, the designated broker -dealer holds an auction to determine the next interest rate. Purchasers provide their proposed rates and the lowest rate at which all of the ARS are remarketed is the rate payable on the ARS for the succeeding period. If there is a failure to remarket, the penalty rate applies and the existing holders of the ARS must continue to hold (absent sales on the open market). Holders of auction rate securities have reacted strongly to the weakening of bond insurers and have chosen to release their debt for remarketing without providing an auction bid. Over the past 4 weeks, this resulted in "failed remarketings" at which the ARS were reset to the penalty rate. We note that each issue for which this occurred has subsequently had its interest rate come down from the penalty rate on subsequent remarketings. However, the rates have not equaled the rates prevailing prior to early February 2008. This has prompted a number of issuers of ARS to consider remarketing of their securities on a different interest rate basis. At the same time that ARS issues were experiencing liquidity troubles, the primary providers of liquidity and credit support for more traditional variable rate debt were experiencing their own changes. A traditional variable rate bond program relies on external support for both liquidity and credit. Holders of traditional variable rate bonds do not take any risk of remarketing. The liquidity support allows the issuer to have sufficient funds to provide payment for those bondholders wishing to relinquish their bonds at any interest rate change. 8.A1.1T.Comm_Fieldman Memo.Debt lssuance.doe - 2 - 19 • MEMORANDUM The current troubles in the market have impacted a number of the large banking institutions that tend to provide the liquidity and credit support Moreover, those institutions that continue to provide letters of credit, are able to charge significantly higher rates for their service. This can negatively impact the cost of future financings, including those of the Commission. When the Commission remarkets the 2008 Bonds and issues additional bonds relating to the remainder of its commercial paper program, it will face the requirement to successfully place its debt. However, the situation facing the Commission differs significantly from the situation of market participants during early 2008. There are two fundamental differences: 1. The Commission will be engaged in a lengthy effort to remarket its bonds prior to the deadline. Unlike the issuers involved in failed ARS sales, the Commission will have months to plan and execute its remarketing plan. The Commission will not be locked into a specific requirement to remarket on a particular date; it can move forward at a date earlier than October 1, 2009, if circumstances warrant. 2. The Commission has a number of options as to the structure of its bonds on remarketing or refinancing. The current troubles in the market are focused on specific types of bonds, with specific security. The problem areas right now concern ARS as described above and certain bonds with credit enhancement As we noted above, many of the bond insurers are under credit stress; moreover, many of the providers of bank credit and liquidity support for variable rate debt are either under credit stress themselves or are in position to charge significantly higher fees. However, the Commission has a significant amount of latitude to structure its 2009 offerings. To the extent that certain problem areas exist, the structure can be altered to avoid or minimize those problems. There is no financial transaction free of all risk However, given the Commission's alternatives, we believe that the negative impacts comparable to those, currently experienced by issuers can be controlled by the Commission. We do not believe that the Commission faces significant risk of negative impact resulting from the structure of the 2008 Bonds. 8.A I .TT.Comm.Fieldman Memo.Debt lssuance.doc 3 _ 20 Presentation to the Budget & Implementation Committee 13k qL Commercial Paper Activity J mon Application of Current Outstanding Commercial Paper Sources Proceeds $ 110,005,000 Reimbursements 824,878 Imestment income 2,009,333 Total sources 112,839,011 Uses Professional services & costs of Issuance 3,710,325 Preliminary engineering 1.228,701 Construction 6,499,023 Land mitigation 68,179,019 Regional arterials 5,035,900 Interest payments 4.754.011 Total uses 90, 306, 979 Net available for expenditure $ 22.532,032 Commercial Paper Program ,mot' 'Aa • Established in March 2005 to advance project development of 2009 Measure A projects — $185 million funding capacity — Executed advance funding agreements with local agencies wanting to participate • Secured by sales taxes to be received beginning in September 2009 • Supported by credit and liquidity facility provided by Bank of America 2 Commercial Paper Uses t • MSHCP activities • P/E on SR-91 corridor and I-215 projects • SR-91/Green River interchange construction • Advance funding for CVAG, Indio, and Blythe projects • Strategic partnership advisory services • Administrative and interest costs 1 Commercial Paper Availability, Amount approved by Commission Add: Interest and reimbursements Less: Amount expended to date Remaining capacity Less: Unexpended commitments Amount currently available 8185 million 3 million 90 million 98 million 54 million $ 44 million • $44 million available — Remainder of FY07/08 — FY 08/09 budget — Perris Valley Line (PVL) short-term financing Plan of Finance: 2008 Sales Tax Revenue Bonds Commercial Paper Availability' ne2e rn a uremrwr.e ba.rn... nr yvsm • Amounts e.pnNE la Mb o sa eva..n ie..r menhense cenmmen • Pawing grade separation comtimnr e WAG MSHCPe regional arterial propero commmm PL. Aknos bridge mmrXnem Interim Financing Program • Commercial paper program has met interim financing needs for 2009 Measure A program — Upon Commission approval in 2006, entered into $185 million of forward starting swaps to lock in 2009 interest rates for commercial paper refinancing at 3.679% • Success with PVL and other projects has expanded interim financing demand beyond $185 million commercial paper program • Short-term fixed rate bond financing with 16-18 month maturity is most cost-effective way to expand interim funding capacity through start of sales tax collections in 2009 2 Financing Overview $110 million* of bond proceeds to refinance and take out outstanding commercial paper and fund projects, as necessary - Capitalized interest fund to be funded for interest payments through 2009, as 2009 Measure A sales tax receipts begin in late 2009 - Debt service reserve fund to be established - Issuance costs to be paid from proceeds • Resulting new capacity in commercial paper program to be used for the PVL and other projects • Bonds are secured by 2009 Measure A sales tax revenues • 2009 Measure A has debt limitation of $500 million rellrcarary, subject to change 9 Summary of Issuance Documents:' • Preliminary Official Statement • Resolution Authorizing Issuance and Sale of Bonds • Indenture - Relating to RCTC Sales Tax Revenue Bonds • First Supplemental Indenture — Relating to RCTC Sales Tax Revenue Bonds, 2008 Series A 11 • Bonds will carry a fixed interest rate through 2009 — Current market yields indicate a range of 2.65 % * to 3 % * • In 2009 ROTC will refinance these bonds — RCTC already planned to refinance outstanding commercial paper balances in 2009 in connection with forward starting swap If RCTC does not have access to markets in 2009 as planned, this is not an "Event of Default"; rather RCTC will pay a higher interest rate until bonds can be refinanced — Failed remarketing rate of 1104 until RCTC can refinance — Risk is perceived as low — Wide latitude with the structure of future financings %urinary, subject to charge 10 Current Credit Markets Situatio • Most municipal bond insurers were downgraded since they also insured sub -prime mortgages that are now defaulting — Uncertainty has drastically weakened demand for auction rate securities and other insured variable rate debt Without bond insurance many Issuers have looked to Banks to provide credit and liquidity facilities — Has reduced availability and increased cost of bank liquidity — Makes expansion of commercial paper program expensive and difficult RCTC's credit strength helps in this difficult market • Economic slowdown and lower interest rates means RCTC can lock in a low interest rate through 2009 • RCTC's commercial paper program is also expected to benefit from lower interest rates through 2009 rl 3 Timeline .Date Wednesday. Apnl 9, 2008 g ' ";j1i;l �-.� Ll,n, ,�° : , �. '""�'4 __ ,,. 13 Description - Cplanniommigissionfor dlrectsdeb[issraf(tosue continue with Monday, April 14, 2008 Draft documents sent to Rating Agencies Monday, Apnl 21, 2008 Meeting with Rating Agencies in New York Wednesday, Apnl 30, 2008 Meeting with Rating Agency in San Francisco Wednesday, May 7, 2008 Bond Ratings Received Wednesday, May 14, 2008 Commission approves Financing Documents Wednesday, May 28, 2008 Bond Sale Tuesday, June 10, 2008 Bond Closing 4 ;, 'I it NEW ISSUE 1111 ATTACHMENT 2 PRELIMINARY OFFICIAL STATEMENT, DATED , 2UU8 BOOK -ENTRY ONLY Ratings for the Series 2008 Bonds (as defined herein): Moody's: "_" Fitch:" " S&P: "_" See "RATINGS" herein [DAC Logo] In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based on an analysis of existing law, statutes, regulations, rulings and court decisions and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2008 Bonds 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. In the opinion of Bond Counsel, interest on the Series 2008 Bonds 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 in calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other federal or state tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series 2008 Bonds. See "TAX EXEMPTION" herein. RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) Series 2008 A Dated: Date of Delivery Due: June 1, 2029 The Sales Tax Revenue Bonds described above (the "Series 2008 Bonds') are being issued by the Riverside County Transportation Commission (the "Commission') to (i) refinance a portion of the outstanding principal amount of the Commission's Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, as more particularly described herein (collectively, the "Notes"), (ii) fund capitalized interest on the Series 2008 Bonds through December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and vi) pay costs of issuance of the Series 2008 Bonds. The initial Interest Rate Period for the Series 2008 Bonds will be a Long -Term Rate Period and the initial Long -Term Rate eriod will be the period commencing on and including the date of delivery of the Series 2008 Bonds and ending on and excluding December 1, 2009. The Series 2008 Bonds shall initially bear interest at a rate of _% per annum. During the initial Long -Term Rate Period, interest on the Series 2008 Bonds is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2008, except that the final interest payment with respect to the initial Long Term Interest Rate Period shall be paid on December 1, 2009. On December 1, 2009, there will be a mandatory tender for purchase of the Series 2008 Bonds (the "Initial Mandatory Tender Date"). The Commission has agreed prior to the Initial Mandatory Tender Date to hire remarketing agents to use their best efforts to remarket the Series 2008 Bonds on such date. If such remarketing agents are unable to remarket the Series 2008 Bonds on the Initial Mandatory Tender Date, such Series 2008 Bonds will continue to be owned by the then current Holders and will commence to bear interest at the rate of % per annum until such time as the Commission elects to adjust the interest rate to be borne on the Series 2008 Bonds to a Daily Rate, Weekly Rate, Long -Term Rate, Commercial Paper Rate or a Fixed Interest Rate and there is a successful remarketing of the Series 2008 Bonds. There is no liquidity facility supporting the purchase of the Series 2008 Bonds on the Initial Mandatory Tender Date, nor is there any plan to provide any. The interest rate on the Series 2008 Bonds may thereafter be adjusted to a Daily Rate, Weekly Rate, a Long -Term Rate, a Commercial Paper Rate or a Fixed Rate, as provided in the Indenture. The Series 2008 Bonds are initially being issued as fully registered bonds without coupons in the denominations of $5,000 or any integral multiple thereof. The Series 2008 Bonds will be registered in the name of Cede & Co., as holder of the Series 2008 Bonds and nominee for The Depository Trust Company ("DTC"), New York, New York. Purchasers will not receive certificates representing their interest in the Series 2008 Bonds purchased. The principal or redemption price of and interest on the Series 2008 Bonds is payable by wire transfer to DTC which, in tum, will remit such principal, redemption price or interest to the DTC Participants for subsequent disbursement to the Beneficial Owners of the Series 2008 Bonds, as more fully discussed herein. The Series 2008 Bonds will mature on June 1, 2029. This Official Statement is not intended to provide certain information with respect to the Series 2008 Bonds (including the terms of such Series 2008 Bonds) after conversion from the initial Long -Term Rate. Owners and prospective purchasers of the Series 2008 Bonds should not rely on this Official Statement for information concerning the Series 2008 Bonds in connection with any conversion of the Series 2008 Bonds to Series 2008 Bonds bearing interest at a rate other than a Long -Term Rate, but should look solely to the offering document to be used in connection with any such conversion. The Series 2008 Bonds are subject to redemption prior to maturity, as more fully described herein. During the initial Long -Term Rate Period, the Series 2008 Bonds are not subject to redemption. The Series 2008 Bonds are special obligations of the Commission payable from and secured solely by a pledge of the Revenues (which is defined herein and which principally includes the receipts from the imposition in the County of Riverside, California of a %- .nt sales tax scheduled to take effect July 1, 2009 (the "Sales Tax"), less certain administrative fees paid to the California State Board of Preliminary, subject to change. 8.A2.TT.Comm.Preliminary Offering Stint -Debt Issuance.DOC 21 NG10E Draft dated March 18, 2008 Equalization), as described herein. The Sales Tax was approved by more than a 2/3 vote of the electorate of the County of Riverside on November 5, 2002 and is scheduled to expire on June 30, 2039. NEITHER THE FAITH AND CREDIT NOR THE TAXINGTOWER 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 THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2008 BONDS. The Series 2008 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of validity by Orrick Herrington & Sutcliffe LLP„ 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, as disclosure counsel, and by Best Best & Krieger, LLP, Riverside, California, the Commission's General Counsel. Certain legal matters will be passed upon for the Underwriters by Stradling, Yocca, Carlson & Rauth, Newwport Beach, California. It is anticipated that the Series 2008 Bonds will be available for delivery to DTC on or about June _, 2008. Lehman Brothers Banc of America Securities LLC Dated: , 2008 8.AITT.Comm.Preliminary Offering Stmt-Debt Issuance.DOC • 22 • • • Final Maturity Date Initial Mandatory Tender Date Principal Amount to be Tendered December 1, June 1, 2029 2009 $ Series 2008 Bonds Initial Long -Term Rate ending on (but excluding) December 1,2009 Yield to Initial Mandatory Tender Date CUSIP No.t t CUSIP numbers are provided for convenience of reference only. Neither the Commission nor the Underwriters take any responsibility for the accuracy of such numbers. Term Bonds. 23 • No dealer, salesman or any other person has been authorized by the Riverside County Transportation Commission (the "Commission") or the Underwriters to give any information or to make any statements or representations, other than those contained in this Official Statement, and, if given or made, such other information, statements or representations must not be relied upon as havingbeen authorized. The information set forth herein has been obtained from the Commission and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and it is not to be construed as a representation by the Underwriters. The information in this Official Statement is subject to change, and neither the delivery of this Official Statement nor any sale made after any delivery shall, under any circumstances, create any implication that there has been no change since the date of this Official Statement. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Series 2008 Bonds in any jurisdiction in which such offer or solicitation as not authorized, or in which any person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. This Official Statement is not to be construed as a contract with the Purchasers of the Series 2008 Bonds. Statements contained in this Official Statement 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 fact. THE PRICES AT WHICH THE SERIES 2008 BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITERS (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDS APPEARING ON THE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITERS MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN CONNECTION WITH THE OFFERING OF THE SERIES 2008 BONDS, THE UNDERWRITERS MAY EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2008 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION CONCERNING THE COMMISSION AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY COMMISSION. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the infonnation in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expression of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication 24 that there has been no change in affairs of the Commission since the date hereof. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with one or more repositories. FORWARD -LOOKING STATEMENTS Certain statements included or incorporated by reference in this Official Statement constitute forward -looking statements. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" or other similar words. The achievement of certain results or other expectations contained in such forward - looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward -looking statements. No assurance is given that actual results will meet the forecasts of the Commission in any way, regardless of the level of optimism communicated in the information. The Commission is not obligated to issue any updates or revisions to the forward -looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. THE COMMISSION DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD -LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER THAN AS DESCRIBED UNDER "CONTINUING DISCLOSURE" HEREIN. 25 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Jeff Stone, Chair Bob Magee, Vice Chair Bob Buster, rd Vice Chair John F. Tavaglione Roger Berg Ron Wilson John Chlebnik Marion Ashley Gregory S. Pettis Bob Botts Jeff Miller Joseph DeConinck Robin Lowe Mary Craton Patrick J. Mullany Eduardo Garcia Michael H. Wilson Yvonne Parks Rick Gibbs Terry Henderson Dick Kelly Frank West Daryl Busch Frank Hall Steve Adams Ginny Foat Ron Roberts Gordon Moller Mike Perovich Chris Carlson MANAGEMENT Executive Director Anne Mayer Deputy Executive Director John Standiford Chief Financial Officer Theresia Trevino SPECIAL SERVICES Financial Advisor Fieldman, Rolapp & Associates Irvine, Califomia Bond Counsel Orrick, Herrington & Sutcliffe LLP San Francisco, California Trustee U.S. Bank National Association Los Angeles, California 26 • TABLE OF CONTENTS Page INTRODUCTION 1 General 1 Commission for Issuance 1 Purpose 1 Security 1 Continuing Disclosure 2 References 2 THE SERIES 2008 BONDS 3 General 3 Initial Interest Rate Period 3 Long -Term Rate Period 4 Notice of Adjustment 7 Payment of Principal and. Interest 8 Redemption Terms of the Series 2008 Bonds 8 General Redemption Provisions 9 Purchase of Series 2008 Bonds Upon Conversion 10 PLAN OF FINANCE 11 APPLICATION OF SERIES 2008 BOND PROCEEDS 12 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS 12 Limited Obligation 12 Pledge of Revenues 13 Revenue Fund; Allocation of Revenues 13 Bond Reserve Fund 15 Additional Bonds and Parity Debt 16 Subordinate Obligations 17 THE SALES TAX 17 General 17 Collection of Sales Tax Revenues 18 1988 Sales Tax Revenues 18 RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL 1988 SALES TAX REVENUES 19 The Series 2008 Bonds are not secured by 1988 Sales Tax Revenues . 19 THE COMMISSION 20 General 20 Commissioners 20 Executive Staff 21 THE TRANSPORTATION EXPENDITURE PLAN 21 INVESTMENT CONSIDERATIONS 22 Economy of the County and the State 22 No Liquidity Facility 22 The Sales Tax 23 Proposition 218 23 Further Initiatives 23 Loss of Tax Exemption 23 i 27 FINANCIAL STATEMENTS 24 LITIGATION 24 TAX EXEMPTION 24 CERTAIN LEGAL MATTERS 26 RATINGS 26 UNDERWRITING 26' FINANCIAL ADVISOR 26 CONTINUING DISCLOSURE 27 MISCELLANEOUS 27 APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F Commission Audited Financial Statements For Fiscal Year Ended June 30, 2007 A-1 County Demographic and Economic Information B-1 Summary of Certain Provisions of the Indenture C-1 Book -Entry System D-1 Proposed Form of Bond Counsel Opinion E-1 Proposed Form of Continuing Disclosure Certificate F-1 ii 28 OFFICIAL STATEMENT RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (Limited Tax Bonds) Series 2008 A INTRODUCTION General This Official Statement, which includes the cover page and the appendices hereto, sets forth certain information in connection with the offering by the Riverside County Transportation Commission (the "Commission") of $ * principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2008 A (the "Series 2008 Bonds"). Commission for Issuance The Series 2008 Bonds are being issued by the Commission under and 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"), an Indenture, dated as of June 1, 2008 (the "2008 Indenture"), between the Commission and U.S. Bank National Association (the "Trustee") and the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture" and, collectively with the 2008 Indenture, the "Indenture"). All capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in APPENDIX C "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE," or, if not defined therein, in the Indenture. Purpose The Series 2008 Bonds are being issued in order to (i) refinance a portion of the outstanding principal amount of the Commission's Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, as more particularly described herein (collectively, the "Notes"), (ii) fund capitalized interest on the Series 2008 Bonds to December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and (vi) pay costs of issuance of the Series 2008 Bonds. Security The Series 2008 Bonds are limited obligations of the Commission payable from and secured by certain revenues (the "Revenues") pledged' under the Indenture, including a pledge of revenues (the "Sales Tax Revenues") derived from a '%-cent sales tax scheduled to take effect July 1, 2009 (the "Sales Tax"), imposed in accordance with the Act and the California Transactions and Use Tax Law (Revenue and Taxation Code Section 7251 et seq.), net of an administrative fee paid to the California State Board of Equalization (the "Board of Preliminary, subject to change. 1 29 Equalization") in connection with the collection and disbursement of the Sales Tax. The Sales Tax was approved by more than a two-thirds vote of the electorate of the County of Riverside on November 5, 2002 and is scheduled to expire on June 30, 2039. Additional Parity Debt may hereafter be issued and paid from the Revenues. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS - Additional Bonds and Parity Debt" and "PLAN OF FINANCE" herein. A Bond Reserve Fund is established under the Indenture. The Bond Reserve Requirement under the Indenture with respect to the Series 2008 Bonds in the amount of $ will be funded from the proceeds of the sale of the Series 2008 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS - Bond Reserve Fund," and APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Definitions" herein. 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 THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE SERIES 2008 BONDS. Continuing Disclosure The Commission has covenanted for the benefit of the owners and beneficial owners of the Series 2008 Bonds to provide certain fmancial information and operating data relating to the Commission by not later than 210 days following the end of the Commission's Fiscal Year (presently June 30), commencing with the report for the 2008-09 Fiscal Year, and to provide notices of occurrence of certain enumerated events, if material. See "CONTINUING DISCLOSURE" herein and APPENDIX F - "PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE." References The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each such document, copies of which are available for inspection at the offices of the Commission. 2 30 • THE SERIES 2008 BONDS General The Series 2008 Bonds are being issued in the aggregate principal amount of $ * to (i) refinance a portion of the outstanding principal amount of the Notes, (ii) fund capitalized interest on the Series 2008 Bonds to December 1, 2009, (iii) fund a reserve fund for the Series 2009 Bonds, and (vi) pay costs of issuance of the Series 2008 Bonds. The following is a summary of certain provisions of the Series 2008 Bonds. Reference is made to the Series 2008 Bonds for the complete text thereof and to the Indenture for a more detailed description of these provisions. The discussion herein is qualified by such reference. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" herein. This Official Statement is not intended to provide certain information with respect to the Series 2008 Bonds (including the terms of such Series 2008 Bonds) after conversion from the Initial Long -Term Rate. Owners and prospective purchasers of the Series 2008 Bonds should not rely on this Official Statement for information concerning the Series 2008 Bonds in connection with any conversion of the Series 2008 Bonds to Series 2008 Bonds bearing interest at a rate other than a Long -Term Rate, but should look solely to the offering document to be used in connection with any such conversion. As used herein, the term "Bonds" means any Bonds, including the Series 2008 Bonds, issued pursuant to the Indenture. Further, "Series" means Bonds designated as being of the same Series and "Variable Interest Rate" means a Daily Rate, Weekly Rate, Commercial Paper Rate and a Long -Term Rate. Initial Interest Rate Period The initial Interest Rate Period for the Series 2008 Bonds will be a Long -Term Rate Period and the initial Long -Tenn Rate Period will be the period commencing on and including the date of delivery of the Series 2008 Bonds and ending on and excluding December 1, 2009, the last day of the initial Long -Term Rate Period. The Series 2008 Bonds shall initially bear interest at rates as set forth on the inside cover hereof. During the initial Term Interest Rate Period, interest on the Series 2008 Bonds is payable semi-annually on June 1 and December 1 of each year commencing on December 1, 2008, and the final interest payment with respect to the initial Long -Term Rate Period will be paid on December 1, 2009. On December 1, 2009, there will be a mandatory tender for purchase of the Series 2008 Bonds (the "Initial Mandatory Tender Date"). The Commission has agreed to hire remarketing agent(s) to use their best efforts to remarket the Series 2008 Bonds on such date. If such remarketing agents are unable to remarket the Series 2008 Bonds on the Initial Mandatory Tender Date, such Series 2008 Bonds will continue to be owned by the then current Holders and will commence to bear interest at the rate of I %j per annum until such time as the Commission elects to adjust the interest rate to be borne on the Series 2008 Bonds to a Daily Rate, Weekly Rate, Long -Term Rate, Commercial Paper Rate, or a Fixed Interest Preliminary, subject to change 3 31 Rate and there is a successful remarketing of the Series 2008 Bonds. See "Long -Term Rate Period" herein. There is no liquidity facility supporting the purchase of the Series 2008 Bonds on the Initial Mandatory Tender Date nor is there any plan to provide a liquidity facility. On the InitialMandatory Tender Date, the Series 2008 Bonds are also subject to optional redemption pursuant to the Indenture. See "Redemption Terms of the Series 2008 Bonds" below. The interest rate on the Series 2008 Bonds may thereafter be adjusted to a Daily Rate, Weekly Rate, another Long -Term Rate, Commercial Paper Rate or converted to a Fixed Rate as provided in the Indenture. The Series 2008 Bonds will be issued in the aggregate principal amount and will mature on the Maturity Date shown on the pages immediately succeeding the cover page of this Official Statement. The Series 2008 Bonds will be dated the date of original delivery. The Series 2008 Bonds shall bear interest on the unpaid principal amount thereof as described below. At no time shall any Series 2008 Bonds bear interest at a rate in excess of the Maximum Rate, which is defined as the lesser of: (i) 12% per annum or (ii) the maximum rate of interest that may legally be paid on the Bonds. The Depository Trust Company, or DTC, will act as the initial securities depository for each Series of the Series 2008 Bonds, which will be issued initially pursuant to a book -entry only system. See "APPENDIX D — BOOK -ENTRY SYSTEM" herein. Under the Indenture, the Commission may appoint a successor securities depository to DTC for the Series 2008 Bonds: The Holders of the Series 2008 Bonds have no right to a book -entry only system for the Series 2008 Bonds. The information under this caption, "THE SERIES 2008 BONDS" is subject in its entirety to the provisions described below under "APPENDIX D — BOOK -ENTRY SYSTEM" while the Series 2008 Bonds are in the book -entry only system. Long -Term Rate Period Determination of Long -Term Rate. During a Long -Tenn Rate Period after the initial Long -Tenn Rate Period, the Series 2008 Bonds shall bear interest at the Long -Term Rate. The Long -Term Rate shall be determined by the Remarketing Agent on a Business Day no later than the Long -Term Conversion Date. Subject to the certain provisions of the Indenture, the Long - Term Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the minimum interest rate which, if borne by the Series 2008 Bonds, would enable the Remarketing Agent to sell such Series 2008 Bonds on such date at a price (without regarding accrued interest) equal to the principal amount thereof; provided that in the event of a failure of the Commission to elect a new interest period for the Series 2008 Bonds or a failure of the Remarketing Agent to remarket the Series 2008 Bonds on December 1, 2009, the Series 2008 Bonds shall bear interest at the rate of f %] per annum until such time as the Commission shall elect to adjust the interest rate to be borne on the Series 2008 Bonds to a Daily Rate, Weekly Rate, Long -Term Rate, Commercial Paper Rate, or a Fixed Rate and there is a successful remarketing of the Series 2008 Bonds. 4 32 • Adjustment to or Continuation of Long -Term Rate. Subject to the Indenture, at any time, the Commission, by written direction to the Trustee, the Tender Agent (if any), the Liquidity Facility Provider (if any), and the Remarketing Agent (if any), may elect that the Series 2008 Bonds shall bear interest at a Long -Term Rate. Such direction of the Commission (i) shall specify the duration of the Long -Term Rate Period, (ii) shall specify the proposed effective date of the Long -Term Rate Period, which date shall be (1) a Business Day not earlier than the 30th day following receipt by the Trustee of such direction, (2) in the case of an adjustment from a Commercial Paper Interest Rate Period to a Long -Term Rate Period, the day immediately following the last day of the Commercial Paper Interest Rate Period, (3) in the case of an adjustment from one Long -Term Rate Period to another Long -Term Rate Period, the day immediately following the last day of the then -current Long -Term Rate Period or a day on which the Series 2008 Bonds otherwise would be subject to optional redemption pursuant to the Indenture if such adjustment did not occur; and (iii) with respect to any such Long -Term Rate Period, may specify redemption prices and periods different than those set forth in the Indenture, if approved by Bond Counsel The last day of the Long -Term Rate Period shall be determined by the Remarketing Agent on a Business Day not later than the Long Term Conversion Date (which last day shall be either the day immediately prior to the Maturity Date for such Series, or a day which both immediately precedes a Business Day and is at least 181 days after the effective date thereof). The direction of the Commission described above shall be accompanied by a letter of Bond Counsel that it expects to be able to give a Favorable Opinion of Bond Counsel on the Long -Term Conversion Date and by a form of the notice to be mailed by the Trustee to the Holders of the Bonds of such Series as provided in the Indenture. During the Long -Term Rate Period commencing and ending on the dates so determined and during each successive Long - Term Rate Period, if any, so determined, the interest rate borne by the Series 2008 Bonds shall be a Long -Tenn Rate. If, by the 45th day prior to the last day of any Long -Term Rate Period with respect to the Series 2008 Bonds which ends on a day other than the day immediately preceding the Maturity Date of such Bonds, the Trustee shall not have received notice of the Commission's election that, during the next succeeding Interest Rate Period, the Series 2008 Bonds shall bear interest at a Daily Rate, Weekly Rate, Commercial Paper Rate or shall be converted to the Fixed Rate, the next succeeding Interest Rate Period for such Bonds shall be a [Weekly Rate Period] until such time as the interest rate on such Bonds shall be adjusted to a Daily Rate, Weekly Rate, Commercial Paper Rate or converted to the Fixed Interest Rate as provided in the Indenture; provided that, except with respect to the Initial Long -Term Rate Period, if the Commission fails to make an election with respect to the interest rate to be borne by the Series 2008 Bonds prior to each successive Long -Term Rate Period or the Remarketing Agent fails to remarket on any such date, the next succeeding interest rate period for the Series 2008 Bonds will be a Long -Term Period of as determined above. See "Determination of Long -Term Rate" above. After the Fixed Rate Conversion Date, the Series 2008 Bonds shall no longer be subject to or have the benefit of the tender provisions of the Indenture. 5 33 Notice of Adjustment to or Continuation of Long -Term Rate. The Trusteeshall give notice of an adjustment to a (or the establishment of another) Long -Tenn Rate Period for the Series 2008 Bonds to the Holders of such Bonds not less than 30 days prior to the proposed effective date of such Long -Tenn Rate Period, including the establishment of the Long - Term Rate described above, if possible. See "Determination of Long -Term Rate" above. Such notice shall state: (i) that the interest rate on the Series 2008 Bonds shall be- adjusted to, or continue to be, a Long -Tenn Rate unless Bond Counsel fails to deliver a Favorable Opinion of Bond Counsel to the Trustee, the Commission and the Remarketing Agent as to such adjustment in the Interest Rate Period on the effective date of such adjustment; (ii) the proposed effective date and duration of such Long -Term Rate Period; and (iii) that the Series 2008 Bonds are subject to mandatory tender for purchase on such proposed effective date and setting forth the applicable Purchase Price and the place of delivery for purchase of such Bonds. Sale at Premium or Discount. Notwithstanding the above provisions, the Long -Term Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the interest rate which, if borne by the Series 2008 Bonds, would enable the Remarketing Agent to sell such Series 2008 Bonds at a price (without regard to accrued interest) which will result in the lowest net interest cost for the Series 2008 Bonds, after taking into account any premium or discount at which such Series 2008 Bonds are sold by the Remarketing Agent, provided that: (1) The Remarketing Agent certifies to the Trustee, the Tender Agent, the Commission that the sale of the Series 2008 Bonds at the interest rate and premium or discount specified by the Remarketing Agent is expected to result in the lowest net interest cost for such Series 2008 Bonds on the Long -Term Conversion Date; (2) The Commission consents in writing to the sale of the Series 2008 Bonds by the Remarketing Agent at such premium or discount; (3) In the case of Series 2008 Bonds to be sold at a discount, either (a) a Liquidity Facility is in effect with respect to such Series 2008 Bonds and provides for the purchase of such Series 2008 Bonds at such discount or (b) the Commission agrees to transfer to the Tender Agent on the Long -Term Conversion Date, in immediately available funds, for deposit in the Purchase Account, an amount equal to such discount; (4) In the case of Series 2008 Bonds to be sold at a premium, the Remarketing Agent shall transfer to the Trustee for deposit in the Revenue Fund an amount equal to such premium which amount may be used to pay amounts related to the costs of conversion; (5) On or before the date of the determination of the Long -Term Rate, the Commission delivers to the Trustee and the Remarketing Agent a letter of Bond Counsel to the effect that Bond Counsel expects to be able to give a Favorable Opinion of Bond Counsel on the Long -Term Conversion Date; and (6) On or before the Long -Term Conversion Date, a Favorable Opinion of Bond Counsel shall have been received by the Trustee and confirmed to the Commission and the Remarketing Agent. 6 34 • • • Notice of Adjustment In the event that the Commission shall elect to adjust the interest rate on the Series 2008 Bonds to a Daily Rate, Weekly Rate, Long -Term Rate, Commercial Paper Rate or converted to a Fixed Rate as provided in the Indenture, then the written direction furnished by the Commission as required by such sections shall be made by registered or certified mail, or by telecopy, confirmed by registered or certified mail. Notwithstanding anything in the Indenture, in connection with any Conversion of the Interest Rate Period, the Commission shall have the right to deliver to the Trustee, the Remarketing Agent (if any), the Tender Agent (if any), the Liquidity Facility Provider (if any), on or prior to 10:00 a.m., New York City time, on the second Business Day preceding the effective date of any such Conversion a notice to the effect that the Commission elects to rescind its election to make such Conversion. If the Commission rescinds its election to make such Conversion, then the Interest Rate Period shall not be converted and the Series 2008 Bonds shall continue to bear interest at the Daily Rate, Weekly Rate, Long -Term Rate or Commercial Paper Rate, as the case may be, as in effect immediately prior to such proposed Conversion (provided, that the period of any such continuing Long -Term Rate Period shall be ). In any event, if notice of a Conversion has been mailed to the Holders as provided in the Indenture and the Commission rescinds its election to make such Conversion, then the Series 2008 Bonds shall continue to be subject to mandatory tender for purchase on the date which would have been the effective date of the Conversion as provided in the Indenture. No Conversion from one Interest Rate Period to another shall take effect under the Indenture unless each of the following conditions, to the extent applicable, shall have been satisfied. (0 The Trustee shall have received a Favorable Opinion of Bond Counsel with respect to such Conversion. In the case of any Conversion with respect to which there shall be no Liquidity Facility in effect to provide funds for the purchase of Series 2008 Bonds on the Conversion Date, the remarketing proceeds available on the Conversion Date shall not be less than the amount required to purchase all of the Series 2008 Bonds at the Purchase Price (unless the Commission, in its sole discretion, elects to transfer to the Tender Agent the amount of such deficiency on or before the Conversion Date). (ii) In the case of any Conversion of a Series 2008 Bonds from a Long -Term Rate Period to a Daily Rate Period or a Weekly Rate Period, prior to the Conversion Date the Commission shall have appointed a Tender Agent and a Remarketing Agent and shall have delivered a Liquidity Facility in accordance with the Indenture and there shall have been executed and delivered a Tender Agent Agreement and a Remarketing Agreement. If any condition to the Conversion shall not have been satisfied, then the Interest Rate Period shall not be converted and the Series 2008 Bonds shall continue to bear interest at the Daily Rate, Weekly Rate, Long -Term Rate or Commercial Paper Rate or , as the case may be, as in effect immediately prior to such proposed Conversion (provided, that the period of any such 7 35 continuing Long -Term Rate Period shall be ), and the Series 2008 Bonds shall continue to be subject to mandatory tender for purchase on the date which would have been the effective date of the Conversion as provided in the Indenture. Notwithstanding anything in the Indenture to the contrary, in connection with the adjustment from a Long -Term Rate Period that would require the mandatory tender for purchase of Series 2008 Bonds at a Purchase Price greater than the principal amount thereof as provided in the Indenture, the Commission, as a condition to exercising its option to cause an adjustment in the Interest Rate Period, shall deliver to the Trustee prior to the mailing of notice of such adjustment, immediately available funds for the purpose of paying such premium, unless the Liquidity Facility, if any, then in effect with respect to such Series 2008 Bonds provides for the payment of such premium. Payment of Principal and Interest The Series 2008 Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. Individual purchases of interests in the Series 2008 Bonds will be made in book -entry form only, in authorized denominations of $5,000 or any integral multiple thereof. Purchasers of interests will not receive certificates representing their interests in the Series 2008 Bonds. For a description of the method of payment of principal, premium, if any, and interest on the Series 2008 Bonds and matters pertaining to transfers and exchanges while in the book -entry system, see "APPENDIX D — BOOK -ENTRY SYSTEM." So long as Cede & Co. is the registered owner of the Series 2008 Bonds, the Trustee will pay principal of and premium, if any, and interest on the Series 2008 Bonds to DTC, which will remit principal, premium, if any, and interest payments to the Beneficial Owners of the Series 2008 Bonds, as described under "APPENDIX D — BOOK -ENTRY SYSTEM." The principal, purchase price or redemption price of the Series 2008 Bonds and interest thereon shall be payable in lawful money of the United States of America at the principal corporate trust office of the Trustee. Redemption Terms of the Series 2008 Bonds Optional Redemption of the Series 2008 Bonds — Long -Term Rate Period During the initial Long -Term Period (from May 2008, the date of delivery of the Series 2008 Bonds through December 1, 2009), the Series 2008 Bonds are not subject to redemption. The Series 2008 Bonds are subject to redemption prior to their stated maturity, at the option of the Commission (which option shall be exercised upon request of the Commission given to the Trustee (unless Waived bythe. Trustee) of least 45 days prior to the date fixed for redemption), in whole or in part, in such amounts as may be specified by the Commission, on December 1, 2009, and, if the Remarketing Agent fails to remarket the Series 2008 Bonds on such date, any date during the Long -Term Rate Periods of thereafter in effect. After the Initial Long -Term Rate Period, while any Long -Tenn Rate is in effect the Series 2008 Bonds are subject to redemption prior to their stated maturity, at the option of the Commission (which option shall be exercised upon request of the Commission given to the Trustee (unless waived by the Trustee) at 8 36 • • • least 45 days prior to the date fixed for redemption), in whole or in part, in such amounts as may be specified by the Commission,on the fust day of such Long -Term Rate Periodat a Redemption Price equal to the amount of Series 2008 Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium. Mandatory Redemption of the Series 2008 Bonds from Sinking Fund Installments. The Series 2008 Bonds are subject to mandatory redemption from Mandatory Sinking Account Payments for such Series 2008 Bonds, on each date a Mandatory Sinking Account Payment for such Series 2008 Bonds is due, and in the principal amount equal to the Mandatory Sinking Account Payment due on such date at a redemption price equal to the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium, as set forth below. Redemption Redemption Date Sinking Fund* Date Sinking Fund* (June 1) Installment (June1) Installment t Final Maturity General Redemption Provisions Selection of Series 2008 Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Series 2008 Bonds or any given portion thereof, the Trustee shall select the Series 2008 Bonds to be redeemed or such given portion thereof not previously called for redemption, by lot, in any manner which the Trustee in its sole discretion shall deem appropriate and fair. Notice of Redemption. Notice of redemption shall be mailed by the Trustee on behalf of the Commission, but failure by the Trustee to mail any notice to any one or more of the Holders or any one or more of the securities information services or depositories designated by the Commission shall not affect the sufficiency of the proceedings for the redemption of Series 2008 Preliminary, subject to change. 9 37 Bonds. Each notice of redemption shall. state (i) the date of the notice, (ii) the Series designation and the date of issue of the Series 2008 Bonds, (iii) the redemption date, (iv) the Redemption Price, (v) the place or places of redemption, including the name and address of the Trustee, (vi) the maturity, (vii) the CUSIP numbers, if any, and (viii) in the case of Series 2008 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Notice of redemption shall be mailed by the Trustee, not less than thirty (30) days nor more than sixty (60) days to the Holder of Series 2008 Bonds called for redemption. Such notice shall be given to the Holders of Series 2008 Bonds designated for redemption at their addresses appearing on the bond registration books maintained by the Trustee as of the close of business on the day before notice is given. Notice shall also be given to the Remarketing Agent and the Securities Depository and/or securities information services designated in the Indenture. Rescission. The Commission may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by written notice of the Commission to the Trustee and the Trustee shall mail notice of such cancellation to the recipients of the notice of redemption being cancelled. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the redemption date on, the Series 2008 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Series 2008 Bonds (or portions thereof) so called for redemption shall become due and payable at the redemption price specified in such notice, together with interest accrued thereon to the date fixed for redemption, interest on the Series 2008 Bonds so called for redemption shall cease to accrue, said Series 2008 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Indenture, and the Holders of said Series 2008 Bonds shall have no rights in respect thereof except to receive payment of said redemption price and accrued interest to the date fixed for redemption. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the Commission shall execute, and the Trustee shall authenticate and deliver to the Holder of such Series 2008 Bond, at the expense of the Commission, a new Bond or Bonds of Minimum Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered, at the same maturity and terms as the surrendered Bond. Purchase of Series 2008 Bonds Upon Conversion Tenders of Series 2008 Bonds and Converted Series 2008 Bonds Are Subject to DTC Procedures. As long as the book -entry only system is in effect with respect to any Series 2008 Bonds, all tenders for purchase and deliveries of Series 2008 Bonds upon Conversion tendered for purchase or subject to mandatory tender under the provisions of the applicable Indenture shall be made pursuant to DTC's procedures as in effect from time to time, and neither the Commission, the Trustee, nor any Remarketing Agent shall have any responsibility for or liability with respect to the implementation of these procedures. For a description of the tender procedures through DTC, see "APPENDIX D-- BOOK -ENTRY SYSTEM." 10 38 • Mandatory Tender for Purchase on First Day of Each Interest Rate Period Series 2008 Bonds to be converted shall be subject to mandatory tender for purchase on the first day of each Interest Rate Period, at a Purchase Price equal to the principal amount thereof. PLAN OF FINANCE The Series 2008 Bonds are being issued in order to (i) refinance a portion of the outstanding principal amount of the Notes, (ii) fund capitalized interest on the Series 2008 Bonds to December 1, 2009, (iii) fund a reserve fund for the Series 2008 Bonds, and (vi) pay costs of issuance of the Series 2008 Bonds. In March, 2005, the Commission authorized the issuance of its Commercial Paper Notes (Limited Tax Bonds) Series A in an aggregate principal amount up to $110,000,000 and Series B in an aggregate principal amount up to $75,000,000. As of [April 15, 2008], there is $ outstanding principal amount of Notes. The Notes are secured by a pledge of the Sales Tax subordinate to the pledge of the Sales Tax in favor of the holders of the Series 2008 Bonds. The principal of and interest on the Notes are payable from draws under an irrevocable, direct pay letter of credit issued by Bank of America, N.A. (the `Bank"), pursuant to a reimbursement agreement dated as of March 1, 2005 ("Reimbursement Agreement") by and between the Commission and the Bank. The stated amount of the letter of credit may not exceed $190,000,000. The letter of credit expires March 29, 2010, unless terminated earlier as provided in the Reimbursement Agreement. The Commission's obligation to reimburse the Bank for draws under the letter of credit to pay the principal of and interest on the Notes is secured by a pledge of Sales Tax on parity with the obligation to pay Note holders and subordinate to the pledge in favor of the holders of the Series 2008 Bonds. The Commission has entered into the following interest rate swap agreements (collectively, the "Initial Swap Agreements"), in a combined notional amount of $185,000,000, which Initial Swap Agreements have an effective date of October 1, 2009 and expire on June 1, 2029: a. An ISDA Master Agreement, dated as of August 22, 2006, between the Bank and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between the Bank and the Commission; and b. An ISDA Master Agreement, dated as of August 22, 2006, between Lehman Brothers Derivative Products Inc. ("Lehman") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between Lehman and the Commission. Pursuant to the Initial Swap Agreements, the Commission has agreed to pay a fixed interest rate to the Bank and Lehman, and the Bank and Lehman have agreed to pay the Commission a floating rate of interest. To secure its obligation to make regularly scheduled payments to the Bank and Lehman, until the Commission issues floating rate debt payable from the Sales Tax on a senior lien basis to the Notes, the Commission has pledged the Sales Tax Revenues on a parity basis with the obligation to pay principal of and interest on the Notes and reimburse the Bank for 11 39 draws under the letter of credit; after issuance of any floating rate debt payable from the Sales Tax on a senior lien basis to the Notes, the pledge of Sales Tax in favor of Lehman and the Bank will be on a parity basis with the lien of the Sales Tax in favor of the senior lien floating rate bond holders. The Commission's obligation to pay an early termination amounts to Lehman and the Bank pursuant to the Initial Swap Agreements is subordinate to the pledge in favor of the Notes and the Series 2008 Bonds. APPLICATION OF SERIES 2008 BOND PROCEEDS The proceeds from the sale of the Series 2008 Bonds will be applied as follows: Sources of Funds: Principal Amount of Bonds [Plus/Less]: Original Issue [Premium/Discount] Total Sources: $ Uses of Funds: Notes Escrow 2008 Capitalized Interest Fund(1) Costs of Issuance(2) Reserve Fund Total Uses: (1) Capitalized interest calculated from the date of the delivery of the Series 2008 Bonds to December 1, 2009. (2) Includes underwriters' discount, rating agency fees, trustee fees, printing costs, bond counsel, disclosure counsel and financial advisor fees and expenses and other miscellaneous expenses. SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2008 BONDS Limited Obligation The Series 2008 Bonds are limited obligations of the Commission and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from the Revenues, which principally include Sales Tax Revenues, pledged under the Indenture. 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 PLEDGED REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2008 BONDS. 12 40 • Pledge of Revenues All Sales Tax Revenues are irrevocably pledged by the Commission to secure the punctual payment of the principal or purchase price of, premium, if any, and interest on the Series 2008 Bonds and any additional Series of Bonds issued under the Indenture (collectively, the "Bonds") and any additional Panty Debt in accordance with their terms. The Sales Tax Revenues shall not be used for any other purpose while any of the Bonds or Parity Debt remains Outstanding, except as permitted by the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Additionally, there are pledged to secure the payment of the principal of, redemption premium, if any, and interest on the Bonds in accordance with their terms, all amounts (including proceeds of the Bonds) held by the Trustee under the Indenture (except for amounts held in the Rebate Fund), subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Pursuant to the Indenture, the pledge of Sales Tax Revenues constitutes a first lien to secure the Bonds and Panty Debt. The pledge of Sales Tax Revenues shall be irrevocable until all Bonds issued under the Indenture, including the Series 2008 Bonds, and all Parity Debt are no longer Outstanding. The Sales Tax Revenues pledged to the payment of the Bonds and Panty 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 Bonds and Parity Debt; but nevertheless out of Sales Tax Revenues certain amounts may be applied for other purposes as provided in the Indenture. Out of Revenues there shall be applied all sums required for the payment of the principal of (including any premium thereon) and interest on the Bonds and all Panty Debt, including any Regular Swap Payments, together with any sinking fund payments relating to Bonds and Parity Debt and Reserve Fund requirements with respect thereto. All remaining Revenues, after making the foregoing allocations, shall be available to the Commission for all lawful Commission purposes. For a detailed description of the Sales Tax and projected receipts of Sales Tax Revenues, see "THE SALES TAX" herein. Revenue Fund; Allocation of Revenues As long as any Bonds are Outstanding or any Parity Debt remains unpaid, the Commission has assigned the Sales Tax Revenues to the Trustee and shall cause the Board of Equalization to transmit the same directly to the Trustee. The Sales Tax Revenues shall be received and held in trust by the Trustee for the benefit of the Owners of the Bonds and any Panty Debt. The Trustee shall forthwith deposit all Sales Tax Revenues in the Revenue Fund, maintained and held in trust by the Trustee, when and as such Sales Tax Revenues are received by the Trustee. See APPENDIX C— "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE Allocation of Revenues." Investment income on amounts held by the Trustee (other than amounts held in the Rebate Fund or for which particular instructions are provided) shall also be deposited in the Revenue Fund. In order to carry out and effectuate the pledge, charge and lien on Swap Revenues contained in the Indenture, the Commission agrees and 13 41 covenants that all Swap Revenues shall be deposited when received with the Trustee for deposit in the Interest Fund. In each month while Bonds remain Outstanding, the Trustee is required to set aside receipts of Sales Tax Revenues in the following respective funds, amounts and order of priority (provided that deficiencies in any previously required deposit may be made up prior to the deposit to a fund subsequent in priority and further provided that set asides or transfers required with respect to other Parity Debt may be made on a parity basis, as provided in the Indenture): 1. Interest Fund. The Indenture requires the Trustee to make monthly deposits in the Interest Fund in an amount equal to (a) one -sixth of the aggregate half - yearly amount of interest becoming due and payable on Outstanding Current Interest Bonds during the ensuing six-month period, plus (b) the aggregate amount of interest, calculated at the Maximum Rate to accrue during that month on the Outstanding Variable Rate Bonds other than Variable Rate Bonds which are the subject of a Swap, plus (c) one -sixth of the aggregate half yearly amount of any Regular Swap Payments becoming due on Swaps. 2. Principal Fund; Sinking Accounts. The Indenture also requires the Trustee to make monthly deposits in the Principal Fund in an amount equal to at Ieast (a) one -sixth of the aggregate semiannual amount of principal, accreted value, if applicable, and mandatory sinking account payments becoming due and payable within the next six months on Outstanding Bonds having semiannual maturity dates and mandatory sinking account redemption, plus (b) one -twelfth of the aggregate yearly amount of principal, accreted value, if applicable, and mandatory sinking account payments becoming due and payable within the next twelve months on Outstanding Bonds having annual maturity dates and mandatory sinking account redemption, plus (c) one -sixth of the aggregate of the Mandatory Sinking Account Payments to be paid during the next six-month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts have been created and for which semiannual mandatory redemption is required from said Sinking Accounts, plus (d) one - twelfth of the aggregate of the Mandatory Sinking Account Payments to be paid during the next 12-month period into the respective Sinking Accounts for the Term 'Bonds of all Series for which Sinking Accounts have been created and for which annual mandatory redemption is required from such Sinking Accounts. 3. Bond Reserve Fund. The Indenture also requires the Trustee to make deposits to the Bond Reserve Fund as set forth below. See "—Bond Reserve Fund" below. 4. Subordinate Obligations Fund. The Indenture requires the Trustee to establish, maintain and hold in trust a separate fund designated as the "Subordinate Obligations Fund." As long as any Subordinate Obligations remain unpaid, any Revenues remaining in the Revenue Fund after the transfers described in (1), (2) and (3) above have been made shall be transferred the Notes Trustee. After the Notes Trustee has made the required deposit of Revenues under the Notes Indenture, the Notes Trustee shall transfer any remaining Revenues back to the Trustee. 14 42 • 5. Fees and Expenses Fund. The Indenture requires the Trustee to establish, maintain and hold in trust a separate fund designated as the "Fees and Expenses Fund." At the direction of the Commission, after the transfers described in (1), (2), (3) and (4) above have been made, the Trustee is required to deposit as soon as practicable in each month in the Fees and Expenses Fund (i) amounts necessary for payment of fees, expenses and similar charges (including. fees, expenses and similar charges relating to . any Liquidity Facility or Credit Enhancement for the Bonds or any Parity Obligations) owing in such month or the following month by the Commission in connection with the Bonds or any Parity Obligations and (ii) amounts necessary for payment of fees, expenses and similar charges owing in such month or the following month by the Commission in connection with Subordinate Obligations. The Commission shall inform the Trustee of such amounts, in writing, on or prior to the first Business Day of each month. Any Revenues remaining in the Revenue Fund after the foregoing transfers described in (1), (2), (3), (4) and (5) of above, except as the Commission shall otherwise direct in writing or as is otherwise provided in a supplemental indenture, shall be transferred to the Commission on the same Business Day or as soon as practicable thereafter. The Commission may use and apply the Revenues when received by it for any lawful purpose of the Commission, including the redemption of Bonds upon the terns and conditions set forth in the supplemental indenture relating to such Bonds and the purchase of Bonds as and when and at such prices as it may determine. See APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Revenues" and " — Definitions" for a more complete discussion. Bond Reserve Fund The initial Bond Reserve Requirement under the Indenture in the amount of $ will be funded from the proceeds of the sale of the Series 2008 Bonds. "Bond Reserve Requirement" is defined under the Indenture as follows: as of any date of calculation, the lesser of (i) 10% of the aggregate original principal amount of Series 2008 Bonds (less any original issue discount), or (ii) 125% of average Annual Debt Service for the Series 2008 Bonds or (iii) 100% of Maximum Annual Debt Service for the Series 2008 Bonds. A Bond Reserve Fund is established under the Indenture. Except as otherwise provided in the Indenture, on or after July 1, 2009, upon the occurrence of any deficiency in the Bond Reserve Fund, the Trustee shall deposit in the Bond Reserve Fund, as soon as possible in each month, until the Balance therein is at least equal to the Bond Reserve Requirement, (i) one -twelfth (1/12th) of the aggregate amount of each unreplenished prior withdrawal from the Bond Reserve Fund and (ii) the full amount of any deficiency due to any required valuation of the investments in the Bond Reserve Fund. In lieu of a cash deposit, the Commission may fulfill all or a portion of its obligation to fund the Bond Reserve Fund by depositing a letter of credit, surety bond or insurance policy, as, provided in the Indenture. See APPENDIX C - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Funding and Application of Bond Reserve Fund" and " — Definitions" for a more complete discussion. 15 43 Additional Bonds and Parity Debt Under the Indenture or other instrument authorizing Parity Debt, the Commission may issue other obligations payable in whole or in part from Sales Tax Revenues subject to the terms and conditions contained in such authorizing instrument. Issuance of Additional Series of Bonds. The Commission may by Supplemental Indenture establish one or more additional Series of Bonds payable from Revenues and secured by the pledge made under the Indenture equally and ratably with Bonds previously issued, but only upon compliance by the Commission with the provisions of the Indenture. Certain of the applicable provisions of the Indenture are described below: (a) No Event of Default shall have occurred and then be continuing. (b) The Supplemental Indenture providing for the issuance of such Series shall require that the balance in the Bond Reserve Fund, forthwith upon the receipt of the proceeds of the sale of Bonds of such Series, be increased, if necessary, to an amount at least equal to the Bond Reserve Requirement with respect to all Bonds to be considered Outstanding upon the issuance of Bonds of such Series. Said deposit may be made from the proceeds of the sale of Bonds of such Series or from other funds of the Commission or from both such sources or in the form of a letter of credit or surety bond or insurance policy as described under "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Funding and Application of Bond Reserve Fund." (c) The Commission shall place on file with the Trustee a Certificate of the Commission certifying that the amount of Sales Tax Revenues and 1988 Sales Tax` Revenues collected during the Fiscal Year for which audited fmancial statements are available preceding the date on which such additional Series of Bonds will become Outstanding shall have been at least equal to 1.5 times Maximum Annual Debt Service on all Series of Bonds and Parity Obligations then Outstanding and the additional Series of Bonds then proposed to be issued, which Certificate shall also set forth the computations upon which such Certificate is based. Nothing in the Indenture shall prevent or be construed to prevent the Supplemental Indenture providing for the issuance of an additional Series of Bonds from pledging or otherwise providing, in addition to the security given or intended to be given by the Indenture, additional security for the benefit of such additional Series of Bonds or any portion thereof. Issuance of Refunding Bonds. Refunding Bonds may be authorized and issued by the Commission without compliance with the provisions of the Indenture described above under "Issuance of Additional Series of Bonds" and other terms of the Indenture; provided that Maximum Annual Debt Service on all Bonds and Parity Debt Outstanding following the issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Bonds and Parity Debt Outstanding prior to the issuance of such Refunding Bonds. Issuance of Parity Debt. The Commission may also issue additional Parity Debt payable on a parity with the Bonds and which will have, when issued, an equal lien and charge upon the Sales Tax Revenues, provided that the conditions to the issuance of such Parity Debt set 16 44 • forth in the Indenture and such other authorizing instruments are satisfied, including the coverage test described in subsection (c) above under the caption "Issuance of Additional Series of Bonds." The Commission has agreed pursuant to the Initial Swap Agreements to secure its obligation to make regularly scheduled payments with a pledge of Sales. Tax on a parity basis with the Series 2008 Bonds on and after the date the Commission issues Bonds bearing interest at a variable rate of interest. Subordinate Obligations The Commission may issue obligations which are subordinate to the payment of the principal, premium, interest and reserve fund requirements for the Bonds and all Panty Debt, and which subordinated obligations are payable as to principal, premium, interest and reserve fund requirements, if any, only out of Sales Tax Revenues after the prior payment of all amounts then required to be paid from Revenues for principal, premium, interest and reserve fund requirements for the Bonds and all Parity Debt, as the same become due and payable. As of the date hereof, the only subordinate obligations that are authorized are the Notes and the Commission's obligation to make early termination payments pursuant to the InitialSwap Agreements. THE SALES TAX General 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 voting on the measure approved Measure "A" which authorized the imposition of The Sales Tax in the county commencing in July 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 17 45 Sales Tax"), with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and The SalesTax. 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. Collection of Sales Tax 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 National Association, 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 2006-07 for collection of the 1988 Sales Tax was $1,412,100. 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 July, 2009, when. collection; of The Sales Tax commences. 1988 Sales Tax Revenues This tax represents an additional source of revenue to the Commission, is a separate tax from the Sales Tax and does not secure the Series 2008 Bonds. 18 46 • 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 sales 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 "1988 Sales Tax"). The 1988 Sales Tax ceases to be effective on June 30, 2009 with major collection of 1988 Sales Taxes to be received by the Commission no later than September 30, 2009. The Commission has issued indebtedness secured by the 1988 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 1988 Sales Tax. The following table shows the 1988 Sales Tax remitted to the Commission during the fiscal years ended June 30, 1997 through June 30, 2007. RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL 1988 SALES TAX REVENUE RECEIPTS Fiscal Year Net Sales % Change Ended June 30 Tax Receipts") From Prior Fiscal Year 1997 $57,888,147 4.46 1998 63,496,222 9.69 1999 70,396,828 10.87 2000 81,543,732 15.83 2001 89,464 634 9.71 2002 94,400,890 5.52 2003 102,817,407 8.92 2004 117,632,722 14.41 2005 134,516,986 14.35 2006 155,206,029 15.38 2007 157,092,807 1.22 (1) Net of State Board of Equalization administrative fee. Source: The Commission The Series 2008 Bonds are not secured by 1988 Sales Tax Revenues. Annual Sales Tax Revenues to be received as projected for the Fiscal Year ended June 30, 2007, total $135,000,000. These Sales Tax Revenues are anticipated to equal at least times Maximum Annual Debt Service on the Series 2008 Bonds assuming interest rates based on the fixed rates paid by the Commission pursuant to the Initial Swap Agreements and the amortization of the principal amount of the Series 2008 Bonds based on the mandatory sinking fund schedule. The projection of Sales Tax receipts for Fiscal Year ended June 30, 2008 represent a 14% decline from Fiscal Year ended June 30, 2007.. This decline is higher than what 19 47 is being experienced at the state and national level with regard to sales tax receipts for this period. There can be no assurances if and when Sales Tax receipts will begin to increase. For a summary of historical taxable retail sales within the County see the table entitled "County of Riverside, Taxable Sales Transactions" in APPENDIX B of this Official Statement. THE COMMISSION General The Commission is charged with a number of important responsibilities in serving the residents of the county. Administering the prior sales tax program is by far the most prominent of these responsibilities since that program has raised more than $1 billion. The Commission, which has the responsibility of placing future transportation ballot measures before the public, was successful in November of 2002 in obtaining more than 2/3rds voter approval of the Sales Tax. 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 — 650 call boxes along the County roadways and 20 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 20 48 • 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. ANNE MAYER, EXECUTIVE DIRECTOR. Anne Mayer was appointed in October 2007 as the Chief Executive Officer of the Commission. She is responsible for overall management of the Commission including execution of operational policies and procedures and all personnel decisions. Ms. Mayer joined the Commission in May 2005 as Deputy Executive Director. Prior to joining the Commission, she was the District 8 Director for the California Department of Transportation (CALTRANS). As District Director, she was responsible for management of the state highway system in San Bernardino and Riverside counties. With over 24 years of experience in the public works field, Ms. Mayer was with CALTRANS for 14 of those years. Ms. Mayer holds a civil engineering degree from Michigan State University. JOHN STANDIFORD, DEPUTY EXECUTIVE DIRECTOR. In January 2008, John Standiford was appointed as Deputy Executive Director for the Commission, he joined the Commission in 1999 and was the Public Affairs Director prior to his new appointment. He also served as the Manager of Government and Media Relations for the Orange County Transportation Authority, where he worked for more than seven years. Earlier in his career, Mr. Standiford worked for three state legislators from the Los Angeles area. He received his bachelor and masters degrees from the. University of California, Irvine. THERESIA TREVINO, CHIEF FINANCL1L OFFICER. Ms. Trevino joined the Commission as the Chief Financial Officer in January 2004. 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. 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 21 49 improvements to relieve congestion cannot be accomplished with availablefiords. 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 roads, transit and commuter rail, new corridors and economic development. In the Western County, $370 million is to be used for new corridor projects, $1.320 million for highway and regional arterial projects, $390 million for transit and commuter rail, $970 million for local street and road improvements, $270 million for bond financing costs, and the remaining $40 million 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. INVESTMENT CONSIDERATIONS Economy of the County and the State The level of sales tax revenues collected at any time is dependent upon the level of retail sales within the County, which level of retail sales is, in turn, dependent upon the level of economic activity in the County and in the State generally. As a result, any substantial deterioration in the level of economic activity within the County or in the State could have a material adverse impact upon the level of sales tax revenues and therefore upon the ability of the Commission to issue sales tax revenue bonds in the future. For information relating to current economic conditions within the County and the State see APPENDIX B - "COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." No Liquidity Facility There is no initial or planned third -party liquidity facility supporting the purchase of the Series 2008 Bonds. If any remarketing agents appointed by the Commission are unable to 22 50 • remarket the Series 2008 Bonds on the Initial Mandatory Tender Date, such Series 2008 Bonds will continue to be owned by the then current Holders and will, commence to bear interest at the rate of [ %] per annum until such time as the Commission elects to adjust the interest rate to be borne on the Series 2008 Bonds to a Weekly Interest Rate, Long -Term Rate, Commercial Paper Rate or a Fixed Interest Rate and there is a successful remarketing of the Series 2008 Bonds. In such circumstances the rate of interest to be borne on the Series 2008 Bonds will be equal to [ %] per annum. See "SERIES 2008 BONDS — Initial Interest Rate Period" herein. The Sales Tax With limited exceptions, the Sales Tax will be imposed upon the same transactions and items subject to the sales tax levied statewide by the State. The State Legislature or the voters within the State, through the initiative process, could change or limit the transactions and items upon which the statewide sales tax and the Sales Tax are imposed. Any such change or limitation could have an adverse impact on the sales tax revenues collected. For a further description of the Sales Tax, see "THE SALES TAX — The Sales Tax." Proposition 218 On November 5, 1996, voters in the State 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 Sales Tax was approved by more than two- thirds of the voters in Riverside County and is therefore in compliance with the requirements of Proposition 218. 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, the interpretation and application of Proposition 218 will ultimately be determined by the courts. It is likely that the interpretation and application of Proposition 218 will ultimately be determined by the courts. Further Initiatives Proposition 218 and Proposition 42 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 1976 Sales Tax or the Sales Tax, or change the types of products or items subject to a sales tax. Loss of Tax Exemption As discussed under "TAX EXEMPTION," interest on the Series 2008 Bonds could become includable in federal gross income, possibly from the date of issuance of the Series 2008 Bonds, as a result of acts or omissions of the Commission subsequent to the issuance of the 23 51 Series 2008 Bonds. Should interest become includable in federal gross income, the Series 2008 Bonds are not subject to redemption by reason thereof and will remain outstanding until maturity. FINANCIAL STATEMENTS The financial statements of the Commission for the Fiscal Year ended June 30, 2007, included in APPENDIX A of this Official Statement, have been audited by McGladrey & Pullen, LLP, certified public accountants, as stated in their report therein. McGladrey & Pullen, LLP was not requested to consent to the inclusion of its report in APPENDIX A, nor has it undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by McGladrey & Pullen, LLP with respect to any event subsequent to the date of its report. Except as described herein, the Commission represents that there has been no material adverse change in its financial position since June 30, 2007. LITIGATION There is not now pending any litigation restraining or enjoining the issuance or delivery of the Bonds or questioning or affecting the validity of the Bonds or the proceedings and authority under which they are to be issued. Neither the creation, organization or existence of the Commission, nor the title of the present members of the Commission to their respective offices is being contested. TAX EXEMPTION In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based on existing statutes, regulations, rulings and court decisions, interest on the Series 2008 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix E. The Internal Revenue Code of 1986 (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 Series 2008 Bonds. The Commission has covenanted to comply with certain restrictions designed to assure that interest on the Series 2008 Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Series 2008 Bonds being included in federal gross income, possibly from the date of issuance of the Series 2008 Bonds. The opinion of Bond Counsel assumes compliance with such covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Series 2008 Bonds may affect the value of, or the tax status of interest on the Series 2008 Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Series 2008 Bonds. Prospective owners are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. 24 52 • Bond Counsel is further of the opinion that interest on the Series 2008 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. Bond Counsel observes, however, that such interest is included in adjusted current earnings in calculating corporate alternative minimum taxable income. Prospective purchasers of the Series 2008 Bonds should be aware that: (i) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest with respect to the Series 2008 Bonds; (ii) interest with respect to the Series 2008 Bonds eamed by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code; (iii) passive investment income, including interest with respect to the Series 2008 Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations having subchapter C earnings and profits at the close of the taxable year and gross receipts more than 25% of which constitute passive investment income; and (iv) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, receipts or accruals of interest on the Series 2008 Bonds. The Series 2008 Bonds may be purchased in the initial offering for an amount greater than their principal amount payable at maturity (hereinafter, the "Premium Series 2008 Bonds"). The excess of the tax basis of a purchaser of a Premium Series 2008 Bond (other than a purchaser who holds a Premium Series 2008 Bond as inventory, stock in trade or for sale to customers in the ordinary course of business) over the principal amount of such Premium Series 2008 Bond is "bond premium." Bond premium is amortized for federal income tax purposes over the term of a Premium Series 2008 Bond based on the purchaser's yield to maturity in the Premium Series 2008 Bonds, except that in the case of a Premium Series 2008 Bond callable prior to its stated maturity, the amortization period and the yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such Premium Series 2008 Bond. A purchaser of a Premium Series 2008 Bond is required to decrease his or her adjusted basis in such Premium Series 2008 Bondby the amount of bond premium attributable to each taxable year in which such purchaser holds such Premium Series 2008 Bond. The amount of bond premium attributable to a taxable year is not deductible for federal income tax purposes. Purchasers of Premium Series 2008 Bonds should consult their tax advisors with respect to the precise determination for federal income tax purposes of the amount of bond premium attributable to each taxable year and the effect of bond premium on the sale or other disposition of a Premium Series 2008 Bond, and with respect to the state and local tax consequences of owning and disposing of a Premium Series 2008 Bond. Certain agreements, requirements and procedures contained or referred to in the Indenture and other relevant documents may be changed and certain actions 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 Series 2008 Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Bond Counsel. Although Bond Counsel has rendered an opinion that interest on the Series 2008 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of 25 53 California personal income taxes, the accrual or receipt of interest; including original issue discount, on the Series 2008 Bonds may otherwise affect a Holder's state or federal tax liability. The nature and extent of these other tax consequences will depend upon the Holder's particular tax status and the Holder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such consequences. CERTAIN LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, Bond Counsel, will render an opinion with respect to the validity of the Series 2008 Bonds. The proposed form of such approving opinion is attached hereto as APPENDIX E. Bond Counsel assumes no responsibility for the accuracy, completeness, or fairness of this Official Statement. Compensation paid to Bond Counsel, Disclosure Counsel and Underwriters' Counsel is conditioned upon the successful issuance of the Series 2008 Bonds. Certain legal matters will be passed upon for the Commission by Nossaman, Guthner, Knox & Elliott, LLP, Los Angeles, California, as disclosure counsel, and by Best Best & Krieger .LLP, Riverside, California, the general counsel for the Commission. Certain legal matters will be passed upon for the Underwriters by Stradling, Yocca, Carlson & Rauth, Newport Beach, California. RATINGS The Series 2008 Bonds have been assigned ratings of " by Moody's Investors Service, Inc., " " by Fitch Ratings and " " by Standard & Poor's Ratings Group, a division of the McGraw Hill Companies, Inc.. These ratings reflect only the views of the rating agencies, and do not constitute a recommendation to buy, sell or hold securities. The Commission has fumished to the rating agencies certain information respecting the Series 2008 Bonds and the Commission. Generally, rating agencies base their ratings on such information and materials and their own investigations, studies and assumptions. The ratings are subject to revision :or withdrawal at any time by the rating agencies, and there is no assurance that the ratings will continue for any period of time or that they will not be lowered or withdrawn. Any reduction or withdrawal of the ratings may have an adverse effect on the market price of the Bonds or the ability to remarket the Series 2008 Bonds. UNDERWRITING Lehman Brothers Inc., as representative of the underwriters of the Series 2008 Bonds, has agreed, subject to certain conditions, to purchase the Series 2008 Bonds at a price of $ (representing $ aggregate principal amount of the Series 2008 Bonds, [plus/less] original issue [premium/discount] of $ and less $ Underwriters' discount). The Purchase Contract provides that the Underwriters will purchase all the, Series 2008 Bonds if any are purchased. FINANCIAL ADVISOR The Commission has retained FieIdman, Rolapp & Associates, Irvine, California, as Financial Advisor in connection with the authorization and delivery of the Series 2008 Bonds. Compensation paid to the Financial Advisor is conditioned on the successful issuance of the Series 2008 Bonds. 26 • • 54 • CONTINUING DISCLOSURE The Commission has covenanted' for the benefit of the owners and beneficial owners of the Series 2008 Bonds to provide certain financial information and operating data relating to the Commission by not later than 210 days following the end of the Commission's Fiscal Year (presently June 30) (the "Annual Report"), commencing with the report for the 2008-2009 Fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Dissemination Agent on behalf of the Commission with each Nationally Recognized Municipal Securities Information Repository (the "NRMSIRs"). The notices of material events will be filed by the Dissemination Agent on behalf of the Commission with the Municipal Securities Rulemaking Board and with the NRMSIRs. The specific nature of the information to be contained in the Annual Report and the notices of material events is set forth under the caption "APPENDIX F — PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Commission is in compliance with all continuing disclosure requirements applicable to its securities. MISCELLANEOUS The references herein to the Act and the Indenture are brief outlines of certain provisions thereof. Such outlines do not purport to be complete and for full and complete statements of such provisions reference is made to said documents or the Act, as the case may be. Copies of the documents mentioned under this heading are available for inspection at the Commission and following delivery of the Series 2008 Bonds will be on file at the offices of the Trustee in Los Angeles, California. References are made herein to certain documents and reports which are brief summaries thereof which do not purport go be complete or defmitive. Reference is made to such documents and reports for full and complete statements of the content thereof. Any statement in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Commission and the purchasers or Holders of any of the Series 2008 Bonds. 27 55 The execution and delivery of this Official Statement has been duly authorized by the Commission. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director 28 56 • APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2007 A-1 57 APPENDIX B COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION B- I 58 • • APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE D-1 59 • APPENDIX D BOOK ENTRY SYSTEM The information concerning DTC set forth herein has been supplied by DTC, and the Commission assumes no responsibility for the accuracy thereof. 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 ("DTC Participants") deposit with DTC. DTC also facilitates the settlement among DTC Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in DTC Participants' accounts, thereby eliminating the need for physical movement of securities certificates. "DTC Direct Participants" include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its DTC 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 DTC Direct Participant, either directly or indirectly ("DTC Indirect Participants"). The Rules applicable to DTC and its DTC Participants are on file with the Securities and Exchange Commission. Purchases of Series 2008 Bonds under the DTC system must be made by or though DTC Direct Participants, which will receive credit for the Series 2008 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2008 Bond (a `Beneficial Owner") is in turn to be recorded on the Direct and DTC 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 DTC Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2008 Bonds are to be accomplished by entries made on the books of DTC Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2008 Bonds, except in the event that use of the book -entry system for the Series 2008 Bonds is discontinued. To facilitate subsequent transfers, all Series 2008 Bonds deposited by DTC Participants with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of Series 2008 Bonds 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 Series 2008 Bonds; DTC's records reflect only the identity of the DTC Direct Participants to whose accounts such Series 2008 Bonds are credited, which may or may not be the Beneficial Owners. The DTC Participants will remain responsible for keeping account of their holdings on behalf of their customers. D-1 60 Conveyance of notices and other communications by DTC to DTC Direct Participants, by DTC Direct Participants to DTC Indirect Participants, and by DTC Direct Participants and DTC" 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. Redemption notices will be sent to Cede & Co. If less than all of the Series 2008 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each DTC Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to Series 2008 Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Commission as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those DTC Direct Participants to whose accounts the Series 2008 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Series 2008 Bonds will be made to DTC. DTC's practice is to credit DTC Direct Participants' accounts on the payment 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 a payment date. Payments by DTCParticipants 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 DTC Participant and not of DTC, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Trustee, disbursement of such payments to DTC Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and DTC Indirect Participants. The Commission and the Trustee cannot and do not give any assurances that DTC Direct Participants or DTC Indirect Participants will distribute to the Beneficial Owners (i) principal and interest on the Series 2008 Bonds, (ii) certificates representing an ownership interest in or other confirmation of ownership interests in the Series 2008 Bonds, or (iii) redemption or other notices sent to DTC or Cede & Co., its nominee, as registered owner of the Series 2008 Bonds, or that they will do so on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will service and act in the manner described in the Official Statement. The Commission and the Trustee will be entitled to treat the person in whose name any Series 2008 Bond is registered as the Bond Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee will have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any Beneficial Owners of the Series 2008 Bonds. Neither the Commission nor the Trustee will have any responsibility or obligations, legal or otherwise, to the Beneficial Owners or to any other party including DTC or its successor (or substitute depository or its successor), except for the registered owner of any Series 2008 Bond. D-2 61 • DTC may discontinue providing its services as securities depository with respect to the Series 2008 Bonds at any time by giving notice to the Commission or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2008 Bonds are required to be printed and delivered. THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR THE SERIES 2008 BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE SERIES 2008 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. D-3 62 APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION E-1 63 • APPENDIX F PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate"), dated as; of 2008, is executed and delivered by the Riverside County Transportation Commission (the "Commission") in connection with the issuance of its $ Sales Tax Revenue Bonds, Series 2008 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of June 1, 2008 (the 1008 Indenture"), by and between the Commission and U.S. Bank National Association (the "Trustee") and the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture" and, together with the 2008 Indenture, the "Indenture"). Pursuant to the Indenture, the Commission covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Commission for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). SECTION 2. Definitions. In addition to the, definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Commission pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Disclosure Representative" shall mean the designee of the Commission to act as the Disclosure Representative. "Dissemination Agent" shall mean an entity selected and retained by the Commission, or any successor thereto selected by the Commission. The initial Dissemination Agent shall be Digital Assurance Certificate LLC. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate and any other event legally required to be reported pursuant to the Rule. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories approved by the Securities and Exchange Commission as of the date of this Agreement are currently set forth at the following website: http://www_sec.gov/info/municipal/nrmsir.htm. "Participating Underwriters" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. F-1 64 "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the. State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The Commission shall provide to each Repository, or shall cause the Dissemination Agent to provide to each Repository, not later than 210 days after the end of the Commission's fiscal year, commencing with the fiscal year ending June 30, 2008, an Annual Report which is consistent with the requircments of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a - package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the Commission shall provide the Annual Report to the Dissemination Agent. The Commission shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Commission hereunder. The Dissemination Agent may conclusively rely upon such certification of the Commission. (b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repositories, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Commission to determine if the Commission is in with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annuals. Report the name and address of each National Repository and the State Repository, if any; and (ii) (if the Dissemination Agent is other than the Commission), to the extent appropriate information is available to it, file a report with the Commission certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided. • F-2 65 SECTION 4. Content of Annual Reports. The. Commission's Annual Report shall contain or include by reference the following: (a) The audited financial statements of the Commission for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Commission's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement relating to the Bonds (the "Official Statement"), and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) An update (as of the most recently ended fiscal year of the Commission) for the table entitled "Historical 1988 Sales Tax Revenues" set forth in the Official Statement under the caption "THE SALES TAX - 1988 Sales Tax Revenues'; provided that, commencing with the fiscal year ending June 30, 2010, the Commission shall provide such information with respect to Sales Tax Revenues in lieu of such information with respect to 1988 Sales Tax Revenues. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Commission is an "obligated person" (as defined by the Rule), which have been filed with each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a fmal official statement, it must be available from the Municipal Securities Rulemaking Board., The Commission shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. principal and interest payment delinquencies; 2. non-payment related defaults; 3. modifications to rights of Bondholders; 4. optional, contingent or unscheduled Bond calls; 5. defeasances; 6. rating changes; 7. adverse tax opinions or events affecting the tax-exempt status of the Bonds; F-3 66 • 8. unscheduled draws on the debt service reserves, if any, reflecting financial difficulties; 9. unscheduled draws on credit enhancements, if any, reflecting financial difficulties; 10. substitution of credit or liquidity providers, if any, or their failure to perform; and 11. release, substitution, or sale of property, if any, securing repayment of the Bonds. (b) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, the Commission shall as soon as possible determine if such event would constitute material information for Holders of Bonds. (c) If the Commission has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Commission shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d). (d) If the Dissemination Agent has been instructed by the Commission to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Repository. Notwithstanding the foregoing: (i) notice of the occurrence of a Listed Event described in subsections (a)(1), (4) or (5) shall be given by the Dissemination Agent unless the Commission gives the Dissemination Agent affirmative instructions not to disclose such occurrence; and (ii) notice of Listed Events described in subsections (a)(4) and (5) shall not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Holders of affected Bonds pursuant to the Indenture. (e) Termination of Reporting Obligation. The obligations of the Commission and the Dissemination Agent under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the fmal maturity of the Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under Section 5(f) hereof. SECTION 6. Dissemination Agent. The Commission may, from time to time, appoint; or engage a Dissemination Agent to assist it in carrying out its. obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign at any time by providing at least 30 days' notice in writing to the Commission. SECTION 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Commission may amend this Disclosure Certificate, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be F-4 67 • made without the consent of such party, and any provision of this Disclosure Certificate may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the Commission and the Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. SECTION 8. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Commission from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Commission chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Disclosure Certificate, the Commission shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 9. Default. In the event of a failure of the Commission to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions, as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Commission to comply with this Disclosure Certificate shall be an action to compel performance. The Commission hereby represents and warrants that it is currently not in default under any other continuing disclosure arrangement entered into in. connection with the Rule. SECTION 10. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Commission agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or ire the exercise or performance of their respective powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Commission for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the Distract, the Bondholders, or any other party. The obligations of the Commission under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. F-5 68 SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Commission, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: F-6 • 69 • EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Riverside County Transportation Commission Name of Bond Issue: $ Sales Tax Revenue Bonds, Series 2008 Date of Issuance: , 2008 NOTICE IS HEREBY GIVEN that the Riverside County Transportation Commission (the "Commission') has not provided an Annual Report with respect to the above -named Bonds as required by that certain Indenture, dated as of June 1, 2008, by and between the Commission and U.S. Bank National Association (the "Trustee") and that certain First Supplemental Indenture, dated as of June 1, 2008, by and between the Commission and the Trustee. The Commission anticipates that the Annual Report will be filed by Dated: U.S. BANK NATIONAL ASSOCIATION, on behalf of the Commission By: Its: cc: Riverside County Transportation Commission Exhibit A 70 r i ATTACHMENT 3 OH&S Draft 3/17/08 NO.08-010 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $[115,000,0001 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS), SERIES 2008, THE EXECUTION AND DELIVERY OF AN INDENTURE, SUPPLEMENTAL INDENTURE, PURCHASE CONTRACT, OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT 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 July 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 June 30, 2009, and thereafter at the rate of one-half of one percent (1/2%) for a period not to exceed thirty (30) years; OHS West260379561.5 71 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 sales tax revenue bonds), secured and payable in whole or in part from revenues of the Sales Tax ("Sales Tax Revenues"); WHEREAS, the Commission has heretofore authorized the issuance of not to exceed $200,000,000 in aggregate principal amount of its Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (collectively, the "CP Notes"), pursuant to an Indenture dated as of March 1, 2005 (the "CP Indenture"), by and between the Commission and U.S. Bank National Association, as successor trustee; WHEREAS, the Commission has heretofore executed and delivered interest rate swap agreements in an aggregate notional amount of $185 million (the "Initial Swaps"), which Initial Swaps have an effective date of October 1, 2009; WHEREAS, the Commission hereby determines that one or more new series or subseries of bonds in an aggregate principal amount not to exceed [one hundred fifteen] million dollars ($[115,000,000]) is necessary in order to finance (i) the refunding of a portion of the outstanding principal amount of CP Notes, (ii) capitalized interest on the bonds through December 1, 2009, (iii) the reserve fund for such bonds, if any, (iv) swap termination payments, if any, (v) funds for projects authorized in the Expenditure Plan, and (vi) the costs of issuance incurred in connection with such bonds, and the Commission has determined that such bonds in an amount not to exceed such principal amount shall be issued, secured by the Sales Tax Revenues and entitled, "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A" (the "Series 2008 Bonds"); WHEREAS, the Commission hereby further determines that the Series 2008 Bonds shall be issued pursuant to an Indenture (the "Indenture"), as amended and supplemented, including as amended and supplemented by a Supplemental Indenture thereto (the "Supplemental Indenture"), which Indenture and Supplemental Indenture are proposed to be entered into by the Commission and U.S. Bank National Association, as trustee (the "Trustee"); WHEREAS, there has been prepared and presented to the Board a proposed form of Indenture and proposed form of Supplemental Indenture; WHEREAS, in order to minimize debt service and maximize benefits to the Commission in connection with the issuance of the Series 2008 Bonds, it may be desirable to issue the Series OHS West:260379561.5 -2- %2 • • • 2008 Bonds as fixed rate bonds or as variable rate bonds in a term mode (the "Variable Rate Bonds"); WHEREAS, in order to set forth the terms of sale of the Series 2008 Bonds, the Commission proposes to enter into a bond purchase agreement (the "Purchase Contract") with Lehman Brothers Inc. and Banc of America Securities LLC (collectively, the "Purchasers"); WHEREAS, the Purchasers have caused to be prepared and submitted to the Commission a proposed form of Purchase Contract; WHEREAS, in order to provide liquidity support, credit enhancement or both, for the Series 2008 Bonds, the Commission may purchase bond insurance or enter into one or more credit agreements, reimbursement agreements, standby bond purchase agreements or other liquidity or credit support agreements (each, a "Support Agreement"), containing such terms and conditions as the Executive Director of the Commission (the "Executive Director") considers appropriate and with a bank or other financial institution or insurance company or association (each a "Support Provider," and collectively, the "Support Providers') to be selected by the Executive Director in the event a Support Agreement is determined to be beneficial to the marketing of the Series 2008 Bonds; WHEREAS, in order to provide information about the Series 2008 Bonds and related matters to purchasers and potential purchasers of the Series 2008 Bonds, the Commission proposes to execute and deliver an official statement (the "Official Statement"); WHEREAS, there has been prepared and presented to the Board a proposed form of Official Statement in preliminary form (the "Preliminary Official Statement') and a proposed form of Continuing Disclosure Agreement (the "Continuing Disclosure Agreement'); WHEREAS, the Commission has been presented with the forms of the Indenture, the Supplemental Indenture, the Purchase Contract, the Continuing Disclosure Agreement and the Official Statement relating to the fmancing described herein (the "Financing"), and the Commission has examined and approved each document and desires to authorize and direct the execution of such documents as are specified herein and such other documents as are necessary in connection with the Financing and to authorize and direct the consummation of the Financing; and WHEREAS, all acts, conditions and things required by the Law and the Constitution and laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the Financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Commission is now duly authorized and empowered, pursuant to each and every requirement of law, to authorize such Financing and to authorize the execution of the Indenture, the Supplemental Indenture, the Purchase Contract, one or more Support Agreements, the Official Statement and the Continuing Disclosure Agreement for the purposes, in the manner and upon the terms provided; NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES: -3- OHS West:260379561.5 73 Section 1. The Commission finds and determines that the foregoing recitals are true and correct. Section 2. The issuance by the Commission of not to exceed $[115,000,000] aggregate principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2008, in accordance with the provisions set forth in the ` Indenture, in one or more series or subseries, is hereby authorized and approved. Section 3. The proposed form of Indenture and Supplemental Indenture presented to. this meeting and the terms and conditions thereof are hereby approved. The structure, date, maturity date or dates (not to exceed June 1, 2039), fixed or variable interest rate or rates (such rates not to exceed a maximum of 12% per annum) or methods of determining the same, interest payment dates, forms, registration privileges, place or places of payment, terms of redemption, tender, mandatory purchase, additional series designation and number thereof and other terms of the Series 2008 Bonds shall be (subject to the foregoing limitations) as provided in the Indenture and the Supplemental Indenture as finally executed and delivered. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Indenture and the Supplemental 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. The proposed form of Purchase Contract 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 sell the Series 2008 Bonds to the Purchasers pursuant to the Purchase Contract with the Purchasers' compensation not to exceed 1% of the principal amount of the Series 2008 Bonds and to execute and deliver a Purchase Contract, 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. The Executive Director is hereby authorized and directed to negotiate with Support Providers, and, if the Executive Director, with the advice of Feldman, Rolapp & Associates (the "Financial Advisor"), determines that it is in the best interests of the Commission, to enter into a Support Agreement for the Series 2008 Bonds on such terms as the Executive Director, with the advice of the Financial Advisor, determines are appropriate. Section 6. The proposed form of Preliminary Official Statement presented to this meeting is hereby approved. The Executive Director or his designee is hereby authorized and directed to create and deliver to the Purchasers a certificate deeming the Preliminary Official Statement, in substantially the form on file with the Clerk and presented to this meeting and with such changes as the Executive Director approves in the interest of the Commission, final within the meaning of Securities Exchange Commission Rule 15c2-12. The Purchaser is hereby authorized to distribute the Preliminary Official Statement in the form so deemed final by the Executive Director. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver a fmal Official Statement, in OHS West:260379561.5 -4- 74 • 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. The proposed form of Continuing Disclosure Agreement 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 the Continuing Disclosure Agreement, in substantially said form, with such changes therein as such officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 8. The Executive Director is hereby authorized and directed to negotiate with financial institutions and/or insurance companies, as applicable, and, if the Executive Director, with the advice of the Financial Advisor, determines that it is in the best interest of the Commission, to secure an irrevocable letter of credit, or a surety bond, or an insurance policy on such terms as the Executive Director determines are appropriate, in order to fund any bond reserve fund established pursuant to the Indenture or the Supplemental Indenture. Section 9. The Executive Director is hereby authorized to enter into or to instruct the Trustee to enter into, with the advice of the Financial Advisor, one or more investment agreements, float contracts, swaps or other hedging products or to terminate or revise the Initial Swaps (hereinafter collectively referred to as "Hedge Agreements") providing for the hedging of interest rate or the investment of moneys in any of the funds and accounts created under the Indenture or the Supplemental Indenture, on such terms as the Executive Director shall deem appropriate. Pursuant to Section 5922 of the California Government Code, the Commission hereby finds and determines that the Hedge Agreements will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Hedge Agreements and/or is designed to reduce the amount or duration of payment, rate, spread or similar risk or result in a lower cost of borrowing when used in combination with the Initial Swaps and the Series 2008 Bonds or enhance the relationship between risk and return with respect to investments. Section 10. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution or the Initial Swaps, including, without limitation, any amendment of any of the documents authorized by this Resolution or the Initial Swaps or other agreement related thereto, and any of the foregoing that may be necessary or desirable in connection with any Support Agreement or the extension or replacement thereof, or any reserve facility, any investment of proceeds of the Series 2008 Bonds, or in connection with the addition, substitution or replacement of underwriters or remarketing agents, or any agreements with paying agents, escrow agents or verification agents, the removal or replacement of the Trustee 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 OHS West:260379561.5 -5- 75 the Series 2008 Bonds, 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 11. All actions heretofore taken by the officers and agents of the Commission with respect to the Financing and the issuance and sale of the Series 2008 Bonds 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 Chief Financial Officer of the Commission shall act as the Auditor -Controller of the Commission for execution of the Series 2008 Bonds. 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. 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 Series 2008 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, this Resolution, the Series 2008 Bonds and the documents approved hereby. OHS West:260379561.5 -6- 76 • • Section 13. This Resolution shall take effect immediately upon its adoption and approval. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on , 2008. ATTEST: By: Clerk of the Board of the Commission OHS West:266379561.5 By: Chairman, Board of Commissioners -7- 77 CER1'iPICATE OF THE CLERK OF THE BOARD OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION I, Jennifer Harmon, Clerk of the Board of the Riverside County Transportation Commission (the "Commission'), hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted at a meeting of the governing board of said Commission duly and regularly held in Riverside, California, on , 2008, of which meeting all of the members of said Commission had due notice. I further certify that I have carefully compared the foregoing copy with the original minutes of said meeting on file and of record in my office; that said copy is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and that said resolution has not been amended, modified, rescinded or revoked in any manner since the date of its adoption, and the same is now in full force and effect. I further certify that an agenda of said meeting was posted at least 72 hours before said meeting at a location in Riverside, Califomia, freely accessible to the public and a brief general description of the resolution to be adopted at said meeting appeared on said agenda. IN WITNESS WHEREOF, I have executed this certificate hereto as of this date, , 2008. OHS West:260379561.5 By Clerk -8- 78 0 L J ATTACHMENT 4 OH&S Draft 3/17/08 INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2008 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) OHS West:260379475.5 79 • TABLE OF CONTENTS Page ARTICLE I EQUALITY OF SECURITY; DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01 Equality of Security 3 SECTION 1.02 Definitions 3 SECTION 1.03 Content of Certificates 21 ARTICLE II THE BONDS SECTION 2.01 Authorization of Bonds 21 SECTION 2.02 Terms of the Bonds 22 SECTION 2.03 Form of Bonds 22 SECTION 2.04 Execution of Bonds 22 SECTION 2.05 Transfer of Bonds 23 SECTION 2.06 Exchange of Bonds 23 SECTION 2.07 Bond Register 23 SECTION 2.08 Temporary Bonds 23 SECTION 2.09 Bonds Mutilated; Lost; Destroyed or Stolen 24 SECTION 2.10 Use of Securities Depository 24 ARTICLE III ISSUANCE OF BONDS SECTION 3.01 Issuance of Bonds 26 SECTION 3.02 Issuance of Additional Bonds 26 SECTION 3.03 Proceedings for Issuance of Additional Bonds 27 SECTION 3.04 Issuance of Refunding Bonds 27 SECTION 3.05 Limitations on the Issuance of Obligations Payable from Sales Tax Revenues; Parity Obligations; Subordinate Obligations 29 SECTION 3.06 Calculation of Maximum Annual Debt Service with Respect to Bonds and Parity Obligations 31 SECTION 3.07 Application of Proceeds 31 ARTICLE IV REDEMPTION, TENDER AND PURCHASE OF BONDS ,SECTION 4.01 Terms of Redemption, Tender and Purchase 31 SECTION 4.02 Notice of Redemption 31 SECTION 4.03 Partial Redemption of Bonds 33 SECTION 4.04 Effect of Redemption 33 ARTICLE V SALES TAX REVENUES SECTION 5.01 Pledge of Revenues; Revenue Fund 33 SECTION 5.02 Allocation of Sales Tax Revenues 34 OHS West:260379475.5 -t- 80 TABLE OF CONTENTS (continued) Page SECTION 5.03 Application of Interest Fund 38 SECTION 5.04 Application of Principal Fund 38 SECTION 5.05 Establishment, Funding and Application of Bond Reserve Funds 39 SECTION 5.06 Application of Subordinate Obligations Fund 42 SECTION 5.07 Application of Fees and Expenses Fund 42 SECTION 5.08 Application of Redemption Fund 42 SECTION 5.09 Rebate Fund 42 SECTION 5.10 Payment Provisions Applicable to Interest Rate Swap Agreements 43 SECTION 5.11 Investment in Funds and Accounts 44 ARTICLE VI COVENANTS OF THE COMMISSION SECTION 6.01 Punctual Payments 45 SECTION 6.02 Extension of Payment of Bonds 45. SECTION 6.03 Waiver of Laws 45 SECTION 6.04 Further Assurances 46 SECTION 6.05 Against Encumbrances 46 SECTION 6.06 Accounting Records and Financial Statements 46 SECTION 6.07 Collection of Sales Tax Revenues 46 SECTION 6.08 Tax Covenants 47 SECTION 6.09 Continuing Disclosure 48 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES SECTION 7.01 Events of Default 48 SECTION 7.02 Application of the Revenues and Other Funds After Default; No Acceleration 49 SECTION 7.03 Trustee to Represent Bondholders 50 SECTION 7.04 Bondholders' Direction of Proceedings 51 SECTION 7.05 Limitation on Bondholders' Right to Sue 51 SECTION 7.06 Absolute Obligation of the Commission 52 SECTION 7.07 Termination of Proceedings 52 SECTION 7.08 Remedies Not Exclusive 52 SECTION 7.09 No Waiver of Default 52 SECTION 7.10 Credit Provider Directs Remedies Upon Event of Default 52 ARTICLE VIII THE TRUSTEE SECTION 8.01 Appointment, Duties Immunities and Liabilities of Trustee 53 SECTION 8.02 Accounting Records and Monthly Statements 54 SECTION 8.03 Merger or Consolidation 55 SECTION 8.04 Liability of Trustee 55 SECTION 8.05 Right of Trustee to Rely on Documents and Opinions 57 OHS West:260379475.5 -11- 81 TABLE OF CONTENTS (continued) Page SECTION 8.06 Compensation and Indemnification of Trustee 58 ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE SECTION 9.01 Amendments Permitted 58 SECTION 9.02 Effect of Supplemental Indenture 60 SECTION 9.03 Endorsement of Bonds; Preparation of New Bonds 61 SECTION 9.04 Amendment of Particular Bonds 61 ARTICLE X DEFEASANCE SECTION 10.01 Discharge of Indenture 61 SECTION 10.02 Discharge of Liability on Bonds 62 SECTION 10.03 Deposit of Money or Securities 62 SECTION 10.04 Payment of Bonds After Discharge of Indenture 63 ARTICLE XI MISCELLANEOUS SECTION 11.01 Liability of Commission Limited to Sales Tax Revenues 63 SECTION 11.02 Successor Is Deemed Included in All References to Predecessor 64 SECTION 11.03 Limitation of Rights 64 SECTION 11.04 Waiver of Notice 64 SECTION 11.05 Destruction or Delivery of Canceled Bonds 64 SECTION 11.06 Severability of Invalid Provisions 64 SECTION 11.07 Notice to Commission and Trustee 64 SECTION 11.08 Evidence of Rights of Bondholders 65 SECTION 11.09 Disqualified Bonds 65 SECTION 11.10 Money Held for Particular Bonds 66 SECTION 11.11 Funds and Accounts 66 SECTION 11.12 Limitations on Rights of Credit Providers, Liquidity Providers, Reserve Facility Providers 66 SECTION 11.13 Article and Section Headings and References 67 SECTION 11.14 Waiver of Personal Liability 67 SECTION 11.15 Governing Law 67 SECTION 11.16 Business Day 67 SECTION 11.17 Effective Date of Indenture 67 SECTION 11.18 Execution in Counterparts 67 OHS West:260379475.5 -Ill- 82 • INDENTURE This INDENTURE, dated as of June 1, 2008 (as more fully defined in Section 1.02, the "Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly established and existing under the laws of the State of California (the "Commission"), and U.S. BANK 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" ("1988 Ordinance"), 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, 1988 Ordinance 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 July 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 June 30, 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; OHS West:260379475.5 1 83 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 any limit required by law 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 sales tax revenue bonds), secured and payable in whole or in part from revenues of the Sales Tax (as more fully defined in Section 1.02, the "Sales Tax Revenues"); WHEREAS, the Commission has heretofore entered into an Indenture, dated as of March 1, 2005 (the "Notes Indenture"), between the Commission and U.S. Bank National Association, successor by merger to U.S. Bank Trust National Association, astrustee, pursuant to which the Commission has authorized the issuance of certain limited tax bonds (the "Notes") payable from and secured by the Sales Tax Revenues; WHEREAS, the Commission has heretofore executed and delivered interest rate swap agreements in an aggregate notional amount of $185 million (the "Initial Swaps"), which Initial Swaps have an effective date of October 1, 2009; WHEREAS, the Commission has determined to enter into this Indenture in order to provide for the authentication and delivery of certain limited tax bonds (the 'Bonds"), to establish and declare the terms and conditions upon which the Bonds and other obligations secured by the retail transactions and use tax shall be issued and secured and to secure the payment of the principal thereof, premium (if any), and interest on the Bonds and obligations secured by the retail transactions and use tax on a parity with the Bonds (as more fully defined in Section 1.02, "Parity Obligations"); WHEREAS, the execution and delivery of this Indenture has in all respects been duly and validly authorized by resolution duly passed and approved by the Commission; and WHEREAS, 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, premium, if any, and the interest on all Bonds at any time issued, authenticated and delivered hereunder, to secure the payment of Parity Obligations in accordance with terms hereof and to provide the terms and conditions under which all property, rights and interests hereby assigned and pledged are to be dealt with and disposed of, and to secure performance and observance of the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and in consideration of the premises and of the material OHS West:260379475.5 2 84 • • covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof; and for other valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, the Commission does hereby agree and covenant with the Trustee for the benefit of the respective owners, from time to time, of the Bonds, or any part thereof, and for the benefit of the holders of Parity Obligations, in accordance with terms hereof, as follows: ARTICLE I EQUALITY OF SECURITY; DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS SECTION 1.01 Equality of Security. In consideration of the acceptance of the Bonds by the owners thereof from time to time, this Indenture shall be deemed to be and shall constitute a contract among the Commission, the Trustee and the owners from time to time of the Bonds and the covenants and agreements herein set forth to be performed by or on behalf of the Commission or the Trustee shall be for the equal and proportionate benefit, security and protection of all owners of the Bonds, without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reasons of the Series, time of issue; sale or negotiation thereof or for any cause whatsoever, except as expressly provided therein or herein. Nothing herein shall prevent additional security being provided for the benefit of a particular Series of Bonds under any supplement to this Indenture. SECTION 1.02 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. "Accreted Value" means, with respect to any Capital Appreciation Bond, the principal amount thereof plus the interest accrued thereon, compounded at the approximate interest rate thereon on each date specified therein. The Accreted Value at any date shall be the amounts set forth in the Accreted Value Table as of such date, if such date is a compounding date, and if not, as of the immediately preceding compounding date. "Accreted Value Table" means the table denominated as such which appears as an exhibit to, and to which reference is made in, a Supplemental Indenture providing for a Series of Capital Appreciation Bonds issued pursuant to such Supplemental Indenture. "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 itmayfrom time to time hereafter be amended or supplemented. "Alternate Credit Enhancement" means, with respect to a Series of Bonds, any Insurance, letter of credit, line of credit, surety bond or other instrument, if any, which secures or guarantees the payment of principal of and interest on a Series of Bonds, issued by an insurance company, commercial bank, pension fund or other financial institution, and delivered or made available to the Trustee, as a replacement or substitution for any Credit Enhancement then in effect. OHS West:260379475.5 3 85 "Alternate Liquidity Facility" means; with respect to a Series of Bonds, a line of credit,,. letter of credit, standby purchase agreement or similar liquidity facility, issued by a commercial bank, insurance company, pension fund or other financial institution, and delivered or made available to the Trustee, as a replacement or substitute for any Liquidity Facility then in effect. "Annual Debt Service" means, for any Fiscal Year, the aggregate amount (without duplication) of principal and interest on all Bonds and Parity Obligations becoming due and payable during such Fiscal Year calculated using the principles and assumptions set forth under the defmition of Debt Service. "Assumed Debt Service" means for any Fiscal Year the aggregate amount of principal and interest which would he payable on all Bonds if each Excluded Principal Payment were amortized on a substantially level debt service basis or other amortization schedule provided by the Commission for a period commencing on the date of calculation of such Assumed 'Debt Service and ending on the earlier of (i) the date specified by the Commission not exceeding thirty (30) years from the date of calculation, or (ii) the Tax Expiration Date, such Assumed Debt Service to be calculated on a level debt service basis or other amortization schedule provided by the Commission, based on a fixed interest rate equal to the rate at which the Commission could borrow for such period, as set forth in a certificate of a financial advisor or investment banker, delivered to the Trustee, who may rely conclusively on such certificate, such certificate to be delivered within thirty (30) days of the date of calculation. "Authorized Representative" means the Executive Director, the Deputy Executive Director, the Chief Financial Officer, the Accounting and Human Resources Manager, or any other person designated to act on behalf of the Commission by a written certificate furnished to the Trustee containing the specimen signature of such person and signed on behalf of the Commission by an Authorized Representative. "Beneficial Owner" means any Person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of any Bond, including, without limitation, any Person holding Bonds through nominees or depositories, including the Securities Depository. "Board" means the Board of Commissioners of the Commission. "Bond Obligation" means, as of any given date of calculation, (1) with respect to any Outstanding Current Interest Bond, the principal amount of such Bond, and (2) with respect to any Outstanding Capital Appreciation Bond, the Accreted Value thereof. . "Bond Reserve Fund" means any fund by that name established with respect to one or more Series of Bonds pursuant to the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Bond Reserve Requirement" with respect to a Series of Bonds for which the Commission shall have established a Bond Reserve Fund shall have the meaning specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Bondholder" or "Holder", whenever used herein with respect to a Bond, means the person in whose name such Bond is registered. OHS West:260379475.5 4 86 • "Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) authorized by, and at any time Outstanding pursuant to, this Indenture. "Business Day" means, except as is otherwise provided in the Supplemental Indenture pursuant to which a Series of Bonds are issued, any day other than (1) a Saturday,Sunday, or a day on which banking institutions in the State, the State of New York or the jurisdiction in which the Corporate Trust Office of the Trustee is located are authorized or obligated by law or executive order to be closed, (2) for purposes of payments and other actions relating to Bonds secured by a Credit Enhancement or supported by a Liquidity Facility, a day upon which commercial banks in the city in which is located the office of the issuing bank at which demands for payment under the Credit Enhancement or Liquidity Facility, as applicable, are to be presented are authorized or obligated by law or executive order to be closed, and (3) a day on which the New York Stock Exchange is closed. "Capital Appreciation Bonds" means the Bonds of any Series designated as Capital Appreciation Bonds in the Supplemental Indenture providing for the issuance of such Series of Bonds and on which interest is compounded and paid at maturity or on prior redemption. "Certificate," "Statement," "Request," "Requisition" and "Order" of the Commission mean, respectively, a written certificate, statement, request, requisition or order signed in the name of the Commission by an Authorized Representative. If and to the extent required by Section 1.03, each such instrument shall include the statements provided for in Section 1.03. "Code means the Internal Revenue Code of 1986, and the regulations applicable thereto or 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. "Continuing Disclosure Agreement" means, with respect to each Series of Bonds requiring an undertaking regarding disclosure under Rule 15c2-12, the Continuing Disclosure Agreement, dated the date of issuance of such Series of Bonds, executed by the Commission and a Dissemination Agent, as the same may be supplemented, modified or amended in accordance with its terms. "Corporate Trust Office" or corporate trust office means the corporate trust office of the Trustee at U.S. Bank National Association, 633 West Fifth Street, 24th Floor, Los Angeles CA 90071„ Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee from time to time. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Commission and related to the authorization, execution, sale and delivery of a Series of Bonds, 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 such Series of Bonds, initial fees and OHS West:260379475.5 5 87 charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, financial advisor fees and expenses, rating agency fees, fees and charges for preparation, execution, transportation and safekeeping of Bonds, surety, insurance, credit enhancement and liquidity costs, termination fees payable in connection with the termination of an Interest Rate Swap Agreement in connection with the delivery of such Series of Bonds, and any other cost, charge or fee in connection with the initial delivery of a Series of Bonds or any Parity Obligations delivered in connection with a Series of Bonds. "Costs of Issuance Fund" means a fund by that name established pursuant to the provisions of a Supplemental Indenture to pay Costs of Issuance with respect to a Series of Bonds being issued pursuant to such Supplemental Indenture. "Costs of the Project" means all items of expense related to the Project and directly or indirectly payable by or reimbursable to the Commission in accordance with the Act and the Ordinance. "Counterparty" means an entity which has entered into an Interest Rate Swap Agreement with the Commission. "County" means the County of Riverside, California. "Credit Enhancement" means, with respect to a Series of Bonds, any Insurance, letter of credit, line of credit, surety bond or other instrument, if any, which secures or guarantees the payment of principal of and interest on a Series of Bonds, issued by an insurance company, commercial bank or other financial institution, and delivered or made available to the Trustee, as from time to time supplemented or amended pursuant to its terms, or, in the event of the delivery or availability of an Alternate Credit Enhancement, such Alternate Credit Enhancement. "Credit Provider" means, with respect to a Series of Bonds, the Insurer, commercial bank or other fmancial institution issuing (or having primary obligation, or acting as agent for the financial institutions obligated, under) a Credit Enhancement then in effect with respect to such Series of Bonds. "Current Interest Bonds" means the Bonds of any Series designated as Current Interest Bonds in the Supplemental Indenture providing for the issuance of such Series of Bonds and that pay interest to the Holders thereof on a periodic basis prior to maturity. "Debt Service," when used with respect to any Bonds or Parity Obligations (for purposes of this definition of "Debt Service," herein collectively referred to as "Obligations"), means, as of any date of calculation and with respect to any Fiscal Year,the sum of (1) the interest falling due on such Obligations during such Fiscal Year and (2) the principal or Mandatory Sinking Account Payments required with respect to such Obligations during such Fiscal Year; computed on the assumption that no portion of such Obligations shall cease to be Outstanding during such Fiscal Year except by reason of the application of such scheduled payments; provided, however, that for purposes of such computation: OHS West:260379475.5 - 6 88 • (A) Excluded Principal Payments (and the interest related thereto provided such interest is being paid from the same source as the Excluded Principal Payments) shall be excluded from such calculation and Assumed Debt Service shall be included in such calculation; (B) in determining the principal amount due in each Fiscal Year, payment shall (unless a different subsection of this defmition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with any amortization schedule established for such Obligations, including any Mandatory Sinking Account Payments or any scheduled redemption or payment of Obligations on the basis of Accreted Value, 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 Capital Appreciation Bond; (C) if any Obligations bear, or if any Obligations proposed to be issued will bear, interest at a variable interest rate for which an Interest Rate Swap Agreement is not in place and the interest on which is excluded or expected to be excluded from gross income for federal income tax purposes; the interest rate on such Obligations for periods when the actual interest rate cannot yet be determined shall be assumed to be equal to the average of the SIFMA Swap Index for the five (5) years preceding such date of calculation; (D) if any Obligations bear, or if any Obligations proposed to be issued will bear, interest at a variable interest rate for which an Interest Rate Swap Agreement is not in place and the interest on which is included or expected to be included in gross income for federal income tax purposes, the interest rate on such Obligations shall be calculated at an interest rate equal to 100% of the average One Month USD LIBOR Rate during the five (5) years preceding such date of calculation; (E) with respect to any Obligations bearing interest, or expected to bear interest, at a variable interest rate for which an Interest Rate Swap Agreement is in place providing for a fixed rate of interest to maturity or for a specific term with respect to such Obligations, the interest rate on such Obligations shall be assumed to be the synthetic fixed interest rate specified in such Interest Rate Swap Agreement for such term; provided that if, pursuant to a Certificate of the Commission filed with the Trustee, the sum of (i) interest payable on such Obligations, plus (ii) amounts payable by the Commission under such Interest Rate Swap Agreement, less (iii) amounts receivable by the Commission under such Interest Rate Swap Agreement, is expected to be greater than the interest payable on the Obligations to which such Interest Rate Swap Agreement relates (i.e., if such Interest Rate Swap Agreement is an 'off -market" Interest Rate Swap Agreement), then, in such instance, such excess amounts expected to be payable by the Commission under such Interest Rate Swap Agreement shall be included in the calculation of Debt Service; (F) with respect to any Obligations bearing interest, or expected to bear interest; at a fixed interest rate for which an Interest Rate Swap Agreement is in place providing for a net variable interest rate with respect to such Obligations for a specific term, the interest rate on such Obligations shall be assumed to be equal for such term to the sum of (i) the fixed interest rate or rates to be paid on the Obligations, minus (ii) the fixed interest rate receivable by the Commission under such Interest Rate Swap Agreement, plus (iii) the average interest rate of the OHS West:260379475.5 7 89 index on which the Interest Rate Swap Agreement is based, as identified in a Certificate of the Commission, or, if not based on an identifiable index, then the SIFMA Swap Index, in each case, over the five (5) years preceding the date of calculation; (G) if any Obligations feature an option, on the part of the owners or an obligation under the terms of such Obligations, to tender all or a portion of such Obligations to the Commission, the Trustee or other fiduciary or agent, and requires that such Obligations or portion thereof be purchased if properly presented, and such purchased Obligations are intended to be remarketed or refunded upon tender, then for purposes of determining the amounts of principal and interest due in any Fiscal Year on such Obligations, the options or obligations of the owners of such Obligations to tender the same for purchase or payment prior to the stated maturity or maturities shall be ignored and not treated as a principal maturity; and (H) principal and interest payments on Obligations shall be excluded to the extent such payments are to be paid from Revenues then held on deposit by the Trustee or from other amounts on deposit with the Trustee or other fiduciary in escrow specifically therefor and interest payments shall be excluded to the extent that such interest payments are to be paid from the proceeds of Obligations held by the Trustee or other fiduciary as capitalized interest specifically to pay such interest. "Defeasance Securities" means: (i) U.S. Treasury Certificates, Notes and Bonds, including State and Local Government Series securities; (ii) direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself; (iii) Resolution Funding Corp. securities ("REFCORP"), provided, however, only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable; (iv) pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard & Poor's, provided, however, that if such municipal bonds are rated only by Standard & Poor's, then such pre -refunded municipal bonds must have been pre -refunded with cash, direct United States or United States guaranteed obligations, or "AAA" rated pre -refunded municipal bonds; (v) obligations issued by the following agencies, which are backed by the full faith and credit of the United States: (a) Farmers Home Administration (FmHA) - certificates of beneficial ownership; (b) General Services Administration - participation certificates; (c) U.S. Maritime Administration - Guaranteed Title XI financing; (d) Small Business Administration guaranteed participation certificates and guaranteed pool certificates; (e) GNMA guaranteed MSB and participation certificates; and (f) U.S. Department of Housing and Urban Development (HUD) Local Authority Bonds, or (vi) certain obligations of government -sponsored agencies that are not backed by the full faith and credit of the United States limited to: (a) Federal Home Loan Mortgage Corp. (FHLMC) debt obligations; (b) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives) consolidated system- wide bonds and notes; (c) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; (d) Federal National Mortgage Association (FNMA) debt obligations; (e) Student Loan Marketing Association (SLMA) debt obligations; and (f) Financing Corp. (FICO) debt obligations; and (g) other obligations approved by the Rating Agencies for defeasance escrows rated in the highest Rating Category. "Dissemination Agent" means, with respect to each Series of Bonds requiring an undertaking regarding disclosure under Rule 15c2-12(b)(5), the dissemination agent under the OHS West:260379475.5 $ 90 • Continuing Disclosure Agreement delivered in connection with such Series of Bonds, or any successor dissemination agent designated, in writing by the Commission and which has entered into a Continuing Disclosure Agreement with the Commission. "DTC" means The Depository Trust Company, New York, New York, or any successor thereto. "Electronic Means" means facsimile transmission, email transmission or other similar electronic means of communication providing evidence of transmission, including a telephone communication confirmed by any other method set forth in this definition. "Event of Default" means any of the events specified in Section 7.01. "Excluded Principal Payments" means each payment of principal of Bonds or Parity Obligation which the Commission determines (in the Certificate of the Commission) that the Commission intends to pay with moneys that are not Sales Tax Revenues (such as commercial paper, balloon indebtedness or bond anticipation notes) but from future debt obligations of the Commission, grants from the State or federal government, or any agency or instrumentality thereof, or any other source of funds of the Commission, upon which determination of the Commission the Trustee may conclusively rely. No such determination shall affect the security for such Bonds or the obligation of the Commission to pay such payments from Sales Tax Revenues or amounts on deposit in the Bond Reserve Fund, if any. No payment of principal of Bonds may be determined to be an Excluded Principal Payment unless it is due on or prior to the Tax Expiration Date. "Fees and Expenses Fund" means the fund by that name established pursuant to Section 5.02. "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other 12-month period hereafter selected and designated as the official fiscal year period of the Commission, which designation shall be provided to the Trustee in a Certificate delivered by the Commission. "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, then the term "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Commission. "Holder" or 'Bondholder," whenever used herein with respect to a Bond, means the person in whose name such Bond is registered. "Indenture" means this Indenture, dated as of June 1, 2008, between the Trustee and the Commission, as originally executed or as it may from time to time be supplemented or amended by any Supplemental Indenture delivered pursuant to the provisions hereof. "Initial Swaps" means the following Interest Rate Swap Agreements, in a combined notional amount of $185,000,000, which Initial Swaps have an effective date of October 1, 2009: OHS West:260379475.5 9 91 a. ISDA Master Agreement, dated as of August 22, 2006, between Bank of America, N.A. ("BOfA") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between BofA and the Commission; and b. ISDA Master Agreement, dated as of August 22, 2006, between Lehman Brothers Derivative Products Inc. ("Lehman") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between Lehman and the Commission. "Insurance" means any financial guaranty insurance policy or municipal bond insurance policy issued by an Insurer insuring the payment when due of principal of and interest on a Series of Bonds as provided in such fmancial guaranty insurance policy or municipal bond insurance policy. "Insurer" means any provider of Insurance with respect to a Series of Bonds. "Interest Fund" means the fund by that name established pursuant to Section 5.02. "Interest Payment Date," with respect to each Series of Bonds, shall have the meaning specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Interest Rate Swap Agreement" means an interest rate swap, cap, collar, option, floor, forward, derivative, or other hedging agreement, arrangement or security, however denominated, entered into between the Commission and a Counterparty, in connection with or incidental to, the issuance or carrying of Bonds, including, without limitation, an interest rate swap, cap, collar, option, floor, forward, derivative, or other hedging agreement, arrangement or security entered into in advance of the issuance of Bonds. "Investment Securities" means the following: (1) 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 (3) below to the extent unconditionally guaranteed by the United States of America; (2) 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 (1); (3) obligations of the Federal National Mortgage Association, the Government National Mortgage Association, Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Corporation; OHS Wes1:260379475.5 10 s 92 • • (4) 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 notes 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; (5) 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 at the time of their purchase such obligations are rated in either of the two highest long-term or highest short-term Rating Categories by Moody's and Standard & Poor's; (6) 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 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 (1) or (2) 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 (1) or (2) 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 (6) 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 (6), as appropriate, and (d) which have been rated in one of the two highest long-term Rating Categories by Moody's and Standard & Poor's; (7) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by any corporation which are, at the time of purchase, rated by Moody's and Standard & Poor's in the highest short-term Rating Categories, or, if the term of such indebtedness is longer than three (3) years, rated by Moody's and Standard & Poor's in one of the two highest long-term Rating Categories, for comparable types of debt obligations; (8) demand or time deposits or certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organised under the laws of any state of the United States of America or any national banking association (including the Trustee), provided that such certificates of deposit shall be purchased directly from such a bank, trust company or national banking association and shall be either (a) continuously and fully insured by the Federal Deposit Insurance Corporation, (b) continuously and fully secured by such securities and obligations as are described above in clauses (1) OHS West260379475.5 11 93 through (5), 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, as custodian, by the bank, trust company or national banking association issuing such certificates of deposit, and the bank, trust company or national banking association 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 (c) be issued by an institution the senior debt obligations of which are rated "AA" or higher by Standard & Poor's; (9) taxable commercial paper, other than that issued by bank holding companies, or tax-exempt commercial paper rated in the highest Rating Category by Moody's and Standard & Poor's; (10) variable rate obligations required to be redeemed or purchased by the obligor or its agent or designee upon demand of the holder thereof secured as to such redemption or purchase requirement by a liquidity agreement with a corporation and as to the payment of interest and principal either upon maturity or redemption (other than upon demand by the holder thereof) thereof by an unconditional credit facility of a corporation, provided that the variable rate obligations themselves are rated in the highest Rating Category for its short-term rating, if any, and in either of the two highest Rating Categories for its long-term rating, if any, by Moody's and Standard & Poor's, 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 Moody's and Standard & Poor's; (11) 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) having a minimum permanent capital of one hundred million dollars ($100,000,000) or 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 (1), (2), (3) or (4) above, which shall have a market value (exclusive of accrued interest and valued at least monthly) at least equal to 103% of the principal amount of such investment and shall be Iodged with the Trustee or other fiduciary, as custodian for the Trustee, 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 103% of the principalamount of each such repurchase agreement and the Trustee shall be entitled to rely on each such undertaking; OHS Wes1:26037947 5 .5 12 94 • (12) any cash sweep or similar account arrangement of or available to the Trustee, the investments of which are limited to investments described in clauses (1), (2), (3), (4), (5) and (1'1) of this definition of Investment Securities and any money market fund, the entire investments of which are limited to investments described in clauses (1), (2), (3), (4), (5) and (11) of this definition of Investment Securities; provided that as used in this clause (12) and clause (13) investments will be deemed to satisfy the requirements of clause (11) if they meet the requirements set forth in clause (11) ending with the words "clauses (1), (2), (3) or (4) above" and without regard to the remainder of such clause (11); (13) any investment agreement with a financial institution or insurance company or whose obligations are guaranteed by a financial institution or insurance company which: (a) has at the date of execution thereof an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims paying ability rated in either of the two highest long-term Rating Categories by Moody's and Standard & Poor's; or (b) is fully secured by obligations described in items (1), (2), (3) or (4) of the defmitionof Investment Securities which are (A) valued not less frequently than monthly and have a fair market value, exclusive of accrued interest, at all times at least equal to the principal amount of the investment, (B) held by the Trustee or other custodian acceptable to the Trustee, (C) subject to a perfected fast lien in the Trustee, and (D) free and clear from all third party liens; (14) shares of beneficial interest in diversified management companies investing exclusively in securities and obligations described in clauses (1) through (13) of this definition of Investment Securities and which companies have either the highest rating by Moody's and 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; (15) shares in a common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended; (16) bankers' acceptances issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System, the short-term paper of which is rated in the highest category by Moody's and Standard & Poor's, which purchases may not exceed two hundred seventy (270) days maturity; (17) the pooled investment fund of the County of Riverside, California, which is administered in accordance with the investment policy of said County as established by the Treasurer/Tax Collector thereof, as permitted by Section 53601 of the Government Code of the State, copies of which policy are available upon written request to said Treasurer/Tax Collector; OHS West:260379475_5 13 95 (18) the Local Agency Investment Fund or similar pooled fund operated by or on behalf of the State of California and which is authorized to accept investments of moneys held in any of the funds or accounts established pursuant to this Indenture; (19) obligations of the Resolution Trust Corporation and interest obligations of the Resolution Funding Corporation; (20) financial futures or fmancial 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 (21) Any other forms of investments approved by the Board and consented to by each Credit Provider then providing Credit Enhancement for a Series of Bonds. "Letter of Credit Account" means an account by that name established to hold funds that are drawn on Credit Enhancement provided in the form of a letter of credit and that are to be applied to pay the principal of or interest on a Series of Bonds, which account shall be established pursuant to the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Liquidity Facility" means, with respect to a Series of Bonds, a line of credit, letter of credit, standby purchase agreement or similar liquidity facility securing or guaranteeing the payment of purchase price of such Series of Bonds and issued by a commercial bank, insurance company, pension fund or other fmancial institution, and delivered or made available to the Trustee, as from time to time supplemented or amended pursuant to its terms, or, in the event of the delivery or availability of an Alternate Liquidity Facility, such Alternate Liquidity Facility. "Liquidity Facility Bonds" means any Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a Liquidity Facility, but excluding any Bonds no longer considered to be Liquidity Facility Bonds in accordance with the terms of the applicable Liquidity Facility. "Liquidity Facility Rate" means, with respect to a Series of Bonds, the interest rate per annum, if any, specified as applicable to Liquidity Facility Bonds in the Liquidity Facility delivered in connection with such Series of Bonds. "Liquidity Provider" means, with respect to a Series of Bonds, the commercial bank, insurance company, pension fund or other fmancial institution issuing (or having primary obligation, or acting as agent for the financial institutions obligated, under) a Liquidity Facility then in effect with respect to such Series of Bonds. "Mandatory Sinking Account Payment" means, with respect to Bonds of any Series and maturity, the amount required by the Supplemental Indenture establishing the terms and provisions of such Series of Bonds to be deposited by the Commission in a Sinking Account for the payment of Term Bonds of such Series and maturity. OHS West:260379475.5 14 96 "Maturity Date" means, with respect to a Series of Bonds, the date of maturity or maturities specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Maximum Annual Debt Service" means the maximum amount of Annual Debt Service becoming due and payable on all Bonds Outstanding and all Parity Obligations outstanding during the period from the date of such calculation through the final maturity date of the Bonds and Parity Obligations, calculated utilizing the assumptions set forth under the defmition of Debt Service. "Maximum Interest Rate" means, with respect to all Bonds other than Liquidity Facility Bonds, the lesser of (i) twelve percent (12%) and (ii) the maximum rate of interest that may legally be paid on the Bonds from time to time, and means, with respect to Liquidity Facility . Bonds, the lesser of (x) the Liquidity Facility Rate and (ii) the maximum rate of interest that may legally be paid on the Liquidity Facility Bonds from time to time. "Moody's" means Moody's Investors Service, a corporation duly organized and existing under 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 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 Commission. "1988 Ordinance" means the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on July 6, 1988 and approved by a majority of the electors voting on such proposition on November8, 1988, as supplemented and amended. "1988 Sales Tax" means the sales and use tax imposed by the Commission pursuant to the 1988 Ordinance from July 1, 1989 to June 30, 2009. "1988 Sales Tax Revenues" means 100% of the amounts collected by the State Board of Equalization on behalf of the Commission pursuant to the Act from the 1988 Sales Tax. "Notes" means the Riverside County Transportation Commission Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, authorized by, and at any time Outstanding pursuant to, the Notes Indenture in an aggregate amount not to exceed two hundred million dollars ($200,000,000). "Notes Indenture" means the Indenture, dated as of March I, 2005, between the Commission and U.S. Bank National Association, successor by merger to U.S. Bank Trust National Association, as trustee, as supplemented and amended from time to time pursuant to its terms. "Notes Trustee" means U.S. Bank National Association, successor by merger to U.S. Bank Trust National Association, as trustee under the Notes Indenture, and its successors and assigns. "Notice Parties" means, as and to the extent applicable, the Commission, the Trustee, the Credit Provider, if any, for the Series of Bonds to which the notice being given relates, the OHS West:260379475.5 15 97 auction agent, if any, for the Series of Bonds to which the notice being given relates, the broker - dealer, if any, for the Series of Bonds to which the notice being given relates, the Liquidity Provider, if any, for the Series of Bonds to which the notice being given relates, and the remarketing agent, if any, for the Series of Bonds to which the notice being given relates. "Obligations" has the meaning given to such term in the definition of "Debt Service." "One Month USD LIBOR Rate" means the rate for deposits in U.S. dollars fora one - month maturity that appears on Reuters Screen LIBOR01 Page (or such other page as may replace that page on that service, or such other service as may be nominated by the British Bankers Association, for the purpose of displaying London interbank offered rates for U.S. dollar deposits) as of 11:00 a.m., London time, on the date of determination of such rate, except that, if such rate does not appear on such page on such date, the One Month USD LIBOR Rate means a rate determined on the basis of the rates at which deposits in U.S. dollars for a one -month maturity and in a principal amount of at least U.S. $1,000,000 are offered at approximately 11:00 a.m., London time, on such date, to prime banks in the London interbank market by three major banks in the London interbank market (herein referred to as the 'Reference Banks") selected by the Trustee (provided, however, that the Trustee may appoint an agent to identify such Reference Banks) The Trustee or its agent is to request the principal London office of each of such Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the One Month LIBOR Rate will be the arithmetic mean of such quotations. If fewer than two quotations are provided, the One Month LIBOR Rate will be the arithmetic mean of the rates quoted by three (if three quotations are not provided, two or one, as applicable) major banks in New York City, selected by the Tnistee or its agent, at approximately 11:00 a.m., New York City time, on such date for loans in U.S. dollars to leading European banks in a principal amount of at least U.S. $1,000,000 having a one -month maturity. If none of the banks in New York City selected by the Trustee or its agent is then quoting rates for such loans, then the One Month LIBOR Rate for the ensuing interest period will mean the One Month LIBOR Rate most recently in effect. "Opinion of Bond Counsel" means a written opinion of a law firm of national standing in the field of public finance selected by the Commission. "Ordinance" means the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance; adopted by the Commission on May 8, 2002, and approved by at least two-thirds of electors voting on such proposition in the November 5, 2002 election and any amendments or extensions thereto, and all future ordinances adopted, amended or extended pursuant to the Act from time to time. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09) all Bonds theretofore, or thereupon being; authenticated and delivered by the Trustee under this Indenture except: (1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds with respect to which all liability of the Commission shall have been discharged in accordance with Section 10.02, including Bonds (or portions of Bonds) referred to in Section 11.10; and (3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture; provided, however, that in OHS West:260379475.5 16 98 • • • the event the principal of or interest due on any Bonds shall be paid by the Credit Provider pursuant to the Credit Enhancement issued in connection with such Bonds, such Bonds shall remain Outstanding for all purposes and shall not be considered defeased or otherwise satisfied or paid by the Commission and the pledge of Revenues and all covenants, agreements and other obligations of the Commission to the Holders shall continue to exist and shall run to the benefit of such Credit Provider and such Credit Provider shall be subrogated to the rights of such Holders. "Parity Obligations" means (i) any indebtedness, installment sale obligation, lease obligation or other obligation of the Commission for borrowed money, (ii) any obligation to pay the Rebate Requirement, (iii) the Initial Swaps, or (iv) any other Interest Rate Swap Agreement (excluding fees and expenses and termination payments on Interest Rate Swap Agreements„ which fees and expenses and termination payments shall be secured by a lien and charge on the Sales Tax Revenues subordinate to the lien and charge upon Sales Tax Revenues that secures the Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations) entered into in connection with a Series of Bonds, in each case (other than in the case of the Initial Swaps) incurred in accordance with Section 3.05(C), and in each case having an equal lien and charge upon the Sales Tax Revenues and therefore being payable on a parity with the Bonds (whether or not any Bonds are Outstanding). "Participating Underwriter" means any of the original underwriters of a Series of Bonds required to comply with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission, under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Person" means an association, corporation, firm, 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 5.02. "Principal Office" means, with respect to the Trustee, the corporate trust office of the Trustee at 633 West Fifth Street, 24th Floor, Los Angeles, CA 90071, Attention: Corporate Trust Services, or such other or additional offices as may be designated by the Trustee from time to time, and means, with respect to a Credit Provider or a Liquidity Provider, the office designated as such in writing by such party in a notice delivered to the Trustee and the Authority. "Project" means capital outlay expenditures for transportation purposes, including the construction, capital, acquisition and maintenance of streets, roads, highways and public transit systems and related purposes permitted by the Ordinance, including planning, environmental reviews, engineering and design costs and right-of-way acquisition and also including, without limitation, engineering, inspection, legal, fiscal agents, financial consultant and other fees, bond and other reserve funds, working capital, bond or note interest estimated to accrue during the construction period and for a period of not to exceed three years thereafter, and expenses for all proceedings for the authorization, issuance and sale of Bonds. 011S West:260379475.5 17 99 "Project Fund" means, with respect to any Series of Bonds, a fund by that name established pursuant to' the provisions of a Supplemental Indenture to hold the proceeds of a Series of Bonds or a portion thereof prior to expenditure on the portion of the Project being financed with the proceeds of such Series of Bonds. "Proportionate Basis," when used with respect to the redemption of Bonds, means that the amount of Bonds of each maturity to be redeemed shall be determined as nearly as practicable by multiplying the total amount of funds available for redemption by the ratio which the amount of Bond Obligation of Bonds of such maturity bears to the amount of all Bond Obligation of Bonds to be redeemed, provided, however that, any Bond may only be redeemed in an authorized denomination. For purposes of the foregoing, Term Bonds shall be deemed to mature in the years and in the amounts of the Mandatory Sinking Account Payments, and Capital Appreciation Bonds and Current Interest Bonds maturing or subject to Mandatory Sinking Account Payments in the same year shall be treated as separate maturities. When used with respect to the payment or purchase of a portion of Bonds, "Proportionate Basis" shall have the same meaning set forth above except that "pay" or purchase" shall be substituted for "redeem" or "redemption" and "paid" or "purchased" shall be substituted for "redeemed." "Purchase Fund" means a fund by that name established to hold funds to be applied to pay the purchase price of a Series of Bonds, which fund shall be established pursuant to the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Rating Agency" means, as and to the extent applicable to a Series of Bonds, each of Fitch, Moody's and Standard & Poor's then maintaining a rating on such Series of Bonds at the request of the Commission. "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 that fund by that name established pursuant to Section 5.09. "Rebate Instructions" means, with respect to any Series of Bonds, those calculations and directions required to be delivered to the Trustee by the Commission pursuant to the Tax Certificate delivered in connection with such Series of Bonds. "Rebate Requirement" means, with respect to any Series of Bonds, the Rebate Requirement determined in accordance with the Tax Certificate delivered" in connection with such Series of Bonds. "Record Date," with respect to each Series of Bonds, shall have the meaning specified in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. "Redemption Fund" means the fund by that name established pursuant to Section 5.08. OHS West:260379475.5 18 • 100 "Redemption Price" means, with respect to any Bond (or portion thereof) the Bond Obligation of such Bond (or portion thereof) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and this Indenture. "Refunding Bonds" means a Series of Bonds or a portion of a Series of Bonds issued pursuant to the provisions set forth in Section 3.04. "Repositories" means the public or private entities designated as Repositories in a Continuing Disclosure Agreement entered into in connection with a Series of Bonds. "Reserve Facility" means any insurance policy, letter of credit or surety bond issued by a Reserve Facility Provider, meeting the requirements set forth in Section 5.05, and delivered to the Trustee in satisfaction of all or a portion of the Bond Reserve Requirement applicable to one or more Series of Bonds. "Reserve Facility Provider" means any issuer of a Reserve Facility. "Revenue Fund" means the Revenue Fund established pursuant to Section 5.01. "Revenues" means: (i) all Sales Tax Revenues; and (ii) all Swap Revenues. In accordance with the provisions set forth in Section 3.02, the Commission by Supplemental Indenture may provide for additional revenues or assets of the Commission to be included in the definition of Revenues hereunder. "Rule 15c2-12" means Securities and Exchange Commission Rule 15c2-12, as supplemented and amended from time to time. "Sales Tax Revenues" means the amounts available for distribution to the Commission on and after July 1, 2009 on account of the retail transactions and use tax imposed in the County of Riverside pursuant to the Act and the Ordinance after deducting amounts payable by the Commission to the State Board of Equalization for costs and expenses for its services in connection with the retail transactions and use taxes collected pursuant to the Act. "Securities Depository" means DTC, or, in accordance with then -current guidelines of the Securities and Exchange Commission, such other securities depository, or no such depositories, as the Commission may designate in a Request of the Commission delivered to the Trustee. "Serial Bonds" means Bonds, maturing in specified years, for which no Mandatory Sinking Account Payments are provided. "Series," whenever used herein with respect to Bonds, means all of the Bonds designated as being of the same series, authenticated and delivered in a simultaneous transaction regardless of variations in maturity, interest rate, redemption and other provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange or in lieu of or in substitution for (but not to refund) such Bonds as herein provided. "SIFMA Swap Index" means, on any date, a rate determined on the basis of the seven- day high grade market index of tax-exempt variable rate demand obligations, as produced by OHS West260379475.5 19 101 Municipal Market Data and published or made available by the Securities Industry & Financial Markets Association (formerly the Bond Market Association) ("SIFMA"), or by a successor index or a comparable index specified by the Commission, or any Person acting in cooperation with or under the sponsorship of SIFMA and acceptable to the Trustee and effective from such date. "Sinking Account" means an account by that name established in the Principal Fund pursuant to Section 5.04 for the payment of Tenn Bonds. "Standard & Poor's" or "S&P" means Standard & Poor's, 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 Commission. "State" means the State of California. "State Board of Equalization" means the California State Board of Equalization. "Subordinate Obligations" means the Notes, any other obligations of the Commission that constitute "Parity Debt" under and as defined in the Notes Indenture, and any other obligations of the Commission issued or incurred in accordance with Section 3.05(D). "Subordinate Obligations Fund" means the fund by that name established pursuant to Section 5.02. "Supplemental Indenture" means any indenture hereafter duly executed and delivered, supplementing, modifying or amending this Indenture, but only if and to the extent that such supplemental indenture is authorized specifically hereunder. "Swap Revenues" means all regularly -scheduled amounts (but not termination payments) owed or paid to the Commission by any Cmmterparty under any Interest Rate Swap Agreement after offset for the regularly -scheduled amounts (but not termination payments) owed or paid by the Commission to such Counterparty under such Interest Rate Swap Agreement. "Tax Certificate" means each Tax Certificate delivered by the Commission at the time of issuance and delivery of a Series of Bonds, as the same may be amended or supplemented in accordance with its terms. "Tax Expiration Date" means June 30, 2039, or such later date to which the levy of the retail transactions and use tax is extended in accordance with the Act. "Term Bonds" means Bonds payable at or before their specified maturity date or dates from Mandatory Sinking Account Payments established for that purpose and calculated to retire such Bonds on or before their specified maturity date or dates. OHS West260379475.5 20 • 102 • • • "Trustee" means U.S. Bank National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, or its successor, as Trustee as provided in Section 8.01. "2008 Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A, authorized by, and at any time Outstanding pursuant to, this Indenture. "Variable Rate Indebtedness" means any indebtedness, including Bonds, Parity Obligations, and Subordinate Obligations, 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 numerical rate or rates for the entire term of such indebtedness. SECTION 1.03 Content of Certificates. Every certificate 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 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 is based; (3) a statement that, in the opinion of such person, he or she 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 instrument 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 given by an officer of the Commission 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 fmancial advisor, an investment banker or an independent consultant, unless such officer 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, and 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 Commission) upon a certificate or opinion of or representation by an officer of the Commission, 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 officer of the Conunission, or the same counsel, accountant, financial advisor, investment 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. OHS West:260379475.5 21 103 ARTICLE II THE BONDS SECTION 2.01 Authorization of Bonds. Bonds may be issued hereunder as fully registered bonds without coupons, in book -entry form or otherwise, from time to time as the issuance thereof is approved by the Commission. The maximum principal amount of Bonds which may be issued hereunder is not limited; subject, however, to any limitations contained in the Act and to the right of the Commission, which is hereby reserved, to limit the aggregate principal amount of Bonds which may be issued or Outstanding hereunder. The Bonds are designated generally as "Riverside County Transportation Commission Sales Tax Revenue Bonds" and shall include in the name "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 Bonds. The Bonds may be issued in such Series as from time to time shall be established and authorized by the Commission, subject to the covenants, provisions and conditions herein contained. SECTION 2.02 Terms of the Bonds. The Bonds of each Series shall bear interest, if any, at such rate or rates or determined in such manner and payable at such intervals as may be determined by the Commission at the time of issuance thereof pursuant to the Supplemental Indenture under which issued, not to exceed the Maximum Interest Rate, and shall mature and become payable on such date or dates and in such year or years as the Commission may determine by the Supplemental Indenture creating such Series. Principal of and interest on such Bonds shall be payable in such manner as may be specified in the Supplemental Indenture creating such Series. The Bonds of each Series shall be issued in such denominations as may be authorized by the Supplemental Indenture creating such Series. Unless otherwise provided in the Supplemental Indenture delivered in connection with such. Series of Bonds, the Bonds of each Series shall be initially registered in the name of "Cede & Co.," as nominee of the Securities Depository and shall be evidenced by one bond certificate for each maturity of each Series of Bonds. Registered ownership of any Series of Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 2.10, or in the event the use of the Securities Depository is discontinued, in accordance with the provisions set forth in Section 2.05. SECTION 2.03 Form of Bonds. The Bonds of any Series shall be in such form or forms as may be specified in the Supplemental Indenture creating such Series. SECTION 2.04 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Commission by the facsimile or manual signature of the Chairperson of the Board or any Viee Chairperson of the Board and shall be countersigned by the facsimile or manual signature of the Auditor -Controller of the Commission, and shall have the official seal of the Commission attached or affixed thereon in manual or facsimile form. Unless otherwise provided in any Supplemental Indenture, the Bonds shall then be delivered to the Trustee for authentication by the Trustee. In case any of the officers who shall have signed or attested any of the Bonds shall cease to be such officer or officers of the Commission before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the OHS West:260379475.5 22 104 • Commission, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Commission as though those who signed and attested the same had continued to be such officers of the Commission, and also any Bond may be signed and attested on behalf of the Commission by such persons as at the actual date of execution of such Bond shall be the proper officers of the Commission although at the nominal date of such Bond any such person shall not have been such officer of the Commission. Except as may be otherwise be provided in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds, only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form recited in the Supplemental Indenture creating such Series of Bonds, manually executed by the Trustee, 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 Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. SECTION 2.05 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the register required to be kept pursuant to the provisions of Section 2.07, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Commission shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds, of the same Series, tenor, maturity and interest rate and a like aggregate principal amount; provided that, unless otherwise provided in any Supplemental Indenture, no registration of transfer may occur during the period established by the Trustee for selection of Bonds for redemption, or of any Bond or portion of a Bond so selected for redemption. The Trustee shall require the Bondholder requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. SECTION 2.06 Exchange of Bonds. Bonds may be exchanged at the Corporate Trust Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations of the same Series, tenor, maturity and interest rate; provided that, unless otherwise provided in any Supplemental Indenture, no exchange may occur during the period established by the Trustee for selection of Bonds for redemption, or of any Bond or portion of a Bond so selected for redemption. The Trustee shall require the Bondholder requesting such exchange to pay any tax or other govemmental charge required to be paid with respect to such exchange. SECTION 2.07 Bond Register. Unless otherwise provided in a Supplemental Indenture delivered in connection with a Series of Bonds, the Trustee will keep or cause to be kept, at its Corporate Trust Office sufficient books for the registration and transfer of each Series of Bonds, which shall at all times be open to inspection during normal business hours by the Commission and each Credit Provider upon reasonable prior notice; and, upon presentation for OHS West:260379475.5 23 105 such purpose; the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such books, Bonds as hereinbefore provided. SECTION 2.08 Temporary Bonds. The Bonds may be issued in temporary form exchangeable for defmitive Bonds when ready for delivery. Any temporary Bond may be printed, lithographed or typewritten, shall be of such denomination as may be determined by the Commission, shall be in registered form and may contain such reference to any of the provisions of this Indenture as may be appropriate. A temporary Bond may be in the form of a single Bond payable in installments, each on the date, in the amount and at the rate of interest established for the Bonds maturing on such date. Every temporary Bond shall be executed by the'Commission and authenticated by the Trustee upon the same conditions and in substantially the same manner as the defmitive Bonds. If the Commission issues temporary Bonds the Commission will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Corporate Trust Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations of the same Series, tenor and maturity or maturities. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. SECTION 2.09 Bonds Mutilated. Lost; Destroyed or Stolen. If any Bond shall become mutilated, the Commission, at the expense of the Holder of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like Series, tenor, maturity and interest rate in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by the Trustee and delivered to, or upon the Order of, the Commission. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Commission and to the Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to both shall be given, the Commission, at the expense of the Holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like Series, tenor, maturity and interest rate in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have'been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of the aforementioned indenmity). The Commission may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the Commission and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Commission whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds secured by this Indenture. Neither the Commission nor the Trustee shall be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. OHS West:260379475.5 24 • 106 • SECTION 2.10 Use of Securities Depository. Unless otherwise provided in a Supplemental Indenture delivered in connection with a Series of Bonds, notwithstanding any provision of this Indenture to the contrary: (A) The Bonds shall be delivered and registered as provided in Section 2.02. Registered ownership of any Series of Bonds, or any portion thereof, may not thereafter be transferred except: (I) To any successor of the Securities Depository or its nominee, or to any substitute depository designated pursuant to clause (2) of this subsection (A) (each, a "substitute depository"); provided that any successor of the Securities Depository or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (2) To any substitute depository designated by the Commission upon (a) the resignation of the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository or (b) a determination by the Commission that the Securities Depository or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (3) To any Person as provided below, upon (a) the resignation of the Securities Depository or its successor (or substitute depository or its successor) from its functions as depository; provided that no substitute depository can be obtained or (b) a determination by the Commission that it is in the best interests of the Commission to remove the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository. (B) In the case of any transfer pursuant to clause (1) or clause (2) of subsection (A) above, upon receipt of the Outstanding Bonds by the Trustee, together with a Statement of the Commission to the Trustee, a single new Bond for each maturity of each Series of Bonds then Outstanding shall be executed and delivered in the aggregate principal amount of the Bonds of such Series then Outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Statement of the Commission. In the case of any transfer pursuant to clause (3) of subsection (A) hereof, upon receipt of the Outstanding Bonds by the Trustee together with the Statement of the Commission to the Trustee, new Bonds of each Series then Outstanding shall be authorized and prepared by the Commission and authenticated and delivered by the Trustee in such authorized denominations and registered in the names of such Persons as are requested in such a Statement of the Commission, numbered in such manner as the Trustee shall determine, subject to the limitations of Section 2.02. (C) In the case of partial redemption or an advance refunding of any Series of the Bonds evidencing all or a portion of such amount Outstanding, the Securities Depository shall make an appropriate notation on such Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. OHS Wes1:2603794755 25 107 (D) The Commission and the Trustee shall be entitled to treat the Person in whose name any Bond is registered as the Bondholder thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Commission; and the Commission and the Trustee shall have no responsibility for transmitting payments to, communicating with, notifying or otherwise dealing with any Beneficial Owners of the Borids. Neither the Commission nor the Trustee will have any responsibility or obligations, legal or otherwise, to the Beneficial Owners or to any other party including the Securities Depository or its successor (or substitute depository or its successor), except for the Holder of any Bond. (E) So long as the Outstanding Bonds are registered in the name of Cede & Co. or its registered assign, the Commission and the Trustee shall cooperate with Cede & Co., as sole registered Bondholder, and its registered assigns in effecting payment of the principal of, redemption premium, if any, purchase price and interest on the Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. ARTICLE III ISSUANCE OF BONDS SECTION 3.01 Issuance of Bonds. Whenever the Commission shall determine to issue a Series of Bonds hereunder, the Commission (i) shall authorize the execution of a Supplemental Indenture specifying the principal amount, and prescribing the forms of Bonds of such Series and providing the terms, conditions, distinctive designation, denominations, date, maturity date or dates, interest rate or rates (or the manner of determining the same), redemption provisions, tender provisions, if any, and place or places of payment of principal or Redemption Price, if any, of and interest on such Bonds, and any other provisions respecting the Bonds of such Series not inconsistent with the terms of this Indenture, (ii) shall execute such Supplemental Indenture and (iii) shall deliver such Supplemental Indenture to the Trustee for execution. SECTION 3.02 Issuance of Additional Bonds. Subsequent to the issuance of the 2008 Bonds, the Commission may by Supplemental Indenture establish one or more additional Series of Bonds, payable from Sales Tax Revenues and secured by the pledge made under this Indenture equally and ratably with the 2008 Bonds, and the Commission may issue, and the Trustee may authenticate and deliver to the purchasers thereof, Bonds of any Series so established, in such principal amount as shall be determined by the Commission, but only, with respect to each additional Series of Bonds issued subsequent to the 2008 Bonds issued hereunder, upon compliance by the Commission with the provisions of this Section 3.02, Section 3.03 and any additional requirements set forth in said Supplemental: Indenture and subject to the specific conditions set forth below, each of which is hereby made a condition precedent to the issuance of any such additional Series of Bonds. (A) No Event of Default shall have occurred and then be continuing. (B) Subject to the provisions of Section 5.05, in the event a Supplemental Indenture providing for the issuance of such Series shall require either (i) the establishment of a Bond OHS West:260379475.5 26 • 108 • Reserve Fund to provide additional security for such Series of Bonds or (ii) that the balance on deposit in an existing Bond Reserve Fund be increased, forthwith upon the receipt of the proceeds of the sale of such Series, to an amount at least equal to the Bond Reserve Requirement with respect to such Series of Bonds and all other Bonds secured by such Bond Reserve Fund to be considered Outstanding upon the issuance of such additional Series of Bonds, the Supplemental Indenture providing for the issuance of such additional Series of Bonds shall. require deposit of the amount necessary. Said deposit shall be made as provided in the Supplemental Indenture providing for the issuance of such additional Series of Bonds and may be made from the proceeds of the sale of such Series of Bonds or from other funds of the Commission or from both such sources or may be made in the form of a Reserve Facility. (C) The aggregate principal amount of Bonds issued hereunder shall not exceed any limitation imposed by the Act or any other law or by any Supplemental Indenture. (D) The Commission shall place on file with the Trustee a Certificate of the Commission certifying that the amount of Sales Tax Revenues and 1988 Sales Tax Revenues collected during the Fiscal Year for which audited financial statements are available preceding the date on which such additional Series of Bonds will become Outstanding shall have been at least equal to [1.5] times Maximum Annual Debt Service on all Series of Bonds and Parity Obligations then Outstanding and the additional Series of Bonds then proposed to be issued, which Certificate shall also set forth the computations upon which such Certificate is based. (E) Principal payments of each additional Series of Bonds shall be due on June 1 or December 1 in each year in which principal is to be paid if and to the extent deemed practical in the reasonable judgment of the Commission with regard to the type of Bond to be issued, and, if the interest on such Series of Bonds is to be paid semiannually, such interest payments shall be due on June 1 and December 1 in each year to the extent deemed practical in the reasonable judgment of the Commission with regard to the type of Bond to be issued. Nothing in this Section or in this Indenture contained shall prevent or be construed to prevent the Supplemental Indenture providing for the issuance of an additional Series of Bonds 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 Bonds or any portion thereof. In the event additional assets or revenues are included within the definition of "Revenues" by a Supplemental Indenture, such additional assets or revenues shall be included in the calculations to be provided in subsection (D) above as if such additional assets or revenues had always been included in "Revenues." SECTION 3.03 Proceedings for Issuance of Additional Bonds. Subsequent to the issuance of the 2008 Bonds, before any additional Series of Bonds shall be issued and delivered, the Commission shall file each of the documents identified below with the Trustee (upon which documents the Trustee may conclusively rely in determining whether the conditions precedent to the issuance of such Series of Bonds have been satisfied). (A) A Supplemental Indenture authorizing such Series executed by the Commission. OHS West:260379475.5 27 109 (B) A Certificate of the Commission certifying: (i) that no Event of Default has occurred and is then continuing; and (ii) that the requirementS`sjicified in Section 3.02(B) and Section 3.02(C) hereof have been satisfied by the Commission.'` " y 5 a'8, (C) A Certificate of the Commission certifying (on.t# eiyasis of computations made no later than the date of sale of such Series of Bonds) that the rNiilrement of Section 3.02(D) is satisfied. Gidirr€ ont n (D) An Opinion of Bond Counsel to the effect thatithe Supplemental Indenture is being entered into in accordance with this Indenture and that mkt' Series of Bonds, when duly executed by the Commission and authenticated and deliverekhrthe Trustee, will be valid and binding obligations of the Commission. SECTION 3.04 =3_r Issuance of Refunding Bonds: `- E or : (A) Refunding Bonds may be authorized and issueduby the Commission without compliance with the provisions of Sections 3.02(D) or 3.03(C)r.provided that the Trustee shall' have been provided with a Certificate of the Commission to;tlie eet that the Commission has determined one of the following: (i) that Maximum Anditibr-Debt Service on all Bonds Outstanding and all Parity Obligations outstanding followineithtt' issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service till Bonds Outstanding and all Parity Obligations outstanding prior to the issuance of suchoRefiinding Bonds, or (ii) that the Commission expects a reduction in Debt Service on all Bonds Outstanding and all Parity Obligations outstanding to result from the refunding to be wed with the proceeds of such Refunding Bonds. Such Refunding Bonds may be issued fit idt aggregate principal amount sufficient (together with any additional funds available or to brie available) to provide funds for the payment of all or a portion of the following: � of I giber (1) the principal or Redemption Price,ofi\the Outstanding Bonds or outstanding Parity Obligations to be refunded; f ti© (2) all expenses incident to the calling, retiring'-tir paying of such Outstanding Bonds or outstanding Parity Obligations and the . Costs;-(Ftt Issuance of such Refunding Bonds; ,i vet (3) any termination payment owed by the Commission to a Counterparty after offset for any payments made to the Commission fxauitituch Counterparty under any Interest Rate Swap Agreement that was entered int heineoonnection with the Bonds or Panty Obligations to be refunded; ,,Ovic eu in (4) interest on all Outstanding Bonds or outstanding Parity Obligations to be refunded to the date such Bonds or Parity Obligations will be called for redemption or paid at maturity; Y";Fads e (5) interest on the Refunding Bonds from Ow date thereof to the date of payment or redemption of the Bonds or Parity Obligatiw*ba be refunded; and (6) funding a Bond Reserve Fund for the Rung Bonds, if required. OHS West:260179475.5 28 110 • (B) Before such Series of Refunding Bonds shall be issued and delivered pursuant to this Section 3.04, the Commission shall file each of the documents identified below with the Trustee (upon which documents the Trustee may conclusively rely in determining whether the conditions precedent to the issuance of such Series of Refunding Bonds have been satisfied). (1) A Supplemental Indenture authorizing such Series of Refunding Bonds executed by the Commission. (2) A Certificate of the Commission certifying: (i) that Maximum Annual Debt Service on all Bonds and Parity Obligations which will be outstanding following the issuance of such Series of Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Bonds Outstanding and Parity Obligations outstanding prior to the issuance of such Refunding Bonds or that the Commission expects a reduction in Debt Service on all Bonds Outstanding and all Parity Obligations outstanding to result from the refunding to be effected with the proceeds of such Refunding Bonds; and (ii) that the requirements of Sections 3.02(A), (B), and (C) hereof are satisfied. (3) If any of the Bonds to be refunded are to be redeemed prior to their stated maturity dates, irrevocable instructions to the Trustee to give the applicable notice of redemption or a waiver of the notice of redemption signed by the Holders of all or the portion of the Bonds or Parity Obligations to be redeemed, or proof that such notice has been given by the Commission; provided, however, that in lieu of such instructions or waiver or proof of notice of redemption, the Commission may cause to be deposited with the Trustee all of the Bonds and Parity Obligations proposed to be redeemed (whether canceled or uncanceled) with irrevocable instructions to the Trustee to cancel said Bonds or Panty Obligations so to be redeemed upon the exchange and delivery of said Refunding Bonds; and provided further that no provision of this Indenture shall be construed to require the redemption of Bonds prior to their respective maturity dates in connection with the refunding thereof. (4) An Opinion of Bond Counsel to the effect that the Supplemental Indenture is being entered into in accordance with this Indenture and that such Series of Refunding Bonds, when duly executed by the Conunission and authenticated and delivered by the Trustee, will be valid and binding obligations of the Commission. (5) The proceeds of the sale of the Refunding Bonds shall be applied by the Trustee according to the written direction of the Commission to the retirement of the Outstanding Bonds or Panty Obligations for the refunding of which said Refunding Bonds are to be issued. All Bonds or Parity Obligations purchased, redeemed or retired by use of funds received from the sale of Refunding Bonds, and all Bonds surrendered to the Trustee against the issuance of Refunding Bonds, shall be forthwith canceled and shall not be reissued. SECTION 3.05 Limitations on the Issuance of Obligations Payable from Sales Tax Revenues; Parity Obligations; Subordinate Obligations. Subsequent to the issuance of the 2008 Bonds, the Commission will not, so long as any of the Bonds are Outstanding, issue any OttS West:2603794755 29 111 obligations or securities, howsoever denominated, payable in whole or in part from Sales Tax Revenues except as set forth below. (A) Bonds authorized pursuant to Sections 3.01 and 3.02. (B) Refunding Bonds authorized pursuant to Section 3.04. (C) Parity Obligations, provided that the following conditions to the issuance or incurrence of such Parity Obligations are satisfied: (1) Such Parity Obligations have been duly and legally authorized by the Commission for any lawful purpose; (2) No Event of Default shall have occurred and then be continuing, as evidenced by the delivery of a Certificate of the Commission to that effect, which Certificate of the Commission shall be filed with the Trustee; (3) Such Parity Obligations are being issued or incurred either (i) for purposes of refunding incompliance with the requirements for the issuance of Refunding Bonds set forth in Section 3.04 or (ii) the Commission shall have placed on file with the Trustee a Certificate of the Commission, upon which the Trustee may conclusively rely certifying (on the basis of calculations made no later than the date of sale or incurrence of such Parity Obligations, as applicable) that the requirements set forth in Section 3.02(D) relating to the issuance of an additional Series of Bonds have been satisfied with respect to such Parity Obligations, which Certificate shall also set forth the computations upon which such Certificate is based; and (4) As and to the extent applicable, the Trustee shall be designated as paying agent or trustee for such Panty Obligations and the Commission shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Parity Obligations (but the Trustee shall not be responsible for the validity or sufficiency of such proceedings or such Parity Obligations). (D) Subordinate Obligations that are payable as to principal, premium, interest and reserve fund requirements, if any, only out of Sales Tax Revenues after the prior payment of all amounts then required to be paid hereunder from Sales Tax Revenues for principal, premium, interest and reserve fund requirements, if any, for all Bonds Outstanding, and all Parity Obligations outstanding, as the same become due and payable, and at the times and in the amounts as required in this Indenture and in the instrument or instruments pursuant to which any Parity Obligations were issued or incurred, provided that the following conditions to issuance or incurrence of such Subordinate Obligations are satisfied: (1) Such Subordinate Obligations have been duly and legally authorized by the Commission for any lawful purpose; (2) No Event of Default shall have occurred and then be continuing, as evidenced by the delivery to the Trustee of a Certificate of the Commission to that effect; and OHS West:260379475.5 30 112 • (3) As and to the extent applicable, the Trustee shall be designated as paying agent or trustee for such Subordinate Obligations and the Commission shall deliver to the Trustee a transcript of the proceedings providing for the issuance of such Subordinate Obligations (but the Trustee shall not be responsible for the validity or sufficiency of such proceedings or such Subordinate Obligations). Notwithstanding the foregoing, Notes and the credit agreements supporting the Notes may continue to be issued and outstanding from time to time under the Notes Indenture without complying with the foregoing provisions of (D). (E) Termination payments and fees and expenses on Interest Rate Swap Agreements, Liquidity Provider or Credit Provider fees and expenses and other obligations that may be secured by a lien and charge on the Revenues subordinate to the lien and charge upon the Revenues that secures the Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. (F) The Commission and the Trustee hereby acknowledge that the Initial Swaps have been entered into by the Commission and that the obligation of the Commission to make payments required under the Initial Swaps (excluding fees and expenses and termination payments under the Initial Swaps) constitute Parity Obligations hereunder. The obligation of the Commission to pay fees, expenses and termination payments under the Initial Swaps is secured by a lien and charge on the Sales Tax Revenues subordinate to the lien and charge upon the Sales Tax Revenues that secures the Bonds, Panty Obligations and payment of principal of and interest on Subordinate Obligations. SECTION 3.06 Calculation of Maximum Annual Debt Service with Respect to Bonds and Parity Obligations. For purposes of this Article III, Maximum Annual Debt Service with respect to Bonds shall be determined no later than the date of delivery of such Bonds, and no earlier than the sixtieth (60th) day preceding the date of pricing or sale of such Bonds, utilizing the assumptions set forth in the definition of Debt Service. For purposes of this Article III, Maximum Annual Debt Service with respect to Parity Obligations shall be determined no later than the date of incurrence of such Parity Obligations utilizing the assumptions set forth in the definition of Debt Service; provided, however, that if a Parity Obligation is contingent upon funds being provided pursuant to such Parity Obligation to pay principal, or purchase price of, or interest on a Bond, such Parity Obligations shall not be considered outstanding until such payment is made thereunder. SECTION 3.07 Application of Proceeds. Proceeds of each Series of Bonds shall be applied as specified in the Supplemental Indenture pursuant to which such Series of Bonds is issued. ARTICLE IV REDEMPTION, TENDER AND PURCHASE OF BONDS SECTION 4.01 Terms of Redemption, Tender and Purchase. Each Series of Bonds may be made subject to redemption or mandatory or optional tender and purchase prior to their OHS West260379475.5 31 113 respective stated maturities, as a whole or in part, at such time or times, upon such terms and conditions and upon such notice and with such effect as may be provided in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds. SECTION 4.02 Notice of Redemption. Unless otherwise specified in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds, each notice of redemption shall be mailed by the Trustee, not less than ten (10) nor more than sixty (60) days prior to the redemption date, to each Holder and each of the Repositories. A copy of such notice shall also be provided to each of the Notice Parties with respect to Series of Bonds to which such notice relates. Notice of redemption to the Holders, the Repositories and the applicable Notice Parties shall be given by fast class mail. Each notice of redemption shall state the date of such notice, the date of issue of the Series of Bonds to which such notice relates, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity, the distinctive certificate numbers of the Bonds of such maturity, if any, to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the Redemption Price thereof or of said specified portion of the principal amount thereof in the case of a Bond to. be redeemed in part only, together with interest accrued thereon to the date fixed for redemption, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Neither the Commission nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Commission nor the Trustee shall be liable for any inaccuracy in such CUSIP numbers. Failure by the Trustee to give notice to any Notice Party or any one or more of the Repositories or failure of any Holder, any Notice Party or any Repository to receive notice or any defect in any such notice shall not affect the sufficiency or validity of the proceedings for redemption. With respect to any notice of optional redemption of Bonds delivered pursuant to this Section 4.02 or any provision of any Supplemental Indenture, unless, upon the giving of such notice, such Bonds shall be deemed to have been paid within the meaning of Article X hereof, such notice shall state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of amounts sufficient to pay the principal of, and premium, if any, and interest on, such Bonds to be redeemed, and that if such amounts shall not have been so received said notice shall be of no force and effect and the Commission shall not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such amounts are not so received, the redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice to the Holders to the effect that such amounts were not so received and such redemption was not made, such notice to be given by the Trustee in the manner in which the notice of redemption was given. OHS West:260379475.5 32 114 • Any notice given pursuant to this Section 4.02 may be rescinded by written notice given to the Trustee by the Commission and the Trustee shall give notice of such rescission as soon thereafter as practicable in the same manner, and to the same Persons, as notice of such redemption was given pursuant to this Section 4.02. SECTION 4.03 Partial Redemption of Bonds Upon surrender of any Bond redeemed in part only, the Commission shall execute (but need not prepare) and the, Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Commission, a new Bond or Bonds of authorized denominations, and of the same Series, maturity and interest rate, equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. SECTION 4.04 Effect of. Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice together with interest accrued thereon to the redemption date, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest to the date fixed for redemption from funds held by the Trustee for such payment and such funds are hereby pledged to such payment. All Bonds redeemed pursuant to the provisions of this Article shall be canceled upon surrender thereof ARTICLE V SALES TAX REVENUES SECTION 5.01 Pledge of Revenues; Revenue Fund. (A) As security for the payment of all amounts owing on the Bonds and Parity Obligations, there are irrevocably pledged to the Trustee: (i) all Revenues; and (ii) all amounts, including proceeds of the Bonds, held on deposit in the funds and accounts established hereunder (except for amounts held in the Rebate Fund, any Letter of Credit Account and any Purchase Fund), subject to the provision of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture. The collateral identified above shall immediately be subject to this pledge, and this pledge shall constitute a first lien on and security interest in such collateral which shall immediately attach to the collateral and be effective, binding and enforceable against the Commission and all others asserting the rights therein, to the extent set forth, and in accordance with, this Indenture irrespective of whether those parties have notice of this pledge and without the need for any physical delivery, recordation, filing or further act. The pledge of Revenues and all amounts held on deposit in the funds and accounts established hereunder (except for amounts held in the Rebate Fund, any Letter of Credit Account and any Purchase Fund) herein made shall be irrevocable until all of the Bonds, all Parity Obligations and amounts owed in connection with the Bonds and Parity Obligations are no longer Outstanding. OHS West:2E6379475_5 33 115 All Bonds and Parity Obligations shall be of equal rank without preference, priority or distinction of any Bonds and Parity Obligations over any other Bonds and Panty Obligations. (B) As long as any Bonds are Outstanding or any Parity Obligations remain unpaid, the Commission hereby assigns and shall cause Sales Tax Revenues to be transmitted by the State Board of Equalization directly to the Trustee. The Trustee shall forthwith deposit in a trust fund, designated as the "Revenue Fund," which fund the Trustee shall establish and maintain, all Sales Tax Revenues, when and as received by the Trustee. The Sales Tax Revenues shall be received and held in trust by the Trustee for the benefit of the Holders of the Bonds and the Parity Obligations and shall be disbursed, allocated and applied solely for the uses and purposes set forth in this Indenture. Investment income on amounts held by the Trustee hereunder (other than amounts held in the Rebate Fund or for which particular instructions, such as with respect to a Project Fund, a Letter of Credit Account or a Purchase Fund, are provided in a Supplemental Indenture), shall also be deposited in the Revenue Fund. All moneys at any held in the Revenue Fund shall be held in trust for the benefit of the Holders of the Bonds and the holders of Parity Obligations and shall be disbursed, allocated and applied solely for the uses and purposes set forth in this Indenture: (C) The Bonds are limited obligations of the Commission and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from the Revenues and other funds pledged hereunder. SECTION 5.02 Allocation of Sales Tax Revenues. (A) So long as any Bonds are Outstanding and Panty Obligations, Subordinate Obligations, and all other amounts payable hereunder remain unpaid, the Trustee shall set aside in each month following receipt of the Sales Tax Revenues the moneys in the Revenue Fund in the following respective funds (each of which the Trustee shall establish, maintain and hold in trust for the benefit of the Holders of the Bonds and, as and to the extent applicable, the holders of Panty Obligations) in the following amounts, in the following order of priority, the requirements of each such fund (including the making up of any deficiencies in any such fund resulting from lack of Revenues sufficient to make any earlier required deposit) 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 any outstanding Panty Obligations as provided in the proceedings for such Panty Obligations delivered to the Trustee pursuant to Section 3.05 (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 Bonds and such Parity Obligations); provided further that payments on Interest Rate Swap Agreements that are payable on a parity with the Bonds shall be payable from the Interest Fund and the required deposits below shall be adjusted to include payments on such Interest Rate Swap Agreements in accordance with Section 5.10: (1) Interest Fund. Following receipt of the Sales Tax Revenues in each month, the Trustee shall set aside in the Interest Fund as soon as practicable in such month an amount equal to (a) one -sixth of the aggregate half -yearly amount of interest becoming due and payable on the Outstanding Current Interest Bonds (except for Bonds constituting Variable Rate Indebtedness which shall be governed by subparagraph (b) OHS West:260379475.5 34 116 • • • below) during the next ensuing six (6) months (excluding any interest for which there are moneys deposited in the Interest Fund from the proceeds of any Series of Bonds or other source and reserved as capitalized interest to pay such interest during said next ensuing six (6) months), until the requisite half -yearly amount of interest on all such Outstanding Current Interest Bonds (except for Bonds constituting Variable Rate Indebtedness which shall be governed by subparagraph (b) below) is on deposit in such fund; provided that from the date of delivery of a Series of Current Interest Bonds until the first Interest Payment Date with respect to such Series of Bonds the amounts set aside in such fund with respect to such Series of Bonds shall be sufficient on a monthly pro rata basis to pay the aggregate amount of interest becoming due and payable on said Interest Payment Date with respect to such Series of Bonds, plus (b) the aggregate amount of interest to accrue during that month on Outstanding Variable Rate Indebtedness, calculated, if the actual rate of interest is not known, at the interest rate specified in writing by the Commission, or if the Commission shall not have specified an interest rate in writing, calculated at the maximum interest rate borne by such Variable Rate Indebtedness during the month prior to the month of deposit plus one hundred (100) basis points (provided, however, that the amount of such deposit into the Interest Fund for any month may be reduced by the amount by which the deposit in the prior month exceeded the actual amount of interest accrued and paid during that month on said Outstanding Variable Rate Indebtedness and provided further that the amount of such deposit into the Interest Fund for any month shall be increased by the amount by which the deposit in the prior month was less than the actual amount of interest accruing during that month on said Outstanding Variable Rate Indebtedness). No deposit need be made into the Interest Fund if the amount contained therein is at least equal to the interest to become due and payable on the Interest Payment Dates falling within the next six (6) months upon all of the Bonds issued hereunder and then Outstanding and on June 1 and December, 1 of each year any excess amounts in the Interest Fund not needed to pay interest on such date (and not held to pay interest on Bonds having Interest Payment Dates other than June 1 and December 1) shall be transferred to the Commission (but excluding, in each case, any moneys on deposit in the Interest Fund from the proceeds of any Series of Bonds or other source and reserved as capitalized interest to pay interest on any future Interest Payment Dates following such Interest Payment Dates). All Swap Revenues received with respect to Interest Rate Swap Agreements that are Parity Obligations shall be deposited in the Interest Fund and credited to the above required deposits. (2) Principal Fund; Sinking Accounts. Following receipt of the Sales Tax Revenues in each month, the Trustee shall deposit in the Principal Fund as soon as practicable in such month an amount equal to at least (a) one -sixth of the aggregate semiannual amount of Bond Obligation becoming due and payable on the Outstanding Serial Bonds of all Series having semiannual maturity dates within the next six (6) months, plus (b) one -twelfth of the aggregate yearly amount of Bond Obligation becoming due and payable on the Outstanding Serial Bonds of all Series having annual maturity dates within the next twelve (12) months, plus (c) one -sixth of the aggregate of the Mandatory Sinking Account Payments to be paid during the next six-month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts have been created and for which semiannual mandatory redemption is required from said Sinking Accounts, plus (d) one -twelfth of the aggregate of the Mandatory OHS West:260379475.5 35 117 Sinking Account Payments to be paid during the next 12-month period into the respective Sinking Accounts for the Term Bonds of all Series for which Sinking Accounts shall have been created and for which annual mandatory redemption is required from such Sinking Accounts; provided that if the Commission certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from amounts on deposit in a Bond Reserve Fund that would be in excess of the Bond Reserve Requirement applicable to such Bond Reserve Fund upon such payment, no amounts need be set aside towards such principal to be so refunded or paid. All of the aforesaid deposits made in connection with future Mandatory Sinking Account Payments shall be made without priority of any payment into any one such Sinking Account over any other such payment. In the event that the Sales Tax Revenues shall not be sufficient to make the required deposits so that moneys in the Principal Fund on any principal or mandatory redemption date are equal to the amount of Bond Obligation to become due and payable on the Outstanding Serial Bonds of all Series plus the Bond Obligation amount of and redemption premium on the Outstanding Term Bonds required to be redeemed or paid at maturity on such date, then such moneys shall be applied on a Proportionate Basis and in such proportion as said Serial Bonds and said Tenn Bonds shall bear to each other, after first deducting for such purposes from said Term Bonds any of said Term Bonds required to be redeemed annually as shall have been redeemed or purchased during the preceding 12-month period and any of said Tenn Bonds required to be redeemed semiannually as shall have been redeemed or purchased during the six-month period ending on such date or the immediately preceding six month period. In the event that the Sales Tax Revenues shall not be sufficient to pay in full all Mandatory Sinking Account Payments required to be paid at any one time into all such Sinking Accounts, then payments into all such Sinking Accounts shall be made on a Proportionate Basis, in 'proportion that the respective Mandatory Sinking Account Payments required to be made into each Sinking Account during the then current 12-month period bear to the aggregate of all of the Mandatory Sinking Account Payments required to be made into all such Sinking Accounts during such 12-month period. No deposit need be made into the Principal Fund so long as there shall be in such fund (i) moneys sufficient to pay the Bond Obligations of all Serial Bonds issued hereunder and then Outstanding and maturing by their terms within the next twelve (12) months plus (ii) the aggregate of all Mandatory Sinking Account Payments required to be made in such 12-month period, but less any amounts deposited into the Principal Fund during such 12-month period and theretofore paid from the Principal Fund to redeem or purchase Tenn Bonds during such 12-month period; provided that if the Commission certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from amounts on deposit in a Bond Reserve Fund that would be in excess of the Bond Reserve Requirement applicable to such Bond Reserve Fund upon such payment, no amounts need be on deposit with respect to such principal payments. At the beginning of each Fiscal Year and in any event not later than June 1 of each year, the Trustee shall request from the Commission a Certificate of the Commission setting forth the principal payments for which deposits will not be necessary pursuant to the preceding sentence and the reason therefor. On June 1 of each year or as OHS West:260379475.5 36 118 • • soon as practicable thereafter any excess amounts in the Principal Fund not needed to pay principal on such date (and not held to pay principal on Bonds having principal payment dates other than June 1) shall be transferred to the Commission. (3) Bond Reserve Fund. Upon the occurrence of any deficiency in any Bond Reserve Fund, the Trustee shall make such deposit to such Bond Reserve Fund as is required pursuant to Section 5.05(D), each such deposit to be made as soon as possible in each month, until the balance therein is at least equal to the applicable Bond Reserve Requirement. (4) Subordinate Obligations Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Subordinate Obligations Fund." As long as any Subordinate Obligations remain unpaid, any Revenues remaining in the Revenue Fund after the transfers described in (1), (2) and (3) above have been made shall be transferred on the same Business Day to the Notes Trustee. After the Notes Trustee has made the required deposit of Revenues under the Notes Indenture, the Notes Trustee shall transfer any remaining Revenues back to the Trustee. (5) Fees and Expenses Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Fees and Expenses Fund." At the direction of the Commission, after the transfers described in (1), (2), (3) and (4) above have been made, the Trustee shall deposit as soon as practicable in each month in the Fees and Expenses Fund (i) amounts necessary for payment of fees, expenses and similar charges (including fees, expenses and similar charges relating to any Liquidity Facility or Credit Enhancement for the Bonds or any Parity Obligations) owing in such month or the following month by the Commission in connection with the Bonds or any Parity Obligations and (ii) amounts necessary for payment of fees, expenses and similar charges owing in such month or the following month by the Commission in connection with Subordinate Obligations. The Commission shall inform the Trustee of such amounts, in writing, on or prior to the first Business Day of each month. (B) Any Revenues remaining in the Revenue Fund after the foregoing transfers described in (1), (2), (3), (4) and (5) of subsection (A) above, except as the Commission shall otherwise direct in writing or as is otherwise provided in a Supplemental Indenture, shall be transferred to the Commission on the same Business Day or as soon as practicable thereafter. The Commission may use and apply the Revenues when received by it for any lawful purpose of the Commission, including the redemption of Bonds upon the terms and conditions set forth in the Supplemental Indenture relating to such Bonds and the purchase of Bonds as and when and at such prices as it may determine. (C) If five (5) days prior to any principal payment date, Interest Payment Date or mandatory redemption date the amounts on deposit in the Revenue Fund, the Interest Fund, the Principal Fund, including the Sinking Accounts therein, and, as and to the extent not required to satisfy the Bond Reserve Requirement following such payments, any Bond Reserve Fund established in connection with a Series of Bonds with respect to the payments to be made on such upcoming date are insufficient to make such payments, the Trustee shall immediately notify the Commission, in writing, of such deficiency and direct that the Commission transfer the OHS West:260379475.S 37 119 amount of such deficiency to the Trustee on or prior to such payment date. The Commission hereby covenants and agrees to transfer to the Trustee from any Revenues in its possession the amount of such deficiency on or prior to the principal, interest or mandatory redemption date referenced in such notice. SECTION 5.03 Application of Interest Fund. All amounts in the Interest Fund shall be used and withdrawn by the Trustee solely for the purposes of (a) paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to this Indenture), or for reimbursing the Credit Provider for a drawing for such purposes made on Credit Enhancement provided in the form of an irrevocable, direct -pay letter of credit, and (b) making periodic payments on Interest Rate Swap Agreements, as provided in Section 5.10. SECTION 5.04 Application of Principal Fund. (A) All amounts in the Principal Fund shall be used and withdrawn by the Trustee solely for the purposes of paying the Bond Obligation of the Bonds when due and payable, except that all amounts in the Sinking Accounts shall be used and withdrawn by the Trustee solely to purchase or redeem or pay at maturity Tenn Bonds, as provided herein, or for reimbursing the Credit Provider for a drawing for such purposes made on Credit Enhancement provided in the form of an irrevocable, direct -pay letter of credit. (B) The Trustee shall establish and maintain within the Principal Fund a separate account for the Term Bonds of each Series and maturity, designated as the " Sinking Account," inserting therein the Series and maturity designation of such Bonds. On or before the Business Day prior to any date upon which a Mandatory Sinking Account Payment is due, the Trustee shall transfer the amount of such Mandatory Sinking Account Payment (being the principal thereof, in the case of Current Interest Bonds, and the Accreted Value, in the case of Capital Appreciation Bonds) from the Principal Fund to the applicable Sinking Account. With respect to each Sinking Account, on each Mandatory Sinking Account Payment date established for such Sinking Account, the Trustee shall apply the Mandatory Sinking Account Payment required on that date to the redemption (or payment at maturity, as the case may be) of Term Bonds of such Series and maturity for which such Sinking Account was established, in the manner provided in this Indenture or the Supplemental Indenture pursuant to which such Series of Bonds was created; provided that, at any time prior to giving such notice of such redemption, the Trustee shall, upon receipt of a Request of the Commission, apply moneys in such Sinking Account to the purchase of Tenn Bonds of such Series and maturity at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as is directed by the Commission, except that the purchase price (excluding accrued interest, in the case of Current Interest Bonds) shall not exceed the principal amount or AccretedValue thereof. If, during the 12-month period (or six- month period with respect to Bonds having semi-annual Mandatory Sinking Account Payments) immediately preceding said Mandatory Sinking Account Payment date, the Trustee has purchased Term Bonds of such Series and maturity with moneys in such Sinking Account, or, during said period and prior to giving said notice of redemption, the Commission has deposited Term Bonds of such Series and maturity with the Trustee, or Term Bonds of such Series and maturity were at any time purchased or redeemed by the Trustee from the Redemption Fund and OHS Wes1:260379475.5 38 120 • allocable to said Mandatory Sinking Account Payment, such Term Bonds so purchased or deposited or redeemed shall be applied, to the extent of the full principal amount thereof, to reduce said Mandatory Sinking Account Payment. All Tenn Bonds purchased or deposited pursuant to this subsection shall be cancelled by the Trustee and destroyed by the Trustee and a certificate of destruction shall be delivered to the Commission by the Trustee. Any amounts remaining in a Sinking Account on June 1 of each year following the redemption as of such date of the Term Bonds for which such account was established shall be withdrawn by the Trustee and transferred as soon as practicable to the Commission to be used for any lawful purpose. All Term Bonds purchased from a Sinking Account or deposited. by the Commission with the Trustee in a twelve month period ending May 31 (or in a six-month period ending May 31 or September 30 with respect to Bonds having semi-annual Mandatory Sinking Account Payments) and prior to the giving of notice by the Trustee for redemption from Mandatory Sinking Account Payments for such period shall be allocated first to the next succeeding Mandatory Sinking Account Payment for such Series and maturity of Tenn Bonds, if any, occurring on the next June 1 or December 1, then as a credit against such future Mandatory Sinking Account Payments for such Series and maturity of Tenn Bonds as may be specified in a Request of the Commission. All Tenn Bonds redeemed by the Trustee from the Redemption Fund shall be credited to such future Mandatory Sinking Account Payments for such Series and maturity of Tenn Bonds as may be specified in a Request of the Commission. SECTION 5.05 Establishment, Funding and Application of Bond Reserve Funds. The Commission may at its sole discretion at the time of issuance of any Series of Bonds or at any time thereafter by Supplemental Indenture provide for the establishment of a Bond Reserve Fund as additional security for a Series of Bonds. Any Bond Reserve Fund so established by the Commission shall be available to secure one or more Series of Bonds as the Commission shall determine and shall specify in the Supplemental Indenture establishing such Bond Reserve Fund. Any Bond Reserve Fund established by the Commission shall be held by the Trustee and shall comply with the requirements set forth in this Section 5.05. (A) In lieu of making the Bond Reserve Requirement deposit applicable to one or more Series of Bonds in cash or in replacement of moneys then on deposit in any Bond Reserve Fund (which shall be transferred by the Trustee to the Commission), or in substitution of any Reserve Facility comprising part of the Bond Reserve Requirement relating to one or more Series of Bonds, the Commission may, at any time and from time to time, deliver to the Trustee an irrevocable letter of credit issued by a financial institution having unsecured debt obligations rated at the time of delivery of such letter of credit in one of the two highest Rating Categories of Moody's and Standard & Poor's, in an amount, which, together with cash, Investment Securities or other Reserve Facilities, as described in Section 5.05(B), then on deposit in such Bond Reserve Fund, will equal the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates. Such letter of credit shall have a term no less than three (3) years or, if less, the fmal maturity of the Bonds in connection with which such letter of credit was obtained and shall provide by its terms that it may be drawn upon as provided in this Section 5.05_ At least one (1) year prior to the stated expiration of such letter of credit, the Commission shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least one (1) additional year or, if less, the fmal maturity of the Bonds in connection with which such letter of credit was obtained, or (iii) deliver to the Trustee a Reserve Facility satisfying the requirements of Section 5.05(B). Upon delivery of such replacement Reserve OHS West:260379475.5 39 121 Facility, the Trustee shall deliver the then -effective letter of credit to or upon the order of the Commission. If the Commission shall fail to deposit a replacement Reserve Facility with the Trustee, the Commission shall immediately commence to make monthly deposits with the Trustee so that an amount equal to the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates will be on deposit in such Bond Reserve Fund no later than the stated expiration date of the letter of credit. If an amount equal to the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates as of the date following the expiration of the letter of credit is not on deposit in such Bond Reserve Fund one (1) week prior to the expiration date of the letter of credit (excluding from such determination the letter of credit), the Trustee shall draw on the letter of credit to fimd the deficiency resulting therefrom in such Bond Reserve Fund. (B) In lieu of making a Bond Reserve Requirement deposit in cash or in replacement of moneys then on deposit in a Bond Reserve Fund (which shall be transferred by the Trustee to the Commission) or in substitution of any Reserve Facility comprising part of a Bond Reserve Requirement for any Bonds, the Commission may, at any time and from time to time, deliver to the Trustee a surety bond or an insurance policy securing an amount which, together with moneys, Investment Securities, or other Reserve Facilities then on deposit in a Bond Reserve Fund, is no less than the Bond Reserve Requirement relating to the Bonds to which such Bond Reserve Fund relates. Such surety bond or insurance policy shall be issued by an insurance company whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies) are rated at the time of delivery in one of the two highest Rating Categories of Moody's and Standard & Poor's. Such surety bond or insurance policy shall have a term of no less than the final maturity of the Bonds in connection with which such surety bond or insurance policy is obtained. In the event that such surety bond or insurance policy for any reason lapses or expires, the Commission shall immediately implement (i) or (iii) of the preceding paragraph or make twelve equal monthly deposits to such Bond Reserve Fund so that the Bond Reserve Fund is replenished to the required level after a year. (C) Subject to Section 5.05(E), all amounts in any Bond Reserve Fund (including all amounts which may be obtained from a Reserve Facility on deposit in such Bond Reserve Fund) shall be used and withdrawn by the Trustee, as hereinafter provided: (i) for the purpose of making up any deficiency in the Interest Fund or the Principal Fund relating to the Bonds of the Series to which such Bond Reserve Fund relates; or (ii) together with any other moneys available therefor, (x) for the payment or redemption of all Bonds then Outstanding of the Series to which such Bond Reserve Fund relates, (y) for the defeasance or redemption of all or a portion of the Bonds then Outstanding of the Series to which such Bond Reserve Fund relates, provided, however, that if funds on deposit in any Bond Reserve Fund are applied to the defeasance or redemption of a portion of the Series of Bonds to which such Bond Reserve Fund relates, the amount on deposit in the Bond Reserve Fund immediately subsequent to such partial defeasance or redemption shall equal the Bond Reserve Requirement applicable to all Bonds of such Series Outstanding immediately subsequent to such partial defeasance or redemption, or (z) for the payment of the fmal principal and interest payment of. the Bonds of such Series. Unless otherwise directed in a Supplemental Indenture establishing the terms and provisions of a Series of Bonds, the Trustee shall apply amounts held in cash or Investment Securities in any Bond Reserve Fund prior to applying amounts held in the form of Reserve Facilities in any Bond Reserve Fund, and if there is more than one Reserve Facility being held on deposit in any Bond OHS West:260379475.5 40 122 i Reserve Fund, shall, on a pro rata basis with respect to the portion of a Bond Reserve Fund held in the form of a Reserve Facility (calculated by reference to the maximum amount of such Reserve Facility), draw under each Reserve Facility issued with respect to such Bond Reserve Fund, in a timely manner and pursuant to the terms of such Reserve Facility to the extent necessary in order to obtain sufficient funds on or prior to the date such funds are needed to pay the Bond Obligation of, Mandatory Sinking Account Payments with respect to, and interest on the Bonds of the Series to which such Bond Reserve Fund relates when due. In the event that the Trustee has notice that any payment of principal of or interest on a Bond has been recovered from a Holder pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the fmal, nonappealable order of a court having competent jurisdiction, the Trustee, pursuant to the terms of, and if so provided by, the terms of the Reserve Facility, if any, securing the Bonds of such Series, shall so notify the issuer thereof and draw on such Reserve Facility to the lesser of the extent required or the maximum amount of such Reserve Facility in order to pay to such Holders the principal and interest so recovered. (D) The Trustee shall notify the Commission of any deficiency in any Bond Reserve Fund (i) due to a withdrawal from such Bond Reserve Fund for purposes of making up any deficiency in the Interest Fund or the Principal Fund relating to the Bonds of the Series to which such Bond Reserve Fund relates or (ii) resulting from a valuation of Investment Securities held on deposit in such Bond Reserve Fund pursuant to Section 5.11 and shall request that the Commission replenish such deficiency or repay any and all obligations due and payable under the terms of any Reserve Facility comprising part of any Bond Reserve Requirement. Upon receipt of such notification from the Trustee, the Commission shall instruct the Trustee to commence setting aside in each month following receipt of Sales Tax Revenues for deposit in the applicable Bond Reserve Fund an amount equal to one -twelfth (1/12th) of the aggregate amount of each unreplenished prior withdrawal from such Bond. Reserve Fund or decrease resulting from a valuation pursuant to Section 5.11 and shall further instruct the Trustee to. transfer to each Reserve Facility Provider providing a Reserve Facility satisfying a portion of the Bond Reserve Requirement relating to the Bonds of the Series to which such Bond Reserve Fund relates, an amount equal to one -twelfth (1/12th) of the aggregate amount of any unreplenished prior withdrawal on such Reserve Facility, such amount to be transferred by the Trustee as promptly as possible after receipt of the Sales Tax Revenues each month, commencing with the month following the Commission's receipt of notification from the Trustee of withdrawal or decrease resulting from a valuation, as applicable, until the balance on deposit in such Bond Reserve Fund is at least equal to the Bond Reserve Requirement relating to the Bonds of the Series to which such Bond Reserve Fund relates. (E) Unless the Commission shall otherwise direct in writing, any amounts in any Bond Reserve Fund in excess of the Bond Reserve Requirement relating to the Bonds of the Series to which such Bond Reserve Fund relates shall be transferred by the Trustee to the Commission on the Business Day following June 1 of each year; provided that such amounts shall be transferred only from the portion of such Bond Reserve Fund held in the form of cash or Investment Securities. In addition, amounts on deposit in any Bond Reserve Fund shall be transferred by the Trustee to the Commission upon the defeasance, retirement or refunding of Bonds of the Series to which such Bond Reserve Fund relates or upon the replacement of cash on deposit in such Bond Reserve Fund with one or more Reserve Facilities in accordance with Section 5.05(A) or Section 5.05(B). The Bond Reserve Requirement is only required to be OHS West:260379475.5 41 123 calculated upon the issuance or retirement of a Series of Bonds or upon the defeasance of all or a portion of a Series of Bonds. SECTION 5.06 Application of Subordinate Obligations Fund. All moneys in the Subordinate Obligations Fund shall be applied to the payment of principal of and interest on Subordinate Obligations in accordance with Section 5.02(A)(4). SECTION 5.07 Application of Fees and Expenses Fund. All amounts in the Fees and Expenses Fund shall be used and withdrawn by the Trustee solely for the purpose of paying fees, expenses and similar charges owed by the Commission in connection with the Bonds or any Parity Obligations or Subordinate Obligations as such amounts shall become due and payable. SECTION 5.08 Application of Redemption Fund. The Trustee shall establish; maintain and hold in trust a special fund designated as the "Redemption Fund." All moneys deposited by the Commission with the Trustee for the purpose of optionally redeeming Bonds of any Series shall, unless otherwise directed by the Commission, be deposited in the Redemption Fund. All amounts deposited in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds of such Series and maturity as shall be specified by the Commission in a Request to the Trustee, in the manner, at the times and upon the terms and conditions specified in the Supplemental Indenture pursuant to which the Series of Bonds was created; provided that, at any time prior to giving such notice of redemption, the Trustee shall, upon receipt of a Request of the Commission, apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding, in the case of Current Interest Bonds, accrued interest, which is payable from the Interest Fund) as is directed by the Commission, except that the purchase price (exclusive of any accrued interest) may not exceed the Redemption Price or Accreted Value then applicable to such Bonds. All Term Bonds purchased or redeemed from the Redemption Fund shall be allocated to Mandatory Sinking Account Payments applicable to such Series and maturity of Tenn Bonds as may be specified in a Request of the Commission. SECTION 5.09 Rebate Fund. (A) Upon receipt of funds to be applied to the Rebate Requirement, 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 shall be necessary in order to comply with the terms and requirements of each Tax Certificate as directed in writing by the Commission. Subject to the transfer provisions provided in paragraph (C) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the federal government of the United States of America, and neither the Trustee nor any Holder nor any other Person 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 the applicable the Tax Certificates. The Commission 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 Commission 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 OHS Wes1260379475.5 42 124 • • • conclusively to have complied with the provisions of this Section 5.09(A) if it follows such instructions of the Commission, and the Trustee shall have no liability or responsibility to enforce compliance by the Commission with the terms of any Tax Certificate nor to make computations in connection therewith. (B) Pursuant to each Tax Certificate, an amount shall be deposited in the Rebate Fund by the Commission so that the balance of the amount on deposit thereto shall be equal to the Rebate Requirement applicable to the Series of Bonds to which such Tax Certificate relates. Computations of each Rebate Requirement shall be furnished by or on behalf of the Commission to the Trustee in accordance with the applicable Tax Certificate. (C) The Trustee shall invest all amounts held in the Rebate Fund, pursuant to written instructions of the Commission, in Investment Securities, subject to the restrictions set forth in the applicable Tax Certificate. Money shall not be transferred from the Rebate Fund except as provided in paragraph (D) below. (D) Upon receipt of Rebate Instructions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States of America, as so directed. In addition, if the Rebate Instructions so direct, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed by the Rebate Instructions. Any funds remaining in the Rebate Fund after redemption and payment of all of a Series of Bonds and payment and satisfaction of any Rebate Requirement applicable to such Series of Bonds, shall be withdrawn and remitted to the Commission in accordance with a Request of the Commission. (E) Notwithstanding any other provision of the Indenture, including in particular Article X thereof, the obligation to remit the Rebate Requirement applicable to each Series of Bonds 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 Bonds. SECTION 5.10 Payment Provisions Applicable to Interest Rate Swap Agreements. The Commission and the Trustee hereby acknowledge that the Initial Swaps have been entered into by the Commission and that the obligation of the Commission to make payments required under the Initial Swaps (excluding fees and expenses and termination payments under the Initial Swaps) constitute Parity Obligations hereunder following the effective date thereof and shall be payable from the Interest Fund. In the event the Commission shall enter into an Interest Rate Swap Agreement in connection with a Series of Bonds other than the Initial Swaps, the amounts received by the Commission, if any, pursuant to such Interest Rate Swap Agreement may be applied to the deposits required hereunder. If the Commission so designates in a Supplemental Indenture establishing the terms and provisions of such Series of Bonds (or if such Interest Rate Swap Agreement is entered into subsequent to the issuance of such Series of Bonds, if the Commission so designates in a Certificate of the Commission delivered to the Trustee concurrently with the execution of such Interest Rate Swap Agreement), amounts payable under such Interest Rate Swap Agreement (excluding termination payments and payments of fees and expenses incurred in connection with Interest Rate Swap Agreements which shall in all cases be payable from, and secured by, Sales Tax Revenues on a subordinate basis to Bonds, Parity OHS West:260379475.5 43 125 Obligations and payment of principal of and interest on Subordinate Obligations) shall constitute Panty Obligations under this Indenture, and, in such event, the Commission shall pay or cause to be paid to the Trustee for deposit in the Interest Fund, at the times and in the manner provided by Section 5.02, the amounts to be paid pursuant to such Interest Rate Swap Agreement, as if such amounts were additional interest due on the Series of Bonds to which such Interest Rate Swap Agreement relates, and the Trustee shall pay to the Counterparty to such Interest Rate Swap Agreement, to the extent required thereunder, amounts deposited in the Interest Fund for the payment of interest on the Series of Bonds with respect to which such Interest Rate Swap Agreement was entered into. SECTION 5.11 Investment in Funds and Accounts. All moneys in any of the funds and accounts held by the Trustee and established pursuant to this Indenture shall be invested, as directed by the Commission, solely in Investment Securities. All Investment Securities shall, as directed by the Commission in writing or by telephone, promptly confirmed in writing, be acquired subject to the limitations set forth in Section 6.08, 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 Commission,. If and to the extent the Trustee does not receive investment instructions from the Commission 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 (12) of the definition thereof and the Trustee shall thereupon request investment instructions from the Commission for such moneys. Moneys in any Bond Reserve Fund shall be invested in Investment Seemities available on demand for the purpose of payment of the Bonds to which such Bond Reserve Fund relates as provided herein. 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 establishing the terms and provisions of a Series of Bonds: (i) all interest, profits and other income received from the investment of moneys in the Interest Fund representing accrued interest or capitalized interest shall be retained in the Interest Fund; (ii) all interest, profits and other income received from the investment of moneys in a Bond Reserve Fund shall be retained in such Bond Reserve Fund to the extent of any deficiency therein, and otherwise shall be transferred to the Revenue Fund; (iii) all interest, profits and other income received from the investment of moneys in a Costs of Issuance Fund shall be transferred to the Revenue Fund; (iv) all interest, profits and other income received from the investment of moneys in a Project Fund shall be retained in such Project Fund, unless the Commission shall direct that such earnings be transferred to the Rebate Fund; (v) all interest, profits and other income received from the investment of moneys in the Rebate Fund shall be retainedin the Rebate Fund, except as otherwise provided in Section 5.09, (vi) all interest, profits and other income received from the investment of moneys in any Purchase Fund shall be retained in such Purchase Fund; and (vii) all interest, profits and other income received from the investment of moneys in any other fund or account shall be transferred to the Revenue Fund. 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, OHS West:260379475.5 44 126 • 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. All Investment Securities credited to any Bond Reserve Fund shall be valued (at market value) as of June 1 and December l of each year (or the next succeeding Business Day if such day is not a Business Day), such market value to be determined by the Trustee in the manner then currently employed by the Trustee or in any other manner consistent with corporate trust industry standards. Notwithstanding anything to the contrary herein, in making any valuations of. investments hereunder, the Trustee may utilize and rely on computerized securities pricing services that may be available to it, including those available through its regular accounting system. The Trustee may commingle any of the funds or accounts established pursuant to this Indenture (except the Rebate Fund and any Purchase 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 may act as principal or agent in the making or disposing of any investment and, with the prior written consent of the Commission may impose its customary charge therefor. The Trustee may sell at the best price obtainable, 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. The Trustee shall not be liable or responsible for any loss resulting from any investment made in accordance herewith. ARTICLE VI COVENANTS OF THE COMMISSION SECTION 6.01 Punctual Payments. The Commission will punctually pay or cause to be paid the principal or Redemption Price of and interest on all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, and shall punctually pay or cause to be paid all Mandatory Sinking Account Payments, but in each case only out of Revenues as provided in this Indenture. SECTION 6.02 Extension of Payment of Bonds. The Commission will not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any Bonds or claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds 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 Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Commission to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of Bonds. OHS West:260379475.5 45 127 SECTION 6.03Waiver of haws. The Commission 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 of law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Commission to the extent permitted by law. SECTION 6.04 Further Assurances. The Commission 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 Holders of the Bonds of the rights and benefits provided in this Indenture. SECTION 6.05 Against Encumbrances. The Commission will not create any pledge, lien or charge upon any of the Sales Tax Revenues having priority over or having parity with the lien of the Bonds except only as permitted in Section 3.05. SECTION 6.06 Accounting Records and Financial Statements: (A) The Commission 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 Revenues. Such books of record and account shall be available for inspection by the Trustee at reasonable hours and under reasonable circumstances. (B) The Commission will furnish the Trustee, within two hundred ten (210) days after the end of each Fiscal Year or as soon thereafter as can practically be furnished, the financial statements of the Commission 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 an Authorized Representative 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 Commission to cure such default. Thereafter, a copy of such fmancial statements will be furnished to any Holder upon written request to the Commission, which copy of the financial statements may, at the sole discretion of the Commission, be provided by means of posting such financial statements on an internet site that provides access to the Holders. SECTION 6.07 Collection of Sales Tax Revenues. (A) The Commission covenants and agrees that it has duly levied a retail transactions and use tax in accordance with the Act, pursuant to and in accordance with the Ordinance, duly passed and adopted by the Commission. Said Ordinance has not and will not be amended, modified or altered so long as any of the Bonds are Outstanding in any manner which would reduce the amount of or timing of receipt of Sales Tax Revenues, and the Commission will continue to levy and collect such retail transactions and use tax to the full amount permitted by OHS West:260379475.5 46 128 • law. The Commission further covenants that it has entered into an agreement with the State Board of Equalization under and pursuant to which the State Board of Equalization will process and supervise collection of said retail transactions and use tax and will transmit Sales Tax Revenues directly to the Trustee. Said agreement will be continued in effect so long as any Bonds are Outstanding and shall not be amended, modified or altered without the written consent of the Trustee so long as any of the Bonds are Outstanding. The Commission will receive and hold in trust for (and remit immediately to) the Trustee any Sales Tax Revenues paid to the Commission by the State Board of Equalization. (B) Sales Tax Revenues received by the Trustee shall be transmitted to the Commission pursuant to Section 5.02; provided that, during the continuance of an Event of Default, any Sales Tax Revenues received by the Trustee shall be applied as set forth in Section 7.02. (C) The Commission 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 Commission covenants that so long as the Bonds are Outstanding, it 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 Bondholders. SECTION 6.08 Tax Covenants. The Commission 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 Bonds under Section 103 of the Code; provided that, prior to the issuance of any Series of Bonds, the Commission may exclude the application of the covenants contained in this Section 6.08 and Section 5.09 to such Series of Bonds. The Commission will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Commission, or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. To that end, the Commission will comply with all requirements of the Tax Certificate relating to each Series of the Bonds. In the event that at any time the Commission is of the opinion that for purposes of this Section 6.08 it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under this Indenture, the Commission shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. Without limiting the generality of the foregoing, the Commission agrees that there shall be paid from time to time all amounts required to be rebated to the federal government of the United States of America pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds from time to time. The Commission specifically covenants to pay or cause to be paid to the federal government of the United States of America the Rebate Requirement with respect to each Series of Bonds at the times and in the amounts determined under and as described in the Tax Certificate executed and delivered in connection with such Series of Bonds. OHS West:260379475.5 47 129 Notwithstanding any provision of this Section 6.08, Section 5.09 and any Tax Certificate, if the Commission shall receive an Opinion of Bond Counsel to the effect that any action required under this Section 6.08, Section 5.09 or any Tax Certificate 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 Bonds pursuant to Section 103 of the Code, the Commission 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. Notwithstanding any provisions of this Indenture, including particularly Article X, the covenants and obligations set forth in this Section 6.08 shall survive the defeasance of the Bonds or any Series thereof. SECTION 6.09 Continuing Disclosure. Upon the issuance of any Series of Bonds requiring an undertaking regarding continuing disclosure under Rule 15c2-12, the Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement executed and delivered in connection with such Series of Bonds. Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the provisions of any Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee shall, at the written request of any Participating Underwriter or of the Holders of at least twenty-five (25%) aggregate principal amount of any Series of Bonds then Outstanding (but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, reasonable fees and expenses of its attorneys), or any Holder or beneficial owner may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Section 6.09. SECTION 7.01 Default: ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Events of Default. The following events shall be Events of (A) default in the due and punctual payment of the principal or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise, or default in the redemption from any Sinking Account of any Bonds in the amounts and at the times provided therefor; (B) default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable; (C) if the Commission 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 OHS West:260379475-5 48 • 130 • notice, specifying such failure and requesting that it be remedied, has been given to the Commission by the Trustee or by any Credit Provider; except that, if such failure can be remedied but not within such sixty (60) day period and if the Commission 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 Commission shall diligently proceed to remedy the same in accordance with and subject to any directions or limitations of time established by the Trustee; (D) if any payment default shall exist under any agreement governing any Parity Obligations and such default shall continue beyond the grace period, if any, provided for with respect to such default; (E) if the Commission 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; (F) if a court of competent jurisdiction shall enter an order, judgment or decree declaring the Commission insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the Commission, or approving a petition filed against the Commission seeking reorganization of the Commission 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; (G) 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 Commission 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; or (H) if the Legislature of the State shall repeal or amend all or any portion of the provisions of the Act relating to the retail transactions and use tax, being Sections 240300 to 240323, inclusive, of the Public Utilities Code of the State unless the Commission has determined that said repeal or amendment does not materially and adversely affect the rights of Bondholders. SECTION 7.02 Application of the Revenues and Other Funds After Default; No Acceleration. If an Event of Default shall occur and be continuing, the Commission shall immediately transfer to the Trustee all Revenues held by it 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 (excluding the Rebate Fund and any Purchase Fund and 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 Holders of the Bonds and Parity Obligations, including the costs and expenses of the Trustee and the Bondholders in declaring such Event of Default, and payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its OHS Wesc260379475.5 49 131 counsel and other agents) incurred in and about the performance of its powers and duties under this Indenture; (2) to the payment of the whole amount of Bond Obligation then due on the Bonds and Parity Obligations (upon presentation of the Bonds and Panty Obligations to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture (including Section 9.02), with interest on such Bond Obligation, at the rate or rates of interest borne by the respective Bonds and on Parity Obligations, to the payment to the persons entitled thereto of all installments of interest then due and the unpaid principal or Redemption Price of any Bonds and Parity Obligations which shall have become due, whether at maturity, by call for redemption or otherwise, in the order of their due dates, with interest on the overdue Bond Obligation and Parity Obligations at the rate home by the respective Bonds and Parity Obligations, and, if the amount available shall not be sufficient to pay in full all the Bonds and Parity Obligations due on any date, together with -such interest, then to the payment thereof ratably, according to the amounts of principal or Accreted Value (plus accrued interest) due on such date to the persons entitled thereto, without any discrimination or preference; (3) to the extent Revenues are available therefor, to be transferred to the trustee for the Subordinate Obligations in the amount necessary for payment of Subordinate Obligations; and (4) to the payment of all other obligations payable hereunder. Notwithstanding anything in this Indenture to the contrary, in no event are the Bonds subject to acceleration if an Event of Default occurs and is continuing. SECTION 7.03 Trustee to Represent Bondholders. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney -in -fact of the Holders of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions of the Bonds, this Indenture, the Act and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and, with respect to any Series of Bonds for which a Credit Enhancement has been provided, upon the written request of the Credit Provider providing such Credit Enhancement, or if such Credit Provider is then failing to make a payment required pursuant to such Credit Enhancement, upon the written request of the Holders of not less than a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall proceed to protect or enforce its rights or the rights of such Holders 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 Holders 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 OBS West:260379475.5 50 132 • receiver of the Sales Tax Revenues and other assets pledged under this Indenture, pending such proceedings; provided, however, that, with respect to any Series of Bonds for which a Credit Enhancement has been provided, the Trustee may only act with the consent of the Credit Provider providing such Credit Enhancement. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds 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 Holders of such Bonds, subject to the provisions of this Indenture (including Section 7.05). SECTION 7.04 Bondholders' Direction of Proceedings. Anything in this Indenture to the contrary (except provisions relating to the rights of a Credit Provider to direct proceedings as set forth in Section 7.10) notwithstanding, the Holders of a majority in aggregate amount of Bond Obligation of the Bonds 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 Bondholders or holders of Parity Obligations not parties to such direction. SECTION 7.05 Limitation on Bondholders' Right to Sue. No Holder of any Bond 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, the Act or any other applicable law with respect to such Bond, unless: (1) such Holder shall have given to the Trustee written notice of tCte occurrence of an Event of Default; (2) the Holders of not less than a majority in aggregate amount of Bond Obligation of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Holder or said Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (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; provided, however, that the written consent of a Credit Provider providing a Credit Enhancement with respect to a Series of Bonds shall be required if the Credit Enhancement with respect to such Series of Bonds is in full force and effect and if the Credit Provider providing such Credit Enhancement is not then failing to make a payment as required in connection therewith. 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 Holder of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Holders of Bonds 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 Holders of Bonds, or to enforce any right under this Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such OHS West260379475.5 51 133 right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Holders of the Outstanding Bonds, subject to the provisions of this Indenture. SECTION 7.06 Absolute Obligation of the Commission. Nothing in Section 7.05 or in any other provision of this Indenture, or in the Bonds, contained shall affect or impair the obligation of the Commission, which is absolute and unconditional, to pay the principal or Redemption Price of and interest on the Bonds to the respective Holders of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. SECTION 7.07 Termination of Proceedings. In case any proceedings taken by the Trustee, any Credit Provider or any one or more Bondholders 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, any Credit Provider or the Bondholders, then in every such case the Commission, the Trustee, each Credit Provider and the Bondholders, 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 Commission, the Trustee, each Credit Provider and the Bondholders 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, to any Credit Provider or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent 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 No Waiver of Default. No delay or omission of the Trustee, any Credit Provider or of any Holder of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee, to any Credit Provider or to the Holders of the Bonds may be exercised from time to time and as often as may be deemed expedient. No waiver of any Event of Default hereunder, whether by Trustee or by any Credit Pmvider or by the Bondholders, shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent thereon. SECTION 7.10 Credit Provider Directs Remedies Upon Event of Default. Anything in the Indenture to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default as defined herein, the Credit Provider then providing Credit Enhancement for any Series of Bonds shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders of the. Bonds secured by such Credit Enhancement or granted to the Trustee for the benefit of the Holders of the Bonds secured by such Credit Enhancement, provided that the Credit Provider's consent shall not be required as otherwise provided herein unless the Credit Enhancement is in full force and effect and such Credit Provider is not in OHS West:2603794755 52 134 • • default of any of its payment obligations as set forth in the Credit Enhancement provided by such Credit Provider. ARTICLE VIII THE TRUSTEE SECTION 8.01 Appointment, Duties Immunities and Liabilities of Trustee. (A) U.S. Bank National Association is hereby appointed as Trustee under this Indenture and hereby accepts the trust imposed upon it as Trustee hereunder and 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 any Event of Default (which has 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 of his or her own affairs. (B) The Commission 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 the Holders of not less than a majority in aggregate amount of Bond Obligation of the Bonds 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 each Credit Provider then providing a Credit Enhancement for any Series of Bonds, 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 Commission and each Credit Provider then insuring any Series of Bonds and by giving the Bondholders notice of such resignation by mail at the addresses shown on the registration books maintained by the Trustee. Upon receiving such notice of resignation, the Commission 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 forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bondholder (on behalf of himself and all other Bondholders) 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 OHS West:260379475_5 53 135 appointment by executing and delivering to the Commission, each Credit Provider then insuring. any Series of Bonds 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 Commission 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 Commission shall execute and deliver any and all instruments as may be reasonably required for more frilly 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 Commission shall give notice of the succession of such Trustee to the trusts hereunder by mail to the Bondholders at the addresses shown on the registration books maintained by the Trustee. If the Commission fails to mail such notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Commission. (E) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company or bank having the powers of a trust company having (or, if such trust company or bank is a member of a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least one hundred million dollars ($100,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company or bank holding company publishes 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 immediately in the manner and with the effect specified in this Section. SECTION 8.02 Accounting Records and Monthly Statements. The Trustee shall keep proper books of record and accounts containing complete and correct entries of all transactions relating to the receipt, investment, disbursement, allocation and application of the moneys related to the Bonds, including proceeds of each Series of Bonds and moneys derived from, pledged to, or to be used to make payments on each Series of Bonds. Such records shall specify the account or fund to which each. deposit and each investment (or portion thereof) held by the Trustee is allocated and shall set forth, in the case of each investment security, (a) its purchase price, (b) identifying information, including par amount, coupon rate, and payment dates, (c) the amount received at maturity or its sale price, as the case may be, including accrued interest, (d) the amounts and dates of any payments made with respect thereto, and (e) the dates of acquisition and disposition or maturity. The Trustee shall furnish the Commission with a monthly statement which shall include a summary of all deposits and all investment transactions related to each Series of Bonds then Outstanding, such statement to be provided to the OHS Wesb260379475.5 54 136 • Commission no later than the fifth (5th) Business Day of the month following the month to which such statement relates, the first such monthly statement to be provided by the fifth (5th) Business Day of the month immediately following the month in which the 2008 Bonds are delivered by the Trustee pursuant to the provisions of this Indenture. SECTION 8.03 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 8.04 Liability of Trustee. (A) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Commission, and the Trustee assumes no responsibility for the correctness of the same (other than the certificate of authentication of the Trustee on each Bond), and makes no representations as to the validity or sufficiency of this Indenture, or of the Bonds, as to the sufficiency of the Revenues or the priority of the lien of this Indenture thereon, or as to the fmancial 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 Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence, willful misconduct or breach of the express terms and conditions hereof. The Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Holder of a Bond 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 Commission, own, accept or negotiate any drafts, bills of exchange, acceptances or obligations of the Commission and make disbursements for the Commission 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. (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 Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding 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. OHS Wesr260379475.5 55 137 (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 Credit Provider or any of the Bondholders pursuant to the provisions of this Indenture, including, without limitation,the provisions of Article VII hereof, unless such Credit Provider or such Bondholders 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; provided, however, that no security or indemnity shall be requested or required for the Trustee to deliver a notice to obtain funds under the Credit Enhancement delivered in connection with any Series of Bonds in order to pay principal of and interest on such Series of Bonds. (E) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any fmancial liability in the performance or exercise of any of its duties hereunder or in the exercise of its rights or powers. (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 that 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 Commission, any Credit Provider then providing a Credit Enhancement for a Series of Bonds or the Holders of twenty-five percent (25%) of the Bond Obligation 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 Commission of the terms, conditions, covenants or agreements set forth in Article VI hereof (including, without limitation, the covenants of the Commission set forth in Section 5.09 and 6.08 hereof, other than the covenants of the Commission to make payments with respect to the Bonds when due as set forth in Section 6.01 and to file with the Trustee when due, such reports and certifications as the Commission 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, requisition, 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 Commission, personally or by agent or attorney. (I) The Trustee shall not be responsible for. (1) the application or handling by the Commission of any Revenues or other moneys transferred to or pursuant to any Requisition or Request of the Commission in accordance with the terms and conditions hereof; OHS West:260379475.5 56 138 • (2) the application and handling by the Commission of any other fund or account designated to be held by the Commission hereunder; (3) any error or omission by the Commission in making any computation or giving any instruction pursuant to Section 5.09 and Section 6.08 and may rely conclusively on the Rebate Instructions and any computations or instructions furnished to it by the Commission in connection with the requirements of Section 5.09, Section 6.08 and each Tax Certificate; (4) the construction, operation or maintenance of any portion of the Project by the Commission. (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. (K) The Trustee agrees to accept and act upon written instructions and/or directions provided by Electronic Means pursuant hereto, provided, however, that: (i) subsequent to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith receive the originally executed instructions and/or directions, and (ii) such originally executed instructions and/or directions shall be signed on behalf of the Commission by an Authorized Representative and shall be signed on behalf of any other party by a person authorized to sign for the party delivering such instructions and/or directions, which person shall provide such documentation as the Trustee shall request in order to evidence such authorization. SECTION 8.05 Right of Trustee to Rely on Documents and Opinions. 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 Commission, and may request an opinion of counsel, with regard to legal questions, including, without limitation, legal questions relating to proposed modifications or amendments of this Indenture, 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 unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. 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, including, without limitation, matters relating to proposed modifications or amendments of this Indenture, the Trustee may request a'Certificate of the Commission and such. matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by such Certificate of the Commission, 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, statement, requisition, facsimile transmission, electronic mail or OHS Wesc260379475.5 57 139 certification of any certified public accountant, investment banker, financial consultant, or other expert selected by the Commission 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 8.06 Compensation and Indemnification of Trustee. The Commission 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 Commission 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 Commission, 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 attorneys' fees) 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 Commission under this Section 8.06 shall survive the discharge of the Bonds and this Indenture and the resignation or removal of the Trustee. ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE SECTION 9.01 Amendments Permitted. (A) (1) This Indenture and the rights and obligations of the Commission, the Holders of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Commission and the Trustee may enter into when the written consent of (i) each Credit Provider then providing a Credit Enhancement for any Series of Bonds, provided that the Credit Enhancement provided by such Credit Provider is in full force and effect and the Credit Provider is not then failing to make a payment as required in connection therewith; or (ii) the Holders of a majority in aggregate amount of Bond Obligation of the Bonds (or, if such Supplemental Indenture is only applicable to a Series of Bonds, such Series of Bonds) then Outstanding 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 Bonds of any particular maturity remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under this Section; and provided, further, that if the Credit Enhancement provided for any Series of Bonds is in full force and effect and if the Credit Provider providing such Credit Enhancement is not failing to make a payment as required in connection therewith, such Credit Provider shall also consent in writing to such modification or amendment, which consent shall not be unreasonably withheld. OHS West260379475.5 58 140 • (2) No such modification or amendment shall (a) extend the maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment or reduce the amount of any Mandatory Sinking Account Payment provided for the payment of any Bond, or reduce the rate of interest thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the Holder of each Bond so affected, or (b) reduce the aforesaid percentage of Bond Obligation the consent of the Holders 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 Holders of the Bonds 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 Holders of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution and delivery by the Commission and the Trustee of any Supplemental Indenture pursuant to this Section 9.01(A), the Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Indenture to the Holders of the Bonds at the addresses shown on the registration books of the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. (B) This Indenture and the rights and obligations of the Commission, of the Trustee and of the Holders of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Commission may adopt without the consent of any Bondholders or of each Credit Provider then providing a Credit Enhancement for any Series of Bonds but only to the extent permitted by Act and only for any one or more of the following purposes: (1) to add to the covenants and agreements of the Commission in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Commission; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Commission may deemnecessary or desirable, and which shall not materially and adversely affect the interests of the Holders of the Bonds; (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 Holders of the Bonds; (4) to provide for the issuance of an additional Series of Bonds pursuant to the provisions of Article III hereof; OHS West:260379475.5 59 141 (5) to make modifications or adjustments necessary, appropriate or desirable to provide for the issuance or incurrence, as applicable, of Capital Appreciation Bonds, Parity Obligations, Subordinate Obligations or Variable Rate Indebtedness, with such interest rate, payment, maturity and other terms as the Commission may deem desirable; subject to the provisions of Section 3.02, Section 3.03 and Section 3.05; (6) to make modifications or adjustments necessary, appropriate or desirable to provide for change from one interest rate mode to another in connection with any Series of Bonds; (7) to make modifications or adjustments necessary, appropriate or desirable to accommodate Credit Enhancements, Liquidity Facilities and Reserve Facilities; (8) to make modifications or adjustments necessary, appropriate or desirable to provide for the appointment of an auction agent, a broker -dealer, a remarketing agent, a tender agent and/or a paying agent in connection with any Series of Bonds; (9) to modify the auction provisions applicable to any Series of Bonds in accordance with the terms and provisions set forth in the Supplemental Indenture establishing the terms and provisions of such Series of Bonds; (10) to provide for any additional covenants or agreements necessary, to maintain the tax-exempt status of interest on any Series of Bonds; (11) if the Commission agrees in a Supplemental Indenture to maintain the exclusion of interest on a Series of Bonds from gross income for purposes of federal income taxation, to make such provisions as are necessary or appropriate to ensure such exclusion; (12) to provide for the issuance of Bonds in book -entry form or bearer form and/or to modify or eliminate the book -entry registration system for any Series of Bonds; (13) to modify, alter, amend or supplement this Indenture in any other respect, including amendments that would otherwise be described in Section 9.01(A), if the effective date of such amendments is a date on which all Bonds affected thereby are subject to mandatory tender for purchase pursuant to the provisions of this Indenture or if notice of the proposed amendments is given to Holders of the affected Bonds at least thirty (30) days before the proposed effective date of such amendments and, on or before such effective date, such Holders have the right to demand purchase of their Bonds pursuant to the provisions of this Indenture or if all Bonds affected thereby are in an auction mode and a successful auction is held following notice of such amendinent; and (14) for any other purpose that does not materially and adversely affect the interests of the Holders of the Bonds. Any Supplemental Indenture entered into pursuant to this Section shall be deemed not to materially adversely affect the interest of the Holders so long as (i) all Bonds are secured by a OHS West:260379475.5 60 142 • Credit Enhancement and (ii) each Credit Provider shall have given its written consent to such Supplemental Indenture as provided in Section 9.01(A). 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 Commission, the Trustee and all Holders of Bonds 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 Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after any Supplemental Indenture becomes effective pursuant to this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the Commission and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Bolder of any Bond Outstanding at the time of such execution and presentation of his Bond for such purpose at the Corporate Trust Office or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bond. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Commission and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Commission and authenticated by the Trustee, and upon demand of the Holders of any Bonds then Outstanding shall be exchanged at the Corporate Trust Office, without cost to any Bondholder, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amounts of the same Series, tenor and maturity. SECTION 9.04 Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. ARTICLE X DEFEASANCE SECTION 10.01 Discharge of Indenture. Bonds of any Series or a portion thereof may be paid by the Commission in any of the following ways: (A) by paying or causing to be paid the Bond Obligations of and interest on such Outstanding Bonds, as and when they 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 or redeem such Outstanding Bonds; or (C) by delivering to the Trustee, for cancellation by it, such Outstanding Bonds. OHS West:260379475.5 61 143 If the Commission shall pay all Series for which any Bonds are Outstanding and also pay or cause to be paid all other sums payable hereunder by the Commission, then and in that case, at the election of the Commission (evidenced by a Certificate of the Commission, filed with the Trustee, signifying the intention of the Commission to discharge all such indebtedness and this Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, this Indenture and the pledge of Sales Tax Revenues and other assets made under this Indenture and all covenants, agreements and other obligations of the Commission under this Indenture shall cease, terminate, become void and be completely discharged and satisfied. In such event, upon Request of the Commission, the Trustee shall cause an accounting for such period or periods as may be requested by the Commission to be prepared and filed with the Commission and shall execute and deliver to the Commission all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the Commission all moneys or securities or other property held by it pursuant to this Indenture which, as evidenced by a verification report, upon which the Trustee may conclusively rely, from an independent certified public accountant, a firm of independent certified public accountants or other independent consulting firm, are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption. SECTION 10.02 Discharge of Liability on Bonds. Upon the deposit with the Trustee, 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 or redeem any Outstanding Bond (whether upon or prior to its maturity or the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to maturity, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Commission in respect of such Bond shall cease, terminate and be completely discharged, provided that the Holder thereof shall thereafter be entitled to the payment of the principal of and premium, if any, and interest on the Bonds, and the Commission shall remain liable for such payment, but only out of such money or securities deposited with the Trustee as aforesaid for their payment. The Commission may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the Commission may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. Notwithstanding anything in this Section 10.02 to the contrary, if the principal of or interest on a Series of Bonds shall be paid by a Credit Provider pursuant to the Credit Enhancement issued in connection with such Series of Bonds, the obligations of the Commission shall not be deemed to be satisfied or considered paid by the Commission by virtue of such payments, and the right, title and interest of the Commission herein and the obligations of the Commission hereunder shall not be discharged and shall continue to exist and to run to the benefit of such Credit Provider, and such Credit Provider shall be subrogated to the rights of the. Holders of the Bonds of such Series so paid. 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 or redeem and discharge any Bonds, the money or securities so to be OHS West:260379475.5 62 144 • • • deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to this Indenture and shall be: (A) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount or Redemption Price of such Bonds and all unpaid interest thereon to the redemption date; or (B) Defeasance Securities the principal of and interest on which when due will, in the opinion of an independent certified public accountant, a firm of independent certified public accountants or other independent consulting firm delivered to the Trustee (as confirmed by a verification report upon which verification report the Trustee may conclusively rely), provide money sufficient to pay the principal or Redemption Price of and all unpaid interest to maturity, or to the redemption date, asthe case may be, on the Bonds to be paid or redeemed, as such principal or Redemption Price and interest become due, provided that, in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this Indenture or by Request of the Commission) to apply such money to the payment of such principal or Redemption Price and interest with respect to such Bonds. SECTION 10.04 Payment of Bonds After Discharge of Indenture. Any moneys held by the Trustee in trust for the payment of the principal, Redemption Price, or interest on any Bond and remaining unclaimed for one (1) year after such principal, Redemption Price, or interest has become due and payable (whether at maturity or upon call for redemption as provided in this Indenture), if such moneys were so held at such date, or one (1) year after the date of deposit of such principal, Redemption Price or interest on any Bond if such moneys were deposited after the date when such Bond became due and payable, shall be repaid to the Commission free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Commission as aforesaid, the Trustee may (at the cost of the Commission) first mail to the Holders of any Bonds remaining unpaid at the addresses shown on the registration books maintained by the Trustee a notice, in such form as may be deemed appropriate by the Trustee, with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Commission of the moneys held for the payment thereof. All moneys held by or on behalf of the Trustee for the payment of principal or Accreted Value of or interest or premium on Bonds, whether at -redemption or maturity, shall be held in trust for the account of the Holders thereof and the Trustee shall not be required to pay Holders any interest on, or be liable to the Holders or any other person (other than the Commission) for interest earned on, moneys so held. Any interest earned thereon shall belong to the Commission and shall be deposited upon receipt by the Trustee into the Revenue Fund. OHS WW:260379475.5 63 145 ARTICLE XI MISCELLANEOUS SECTION 11,0I Liability of Commission Limited to Sales Tax Revenues. Notwithstanding anything in this Indenture or in the Bonds contained, the Commission shall not be required to advance any moneys derived from any source other than the Sales Tax Ievenues and other assets pledged hereunder for any of the purposes in this Indenture mentioned, whether for the payment of the principal or Redemption Price of or interest on the Bonds or for any other purpose of this Indenture. SECTION 11.02 Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Commission 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 Commission 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. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Commission, the Trustee, each Credit Provider, each Liquidity Provider, each Reserve Facility Provider, the Holders of the Bonds and the holders of any Parity Obligations, including each Counterparty, 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; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Commission, the Trustee, each Credit Provider, each Liquidity Provider, each Reserve Facility Provider, the Holders of the Bonds and the holders of any Parity Obligations, including each Counterparty. 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 6f any action taken in reliance upon such waiver. SECTION 11.05 Destruction or Delivery of Canceled Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Commission of any Bonds, the Trustee may, in its sole discretion, in lieu of such cancellation and delivery, destroy such Bonds, and deliver a certificate of such destruction to the Commission. SECTION 11.06 Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provisions 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 OHS West:260379475.5 64 146 • been contained herein. The Commission hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. SECTION 11.07 Notice to Commission and Trustee. 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 listed below. Any such communication may also be sent by Electronic Means, receipt of which shall be confirmed. Trustee: Commission: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Services Telephone: (213) 615-6002 Fax: (213)615-6199 Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 SECTION 11.08 Evidence of Rights of Bondholders. Any request, consent or other instrument required or permitted by this indenture to be signed and executed by Bondholders may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Bondholders 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 the holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Commission 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 swom to before such notary public or other officer. The ownership of Bonds shall be proved by the bond registration books held by the Trustee. The Trustee may establish a record date as of which to measure consent of the Holders in order to determine whether the requisite consents are received. OHS Wesc260379475.5 65 147 Any request, consent, or other instrument or writing of the Holder of any Bond shall bind every future Holder of the same Bond and the Holder of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Commission in accordance therewith or reliance thereon. SECTION 11.09 Disqualified Bonds. In determining whether the Holders of the requisite aggregate Bond Obligation of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds that are owned or held by or for the account of the Commission, or by any other obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Commission or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds 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 Bonds and that the pledgee is not a person directly or indirectly controlled by, or under direct or indirect common control with, the Commission. 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 11.10 Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal, Redemption Price or purchase price due on any date with respect to particular Bonds (or portions of Bonds in the case of registered Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Holders of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04. SECTION 11.11 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 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 corporate trust industry, to the extent practicable, and with due regard for the protection of the security of the Bonds and the rights of every holder thereof. SECTION 11.12 Limitations on Rights of Credit Providers Liquidity Providers, Reserve Facility Providers. A Supplemental Indenture establishing the terms and provisions of a Series of Bonds may provide that any Credit Provider, Liquidity Provider or Reserve Facility Provider may exercise any right under this Indenture given to the Holders of the Bonds to which such Credit Enhancement, Liquidity Facility or Reserve Facility relates. All provisions under this Indenture authorizing the exercise of rights by a Credit Provider, a Liquidity Provider or a Reserve Facility Provider with respect to consents, approvals, directions, waivers, appointments, requests or other actions, shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Provider, Liquidity Provider or Reserve Facility Provider were not mentioned therein (i) during any period during which there is a default by such Credit Provider, Liquidity Provider or Reserve Facility Provider under the applicable Credit Enhancement, Liquidity Facility or Reserve Facility or (ii) after the applicable Credit Enhancement, Liquidity Facility or Reserve Facility shall at any time for any reason cease to be valid and binding on the provider thereof, or shall be declared to OHS West:260379475.5 66 148 • be null and void by final judgment of a court of competent jurisdiction, or after the Credit Enhancement, Liquidity Facility or Reserve Facility has been rescinded, repudiated by the provider thereof or terminated, or after a receiver, conservator or liquidator has been appointed for the provider thereof. All provisions relating to the rights of a Credit Provider, Liquidity Provider or Reserve Facility Provider shall be of no further force and effect if all amounts owing to such Credit Provider, Liquidity Provider or Reserve Facility Provider shall have been paid pursuant to the terms of the applicable Credit Enhancement, Liquidity Facility or Reserve Facility and such Credit Enhancement, Liquidity Facility or Reserve Facility shall no longer be in effect. 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 Commission or the Trustee shall be individually or personally liable for the payment of the principal or Redemption Price of or interest on the Bonds 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 Commission or the Trustee from the performance of any of any official duty provided by law or by this Indenture. SECTION 11.15 Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. SECTION 11.16 Business Day. Except as specifically set forth in this Indenture or a Supplemental Indenture, 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 with the same effect as if made on such prior date. SECTION 11.17 Effective Date of Indenture. This Indenture shall take effect upon its execution and delivery. SECTION 11.18 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. OHS West:260379475.5 67 149 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: By: General Counsel OHS West260379475.5 68 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 150 • L_ ATTACHMENT 5 OH&S Draft 3/17/08 FIRST SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2008 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2008 SERIES A (Supplementing the Indenture Dated as of June 1, 2008) OHS West:260379565.5 151 • INDEX TO EXHIBITS Page ARTICLE XH DEFINITIONS 1 Section 12.01. Section 12.02. Definitions 1 Rules of Construction ARTICLE )(EH FINDINGS, DETERMINATIONS AND DIRECTIONS Section 13.01. Section 13.02. Section 13.03. ARTICLE XIV Section 1 Findings and Determinations Recital in Bonds Effect of Findings and Recital AUTHORIZATION OF 2008 BONDS 4.01. Principal Amount, Designation and Series Section 14.02. Section 14.03. Section 1 Section 1 Section 1 ARTICLE XV Section 1 Section 1 Purpose and Application of Proceeds Form, Denomination, Numbers and Letters 4.04. Date, Maturities and Interest Rates 4.05. Interest Rates on 2008 Bonds 4.06. Disposition of Proceeds of 2008 Bonds REDEMPTION AND PURCHASE OF 2008 BONDS 5.01. Optional Redemption of 2008 Bonds 5.02. Mandatory Redemption of 2008 Bonds From Mandatory 9 9 9 9 9 10 10 10 10 10 11 27 27 27 Sinking Account Payments 31 Section 15.03. Purchase In Lieu of Redemption 32 Section 15.04. Holder's Option to Tender 2008 Bonds for Purchase 32 Section 15.05. Mandatory Tender of 2008 Bonds for Purchase 33 Section 15.06. Delivery of Tendered 2008 Bonds 35 Section 15.07. 2008 Bonds Deemed Purchased 35 Section 15.08. Deposit of 2008 Bonds 36 Section 15.09. Remarketing of Tendered 2008 Bonds 36 Section 15.10. Deposits into Accounts in the 2008 Bonds Purchase Fund 39 Section 15.11. Disbursements from the 2008 Bonds Purchase Fund 40 Section 15.12. Delivery of 2008 Bonds 41 Section 15.13. 2008 Liquidity Facilities; Liquidity Facility Bonds 41 Section 15.14. Alternate Liquidity Facilities 43 OHS West:260379565.5 152 Section 15.15. Remarketing Agents for the 2008 Bonds 45 ARTICLE XVI PURCHASE OF 2008 BONDS AT DIRECTION OF COMMISSION 46 Section 16.01. Mandatory Tender for Purchase of 2008 Bonds at Direction of Commission 46 Section 16.02. Delivery of Tendered 2008 Bonds 48 Section 16.03. 2008 Bonds Deemed Purchased 48 Section 16.04. Deposit of 2008 Bonds 48 Section 16.05. Payment of Optional Purchase Price of 2008 Bonds 49 Section 16.06. 2008 Bonds Owned by Commission 49 ARTICLE XVII ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF; 2008 LETTER OF CREDIT 50 Section 17.01. Funds and Accounts 50 Section 17.02. 2008 Costs of Issuance Fund 50 Section 17.03. Funding and Application of the 2008 Bonds Reserve Fund; Bond Reserve Requirement for the 2008 Bonds 50 Section 17.04. 2008 Bonds Purchase Fund 51 ARTICLE XVIII MISCELLANEOUS 51 Section 18.01. Severability 51 Section 18.02. Parties Interested Herein 52 Section 18.03. Headings Not Binding 52 Section 18.04. Notice Addresses 52 Section 18.05. Notices to Rating Agencies 52 Section 18.06. Indenture to Remain in Effect 52 Section 18.07. Effective Date of First Supplemental Indenture 53 Section 18.08. Execution in Counterparts 53 EXHIBIT A FORM OF 2008 BOND A-1 EXHIBIT B NOTICE ADDRESSES B-I OHS West:260379565.5 • • 153 • • • FIRST SUPPLEMENTAL INDENTURE THIS FIRST SUPPLEMENTAL INDENTURE, dated as of June 1, 2008 (this "First Supplemental Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly established and existing under the laws of the State of California (the "Commission") and U.S. BANK 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, this First Supplemental Indenture is supplemental to the Indenture, dated as of June 1, 2008 (as supplemented and amended from time to time pursuant to its terms, the "Indenture"), between the Commission and the Trustee; WHEREAS, the Indenture provides that the Commission may issue Bonds from time to time as authorized by a Supplemental Indenture, which Bonds are to be payable from Revenues and from such other sources as may be specified with respect to a particular Series of Bonds in the Supplemental Indenture authorizing such Series; and WHEREAS, the Commission desires to provide at this time for the issuance of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A" (the "2008 Bonds") for the purpose of refunding a portion of the $[100,000,000] principal amount of the Commission's Outstanding Notes and all as provided in this First Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE XH DEFINITIONS Section 12.01. Definitions. (a) Definitions. Unless the context otherwise requires, or as otherwise provided in subsection (b) of this Section or in Appendix A to this First Supplemental Indenture, all terms which are defined in Section 1.02 of the Indenture shall have the same meanings in this First Supplemental Indenture. (b) Additional Definitions. Unless the context otherwise requires, the following terms shall, for all purposes of this First Supplemental Indenture, have the following meanings: "Authorized Denominations" means, with respect to the 2008 Bonds: (i) during a Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, $100,000 and any integral multiple of $5,000 in excess thereof and (ii) during a Long -Term Rate Period or the Fixed Rate Period, $5,000 and any integral multiple thereof; provided, however, that if as a result of a Conversion of the 2008 Bonds from a Long -Term Rate Period to another Interest Rate OHS West:260379565.5 154 Determination Method, it is not possible to deliver all the 2008 Bonds required or pennitted to be Outstanding in a denomination permitted above, the 2008 Bonds may be delivered, to the extent necessary, in different denominations in any integral multiple of $5,000. "Calendar Week" means the period of seven (7) days from and including_ Thursday of any week- to and including Wednesday of the next following week. "Commercial Paper Rate" means the interest rate established from time to time pursuant to Section 14.05(a)(iii). "Commercial Paper Rate Period" means each period during which the 2008 Bonds bear interest at a Commercial Paper Rate determined pursuant to Section 14.05(a)(iii). "Commercial Paper Tender Bonds" shall have the meaning set forth in Section 15.09(a). "Conversion" means conversion of the 2008 Bonds from one Interest Rate Determination Method to another, which may be made from time to time in accordance with the terms of Section 1405(b). "Conversion Date" means the date Conversion of the 2008 Bonds becomes effective in accordance with Section 14.05(b) (or, with respect to notices, time periods and requirements in connection with the proceedings for such Conversion, the day on which it is proposed that such Conversion occur). "Conversion Notice" shall have the meaning set forth in Section 14.05(b). "Daily Put Bonds" shall have the meaning set forth in Section 15.09(a). "Daily Rate" means the _ interest rate established from time to time pursuant to Section 14.05(a)(i). "Daily Rate Index" means, on any Business Day, the SIFMA Swap Index or, if the SIFMA Swap Index is no longer published, an index or rate agreed upon by the Commission and the Remarketing Agent, which Daily Index Rate shall in no event exceed the Maximum Interest Rate. "Daily Rate Period" means any period during which the 2008 Bonds bear interest at the Daily Rate. "Expiration" (and other forms of "expire") means, when used with respect to a 2008 Credit Enhancement, the expirationof such 2008 Credit Enhancement in accordance with its terms. "Favorable Opinion of Bond Counsel" means, with respect to any action requiring such an opinion, an Opinion of Bond Counsel to the effect that such action will not, in and of itself, adversely affect the Tax -Exempt status of interest on the Bonds or such portion thereof as shall be affected thereby. OHS West:260379565.5 2 155 • • "First Supplemental Indenture" means this First Supplemental Indenture, between the Commission and the Trustee, as amended and supplemented from time to time. "Fixed Rate" means the fixed rate bome by the 2008 Bonds from the Fixed Rate Conversion Date, which rate shall be established in accordance with Section 14.05(a)(v). "Fixed Rate Computation Date" means any Business Day during the period from and including the date of receipt of a Conversion Notice relating to a Fixed Rate Conversion to and including the Business Day next preceding the proposed Conversion Date. "Fixed Rate Conversion Date" means the Conversion Date on which the interest rate on the 2008 Bonds shall be converted to a Fixed Rate. "Fixed Rate Period" means the period from and including the Fixed Rate Conversion Date of the 2008 Bonds to and including their maturity date or earlier date of redemption. "Interest Payment Date" means (a) with respect to the 2008 Bonds: (i) in the Daily Rate Period or the Weekly Rate Period, the first Business Day of each calendar month; (ii) in the Commercial Paper Rate Period, the day immediately succeeding the last day of each Commercial Paper Rate Period for such 2008 Bond; (iii) each Conversion Date; and (iv) in the Long -Term Rate Period or the Fixed Rate Period, each Semi -Annual Interest Payment Date; and (b) in all events, the final maturity date, redemption date or Optional Purchase Date of each 2008 Bond. "Interest Rate Determination Method" means any of the methods of determining the interest rate on the 2008 Bonds from time to time as described in Section 14.05(a). "Issue Date" means, with respect to the 2008 Bonds, the date on which the 2008 Bonds are first delivered to the purchasers thereof. "London Banking Day" means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency) in the City of London, United Kingdom. "Long -Term Rate" means the rate of interest on the 2008 Bonds established in accordance with Section 14.05(a)(iv). "Long -Term Rate Computation Date" means any Business Day during the period from and including the date of receipt of a Conversion Notice relating to a Conversion to a Long -Term Rate for the 2008 Bonds to and including the Business Day next preceding the proposed Long - Term Rate Conversion Date. "Long -Term Rate Conversion Date" means- (i) the Conversion Date on which the interest rate on the 2008 Bonds shall be converted to a Long -Term Rate; and (ii) the date on which a new Long -Term Rate Period and -Long -Term Rate are to be established. "Long -Term Rate Continuation Notice" shall have the meaning given such term in Section I4.05(a)(iv)(B). OHS West:260379565.5 3 156 "Long -Term Rate Period" means any period during which the 2008 Bonds bear interest at the Long -Term Rate. "Mandatory Tender Bonds" has the meaning specified in Section 15.09(c). "Optional Purchase Date" means each date on which the 2008 Bonds would be subject to optional redemption and therefore are subject to purchase at the option of the Commission pursuant to Article XVI. "Optional Purchase Price" means, with respect to the purchase of 2008 Bonds to be purchased pursuant to Article XVI on any Optional Purchase Date, the principal amount of the 2008 Bonds to be purchased on such Optional Purchase Date, plus accrued interest to such Optional Purchase Date, plus an amount equal to the premium, if any, that would be payable upon the redemption, at the option of the Commission exercised on such Optional Purchase Date, of the 2008 Bonds to be purchased. "Par Call Date" has the meaning assigned in Section 15.01(a)(5). "Participant" means, with respect to a Securities Depository, each participant listed in such Securities Depository's book -entry system as having an interest in the 2008 Bonds. "Purchase Date" means any date on which any 2008 Bond is purchased pursuant to Section 15.04 or Section 15.05. "Purchase Price" means, with respect to any 2008 Bond tendered or deemed tendered pursuant to Section 15.04 or Section 15.05, an amount equal to 100% of the principal amount of any 2008 Bond tendered or deemed tendered to the Trustee for purchase pursuant to Section 15.04 or 15.05. In addition, if the Purchase Date is not an Interest Payment Date, the Purchase Price for each 2008 Bond tendered or deemed tendered shall be increased to include accrued interest thereon to but not including the Purchase Date; provided, however, if such Purchase Date occurs before an Interest Payment Date, but after the Record Date applicable to such Interest Payment Date, then the Purchase Price shall not include accrued interest, which shall be paid to the Holder as of the applicable Record Date. "Rate" means, with respect to the 2008 Bonds, the interest rate applicable as provided in this First Supplemental Indenture. "Rate Index" means the Daily Rate Index, the Weekly Rate Index, or both, as the context may require. "Rate Period" means any Daily Rate Period, Weekly Rate Period, Commercial Paper Rate Period, Long -Term Rate Period or Fixed Rate Period. "Record Date" means (a) for any Interest Payment Date in respect of any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, the Business Day next preceding such Interest Payment Date; (b) for any Interest Payment Date in respect of any Long -Term Rate Period or Fixed Rate Period, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. OHS West:260379565.5 4 157 • "Redemption Date" means the date fixed for redemption of Bonds of a Series subject to redemption in any notice of redemption given in accordance with the terms of the Indenture. "Redemption Price" means, with respect to the 2008 Bonds or a portion thereof, 100% of the principal amount thereof to be redeemed, plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or this First Supplemental Indenture. "Remarketing Agent" means the one or more banks, trust companies or members of the National Association of Securities Dealers, Inc. meeting the qualifications set forth in Section 15.15 and appointed by an Authorized Representative to serve as a Remarketing Agent for any 2008 Bonds. "Remarketing Agreement" means any agreement or agreements entered into by and between the Commission and a Remarketing Agent for 2008 Bonds. "Semi -Annual Interest Payment Date" means June 1 or December 1. "Spread Premium" has the meaning specified in Section 15.01(a)(5). "Tax -Exempt" means, with respect to interest on any obligations of a state or local government, that such interest is excluded from the gross income of the holders thereof (other than any holder who is a "substantial user" of facilities financed with such obligations or a "related person" within the meaning of Section 147(a) of the Code) for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including any altemative minimum tax or environmental tax under the Code. "Tax -Exempt Securities" means bonds, notes or other securities the interest on which is Tax -Exempt. "Termination" (and other forms of "terminate") means, when used with respect to any 2008 Liquidity Facility, the replacement, removal, surrender or other termination of such 2008 Liquidity Facility other than an Expiration or an extension or renewal thereof; provided, however, that Termination does not include immediate suspension or termination events. "Treasury Rate" means the interest rate applicable to 13-week United States Treasury bills determined by the Remarketing Agent on the basis of the average per annum discount rate at which such 13-week Treasury bills shall have been sold at the most recent Treasury auction. "2008 Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A, authorized by Article XIV of this Indenture. "2008 Bonds Purchase Fund" means the 2008 Bonds Purchase Fund established pursuant to Section 17.01(d). "2008 Bonds Reserve Fund" means the fund by that name established pursuant to Section 17.01(b). OHS Wes1260379565.5 5 158 "2008 Bonds Reserve Requirement means, as of any date of calculation, an amount equal to the least of (i) ten percent (10%) of the principal amount of the 2008 Bonds (or if the amount of original issue discount or original issue premium applicable to the 2008 Bonds exceeds two percent (2%), ten percent (10%) of the issue price of the 2008 Bonds), (ii) one hundred twenty-five percent (125%) of average Annual Debt Service on the Outstanding 2008 Bonds, and (iii) Maximum Annual Debt Service on the Outstanding 2008 Bonds. "2008 Bonds Tax Certificate" means the Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2008 Bonds. "2008 Commission Account" means the 2008 Commission Account within the 2008 Bonds Purchase Fund established pursuant to Section 17.01(d). "2008 Liquidity Facility" means any Liquidity Facility provided with respect to the 2008 Bonds pursuant to Section 15.14, and means, with respect to any other Series of 2008 Bonds, the Liquidity Facility provided with respect to such Series of 2008 Bonds or any Alternate Liquidity Facility provided with respect to such. Series of 2008 Bonds pursuant to Section 15.14. "2008 Liquidity Facility Bonds" means Liquidity Facility Bonds consisting of any 2008 Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a 2008 Liquidity Facility as provided in Section 15.11(a), but excluding any Bonds no longer considered to be 2008 Liquidity Facility Bonds in accordance with the terms of the applicable 2008 Liquidity Facility and Section 15.13(d). "2008 Liquidity Facility Purchase Account" means the 2008 Liquidity Facility Purchase Account within the 2008 Bonds Purchase Fund established pursuant to Section 17.01(d). "2008 Liquidity Provider" means the issuer of the 2008 Liquidity Facility or any successor Liquidity Provider providing liquidity for the Purchase Price of the 2008 Bonds pursuant to a 2008 Liquidity Facility. "2008 Proceeds Fund" means the 2008 Proceeds Fund established pursuant to Section 17.01(a). "2008 Remarketing Account" means the 2008 Remarketing Account within the 2008 Bonds Purchase Fund established pursuant to Section 17.01(d). "USD-ISDA Swap Rate" shall have the meaning set forth in Section 15.01(a)(5). "Variable Rate" means any of the Daily Rate, the Weekly Rate,. the Commercial Paper Rate or the Long -Term Rate, as applicable. "Variable Rate Demand Bonds" means the 2008 Bonds bearing interest at a Daily Rate or a Weekly Rate. "Weekly Put Bonds" shall have the meaning set forth in Section 15.09(b). OHS West:260379565.5 6 159 i • "Weekly Rate" means the variable interest rate on the 2008 Bonds established in accordance with Section 14.05(a)(ii). "Weekly Rate Index" means, on any Business Day, the SIFMA Swap Index or, if the SIFMA Swap Index is no longer published, an index or rate agreed upon by the Commission and the Remarketing Agent, but in no event in excess of the Maximum Interest Rate. "Weekly Rate Period" means each period during which the 2008 Bonds bear interest at Weekly Rates. Section 12.02. Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa; and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. Defined terns shall include any variant of the terms set forth in this Article XII. The terms "hereby;" "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this First Supplemental Indenture, refer to the Indenture. ARTICLE XIII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 13.01. Findings and Determinations. The Commission hereby finds and determines that the 2008 Bonds shall be issued pursuant to Section 3.01 and upon the issuance of the 2008 Bonds, any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the issuance thereof, will exist, will have happened and will have been performed, in due time, form and manner, as required by the Constitution and statutes of the State. Section 13.02. Recital in Bonds. There shall be included in each of the definitive 2008 Bonds, and also in each of the temporary 2008 Bonds, if any are issued, a certification and recital that any and 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 that 2008 Bond, and in the issuing of that 2008 Bond, exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State and the Act, and that said 2008 Bond, together with all other indebtedness of the Commission payable out of Revenues, is within every debt and other limit prescribed by the Constitution and statutes of the State and the Act, and that such certification and recital shall be in such form as is set forth in the form of the 2008 Bond attached hereto as Exhibit A. Section 13.03. Effect of Findings and Recital. From and after the issuance of the 2008 Bonds, the findings and determinations herein shall be conclusive evidence of the existence of the facts so found and determined in any action or proceeding in any court in which the validity of the 2008 Bonds is at issue. OHS West:260379565.5 7 160 ARTICLE XIV AUTHORIZATION OF 2008 BONDS Section 14.01. Principal Amount, Designation and Series. Pursuant to the provisions of this Indenture and the provisions of the Act, a Series of Bonds entitled to the benefit, protection and security of such provisions is hereby authorized in the aggregate principal amount of $[115,000,000]. Such Bonds shall be designated as, and shall be distinguished from the Bonds of all other Series by the title, "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2008 Series A." At any time after the execution and delivery of this Supplemental Indenture, the Commission may execute and, upon the order of the Commission, the Trustee shall authenticate and deliver the 2008 Bonds in the aggregate principal amount set forth above. Section 14.02. Purpose and Application of Proceeds. The 2008 Bonds are issued for the purpose of refunding a portion of $[100,000,000] principal amount of the Commission's Notes. In addition, a portion of the proceeds will be applied to pay capitalized interest on the Bonds through December 1, 2009, to fiord the 2008 Bond Reserve Requirement and to pay Costs of Issuance of the 2008 Bonds. The net proceeds from the sale of the 2008 Bonds in the amount of $ shall be received by the Trustee, and the Trustee shall deposit or transfer such funds as follows: (a) $ of such proceeds shall be deposited in the 2008 Costs of Issuance Fund; (b) $ of such proceeds shall be deposited in the Interest Fund in an amount sufficient to pay capitalized interest on the 2008 Bonds through December 1, 2009; (c) $ of such proceeds shall be deposited in the 2008 Bonds Reserve Fund in satisfaction of the 2008 Bonds Reserve Requirement; and (d) $ of such proceeds shall be transferred to the Notes Trustee for deposit upon the order of the Commission. Section 14.03. Form, Denomination, Numbers and Letters. The 2008 Bonds shall be issued as fully registered bonds without coupons in book -entry form and in Authorized Denominations and shall be numbered from one upward in consecutive numerical order preceded by the letter "R" prefixed to the number. Each 2008 Bond and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of the 2008Bondsand as the form of the certificate of authentication as such form shall be completed based on the terms of the 2008 Bonds set forth herein. Section 14.04. Date, Maturities and Interest Rates. The 2008 Bonds shall be dated their Issue Date. The 2008 Bonds shall be issued in the aggregate principal amount of $[115,000,000] and shall mature and be payable on June 1, 2029. [The 2008 Bonds shall be issued as Variable Rate Bonds and each 2008 Bond shall bear interest at the rate or rates determined in accordance with Section 14.05. Each 2008 Bond shall initially bear interest at a OHS West:260379565.5 8 161 • Long -Term Rate of percent ( %) per annum with a Long -Term Rate Period ending December 1, 2009, and the initial Interest Payment Date shall be December I, 2008. On December 1, 2009, the 2008 Bonds shall be subject to mandatory purchase and conversion to another Interest Rate Determination Method pursuant to Section 14.05(b). Prior to December 1, 2009, the 2008 Bonds shall not be subject to conversion to another Interest Rate Determination Method. The 2008 Bonds shall not be subject to redemption until the end of the Long -Term Rate Period, December 1, 2009. Interest on each 2008 Bond shall be payable on each Interest Payment Date until the principal sum has been paid; provided, however, that if at the maturity date of the 2008 Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof, in full accordance with terms of the Indenture, such 2008 Bond shall then cease to bear interest. Each 2008 Bond shall bear interest from the latest of: (i) its Issue Date; (ii) the most recent Interest Payment Date to which interest has been paid thereon or duly provided for, or (iii) if the date of authentication of such Bond is after a Record Date but prior to the immediately succeeding Interest Payment Date, the Interest Payment Date immediately succeeding such date of authentication. Each 2008 Bond shall be payable as provided in Section 2.10, including Section 2.10(E) or, in the event the use of the Securities Depository is discontinued, the principal of each 2008 Bond shall be payable in lawful money of the United States of America upon surrender thereof at the Principal Office of the Trustee, and the interest on each 2008 Bond shall be payable in lawful money of the United States of America by the Trustee to the Holder thereof as of the close of business on the Record Date, such interest to be paid by the Trustee to such Holder in immediately available funds (by wire transfer or by deposit to the account of the Holder if such account is maintained with the Trustee), according to the instructions given by such Holder to the Trustee or, in the event no such instructions have been given, by check mailed by first class mail to the Holder at such Holder's address as it appears as of the Record Date on the bond registration books kept by the Trustee. Section 14.05. Interest Rates on 2008 Bonds. Except for 2008 Liquidity Facility Bonds, which shall bear interest at the rate or rates (but not in excess of the Maximum Interest Rate), and be payable at the times, specified in the applicable 2008 Liquidity Facility, the 2008 Bonds shall be Current Interest Bonds and, until converted to a Fixed Rate, the 2008 Bonds shall constitute Variable Rate Indebtedness and shall bear interest at a Variable Rate determined as provided in this First Supplemental Indenture. The 2008 Bonds shall bear interest as provided herein from and including the Issue Date to but excluding the date of payment in full of such 2008 Bonds (such interest to be computed on the basis of a 3651366-day year and actual days elapsed during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period; computed on the basis of a 360-day year of twelve (12) 30-day months during any Long -Term Rate Period. Interest shall accrue on the 2008 Bonds from one Interest Payment Date to, but not including, the next Interest Payment Date. OHS West:260379565.5 9 162 Upon Conversion of the 2008 Bonds to a Fixed Rate, the 2008 Bonds shall bear interest from and including the Conversion Date to the date of payment in full of the 2008 Bonds (computed on the basis of a 360-day year of twelve (12) 30-day months). The interest rates on the 2008 Bond shall be determined as provided in Section 14.05(a); provided, that no Rate as so determined shall exceed the Maximum Interest Rate in effect on the date of determination thereof At any one time, each 2008 Bond shall have the same Interest Rate Determination Method and (except 2008 Bonds that are 2008 Liquidity Facility Bonds, 2008 Bonds during a Commercial Paper Rate Period, and 2008 Bonds of different maturities bearing interest at a Fixed Rate) shall bear interest at the same interest rate. Upon issuance, the 2008 Bonds shall bear interest at a Long -Term Rate. 14.05(a) Interest Rate Determination Method. 14.05(a)(i) Daily Rate. Upon a successful Conversion of the 2008 Bonds to bear interest at the Daily Rate pursuant to Section 14.05(b) and until such 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to said Section 14.05(b), such 2008 Bonds shall bear interest at a Daily Rate. During each Daily Rate Period for 2008 Bonds, the Remarketing Agent shall set a Daily Rate for such 2008'Bonds :by 9:30 a.m., New York City time, on each Business Day, which Daily Rate shall be the rate of interest which, if borne by such 2008 Bonds in the Daily Rate Period, would, in the judgment of the Remarketing Agent, having due regard for the prevailing financial market conditions for Tax - Exempt Securities that are of the same general nature as such 2008 Bonds, or Tax -Exempt Securities that are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of such 2008 Bonds for which the Daily Rate is to be determined, be the lowest interest rate that would enable such Remarketing Agent to place such 2008 Bonds' at a price equal to 100% of the aggregate principal amount of such 2008 Bonds (plus accrued interest, if any) on such Business Day. The Daily Rate for any non -Business Day will be the rate for the last Business Day on which a Daily Rate was set. 14.05(a)(ii) Weekly Rate. Upon a successful Conversion of the 2008 Bonds to bear interest at the Weekly Rate pursuant to Section 14.05(b) and until such 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to Section 14.05(b), such 2008 Bonds shall bear interest at a Weekly Rate. During each Weekly Rate Period, the Remarketing Agent shall set a Weekly Rate for such 2008 Bonds, by 5:00 p.m., New York City time, on each Wednesday (or the immediately succeeding Business Day, if such Wednesday is not a Business Day) for the next Calendar Week; provided, that, the Weekly Rate for the first Calendar Week (or portion thereof) following a Conversion Date resulting in a change in the Interest Rate Determination Method to a Weekly Rate shall be set by such Remarketing Agent on the Business Day immediately preceding such Conversion Date. Each Weekly Rate shall be the rate of interest that, if borne by such 2008 Bonds in the Weekly Rate Period, would, in the judgment of the Remarketing Agent, having due regard for the prevailing financial market conditions for Tax -Exempt Securities that are of the same general nature as such 2008 Bonds for which the Weekly Rate is to be determined, or Tax -Exempt Securities that are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period OHS West:260379565.5 10 163 • for tender) of the 2008 Bonds for which the Weekly Rate is to be determined, be the lowest interest rate that would enable the Remarketing Agent to place such 2008 Bonds at a price equal to 100% of the aggregate principal amount of such 2008 Bonds (plus accrued interest, if any) on the first day of such Weekly Rate Period. 14.05(a)(iii) Commercial Paper Rate. Upon a successful Conversion of the 2008 Bonds to bear interest at the Commercial Paper Rate pursuant to Section 14.05(b), and until such 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to said Section 14.05(b), such 2008 Bonds shall bear interest at the Commercial Paper Rate or Rates applicable to such 2008 fonds. The Remarketing Agent shall select the Commercial Paper Rate Period for such 2008 Bonds on a Business Day selected by the Remarketing Agent not more than five (5) Business Days prior to the first day of such Commercial Paper Rate Period and not later than 12:30 p.m., New York City time, on the first day of such Commercial Paper Rate Period. Each Commercial Paper Rate Period shall be a period of not less than one (1) nor more than 270 days determined by the Remarketing Agent with the intention of yielding the lowest overall interest expense on the 2008 Bonds, taking into account (A) all other Conunercial Paper Rate Periods for all the 2008 Bonds bearing interest at a Commercial Paper Rate, (B) general economic and market conditions relevant to such 2008 Bonds and (C) such other facts, circumstances and conditions as such Remarketing Agent determines to be relevant. Notwithstanding the foregoing, no Commercial Paper Rate Period for any 2008 Bond shall be selected with a last day later than the fifth (5th) Business Day prior to the expiration date of any 2008 Liquidity Facility then in effect with respect to such 2008 Bond while bearing interest at the Commercial Paper Rate. The last day of each Commercial Paper Rate Period shall be a day immediately preceding a Business Day. If the Interest Rate Determination Method with respect to any 2008 Bonds is being converted from a Commercial Paper Rate to a new Interest Rate Determination Method, after receipt of the Conversion Notice delivered pursuant to Section 14.05(b), the Remarketing Agent shall determine the Commercial Paper Rate Periods with respect to such 2008 Bonds in such manner that, as soon as possible, all Commercial Paper Rate Periods with respect to such 2008 Bonds shall end on the same date, which date shall be the last day of the then -current Commercial Paper Rate Periods and, upon the establishment of such Commercial Paper Rate Periods, the day next succeeding the last day of all such Commercial Paper Rate Periods shall be the Conversion Date for the new Interest Rate Determination Method. The Remarketing Agent, promptly upon the determination of the last day of such Commercial Paper Rate Periods prior to Conversion to a new Interest Rate Determination Method, shall give written notice of such last day and such Conversion Date to the Notice Parties. The Remarketing Agent shall set a Commercial Paper Rate for each 2008 Bond bearing interest at the Commercial Paper Rate not later than 12:30 p.m., New York City time, on the first day of each Commercial Paper Rate Period for such 2008 Bonds. The Commercial Paper Rate applicable to each 2008 Bond bearing interest at the Commercial Paper Rate will be the rate determined by the Remarketing Agent to be the lowest interest rate that would enable such Remarketing Agent to place such 2008 Bond on the first day of the applicable Commercial Paper Rate Period at a price equal to 100% of the aggregate principal amount of such Bond. 14.05(a)(iv)(A) Long -Term Rate. The 2008 Bonds are issued in a Long - Term Rate with a term ending December 1, 2009 and until the establishment of a new Long - OHS Wc0260379565.5 11 164 Term Rate Period and a new Long -Term Rate for the 2008 Bonds then bearing interest at a Long -Tenn Rate, or until such 2008 Bonds are successfully converted to another Interest Rate Determination Method pursuant to Section 14.05(b) or Section 14.05(a)(iv)(F), such 2008 Bonds shall bear interest at the Long -Term Rate specified in Section 14.04 for the Long -Term Rate Period specified therein. The Commission shall select the duration of each Long -Term Rate Period for 2008 Bonds and shall include the duration of the Long -Term Rate Period in the Conversion Notice given with respect to such Long -Term Rate Period pursuant to Section 14.05(b) or the Long -Term Rate Continuation Notice given with respect to any new Long -Term Rate and Long -Term Rate Period for 2008 Bonds then bearing interest at a Long- Term Rate. Each Long -Term Rate Period shall commence on the Long -Term Rate Conversion' Date and end on a Business Day selected by the Commission which is a minimum of 180 days after the Long -Term Rate Conversion Date, but in no event later than the maturity date of the applicable 2008 Bonds. With respect to each Long -Term Rate Period, the Remarketing Agent will set the Long -Term Rate for the 2008 Bonds by 5:00 p.m., New York City time, on the applicable Long -Term Rate Computation Date. Subject to the provisions of Section 14.05(a)(iv)(G), each Long -Term Rate shall be the rate of interest that, if borne by such 2008 Bonds in such Long -Term Rate Period, would, in the judgment of the Remarketing Agent, having due regard for the prevailing fmancial market conditions for Tax -Exempt Securities that are of the same general nature as the 2008 Bonds for which the Long -Term Rate is to be determined, or Tax -Exempt Securities that are competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of the 2008 Bonds for which the Long -Term Rate is to be determined, be the lowest interest rate that would enable such Remarketing Agent to place such 2008 Bonds at a price equal to 100% of the aggregate principal amount of such 2008 Bonds on the first day of such Long -Term Rate Period. 14.05(a)(iv)(B) Long -Term Rate Continuation. As of the day following the last day of a Long -Term Rate Period for any 2008 Bonds, unless the Commission has given a Conversion Notice with respect to the Conversion of such 2008 Bonds to another Interest Rate Determination Method pursuant to Section 14.05(b), the Commission may establish a new Long - Term Rate Period and Long -Term Rate for such 2008 Bonds with such right to be exercised by delivery of a written notice of an Authorized Representative (a "Long -Term Rate Continuation Notice") to the Notice Parties no less than thirty-five (35) Business Days prior to the March 31st preceding the effective date of the new Long -Term Rate Period. The Long -Term Rate Continuation Notice must be accompanied by (i) an Opinion of Bond Counsel stating that the new Long -Term Rate Period is authorized and permitted under this First Supplemental Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the 2008 Bonds, and (ii) a notice of any 2008 Credit Provider and 2008 Credit Enhancement, if at the same time as a new Long -Term Rate Period and Long -Term Rate are being established for such 2008 Bonds, there will be any 2008 Credit Provider or 2008 Credit Enhancement with respect to such 2008 Bonds. 14.05(a)(iv)(C) Limitations. Any establishment of a new Long -Term Rate and Long -Term Rate Period for 2008 Bonds pursuant to Section 14.05(a)(iv)(B) above must comply with the following: OHS West:260379565.5 12 • 165 - the first day of such new Long -Term Rate Period must be an Interest Payment Date on which such 2008 Bonds are subject to mandatory tender pursuant to the applicable provisions of Section 15.05; — the fast day of such new Long -Term Rate Period must be a Business Day; and — no new Long -Term Rate shall become effective unless the Opinion of Bond Counsel referred to in Section 14.05(a)(iv)(B) is redelivered on (and as of) the first day of the new Long -Term Rate Period and all such Outstanding 2008 Bonds are successfully remarketed in the new Long -Term Rate Period at the new Long -Term Rate on the fast day of the new Long -Term Rate Period. 14.05(a)(iv)(D) Contents of Long -Tenn Rate Continuation Notice. The Commission's Long -Term Rate Continuation Notice must specify: (i) the proposed Long -Term Rate Period; (ii) whether any 2008 Credit Enhancement will be in effect; and (iii) if 2008 Credit Enhancement will be in effect alter the proposed Long -Term Rate Conversion Date, the provider of such 2008 Credit Enhancement, the form of such 2008 Credit Enhancement and the anticipated term of such 2008 Credit Enhancement. 14.05(a)(iv)(E) Notice to Holders. Upon receipt of a Long -Term Rate Continuation Notice from an Authorized Representative, as soon as possible; but in any event not less than thirty (30) days prior to the fast day of the proposed Long -Term Rate Period, the Trustee shall give notice by first-class mail to the Holders of the affected 2008 Bonds which notice shall state in substance: - that a new Long -Term Rate Period and Long -Term Rate is to be established for such 2008 Bonds on the applicable Long -Term Rate Conversion Date if the conditions specified in this First Supplemental Indenture are satisfied on or before such date; - that all affected 2008 Bonds are subject to mandatory tender for purchase on the first day of the new Long -Term Rate Period (whether or not the proposed new Long -Tenn Rate Period becomes effective on such date) at the Purchase Price, which shall be specified therein; - the first day of the new Long -Term Rate Period; - that the Commission has delivered to the Trustee an Opinion of Bond Counsel to the effect that the new Long -Term Rate Period is authorized and permitted under this First Supplemental Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the 2008 Bonds; - that a new Long -Term Rate Period and Long -Term Rate for such 2008 Bonds shall not be established unless the Opinion of Bond Counsel referred to above is redelivered to the Trustee on (and as of) the first day of the new Long -Term Rate Period and all such 2008 Bonds are successfully remarketed in the new Long -Tenn Rate Period and at the new Long -Term Rate on the first day thereof; OHS Wesc260379565.5 13 166 the CUSIP numbers or other identification information of such 2008 Bonds; and that, to the extent that there shall be on deposit with the Trustee on the first day of the new Long -Term Rate Period an amount of money sufficient to pay the Purchase Price thereof, allsuch2008 Bonds not delivered to the Trustee on or prior to such date shall be deemed to have been properly tendered for purchase and shall cease to constitute or represent a right on behalf of the Holder thereof to the payment of principal thereof or interest thereon and shall represent and constitute only the right to payment of the Purchase Price on deposit with the Trustee, without interest accruing thereon after such date. 14.05(a)(iv)(F) End of Long -Term Rate. In the event the Commission has not given a Long -Term Rate Continuation Notice or a Conversion Notice with respect to 2008 Bonds bearing interest at a Long -Term Rate at the time required by Section 14.05(a)(iv)(B) or Section 14.05(b), as applicable, or if the conditions to the effectiveness of a new Long -Term Rate Period and New Long -Term Rate set forth in Section 14.05(a)(iv)(C) are not satisfied, including as a result of the Remarketing Agent failing to establish a Long -Term Rate as herein provided, then on the day following the last day of the current Long -Terns Rate Period, a Weekly Rate Period shall automatically commence for such 2008 Bonds; provided, however, that such 2008 Bonds shall not be subject to optional tender and shall bear interest as provided in Section 15.11(d) until such time as such Bonds shall be converted to another Interest Rate Determination Method in accordance with the provisions hereof. 14.05(a)(iv)(G) Sale at Premium or Discount. Notwithstanding the provisions of Section 14.05(a)(iv)(A), the Long -Term Rate shall be the rate of interest per annum determined by the Remarketing. Agent to be the interest rate which, if borne by the 2008 Bonds, would enable the Remarketing Agent to sell such 2008 Bonds at a price (without regard to accrued interest) which will result in the lowest net interest cost for the 2008 Bonds, after taking into account any premium or discount at which such 2008 Bonds are sold by the Remarketing Agent, provided that: - the Remarketing Agent certifies to the Trustee and the Commission that the sale of the 2008 Bonds at the interest rate and premium or discount specified by the Remarketing Agent is expected to result in the lowest net interest cost for such 2008 Bonds on the Long -Term Rate Conversion Date; the Commission consents in writing to the sale of the 2008 Bonds by the Remarketing Agent at such premium or discount; - in the case of 2008 Bonds to be sold at a discount, either (a) a 2008 Liquidity Facility is in effect with respect to such 2008 Bonds and provides for the purchase of such 2008 Bonds at such discount, or (b) the Commission agrees to transfer to the Remarketing Agent on the Long -Tenn Rate Conversion Date, in immediately availablefunds for deposit in the 2008 Commission Account, an amount equal to such discount; " - in the case of 2008 Bonds to be sold at a premium, the Remarketing Agent shall transfer to the Trustee for deposit in the Revenue Fund an amount equal to such premium, OHS West:260379565.5 14 167 • which amount, upon Order of the Commission, may be used to pay the specific costs of Conversion; and - on or before the date of the determination of the Long -Term Rate, the Commission delivers to the Trustee and the Remarketing Agent a letter of Bond Counsel to the effect that Bond Counsel expects to be able to give a Favorable Opinion of Bond Counsel on the Long -Term Rate Conversion Date; and - on or before the Long -Term Rate Conversion Date, a Favorable Opinion of Bond Counsel shall have been received by the Trustee and confirmed to the Commission and the Remarketing Agent. 14.05(a)(v) Fixed Rate. 14.05(a)(v)(A)The Interest Rate Determination Method for 2008 Bonds may be converted from any Variable Rate to a Fixed Rate in accordance with the provisions of Section 14.05(b). After such Conversion, such 2008 Bonds shall bear interest at the Fixed Rate and shall not be subject to Conversion to another Interest Rate Determination Method. The interest rate to be borne by such 2008 Bonds of each maturity from the Fixed Rate Conversion Date shall be the rate determined by the applicable Remarketing Agent on the Fixed Rate Computation Date to be the rate that, if borne by such 2008 Bonds, would, in the judgment of the Remarketing Agent having due regard for prevailing market conditions for Tax -Exempt Securities that are comparable to such 2008 Bonds, be the lowest interest rate that would enable such Remarketing Agent to place such 2008 Bonds of such maturity for which the Fixed Rate is to be determined at a price equal to 100% of the aggregate principal amount of such 2008 Bonds on the Fixed Rate Conversion Date. 14.05(a)(v)(B) If the Commission obtains a Favorable Opinion of Bond Counsel with respect to such actions: (i) in determining the Fixed Rate for any 2008 Bond, the applicable Remarketing Agent, subject to the approval of an Authorized Representative, may also determine on or before the Business Day next preceding the determination of the Fixed Rate for such 2008 Bonds, redemption dates and redemption premiums, if any, to be paid upon the optional redemption of such 2008 Bonds which differ from such redemption dates and premiums as are set forth in Section 15.01(a)(4), such redemption dates and redemption premiums, if any, to be, in the best judgment of the Remarketing Agent, consistent with then -current market conditions; and (ii) the Remarketing Agent, subject to the approval of an Authorized Representative, may also determine, on or before the Business Day next preceding the determination of the Fixed Rate for such 2008 Bonds, with respect to any 2008 Bond constituting a Term Bond, a new maturity date for any portion of such 2008 Bond; provided, however, that such new maturity date shall be a June 1 prior to the original maturity date; and provided further that such 2008 Bond shall continue to be subject to mandatory redemption from Mandatory Sinking Account Payments established for such 2008 Bond unless, on any Mandatory Sinking Account Payment due date for such 2008 Bond, such Mandatory Sinking Account Payment is applied to the payment of that portion of such 2008 Bond which now matures on such Mandatory Sinking Account Payment due date. OHS WesC260379565.5 15 168 14.05(a)(vi) Failure to Determine Rate for Certain Rate Periods. 14.05(a)(vi)(A) If, for any reason, the Daily Rate or the Weekly Rate on any 2008 Bond is not established as provided herein by the Remarketing Agent pursuant to Sections 14.05(a)(i) or (ii) or no Remarketing Agent shall be serving as such hereunder for such 2008 Bonds or any Rate so established is held to be invalid or unenforceable with respect to any such Rate Period, then the interest rate for such Rate Period shall be 100% of the applicable Rate Index on the date such Daily Rate or Weekly Rate was (or would have been) determined as provided above. 14.05(a)(vi)(B) If, for any reason, the Remarketing Agent fails to set the length of any Commercial Paper Rate Period or to establish any Commercial Paper Rate for any 2008 Bond or a court holds any Commercial Paper Rate Period or Commercial Paper Rate for any 2008 Bond to be invalid or unenforceable, a Commercial Paper Rate Period for such 2008 Bond lasting through the next day immediately preceding a Business Day (or until the earlier stated maturity thereof) and the interest rate applicable to such 2008 Bond shall be 100% of the Daily Rate Index. 14.05(a)(vii) Notice of Rates. In a timely fashion following the determination of any Rate, the Remarketing Agent establishing such Rate shall give written notice or notice by Electronic Means thereof to the Commission and the Trustee. Such notice shall also include details as to the principal amount of the 2008 Bonds and the Interest Rate Determination Method at the time applicable. Promptly upon receipt of notice from a Remarketing Agent of any Fixed Rate, the Trustee shall give the Holder of each 2008 Bond being converted to a Fixed Rate notice of the Fixed Rate. 14.05(a)(viii) Absence of Remarketing Agent; Binding Determination. If no Remarketing Agent shall be serving hereunder with respect to the 2008 Bonds (other than 2008 Bonds in a Fixed Rate Period), the determination of the applicable Rate Index shall be made by the Trustee at the direction of the Commission. The determination of any Rate or Rate Index by a Remarketing Agent or, as aforesaid, the Trustee, at the direction •of the Commission, with respect to any 2008 Bond, shall be conclusive and binding upon the Commission, the Trustee, the Remarketing Agent, each 2008 Credit Provider, each 2008 Liquidity Provider and the Holder of such 2008 Bond. 14.05(a)(ix) No Liability. In determining the interest rate that any 2008 Bond shall bear as provided in this Section 14.05, neither the Remarketing Agent nor the Trustee shall have any liability to the Commission or the Holder of such 2008 Bond, except for its negligence or willful misconduct. 14.05(b) Conversion of Interest Rate Determination Method. 14.05(b)(i) Right of Conversion. The Interest Rate Determination Method for any Outstanding 2008 Bonds is subject to Conversion from time to time by the Commission, with such right to be exercised by delivery of a written notice of an Authorized Representative (each such notice being a "Conversion Notice") to the Notice Parties as follows: OHS Wesc260379565.5 I 169 • • (1) at least four (4) Business Days prior to the thirtieth (30th) day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period; and (2) at least five (5) Business Days prior to the thirtieth (30th) day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Long - Term Rate or a Fixed Rate. Each Authorized Representative is hereby authorized to execute and deliver a Conversion Notice to change the Interest Rate Determination Method at such times or times as the officer executing the Conversion Notice determines to be in the best interests of the Commission, such determination to be conclusively evidenced by such execution. The Conversion Notice must be accompanied by (i) an Opinion of Bond Counsel stating that the Conversion is authorized and permitted under this Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on any of such 2008 Bonds to be converted, and (ii) a notice of the 2008 Liquidity Provider or 2008 Credit Provider, if applicable, and the 2008 Liquidity Facility or 2008 Credit Enhancement, if at the same time as such 2008 Bonds are being converted there will be a change of 2008 Liquidity Provider, 2008 Credit Provider, 2008 Liquidity Facility or 2008 Credit Enhancement with respect to such 2008 Bonds. 14.05(b)(ii) Limitations. Any Conversion pursuant to this Section 14.05(b) must comply with the following: 14.05(b)(ii)(A) the Conversion Date must be a date on which such 2008' Bonds are subject to mandatory tender pursuant to the applicable provisions of Section 15.05; 14.05(b)(ii)(B) the Conversion Date must be a Business Day and, if the Conversion is from the Commercial Paper Rate, shall be a date determined in accordance with Section 14.05(a)(iii); 14.05(b)(ii)(C) the 2008 Liquidity Facility for such 2008 Bonds after a Conversion to a Variable Rate (other than a Long -Term Rate) must cover principal plus accrued interest (computed at the Maximum Interest Rate then in effect on the basis of a 365-day year and actual days elapsed or a 360 day year of twelve 30-day months, as applicable) for the maximum number of days between Interest Payment Dates permitted under that Interest Rate Determination Method, plus such additional number of days, if any, as shall be required by each Rating Agency then rating such 2008 Bonds; provided that if the number of days of interest coverage provided by the applicable 2008 Liquidity Facility is being changed from the number of days previously in place, the Trustee shall have also received a Rating Confirmation from each of the Rating Agencies then rating such 2008 Bonds; 14.05(b)(ii)(D) no Conversion shall become effective unless the Opinion of Bond Counsel referred to in Section 14.05(b)(i) is redelivered on (and as of) the Conversion Date and all affected Outstanding 2008 Bonds are successfully purchased or deemed purchased and remarketed in the new Interest Rate Determination Method on the Conversion Date; and OHS West:260379565.5 17 170 14.05(b)(ii)(E) upon Conversion of 2008 Bonds to a Fixed Rate Period or a Long -Term Rate Period without a liquidity Facility, an Authorized Representative may provide in the Conversion Notice to the applicable 2008 Liquidity Provider a request for termination of the 2008 Liquidity Facility with respect to such 2008 Bonds to be effective upon such Conversion. 14.05(b)(iii) Contents of Conversion Notice. The Conversion Notice must specify: (A) the proposed Conversion Date; (B) the new Interest Rate Determination Method to take effect; (C) if the Conversion is to a Long -Term Rate, the Long -Term Rate Period; (D) if a 2008 Credit Enhancement or 2008 Liquidity Facility will be in effect after the proposed Conversion Date, the form of such 2008 Credit Enhancement or 2008 Liquidity Facility and the identity of the 2008 Credit Provider or 2008 Liquidity Provider; and (E) if the Conversion is to a Long -Tenn Rate Period or Fixed Rate Period, the redemption dates and redemption prices applicable to such Long -Tenn Rate Period or Fixed Rate Period. 14.05(b)(iv) Notice to Holders. Upon receipt of a Conversion Notice from an Authorized Representative, as soon as possible, but in any event not less than thirty (30) days prior to the proposed Conversion Date, the Trustee shall give notice by first-class mail to the affected Holders of 2008 Bonds, which notice shall state in substance: 14.05(b)(iv)(A) that the Interest Rate Determination Method for the applicable 2008 Bonds shall be converted to the specified Variable Rate or the Fixed Rate, as the case may be, on the applicable Conversion Date if the conditions specified in this First Supplemental Indenture are satisfied on or before such date; 14.05(b)(iv)(B) the applicable Conversion Date; 14.05(b)(iv)(C) that the Conunission has delivered to the Trustee an Opinion of Bond Counsel to the effect that the Conversion is authorized and permitted under this Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on any of such 2008 Bonds to be converted; 14.05(b)(iv)(D) that the Interest Rate Determination Method for such 2008 Bonds shall not be converted unless the Opinion of Bond Counsel referred to above is redelivered to the Trustee on (and as of) the Conversion Date and all such 2008 Bonds are successfully purchased and remarketed in the new Interest Rate Determination Method on the Conversion Date; 14.05(b)(iv)(E) the CUSH' numbers or other identification information of such 2008 Bonds; 14.05(b)(iv)(F) that all such 2008 Bonds are subject to mandatory tender for purchase on the Conversion Date at the applicable Purchase Price, which Purchase Price shall be specified in the notice (whether or not the proposed Conversion becomes effective on such date); and 14.05(b)(iv)(G) that, to the extent that there shall be on deposit with the Trustee on the applicable Conversion Date an amount of money sufficient to pay the Purchase OHS West:260379565.5 18 171 • Price thereof, all, 2008 Bonds to be converted on the Conversion Date not delivered to the Trustee on or prior to the Conversion Date shall be deemed to have been properly tendered for purchase and shall cease to constitute or represent a right on behalf of the Holder thereof to the payment of principal thereof or interest thereon and shall represent and constitute only the right to payment of the Purchase Price on deposit with the Trustee, without interest accruing thereon after the Conversion Date. 14.05(b)(v) Failure of Conditions to be Met. If the Commission fails to deliver the Opinion of Bond Counsel required by Section 14.05(b)(ii)(D) to the Trustee on or before the Conversion Date or if the Trustee receives written notice to the effect that the Remarketing Agent has not successfully remarketed all of the Outstanding 2008 Bonds to be converted to the new Interest Rate Determination Method on the Conversion Date, the Interest Rate Determination Method shall not be converted, but such 2008 Bonds shall be deemed to have been tendered for purchase on the Conversion Date specified in the Conversion Notice and shall be purchased on the Conversion Date specified in the Conversion Notice and, except as otherwise provided in Section 14.05(a)(iv)(F), such 2008 Bonds shall continue to bear interest at the Interest Rate Determination Method in effect prior to the proposed Conversion Date specified in the Conversion Notice; provided, however, that notwithstanding anything to the contrary provided in this Section 14.05, the rate of interest on such 2008 Bonds shall be determined on the proposed Conversion Date and, if sufficient funds are not available for the purchase of such 2008 Bonds, the provisions of Section 15.11(d) shall apply. In such event, the Commission and the Holders of such 2008 Bonds that were to be converted to another Interest Rate Determination Method shall be restored (except as aforesaid with respect to the purchase of 2008 Bonds) to their former positions and rights hereunder with respect to such 2008 Bonds, and all rights of the Commission hereunder shall continue as if no such proceedings for the Conversion of the Interest Rate Determination Method on such 2008 Bonds had taken place. The Trustee shall immediately notify by Electronic Means the Notice Parties of each such failed Conversion. 14.05(b)(vi) Notice Failure No Bar. Failure of a Holder of a 2008 Bond to receive the notice described in Section 14.05(b)(iv), or any defect therein, shall not affect the validity of any Rate or any continuation of or change in the Interest Rate Determination Method for any of the 2008 Bonds or extend the period for tendering any of the 2008 Bonds for purchase, and the Trustee shall not be liable to any Holder of a 2008 Bond by reason of the failure of such Holder to receive such notice or any defect therein. 14.05(b)(vii) No Conversion During Continuance of Event of Default. No Conversion shall occur under this Section 14.05(b) if at the time of such Conversion an Event of Default shall have occurred and be continuing. The Trustee and the Remarketing Agent may conclusively rely upon a certificate of an Authorized Representative that no such default exists. 14:05(b)(viii) Notice to Remarketing Agent. The Commission may not elect a change in the Interest Rate Determination Method for the Bonds without written notice to the Remarketing Agent for the 2008 Bonds. OHS West:260379565,5 19 172 14.05(b)(ix) Rescission of Election. Notwithstanding anything herein to the contrary, the Commission may rescind any Conversion Notice given pursuant to this Section 14.05(b) prior to the proposed Conversion Date set forth in the Conversion Notice by giving written notice thereof to the Notice Parties two or more Business Days prior to such proposed Conversion Date. If the Trustee receives notice of such rescission prior to the time the Trustee has given notice to the Holders of the affected 2008 Bonds pursuant to Section 14.05(b)(iv), then the Conversion Notice previously delivered by the Commission shall be of no force and effect. If the Trustee receives notice from the Commission of rescission of the Conversion Notice after the Trustee has given notice to the Holders of the affected 2008 Bonds pursuant to Section 14.05(b)(iv), then such 2008 Bonds shall continue to be subject to mandatory tender for purchase on the Conversion Date specified in the Conversion Notice and the Rate Period for such 2008 Bonds shall automatically adjust to, or continue as, a Weekly Rate Period on the Conversion Date specified in the Conversion Notice. No Opinion of Bond Counsel shall be required in connection with any automatic adjustment to a Weekly Rate Period. 14.05(c) Conversion of 2008 Liquidity Facility Bonds. Notwithstanding anything to the contrary contained in the Indenture, if all of the Outstanding 2008 Bonds are 2008 Liquidity Facility Bonds, such 2008 Bonds may be converted to a Fixed Rate on such. Conversion Date as shall be acceptable to the applicable 2008 Liquidity Provider, the Trustee, the Remarketing Agent and the Commission, provided that on such Conversion Date the Commission shall deliver to the Trustee an Opinion of Bond Counsel stating that the Conversion is authorized and permitted under the Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on any 2008 Bonds. ARTICLE XV REDEMPTION AND PURCHASE OF 2008 BONDS Section 15.01. Optional Redemption of 2008 Bonds. (a) Optional Redemption of 2008 Bonds. (1) Commercial Paper Rate Period. 2008 Bonds bearing interest at the Commercial Paper Rate are not subject to optional redemption prior to the maturity date. 2008 Bonds bearing interest at the Commercial Paper Rate are subject to redemption at the option of the Commission in whole or in part on the maturity date at a redemption price equal to the Purchase Price thereof. (2) Daily Rate Period and Weekly Rate Period. 2008 Bonds bearing interest at a Daily Rate or a Weekly Rate are subject to redemption, at the option of the Commission, in whole or in part, in Authorized Denominations on any Business Day, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. (3) Long -Tern Rate Period. 2008 Bonds bearing interest at the Long -Term Rate are subject to redemption, at the option of the Commission, in whole or in part, in Authorized Denominations, on the day following the last day of any Long -Term Rate Period and on such other dates as shall be specified in the Conversion Notice delivered with a Favorable OHS West:260379565.5 20 173 • • • Opinion of Bond Counsel, at a redemption price equal to the principal amount thereof, plus accrued interest, if -any, without premium. (4) Fixed Rate Period. Unless the Commission obtains a Favorable Opinion of Bond Counsel and changes redemption provisions as provided in Section 14.05(a)(v)(B), 2008 Bonds bearing interest at a Fixed Rate are subject to redemption in whole or in part (and if in part, in such order as the Commission shall specify or by such other method as the Trustee determines to be fair and reasonable and in Authorized Denominations), at the option of the Commission, on any date, at such times and at such redemption prices as follows: (a) If, on the Fixed Rate Conversion Date, the remaining term of such 2008 Bonds being converted to a Fixed Rate is greater than eight years, then such 2008 Bonds will not be subject to optional redemption until the first June 1 or December 1 (whichever is earlier) to follow the eighth (8th) anniversary of the conversion of such 2008 Bonds to a Fixed Rate. On such first June 1 or December 1, such 2008 Bonds will be subject to redemption at 102% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, which redemption price will decline by one percent (1%) per annum on each succeeding anniversary of such first June 1 or December 1 until reaching a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, and thereafter at a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption. (b) If, on the Fixed Rate Conversion Date, the remaining term of such 2008 Bonds is less than eight years, then such 2008 Bonds will not be subject to optional redemption following Conversion. (b) Selection of Bonds for Optional Redemption. (1) 2008 Bonds. If less than all 2008 Bonds are to be redeemed at any one time, the Trustee shall select the 2008 Bonds to be redeemed in any manner that it deems appropriate and fair and shall promptly notify the Commission in writing of the numbers of the 2008 Bonds so selected for redemption. For purposes of such selection, 2008 Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. In the event Term Bonds are designated for redemption, the Commission may designate the Mandatory Sinking Account Payments under Section 15.02(a), or portions thereof, that are to be reduced as allocated to such redemption. (c) Sufficient Funds Required for Optional Redemption. Any optional redemption of 2008 Bonds and notice thereof shall be rescinded and cancelled pursuant to the provisions of Section 4.02 if for any reason on the date fixed for redemption moneys are not available in the Redemption Fund or otherwise held in trust for such purpose in an amount sufficient to pay in full on said date the principal of, interest, and any premium due on the 2008 Bonds called for redemption. (d) Notice of Optional Redemption; Rescission. Any notice of optional redemption of the 2008 Bonds shall be delivered in accordance with Section 4.02 and may be rescinded as provided in Section 4.02. OHS West:260379565.5 21 174 Section 15.02. Mandatory Redemption of 2008 Bonds From Mandatory Sinking Account Payments. (a) Mandatory Redemption of 2008 Bonds. Except as otherwise provided in Section 14.05(a)(v)(B), 2008 Bonds are Term Bonds and are subject to mandatory redemption from Mandatory Sinking Account Payments .for such 2008 Bonds, on each date a Mandatory Sinking Account Payment for such 2008 Bonds is due, and in the principal amount equal to the Mandatory Sinking Account Payment due on such date at a Redemption Price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. Mandatory Sinking Account Payments for the 2008 Bonds that are Term Bonds shall be due in such amounts and on such dates as follows. 2008 Bonds Mandatory Mandatory Sinking Redemption Sinking Redemption Date Account Date Account (June 1) Payment (June 1) Payment 2010 2020 2011 2021 2012 2022 2013 2023 2014 2024 2015 2025 2016 2026 2017 2027 2018 2028 2019 2029 t Final Maturity (b) Selection of Bonds for Mandatory Sinking Account Redemption. If less than all 2008 Bonds are to be redeemed at any one time with Mandatory Sinking Account Payments, the Trustee shall select the 2008 Bonds to be redeemed by lot in any manner that it deems appropriate, and the Trustee shall promptly notify the Commission in writing of the numbers of the 2008 Bonds so selected for redemption. For purposes of such selection, 2008 Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. Section 15.03. Purchase In Lieu of Redemption. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2008 Bonds purchased on the open market, and such 2008 Bonds shall be cancelled by the Trustee. If any 2008 Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within the 2008 Bonds so purchased that are to be reduced as a result of such cancellation. The Commission covenants and agrees that any 2008 Bonds so purchased on the open market in lieu of mandatory redemption will be surrendered promptly to the Trustee for cancellation. OHS West:260379565.5 22 • 175 • Section 15.04. Holder's Option to Tender 2008 Bonds for Purchase. (a) During any Daily Rate Period, any 2008 Bond or (subject to subsection (c) of this Section) a portion thereof, may be tendered for purchase on any Business Day at the applicable Purchase Price, payable in immediately available funds, upon (A) delivery by the Holder or Beneficial Owner of such 2008 Bond to the Remarketing Agent and to the Trustee at its Principal Office of an irrevocable written notice or notice by Electronic Means by 11:00 a.m. (New York City time) on the Purchase Date, which states the principal amount of such 2008 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2008 Bond to the Trustee on the Purchase Date in accordance with Section 15.06. The Trustee shall keep a written record of the notice described in clause (A) of this subsection (a). (b) During any Weekly Rate Period, any 2008 Bond or (subject to subsection (c) of this Section) a portion thereof, may be tendered for purchase on any Business Day at the applicable Purchase Price, payable in accordance with Section 15.11 in immediately available funds, upon (A) delivery by the Holder or Beneficial Owner of such 2008 Bond to the Remarketing Agent and to the Trustee at its Principal Office of an irrevocable written notice or notice by Electronic Means by 5:00 p.m_ (New York City time) on any Business Day at least seven (7) days prior to the Purchase Date, which states the principal amount of such 2008 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2008 Bond to the Trustee on the Purchase Date in accordance with Section 15.06. The Trustee shall keep a written record of the notice described in clause (A) of this subsection (b)• (c) If any 2008 Bond is to be purchased in part pursuant to subsection (a) or subsection (b) of this Section, the amount so purchased and the amount not so purchased must each be an Authorized Denomination. (d) Any instrument delivered to the Trustee in accordance with this Section shall be irrevocable with respect to the purchase for which such instrument was delivered and shall be binding upon the Securities Depository and any subsequent Holder or Beneficial Owner of the 2008 Bond to which it relates, including any 2008 Bond issued in exchange therefor or upon the registration of transfer thereof, and as of the date of such instrument, the Holder or Beneficial Owner of the 2008 Bonds specified therein shall not have any right to optionally tender for purchase such 2008 Bonds prior to the date of purchase specified in such notice. The Commission, the Remarketing Agent and the Trustee may conclusively assume that any person (other than a Holder) providing notice of optional tender pursuant to subsection (a) or subsection (b) of this Section is the Beneficial Owner of the 2008 Bond to which such notice relates, and none of the Commission, the Remarketing Agent or the Trustee shall assume any liability in accepting such notice from any person whom it reasonably believes to be a Beneficial Owner of 2008 Bonds. Section 15.05. Mandatory Tender of 2008 Bonds for Purchase. (a) The 2008 Bonds shall be subject to mandatory tender for purchase at the applicable Purchase Price, at the following times and upon the occurrence of any of the events stated below: OHS West:260379565.5 23 176 (1) on the Conversion Date for such 2008 Bonds to a new Interest Rate Determination Method specified in a Conversion Notice (whether or not the proposed Conversion becomes effective on such date); (2) with respect to 2008 Bonds bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate: (A) on the fifth (5th) Business Day preceding (i) the scheduled expiration of a 2008 Liquidity Facility, (ii) the Termination of a 2008 Liquidity Facility at the election of the Commission as permitted by such 2008 Liquidity Facility; and (B) on the date of the provision of an Altemate Liquidity Facility for such 2008 Bonds pursuant to Section 15.14 and the resultant Termination of the existing 2008 Liquidity Facility; provided, however, that, notwithstanding any other provision of this Indenture to the contrary, no mandatory tender for purchase shall be required pursuant to this subsection if a Rating Confirmation shall be delivered by each Rating Agency then rating the 2008 Bonds with respect to which an Alternate Liquidity Facility is being provided pursuant to Section 15.14; (3) with respect to each 2008 Bond bearing interest at a Commercial Paper Rate, on each Interest Payment Date immediately following each Commercial Paper Rate Period for such 2008 Bond; (4) with respect to each 2008 Bond bearing interest at a Long -Term Rate, on the Interest Payment Date immediately following each Long -Term Rate Period for such 2008 Bond; and (5) with respect to 2008 Bonds bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, upon receipt by the Trustee of written notice from the 2008 Liquidity Provider for such 2008 Bonds that an event of default or an event of Termination (other than an immediate termination or suspension) has occurred under the 2008 Liquidity Facility with the effect that the obligations of such 2008 Liquidity Provider to purchase such 2008 Bonds or otherwise provide for the Purchase Price of such 2008 Bonds under such 2008 Liquidity Facility shall terminate on the date specified in such notice, in which event such 2008 Bonds shall be subject to purchase on a Business Day selected by the Trustee which date shall be not more than five (5) Business Days after receipt of such notice, but in no event later than the Business Day preceding the Termination date specified in the notice received from such 2008 Liquidity Provider; (b) Notice of mandatory tender for purchase on the Conversion Date shall be given by the Trustee to the Holders as provided in Section,14.05(b)(iv). (c) The Trustee shall give notice by first class mail to the Holders of 2008 Bonds of each Termination of a 2008 Liquidity Facility and each expiration of a 2008 Liquidity Facility making 2008 Bonds subject to mandatory tender pursuant to Section 15.05(a)(2), which notice shall (i) state the date of such Termination, substitution or expiration; (ii) state that unless a Rating Confirmation is received with respect to the substitution (in which event no mandatory tender for purchase shall occur), such 2008 Bonds shall be subject to mandatory tender for purchase on the specified Purchase Date at the applicable Purchase Price (which shall be specified in such notice); and (iii) be mailed by the Trustee not later than the fifteenth (15th) day prior to such Termination, substitution or expiration. OHS West:260379565.5 24 177 • (d) No notice need be given to the Holders of any 2008 Bond bearing interest at a Commercial Paper Rate of the mandatory tender for purchase of such 2008 Bond on an Interest Payment Date for such 2008 Bond. (e) Upon the expiration of the then current Long -Term Rate Period for the 2008 Bonds, the Trustee shall give notice by first class mail to the Holder of such 2008 Bonds at the address shown on the bond registration books maintained by the Trustee not later than the fifteenth (15th) day prior to the date on which such 2008 Bonds are subject to mandatory tender for purchase pursuant to Section 15.05(a)(4), which notice shall state that such 2008 Bonds are subject to mandatory tender on the specified Purchase Date at the applicable Purchase Price (which shall be specified in such notice). (f) The Trustee shall give notice by first class mail within two (2) Business Days of receipt of a notice from a 2008 Liquidity Provider pursuant to Section 15.05(a)(5), to the Holders of the 2008 Bonds at their addresses shown on the bond registration books maintained by the Trustee which notice shall: (1) state such 2008 Bonds are subject to mandatory tender for purchase pursuant to Section 15.05(a)(5) at the applicable Purchase Price (which shall be specified in such notice); and (2) state the Purchase Date. Section 15.06. Delivery of Tendered 2008 Bonds. With respect to any 2008 Bond that is registered in book -entry form with a Securities Depository, delivery of such 2008 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to Section 15.04 or 15.05 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2008 Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such 2008 Bond to the account of the Trustee, or to the account of a Participant of such Securities Depository acting on behalf of the Trustee. With respect to any 2008 Bond that is not registered in book -entry form with a Securities Depository, delivery of such 2008 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to Section 15.04 or 15.05 shall be effected by physical delivery of such 2008Bond to the Trustee at its Principal Office, by 1:00 p.m. (New York City time) on the Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Trustee, executed in blank by the Holder thereof with the signature of such Holder guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs. Section 15.07. 2008 Bonds Deemed Purchased. (a) If moneys sufficient to pay the Purchase Price of 2008 Bonds to be purchased pursuant to Section 15.04 or 15.05 shall be held by the Trustee on the applicable Purchase Date, such 2008 Bonds shall be deemed to have been purchased for all purposes of the Indenture, irrespective of whether or not such 2008 Bonds shall have been delivered to the Trustee or transferred on the books of a Securities Depository for such 2008 Bonds, and neither the former Holder or Beneficial Owner of such 2008 Bonds nor any other person shall have any claim thereon, under the Indenture or otherwise, for any amount other than the Purchase Price thereof. OHS West:260379565.5 25 178 (b) In the event of non -delivery of any 2008 Bond to be purchased pursuant to Section 15.04 or 15.05, the Trustee shall segregate and hold uninvested the moneys for the Purchase Price of such 2008 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2008 Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for the satisfaction of any claim for the Purchase Price of such 2008 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Purchase Price of any 2008 Bond and remaining unclaimed for two (2) years after the date of purchase shall be paid automatically to the Commission. After the payment of such unclaimed moneys to the Commission, the former Holder or Beneficial Owner of such 2008 Bond shall look only to the Commission for the payment thereof. Section 15.08. Deposit of 2008 Bonds. The Trustee agrees to accept and hold all 2008 Bonds deliveredto it pursuant to Section 15.04 or 15.05 in trust for the benefit of the respective Holders or Beneficial Owners which shall have so delivered such 2008 Bonds until the Purchase Price of such 2008 Bonds shall have been delivered to or for the account of or to the order of such Holders or Beneficial Owners pursuant to Section 15.11. Any 2008 Bonds registered for transfer to new purchasers and delivered to the Trustee as described in Section 15.12 shall be held in trust by the Trustee for the benefit of such new purchasers until delivery to such new purchasers. Section 15.09. Remarketing of Tendered 2008 Bonds. (a) Daily Put or Commercial Paper Tender Bonds. (i) Not later than 11:15 a.m. (New York City time) on each Business Day on which the Trustee receives a notice from a Holder or Beneficial Owner of a 2008 Bond to be tendered pursuant to Section 15.04(a) (the 'Daily Put Bonds"), and on each day any 2008 Bonds bearing interest at a Commercial Paper Rate are subject to mandatory tender pursuant to Section 15.05(a)(3) (the "Commercial Paper Tender Bonds"), the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission, specifying the principal amount of 2008 Bonds for which it has received such notice and the names of the Holder or Holders thereof. The' Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Daily Put Bonds or Commercial Paper Tender Bonds, other than 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. (ii) Not later than 11:30 a.m. (New York City time) on the Purchase Date described in subparagraph (i) above, the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission of the accrued amount of interest payable with respect to the Daily Put Bonds or Commercial Paper Tender Bonds, as applicable, as of such Purchase Date and confirming the aggregate principal amount of the Daily Put Bonds or Commercial Paper Tender Bonds. (iii) Not later than 12:00 noon (New York City time) on any Purchase Date for Daily Put Bonds or Commercial Paper Tender Bonds, the Remarketing Agent shall give notice by Electronic Means to the Commission and the Trustee of the principal amount of any Daily Put Bonds or Commercial Paper Tender Bonds, as applicable, which have not been remarketed in OHS West:260379565.5 26 179 • accordance with the applicable Remarketing Agreement and its commitment to deliver funds from the Daily Put Bonds or Commercial Paper Tender Bonds that have been remarketed to the Trustee by 2:00 p.m. (New York City time) on such day pursuant to Section 15.10. (iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Daily Put Bonds or Commercial Paper Tender Bonds to be purchased on any Purchase Date, the Trustee shall demand payment under the applicable 2008 Liquidity Facility then in effect with respect to the tendered 2008 Bonds in sufficient time (as set forth by the terms of the 2008 Liquidity Facility) so as to provide by 2:00 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Daily Put Bonds or Commercial Paper Tender Bonds, as applicable. The Trustee shall immediately after such demand for payment give notice by Electronic Means to the Commission of the amount, if any, of such demand. (b) Weekly Put Bonds. (i) Not later than 10:30 a.m. (New York City time) on each Business Day succeeding a day on which the Trustee receives a notice from a Holder or Beneficial Owner of 2008 Bonds to be tendered pursuant to Section 15.04(b) (the "Weekly Put Bonds"), the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission, specifying the principal amount of 2008 Bonds for which it has received such notice, the names of the Holder or Holders thereof and the Purchase Date. The Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Weekly Put Bonds, other than 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. (ii) Not later than 11:00 a.m. (New York City time) on the Business Day immediately preceding the Purchase Date described in subparagraph (i) above, the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission of the accrued amount of interest payable with respect to the Weekly Put Bonds as of such Purchase Date and confirming the aggregate principal amount of the Weekly Put Bonds. (iii) Not later than 11:30 a.m. (New York City time) on any Purchase Date for Weekly Put Bonds, the Remarketing Agent shall give notice by Electronic Means to the Commission and the Trustee of the principal amount of Weekly Put Bonds that have not been remarketed in accordance with the applicable Remarketing Agreement and its commitment to deliver funds from the Weekly Put Bonds that have been remarketed to the Trustee by 2:00 p.m. (New York City time) on the Purchase Date pursuant to Section 15.10. (iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Weekly Put Bonds to be purchased on any Purchase Date, the Trustee shall demand payment under the applicable 2008 Liquidity Facility then in effect with respect to the Weekly Put Bonds in sufficient time (as set forth by the terms of the 2008 Liquidity Facility) so as to provide by 2:00 p.m. (New York City time) on such Purchase Date an amount sufficient, OHS West:260379565.5 27 180 together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Weekly Put Bonds. The Trustee shall immediately after such demand for payment give notice by Electronic Means to the Commission of the amount, if any, of such demand. (c) Mandatory Tender Bonds. (i) Not later than 9:30 a.m. (New York City time) on each Purchase Date occurring pursuant to Section 15.05 with the exception of subsection 15.05(a)(3), the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission specifying the principal amount of all Outstanding 2008 Bonds that are subject to mandatory tender (the "Mandatory Tender Bonds") on such Purchase Date pursuant to any subsection of Section 15.05 except subsection 15.05(a)(3) and the names of the registered Holder or Holders thereof. The Remarketing Agent shall thereupon offer for sale and use its best efforts to find purchasers for such Mandatory Tender Bonds (if there is still an obligation to remarket), other than 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. (ii) Not later than 10:00 a.m. (New York City time) on each Purchase Date described in subparagraph (i) above, the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission of the accrued amount of interest payable with respect to the Mandatory Tender Bonds as of the Purchase Date and confirming the aggregate principal amount of the Mandatory Tender Bonds. (iii) Not later than 11:30 a.m. (New York City time) on any Purchase Date with respect to Mandatory Tender Bonds, the Remarketing Agent shall give notice by Electronic Means to the Trustee and the Commission of the principal amount of Mandatory Tender Bonds that have not been remarketed in accordance with the Remarketing Agreement and its written commitment to deliver funds from the Mandatory Tender Bonds that have been remarketed to the Trustee by 2:00 p.m. (New York City tune) on the Purchase Date pursuant to Section 15.10. (iv) If a Remarketing Agent's notice pursuant to subparagraph (iii) above indicates that such Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Mandatory Tender Bonds to be purchased on such Purchase Date, the Trustee shall demand payment under the applicable 2008 Liquidity Facility then in effect with respect to the Mandatory Tender Bonds in sufficient time (as set forth by the terms of the 2008 Liquidity Facility) so as to provide by 2:00 p.m. (New York City time) on such Purchase Date an amount sufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Mandatory Tender Bonds. The Trustee shall immediately after such demand for payment give notice to the Commission of the amount, if any, of such demand. (d) Optional Commission Deposit. If a Remarketing Agent's notice pursuant to subparagraph (a)(iii), (b)(iii) or (c)(iii) above indicates that such Remarketing Agent has remarketed less than all the Daily Put Bonds, Commercial Paper Tender Bonds, Weekly Put Bonds, or Mandatory Tender Bonds to be purchased on any Purchase Date and the Trustee OHS West:260379565.5 28 181 • • • does not receive sufficient funds from, or has received notice from a 2008 Liquidity Provider that it will not provide sufficient funds from, draws on the applicable 2008 Liquidity Facility to pay the Purchase Price of all such 2008 Bonds that have not been remarketed by 2:00 p.m. (New York City time) on the Purchase Date, the Trustee shall immediately (but in no event later than 2:30 p.m. (New York City time)) give notice by Electronic Means to the Commission specifying the principal amount and the Purchase Price of such 2008 Bonds for which moneys will not be available in the 2008 Bonds Purchase Fund and requesting the Commission to deposit with the Trustee as soon as possible on such Purchase Date, preferably by 3:00 p.m. (New York City time), an amount sufficient to pay that portion of the Purchase Price for which moneys will not be available in the 2008 Bonds Purchase Fund, such notice to be confirmed immediately by Electronic Means to the Commission. Such deposit by the Commission shall be at the sole option of the Commission. (e) Limitation. If a 2008 Liquidity Facility is in effect, the Remarketing Agent shall not remarket any tendered 2008 Bonds to the Commission or any affiliate of the Commission. Each Remarketing Agent shall remarket the 2008 Bonds, as provided herein, at not less than the Purchase Price thereof, except for 2008 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 15.13. Notwithstanding the foregoing, the Remarketing Agent may sell any 2008 Bonds held for its account to the Commission. Section 15.10. Deposits into Accounts in the 2008 Bonds Purchase Fund. (a) The terms of any sale by a Remarketing Agent of any 2008 Bond tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 shall provide for the payment of the Purchase Price for such tendered or deemed tendered 2008 Bond by such Remarketing Agent to the Trustee for deposit in the 2008 Remarketing Account of the 2008 Bonds Purchase Fund in immediately available funds at or before 2:00 p.m. (New York City time) on the Purchase Date. Each Remarketing Agent shall cause to be paid to the Trustee on each Purchase Date for tendered or deemed tendered 2008 Bonds all amounts representing proceeds of the remarketing of such 2008 Bonds, based upon the notice given by such Remarketing Agent pursuant to Section 15.09(a)(iii), 15.09(b)(iii), 15.09(c)(iii), as the case may be. All such amounts shall be deposited in the 2008 Remarketing Account. (b) The Trustee shall deposit in the 2008 Liquidity Facility Purchase Account all amounts received under a 2008 Liquidity Facility pursuant to Section 15.09(a)(iv), 15.09(b)(iv) or 15.09(c)(iv), as the case may be, and related to the 2008 Bonds. (c) Upon receipt of any notice from the Trustee pursuant to Section 15.09(d) that insufficient funds will be on deposit in the 2008 Bonds Purchase Fund to pay the full Purchase Price of the 2008 Bonds to be purchased on the Purchase Date, the Commission shall, at its sole option, deliver or cause to be delivered to the Trustee immediately available funds in an amount equal to such deficiency prior to 3:00 p.m. (New York City time) on the Purchase Date. All such funds shall be deposited in the 2008 Commission Account. (d) All funds received from the Commission pursuant to Section 15.09(f) shall be deposited in the 2008 Commission Account. OHS West:260379565.5 29 182 (e) The Trustee shall hold amounts in the 2008Bonds Purchase Fund uninvested. Section 15.11. Disbursements from the 2008 Bonds Purchase Fund. (a) Application of Moneys. Moneys in the 2008 Bonds Purchase Fund (other than the proceeds of any remarketing of 2008 Liquidity Facility Bonds, which shall be paid to the 2008 Liquidity Provider on the remarketing date) shall be applied at or before 3:00 p.m. (New York City time) to the purchase of 2008 Bonds as provided herein by the Trustee, on each Purchase Date, as follows: First — Moneys constituting funds in the 2008 Remarketing Account shall be used by the Trustee on any Purchase Date to purchase 2008 Bonds tendered or .deemed tendered for purchase pursuant to Section 15.04 or 15.05 at the Purchase Price thereof. Second — In the event such moneys in the 2008 Remarketing Account on the Purchase Date are insufficient to purchase all 2008 Bonds, moneys in the 2008 Liquidity Facility Purchase Account on such Purchase Date shall be used by the. Trustee at that time to purchase such remaining 2008 Bonds at the Purchase Price thereof. Third — If the amount of money in the 2008 Remarketing Account and 2008 Liquidity Facility Purchase Account on the Purchase Date is insufficient to pay in full the Purchase Price of all 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 on such Purchase Date, moneys in the 2008 Commission Account on such Purchase Date, if any, shall be used by the Trustee at that time to purchase such remaining 2008 Bonds at the Purchase Price thereof. Notwithstanding anything to the contrary in this Section, if the 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05 are registered in book -entry form, payment of the Purchase Price of such 2008 Bonds shall be made in accordance with the rules and procedures of the Securities Depository. (b) Nondeliveries. The Trustee shall, as to any 2008 Bonds that are not registered in book -entry form and that have not been delivered to it as required by Section 15.06, (i) notify the Remarketing Agent in writing of such nondelivery and (ii) place a stop transfer against an appropriate amount of 2008 Bonds registered in the name of the Holder of such 2008 Bonds on the bond regishation books maintained by the Trustee. The Trustee shall place and maintain such stop transfer commencing with the lowest serial number 2008 Bond registered in the name of such Holder until stop transfers have been placed against an appropriate amount of 2008 Bonds until the appropriate 2008 Bonds are delivered to the Trustee as required by Section 15.06. Upon such delivery, the Trustee shall make any necessary adjustments to such bond registration books. (c) Limitation. Notwithstanding anything contained herein to the contrary, while any 2008 Liquidity Facility is in effect with respect to the 2008 Bonds, the Trustee shall not use proceeds obtained by remarketing any such 2008 Bonds to the Commission or any affiliate of the Commission to pay any portion of the Purchase Price of the tendered 2008 Bonds, and no such proceeds shall be deposited in the 2008 Remarketing Account. OHS West:260379565.5 30 183 • • Notwithstanding the foregoing, 2008 Bonds purchased from the 2008 Liquidity Facility Purchase Account may be purchased from the 2008 Liquidity Provider by the Commission. (d) Insufficient Funds. If sufficient funds are not available for the purchase of all 2008 Bonds tendered or deemed tendered and required to be purchased on any Purchase Date, all 2008 Bonds shall bear interest at the lesser of [eleven percent], [the SIFMA Swap Index plus three percent] and the Maximum Interest Rate from the date of such failed purchase until all such 2008 Bonds are purchased as required in accordance with this Indenture, and all tendered 2008 Bonds shall be returned to their respective Holders. Notwithstanding any other provision of this Indenture, such failed purchase and return shall not constitute an Event of Default. Thereafter, the Trustee shall continue to take all such action available to it to obtain remarketing proceeds from the Remarketing Agent and sufficient other funds from the Liquidity Provider, if any, for such 2008 Bonds. Section 15.12. Delivery of 2008 Bonds. (a) If the 2008 Bonds are not registered in book -entry form, a principal amount of 2008 Bonds equal to the amount of 2008 Bonds successfully remarketed by each Remarketing Agent shall be delivered to the Trustee for registration or transfer to such persons as shall be designated by the Remarketing Agent. Such 2008 Bonds shall be held available at the office of the Trustee and shall be picked up at a location in Los Angeles, California designated by the Trustee by the applicable Remarketing Agent at or after 1:00 p.m. (New York City time) on the Purchase Date against delivery of funds for deposit into the 2008 Remarketing Account of the 2008 Bonds Purchase Fund equal to the Purchase Price of the 2008 Bonds that have been remarketed. If the 2008 Bonds are registered in book -entry fonn, transfer of ownership of the remarketed 2008 Bonds shall be effected in accordance with the procedures of the Securities Depository against delivery of funds for deposit into the 2008 Remarketing Account of the 2008 Bonds Purchase Fund equal to the Purchase Price of the 2008 Bonds that have been remarketed. (b) Any 2008 Bonds purchased with funds in any 2008 Liquidity Facility Purchase Account of the 2008 Bonds Purchase Fund shall be delivered and held in accordance with Section 15.13. Any 2008 Bonds purchased with funds in any 2008 Commission Account of the 2008 Bonds Purchase Fund shall be delivered and held in accordance with the instructions of the Commission furnished to the Trustee. Such 2008 Bonds shall be held available for registration of transfer and delivery by the Trustee in such manner as may be agreed between the Trustee and the 2008 Liquidity Provider or the Commission, as the case may be. Section 15.13. 2008 Liquidity Facilities; Liquidity Facility Bonds. (a) Unless all the Outstanding 2008 Bonds are 2008 Liquidity Facility Bonds or are in a Long -Term Rate Period or a Fixed Rate Period, the Commission shall provide, or cause to be provided, to the Trustee a 2008 Liquidity Facility_ The Commission shall not reduce the amount of a 2008 Liquidity Facility or permit a substitution of a 2008 Liquidity Provider thereunder without obtaining a Rating Confirmation with respect to such action unless such action is considered a substitution of a 2008 Liquidity Facility subjecting the OHS West:260379565.5 31 184 2008 Bonds affected thereby to mandatory purchase pursuant to Section 15.05(a)(2). The Commission shall have the right at any time to provide, pursuant to Section 15.14, an Alternate Liquidity Facility for any 2008 Liquidity Facility then in effect. If there shall have been delivered to the Trustee (i) an Alternate Liquidity Facility meeting the requirements of Section 15.14 and (ii) the opinions and documents required by Section 15.14, then the Trustee shall accept such Altemate Liquidity Facility and, if so directed by the Commission, on or after the effective date of such Alternate Liquidity Facility promptly surrender the 2008 Liquidity Facility being so substituted in accordance with the respective terms thereof for cancellation; provided the Trustee shall not surrender any 2008 Liquidity Facility until all draws or requests to purchase 2008 Bonds made under such 2008 Liquidity Facility have been honored in accordance with the terms thereof, including all draws required to be made in connection with such substitution. In the event that the Commission elects to provide an Alternate Liquidity Facility with respect to the 2008 Bonds, the 2008 Bonds shall be subject to the mandatory tender provisions of Section 15.05(a)(2). Notwithstanding the foregoing, if at any time there shall cease to be 2008 Bonds Outstanding or if all the Outstanding 2008 Bonds have been converted to a Fixed Rate Period or a Long -Term Rate Period, or a 2008 Liquidity Facility shall be terminated pursuant to its terms, the Trustee shall promptly surrender such 2008 Liquidity Facility in accordance with its terms for cancellation. The Trustee shall comply with the procedures set forth in each 2008 Liquidity Facility relating to the termination thereof. (b) In the event that a 2008 Liquidity Facility is in effect, the Trustee shall make a demand for payment under such 2008 Liquidity Facility, subject to and in accordance with its terms, in order to receive payment thereunder on each Purchase Date for such 2008 Bonds as provided in Section 15.09(a)(iv), Section 15.09(b)(iv) or Section 15.09(c)(iv), as applicable. (c) Each such demand for payment shall be made pursuant to and in accordance with this Indenture. The Trustee shall give notice of each such demand for payment to the Commission at the time of each such demand. The proceeds of each such demand shall be deposited in the 2008 Liquidity Facility Purchase Account within the 2008 Bonds Purchase Fund and used in the order of priority established by Section 15.11. At the time of making any demand under a 2008 Liquidity Facility pursuant to Section 15.13(b), the Trustee shall direct the 2008 Liquidity Provider to pay the proceeds of such demand directly to the Trustee for deposit in the 2008 Liquidity Facility Purchase Account. The Trustee shall comply with all provisions of each 2008 Liquidity Facility in order to realize upon any demand for payment thereunder, and will not demand payment under any 2008 Liquidity Facility of any amounts for payment of: (i) 2008 Liquidity Facility Bonds; or (ii) 2008 Bonds held by the Commission or actually known by the Trustee to be held by any affiliate of the Commission or any nominee of the Commission unless such 2008 Liquidity Facility specifically permits such demand. (d) Any 2008 Bonds purchased with payments made under a 2008 Liquidity Facility pursuant to Section 15.13(b) shall constitute 2008 Liquidity Facility Bonds and shall be registered in the name of, or as otherwise directed by, the applicable Liquidity Provider and delivered to or upon the order of, or as otherwise directed by, such Liquidity Provider. OHS West:260379565.5 32 185 • (e) Unless otherwise provided in a 2008 Liquidity Facility, 2008 Liquidity Facility Bonds shall be remarketed by the applicable Remarketing Agent prior to any other 2008 Bonds tendered for purchase pursuant to Section 15.04 or 15.05 and shall be remarketed in accordance with the terms of the applicable Remarketing Agreement. Upon (i) receipt by the Commission and the Trustee of written notification from a 2008 Liquidity Provider that a 2008 Liquidity Facility has been fully reinstated with respect to principal and interest and (ii) release by the 2008 Liquidity Provider of 2008 Liquidity Facility Bonds that the Remarketing Agent has remarketed, such 2008 Bonds shall be made available to the purchasers thereof and shall no longer constitute 2008 Liquidity Facility Bonds for purposes of this Indenture. The proceeds of any remarketing of 2008 Liquidity Facility Bonds shall be paid to the 2008 Liquidity Provider by the Trustee on such remarketing date in immediately available funds with interest on the sale price being calculated as if such 2008 Bond were not a 2008 Liquidity Facility Bond; provided, however, if all such 2008 Bonds are 2008 Liquidity Facility Bonds, at the principal amount thereof plus accrued interest, and the remarketing date will be considered an Interest Payment Date. (f) Each of the Commission and the Trustee agrees that it will, promptly upon receipt, send to the 2008 Liquidity Provider (by Electronic Means) a copy of every notice received by it hereunder relating to 2008 Liquidity Facility Bonds. (g) Notwithstanding anything to the contrary herein or in the 2008 Bonds, all obligations of the Commission under or in connection with any 2008 Liquidity Facility (including, without limitation, the payment of any reimbursement obligations to any 2008 Liquidity Provider and the payment of any 2008 Liquidity Facility Bonds) shall be governed by the terms of the applicable 2008 Liquidity Facility. (h) The Trustee shall provide to the Remarketing Agent and to each Rating Agency then rating the 2008 Bonds written notice of the provision of a 2008 Liquidity Facility or the extension of any 2008 Liquidity Facility in effect with respect to the 2008 Bonds. (i) Whenever requested in writing by the Commission, the Trustee shall submit to the applicable 2008 Liquidity Provider a reduction certificate or other appropriate documentation necessary under the applicable 2008 Liquidity Facility to reduce the principal amount of the 2008 Bonds and related interest to reflect any purchase or redemption of such 2008 Bonds by the Commission and the cancellation of such 2008 Bonds. Section 15.14. Alternate Liquidity Facilities. (a) So long as any 2008 Bonds bear interest at a Variable Rate (other than 2008 Bonds in a Long -Term Rate Period or a Fixed Rate Period); on or prior to the expiration or termination of any existing 2008 Liquidity Facility, including any renewals or extensions thereof (other than an expiration of such 2008 Liquidity Facility at the final maturity of the 2008 Bonds to which such 2008 Liquidity Facility relates), the Commission shall provide to the Trustee (with a copy to the applicable Remarketing Agent) a renewal or extension of the term of the existing 2008 Liquidity Facility for such 2008 Bonds or an Alternate Liquidity OILS West:260379565.5 33 186 Facility for such 2008 Bonds meeting the requirements set forth in subsection (b) of this Section. (b)The Commission may at any time provide an Alternate Liquidity Facility for the 2008 Bonds in accordance with the provisions hereof and upon delivery to the Trustee of the items specified in subsection (c) of this Section. Any such Alternate Liquidity Facility must meet the following conditions: (i} The obligations of a 2008 Liquidity Provider under an Alternate Liquidity Facility to purchase 2008 Bonds or otherwise provide for the Purchase Price of 2008 Bonds tendered or deemed tendered pursuant to Section 15.04 or Section 15.05 shall not be subject to suspension or termination on less than fifteen (15) days' notice to the Commission and the Trustee; provided, however, that the obligations of a 2008 Liquidity Provider to purchase 2008 Bonds or otherwise provide for the Purchase Price of such 2008 Bonds may be immediately suspended or terminated (A) without such notice upon the occurrence of such events as may be provided in a 2008 Liquidity Facility and which are disclosed to the Holders of such 2008 Bonds in connection with the provision of such 2008 Liquidity Facility or, (B) if applicable, upon the remarketing of such 2008 Bonds upon the mandatory tender thereof as a result of provision of such Alternate Liquidity Facility pursuant to Section 15.05(a)(2); (ii) such Alternate Liquidity Facility must take effect on or before the Purchase Date for the 2008 Bonds established pursuant to Section 15.05(a)(2); and (iii) such Alternate Liquidity Facility must be in an amount sufficient to pay the maximum Purchase Price of the 2008 Bonds which will be applicable during the Rate Period commencing on such substitution. (c) Prior to the date of the delivery of such Alternate Liquidity Facility to the Trustee pursuant to subsection ,(b) of this Section, the Commission shall cause to be furnished to the Trustee (i) an Opinion of Bond Counsel addressed to the Trustee to the effect that the delivery of such Alternate Liquidity Facility to the Trustee is authorized under this Indenture and complies with the terms hereof and will not, in and of itself, adversely affect the Tax -Exempt status of interest on the 2008 Bonds and (ii) an opinion or opinions of counsel to the Liquidity Provider for such Alternate Liquidity Facility addressed to the Trustee, to the effect that such Alternate Liquidity Facility has been duly authorized, executed and delivered by the applicable Liquidity Provider and constitutes the valid, legal and binding obligation of such Liquidity Provider enforceable against such Liquidity Provider in accordance with its terns and (iii) if the 2008 Bonds are not subject to mandatory tender for purchase, the Rating Confirmation required by Section 15.05(a)(2). (d) The Trustee shall give notice by first class mail to the Holders of the 2008 Bonds of the proposed substitution of a 2008 Liquidity Facility not later than the fifteenth (15th) day prior to the substitution date. Section 15.15. Remarketing Agents for the 2008 Bonds. The Commission shall appoint and employ one or more Remarketing Agents for 2008 Bonds in a Daily Rate Period, a Weekly Rate Period, a Commercial Paper Rate Period and a Long -Term Rate Period. The OHS WesL260379565.5 34 • 187 • Commission shall appoint the initial Remarketing Agent for the 2008 Bonds on or before September 1, 2009. All references in this First Supplemental Indenture to the term "Remarketing Agent" shall mean the one or more banks, trust companies or members of the National Association of Securities Dealers Inc. appointed by the Commission to perform the duties and obligations of the Remarketing Agent hereunder with respect to the 2008 Bonds; provided that any such bank, trust company or member of the National Association of Securities Dealers, Inc. so appointed shall be organized and doing business under the laws of any state of the United States of America and shall have, together with its parent, if any, a capitalization of at least fifteen million dollars ($15,000,000) as shown in its or its parent's most recently published annual report. The Commission shall execute and deliver to each Remarketing Agent a Remarketing Agreement, which shall designate the Remarketing Agent's principal office and in which such Remarketing Agent shall agree: (i) to perform the duties and comply with the requirements imposed upon it by such Remarketing Agreement and this Indenture; and (ii) to keep such books and records with respect to its activities as Remarketing Agent as shall be consistent with prudent industry practice and to make such books and records available for inspection by each of the Commission and the Trustee at all reasonable times. ARTICLE XVI PURCHASE OF 2008 BONDS AT DIRECTION OF COMMISSION Section 16.01. Mandatory Tender for Purchase of 2008 Bonds at Direction of Commission. (a) In addition to the provisions relating to the mandatory tender for purchase of 2008 Bonds pursuant to Section 15.05, the 2008 Bonds, or any of them, shall be subject to mandatory tender for purchase by the Commission, in whole or in part (such that the portion that is subject to mandatory tender for purchase pursuant to this Section 16.01 and the portion not subject to such mandatory tender shall each be in an Authorized Denomination), at the applicable Optional Purchase Price on each Optional Purchase Date. In the event that the Commission determines to purchase any 2008 Bonds on any Optional Purchase Date, the Commission shall provide the Trustee with written notice of such determination at least forty-five (45) days prior to the Optional Purchase Date, which notice shall specify the principal amount of 2008 Bonds that are to be purchased and the Optional Purchase Date on which such purchase is to occur. (b) When the Trustee shall receive notice from the Commission of its determination to purchase 2008 Bonds pursuant to subsection (a) of this Section, the Trustee shall give notice, in the name of the Commission, of the mandatory tender for purchase of such 2008 Bonds, which notice shall be mailed, by first class mail, postage prepaid, not more than sixty (60) nor less than thirty (30) days before the Optional Purchase Date to the Holders of any 2008 Bonds or portions of 2008 Bonds to be purchased at their addresses appearing in the bond registration books maintained by the Trustee, with a copy to the Notice Parties. Such notice shall specify the maturities of such 2008 Bonds to be purchased, the Optional Purchase Date, the Optional Purchase Price and the place or places where the Optional Purchase Price due upon such tender for purchase shall be payable and, if less than all of the 2008 Bonds are to be purchased, the letters and numbers or other distinguishing marks of such 2008 Bonds so to be purchased, and, in the case of 2008 Bonds to be purchased in part OHS West:260379565.5 35 188 only, such notice shall also specify the respective portions of the principal amount thereof to be purchased. Such notice shall further state that on such Optional Purchase Date there shall become due and payable upon each 2008 Bond to be purchased, the Optional Purchase Price thereof, or the Optional Purchase Price of the specified portions of the principal amount thereof to be purchased in the case of 2008 Bonds to be purchased in part only, and that from and after such Optional Purchase Date interest on such 2008 Bond for the benefit of the current Holder of such 2008 Bond or the portion of such 2008 Bond to be purchased shall cease to accrue and be payable. Receipt of such notice of mandatory tender for purchase shall not be a condition precedent to the mandatory tender for purchase of the 2008 Bonds and failure of any Holder of a 2008 Bond to receive any such notice or any defect in such notice shall not affect the validity of the proceedings for the mandatory tender for purchase of the 2008 Bonds pursuant to this Section. (c) If at the time the Trustee sends any notice of mandatory tender for purchase of the 2008 Bonds pursuant to this Section, the Commission has not deposited with the Trustee an amount sufficient to pay the full Optional Purchase Price of the 2008 Bonds, or the portions thereof, to be purchased, such notice shall state that such mandatory tender for purchase is conditional upon the receipt by the Trustee on or prior to the Optional Purchase Date fixed for such purchase of moneys sufficient to pay the Optional Purchase Price of such 2008 Bonds, or the portions thereof to be purchased, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Commission shall not be required to purchase such 2008 Bonds. In the event that such notice of mandatory tender for purchase contains such a condition and such moneys are not so received, no purchase of the 2008 Bonds identified in the notice of mandatory tender for purchase shall be made and the Trustee shall, within a reasonable time thereafter, give notice, to the Remarketing Agent and to the persons and in the manner in which the notice of tender was given, that such moneys were not so received and that there will be no purchase of 2008 Bonds pursuant to the notice of mandatory tender for purchase. (d) If less than all of the Outstanding 2008 Bonds are to be called for mandatory tender for purchase pursuant to this Section, the principal amount and maturity of such 2008 Bonds to be purchased shall be selected by the Commission in its sole discretion. If less than all of 2008 Bonds of like maturity shall be called for mandatory tender for purchase pursuant this Section, except as otherwise provided by the Securities Depository, the particular 2008 Bonds or portions of 2008 Bonds to be purchased shall be selected at random by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate; provided, however, that in selecting portions of 2008 Bonds for purchase, the Trustee shall treat each 2008 Bond as representing that number of 2008 Bonds of the minimum Authorized' Denomination for the 2008 Bonds which is obtained by dividing the principal amount of such 2008 Bond by the minimum Authorized Denomination for the 2008 Bonds. Section 16.02. Delivery of Tendered 2008 Bonds. With respect to any 2008 Bond that is registered in book -entry form, delivery of such 2008 Bond to the Trustee in connection with any mandatory tender for purchase pursuant to Section 16.01 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities OHS West:260379565.5 36 189 • • Depository for such 2008 Bond or any Participant thereof to reflect the transfer of the beneficial ownership interest in such 2008 Bond to the account of the Trustee, on behalf of the Commission, or to the account of a Participant acting on behalf of the Commission. With respect to any 2008 Bond that is not registered in book -entry form, delivery of such 2008 Bond to the Trustee in connection with any mandatory tender for purchase pursuant to Section 16.01 shall be effected by physical delivery of such 2008 Bond to the Trustee at its Principal Office, by 1:00 p.m. (New York City time) on the Optional Purchase Date, accompanied by an instrument of transfer thereof, in a form satisfactory to the Trustee, executed in blank by the Holder thereof with the signature of such Holder guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs. Section 16.03. 2008 Bonds Deemed Purchased. (a) If moneys sufficient to pay the Optional Purchase Price of 2008 Bonds to be purchased pursuant to Section 16.01 on an Optional Purchase Date shall be held by the Trustee on such Optional Purchase Date, such 2008 Bonds shall be deemed to have been purchased for all purposes of this Indenture, irrespective of whether or not such 2008 Bonds shall have been delivered to the Trustee or transferred on the books of the Securities Depository for the 2008 Bonds, and neither the former Holder or former Beneficial Owner of such 2008 Bonds nor any other person shall have any claim thereunder, under this Indenture or otherwise, for any amount other than the Optional Purchase Price thereof. (b) In the event of non -delivery of any 2008 Bond to be purchased pursuant to Section 16.01, the Trustee shall segregate and hold uninvested the moneys for the Optional Purchase Price of such 2008 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2008 Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for the satisfaction of any claim for the Optional Purchase _Price of such 2008 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Optional Purchase Price of any 2008 Bond remaining unclaimed for two (2) years after the Optional Purchase Date shall be paid automatically to the Commission. After the payment of such unclaimed moneys to the Commission, the former Holder or former Beneficial Owner of such 2008 Bond shall look only to the Commission for the payment thereof. Section 16.04. Deposit of 2008 Bonds. The Trustee agrees to accept and hold all 2008 Bonds delivered to it pursuant to Section 16.01 in trust for the benefit of the respective Holders or Beneficial Owners which shall have so delivered such 2008 Bonds until the Optional Purchase Price of such 2008 Bonds shall have been delivered to or for the account of or to the order of such Holders or Beneficial Owners pursuant to Section 16.05. Any 2008 Bonds purchased pursuant to Section 16.01 and registered for transfer to the Trustee shall be held in trust by the Trustee for the benefit of the Commission until delivery to the Commission. Section 16.05. Payment of Optional Purchase Price of 2008 Bonds. (a) Moneys held by the Trustee for the payment of the Optional Purchase Price of 2008 Bonds subject to mandatory tender for purchase pursuant to Section 16.01 shall be applied at or before 3:00 p.m. (New York City time) to the purchase of such 2008 Bonds. OHS West:260379565.5 37 190 Except as otherwise provided with respect to 2008 Bonds that are registered in book -entry from, payment of the Optional Purchase Price of 2008 Bonds tendered for purchase pursuant to Section 16.01 shall be made only upon the surrender of such 2008 Bonds to the Trustee. Notwithstanding anything to the contrary in this Section, if the 2008 Bonds to be tendered for purchase pursuant to Section 16.01 are registered in book -entry form, payment of the Optional Purchase Price for tendered 2008 Bonds shall be made in accordance with the rules and procedures of the Securities Depository. (b) The Trustee shall, as to any 2008 Bonds that are not registered in book -entry form and that have not been delivered to it as required by Section 16.02, place a stop transfer against an appropriate amount of 2008 Bonds registered in the name of the Holder of such 2008 Bonds on the bond registration books maintained by the Trustee. The Trustee shall place and maintain such stop transfer commencing with the lowest serial number 2008 Bond registered in the name of such Holder until stop transfers have been placed against an appropriate amount of 2008 Bonds until the appropriate 2008 Bonds are delivered to the Trustee. Upon such delivery, the Trustee shall make any necessary adjustments to such bond registration books. Section 16.06. 2008 Bonds Owned by Commission. (a) Any 2008 Bonds purchased by the Commission pursuant to Section 16.01 shall not be cancelled by the Trustee unless such cancellation is directed by an Authorized Representative but shall remain Outstanding for all purposes of the Indenture. (b) The Commission covenants and agrees that it shall not transfer or cause the transfer of any 2008 Bond purchased by the Commission pursuant to Section 16.01 unless the Commission delivers to the Trustee a Favorable Opinion of Bond Counsel with respect to such transfer. (c) The Commission covenants and agrees that, in the event that at any time there are insufficient funds in the Revenue Fund, the Principal Fund, the Interest Fund or the Redemption Fund, as applicable, to pay the principal of and interest then due on the Outstanding 2008 Bonds, it will surrender or cause to be surrendered to the Trustee for cancellation any 2008 Bonds held by the Commission. ARTICLE XVH ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF; 2008 LETTER OF CREDIT Section 17.01. Funds and Accounts. The following funds and accounts are hereby established in connection with the 2008 Bonds: (a) To ensure the proper application of such portion of proceeds from the sale of the 2008 Bonds to be applied to pay the Costs of Issuance of the 2008 Bonds, there is hereby established the 2008 Costs of Issuance Fund, such fund to be held by the Trustee. (b) To provide for a reserve fund for the 2008 Bonds, there is hereby established and maintained with the Trustee a fund designated as the "2008 Bonds Reserve Fund." OHS West:260379565.5 38 191 • (c) To ensure proper application of funds to be applied to the purchase of 2008 Bonds tendered or deemed tendered for purchase pursuant to Section 15.04 or 15.05, there is hereby established the 2008 Bonds Purchase Fund, such fund to be held by the Trustee. There shall also be created and established three (3) separate accounts in the 2008 Bonds Purchase Fund designated the "2008 Remarketing Account," the "2008 Liquidity Facility Purchase Account," and the "2008 Commission Account." Section 17.02. 2008 Costs of Issuance Fund. The monies set aside and placed in the 2008 Costs of Issuance Fund shall be expended for the purpose of paying the Costs of Issuance of the 2008 Bonds. Before any payment from the 2008 Costs of Issuance Fund shall be made by the Trustee, the Commission shall file or cause to be filed with the Trustee a requisition of the Commission (each a "Requisition"), such Requisition to be signed by an Authorized Representative and to include: (i) the item number of such payment; (ii) the name and address of the person to whom each such payment is due, which may be the Commission in the case of reimbursement for costs theretofore paid by the Commission; (iii) the respective amounts to be paid; (iv) the purpose by general classification for which each obligation to be paid was incurred; and (v) that obligations in the stated amounts have been incurred by the Commission and are presently due and payable and that each item thereof is a proper charge against the 2008 Costs of Issuance Fund and has not been previously paid from said fund. On December 1, 2008 any remaining amounts in the 2008 Costs of Issuance Fund shall be transferred to the Revenue Fund and the 2008 Costs of Issuance Fund shall be closed. Section 17.03. Funding and Application of the 2008 Bonds Reserve Fund; Bond Reserve Requirement for the 2008 Bonds. The Trustee shall hold the amount of $ , on deposit in the 2008 Bond Reserve Fund, which is equal to the 2008 Bonds Reserve Requirement. All amounts in the 2008 Bonds Reserve Fund (including all amounts which may be obtained from any Reserve Facility on deposit in the 2008 Bonds Reserve Fund) shall be used and withdrawn by the Trustee solely: (i) for the purpose of making up any deficiency in the Interest Fund or the Principal Fund relating to the 2008 Bonds; or, (ii) together with any other moneys available therefor, (x) for the payment of all of the 2008 Bonds then Outstanding, (y) for the defeasance or redemption of all or a portion of the 2008 Bonds then Outstanding, provided, however, that if funds on deposit in the 2008 Bonds Reserve Fund are applied to the defeasance or redemption of a portion of the 2008 Bonds, the amount on deposit in the 2008 Bonds Reserve Fund immediately subsequent to a partial defeasance or redemption shall equal the 2008 Bonds Reserve Requirement applicable to all 2008 Bonds Outstanding immediately subsequent to such partial defeasance or redemption, or (z) for the payment of the final principal and interest payment of the 2008 Bonds.] Section 17.04. 2008 Bonds Purchase Fund. Moneys in the 2008 Bonds Purchase Fund shall be applied as provided in this Section. (a) Remarketing Account. All moneys received by the Trustee on behalf of purchasers of 2008 Bonds pursuant to Section 15.10(a), other than the Commission, shall be (i) deposited in the 2008 Remarketing Account within the 2008 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 15.11. OHS West:260379565.5 39 192 (b) Liquidity Facility Purchase Account. All moneys received by the Trustee as payments under any 2008 Liquidity Facility for the purchase of 2008 Bonds pursuant to Section 15.09(a)(iv), Section 15.09(b)(iv) or Section 15.09(c)(iv) shall be (i) deposited in the 2008 Liquidity Facility Purchase Account within the 2008 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 15.11. (c) Commission Account. All moneys received by the Trustee from the Commission for the purchase of 2008 Bonds pursuant to Section 15.10(c) shall be (i) deposited in the 2008 Commission Account within the 2008 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 15.11. The moneys in the 2008 Bonds Purchase Fund shall be used solely to pay the Purchase Price of 2008 Bonds as provided herein (or to reimburse a Liquidity Provider, if any, for payments made under the 2008 Liquidity Facility for such purpose) and may not be used for any other purposes. All amounts held in the 2008 Bonds Purchase Fund, including the 2008 Remarketing Account, the 2008 Liquidity Facility Purchase Account and 2008 Commission Account therein, shall be held in trust by the Trustee for the benefit of the Holders or Beneficial Owners of 2008 Bonds to which such account relates tendered or deemed tendered for purchase pursuant to Section 15.04 and 15.05 (provided that any amounts held ifi the 2008 Remarketing Account that are derived from the remarketing of 2008 Liquidity Facility Bonds shall be held in trust for the benefit of the 2008 Liquidity Provider). Moneys in the 2008 Bonds Purchase Fund shall be held uninvested pending application thereof as provided in this Section 17.04. ARTICLE XVHI MISCELLANEOUS Section 18.01. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this First Supplemental Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this First Supplemental Indenture, and the application of any such covenant, agreement or provision, . or portion thereof, to other Persons or circumstances, shall be deemed severableand shall not be affected thereby, and this First Supplemental Indenture and the 2008 Bonds issued pursuant hereto shall remain valid, and the Holders of the 2008 Bonds shall retain all valid rights and benefits accorded to them under this Indenture, the Act, and the Constitution and statutes of the State. Section 18.02. Parties Interested Herein Nothing in this First Supplemental Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Commission, the Trustee, each 2008 Credit Provider, each 2008 Liquidity Provider and the Holders of the 2008 Bonds, any right, remedy or claim under or by reason of this First Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this First Supplemental Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the OHS West:260379565.5 40 • 193 • Commission, the Trustee, each 2008 Credit Provider, each 2008 Liquidity Provider and the Holders of the 2008 Bonds. Section 18.03. Headings Not Binding. The headings in this First Supplemental Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this First Supplemental Indenture. Section 18.04. Notice Addresses. Except as otherwise provided herein, it shall be sufficient service or giving of notice, request, complaint, demand or other paper if the same shall be duly mailed by registered or certified mail, postage prepaid, addressed to the Notice Address for the appropriate party or parties as provided in Exhibit B hereto. Any such entity by notice given hereunder may designate any different addresses to which subsequent notices, certificates or other communications shall be sent, but no notice directed to any one such entity shall be thereby required to be sent to more than two addresses. Any such communication may also be sent by Electronic Means, receipt of which shall be consumed. Section 18.05. Notices to Rating Agencies. The Trustee shall provide notice to the Rating Agencies of the following events with respect to the 2008 Bonds: (1) Change in Trustee or Remarketing Agent; (2) Amendments to the Indenture; (3) Provision, expiration, termination, substitution or extension of a 2008 Liquidity Facility or any 2008 Liquidity Provider thereunder; (4) Conversion of an Interest Rate Determination Method of the 2008 Bonds; (5) Redemption or defeasance of any 2008 Bonds; and (6) Any mandatory tender of any 2008 Bonds. Section 18.06. Indenture to Remain in Effect. Save and except as amended and supplemented by this First Supplemental Indenture, the Indenture shall remain in full force and effect. Section 18.07. Effective Date of First Supplemental Indenture. This First Supplemental Indenture shall take effect upon its execution and delivery. Section 18.08. Execution in Counterparts. This First Supplemental 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. OHS West260379565.5 41 194 IN WITNESS WHEREOF, the parties hereto have executed this First Supplemental 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: By: General Counsel OHS Wes1:260379565.5 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 42 195 EXHIBIT A FORM OF 2008 BOND No. R-- $ Riverside County Transportation Commission Sales Tax Revenue Bond (Limited Tax Bond) 2008 Series A INTEREST RATE MATURITY ISSUE DATE Variable June 1, 20 , 2008 REGISTERED OWNER: Cede & Co. CUSIP PRINCIPAL AMOUNT: Dollars RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly organized and existing under the laws of the State of California (the "Commission"), for value received, hereby promises to pay (but solely from Revenues as hereinafter referred to) in lawful money of the United States of America, to the registered Holder or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount specified above, together with interest thereon from the Issue Date set forth above until the principal hereof shall have been paid, at the interest rates and on the dates (each, an "Interest Payment Date") described herein. The principal of and premium, if any, on this Bond are payable to the registered Holder hereof upon presentation and surrender of this Bond at the principal office of U.S. Bank National Association, as trustee (together with any successor as trustee under the hereinafter defined Indenture, the "Trustee") in Los Angeles, California. Interest on this Bond shall be paid by check drawn upon the Trustee and mailed on the applicable Interest Payment Date to the registered Holder hereof as of the close of business on the Record Date at such registered Holder's address as it appears on the Bond Register. As used herein, "Record Date" means: (a) for any Interest Payment Date in respect of any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, the Business Day next preceding such Interest Payment Date; and (b) for any Interest Payment Date in respect of any Long -Term Rate Period or Fixed Rate Period, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. This Bond is one of a duly authorized issue of bonds of the Commission, designated as "Riverside County Transportation Commission, Sales Tax Revenue Bonds (Limited Tax Bonds)" (the "Bonds"), of the series designated above, all of which are being issued pursuant to the provisions of 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 (the "Act"), the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the OILS West260379565.5 A-1 196 Commission on May 8, 2002 and approved by at least two-thirds of electors voting on such proposition in the November 5, 2002 election and any amendments or extensions thereto (collectively, and together with the Act, the "Law"), and an Indenture, dated as of June 1, 2008, as supplemented, including as supplemented by a First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture"), each between the Commission and the Trustee, hereinafter referred to collectively as the "Indenture." Said authorized issue of Bonds is not limited in aggregate principal amount and consists or may consist of one or more series of varying denominations, dates, maturities, interest rates and other previsions, as in the Indenture provided. Capitalized terns used herein and not otherwise defined shall have the meaning given such terms in the Indenture. THIS BOND IS A LIMITED TAX BOND OBLIGATION OF THE COMMISSION PAYABLE SOLELY FROM REVENUES AS DEFINED AND PROVIDED IN THE INDENTURE AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE AND THE COMMISSION IS NOT OBLIGATED TO PAY THIS BOND EXCEPT FROM REVENUES AND THOSE CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THIS BOND DOES NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF CALIFORNIA (THE "STATE") OR ANY POLITICAL SUBDIVISION OF THE STATE OTHER THAN THE COMMISSION, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE STATE OR OF ANY POLITICAL SUBDIVISION OF THE STATE. THE GENERAL FUND OF THE COMMISSION IS NOT LIABLE, AND THE CREDIT OR TAXING POWER (OTHER THAN AS DESCRIBED HEREIN) OF THE COMMISSION ISNOT PLEDGED, FOR THE PAYMENT OF THE BONDS, THEIR INTEREST, OR ANY PREMIUM DUE UPON REDEMPTION OF THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE, LIEN OR ENCUMBRANCE UPON, ANY OF THE PROPERTY OF THE COMMISSION OR ANY OF ITS INCOME OR RECEIPTS, EXCEPT THE REVENUES AND THE CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. Reference is hereby made to the Indenture and the Law for a description of the terms on which the Bonds are issued and to be issued, the provisions with regard to the nature and extent of the pledge of Revenues and certain other funds and the rights of the registered Holders of the Bonds and all the terms of the Indenture are hereby incorporated herein and constitute a contract between the Commission and the registered Holder from time to time of this Bond, and to all the provisions thereof the registered Holder of this Bond, by its acceptance hereof, consents and agrees. Additional Bonds may be issued and other indebtedness may be incurred on a parity with the Series of Bonds of which this Bond is a part, but only subject to the conditions and limitations contained in the Indenture. This Bond' is payable as to both principal and interest; and any premium upon redemption hereof, exclusively from the Revenues and other funds pledged under the Indenture, which consist primarily of the amounts available for distribution to the Commission on and after July 1, 2009 on account of the retail transactions and use tax imposed in the County of Riverside pursuant to the Law, after deducting amounts payable by the Commission to the State Board of Equalization for costs and expenses for its services in connection with the retail transactions and use taxes collected pursuant to the Act, and all regularly -scheduled amounts (but not termination payments) owed or paid to the Commission by any Counterparty under any Interest Rate Swap OHS West260379565.5 A-2 197 • Agreement after offset for the regularly -scheduled amounts (but not termination payments) owed or paid by the Commission to such Counterparty under such Interest Rate Swap Agreement, and, as to Purchase Price, from the proceeds of remarketing this Bond, all as provided in the Indenture, and the Commission is not obligated to pay the principal of and interest on this Bond except from Revenues and certain other funds pledged thereunder. Interest Rate Determination Method, Rate Periods, Interest Payment Dates and Authorized Denominations In the manner hereinafter provided and subject to the provisions of the Indenture, the term of this Bond will be divided into consecutive Rate Periods during each of which this Bond shall bear interest at the Daily Rate (the "Daily Rate Period"), the Weekly Rate (the "Weekly Rate Period"), the Commercial Paper Rate (the "Commercial Paper Rate Period"), the Long - Term Rate (the "Long -Term Rate Period") or the Fixed Rate (the "Fixed Rate Period"). The initial Rate Period for this Bond shall be a Long -Term Rate Period and during such initial Rate Period this Bond shall bear interest at Long -Term Rates. The subsequent Rate Period(s) and interest rate(s) for this Bond shall be determined in accordance with the provisions of the Indenture. This Bond shall bear interest from the latest of: (i) its Issue Date; (ii) the most recent Interest Payment Date to which interest has been paid or duly provided for, or (iii) if the date of authentication of this Bond is after a Record Date but prior to the immediately succeeding Interest Payment Date, the Interest Payment Date immediately succeeding such date of authentication. During Daily Rate Periods, Weekly Rate Periods or Commercial Paper Rate Periods, interest on this Bond shall be computed on the basis of a 365- or 366-day year for the number of days actually elapsed. While this Bond is in a Long -Term Rate Period or the Fixed Rate Period, interest on this Bond shall be computed upon the basis of a 360-day year, consisting of twelve 30-day months. The term "Interest Payment Date" means: (i) with respect to any Daily or Weekly Rate Period, the first Business Day of each calendar month; (ii) with respect to any Commercial Paper Rate Period, the day immediately succeeding the last day of the Commercial Paper Rate Period applicable to this Bond; (iii) with respect to a Long -Term Rate Period, each June 1 and December 1 occurring during such Long -Term Rate Period; (iv) with respect to a Fixed Rate Period, each June 1 and December 1 from the Fixed Rate Conversion Date to the maturity or earlier redemption of this Bond; and (v) and in all events the final maturity date or redemption date of this Bond, or any date on which, pursuant to the terms of the Indenture, the Bond is subject to redemption at the option of the Commission. Pursuant to the Indenture, at any one time, each Bond shall have the same Interest Rate Determination Method and shall bear interest at the same rate, except for Bonds during a Commercial Paper Rate Period and Bonds of different maturities bearing interest at a Fixed Rate. At the times and subject to the conditions set forth in the Indenture, the Commission may elect that the Bonds shall bear interest based on an Interest Rate Determination Method and for a Rate Period, different from the Interest Rate Determination Method or Rate Period then applicable. Notice of any adjustment of the Interest Rate Determination Method or Rate Period shall be given by the Trustee to the Holder of this Bond as set forth in the Indenture. OHS West:260379565.5 A-3 198 During each Daily Rate Period, this Bond shall bear interest at the Daily Rate, determined by the Remarketing Agent on each Business Day. During each Weekly Rate Period, this Bond shall bear interest at the Weekly Rate, determined by the Remarketing Agent by 5:00 p.m., New York City time on each Wednesday (or the immediately succeeding Business Day, if such Wednesday is not a Business Day) for the next Calendar Week, provided: that the Weekly Rate for the first Calendar Week (or portion thereof) following a Conversion Date resulting in a change in the Interest Rate Determination Method to a Weekly Rate shall be set by the Remarketing Agent on the Business Day immediately preceding such Conversion Date. During each Commercial Paper Rate Period, this Bond shall bear interest at the Commercial Paper Rate or rates applicable to this Bond. The Remarketing Agent shall select the Commercial Paper Rate Period or Periods for each Series of 2008 Bonds on a Business Day selected by the Remarketing Agent not more than five (5) Business Days prior to the fast day of such Commercial Paper Rate Period and not later than 12:30'p.m., New York City time, on the first day of such Commercial Paper Rate Period. Each Commercial Paper Rate Period shall be a period of not less than one nor more than 270 days. During the Fixed Rate Period, this Bond shall bear interest at the Fixed Rate, determined . by the Remarketing Agent on the Fixed Rate Computation Date in accordance with the provisions of the Indenture, and shall not be subject to Conversion to another Interest Rate Determination Method. During a Long -Term Rate Period, this Bond shall bear interest at the Long -Term Rate determined by the Remarketing Agent by 5:00 p.m. on the Long -Tern Rate Computation Date. The Commission shall select the duration of each Long -Term Rate Period and each Long -Term Rate Period shall end on the March 31 selected by the Commission which is a minimum of 180 days after commencement of such Long -Term Rate Period or if the day next succeeding such March 31 is not a Business Day, on the first day after such March 31 that precedes a Business Day but in no event later than the maturity date of this Bond. This Bond shall; initially bear interest at a Long -Term Rate of percent ( %) per annum with a Long -Term Rate Period ending December 1, 2009, and the initial Interest Payment Date shall be December 1, 2008. On December 1, 2009, this Bond shall be subject to mandatory purchase and conversion to another Interest Rate Determination Method. Prior to December 1, 2009, this Bond shall not be subject to conversion to another Interest Rate Determination Method. This Bond shall not be subject to redemption until the end of the Long -Term Rate Period, December 1, 2009. In no event shall the interest rate on this Bond be greater than the Maximum Interest Rate. This Bond shall be deliverable in the form of a fully registered Bond in the following denominations: (a) during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period, $100,000 and any integral multiple of $5,000 in excess thereof; and (b) during a OHS West:260379565.5 A-4 • 199 • Long -Term Rate Period or the Fixed Rate Period, $5,000 and any multiple thereof (such denominations being referred to herein as "Authorized Denominations"). Optional and Mandatory Tender Provisions While bearing interest at a Daily Rate or a Weekly Rate, this Bond shall be subject to redemption prior to its stated maturity, at the option of the Commission, in whole or in part, in Authorized Denominations, on any date, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. While bearing interest at a Commercial Paper Rate, this Bond shall not be subject to optional redemption prior to its maturity date, but shall be subject to redemption at the option of the Commission in whole or in part on its maturity date at a redemption price equal to the Purchase Price thereof. While bearing interest at a Long -Term Rate, this Bond shall be subject to redemption at the option of the Commission in whole or in part on the day following the last day of any Long - Term Rate Period and on such other dates specified in the conversion notice with respect to such Long -Term Rate Period, at a redemption price equal to the principal ;amount thereof, plus accrued interest, if any, without premium. Unless the Commission obtains a Favorable Opinion of Bond Counsel, any Bonds bearing interest at a Fixed Rate are subject to redemption in whole or in part (and if in part, in such order of maturity and Mandatory Sinking Account Payment dates as the Commission shall specify and within a maturity of Mandatory Sinking Account Payment date by lot or by such other method as the Trustee determines to be fair and reasonable and in Authorized Denominations), on any date, at such times and at such redemption prices as follows: (1) If, on the Fixed Rate Conversion Date, the remaining term of such Bond is greater than eight (8) years, then such Bond will not be subject to optional redemption until the first June 1 or December 1 (whichever is earlier) to follow the eighth (8th) anniversary of the conversion of such Bond to a Fixed Rate. On such first June 1 or December 1, such Bond will be subject to redemption at 102% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, which redemption price will decline by one percent (1%) per annum on each succeeding anniversary of such first June 1 or December 1 until reaching a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption, and thereafter at a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the date of redemption. (2) If, on the Fixed Rate Conversion Date, the remaining term of such Bond is less than eight (8) years, then such Bond will not be subject to optional redemption. Except as otherwise provided in the Indenture, the Bonds are Term Bonds and shall be subject to mandatory redemption prior to their stated maturity, in part, from Mandatory Sinking Account Payments required by and as specified in the Indenture, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, on [June 1, 20 ] and on each June 1 thereafter. OHS West:260379565.5 A-5 200 Mandatory Tender and Purchase at Direction of Commission On each date on which this Bond is subject to redemption at the option of the Commission, this Bond is also subject to mandatory tender for purchase by the Commission, in whole or in part, at a purchase price equal to the amount that would_ be payable upon the redemption of this Bond at the option of the Commission on such date. Notice of such mandatory tender for purchase shall be given by mail not more than 90 days nor less than 10 days before the date of purchase (the "Optional Purchase Date"). Such notice may be, conditional and if conditional notice is given and the Trustee does not have sufficient funds available on the Optional Purchase Date to pay the purchase price of the Bonds (the "Optional Purchase Price") subject to mandatory tender for purchase on such Optional Purchase Date, then such purchase shall be cancelled and the Commission shall be under no obligation to purchase this Bond. If moneys sufficient to pay the Optional Purchase Price of the. Bonds subject to mandatory tender for purchase are held by the Trustee on the Optional Purchase Date, all Bonds subject to mandatory tender for purchase on such Optional Purchase Date shall be deemed purchased by the Commission and neither the former Holder or former Beneficial Owner of this Bond nor any other person shall have any claim thereunder, under the Indenture or otherwise, for any amount other than the Optional Purchase Price. Amendments and Modifications The rights and obligations of the Commission and of the Beneficial Owners, registered Holders and registered Owners of the Bonds may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Indenture, which provide, in certain circumstances, for modifications and amendments without the consent of or notice to the registered Holders of Bonds. Transfer and Exchange Provisions This Bond is transferable or exchangeable as provided in the Indenture, only upon the bond registration books maintained by the Trustee, by the registered Holder hereof in person, or by his or her duly authorized attorney, upon surrender of this Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered Holder or his or her duly authorized attorney, and thereupon a new Bond or Bonds of the same series, maturity and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, upon payment of any charges therein prescribed. Persons Deemed Holders The person in whose name this Bond is registered shall be deemed and regarded as the absolute Holder hereof for all purposes, including receiving payment of, or on account of, the principal, Purchase Price or Optional Purchase Price hereof and any redemption premium and interest due hereon. It is hereby certified and recited that any and 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 Bond, and in the issuing of this Bond, exist, have happened and have been OHS West.260379565.5 A-6 201 • • performed in due time, form and manner, as required by the Constitution and statutes of the State of California and the Act, and that this Bond, together with all other indebtedness of the Commission payable out of Revenue, is within every debt and other limit prescribed by the Constitution and statutes of the State of California and the Act. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee. OHS West:260379565.5 - A-7 202 IN WITNESS WHEREOF the Riverside County Transportation Commission has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its duly authorized representatives all as of the Issue Date set forth above. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Chair of the Board of Directors (Seal) Attest: Director of Finance [FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2008 Series [ ] Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: OHS West:260379565.5 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer A-8 • 203 • [DTC LEGEND] Unless this Bond is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered Owner hereof, Cede & Co., has an interest herein. [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (Please Print or Type Name and Address of Assignee) PLEASE INSERT SOCIAL SECURITY OR OTHER TAX IDENTIFICATION NUMBER OF ASSIGNEE the within bond and all rights thereunder, and hereby irrevocably constitutes and appoint to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature: SIGNATURE GUARANTEED: (Signature of Assignor) Notice: The signature on this assignment must correspond with the name of the registered Holder as it appears upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Notice: Signature must be guaranteed by an eligible guarantor firm. OHS West:260379565.5 A-9 204 INDEX TO EXHIBITS EXHIBIT B NOTICE ADDRESSES To the Commission: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 To the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Division Telephone: (213) 615-6023 Fax: (213)615-6197 To the Rating Agencies: Standard & Poor's Ratings Services 55 Water Street, 38th Floor New York, New York 10041 Telephone No.: 212-43 8-2000 Facsimile No.: 212-438-2157 pub%n structured@standardandpoors.com Moody's Investors Service MSPG Surveillance 99 Church Street, 9`t' Floor New York, New York 10007 Fitch Ratings One State Street Plaza New York, New York 10004 OHS West:260379565_5 - B-1 205 AGENDA ITEM 9 L I 11, !!, 111 I I, I , rirj I !! ! I ' I ! I 1 I •I • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 24, 2008 TO: Budget and Implementation Committee FROM Theresia Trevino, Chief Financial Officer Michele Cisneros, Accounting and Human Resources Manager THROUGH: John Standiford, Deputy Executive Director SUBJECT: Policy Regarding Indirect Cost Reimbursements STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the policy regarding the disposition of indirect cost reimbursements; 2) Adopt Resolution No. 08-011, "Resolution of the Riverside County Transportation Commission Authorizing the Disposition of Indirect Cost Reimbursements" and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: Since FY 2003/04, the Commission has prepared an annual indirect cost allocation plan (ICAP) and submitted it to Ca[trans for approval. Indirect costs include administrative salaries, fringe benefits, and other administrative costs; the indirect costs are recorded in the Commission's general fund. The approved ICAP enables the Commission to seek reimbursements for these indirect costs in connection with billings to federal and state agencies for capital project and other program direct costs. Revenues related to the indirect cost reimbursements have been accounted for with the other direct cost reimbursements in the project subaccount of the special revenue fund in which the direct expenditures were incurred. As a result, the capital project or program has received some additional revenues to be used for additional project costs, and the general fund has not received reimbursements for some of its costs. However, since most indirect cost reimbursements are related to Measure A projects or programs, these reimbursements are maintained in the Measure A program, which consists of several accounting funds. In recent months, the overall decline in sales tax revenues has resulted in a review of practices affecting administrative salaries and benefits due to the Measure A limitation that administrative salaries and benefits may not exceed 1 % of the sales Agenda Item 9 206 taxes revenues. Accordingly, staff has determined that any recovery of indirect costs related to administrative salaries and benefits should be credited as revenue to the general fund rather than the special revenue fund project/program subaccount. In connection with the latest ICAP submitted to Ca!trans for approval, the state auditors have requested that the Commission adopt a formal policy related to the disposition of the indirect cost reimbursement revenues. Accordingly, staff requests the Commission's approval of the fiscal policy related to the disposition of indirect cost reimbursements and adoption of the related resolution. Attachments: 1) Resolution No. 08-011 2) Indirect Cost Reimbursement Policy Agenda Item 9 • 207 • • • RESOLUTION NO. 08-011 RESOLUTION OF THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION AUTHORIZING THE DISPOSITION OF INDIRECT COST REIMBURSEMENTS WHEREAS, a Fiscal Procedures Manual has been created and approved by the Riverside County Transportation Commission on April 11, 2001; WHEREAS, the Commission has developed an annual indirect cost allocation plan related to the recovery of indirect costs related to certain capital projects and other Commission programs subject to federal and state reimbursements. NOW THEREFORE, BE IT RESOLVED, that the Board of Commissioners hereby resolves a policy regarding the Disposition of Indirect Cost Reimbursements as follows: Section 1: The Commission prepares an annual indirect cost allocation plan in order to recover indirect costs as part of federal and state reimbursement claims for certain capital project and other Commission program costs. Such plan must be submitted to and approved by Ca[trans .prior to seeking reimbursements of indirect costs. Section 2: In connection with reimbursements of indirect costs included in invoices to federal and state agencies related to certain capital projects and other Commission programs, revenues related to indirect cost reimbursements may be maintained by the applicable project or program fund, except for the portion related to indirect salaries and fringe benefits which shall be credited to the applicable general administration funds. 208 APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on Wednesday, April 9, 2008. ATTEST: BY: Jennifer Harmon Clerk of the Board BY: Jeff Stone, Chair Riverside County Transportation Commission • 209 • railitYRli'talarm COuttiPissitia INDIRECT COST REIMBURSEMENTS On April 9, 2008, the Commission approved Resolution 08-011, Resolution of the Riverside County Transportation Commission authorizing the disposition of indirect cost reimbursements. Indirect cost reimbursements are the recovery of administrative costs including salaries and fringe benefits and other costs. Policy: • Reimbursements of indirect costs included in invoices to federal and state agencies related to certain capital projects and other Commission programs shall be based on an indirect cost allocation plan KAP) approved by state of California Department of Transportation ICaltransl. • Revenues related to indirect cost reimbursements may be maintained by the applicable project or program fund, except for the portion related to indirect salaries and fringe benefits which shall be credited to the applicable general administration funds. Procedures: • Upon approval of the annual ICAP to be used in connection with billings for capital project or other program costs, a determination shall be made by the Accounting and Human Resources Manager as to the portion of the indirect cost rate which is related to the administrative salaries and benefits. • After the preparation of an invoice which includes reimbursement for indirect costs, the Senior Accounting Assistant shall calculate the amount of the portion of the indirect costs related to the administrative salaries and benefits based on the amount determined' by the Accounting and Human Resources Manager. • In the accounting entry related to the total revenues included in the reimbursement invoice, the Senior Accounting Assistant shall record the portion of the indirect costs related to administrative salaries and benefits as reimbursement revenue in the General Fund. V:/USERS/FINANCE/FISC. PROC/INDIRECT COST REIMRURSEMENTS.DOC - 04.09.08 210 AGENDA ITEM 10 RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 24, 2008 TO: Budget and Implementation Committee FROM: Jerry Rivera, Program Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Fiscal Year 2007/08 Measure A Capital Improvement Plan Amendment for Local Streets and Roads for the City of Palm Springs STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve the amendment to the FY 2007/08 Measure A Capital Improvement Plan (CIP) for local streets and roads for the city of Palm Springs (Palm Springs) as submitted; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: Measure A requires each recipient of local streets and roads monies to annually provide to the Commission a five-year plan on how those funds are to be expended in order to receive its Measure A disbursements. In addition, the Coachella Valley and Western County cities and the county must be participating in either the Coachella Va►ley Association of Governments or Western Riverside Council of Governments Transportation Uniform Mitigation Fee program. The agencies are also required to submit an annual certification of maintenance of effort along with documentation supporting the calculation. The CIP for Palm Springs was approved by the Commission at its July 11, 2007 meeting. Any revisions to the adopted plan must be returned to the Commission for approval. Palm Springs has unexpended Measure A funds remaining from several other prior projects and is requesting to apply $300,000 in excess funds to the Annual Street slurry seal project that was originally budgeted at $500,000. Attachment: Letter from the City of Palm Springs with Revised CIP Schedule Agenda Item 10 211 83257 JR City of Palm Springs Department of Public Works and Engineering 3200 E. Tahquitz Canyon Way • Palm Springs, California 92262 Tel: (760) 323-8253 • Fax: (760) 322-8360 • Web: www.ci.palin-springs.ca.us March 11, 2008 Ms. Anne Mayer Executive Director Riverside County Transportation Commission 4080 Lemon Street, 3td Floor Riverside, CA 92502-2208 Via Facsimile: (951) 787-7920 Re: Fiscal Year 2008-2012, 5-Year Measure "A" Local Street 8r Road Program Proposed City of Palm Springs Annual 5-Year Measure "A" Plan (Fiscal Year 2007/2008) — REVISED Dear Ms. Mayer: I am enclosing the second revision to the Measure A lists for funds that are listed on the "2007/2008" Table for Fiscal Year 2008-2012 5-Year Plan. The City has unexpended Measure A funds that are left -over remaining funds from prior projects that have been swept into a separate unallocated expenditure account by our Finance Department. The unallocated expenditure account currently has a balance of $361,356. It is anticipated.#hat this year's: slurry. seal .project will exceed the originally budgeted amount of $500,000.'Therefore, we are requesting concurrence on using $300,000 of these unexpended Measure A funds for the "Annual Street Slurry Seals (Construction)", which was originally shown with a project cost of $500,000. The increased project cost is $800,000. Please review the information and let me know if you have any further questions. I can be reached at (760) 323-8253, ext..8744, ncerely, Marcus L. Fuller; :P.E`; P:L':S_ Assistant Directorbf Public Works/Assistant City Engineer enc cc: Thomas Wlsori, AssistanrCity Manager "David Berakian,Director.o%Public WolksrCity'Engineer Tom Xanarr, Interim Director of Finance/Treasurer 11©MW7° MAR -13 ?008 icvEkskif m�.hiT COMMISSION Post Office Box:2743 • PadmMngs, California 92263-2743 • RIVERSIDE COUNTY TRAPPORTATION COMMISSION MEASURE "A" LOCAL FUNDS PROGRAM Agency: City of Palm Springs Prepared by: David J. Barakian, Director of Public Works/City Engineer (by Marcus L. Fuller, Assistant Director of Public Works/Assistant City Engineer) Date: June 1, 2007 September 7, 2007 (Revision 1) ,March 11, 2008 (Revision 2) Fiscal Year 2008-2012, 5-Year Measure "A" Local Street & Roads Program Fiscal Year 2007/2008 ITEM NO PROJECT NAME/LIMITS PROJECT TYPE TOTAL COST MEASURE "A" FUNDS 1. ARHM Overlays (Construction) Street Maintenance $500,000 $500,000 2. Annual Street Slurry Seals (Construction) Street Maintenance $800,000 $800,000 3. Gene Autry Trail / Interstate 10 Interchange (fundingto be added to required City match q y ) Expanded Freeway Interchange `Included on previous sheet $400,000 4 Belardo Road Bridge (funding to be added to required City match) New Road Extension and Bridge Construction *Included on previous sheet $400,000 5. Sunrise Way at Mesquite Avenue.Traffic Signal Upgrade Traffic Signal Modification $150,000 $150,000 6. Traffic Signal Interconnect Communication Upgrade Traffic Signal Modification $50,000 $50,000 7. Traffic Striping Improvements (Citywide) Traffic Striping $50,000 $50,000 8. Traffic Signal Street Name Sign Replacement Program Traffic Signal Modification $50,000 $50,000 9. Camino Real Street Improvements Street Improvements $50,000 $50,000 10. ADA Curb Ramp Retrofit/Repair Program Street Improvements $50,000 $50,000 11. Traffic Safety Projects Traffic Signal Modification $40,000 $40,000 12. SB 821 Sidewalk Project (FY 07/08) Sidewalk Construction $70,000 $30,000 Page 1 of 2 Fiscal Year 2008-2012, 5-Year Measure "A" Local Street & Roads Program Fiscal Year 2007/2008 ITEM NO. PROJECT NAME/LIMITS PROJECT TYPE TOTAL COST MEASURE "A" FUNDS 9 Baristo Road at Palm Springs High School Pedestrian Traffic Signal (Design Only) Traffic Signal Installation $15,000 $15,000 10. Mid Valley Parkway Reimbursement (CVAG) Street Improvements $10,422 $10,422 11. Citywide Traffic Signal Synchronization Study Traffic Signal Modification $5,300 $5,300 12. Sunrise Way/Alejo Road Traffic Signal Modification Traffic Signal Modification $174,000 $174,000 TOTAL Fiscal Year 2007/2008 $2,014,722 $2,774,722 Revision 1: Add $174,000 (carryover from continued 2006/2007 Measure "A" funds) for new signal project. Revision 2: Increase Annual Street Slurry Seals (Construction) by $300,000 using unexpended Measure A funds remaining from previously completed projects. Page 2 of 2 • AGENDA ITEM 11 • 11 RIVERSIDE COUIVTY TRANSPORTATION COMM/SS/ON DATE: March 24, 2008 TO: Budget and Implementation Committee FROM: Marlin Feenstra, Project Delivery Director Min Saysay, Right -of -Way Manager Karl Sauer, Bechtel Project Coordinator THROUGH: Anne Mayer, Executive Director SUBJECT: Agreements Related to the Construction of the State Route 74 Widening Project Between Dexter Avenue in the City of Lake Elsinore and 7" Street in the City of Perris STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve Agreement No. 99-31-302-07, Amendment No. 7 to Agreement No. RO-9954, with SC Engineering for additional engineering design and survey services for State Route 74 widening project between Dexter Avenue in the city of Lake Elsinore (Lake Elsinore) and 7' Street in the city of Perris (Perris), for a base amount of $354,636 and a contingency amount of $45,364 for a total amendment not to exceed amount of $400,000; 2) Approve Agreement No. 08-31-092-00 to Southern California Edison (SCE) with a revised not to exceed Commission cost of $701,260 and a revised cost share, for the cost to relocate the SCE facilities, between the Commission (51 %) and SCE (49%), which was required to allow for construction of the SR-74 widening and realignment projects; 3) Approve Agreement No. 04-51-030-04, Amendment No. 4 to Agreement No. 04-51-030, with Epic Land Solutions (Epic) for property management support services for Commission -owned parcels for a not to exceed amount of $70,000 and contingency amount of $10,000 for a total amendment not to exceed amount of $80,000; 4) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf of the Commission; and 5) Forward to the Commission for final action. BACKGROUND INFORMATION: Over the past several years the Measure A SR-74 widening and realignment projects, between Dexter Avenue in Lake Elsinore and T" Street in Perris, were completed and accepted by Caltrans. The improvements included realignment of curves and widening the existing two-lane roadway to four lanes with eight foot Agenda Item 11 215 shoulders and a continuous 14-foot paved median. Even though construction has been completed and the project has have been accepted by Caltrans there still remains close-out work associated with right-of-way acquisition and utility relocation services. This agenda item addresses three items that are required to support the close-out work. Item Number 1 Additional Engineering Design And Survey Services At the January 13, 1999 meeting, the Commission awarded Agreement No. RO-9954 to SC Engineering to provide final PS&E design services for the SR-74 highway improvement projects. Over the years, there have been several amendments to the SC Engineering agreement to provide additional design services. Even though construction of the SR-74 ,project are completed, there still remain a number of engineering and surveying activities, mainly associated with the acquisition of right-of-way for the project that remains to be completed. Such scope was not included in the referenced SC Engineering agreement or amendments to date. Staff requested and SC Engineering responded, see attached letter dated March 13, 2008, with a scope of work and respective cost proposal to provide additional engineering and survey services to complete the. remaining work associated with the SR-74 project. Staff has reviewed and concurs with the SC Engineering scope and cost as outlined in the attached letter. With this agenda item, staff is recommending that the Commission approve Amendment No. 99-31-302-07 with SC Engineering for additional engineering design and survey services for SR-74 widening project between Dexter Avenue in Lake Elsinore and 7' Street in Perris, for a base amount of $354,636 and a contingency amount of $45,364 for a total amendment not to exceed amount of $400,000. Item Number 2 — Utility Relocation Services At the January 8, 2003 Commission meeting, the Commission approved Agreement No. 03-31-048 with SCE, for an amount not to exceed $524,000, to relocate SCE facilities that interfered with construction of the SR-74 widening and realignment project from Dexter Avenue in Lake Elsinore to T`' Street in Perris. Over the past several years SCE has completed all its relocation services required, and the SR-74 projects have been completed and accepted by Caltrans; however, Agreement No. 03-31-048 was never fully executed by SCE. Agenda Item 11 216 • The original SCE estimated total relocation costs of $1,310,000 and the original SCE assumed cost share between the Commission (40%) and SCE(60%) was the basis for the Commission's approved share of $524,000 and included in the original agreement. Subsequent to the completion of all the SCE relocation work, SCE has submitted a revised total cost to relocate its facilities of $1,375,019 and has provided back-up documentation to support a revised cost share between The Commission (51 %) and SCE (49%). Staff has reviewed the SCE revised total relocation cost and back-up documentation and is in concurrence with both. The Commission's share of the revised total relocation cost should be $701,260. This is an increase of $177,260 over the amount previously approved by the Commission. With this agenda item, staff recommends that the Commission approve Agreement No. 08-31-092-00 with SCE with a revised not to exceed Commission cost of $701,260 and a revised cost share, for the cost to relocate the SCE facilities, between the Commission (51 %) and SCE (49%) to allow for construction of the SR-74 widening and realignment project. Item Number 3 — Property Management Support Services On November 12, 2003, the Commission awarded Agreement No. 04-51-030 to Epic for property management support services for Commission -owned properties for a not to exceed amount of $237,238. In July 2004, the Commission approved Amendment No. 1 for a not to exceed amount of $374,589. In December 2005, the Commission approved Amendment No. 2 in the amount of $301,850, and in April 2007, Amendment No. 3 was approved by the Commission in the amount of $622,484. The main objective of Amendment No. 4 is to complete the transfer of title of right-of-way, purchased for the SR-74 widening project between Dexter Avenue in Lake Elsinore and 7' Street in Perris, from the Commission to Caltrans. This. will involve the review of 366 acquisition and relocation assistance files to ensure compliance with Caltrans Right -of -Way Policies and Procedures. In some cases, acquisition documents are missing and have to be reproduced. Approval of this amendment in the amount of $80,000 will increase the total contract value to $1,616,161 . A budget adjustment for FY 2007/08 in the amount of $80,000 is recommended. Agenda Item 11 217 Financial Information No FY 2007/08 $981,260 In Fiscal Year Budget: N/A Year: FY 2008/09 amount: $200,000 Source of Funds: Measure A Budget Ad ustment: Yes' 222-31-81403 P3001 $ 80,000 FY 2007/08 GLA No.: 222-31-81102 P3001 $200,000 FY 2007/08 222-31-81102 P3001 $200,000 FY 2007/08 222-31-81301 P3001 $701,260 FY 2008/09 Fiscal Procedures Approved: \)/Xbi," Date: 03/17/2008 Attachment: Letter from S.C. Engineering dated March 13, 2008 Agenda Item 11 218 ENGINEERING TRANSPORTATION TRAFFIC CIVIL ENGINEERING PROJECT/CONSTRUCTION MANAGEMENT December 20, 2007 (Updated. March f3, 2008) Route 74 from Dexter Ave to Seventh Street Widen to 4-Lanes SC File:RCTC-99-01 Riverside County Transportation Commission 4080 Lemon Street, 3`d Floor Riverside, CA 92502-2208 Attention: Mr. Karl Sauer Project Coordinator Subject: Amendment No. 7 — Additional Right of Way Engineering and Design Services Dear Mr. Sauer: Per our conversation, itemized below are detailed descriptions of additional items that were performed or anticipated to be performed that were not covered in any previous scope of work, and are needed to complete the project: 1. Additional Right -of -Way (RNV) Engineering Services (Record of Survey) A. Increased County of Riverside Review Fees: The original estimated County of Riverside Review Fees was estimated at $3,200. As of today, $4,700 has been paid to Riverside County on Segment 1. Therefore, a fee increase of $8,800 is requested for Segment 2. B. Revise RNV Hard Copies Adjustments per Caltrans/Epic Land Solution Review: As you are aware, Caltrans has been reviewing the Route 74 deeds against the R/W Hard Copies and Maps. This work is anticipated to be completed in early 2008. Associated Engineers anticipates additional work associated with the review and updating the Record of Survey for Segment 2. Therefore a fee increase of $32,784 is requested. C. Reset RAN Monuments due to Record of Survey: As part of the Record of Survey Review, Riverside County requested additional monuments be field set. Therefore, a fee increase of $16,372 is requested. D. Modify Record of Survey per County/Caltrans/Epic Land Solution Review: Revisions in the RNV hardcopy and additional RNV monuments required additional revisions to the Record of Survey. A Fee increase of $28,015 is requested. E. Prepare Legals and Plats (Segment 1) for Grant Deeds: Per Caltrans requirements, all legals and plats must be updated to current standard format prior to acceptance of Right of Way from RCTC. A Fee increase of $16,924 is requested. F. Prepare Legals and Plats (Segment 2) for Grant Deeds: Per Caltrans requirements, all legals and plats must be updated to current standard format prior to acceptance of Right of Way from RCTC. A Fee increase of $38,669 is requested. G. Compare As -Built to R/W Segment 2: Caltrans has requested that the contract as -built plans be compared against the original R/W Maps. A Fee increase of $27,658 is requested H. Revise/Update Legals and Plats per Various reviews: Due to revisions in the RNV hardcopy, Record of Survey, and R/W requirement reviews, additional revisions to legals and plats are required. A Fee increase of $27,254 is requested A total increase of $196,476 is requested for RNV Engineering Services. SERVING THE TRANSPORTATON NEEDS OF THE INLAND EMPIRE AND HIGH DESERT HEADQUARTERS 14990 SEVENTH STREET, UNIT B VICTORVILLE, CA 92395 760.955.77122 i9.955.6130 FAX Mr. Karl Sauer, Project Coordinator December 20, 2007 (Updated march 13, 2008) Riverside County Transportation Commission Page 2 2. Additional Design Efforts A. Contract As -Built Plans: a. Segment 2 - The original contract did not provide a budget to provide As -Built Plans. In order for Caltrans to "Close -Our thedesignportion of the project, As -Built Plans were submitted to Caltrans. A Fee increase of $54,305 is requested. b. Greenwald Avenue -The original contract did not provide a budget to provide As -Built Plans. In order for Caltrans to "Close -Our the design portion of the project, As -Built Plans were submitted to Caltrans. A Fee increase of $3,275 is requested B. SeptidSewer System Design: During the construction of Segment 2, four septic systems failed due to existing high ground water. As a result, these septic systems required a special design. Listed below are the identified septic systems and the anticipated solution and anticipated design fee: a. APN 326-240-021 — Connect to existing City of Perris sewer line on 7'" Street — Design Fee $8,663. b. APN 342-120-013 — Construct a new "Mounded" Septic system on property — Design Fee $4,226. c. APN 342-130-009 — Construct a new "Mounded" Septic system on property — Design Fee $4,226. d. APN 342-151-014 — Construct a new "Mounded" Septic system on property — Design Fee $5,071. e. Prepare Septic System Specifications and assist in the preparation of the construction contract document — Design Fee $2,536. C. Utility Joint Use Agreements (JUA): As part of the utility relocation coordination .Caltrans requires JUA when utilities are relocated with State R/W. The following JUA will be prepared for each of the following utility company: a. The Gas Company — Design Fee $8,452. b. Elsinore Valley Municipal Water District (EVMWD) —Design Fee $8,452. c. Southern Califomia Edison — Design Fee $8,452. D. R/W Coordination/Review (Caltrans/Epic Land Solutions) — Segment 1: Caltrans has reviewed the Route 74, Segment 1 Grant Deeds against the R/W Requirement Plans, Hard Copies and Maps. Caltrans requested that the Designer review and make recommendations on any discrepancies. This work was completed in completed in June 2007. A Fee increase of $8,241 is requested. E. R/W coordination/Review (Caltrans/Epic Land Solutions) — Segment 2: Caltrans has been reviewing the Route 74, Segment 2 Grant Deeds against the RAN Requirement Plans, Hard Copies and Maps. Caltrans will request that the Designer review and make recommendations on any discrepancies. This is. anticipated to be completed in the spring 2008. A Fee increase of $16,904 is requested. F. Project Management/Coordination: Due to the length of the contract and the additional service items, additional project management and coordination is anticipated. A Fee increase of $25,356 is requested. A total increase of $158,160 is requested for additional Design Services. Therefore, a total of $354,636 is requested to complete and close-out the SR-74 widening project. Once again, I appreciate the opportunity to serve RCTC and assist in the process of the approval of the necessary documents and provide a safer transportation facility in Riverside County. Should you have any question, do not hesitate to call me at 760-955-7712. Sincerely, SC ENGINEERING Sal Chavez, PE PrincipaUProject Manager cc: Project Files-55 220 STATE ROUTE 74, Segment 2 Additional Right of Way Engineering and Design Services - TASK - Estimated No. of Sheets Estimated Hours/Sheet Estimated Hours Firm Cost 1. ADDITIONAL RIGHT OF WAY ENGINEERING A. Increase County of Riverside Review Fee 1 - - AE $8,800 B. Revise RNV Hard Copies per Record of Survey/Caltrans/Epic Land 1 328 328 AE $32,784 C. Reset RNV Monuments due to Record of Survey 1 61 - 61 AE $16,372 D. Modify Record of Survey per Caltrans/Epic Land Review 1 284 284 AE $28,015 E. Prepare Legals and Plats (Segment 1) for Grant Deeds - 1 182 182 AE $16,924 F. Prepare Legals and Plats (Segment 2) for Grant Deeds _ 1 434 434 AE $38,669 G. Compare As -Built to RNV Segment 2 1 272 272 AE $27,658 H. Revise/Update Right of Way Maps per Caltrans/Epic Land Review 1 264 264 AE $27,254 Subtotal 1,825 $196,476 2. ADDITIONAL DESIGN SERVICES A. Contract As -Built Plans a. Segment 2 514 1.00 514.0 SC $54,305 b. Greenwald Avenue 31 1.00 31.0 SC $3,275 B. Septic/Sewer Systems Drawing Plans a. APN 326-240-021 (Conned to City of Perris Sewer System) 1 82 82 SC -$8,663 b. APN 342-120-013 (Mounted System) 1 40 40 SC $4,226 c. APN 342-130-009(Mounted System) 1 40 40 SC $4,226 d. APN 342-151-014 (Mounted System) 1 48 48 SC $5,071 e. Septic Specifications/Assist in the Construction Contract Preparatior 1 24 - 24 SC $2,536 C. Utility Joint Use Agreements a. The Gas Company 1 80 80 SC $8,452 b. Elsinore Valley Municipal Water District 1 80 - 80 SC $8,452 c. Southern Califomia Edison 1 80 80 SC $8,452 D. RNV Coordination/Review with Caltrans and Epic Land - Segment 1 1 78 78 SC $8,241 E. FM Coordination/Review with Caltrans and Epic Land— Segment 2 1 160 160 SC $16,904 F. Project Management/Coordination/Meetings 1 240 240 SC $25,356 Subtotal 556 1,497 SC $158,160 TOTAL 3,322 SC+SUBS $354,636 221 STATE ROUTE 74, Segment 2 Addition! Right of Way Engineering and Design Services COSTPROP OSAL WORKSHEET COMPANY: SC ENGINEERING PROJECT: State Route 74, Segment 1 and 2 SCOPE OF WORK Additional RIW Engineering and Design Services DATE December 21, 2w/ (Updated 3-1308 REVISION MILESTONEIPHASEIPROJECT SUMMARY: SUMMARY 1 DIRECT LABOR Sal Chavez Carl SosalStaff David Jenkins/Staff John Davis/Staff Staff Staff Staff Staff Project Manager Senior Engineer Civil Engineer Civil Engineer Bridge Engineer CADD Operator/fedrucWt Landscape Architect Administrations/Project Cantrds 150.0 $ 55.00 $8,250 374.0 $ 47.00 $17,578 0.0 $ 42.00 $0 524.0 $ 40.00 $20.960 0.0 $ - $o 449.0 $ 26.50 $11,899 0.0 $ - $o o.0 $ 26.00 $0 MULTIPLIERS (ESCALATION @ TOTAL HOURS 1497.01 1497.0 $58,687 (RATE) GENERAL/ADMINISTRATIVE@ 116.57%(of Total Direct Labor+Escalation) PAYROLL ADDITIVES @ OTHER DIRECT COST OUTSIDE SERVICES (w/o fee) FEES ISC ENGINEERING @ 28.43% (of Total Direct Labor + Escalation) 145.00% $ 68,410.85 $ 16,684.57 TOTAL MULTIPLIERS TOTAL OTHER DIRECT EXPENSES TOTAL OTHER DIRECT EXPENSES 10% (of Total Direct Labor+Total Multipliers) $ 14,378.19 TOTAL MULTIPLIERS TOTAL COST $85,095 $196,476 $14,378 $354,636 222 • ASSOCIATED ENGINEERS, INC. RefAE 99-138 • SR74 - Right of Way Engineering, Segments 1 & 2 Cost Proposal 01/03/08 Revised 3/11/08 • TASKS Project Manager Chief Mapper Land Surveyor Survey Technician CADD Technician 3-Man Field Crew Chief of Surveys Clerical Proj Admin ODC Costs TOTAL HOURS TOTAL COST Rates: $217.95 $168.92 $120.21 $92.31 $87.18 $341.57 $120.56 $58.97 $65.38 Revlse Hardcopy R/W Maps 4 16 72 96 120 12 8 328 $32,783.68 Reset R/W Monuments 1 4 8 40 6 2 - 61 $16,372.23 Modify Record of Survey 4 8 60 80 120 8 4 $8,800.00 284 $36,815.44 Prepare Legals and Deeds Seg. 1 (78) 4 16 40 40 80 2 182 $16,923.68 Prepare Legals and Deeds Seg. 2 (205) 6 24 100 100 200 4 434 $38,669.30 Compare As -built to RAW Seg. 2 4 16 48 120 80 4 272 $27,657.72 Revised R/W Maps Seg. 2 4 16 60 100 80 4 264 $27,254.04 Total Hours 27 100 388 536 400 40 6 300 28'1 1825 Total Costs $5,884.65 $16,892.00 $46,641.48 S49.478.16 $34,872.00 $13,662.80 $723.36 $17,691.00 $1,830.64 $8,800.00 '- �"�'"�' - $196,476.09. ODC Costs: County Checking Fees $8,800.00 SCOPE: Coordinate with Caltrans, RCTC and Riverside County to make adjustments to the hardcopy and R!W maps, reset previously set R/W monuments and modify the Record of Survey to show results. We have assumed that approximately 205 parcels In Segment 2 and 78 parcels In Segment 1 will need revisions and new legals and deeds written. 0:199.1381AE COST-03-11-08 223 • AGENDA ITEM 12 -7.r--I, l- I iI u i { REVISION TO AGENDA ITEM NO. 12 Additions are noted in Bold Italics, Deletions are noted by Striketh-rough RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 24, 2008 TO: Budget and Implementation Committee FROM: Aaron Hake, Government Relations Manager THROUGH: John Standiford, Deputy Executive Director SUBJECT: State and Federal Legislative Update STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the State and Federal Legislative Update; 2) Adopt a SUPPORT position on AB 2650 (Carter); and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: State Legislative Update Interstate 15 High Occupancy Toll Lane Project to Have Big Week in Sacramento Commission -sponsored AB 1954 (Jeffries) will receive its first hearing in the Assembly Transportation Committee on Monday April 7. The purpose of the bill is to secure the Commission's 1-15 high occupancy toll (HOT) lane project as one of four available slots in an existing pilot program for HOT lanes. Legislative ratification is one of a two-step process required by Speaker Nunez's program. The other step is to receive an eligibility finding by the California Transportation Commission (CTC), which is expected to take place two days after AB 1954's hearing. The Commission is currently the only applicant under this program. The Commission has collaborated closely with the CTC and with Caltrans in the development of its public partnership application for 1-15. CTC staff has conducted a thorough and exhaustive review of the project for its compliance with state laws and the Speaker's pilot program. By memorializing 1-15 as one of the four HOT lane projects statewide, the Legislature will enable the construction of more than 145 new lane miles of highway capacity at zero expense to the state. In such a severe fiscal environment Agenda Item 12 and with congestion continuing to increase, the Commission's 1-15 project provides an opportunity for the Legislature to provide relief to the traveling public without placing additional burden on the state's budget. State Route 91 legislation to be heard in Senate Transportation and Housing Committee The Commission and Orange County Transportation Authority (OCTA) joint - sponsored SB 1316 (Correa) will be heard in Senator Alan Lowenthal's (D-Long Beach) committee on Tuesday April 8. To review, the bill makes amendments to AB 1010 (passed in 2002), which will allow the Commission to develop its planned extension of the SR-91 Express Lanes while maintaining the public interest protections that were crucial in transferring the original express lane franchise out of private ownership. The bill authorizes the Commission to develop the express lanes extension under public ownership and operation, in compliance with all Caltrans and Federal Highway Administration standards for design, construction, inspection and operation. Non -compete clauses in any agreement regarding the lanes are expressly prohibited in the bill. Toll revenues are required to be used to repay bonds issued by the Commission to finance the project; excess revenues generated by the toll facility will be required to be reinvested in improvements to the SR-91 corridor. In drafting the bill language, both agencies and the author have placed a premium on ensuring accountability and public benefit. Additionally, the bill allows OCTA to use excess toll revenues to construct a direct -connector from the existing SR-91 Express Lanes to the SR-241 toll road. Currently, commuters must chose between the SR-91 Express Lanes and SR-241, causing many commuters heading to and from south Orange County to endure heavy congestion in the mainline of SR-91 . OCTA's proposed project would allow seamless transition between both toll facilities and further reduce congestion on the mainline of SR-91. Also, the bill extends the term of OCTA's franchise to match the 50-year length of the Commission's tolling authority. The purpose of this amendment is to allow both counties' toll roads to connect seamlessly without one half creating a bottleneck when the OCTA term reverts to general purpose lanes in 2030. The extended term also allows OCTA to finance the direct connector between the SR-91 and SR-241 and other major corridor improvements. Commission staff has been working with OCTA and Senator Correa to gather a broad coalition of support for the SR-91 project. SR-91 has one of the worst levels of congestion in California and one lane in each direction provided by Measure A by Agenda Item 12 2039 is simply not enough to address the challenges of that freeway. New capacity under public ownership financed by user fees is the only way to go above and beyond what is currently planned for this vital corridor. Inland Empire Legislator Introduces Bill to Extend Streamlining Program Rialto Assemblymember Wilmer Amina Carter has introduced AB 2650 on behalf of Caltrans to extend the pilot program that allows California (and other states) to streamline the environmental approval process for transportation projects. SAFETEA-LU created an experimental program whereby states could accept responsibility for clearing projects through the NEPA process. By participating in this program, states were required to waive their 11"' Amendment sovereign immunity and accept the jurisdiction of the federal courts. Legislation is required to waive this right and participate in the program. The initial legislation passed several years ago contained a sunset date for the 11t Amendment waiver of January 1, 2009. However, the program took several years after the passage of SAFETEA-LU to take effect in California; to date it has only been in effect for six months. In order to allow for more time to conduct this streamlining program, AB 2650 extends the sunset date for the 11 `" Amendment waiver to August 10, 2011. Caltrans reports that draft environmental documents have been approved in 72% less time under this program, and final environmental documents have taken 67% less time. In light of the Commission's program of projects to be delivered in the coming years, programs such as NEPA delegation will be important to expediting delivery. Thus, staff recommends the Commission adopt a SUPPORT position on AB 2650 (Carter). Federal Legislative Update The election -year environment in Washington is reaching a fever pitch. A symptom of this fever includes the debate over a one-year moratorium on earmarks, which are special projects identified by members of Congress in bills for specific funding. Earmarks for important transportation projects are often the focus of lobbying efforts by public agencies such as the Commission and its member cities. Although the Senate defeated an attempt to ban earmarks in FY 2009, the President and Congressional Republicans continue to pressure the Democrat leadership to severely cut down on the level of earmarking this year. Fewer earmarks generally mean more discretionary funds available to the Administration for grant programs. RCTC staff will monitor the movement of the federal budget and any opportunities to secure funding for Commission priorities. Agenda Item 12 The Commission Seeks to Keep Perris Valley Line in the President's Budget President Bush's FY 2009 budget includes $50 million for the Commission's Perris Valley Line (PVL) Metrolink Extension project. This line item in the Small Starts category of the Federal Transit Administration's (FTA) budget is only a proposal to Congress at this point in the process. Congress is currently in the process of passing its own budget resolution and will move to appropriate funds according to that budget later this year. RCTC Commissioner, and Metrolink Chair, Ron Roberts was in Washington, DC in February advocating to members of Congress to keep the President's request in the final federal budget. The PVL was also a major topic of discussion for Commission Chair Jeff Stone during his visits with Senator Barbara Boxer and Representatives Ken Calvert, Mary Bono Mack, Jerry Lewis, and James Oberstar (D-MN, Chairman of the House Transportation and Infrastructure Committee). Senator Feinstein, a member of the subcommittee, which appropriates funds for transportation projects, has been a major proponent of the PVL. Commission advocate Cliff Madison and Executive Director Anne Mayer have met with Senator Feinstein's appropriations staff to discuss the project. The Commission's message to Congress is that the $50 million recommendation is appropriate and necessary to keep the PVL moving forward on schedule. Now that the project has received a "medium -high" Small Starts rating from FTA, the project's development will begin to accelerate and funds will be expended at increasing levels. The President's recommended funding is based on the Administration's confidence in the Commission's ability to deliver the project. Senator Boxer Invited to Transportation Town Hall Meeting Pursuant to the Commission's action at its annual workshop at the end of February, Chair Stone has officially extended an invitation to Senator Boxer to attend a town hall meeting in Riverside County to discuss the county's transportation priorities and collaborative efforts. Senator Boxer's office was receptive to the idea; Commission staff and DC -based advocates will continue to follow-up to secure a date and location with the Senator. Commissioners visiting Washington in the near future are encouraged to express their continued interest in hosting the Senator in Riverside County to discuss transportation issues. Agenda Item 12 • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 24, 2008 TO: Budget and Implementation Committee FROM: Aaron Hake, Government Relations Manager THROUGH: John Standiford, Deputy Executive Director SUBJECT: State and Federal Legislative Update STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the State and Federal Legislative Update; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: State Legislative Update Interstate 15 High Occupancy Toll Lane Project to Have Big Week in Sacramento Commission -sponsored AB 1954 (Jeffries) will receive its first hearing in the Assembly Transportation Committee on Monday April 7. The purpose of the bill is to secure the Commission's 1-15high occupancy toll (HOT) lane project as one of four available slots in an existing pilot program for HOT lanes. Legislative ratification is one of a two-step process required by Speaker Nunez's program. The other step is to receive an eligibility finding by the California Transportation Commission (CTC), which is expected to take place two days after AB 1954's hearing. The Commission is currently the only applicant under this program. The Commission has collaborated closely with the CTC and with Ca!trans in the development of its public partnership application for 1-15. CTC staff has conducted a thorough and exhaustive review of the project for its compliance with state laws and the Speaker's pilot program. By memorializing 1-15 as one of the four HOT lane projects statewide, the Legislature will enable the construction of more than 145 new lane miles of highway capacity at zero expense to the state. In such a severe fiscal environment and with congestion continuing to increase, the Commission's 1-15 project provides an opportunity for the Legislature to provide relief to the traveling public without placing additional burden on the state's budget. Agenda Item 12 224 State Route 91 legislation to be heard in Senate Transportation and Housing Committee The Commission and Orange County Transportation Authority (OCTA) joint- sponsored SB 1316 (Correa) will be heard in Senator Alan Lowenthal's (D-Long Beach) committee on Tuesday April 8. To review, the bill makes amendments to AB 1010 (passed in 2002), which will allow the Commission to develop its planned extension of the SR-91 Express Lanes while maintaining the public interest protections that were crucial in transferring the original express lane franchise out of private ownership. The bill authorizes the Commission to develop the express lanes extension under public ownership and operation, in compliance with all Caltrans and Federal Highway Administration standards for design, construction, inspection and operation. Non -compete clauses in any agreement regarding the ,lanes are expressly prohibited in the bill. Toll revenues are required to be used to repay bonds issued by the Commission to finance the project; excess revenues generated by the toll facility will be required to be reinvested in improvements to the SR-91 corridor. In drafting the bill language, both agencies and the author have placed a premium on ensuring accountability and public benefit. Additionally, the bill allows OCTA to use excess toll revenues to construct a direct -connector from the existing SR-91 Express Lanes to the SR-241 toll road. Currently, commuters must chose between the SR-91 Express Lanes and SR-241, causing many commuters heading to and from south Orange County to endure heavy congestion in the mainline of SR-91. OCTA's proposed project would allow seamless transition between both toll facilities and further reduce congestion on the mainline of SR-91. Also, the bill extends the term of OCTA's franchise to match the 50-year length of the Commission's tolling authority. The purpose of this amendment is to allow both counties' toll roads to connect seamlessly without one half creating a bottleneck when the OCTA term reverts to general purpose lanes in 2030. The extended term also allows OCTA to finance the direct connector between the SR-91 and SR-241 and other major corridor improvements. Commission staff has been working with OCTA and Senator Correa to gather a broad coalition of support for the SR-91 project. SR-91 has one of the worst levels. of congestion in California and one lane in each direction provided by Measure A by 2039 is simply not enough to address the challenges of that freeway. New capacity under public ownership financed by user fees is the only way to go above and beyond what is currently planned for this vital corridor. Agenda Item 12 225 • Federal Legislative Update The election -year environment in Washington is reaching a fever pitch. A symptom of this fever includes the debate over a one-year moratorium on earmarks, which are special projects identified by members of Congress in bills for specific funding. Earmarks for important transportation projects are often the focus of lobbying efforts by public agencies such as the Commission and its member cities. Although the Senate defeated an attempt to ban earmarks in FY 2009, the President and . Congressional Republicans continue to pressure the Democrat leadership to severely cut down on the level of earmarking this year. Fewer earmarks generally mean more discretionary funds available to the Administration for grant programs. RCTC staff will monitor the movement of the federal budget and any opportunities to secure funding for Commission priorities. The Commission Seeks to Keep Perris Valley Line in the President's Budget President Bush's FY 2009 budget includes $50 million for the Commission's Perris Valley Line (PVL) Metrolink Extension project. This line item in the Small Starts category of the Federal Transit Administration's (FTA) budget is only a proposal to Congress at this point in the process. Congress is currently in the process of passing its own budget resolution and will move to appropriate funds according to that budget later this year. RCTC Commissioner, and Metrolink Chair, Ron Roberts was in Washington, DC in February advocating to members of Congress to keep the President's request in the final federal budget. The PVL was also a major topic of discussion for Commission Chair Jeff Stone during his visits with Senator Barbara Boxer and Representatives Ken Calvert, Mary Bono Mack, Jerry Lewis, and James Oberstar (D-MN, Chairman of the House Transportation and Infrastructure Committee). Senator Feinstein, a member of the subcommittee, which appropriates funds for transportation projects, has been a major proponent of the PVL. Commission advocate Cliff Madison and Executive Director Anne Mayer have met with Senator Feinstein's appropriations staff to discuss the project. The Commission's message to Congress is that the $50 million recommendation is appropriate and necessary to keep the PVL moving forward on schedule. Now that the project has received a "medium -high" Small Starts rating from FTA, the project's development will begin to accelerate and funds will be expended at increasing levels. The President's recommended funding is based on the Administration's confidence in the Commission's ability to deliver the project. Agenda Item 12 226 Senator Boxer Invited to Transportation Town Hall Meeting Pursuant to the Commission's action at its annual workshop at the end of February, Chair Stone has officially extended an invitation to Senator Boxer to attend a town hall meeting in Riverside County to discuss the county's transportation priorities and collaborative efforts. Senator Boxer's office was receptive to the idea; Commission staff and DC -based advocates will continue to follow-up to secure a' date and location with the Senator. Commissioners visiting Washington in the near future are encouraged to express their continued interest in hosting the Senator in Riverside County to discuss transportation issues. Agenda Item 12 227