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08 August 12, 2009 Commission87754 RECORDS RIVERSIDE COUNTY TRANSPORTATION COMMISSION MEETING AGENDA TIME: 9:30 a.m. DATE: Wednesday, August 12, 2009 LOCATION: BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside Commissioners Chair: Bob Magee lm Vice Chair: Bob Buster 2nd Vice Chair: Greg Pettis Bob Buster, County of Riverside John F. Tavaglione, County of Riverside Jeff Stone, County of Riverside Roy Wilson, County of Riverside Marion Ashley, County of Riverside Bob Botts / Don Robinson, City of Banning Roger Berg / Jeff Fox, City of Beaumont Joseph DeConinck / Robert Crain, City of Blythe Ray Quint° / Jim Hyatt, City of Calimesa Mary Craton / Jordan Ehrenkranz, City of Canyon Lake Greg Pettis / Kathleen DeRosa, City of Cathedral City Eduardo Garcia / Steven Hernandez, City of Coachella Karen Spiegel / Steve Nolan, City of Corona Scott Matas / Russell Betts, City of Desert Hot Springs Robin Lowe / Eric McBride, City of Hemet Patrick J. Mullany / Larry Spicer, City of Indian Wells Glenn Miller / Ben Godfrey, City of Indio Terry Henderson / Don Adolph, City of La Quinta Bob Magee / Melissa Melendez, City of Lake Elsinore Darcy Kuenzi / Scott Mann, City of Menifee Jesse Molina / Bonnie Flickinger, City of Moreno Valley Rick Gibbs / Kelly Bennett, City of Murrieta Frank Hall / Malcolm Miller, City of Norco Jim Ferguson / Cindy Finerty, City of Palm Desert Steve Pougnet / Ginny Foat, City of Palm Springs Daryl Busch / Al Landers, City of Perris Ron Meepos / Alan Seman, City of Rancho Mirage Steve Adams / Andy Melendrez, City of Riverside James Potts / Jim Ayres, City of San Jacinto Ron Roberts / Jeff Comerchero, City of Temecula Scott Farnam / Bridgette Moore, City of Wildomar Raymond Wolfe, Governor's Appointee Anne Mayer, Executive Director John Standiford, Deputy Executive Director Comments are welcomed by the Commission. If you wish to provide comments to the Commission, please complete and submit a Speaker Card to the Clerk of the Board. 11.36.00 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:30 a.m. Wednesday, August 12, 2009 BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside, CA In compliance with the Brown Act and Government Code Section 54957.5, agenda materials distributed 72 hours prior to the meeting, which are public records relating to open session agenda items, will be available for inspection by members of the public prior to the meeting at the Commission office, 4080 Lemon Street, Third Floor, Riverside, CA, and on the Commission's website, www.rctc.org. In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if special assistance is needed to participate in a Commission meeting, please contact the Clerk of the Board at (951) 787-7141. Notification of at /east 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 Commission may, either at the direction of the Chair or by majority vote of the Commission, 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. In addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Also, the Commission may terminate public comments if such comments become repetitious. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Commission shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Riverside County Transportation Commission Agenda August 12, 2009 Page 2 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. 5. APPROVAL OF MINUTES - TO BE SUBMITTED AT THE NEXT MEETING 6. ADDITIONS/REVISIONS - The Commission may add an item to the Agenda after making a finding that there is a need to take immediate action on the item and that the item came to the attention of the Commission subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Commission. if there are less than 2/3 of the Commission members present, adding an item to the agenda requires a unanimous vote. Added items will be placed for discussion at the end of the agenda. 7. PROGRAMMING AMERICAN RECOVERY AND REINVESTMENT ACT ON THE STATE ROUTE 74/INTERSTATE 215 INTERCHANGE PROJECT Page 1 Overview This item is for the Commission to approve programming $16.101 million of American Recovery and Reinvestment Act (ARRA) highway funds in replacement of $16.101 million of 1989 Measure A funds on the SR-74/l-215 interchange project. 8. PROPOSITION 1B — STATE -LOCAL PARTNERSHIP PROGRAM SUBMITTAL Page 3 Overview This item is for the Commission to approve the programming and submittal of State -Local Partnership Program (SLPP) formula funds in the amount of $3.7 million for the State Route 74/Interstate 215 project. • • • Riverside County Transportation Commission Agenda August 12, 2009 Page 3 9. AUTHORIZATION FOR ISSUANCE OF SALES TAX REVENUE BONDS Overview This item is for the Commission to: Page 5 1) Receive and file the overview presentation regarding the issuance of the 2009 Series A, Series B, and Series C Sales Tax Revenue Bonds (2009 Bonds); 2) Adopt Resolution No. 09-017, "Resolution Authorizing the Issuance and Sale of Not to Exceed $185,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) in One or More Series, the Execution and Delivery of a Supplemental Indenture, One or More Purchase Contracts, an Official Statement and Continuing Disclosure Agreement, One or More Remarketing Agreements, and One or More Liquidity Facilities, and the Taking of All Other Actions Necessary in Connection Therewith;" 3) Approve the draft Official Statement for the issuance of $185 million in 2009 Series A, Series B, and Series C Sales Tax Revenue Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; 4) Approve the draft Second Supplemental Indenture between the Riverside County Transportation Commission and U.S. Bank National Association, as Trustee, and authorize the Executive Director to approve and execute the final Second Supplemental Indenture; 5) Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Barclays Capital Inc. (Barclays), as Underwriter Representative acting on behalf of itself and E.J. De La Rosa & Co. Inc. (De La Rosa) and Backstrom McCarley Berry & Co., LLC (Backstrom), (collectively the Underwriters), and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; 6) Approve the draft Remarketing Agreement between the Riverside County Transportation Commission and the remarketing agent(s), authorize the Executive Director to approve the remarketing agent(s), and authorize the Executive Director to approve and execute one or more final Remarketing Agreement(s); 7) Approve the draft Standby Bond Purchase Agreement between the Riverside County Transportation Commission and JPMorgan Chase Bank, National Association (JPMorgan), as liquidity facility provider, and authorize the Executive Director to approve and execute one or more final standby Bond Purchase Agreement(s); and 8) Approve the estimated costs of issuance to be paid from the bond proceeds and execution of related agreements, as required. Riverside County Transportation Commission Agenda August 12, 2009 Page 4 10. ITEM(S) PULLED FROM CONSENT CALENDAR AGENDA 11. COMMISSIONERS / EXECUTIVE DIRECTOR REPORT Overview This item provides the opportunity for the Commissioners and the Executive Director to report on attended meetings/conferences and any other items related to Commission activities. 12. ADJOURNMENT The next Commission meeting is scheduled to be held at 9:30 a.m., Wednesday, September 9, 2009, Board Room, County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside. • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION ROLL CALL AUGUST 12, 2009 Present Absent County of Riverside, District I County of Riverside, District II County of Riverside, District III County of Riverside, District IV ......_.............. County of Riverside, -District V City of Banning City of Beaumont City of Blythe City of Calimesa City of Canyon Lake City of Cathedral City City of Coachella City of Corona City of Desert Hot Springs City of Hemet City of Indian Wells City of Indio City of La Quinta City of Lake Elsinore City of Menifee City of Moreno Valley City of Murrieta City of Norco City of Palm Desert City of Palm Springs City of Perris City of Rancho Mirage City of Riverside City of San Jacinto City of Temecula City of Wildomar Governor's Appointee, Caltrans District 8 RIVERSIDE COUNTY TRANSPORTATION COMMISSION COMMISSIONER SIGN -IN SHEET AUGUST 12, 2009 M AGENCY EMAIL ADDRESS 6019 �cs TT� 0 %�-f/�t `►u9 �rsa� �<� ,ff�� , 74, t cati_41., 1)-/-2-t-t; / [ Lc. �dt7 -�� 1 ss._ It4ou/t/f M02 (/1--u�/ /= R4 NX -el4L L. Alct eGj lC / b(5 M/L(TX7}- ---Ga l "� C'�rne! r-c-4 8-t-E- —.�& �(:c-e- i T T-S% ,�� SA• pJ %VI c i ry ,r LAr- G�e /d PKrb iot- -P____, S ‘Qt �E i 15 C,7-y 0.14TNE )✓4 (, keaLO4% -Q- ,---- -v aY AGLLQ„ 1 ,— i( Li(c' d -, �..� e i7'" �1L. Ni., PAA r' _ 1tvoto RIVERS/DE COUNTY TRANSPORTATION COMMISSION DATE: August 12, 2009 TO: Riverside County Transportation Commission FROM: Shirley Medina, Programming and Planning Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Programming American Recovery and Reinvestment Act on the State Route 74/Interstate 215 Interchange Project STAFF RECOMMENDATION: This item is for the Commission to approve programming $16.101 million of American Recovery and Reinvestment Act (ARRA) highway funds in replacement of $16.101 million of 1989 Measure A funds on the SR-74/I-215 interchange project. BACKGROUND INFORMATION: In March 2009, the Commission approved ARRA highway funding for five interchange projects. Below is a listing and status of the project obligations: Project SR-60 @ Valley Way Obligation Status Federal Highway Administration (FHWA) obligation complete SR-91 @ Van Buren Boulevard Caltrans District 08 review, pursuing state funding 1-10 @ Bob Hope Drive/Ramon Road FHWA obligation complete 1-10 @ Palm Drive FHWA reviewing obligation 1-215 @ Clinton Keith Road Caltrans HQ reviewing obligation, awaiting FHWA review and obligation The SR-91 /Van Buren Boulevard interchange was approved for $16.101 million in ARRA funding. However, the city of Riverside is currently pursuing state funding currently programmed in the State Transportation Improvement Program (STIP) and local funds (1989 Measure A, Transportation Uniform Mitigation Fee (TUMF) and city funds) for the construction phase to ensure timely delivery of the SR-91 /Van Buren Boulevard interchange project. Therefore, staff recommends the Commission reprogram $16.101 million to another eligible project. Agenda Item 7 1 Given that the ARRA funds must be obligated by March 2010, projects must be ready to list and have their obligation requests submitted to Ca!trans by December 2009. Staff is recommending that the $16.101 million ARRA funding be moved to the SR-74/I-215 interchange project, which is federalized, scheduled for construction in January 2010, and can meet the December obligation submittal date. A budget adjustment would be required to reflect the new funding source for the FY 2009/10 expenditures including a reduction to the 1989 Measure A funds currently budgeted for the SR-74/I-215 interchange from $7.380 million to $3.7 million. The $3.7 million of 1989 Measure A funds will match proposed State -Local Partnership Program funding, which is referenced in a related agenda item. Financial Information In Fiscal Year Budget: No Year: FY 2009/10 Amount: $16,101,000 Source of Funds: ARRA (federal) Budget Adjustment: Yes GLA No.: 222 31 41409 P3015 (Federal revenues - other) Fiscal Procedures Approved: \14te4A46,v juiv O� Date: 08/04/2009 Agenda Item 7 • • 2 • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 12, 2009 TO: Riverside County Transportation Commission FROM: Shirley Medina, Programming and Planning Manager THROUGH: Anne Mayer, Executive Director SUBJECT: Proposition 1 B — State -Local Partnership Program Submittal STAFF RECOMMENDATION: This item is for the Commission to approve the programming and submittal of State -Local Partnership Program (SLPP) formula funds in the amount of $3.7 million for the State Route 74/Interstate 215 project. BACKGROUND INFORMATION: SLPP funding is made available from the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 (Act), commonly referred to as Proposition 1 B. The Act authorized $1 billion for the SLPP over a five-year period and authorizes the California Transportation Commission (CTC) to administer the program. The SLPP consists of two programs. The first program is a formula program for voter -approved taxes and fees. Measure A qualifies as Riverside County's transportation sales tax and the Commission will propose projects for SLPP formula funds. The amount of SLPP formula funding available for programming is $21.965 million. The second program is a competitive grant program. This program is open to agencies that have adopted uniform developer fees. Riverside County's two Transportation Uniform Mitigation Fee (TUMF) programs, administered by the Coachella Valley Association of Governments and Western Riverside Council of Governments, allow local agencies to apply for funding of up to $1 million per project. For FY 2009/10, $9.8 million is available for the competitive grant program statewide. Staff encouraged local agencies with qualified projects to apply under the competitive grant program and provided the SLPP guidelines to the local agencies at the July 2009 Technical Advisory Committee meeting. Agenda Item 8 3 Project applications for the formula and competitive grant programs must be submitted to the CTC by August 15, 2009. In order to be eligible for programming, projects must: • Be ready for construction in FY 2009/10; • Have a dollar for dollar match (sales tax/fee must match SLPP funding amount for construction phase); and • Be fully funded. SLPP Formula Proposal Given that projects must have a dollar for dollar match for the construction phase, staff is recommending programming $3.7 million of SLPP and the required match of $3.7 million of Measure A funds for the SR-74/I-215 interchange, which has a construction estimate of approximately $40 million. Other funding currently programmed for the interchange includes TUMF ($14 million), federal ($2.4 million), and $16.101 million of American Recovery and Reinvestment Act (ARRA) funds proposed in a related agenda item. The state plans to issue bonds in fall 2009 and Ca[trans will include STIP projects that have been deferred due to lack of available funding and SLPP projects. The remaining SLPP formula funding balance can be programmed at any time. Throughout the year the Commission will review highway and regional arterial projects ready for construction that have the required Measure A match for consideration of programming SLPP Formula funds. Commission staff anticipates more projects will be ready for construction in FY 2010/11. Financial Information In Fiscal Year Budget: Yes Year: FY 2009/10 Amount: $3,700,000 Source of Funds: Measure A Highway and SLPP Budget Adjustment: Yes GLA No.: 222 31 41509 P3015 (State Revenue -other) Fiscal Procedures Approved: \Ilm,„*.4. Date: 08/04/2009 Agenda Item 8 • • 4 • COMMISSIONERS PLEASE GIVE SPECIAL ATTENTION TO THE BOLD PARAGRAPH IN THIS AGENDA ITEM. RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: August 12, 2009 TO: Riverside County Transportation Commission FROM: Theresia Trevino, Chief Financial Officer THROUGH: Anne Mayer, Executive Director SUBJECT: Authorization for Issuance of Sales Tax Revenue Bonds STAFF RECOMMENDATION: This item is for the Commission to: 1) Receive and file the overview presentation regarding the issuance of the 2009 Series A, Series B, and Series C Sales Tax Revenue Bonds (2009 Bonds); 2) Adopt Resolution No. 09-017, "Resolution Authorizing the Issuance and Sale of Not to Exceed $185,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) in One or More Series, the Execution and Delivery of a Supplemental Indenture, One or More Purchase Contracts, an Official Statement and Continuing Disclosure Agreement, One or More Remarketing Agreements, and One or More Liquidity Facilities, and the Taking of All Other Actions Necessary in Connection Therewith;" 3) Approve the draft Official Statement for the issuance of $185 million in 2009 Series A, Series B, and Series C Sales Tax Revenue Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; 4) Approve the draft Second Supplemental Indenture between the Riverside County Transportation Commission and U.S. Bank National Association, as Trustee, and authorize the Executive Director to approve and execute the final Second Supplemental Indenture; 5) Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Barclays Capital Inc. (Barclays), as Underwriter Representative acting on behalf of itself and E.J. De La Rosa & Co. Inc. (De La Rosa) and Backstrom McCarley Berry & Co., LLC (Backstrom), (collectively the Underwriters), and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; Agenda Item 9 5 6) Approve the draft Remarketing Agreement between the Riverside County Transportation Commission and the remarketing agent(s), authorize the Executive Director to approve the remarketing agent(s), and authorize the Executive Director to approve and execute one or more final Remarketing Agreement(s); 7) Approve the draft Standby Bond Purchase Agreement between the Riverside County Transportation Commission and JPMorgan Chase Bank, National Association (JPMorgan), as liquidity facility provider, and authorize the Executive Director to approve and execute one or more final standby Bond Purchase Agreement(s); and 8) Approve the estimated costs of issuance to be paid from the bond proceeds and execution of related agreements, as required. BACKGROUND INFORMATION: Prior to the commencement of the 2009 Measure A on July 1, 2009, the Commission established a financing program in order to advance project development and land and right-of-way acquisition, as follows: • In March 2005, the Commission established a $185 million commercial paper program. Currently the Commission has $110 million in outstanding commercial paper notes. • As a means to achieve a greater level of interest rate stability in connection with a proposed refinancing of outstanding debt in late 2009, the Commission entered into two forward -starting interest rate swaps in August 2006, for a total notional amount of $185 million. On a weekly basis subject to monthly settlements, the Commission pays the counterparties a fixed rate of 3.679%, and the counterparties pay the Commission a variable rate of 67% of one -month LIBOR. The swaps are effective on October 1, 2009. In September 2008, one of the swaps was terminated due to the Lehman Brothers bankruptcy, which was a trigger event under the swap agreements. The Commission entered into a replacement swap with another counterparty, Deutsche Bank, at a new fixed rate of 3.206%. • In June 2008, the Commission issued $126.4 million in sales tax revenue bonds (2008 Bonds) to refinance $110.005 million in outstanding commercial paper notes, as it was necessary to restore the commercial paper program to its maximum capacity to continue to pay project cost commitments. The bonds are subject to redemption on December 1, 2009, or will be remarketed at a new interest rate. Agenda Item 9 • 6 • Plan of Finance At the July 8, 2009 meeting, staff presented a plan of finance related to a proposed $185 million bond issuance in 2009 (2009 Bonds). Current plans are to issue variable rate bonds, which will require liquidity support, to refinance the 2008 Bonds and approximately $50 million in commercial paper notes outstanding, fund an increase to the debt service reserve fund, and pay the costs of issuance on the proposed 2009 Bonds. As a variable rate debt issue, the proposed 2009 Bonds would be integrated with the interest rate swaps; however, the financial team also developed alternatives to issue a combination of variable and fixed rate bonds or only fixed rate bonds if one or both of the swaps was terminated. The financial team intends to continue monitoring the swap termination costs and financial market conditions before selecting one of these alternatives. The combination of the commercial paper program maximum debt capacity of $185 million and the proposed 2009 Bonds of $185 million, aggregating $370 million, will not exceed the $500 million debt limitation specified in the 2009 Measure A. The proposed 2009 Bonds are 20-year bonds with a final maturity of June 2029. Interest rates on the bonds will be reset weekly by the remarketing agents, with such rates being determined, in part, based on the market performance of similar, tax-exempt bonds. The underwriters may also serve as remarketing agents and have agreed to an annual remarketing fee of 10 basis points. To support the proposed 2009 Bonds, the Commission solicited bids from banks interested in providing a liquidity facility. The financial team is currently negotiating agreement terms and recommends selecting JPMorgan's offer for a two-year liquidity facility at 125 basis points, subject to agreement on acceptable terms. The security for the bonds and liquidity facility is the 2009 Measure A sales tax receipts. The financing team that has participated in the development of this proposed plan of finance and related documents is comprised of the following key members: • Financial Advisor: Fieldman, Rolapp & Associates; • Bond Counsel: Orrick Herrington & Sutcliffe LLP; • Disclosure Counsel: Fulbright & Jaworski LLP; • General Counsel: Best, Best & Krieger LLP; • Underwriters/Remarketing Agents: Barclays, De La Rosa, and Backstrom; • Underwriters Counsel: Hawkins Delafield & Wood LLP; • Liquidity Provider: JPMorgan; and • Trustee: U.S. Bank National Association. Arrangements have been made to present this plan of finance to the rating agencies. First Vice Chair Bob Buster, 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 proposed 2009 Bonds Agenda Item 9 7 in light of the decline in sales tax revenues. A draft of the rating agency presentation is included as an attachment. Meetings are scheduled for August 24-25, 2009 in New York with Moody's Investors Service, Standards & Poor's, and Fitch Ratings. Credit ratings are expected to be received by September 3, 2009. The proposed documents for this transaction will continue to be reviewed and revised for any matters that arise as a result of these rating meetings and other matters. The Official Statement is expected to be completed and printed by September 14, 2009, in order to price the bonds on September 29, 2009. Final documents will be prepared and executed prior to the expected closing date of October 1, 2009. The drafts of the documents for the proposed 2009 Bonds are included attached for the Commission's adoption or approval and consist of the following: • Official Statement (draft); • Resolution No. 09-017 (draft) authorizing the issuance and sale of a not to exceed amount of sales tax revenue bonds in one or more series; the execution and delivery of a supplemental indenture, one or more purchase contracts, an Official Statement and continuing disclosure agreement, one or more Remarketing Agreements, and one or more liquidity facilities; and the taking of all other actions necessary in connection with this transaction; • Second Supplemental Indenture between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of the proposed 2009 Bonds; and • Bond Purchase Agreement (draft) between the Underwriters and the Commission regarding the purchase of the proposed 2009 Bonds; • Remarketing Agreement (draft) between the remarketing agent(s) and the Commission regarding the remarketing of the proposed 2009 Bonds; and • Standby Bond Purchase Agreement (draft) between JPMorgan and the Commission regarding the liquidity support for the proposed 2009 Bonds. One of the actions at today's meeting is for the Commission to approve the form of the Official Statement and authorize its distribution in connection with the sales and pricing of the proposed 2009 Bonds. The Official Statement is required under state and federal securities laws prohibiting the offer and sale of securities such as the proposed 2009 Bonds unless all matters that would be material to an investor in the proposed 2009 Bonds have been adequately disclosed and there has been no omission of material facts that would cause statements made in the Official Statement, in the light of the circumstances under which they were made, to be misleading. Furthermore, under rules of the Securities and Exchange Commission, the underwriters cannot purchase the proposed 2009 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 9 • 8 The Commissioners serving on the Board as the governing body of the issuer of the proposed 2009 Bonds are expected to read and be familiar with the information described in the attached draft Official Statement. The Commissioners may employ the services of experts to take the lead in the drafting and review of the Official Statement; however, the Commissioners have the duty to review the information and bring to the attention of those responsible for the preparation of the offering document any misstatements or omissions in the draft and to ask questions it is unclear about the information or their role. The financing team will be available at the Commission meeting to respond to the identification of any misstatements or omissions or to such questions. Significant changes to these documents are not anticipated, with the exception of the final agreement terms with a liquidity provider and details of the bond pricing scheduled for September 29, 2009. The financing team is negotiating terms of the Standby Bond Purchase Agreement with JP Morgan as well as a back-up liquidity provider. Since general legal counsel is a key member of the financing team, staff recommends that the executive director be authorized to approve and execute the final documents. Staff recommends adoption of draft Resolution 09-017; approval of the draft Official Statement, Second Supplemental Indenture, Bond Purchase Agreement, Remarketing Agreement, and standby Bopd Purchase Agreement; approval of the estimated costs of issuance and execution of related agreements, as required; and authorization of the Executive Director to approve and execute the final documents. The estimated costs of issuance do not exceed the Commission's debt management policy that limits such costs to 2%. Financial Information $185,000,000 bond proceeds; In Fiscal Year Budget: Yes Year: FY 2009/10 Amount: $176,395,000 principal payment; $700,000 costs of issuance Source of Funds: 2009 Sales Tax Revenue Bonds Budget Adjustment: No 304 31 59102 (Bond proceeds) $185,000,000 304 31 97001 (Transfer out) $126,395,000 Ito retire 2008 bonds) GLA No.: 304 31 97001 (Transfer out) $50,000,000 (to retire commercial paper) 304 31 97001 (Transfer out) $7,905,000 (to increase debt reserve) 304 31 96103 (Costs of issuance) $700,000 Fiscal Procedures Approved: Date: 07/28/2009 Agenda Item 9 9 Attachments: 1) Resolution No. 09-017 (Draft) 2) Official Statement (Draft) 3) Second Supplemental Indenture (Draft) 4) Bond Purchase Agreement (Draft) 5) Remarketing Agreement (Draft) 6) Standby Bond Purchase Agreement (Draft) 7) Estimated Costs of Issuance (Draft) 8) Rating Agency Presentation (Draft) Agenda Item 9 • • 10 ATTACHMENT 1 NO.09-017 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $185,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) IN ONE OR MORE SERIES, THE EXECUTION AND DELIVERY OF A SUPPLEMENTAL INDENTURE, ONE OR MORE PURCHASE CONTRACTS, AN OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT, ONE OR MORE REMARKETING AGREEMENTS, AND ONE OR MORE LIQUIDITY FACILITIES, 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 Califomia (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 issud limited tax bonds payable from the proceeds of such tax; 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; 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"); OHS Wes1:260692474.6 11 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 and there are currently outstanding interest rate swap agreements in an aggregate notional amount of $185 million (the "Existing Swaps"), which Existing Swaps have an effective date of October 1, 2009; WHEREAS, the Commission has heretofore issued its Sales Tax Revenue Bonds (Limited Tax Bonds) (the "Prior Bonds"), pursuant to an Indenture; dated as of June 1, 2008 (as amended and supplemented, the "Indenture"), and a First Supplemental Indenture, dated as of June 1, 2008, each by and between the Commission and U.S. Bank National Association, as trustee (the "Trustee"); WHEREAS, the Commission hereby determines that one or more new series or subseries of bonds in an aggegate principal amount not to exceed one hundred eighty-five million dollars ($185,000,000) is necessary in order to finance (i) the refunding of all of the outstanding Prior Bonds, (ii) the refunding of all or a portion of the outstanding CP Notes, (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), Series 2009" (the "Series 2009 Bonds"); WHEREAS, the Commission hereby further determines that the Series 2009 Bonds shall be issued pursuant to a Second Supplemental Indenture, amending and supplementing the Indenture (the "Second Supplemental Indenture"), by and between the Commission and the Trustee; WHEREAS, there has been prepared and presented to the Commission a proposed form of Second Supplemental Indenture; WHEREAS, in order to minimize debt service and maximize benefits to the Commission in connection with the issuance of the Series 2009 Bonds, it may be desirable to issue the Series 2009 Bonds as fixed rate bonds or as variable rate bonds (the "Variable Rate Bonds") and if the bonds are issued as Variable Rate Bonds to enter into remarketing agreements (the "Remarketing Agreements") with one or more remarketing agents to provide remarketing agent services with respect to the Series 2009 Bonds; OHS West260692474.6 -2- • 12 WHEREAS, in order to set forth the terns of sale of the Series 2009 Bonds, the Commission proposes to enter into one or more bond purchase agreements (the "Purchase Contracts") with Barclays Capital Inc., E.J. De La Rosa & Co., Inc. and Backstrom McCarley Berry & Co., LLC (collectively, the "Purchasers"); WHEREAS, the Purchasers have caused to be prepared and submitted to the Commission proposed forms of the Purchase Contracts and the Remarketing Agreements; WHEREAS, in order to provide liquidity support for the Series 2009 Bonds that are Variable Rate Bonds, the Commission may enter into one or more standby bond purchase agreements or other liquidity support agreements (each a "Liquidity Facility" and, collectively, the "Liquidity Facilities"), containing such terms and conditions as the Executive Director of the Commission (the "Executive Director") or the Chief Financial Officer of the Commission (the "Chief Financial Officer") considers appropriate and with a bank or other financial institution or association (each a "Liquidity Provider" and, collectively, the "Liquidity Providers") to be selected by the Executive Director or Chief Financial Officer in the event a Liquidity Facility is determined to be beneficial to the marketing of the Series 2009 Bonds; WHEREAS, a proposed form of the Liquidity Facilities has been prepared and submitted to the Commission; WHEREAS, in order to provide information about the Series 2009 Bonds and related matters to purchasers and potential purchasers of the Series 2009 Bonds, the Commission proposes to execute and deliver an official statement (the "Official Statement"); WHEREAS, there has been prepared and presented to the Commission a proposed form of Official Statement (the "Official Statement') and a proposed form of Continuing Disclosure Agreement (the "Continuing Disclosure Agreement'); WHEREAS, the Commission has been presented with proposed forms of the Second Supplemental Indenture, the Purchase Contracts, the Continuing Disclosure Agreement, the Remarketing Agreements, the Liquidity Facilities and the Official Statement relating to the financing 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 issuance of the Series 2009 Bonds and 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 Second Supplemental Indenture, the Purchase Contracts, one or more Liquidity Facilities, the Official Statement, the Continuing Disclosure Agreement and the Remarketing Agreements for the purposes, in the manner and upon the terms provided; OHS West:260692474.6 -3- 13 NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES: 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 $185,000,000 aggregate principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2009, 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 Second 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, 2029), 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 2009 Bonds shall be (subject to the foregoing limitations) as provided in the Indenture and the Second 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 Second Supplemental Indenture, in substantially said form, with such changes therein, including without limitation changes necessary to issue the Series 2009 Bonds as fixed rate bonds, 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 the Purchase Contracts 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 2009 Bonds to the Purchasers pursuant to one or more Purchase Contracts with the Purchasers' compensation not to exceed 0.5% of the principal amount of the Series 2009 Bonds and to execute and deliver one or more Purchase Contracts, 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 proposed form of the Liquidity Facilities presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized to negotiate with Liquidity Providers one or more Liquidity Facilities for the Series 2009 Bonds, and, if the Executive Director, with the advice of Fieldman, Rolapp & Associates (the "Financial Advisor"), determines that doing so is in the best interests of the Commission, to enter into such Liquidity Facilities in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 6. The proposed form of Official Statement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed to execute and OHS West:260692474.6 -4- • • • 14 deliver to the Purchasers a certificate deeming the 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 Purchasers are hereby authorized to distribute the Official Statement in the form so deemed final by the Executive Director, including a preliminary form of the Official Statement, if the Executive Director determines such distribution is appropriate for the sale of the Series 2009 Bonds. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Official Statement, in final form, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. The proposed form of Continuing Disclosure Agreement presented to this meeting is hereby approved. If the Executive Director determines that doing so is in the best interests of the Commission, the Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver 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 proposed form of Remarketing Agreements presented to this meeting is hereby approved. If the Executive Director determines that issuing the Series 2009 Bonds as Variable Rate Bonds is in the best interests of the Commission, the Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver one or more Remarketing Agreements with such remarketing agents as the Executive Director shall designate 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 9. The Executive Director is hereby authorized to negotiate with financial institutions and/or insurance companies, as applicable, an irrevocable letter of credit, or a surety bond, or an insurance policy, and, if the Executive Director, with the advice of the Financial Advisor, determines that doing so is in the best interest of the Commission, to secure such irrevocable letter of credit, surety bond, or insurance policy on such terms as the Executive Director, with the advice of the Financial Advisor, determines are appropriate, in order to fiend any bond reserve fund established pursuant to the Indenture or the Second Supplemental Indenture. Section 10. 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 Existing 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 Second 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 OHS West:260692474.6 -5- 15 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 Existing Swaps and the Series 2009 Bonds or enhance the relationship between risk and retum with respect to investments. Section 11. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, the CP Notes or the Existing Swaps, whether before or after the issuance of the Series 2009 Bonds, including, without limitation, any amendment of any of the documents authorized by this Resolution or the Existing Swaps or other agreement related thereto, and any of the foregoing that may be necessary or desirable in connection with any Liquidity Facilities or the extension or replacement thereof, or any reserve facility, any investment of proceeds of the Series 2009 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 the Commission, and each Authorized Representative is hereby authorized and directed to give any such approval, consent, direction, notice, order, request, or other action and to execute such documents and take any such action which such Authorized Representative may deem necessary or desirable to further the purposes of this Resolution. Section 12. 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 2009 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 or the Chief Financial Officer 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 2009 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 or the Chief Financial Officer 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 or verification 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 2009 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, this Resolution, the Series 2009 Bonds and the documents approved hereby. OHS West260692474.6 -6- • 16 • 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 August 12, 2009. ATTEST: By: Clerk of the Board of the Commission OHS West.260692474.6 By: Chairman, Board of Commissioners -7- 17 CERTIFICATE 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 August 12, 2009, 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, California, 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, , 2009. OHS West:260692474.6 By Clerk -8- • 18 Y2-cent sales tax that became effective on July 1, 2009 (the "Sales Tax"), less certain administrative fees paid to the California State Board of Equalization), as described herein. 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. 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 THAT OF THE COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PURCHASE PRICE, OR INTEREST ON THE 2009 BONDS. This cover page contains certain information for general reference only. It is not a summary of the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to make an informed investment decision with respect to the 2009 Bonds. The 2009 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of validity by Orrick, Herrington & Sutcliffe as Bond Counsel, and certain other conditions. Certain legal matters will be passed on for the Commission by Fulbright & Jaworski L.L.P., Los Angeles, Califomia, as Disclosure Counsel, and by Best Best & Krieger LLP, Riverside, Califomia, the Commission's General Counsel. Certain legal matters will be passed upon for the Underwriters by Hawkins Delafield & Wood, San Francisco, Califomia. It is anticipated that the 2009 Bonds will be available for delivery through the book -entry facilities ofDTC on or about October , 2009. Barclays Capital Underwriter and Remarketing Agent for the 2009 Series A Bonds De La Rosa & Co. Backstrom McCarley Berry & Co., LLC Underwriter and Remarketing Agent for the 2009 Series B Bonds Underwriter and Remarketing Agent for the 2009 Series C Bonds Dated: September _ 2009 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. • 75783979.5 20 • No dealer, salesman or any other person has been authorized by the Riverside County Transportation Commission (the "Commission") or the Underwriters of the 2009 Bonds (the "Underwriters") to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Commission or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 2009 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2009 Bonds. Neither the delivery of this Official Statement nor the sale of any of the 2009 Bonds implies that the information herein is correct as of any time subsequent to the date hereof. The information and expressions 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 the implication that there has been no change in the matters described herein since the date hereof. This Official Statement is submitted in connection with the sale of securities referred to herein and may not be reproduced or be used, as a whole or in part, for any other purpose. The information set forth herein has been obtained from the Commission and other sources believed to be reliable. The information and expressions of opinions herein are subject to change without notice and neither delivery of the Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission since the date hereof. All summaries contained herein of the Indenture (as defined herein) or other documents are made subject to the provisions of such documents and do not purport to be complete statements of any or all of such provisions. All statements made herein are made as of the date of this document by the Commission except statistical information or other statements where some other date is indicated in the text. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2009 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL ON THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE 2009 BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. 75783979.5 21 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. 75783979.5 • • 22 • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Bob Magee, Chair Bob Buster, Ist Vice Chair Gregory S. Pettis, 2nd Vice Chair Marion Ashley Jeff Stone John F. Tavaglione Roy Wilson Bob Botts Roger Berg Joseph DeConinck Ray Quinto Mary Craton Eduardo Garcia Karen Spiegel Scott Matas Robin Lowe Patrick J. Mullany MANAGEMENT Executive Director Anne Mayer Deputy Executive Director John Standiford Chief Financial Officer Theresia Trevino SPECIAL SERVICES Financial Advisor Fieldman, Rolapp & Associates Irvine, California Glenn Miller Terry Henderson Darcy Kuenzi Jesse Molina Rick Gibbs Frank Hall Jim Ferguson Steve Pougnet Daryl R. Busch Ron Meepos Steve Adams James Potts Ron Roberts Scott Farnam Ray Wolfe Bond Counsel Disclosure Counsel Orrick, Herrington &Sutcliffe LLP San Francisco, California 757839795 Trustee Fulbright & Jaworski L.L.P. Los Angeles, California Verification Agent U.S. Bank National Association [to come] Los Angeles, California 23 TABLE OF CONTENTS Page INTRODUCTION 1 General 1 Authority for Issuance 1 Purpose and Application of Proceeds 2 The 2009 Bonds 2 Security for the 2009 Bonds 2 Liquidity Facility 3 2009 Bonds Reserve Fund 3 Existing Swaps 3 Continuing Disclosure 3 References 4 THE 2009 BONDS 4 General 4 Weekly Rate 5 Conversion of Interest Rate 5 Redemption 7 General Redemption Provisions g Tender Provisions 9 SPECIAL CONSIDERATIONS RELATING TO THE 2009 BONDS SUBJECT TO OPTIONAL TENDER AND REMARKETING 12 The Remarketing Agents are Paid by the Commission 12 The Remarketing Agents Routinely Purchase 2009 Bonds for their Own Account 12 2009 Bonds May Be Offered at Different Prices on Any Date Including a Rate Determination Date 12 The Ability to Sell the 2009 Bonds Other Than through Tender Process May Be Limited 13 No Remarketing Agent Successor in Certain Circumstances 13 PLAN OF REFUNDING 13 ESTIMATED SOURCES AND USES OF PROCEEDS 14 SECURITY AND SOURCES OF PAYMENT FOR THE 2009 BONDS 14 Limited Obligation 14 Pledge of Revenues 14 Revenue Fund; Allocation of Revenues 15 2009 Bonds Reserve Fund 17 Additional Bonds and Parity Obligations 17 Existing Swap Agreements 19 Subordinate Obligations 20 75783979.5 1 24 TABLE OF CONTENTS (continued) Page THE LIQUIDITY FACILITY 21 THE LIQUIDITY PROVIDER 21 THE SALES TAX 21 General 21 Collection of Sales Tax Revenues 22 1988 Sales Tax Revenues 23 RIVERSIDE COUNTY TRANSPORTATION COMMISSION 24 General 24 Commissioners 25 Executive Staff 26 THE TRANSPORTATION EXPENDITURE PLAN 26 RISK FACTORS 27 Economy of the County and the State 27 Limitations of the Liquidity Facility 28 The Sales Tax 29 Proposition 218 29 Further Initiatives 29 Loss of Tax Exemption 29 FINANCIAL STATEMENTS 30 VERIFICATION OF MATHEMATICAL COMPUTATIONS 30 LITIGATION 30 TAX MATTERS 30 CERTAIN LEGAL MATTERS 32 RATINGS 33 REMARKETING AGENTS 33 UNDERWRITING 33 FINANCIAL ADVISOR 34 CONTINUING DISCLOSURE 34 MISCELLANEOUS 34 75783979.5 11 • • 25 • • • APPENDIX A - APPENDIX B - APPENDIX C - APPENDIX D -- APPENDIX E - APPENDIX F - 75783979.5 TABLE OF CONTENTS (continued) Page - Commission Audited Financial Statements For Fiscal Year Ended June 30, 2008 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 Agreement F-1 lll a 26 • • • OFFICIAL STATEMENT $185,000,000 RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series S RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A Bonds CUSIP No.1 General S RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series B Bonds CUSIP No.r INTRODUCTION RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series C Bonds CUSIP No! 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 $185,000,000 principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A (the "2009 Series A Bonds"), $ principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series B (the "2009 Series B Bonds") and $ principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series C (the "2009 Series C Bonds" and, together with the Series A Bonds and the Series B Bonds, the "2009 Bonds"). As used herein, the term "Bonds" means any Bonds, including the 2009 Bonds, issued pursuant to the Indenture (as defined below). Authority for Issuance The 2009 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'), 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 (collectively, and together with the Act, the "Law"), an Indenture, dated as of June 1, 2008 (the "2008 Indenture"), the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture"), and the Second Supplemental Indenture, dated as of October 1, 2009 (the "Second Supplemental Indenture" and, together with the 2008 Indenture and the First Supplemental Indenture, the "Indenture"), each between the Commission and U.S. Bank National Association, as trustee (the "Trustee"). All capitalized terms used and not otherwise defined herein shall have the meanings assigned to such 75783979.5 1 27 terms in "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" or in the Indenture. Purpose and Application of Proceeds The proceeds of the 2009 Bonds will be applied to (i) refund all of the Commission's Sales Tax Revenue Bonds (Limited Tax Bonds) Series 2008, currently outstanding in the aggregate principal amount of $126,395,000 (the "Refunded Bonds"), (ii) retire a portion of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds), Series A (the "Notes"), in the principal amount of $50,000,000, (iii) fund a [portion of a] reserve for the 2009 Bonds, and (iv) pay costs of issuance of the 2009 Bonds. See "PLAN OF REFUNDING" and "ESTIMATED SOURCES AND USES OF PROCEEDS" herein. The 2009 Bonds The 2009 Bonds will be dated their date of delivery and initially will bear interest at a Weekly Rate during a Weekly Rate Period. Interest on the 2009 Bonds during a Weekly Rate Period will be payable on the first Business Day of each calendar month, commencing November 2, 2009. The 2009 Bonds are initially being issued as fully registered bonds without coupons in the denominations of $100,000 and any integral multiple of $5,000 in excess thereof. The 2009 Bonds will be registered in the name of Cede & Co., as holder of the 2009 Bonds and nominee for The Depository Trust Company ("DTC"). Purchasers will not receive physical certificates representing their interest in the 2009 Bonds purchased. This Official Statement describes terms of the 2009 Bonds only during a Weekly Rate Period. There are significant differences in the terms of the 2009 Bonds bearing interest using other Interest Rate Determination Methods. This Official Statement is not intended to provide information with respect to the 2009 Bonds bearing interest at a Rate other than a Weekly Rate. The 2009 Bonds will be subject to optional and mandatory sinking fund redemption and to optional and mandatory tender for purchase. See "THE 2009 BONDS" herein. Security for the 2009 Bonds The 2009 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 1/4-cent sates tax that became effective on July 1, 2009 (the "Sales Tax"), imposed in the County of Riverside, California (the "County") in accordance with the Law 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 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 on November 5, 2002 and is scheduled to expire on June 30, 2039. 75783979.5 2 • • 28 • 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 2009 BONDS. Liquidity Facility Payment of the purchase price of tendered 2009 Bonds will be payable from the proceeds of remarketing of the 2009 Bonds and, to the extent remarketing proceeds are insufficient, initially from amounts available under the Standby Bond Purchase Agreement, dated as of October 1, 2009 (the "Liquidity Facility"), by and between the Commission and JP Morgan Chase Bank, N.A. (the "Liquidity Provider"), and thereafter from such Altemate Liquidity Facility as may be obtained by the Commission to provide for payment of the purchase price of the 2009 Bonds. The initial Liquidity Facility terminates on October _, 2011, unless extended or terminated sooner in accordance with its terms. See "THE LIQUIDITY FACILITY" and "THE LIQUIDITY PROVIDER" herein. 2009 Bonds Reserve Fund To make up any deficiency in the Interest Fund or the Principal Fund relating to the 2009 Bonds, the Second Supplemental Indenture establishes a 2009 Bonds Reserve Fund, to be maintained by the Trustee. The 2009 Bonds Reserve Fund will be funded initially in the amount of $ from the proceeds of the sale of the 2009 Bonds [and amounts transferred from the Refunded Bonds], which amount is equal to the 2009 Bonds Reserve Requirement upon issuance of the 2009 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2009 BONDS — 2009 Bonds Reserve Fund," and "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions." Existing Swaps The Commission has entered into interest rate swap agreements with a combined notional amount of $185,000,000 (subject to amortization), with an effective date of October 1, 2009. The swaps expire on June 1, 2029. Under the swaps, the Commission has agreed to pay a fixed interest rate to the swap providers and the swap providers have agreed to pay the Commission a floating rate of interest. The Commission's obligation to make regularly scheduled payments under the swaps constitutes a Parity Obligation under the Indenture. The Commission's obligation to pay any early termination amounts under the swaps is secured by a pledge of Sales Tax Revenues subordinate to the pledge in favor of the 2009 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2009 BONDS — Existing Swap Agreements" herein. Continuing Disclosure The Commission has voluntarily agreed to follow the requirements of Rule 15c2-12 (the "Rule"), promulgated by the U.S. Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended, in connection with a Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"), in which the Commission will undertake, for the benefit of the beneficial owners of the 2009 Bonds, to provide certain information to the 75783979.5 3 29 Municipal Securities Rulemaking Board (the "MSRB") as set forth therein. See "APPENDIX F — PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT." The Commission has never failed to comply in all material respects with any previous continuing disclosure undertaking pursuant to the Rule to provide annual reports or notices of material events. 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. THE 2009 BONDS General The 2009 Bonds will be dated their date of delivery and initially will bear interest at a Weekly Rate during a Weekly Rate Period. This Official Statement describes terms of the 2009 Bonds only during a Weekly Rate Period. There are significant differences in the terms of the 2009 Bonds bearing interest using other Interest Rate Determination Methods. This Official Statement is not intended to provide information with respect to the 2009 Bonds bearing interest at a Rate other than a Weekly Rate. Interest on the 2009 Bonds during a Weekly Rate Period will be payable on the fast Business Day of each calendar month, commencing November 2, 2009. "Business Day" means 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, or (3) a day on which the New York Stock Exchange is closed. DTC, will act as the initial securities depository for the 2009 Bonds, which will be issued initially pursuant to a book - entry only system. See "APPENDIX D — BOOK -ENTRY SYSTEM." Under the Indenture, the Commission may appoint a successor securities depository to DTC for the 2009 Bonds. The Holders of the 2009 Bonds have no right to a book -entry only system for the 2009 Bonds. The information under this caption, "THE 2009 BONDS," is subject in its entirety to the provisions described in "APPENDIX D — BOOK -ENTRY SYSTEM" while the 2009 Bonds are in the book -entry only system. There are a number of provisions in the Indenture relating to the terms of 2009 Bonds purchased by the Liquidity Provider that are not described in this Official Statement. All references to the terms of the 2009 Bonds in this Official Statement describe only 2009 Bonds that are not owned by the Liquidity Provider unless expressly indicated herein. 75783979.5 Q • • 30 • The 2009 Bonds will be subject to optional and mandatory sinking fund redemption and to optional and mandatory tender and purchase as described herein. See "THE 2009 BONDS — Redemption" herein. Weekly Rate During each Weekly Rate Period for any Series of 2009 Bonds, the Remarketing Agent for such Series shall set a Weekly Rate for such 2009 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 home by such 2009 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 2009 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 for tender) of the 2009 Bonds for which the Weekly Rate is to be determined, be the lowest interest rate that would enable the Remarketing Agent to place such 2009 Bonds at a price equal to 100% of the aggregate principal amount of such 2009 Bonds (plus accrued interest, if any) on the first day of such Weekly Rate Period. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Conversion of Interest Rate Right of Conversion. The Interest Rate Determination Method for any Series of 2009 Bonds is subject.to Conversion from time to time by the Commission, with such right to be exercised by delivery of a Conversion Notice to the Notice Parties for the 2009 Bonds of such Series as follows: (1) at least two Business Days prior to the fifteenth day preceding the effective date of such proposed Conversion, in the event of a Conversion from the Weekly Rate to a Daily Rate or Commercial Paper Rate; and (2) at least three Business Days prior to the fifteenth day preceding the effective date of such proposed Conversion, in the event of a Conversion to a Long -Term Rate or a Fixed Rate. The date of the proposed Conversion must be a date on which such 2009 Bonds are subject to mandatory tender. The Conversion Notice must be accompanied by (i) 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 the 2009 Bonds to be converted, and (ii) a notice of any 2009 Liquidity Facility or any 2009 Credit Enhancement, if at the same time as such 2009 Bonds are being converted an Alternate Liquidity Facility or a new 2009 Credit Enhancement with respect to such 2009 Bonds will be provided. No Conversion to a new Interest Rate Determination Method may take effect under the Indenture unless each of the following conditions shall have been satisfied: 75783979.5 5 31 (i) the Trustee shall have received a Favorable Opinion of Bond Counsel with respect to such Conversion; (ii) all 2009 Bonds to be converted are successfully purchased or deemed purchased (from remarketing proceeds or from funds provided by the 2009 Liquidity Provider) and remarketed in the new Interest Rate Determination Method on the Conversion Date; (iii) in the case of a Conversion to a Daily Rate or a Commercial Paper Rate, the 2009 Liquidity Facility for such 2009 Bonds 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 2009 Bonds; provided that if the number of days of interest coverage provided by the applicable 2009 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 2009 Bonds; and (iv) such other conditions as are specified in the Indenture. On the Conversion Date, the Commission may, at its sole option, purchase 2009 Bonds not remarketed to other investors, but it will be under no obligation to do so. Conversion of the Interest Rate Determination Method requires that all 2009 Bonds to be converted must be tendered for purchase on the Conversion Date. See "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Notice of Conversion to DTC and Beneficial Owners. Upon receipt of a Conversion Notice, as soon as possible, but in any event not less than 15 days prior to the proposed Conversion Date, the Trustee is to give notice of the proposed Conversion to DTC by first-class mail. 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 of 2009 Bonds to be converted will be governed by arrangements among them, and the Commission and the Trustee will not have any responsibility or obligation to send a Conversion Notice to Beneficial Owners of 2009 Bonds. Rescission of Notice of Conversion. Notwithstanding anything in the Indenture to the contrary, the Commission may rescind any previously given Conversion Notice by giving written notice thereof to the Notice Parties two or more Business Days prior to the proposed Conversion Date. If the Trustee receives notice of such rescission prior to the time the Trustee has given notice of the proposed Conversion to DTC, 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 such rescission after the Trustee has given notice of the proposed Conversion to DTC, then the 2009 Bonds subject to the proposed conversion shall continue to be subject to mandatory tender for purchase on the proposed Conversion Date (unless, prior to the proposed Conversion Date, such 2009 Bonds were in a Long -Term Rate Period for which there was no Liquidity Facility) and the Rate Period for such 2009 Bonds shall automatically adjust to, or continue as, a Weekly Rate Period on the proposed Conversion Date. 75783979.5 6 • 32 • • • Failure to Convert. The Indenture includes provisions setting forth the procedures and conditions for the exercise by the Commission of its right of Conversion of the Interest Rate Determination Method for any Series of 2009 Bonds, including the conditions described above under "— Right of Conversion." Under certain circumstances, a planned Conversion may not be completed. However, once a notice of Conversion is providedrto DTC as described above, all 2009 Bonds subject to the proposed conversion must be tendered for purchase. The Indenture provides that a failed Conversion of the Interest Rate Determination Method for any Series of 2009 Bonds means that such 2009 Bonds will continue to bear interest at the Interest Rate Determination Method in effect prior to the proposed Conversion Date (as if no proceedings for Conversion had taken place) and the rate of interest thereon shall be determined on the proposed Conversion Date. Redemption Optional Redemption. The 2009 Bonds of a Series will be subject to redemption prior to their stated maturity, 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 amount of 2009 Bonds called for redemption, plus accrued interest, if any, without premium. Mandatory Redemption of the 2009 Bonds from Mandatory Sinking Account Payments. The 2009 Bonds of each Series are subject to mandatory redemption from Mandatory Sinking Account Payments on each date a Mandatory Sinking Account Payment for such 2009 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. Series A Bonds Redemption Date Mandatory Sinking (June 1) Account Payment Redemption Date Mandatory Sinking (June 1) Account Payment 2010 2020 2011 2021 2012 2022 2013 2023 2014 2024 2015 2025 2016 2026 2017 2027 2018 2028 2019 2029t t Final Maturity. 75783979.5 7 33 Series B Bonds Redemption Date Mandatory Sinking Redemption Date Mandatory Sinking (June 1) Account Payment (June 1) Account Payment 2010 2020 2011 2021 2012 2022 2013 2023 2014 2024 2015 2025 2016 2026 2017 2027 2018 2028 2019 2029t t Final Maturity. Series C Bonds Redemption Date Mandatory Sinking (June 1) Account Payment Redemption Date Mandatory Sinking (June 1) Account Payment 2010 2020 2011 2021 2012 2022 2013 2023 2014 2024 2015 2025 2016 2026 2017 2027 2018 2028 2019 20291 t Final Maturity. General Redemption Provisions Selection of 2009 Bonds for Redemption. The Commission will designate which Series of 2009 Bonds and which maturities of such Series are to be redeemed; provided, that 2009 Bonds of such Series registered in the name of the 2009 Liquidity Provider must be redeemed prior to redeeming any other 2009 Bonds of such Series. If less than all 2009 Bonds of a Series maturing on any one date are to be redeemed at any one time, DTC's practice is to determine by lot the amount of the interest of each DTC Direct Participant in the Series to be redeemed. For purposes of such selection, the 2009 Bonds of such Series shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. The Commission may designate the Mandatory Sinking Account Payments, or portions thereof, that are to be reduced as a result of such redemption. 75783979.5 8 34 • Notice of Redemption. The Trustee will send each notice of redemption by first class mail not less than 10 nor more than 90 days prior to the redemption date, to DTC, the Remarketing Agents and other parties specified in the Indenture. 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 of 2009 Bonds will be governed by arrangements among them, and the Commission and the Trustee will not have any responsibility or obligation to send a notice of redemption except to DTC. Failure of DTC to receive any notice of redemption or any defect therein will not affect the sufficiency of any proceedings for redemption. Each notice of redemption shall state (i) the date of the notice, (ii) the date of issue of the 2009 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 2009 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. 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 2009 Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the 2009 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 2009 Bonds so called for redemption shall cease to accrue, such 2009 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Indenture, and the Holders of such 2009 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 2009 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. Tender Provisions Optional Tender of 2009 Bonds for Purchase. Except as otherwise provided in the Indenture, during any Weekly Rate Period, any 2009 Bond or (provided that the amount so purchased and the amount not so purchased must each be an Authorized Denomination) a portion thereof, may be tendered for purchase on any Business Day at the applicable Purchase Price, payable in accordance with the Indenture in immediately available funds, upon (A) delivery by the Holder or Beneficial Owner of such 2009 Bond to the Remarketing Agents 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, 75783979.5 9 35 which states the principal amount of such 2009 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2009 Bond to the Trustee on the Purchase Date in accordance with the Indenture. Mandatory Tender of 2009 Bonds for Purchase. The 2009 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: (1) with respect to any Series of 2009 Bonds, on the Conversion Date for such 2009 Bonds to a new Interest Rate Determination Method specified in a Conversion Notice (whether or not the proposed Conversion becomes effective on such date, unless converting from a Long - Term Rate Period for which there is no Liquidity Facility and the proposed Conversion does not occur, in which case the mandatory tender will be cancelled); (2) (A) on the fifth (5th) Business Day preceding (i) the scheduled Expiration of a 2009 Liquidity Facility or (ii) the Termination of a 2009 Liquidity Facility, at the election of the Commission as permitted by such 2009 Liquidity Facility; and (B) on the date of the provision of an Alternate Liquidity Facility for such 2009 Bonds pursuant to the Indenture and the resultant Termination of the existing 2009 Liquidity Facility; provided, however, that, notwithstanding any other provision of the 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 2009 Bonds on the date of the provision of the Alternate Liquidity Facility pursuant to the Indenture and the resultant Termination of the existing 2009 Liquidity Facility; and (3) with respect to each 2009 Bond bearing interest at a Weekly Rate or a Daily Rate upon receipt by the Trustee of written notice from the 2009 Liquidity Provider for such 2009 Bonds that an event of default or an event of termination (other than an immediate termination or suspension) has occurred under the related 2009 Liquidity Facility with the effect that the obligations of such 2009 Liquidity Provider to purchase such 2009 Bonds or otherwise provide for the Purchase Price of such 2009 Bonds under such 2009 Liquidity Facility shall terminate on the date specified in such notice, in which event such 2009 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 2009 Liquidity Provider. Notice of mandatory tender for purchase on the Conversion Date shall be given by the Trustee to the Holders as provided in the Indenture. The 2009 Bonds will be registered in the name of Cede & Co., as Holder of the 2009 Bonds and nominee for DTC. The Trustee shall give notice by first class mail to the Holders of affected 2009 Bonds of each Termination of a 2009 Liquidity Facility and each Expiration of a 2009 Liquidity Facility making 2009 Bonds subject to mandatory tender as provided above, 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 2009 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 75783979.5 10 • 36 Trustee not later than the fifteenth (15th) day prior to such Termination, substitution or expiration. The Trustee shall give notice by first class mail within two (2) Business Days of receipt of a notice from a 2009 Liquidity Provider, to the Holders of the affected 2009 Bonds at their addresses shown on the bond registration books maintained by the Trustee which notice shall: (1) state such 2009 Bonds are subject to mandatory tender for purchase at the applicable Purchase Price (which shall be specified in such notice); and (2) state the Purchase Date. Delivery of Tendered 2009 Bonds. With respect to any 2009 Bond that is registered in book -entry form with a Securities Depository, delivery of such 2009 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to the Indenture shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2009 Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such 2009 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 2009 Bond that is not registered in book -entry form with a Securities Depository, delivery of such 2009 Bond to the Trustee in connection with any optional or mandatory tender for purchase shall be effected by physical delivery of such 2009 Bond 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. 2009 Bonds Deemed Purchased. If moneys sufficient to pay the Purchase Price of 2009 Bonds to be purchased pursuant to the Indenture shall be held by the Trustee on the applicable Purchase Date, such 2009 Bonds shall be deemed to have been purchased for all purposes of the Indenture, irrespective of whether or not such 2009 Bonds shall have been delivered to the Trustee or transferred on the books of a Securities Depository for such 2009 Bonds, and neither the former Holder or Beneficial Owner of such 2009 Bonds nor any other person shall have any claim thereon, under the Indenture or otherwise, for any amount other than the Purchase Price thereof. In the event of non -delivery of any 2009 Bond to be purchased pursuant to the Indenture, the Trustee shall segregate and hold uninvested the moneys for the Purchase Price of such 2009 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2009 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 2009 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Purchase Price of any 2009 Bond and remaining unclaimed for two (2) years after the date of purchase shall, subject to satisfaction of all amounts then due and payable to the Liquidity Provider (other than 2009 Liquidity Provider Bonds), be paid automatically to the Commission. After the payment of such unclaimed moneys to the Commission, the former Holder or Beneficial Owner of such 2009 Bond shall look only to the Commission for the payment thereof. 75783979.5 37 Tenders of 2009 Bonds and Deliveries of Converted 2009 Bonds Are Subject to DTC Procedures. As long as the book -entry only system is in effect with respect to the 2009 Bonds, all tenders for purchase and deliveries upon Conversion of 2009 Bonds tendered for purchase or subject to mandatory tender under the provisions of the 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. SPECIAL CONSIDERATIONS RELATING TO THE 2009 BONDS SUBJECT TO OPTIONAL TENDER AND REMARKETING The Remarketing Agents are Paid by the Commission The Remarketing Agents' responsibilities include determining the interest rate from time to time and remarketing 2009 Bonds that are optionally or mandatorily tendered by the Owners thereof (subject, in each case, to the terms of the applicable Remarketing Agreement), as further described in this Official Statement. The Remarketing Agents are appointed by the Commission and are paid by the Commission for their services. As a result, the interests of the Remarketing Agents may differ from those of existing holders and potential purchasers of such 2009 Bonds. The Remarketing Agents Routinely Purchase 2009 Bonds for their Own Account The Remarketing Agents act as remarketing agent for a variety of variable rate demand obligations and, in their sole discretion, routinely purchase such obligations for their own account. The Remarketing Agents are permitted, but not obligated, to purchase tendered 2009 Bonds for their own account and, in their sole discretion, routinely acquire such tendered 2009 Bonds to achieve a successful remarketing of the 2009 Bonds (i.e., because there otherwise are not enough buyers to purchase the 2009 Bonds) or for other reasons. However, the Remarketing Agents are not obligated to purchase 2009 Bonds, and may cease doing so at any time without notice. The Remarketing Agents may also make a market in the 2009 Bonds by routinely purchasing and selling 2009 Bonds other than in connection with an optional or mandatory tender and remarketing. Such purchases and sales may be at or below par. However, the Remarketing Agents are not required to make a market in the 2009 Bonds. The Remarketing Agents may also sell any 2009 Bonds they have purchased to one or more affiliated investment vehicles for collective ownership or enter into derivative arrangements with affiliates or others in order to reduce its exposure to the 2009 Bonds. The purchase of 2009 Bonds by the Remarketing Agents may create the appearance that there is greater third party demand for the 2009 Bonds in the market than is actually the case. The practices described above also may result in fewer 2009 Bonds being tendered in a remarketing. 2009 Bonds May Be Offered at Different Prices on Any Date Including a Rate Determination Date Pursuant to the Remarketing Agreements, each Remarketing Agent is required to determine the applicable rate of interest that, in its judgment, is the lowest rate that would permit the sale of the applicable 2009 Bonds bearing interest at the applicable interest rate at par plus accrued interest, if any, on and as of the applicable date. The interest rate will reflect, among 75783979.5 12 • 38 • • other factors, the level of market demand for the applicable 2009 Bonds (including whether such Remarketing Agent is willing to purchase such 2009 Bonds for its own account). There may or may not be 2009 Bonds tendered and remarketed on any given date, such Remarketing Agent may or may not be able to remarket any 2009 Bonds tendered for purchase on such date at par and such Remarketing Agent may sell 2009 Bonds at varying prices to different investors on such date or any other date. The Remarketing Agents are not obligated to advise purchasers in a remarketing if they do not have third party buyers for all of the applicable 2009 Bonds at the remarketing price. If a Remarketing Agent owns any 2009 Bonds for its own account, it may, in its sole discretion in a secondary market transaction outside the tender process, offer such 2009 Bonds on any date at a discount to par to some investors. The Ability to Sell the 2009 Bonds Other Than through Tender Process May Be Limited The Remarketing Agents may buy and sell 2009 Bonds other than through the tender process. However, they are not obligated to do so and may cease doing so at any time without notice and may require holders that wish to tender their 2009 Bonds to do so through the tender agent with appropriate notice. Thus, investors who purchase the 2009 Bonds, whether in a remarketing or otherwise, should not assume that they will be able to sell their 2009 Bonds other than by tendering the 2009 Bonds in accordance with the tender process. No Remarketing Agent Successor in Certain Circumstances Under certain circumstances a Remarketing Agent may be removed or have the ability to resign or cease its remarketing efforts, without a successor having been named, subject to the terms of the applicable Remarketing Agreement and the Indenture. PLAN OF REFUNDING The proceeds of the 2009 Bonds will be applied to (i) refund all of the Refunded Bonds, (ii) retire a portion of the Notes, in the principal amount of $50,000,000, (iii) fund a [portion of a] reserve for the 2009 Bonds, and (iv) pay costs of issuance of the 2009 Bonds. Pursuant to the terms of the Indenture, the refunding of the Refunded Bonds will be effected by depositing a portion of the proceeds of the 2009 Bonds in the Redemption Fund created and established under the Indenture for the Refunded Bonds. Such proceeds and other monies deposited by the Commission in the Redemption Fund will be used to purchase Defeasance Securities, the principal of and interest on which when due will provide monies that will be sufficient to redeem the Refunded Bonds on December 1, 2009 (the "Redemption Date"). See "VERIFICATION OF MATHEMATICAL COMPUTATIONS" herein. 75783979.5 13 39 ESTIMATED SOURCES AND USES OF PROCEEDS The proceeds from the sale of the 2009 Bonds are expected to be applied as follows: Sources of Funds: Principal Amount of 2009 Bonds Funds Relating to the Refunded Bonds Total Sources: $ Uses of Funds: Redemption Fund Transfer to Notes Trustee Costs of Issuance(I) 2009 Bonds Reserve Fund Total Uses: $ (1) Includes Underwriters' discount, Rating Agency fees, Trustee fees, printing costs, Bond Counsel, Disclosure Counsel, Financial Advisor, Auditor and Verification Agent fees and expenses and other miscellaneous expenses. SECURITY AND SOURCES OF PAYMENT FOR THE 2009 BONDS Limited Obligation The 2009 Bonds are limited obligations of the Commission and are payable as to principal, Purchase Price and interest 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 THAT OF THE COMMISSION TO THE EXTENT OF THE PLEDGED REVENUES, 1S PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PURCHASE PRICE, OR INTEREST ON, THE 2009 BONDS. Pledge of Revenues All Revenues, consisting of Sales Tax Revenues and Swap Revenues are irrevocably pledged by the Commission to secure the punctual payment of the principal of, premium, if any, and interest on the 2009 Bonds and any additional Series of Bonds issued under the Indenture and all amounts owing on any Parity Obligations in accordance with their terms. The Revenues shall not be used for any other purpose while any of the Bonds or Parity Obligations remain 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, all amounts (including proceeds of the Bonds) held by the Trustee under the Indenture (except for amounts held in the Rebate Fund, any Letter of Credit Account and any Bond Purchase Fund) 75783979.5 14 • 40 are pledged to secure the payment of all amounts owing on the Bonds and Parity Obligations, 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 Revenues constitutes a first lien to secure the Bonds and Parity Obligations. The pledge of Revenues shall be irrevocable until all Bonds issued under the Indenture, including the 2009 Bonds, and all Panty Obligations are no longer Outstanding. The Revenues pledged to the payment of the Bonds and Panty Obligations 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 Obligations; but nevertheless out of Revenues certain. amounts may be applied for other purposes as provided in the Indenture. 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 Obligations remain 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 Holders of the Bonds and any Parity Obligations. 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 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 shall 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 Parity Obligations shall 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 (other than Bonds constituting Variable Rate Indebtedness) during the ensuing six-month period, plus (b) the aggregate amount of interest to accrue during that month, calculated as provided in the Indenture, on the Outstanding Variable Rate Indebtedness; provided that 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, and that payments on such Interest Rate Swap Agreements (other than fees and expenses and termination payments) shall be payable from the Interest Fund and the above -required deposits shall be adjusted to include such payments. 75783979.5 15 41 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 least (a) one -sixth of the aggregate semiannual amount of principal, accreted value, if applicable, becoming due and payable within the next six months on Outstanding Bonds having semiannual maturity dates, plus (b) one -twelfth of the aggregate yearly amount of principal, accreted value, if applicable, becoming due and payable within the next twelve months on Outstanding Bonds having annual maturity dates, 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 (including the 2009 Bonds Reserve Fund) as set forth below. See "— 2009 Bonds Reserve Fund" below. 4. 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 to the Subordinate Trustee. After the Subordinate Trustee has made the required deposit of Revenues under the Subordinate Indenture, the Subordinate Trustee shall transfer any remaining Revenues back to the Trustee. 5. 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) 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. 75783979.5 16 • e • 42 • • See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Revenues" and "— Definitions" for a more complete discussion. 2009 Bonds Reserve Fund The Second Supplemental Indenture establishes the 2009 Bonds Reserve Fund to be maintained in an amount equal to the 2009 Bonds Reserve Requirement, for the purpose of paying principal of and interest on the 2009 Bonds when due if insufficient moneys for such payment are on deposit in the Principal Account and the Interest Account, and for such other purposes as are specified in the Indenture. The initial 2009 Bonds Reserve Requirement upon issuance of the 2009 Bonds is $ , which amount will be funded from the proceeds of the sale of the 2009 Bonds. "2009 Bonds Reserve Requirement' is defined under the Second Supplemental Indenture as follows: as of any date of calculation, the least of (i) 10% of the aggregate original principal amount of 2009 Bonds (or, if the amount of any original issue discount or premium exceeds 2%, 10% of the issue price of the 2009 Bonds), (ii) 125% of average Annual Debt Service for the 2009 Bonds or (iii) 100% of Maximum Annual Debt Service for the 2009 Bonds; provided that with respect to a Series of variable rate 2009 Bonds for which an interest swap is not in place, the interest rate thereon, for periods where the rate has not yet been determined, for purposes of calculating the 2009 Bonds Reserve Requirement shall be assumed to be equal to the rate published in The Bond Buyer as the "Bond Buyer Revenue Bond Index" by the most recent date preceding the sale of such Series. Except as otherwise provided in the Indenture, upon the occurrence of any deficiency in the 2009 Bonds Reserve Fund, the Trustee shall deposit in the 2009 Bonds Reserve Fund, as soon as possible in each month, until the balance therein is at least equal to the 2009 Bonds Reserve Requirement, one - twelfth of the aggregate amount of each unreplenished prior withdrawal from the 2009 Bonds Reserve Fund or decrease resulting from any required valuation of the investments in the 2009 Bonds Reserve Fund. In lieu of a cash deposit, the Commission may fulfill all or a portion of its obligation to fund the 2009 Bonds Reserve Fund by depositing a letter of credit, surety bond or insurance policy meeting the requirements of a Reserve Facility, 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. Additional Bonds and Parity Obligations Under the Indenture, the Commission may issue other obligations payable in whole or in part from Sales Tax Revenues, subject to the terms and conditions contained in the Indenture. Issuance of Additional Series of 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 the Indenture equally and ratably with the 2009 Bonds, but only upon compliance by the Commission with the provisions of the Indenture. Certain of the applicable provisions of the Indenture arc described below: 75783979.5 (1) No Event of Default shall have occurred and then be continuing. 17 43 (2) If so required in the Supplemental Indenture providing for the issuance of such Series, either (i) a Bond Reserve Fund shall be established to provide additional security for such Series of Bonds or (ii) the balance in an existing Bond Reserve Fund, forthwith upon the receipt of the proceeds of the sale of Bonds of such Series shall 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 may be made in the form of a Reserve Facility. (3) 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 Panty 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 Obligations Outstanding following the issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Bonds and Parity Obligations Outstanding prior to the issuance of such Refunding 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 effected with the proceeds of such Refunding Bonds. Issuance of Parity Obligations. The Commission may also issue Parity Obligations 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 Obligations set forth in the Indenture are satisfied, including satisfaction of the coverage test described in subsection (c) above under the caption "Issuance of Additional Series of Bonds" (unless such Parity Obligations are being issued for refunding purposes, in which case the coverage test shall not apply). As defined in the Indenture, "Parity Obligations" means any indebtedness, installment sale obligation, lease obligation or other obligation of the Commission for borrowed money, the Existing Swaps or any other Interest Rate Swap Agreement (excluding fees and expenses and termination payments on Interest Rate Swap Agreements) entered into in connection with a Series of Bonds, in each case incurred in accordance with the provisions of the Indenture and 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). 75783979.5 18 • • 44 • The Commission's obligation to make regularly scheduled payments under the Existing Swap Agreements (as defined below) constitutes a Parity Obligation under the Indenture. Existing Swap Agreements The Commission has entered into the following interest rate swap agreements (collectively, the "Existing Swap Agreements"), in a combined notional amount of $185,000,000 (subject to amortization), which Existing 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 Bank of America, N.A. ("BOA") 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 BOA and the Commission (the "BOA Swap Agreement"). BOA's current long-term unsubordinated ratings are " " by Standard & Poor's Rating Service ("S&P"), " " by Moody's Investors Service ("Moody's") and "_" by Fitch Ratings ("Fitch"). b. An ISDA Master Agreement, dated as of September 24, 2008, between Deutsche Bank AG, New York Branch ("DBAG") and the Commission, as supplemented by the Schedule, dated as of September 24, 2008 and the confirmation of a transaction entered into on September 24, 2008 between DBAG and . the Commission (the "DBAG Swap Agreement"). DBAG's current long-term unsubordinated ratings are " " by S&P, "_" by Moody's and " " by Fitch. The Commission's obligation to make regularly scheduled payments to the swap counterparties under the Existing Swap Agreements is secured by Sales Tax Revenues on a parity basis with the Commission's obligation to pay principal of and interest on the 2009 Bonds, and therefore such obligation constitutes a Parity Obligation under the Indenture. The Commission's obligation to make any early termination payment under the Existing Swap Agreements is secured by a pledge of Sales Tax Revenues subordinate to the pledge of Sales Tax Revenues in favor of the 2009 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. The BOA Swap Agreement is in the initial notional amount of $100,000,000, subject to amortization as set forth therein. Pursuant to this agreement, BOA has agreed to pay the Commission a floating rate equal to 67% of USDLIBOR (One Month) and the Commission has agreed to pay BOA a fixed rate equal to 3.679%. The BOA Swap Agreement is subject to early termination in the event that the unenhanced ratings on the 2009 Bonds issued by Moody's Investors Service ("Moody's") and Standard & Poor's Rating Service ("S&P") fall below investment grade or are withdrawn or suspended; a reduction in the long-term unsubordinated ratings of BOA below investment grade can also result in an early termination of the BOA Swap Agreement. The Commission has the option of terminating the BOA Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. 75783979.5 19 45 The DBAG Swap Agreement is in the initial notional amount of $85,000,000, subject to amortization as set forth therein. Pursuant to this agreement, DBAG has agreed to pay the Commission a floating rate equal to 67% of USDLIBOR (One Month) and the Commission has agreed to pay DBAG a fixed rate equal to 3.206%. The DBAG Swap Agreement is subject to early termination in the event that the unenhanced ratings on the 2009 Bonds issued by Moody's and S&P fall below investment grade or are withdrawn or suspended; a reduction in the unenhanced ratings of the long-term unsecured unsubordinated debt of DBAG below investment grade can also result in an early termination of the DBAG Swap Agreement. The Commission has the option of terminating the DBAG Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. In the event of an early termination of one or both of the Existing Swap Agreements, a termination payment will be payable by either the Commission or the swap counterparty depending on the then current market value of the Existing Swap Agreement subject to termination. Any such termination payment payable by the Commission could be substantial. As of September 1, 2009, the value of the termination payment, if each of the Existing Swap Agreements were terminated based on the mid -market swap curve, assuming functioning markets, and assuming that no party was in default under the Existing Swap Agreements, was estimated by the Commission's financial advisor to be approximately $ million payable by the Commission. Any early termination payments are payable from Sales Tax Revenues on a basis subordinate to the Bonds (including the 2009 Bonds). Subordinate Obligations The Commission may issue obligations ("Subordinate Obligations") payable out of Sales Tax Revenues on a basis subordinate to the payment of the principal, premium, interest and reserve fund requirements for the Bonds and all Parity Obligations, as the same become due and payable. The Notes and the credit agreements supporting the Notes constitute Subordinate Obligations under the Indenture. The Commission's obligation to make early termination payments under the Existing Swap Agreements is secured by a pledge of the Sales Tax Revenues subordinate to the pledge in favor of the 2009 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. As of September 1, 2009, there was $110,000,000 principal amount of Notes outstanding. 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., pursuant to a Reimbursement Agreement, dated as of March 1, 2005 ("Reimbursement Agreement"), by and between the Commission and BOA. 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 BOA 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 Revenues subordinate to the pledge in favor of the holders of the 2009 Bonds and on parity with the obligation to pay Note holders. A portion of the proceeds of the 2009 Bonds will be used to retire $50,000,000 principal amount of the outstanding Notes. See "PLAN OF REFUNDING" herein. 75783979.5 20 • 46 • • THE LIQUIDITY FACILITY [to come from Bank Counsel] THE LIQUIDITY PROVIDER The Liquidity Provider is a wholly owned bank subsidiary of JPMorgan Chase & Co., a Delaware corporation whose principal office is located in New York, New York. The Liquidity Provider offers a wide range of banking services to its customers, both domestically and internationally. It is chartered and its business is subject to examination and regulation by the Office of the Comptroller of the Currency. As of March 31st, 2009, Liquidity Provider, had total assets of $1,688.2 billion, total net loans of $595.9 billion, total deposits of $978.8 billion, and total stockholder's equity of $131.6 billion. These figures are extracted from the Liquidity Provider's unaudited Consolidated Reports of Condition and Income (the "Call Report") as at March 31, 2009, prepared in accordance with regulatory instructions that do not in all cases follow U.S. generally accepted accounting principles, which are filed with the Federal Deposit Insurance Corporation. The Call Report, including any update to the above quarterly figures, can be found at www.fdic.gov. Additional information, including the most recent annual report on Form 10-K for the year ended December 31, 2008, of JPMorgan Chase & Co., the 2008 Annual Report of JPMorgan Chase & Co., and additional annual, quarterly and current reports filed with or furnished to the Securities and Exchange Commission (the "SEC") by JPMorgan Chase & Co., as they become available, may be obtained without charge by each person to whom this Official Statement is delivered upon the written request of any such person to the Office of the Secretary, JPMorgan Chase & Co., 270 Park Avenue, New York, New York 10017 or at the SEC's website at www.sec.gov. The information contained under this caption "THE LIQUIDITY PROVIDER" relates to and has been obtained from the Liquidity Provider. The delivery of this Official Statement shall not create any implication that there has been no change in the affairs of the Liquidity Provider since the date hereof, or that the information contained or referred to under this caption "THE LIQUIDITY PROVIDER" is correct as of any time subsequent to its date. 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 on July 1, 2009. The Sales Tax will be collected for a thirty-year period. The Sales Tax consists of a one-half of one percent (1/21)/0) sales tax on the gross receipts of retailers from the sale of tangible personal property sold in the 75783979.5 21 47 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 an eight and one -quarter percent sales tax levied statewide by the State of California (the "State"). In general, the statewide sales tax applies to the gross receipts of retailers from the sale of tangible personal property. The statewide use tax is imposed on the storage, use or other consumption in the state of property purchased from a retailer for such storage, use or other consumption. Since the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the State for use within the State. The Sales Tax is generally imposed upon the same transactions and items subject to the sales and use tax levied statewide by the State (hereinafter collectively referred to as the "State Sales Tax"), with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Sales Tax. The most important of these exemptions are: sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity and water when delivered 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. Such changes or amendments could have either an adverse or beneficial effect on 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 "RISK FACTORS — Proposition 218" herein. 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 75783979.5 22 • 48 • Tax Revenues, if any, are transferred to the Commission for use for any purpose contemplated by the Ordinance. The fee that the BOE is authorized to charge for collection of the Sales Tax is determined by State legislation. The BOE fee for collection of the Sales Tax for fiscal year 2009-2010 is $1,439,800. 1988 Sales Tax Revenues The 1988 Sales Tax (as defined below) represents an additional source of revenue to the Commission, is a separate tax from the Sales Tax and does not secure the 2009 Bonds. 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 ('/2%) 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 Riverside ("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 ceased to be effective on June 30, 2009, with major collections of the 1988 Sales Tax expected to be received by the Commission no later than September 30, 2009. The Commission has previously issued indebtedness secured by the 1988 Sales Tax, and all outstanding principal and interest with respect to such indebtedness has been fully paid on or before June 1, 2009. The Sales Tax does not serve as security for the repayment of the obligations secured by the 1988 Sales Tax. Conversely, the 1998 Sales Tax does not serve as security for the Bonds, including the 2009 Bonds. For comparative purposes, however, both the Sales Tax and 1998 Sales Tax are levied at the same rate and on the same types of transactions within the County. The following table sets forth the 1988 Sales Tax remitted to the Commission during the fiscal years ended June 30, 2000 through June 30, 2009. 75783979.5 23 49 RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL 1988 SALES TAX REVENUE RECEIPTS Fiscal Year Net Sales % Change Ended June 30 Tax Receipts(I) From Prior Fiscal Year 2000 S 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 2008 146,083,683 (7.01) 2009 124,691,932 (14.64) m Net of State Board of Equalization administrative fee. Source: The Commission. Annual 1988 Sales Tax Revenues received for the Fiscal Year ended June 30, 2009 are $124,691,932, representing a 14.64% decline from those received in the Fiscal Year ended June 30, 2008. Quarterly declines for the Fiscal Year ended June 30, 2009 were: (11.81%) first quarter, (8.70%) second quarter, (17.56%) third quarter and (20.89%) fourth quarter. The decline in 1988 Sales Tax receipts for the Fiscal Year ended June 30, 2009 is deeper than the decline of Sales Tax receipts Statewide for this period. The Commission is unable to predict if and when Sales Tax Revenues will 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 — COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." The following table sets forth the projected debt service coverage on the 2009 Bonds for the Fiscal Year ended June 30, 2010. Projected Revenues Maximum Annual Debt Service) Projected Coverage $121,500,000 (1) Interest on variable rate debt is based on the Existing Swap rates. Source: The Commission. RIVERSIDE COUNTY TRANSPORTATION COMMISSION General The Commission is charged with a number of important responsibilities in serving the residents of the County. Administering the 1988 sales tax program, which has raised more than $1 billion, is by far the most prominent of these responsibilities. The Commission, which has the 75783979.5 24 50 • • responsibility of placing future transportation ballot measures before the public, was successful in November 2002 in obtaining more than two-thirds 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 the County. The results of these programs — 680 call boxes along the County roadways and 20 FSP tow trucks providing assistance to more than 52,000 motorists annually — are among the most visible of the Commission's programs. In 1998, 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. The Commission has the responsibility to program funds received under the California Transportation Development Act, a statewide source of funding for transit purposes, primarily to the County's major public transit providers, although the Commission has no responsibility to provide transit services. 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 Board expanded in 2008 with the addition of two members representing newly incorporated cities. The expanded Commission ensures better representation throughout the County and provides the participatory framework for continued success in carrying out these responsibilities. Commissioners Section 130053 of the California Public Utilities Code specifies that the Commission consists of five members of the Riverside County Board of Supervisors, one member from each incorporated city in Riverside County (each of whom must be a mayor or member of the City Council) and one non -voting member appointed by the governor of the State of California. The role of the Commission is to act as the policy -making board for Riverside County transportation activities. 75783979.5 25 ' 51 Executive Staff The Commission's key staff members, the position held by each and a brief statement of the background of each staff member are 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 25 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 current appointment. Mr. Standiford 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 Financial 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 govemmental 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 Southem Califomia 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% 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 concems in its preamble: "The transportation system in Riverside County is rapidly deteriorating and our population and economy are growing rapidly. Maintenance and repairs of existing roadways and improvements to relieve congestion cannot be accomplished with available funds. Without additional funds, the system will bog down and pavement will crumble into permanent disrepair.... Local governments must either generate revenues to expand our system and 75783979.5 26 • • 52 • • • 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: Maintain and improve the quality of life in Riverside County by supplementing existing funds for transportation; provide for accountability in the expenditure of taxpayer funds; provide for equity in the distribution of Measure "A" Revenues; and 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., Westem 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, $1.020 million for highway projects, $300 million for regional arterial projects, $390 million for public transit, $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. RISK FACTORS 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. The economy of the County is currently experiencing a slowdown as evidenced by an increased unemployment rate, a slowdown in total personal income and taxable "sales, a drop in residential building permits, a decline in the rate of home sales and the median price of single-family homes and condominiums and an increase in notices of default on mortgage loans secured by homes and condominiums. 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 meet its debt service obligations. For information relating to current economic conditions within the County and the State see "APPENDIX B —COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." 75783979.5 27 53 Limitations of the Liquidity Facility The ability to obtain funds under the Liquidity Facility in accordance with its terms may be limited by federal or State law. Bankruptcy, conservatorship, receivership and similar laws goveming fmancial institutions or any issuer of a Liquidity Facility may prevent or restrict payment under the Liquidity Facility. To the extent the short-term rating on any Series of the 2009 Bonds depends in any manner on the rating of the Liquidity Provider, the short-term ratings on such Series of 2009 Bonds could be downgraded or withdrawn if such Liquidity Provider were to be downgraded, placed on credit watch or have its ratings suspended or withdrawn or were to refuse to perform under the Liquidity Facility. The obligation of the Liquidity Providers under the Liquidity Facility to purchase unremarketed 2009 Bonds of a Series is subject to the conditions and limitations set forth therein, and is also subject to all rights and defenses available to contracting parties generally. The Liquidity Facility is not a guaranty to pay the purchase price of any Series of 2009 Bonds tendered for purchase. The Liquidity Facility is a general contract, subject to certain conditions and limitations, and is not a letter of credit. Purchasers of any 2009 Bonds should consult their legal counsel for an explanation of the differences between a general contract and a letter of credit or guaranty. The following is included as a summary of selected differences and does not purport to be complete or definitive. In general, a letter of credit is an independent, special contract by a bank to pay a third party such as a bond trustee holding the letter of credit for the benefit of owners of such bonds. Banks are required by law to honor their letters of credit except in specified circumstances. If a dispute were to develop between a bank and its borrower, except in limited circumstances, the dispute should not jeopardize payment under the letter of credit because (a) the letter of credit would be independent of the disputed contract between the borrower and the bank and (b) the beneficiary of the letter of credit (typically, the bond trustee) would have direct rights under the letter of credit. Further, and although there are defenses to payment of letters of credit, such defenses are limited by law to specified circumstances. In contrast, a standby bond purchase agreement, such as the Liquidity Facility, is merely a general contract. No law expressly requires performance of the contract, although the non - breaching party would be entitled to allowable damages if there were a breach of contract. Although the Trustee is authorized to draw funds in accordance with the Liquidity Facility, the Liquidity Provider has no independent obligation to the Trustee. If a dispute were to develop, the Liquidity Provider will have all defenses allowed at law or in equity to their payment under or other performance of the Liquidity Facility, including but not limited to disputes (whether valid or not) regarding the authority of any party to enter into or perform under the Liquidity Facility. In general, the provider of a standby bond purchase agreement has more defenses against performance than the provider of a letter of credit. A Liquidity Provider or the Commission may seek to have any future dispute resolved in court and appealed to final judgment before it performs under the Liquidity Facility. Further, even if the Commission were to prevail against the Liquidity Provider, a court would not necessarily order the Liquidity Provider to perform under the Liquidity Facility; it could instead 75783979.5 28 54 • • award damages for breach of contract to the Commission. Any such award would not necessarily be in an amount sufficient to pay the purchase price of the applicable Series of 2009 Bonds. 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." 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 2009 Bonds, would violate the Contracts Clause of the United States Constitution and, accordingly, would be precluded. The interpretation and application of Proposition 218 will ultimately be determined by the courts. Further Initiatives Proposition 218 was adopted as a measure that qualified for the ballot pursuant to California's initiative process. From time to time other initiative measures could be adopted, which may affect the Commission's ability to levy and collect the Sales Tax, or change the types of transactions or items subject to a Sales Tax. Loss of Tax Exemption As discussed under "TAX MATTERS," interest on the 2009 Bonds could become includable in federal gross income, possibly from the date of issuance of the 2009 Bonds, as a result of acts or omissions of the Commission subsequent to the issuance of the 2009 Bonds. Should interest become includable in federal gross income, the 2009 Bonds are not subject to redemption by reason thereof and may remain outstanding until maturity. 75783979.5 29 55 FINANCIAL STATEMENTS The financial statements of the Commission for the Fiscal Year ended June 30, 2008, 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 has agreed to the inclusion of its report in APPENDIX A. McGladrey & Pullen, LLP has not 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, 2008. VERIFICATION OF MATHEMATICAL COMPUTATIONS , certified public accountants (the "Verification Agent"), will deliver a report stating that the Verification Agent has verified the accuracy of mathematical computations concerning the adequacy of the maturing principal amounts of and interest earned on the Defeasance Securities initially deposited in the Redemption Fund to provide for the payment of the interest due on each of the Refunded Bonds to and including the Redemption Date, and to pay on the Redemption Date the redemption price thereof. The report of the Verification Agent will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they have no obligations to update their report because of event occurring, or data or information coming to their attention, subsequent to the date of their report. LITIGATION There is not now pending any litigation restraining or enjoining the issuance or delivery of the 2009 Bonds or questioning or affecting the validity of the 2009 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 MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission ("Bond Counsel'), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2009 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the 2009 Bonds is not a specific preference item for purposes of the federal individual and corporate alternative minimum taxes, nor is it included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of the opinion of Bond Counsel is set forth in APPENDIX E. 75783979.5 30 • • 56 To the extent the issue price of any maturity of the 2009 Bonds is less than the amount to be paid at maturity of such 2009 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2009 Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the 2009 Bonds which is excluded from gross income for federal income tax purposes and State of Califomia personal income taxes. For this purpose, the issue price of a particular maturity of the 2009 Bonds is the first price at which a substantial amount of such maturity of the 2009 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the 2009 Bonds accrues daily over the term to maturity of such 2009 Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such 2009 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such 2009 Bonds. Beneficial owners of the 2009 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2009 Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such 2009 Bonds in the original offering to the public at the first price at which a substantial amount of such 2009 Bonds is sold to the public. 2009 Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium 2009 Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium 2009 Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner's basis in a Premium 2009 Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium 2009 Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2009 Bonds. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2009 Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the 2009 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the 2009 Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the 2009 Bonds may adversely affect the value of, or the tax status of interest on, the 2009 Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters. 75783979.5 31 57 Although Bond Counsel is of the opinion that interest on the 2009 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the 2009 Bonds may otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2009 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the 2009 Bonds. Prospective purchasers of the 2009 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the 2009 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Commission or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Commission has covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the 2009 Bonds ends with the issuance of the 2009 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Commission or the beneficial owners regarding the tax-exempt status of the 2009 Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Commission and their appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Commission legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the 2009 Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the 2009 Bonds, and may cause the Commission or the beneficial owners to incur significant expense. CERTAIN LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, Bond Counsel, will render an opinion with respect to the validity of the 2009 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 2009 Bonds. Certain 75783979.5 32 • • • 58 • • legal matters will be passed upon for the Commission by Fulbright & Jaworski L.L.P., 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 Hawkins Delafield & Wood LLP, San Francisco, California. RATINGS It is expected that Moody's Investors Service, Inc., Fitch Ratings and Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc., will assign each Series of the 2009 Bonds the long-term municipal bond credit ratings of "_" and " ," respectively, and the short-term liquidity ratings of " ," " " and "_ " q ty g respectively. Such short-term liquidity ratings are based on the understanding that the Liquidity Facility will be delivered by the Liquidity Provider concurrently with the issuance of the 2009 Bonds. Each such rating should be evaluated independently of any other rating. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same. The ratings described above do not constitute a recommendation to buy, sell or hold the 2009 Bonds. The Commission has furnished to the rating agencies certain information respecting the 2009 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. The Commission and the Underwriters undertake no responsibility either to bring to the attention of the owners of the 2009 Bonds the downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any downward revision or withdrawal of the ratings may have an adverse effect on the market price of the 2009 Bonds or the ability to remarket the 2009 Bonds. REMARKETING AGENTS Barclays Capital Inc. has been appointed to serve as Remarketing Agent for the 2009 Series A Bonds. E.J. De La Rosa & Co. Inc. has been appointed to serve as Remarketing Agent for the 2009 Series B Bonds. Backstrom McCarly Berry & Co., LLC has been appointed to serve as Remarketing Agent for the 2009 Series C Bonds. Each Remarketing Agent will carry out the duties and obligations provided for such Remarketing Agent under and in accordance with the provisions of the Indenture and the related Remarketing Agreement, each dated as of October I, 2009, by and between the Commission and the applicable Remarketing Agent. UNDERWRITING Barclays Capital Inc., as underwriter of the 2009 Series A Bonds, has agreed, subject to certain conditions, to purchase the 2009 Series A Bonds at a price of $ (representing the aggregate principal amount of the 2009 Series A Bonds, less an underwriter's discount of $ ). The Purchase Contract for the 2009 Series A Bonds provides that the Underwriter of the 2009 Series A Bonds will purchase all the 2009 Series A Bonds if any are purchased. 75783979.5 33 59 E.J. De La Rosa & Co. Inc., as underwriter of the 2009 Series B Bonds, has agreed, subject to certain conditions, to purchase the 2009 Series B Bonds at a price of $ (representing the aggregate principal amount of the 2009 Series B Bonds, less an underwriter's discount of $ ). The Purchase Contract for the 2009 Series B Bonds provides that the Underwriter of the 2009 Series B Bonds will purchase all the 2009 Series B Bonds if any are purchased. Backstrom McCarly Berry & Co., LLC, as underwriter of the 2009 Series C Bonds, has agreed, subject to certain conditions, to purchase the 2009 Series C Bonds at a price of $ (representing the aggregate principal amount of the 2009 Series C Bonds, less an underwriter's discount of $ ). The Purchase Contract for the 2009 Series C Bonds provides that the Underwriter of the 2009 Series C Bonds will purchase all the 2009 Series C Bonds if any are purchased. FINANCIAL ADVISOR The Commission has retained Fieldman, Rolapp & Associates, Irvine, California, as Financial Advisor in connection with the authorization and delivery of the 2009 Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for he accuracy, completeness or fairness of the information contained in this Official Statement. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. Compensation paid to the Financial Advisor is contingent upon the successful issuance of the 2009 Bonds. CONTINUING DISCLOSURE The Commission has agreed to execute the Continuing Disclosure Agreement and will covenant therein for the benefit of the beneficial owners of the 2009 Bonds to provide certain financial information and operating data relating to the Commission and the Sales Tax by not later than days after the end of the Commission's prior fiscal year (the "Annual Reports"), and to provide notices of the occurrence of certain enumerated events (the "Listed Events"). The Annual Reports and notices of Listed Events will be filed with the MSRB. See APPENDIX G — "FORM OF CONTINUING DISCLOSURE UNDERTAKING." The Commission has never failed to comply in all material respects with any previous continuing disclosure undertaking pursuant to the Rule to provide annual reports or notices of material events. 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 2009 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 to be complete or definitive. Reference is made to such documents and reports for full and complete statements of the content thereof. 75783979.5 34 • • 60 • 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 2009 Bonds. The execution and delivery of this Official Statement has been duly authorized by the Commission. 75783979.5 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director 35 61 • 75783979.5 APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2008 A -I 62 APPENDIX B COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION Set forth below is certain demographic and economic information with respect to the County of Riverside (the "County"). Such information was provided by the County except as otherwise indicated. Population According to the State Department of Finance, Demographic Research Unit, the County's population was estimated at 2,107,653 as of January 1, 2009, reflecting a 0.1% increase over January 1, 2008. The largest cities in the County are the cities of Riverside, Moreno Valley, Corona, Murrieta, Temecula, Hemet, Indio and Cathedral City. The areas of most rapid population growth continue to he those more populated and industrialized cities in the western and central regions of the County and the southwestern unincorporated region of the County between Sun City and Temecula. The following table sets forth annual population figures as of January 1 of each year for cities located within the County for each of the years listed: 75783979.5 B-1 63 CITY Banning Beaumont Blythe Calimesa Canyon Lake Cathedral City Coachella Corona Desert Hot Springs Hemet Indian Wells Indio Lake Elsinore La Quinta Menifee Moreno Valley Murrieta Norco Palm Desert Palm Springs Perris Rancho Mirage Riverside San Jacinto Temecula Wildomar TOTALS Incorporated Unincorporated County -Wide California COUNTY OF RIVERSIDE POPULATION OF CITIES WITHIN THE COUNTY (As of January 1) 1990 2000 2005 2006 2007 2008 2009 20,570 23,562 27,996 28,185 28,174 28,148 28,457 9,685 11,384 19,051 23,238 28,209 31,317 32,403 8,428 12,155 22,052 22,234 22,608 21,627 21,329 0 7,139 7,491 7,475 7,435 7,423 7,498 0 9,952 10,950 10,983 10,955 10,994 11,128 30,085 42,647 50,819 51,294 52,045 51,972 52,447 16,896 22,724 30,879 35,354 38,437 40,317 41,000 76,095 124,966 144,600 145,265 145,847 146,698 148,597 11,668 16,582 20,820 23,459 24,856 25,939 26,552 36,094 58,812 67,565 70,728 72,537 73,205 74,361 2,647 3,816 4,796 4,885 4,934 5,000 5,093 36,793 49,116 66,358 71,949 77,046 80,962 82,230 18,285 28,928 38,185 41,156 47,568 49,556 50,267 11,215 23,694 36,278 38,500 41,039 42,743 43,778 0 0 0 0 0 0 67,705 118,779 142,381 165,935 175,294 180,228 182,945 186,301 0 44,282 85,328 93,221 97,031 99,576 100,714 23,302 24,157 26,783 27,355 27,329 27,143 27,160 23,252 41,155 49,490 49,774 49,717 50,686 51,509 40,181 42,807 45,877 46,629 46,796 47,019 47,601 21,460 36,189 44,758 47,335 50,597 53,340 54,323 9,778 13,249 16,476 16,740 16,923 16,975 17,180 226,505 255,166 286,563 288,984 291,812 296,191 300,430 16,210 23,779 28,540 31,194 34,297 35,491 36,477 27,099 57,716 81,681 93,673 97,141 99,873 102,604 0 0 0 0 0 0 31,321 385,386 1,124,666 1,379,271 1,444,904 1,493,561 1,525,140 1,648,465 785,027 420,721 504,464 517,110 536,754 553,461 459,188 1,170,413 1,545,387 1,883,735 1,962,014 2,030,315 2,078,601 2,107,653 29,473,000 33,873,086 36,676,931 37,086,191 37,472,074 37,883,992 38,292,687 Source: 1990 and 2000 data is from U.S. Census Bureau; 2005, 2006, 2007, 2008 and 2009 data is from the State Department of Finance, Demographic Research Unit (with 2000 DRU Benchmark). Effective Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor -related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax 75783979.5 B-2 • 64 • payments fines, fees, penalties, etc.) and personal contributions to social security insurance and federal retirement payroll deductions. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." The following table summarizes the total effective buying income for the County and the State for the period 2004 through 2008. RIVERSIDE COUNTY AND CALIFORNIA TOTAL EFFECTIVE BUYING INCOME, MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME AND PERCENT OF HOUSEHOLDS WITH INCOMES OVER $50,000(1) Total Median Household Percent of Effective Buying Effective Buying Households with Income) Income Income over $50,000 2004 Riverside County 27,623,743 39,321 36.0 California 674,721,020 42,924 41.2 2005 Riverside County 29,468,208 40,275 37.1 California 705,108,410 43,915 42.5 2006 Riverside County 32,004,418 41,326 38.9 California 720,799,048 44,681 43.7 2007 Riverside County 35,656,620 43,490 41.8 California 764,120,982 46,275 45.6 2008 Riverside County 38,631,365 45,310 44.3 California 814,894,437 48,203 47.9 Source: "Survey of Buying Power," Sales & Marketing Management Magazine, dated 2004, 2005 and 2008, and Demographics USA, Trade Dimensions for 2006 and 2007. (J) Estimated. (2) Dollars in thousands. 75783979.5 B-3 65 Industry and Employment The County is a part of the Riverside -San Bernardino Primary Metropolitan Statistical Area ("PMSA"), which includes all of Riverside and San Bernardino Counties. The following table sets forth the annual average employment by industry for the PMSA. RIVERSIDE-SAN BERNARDINO-ONTARIO PMSA ANNUAL AVERAGE EMPLOYMENT BY INDUSTRY(I) (In Thousands) INDUSTRY 2003 2004 2005 2006 2007 Agriculture 20.3 18.7 18.3 17.2 16.8 Construction 99.0 111.8 123.3 129.5 112.8 Finance, Insurance and Real Estate 42.6 45.7 49.0 51.8 50.1 Government 211.6 212.5 220.4 224.2 225.7 Manufacturing: 116.1 120.1 121.0 124.0 118.9 Nondurables 33.7 34.6 35.0 36.4 36.4 Durables 82.4 85.5 86.1 87.6 82.5 Natural Resources and Mining 1.2 1.2 1.4 1.4 1.4 Retail Trade 142.7 153.8 165.7 171.5 175.4 Prof., Educ. and other Services 378.6 399.9 416.5 436.2 446.3 Trans., Whse. and Utilities 50.1 55.5 60.2 63.8 66.7 Wholesale Trade 43.5 45.6 49.9 53.8 56.4 Information, Pub. and Telecom. 13.9 14.0 14.5 15.7 15.2 Total, All Industries 1,119.4 1,178.7 1,240.3 1,288.4 1,285.5 Source: State Employment Development Department, Labor Market Information Division. In The employment figures by Industry which are shown above are not directly comparable to the "Total, All Industries" employment figures due to rounded data. 2008 annual figures are unavailable. June 2008 and preliminary June 2009 figures are set forth on the following table. 75783979.5 B-4 • 66 • The following table sets forth an employment data comparison by industry for the period June 2008 and June 2009. June 2009 figures are preliminary. RIVERSIDE-SAN BERNARDINO-ONTARIO PMSA EMPLOYMENT BY INDUSTRY FOR JUNE 2008 AND JUNE 2009111 (In Thousands) INDUSTRY June 2008 June 2009(1) Change Total Farm 23,200 23,100 (1 Total Nonfarm 1,231,800 1,155,500 (76,3 Mining and Logging 1,200 900 (3 Construction 93,800 71,400 (22,4 Manufacturing 108,300 94,700 (13,6 Trade, Transportation & Utilities 293,300 271,700 (21,6 Information 14,800 13,500 (1,3 Financial Advisor 46,900 43,100 (3,8 Professional & Business Services 137,100 129,900 (7,2 Educational & Health Services 130,600 133,600 3,0 Leisure & Hospitality 131,100 125,700 (5,4 Other Services 42,200 40,100 (2,1 Government 232,500 230,900 (1,6 Total All Industries 1,255,000 1,178,600 (76,4 Source: State Employment Development Department, Labor Market Information Division. CI) Preliminary, subject to change. The employment figures by Industry which are shown above are not directly comparable to the "Total, All Industries" employment figures due to rounded data. 75783979.5 B-5 67 The following table sets forth certain of the ten major employers located in the County as of 2008: COUNTY OF RIVERSIDE CERTAIN MAJOR EMPLOYERS") (2008) Company Name The County of Riverside March Air Reserve Base University of California, Riverside Stater Brothers Markets Pechanga Resort & Casino Abbott Vascular Riverside Unified School District Riverside Community College District Kaiser Permanente Riverside Med. Center Temecula Valley USD Product/Service County Government Government/Military College/University Grocery Retailer Casino/Resort Medical Device Manufacturer Education Higher Education Health Care Education No. of Local Employees") 19,595 8,400 6,657 6,425 4,800 4,500 4,041 3,753 3,200 2,952 Source: The Business Press 2008 Book of Lists. (') Certain major employers in the County may have been excluded because of the data collection methodology used by The Business Press. (2) Includes employees within the County; includes, under certain circumstances, temporary, seasonal and per diem employees. Unemployment statistics for the County, the State and the United States are set forth in the following table. COUNTY OF RIVERSIDE COUNTY, STATE AND NATIONAL UNEMPLOYMENT DATA 2004 2005 2006 2007 2008 20091t1 County(I) California(1) United States 5.7% 6.2 5.5 5.1% 5.4 5.1 5.0% 4.9 4.6 6.2% 5.4 4.6 8.6% 7.2 5.8 13.9% 11.6 9.7 Source: State of California Employment Development Department Labor Market Information Division; U.S. Bureau of Labor Statistics. (I) Data is not seasonally adjusted. The unemployment data for the County and State is calculated using unrounded data. 2009 figures as of June 2009. Commercial Activity Commercial activity is an important factor in the County's economy. Much of the County's commercial activity is concentrated in central business districts or small neighborhood commercial centers in cities. There are nine regional shopping malls in the County: Riverside Plaza, Galleria at Tyler (Riverside), Palm Springs Mall, Desert Fashion Mall, Indio Fashion Mall, Hemet Valley Mall, Palm Desert Town Center, Moreno Valley Mall at Towngate and 75783979.5 B-6 68 Temecula Promenade Mall. There are also two factory outlet malls (Desert Hills Factory Stores and Lake Elsinore Outlet Center) and over 200 area centers in the County. The following table sets forth taxable transactions in the County for the years 2003 through 2007. COUNTY OF RIVERSIDE TAXABLE SALES TRANSACTIONS") (In Thousands) 2003 2004 2005 2006 2007 Apparel Stores $ 746,01! $ 867,27( $ 990,12! $ 1,080,38! $ 1,171,10 General Merchandise Stores 2,427,411 2,756,01! 3,021,901 3,250,377 3,272,66 Drug Stores 244,56( 270,31( 282,56( 303,17' 320,46 Food Stores 1,028,39: 1,079,97: 1,197,431 1,309,78: 1,352,60 Eating and Drinking Places 1,713,63: 1,940,61( 2,157,80: 2,316,42: 2,338,03 Home Furnishing and Appliances 691,051 862,55' 964,62! 948,217 843,94 Building Materials and Farm Implements 1,868,99: 2,476,09: 2,756,28( 2,738,15: 1,961,91 Auto Dealers Supplies 3,662,151 4,179,94( 4,474,56( 4,326,04( 4,301,38 Service Stations 1,536,24( 1,855,26: 2,277,08: 2,630,71( 2,835,69 Other Retail Stores 2050,99 2,361,18: 2,641,98: 2,860 18' 2,794,79 Retail Stores Total $16,030,95: $18,715,94I $20,839,21: S21,842,34! $21,242,51 All Other Outlets 5,678.18: 6,521,19! 7,417,27' 7,973,89: 7.781.09 Total All Outlets $21,709,13! $25,237,14/ $28,256,49 829,816,23" $29,023,60 Source: California State Board of Equalization, Research and Statistics Division. (I) 2008 annual figures unavailable. First and second quarter figures for 2008 are set forth below. The taxable transaction figures by industry which are shown above may not be directly comparable to the "Total, All Outlets" figures due to rounded data. 75783979.5 B-7 69 The following table sets forth taxable transactions in the County for first and second quarters of 2008. COUNTY OF'RIVERSIDE 2008 TAXABLE SALES TRANSACTIONS") (In Thousands) First Second uarter uarter Apparel Stores $273,432 $273,863 General Merchandise 807,690 838,724 328,701 344,394 Eating and Drinking 644,880 595,870 Home Furnishing and Appliances 184,154 177,349 Building Materials & Farm Implements 395,751 417,050 Auto Dealers Supplies 905,851 870,813 Service Stations 732,368 874,827 Other Retail Stores 635,203 633,747 Retail Stores Total $4,908,048 $5,026,637 All Other Outlets 1,404,241 1,580,728 Total All Outlets $6,608,575 $6,866,690 Source: California State Board of Equalization, Research and Statistics Division. (I) 2008 annual figures unavailable. The taxable transaction figures by industry which are shown above may not be directly comparable to the "Total, All Outlets" figures due to rounded data. Building and Real Estate Activity The following tables set forth five-year summaries of building permit valuations and new dwelling units authorized in the County (in both incorporated and unincorporated areas) for the years 2004 through 2008. 75783979.5 B-8 • 70 • COUNTY OF RIVERSIDE BUILDING PERMIT VALUATIONS") (In Thousands) RESIDENTIAL New Single -Family New Multi -Family Alterations and Adjustments Total Residential NON-RESIDENTIAL New Commercial New Industry New Other(I) Alterations & Adjustments Total Nonresidential TOTAL ALL BUILDING 2004 2005 2006 2007 2008 $5,997,514 $6,243,790 $4,412,257 $2,207,520 404,616 407,429 431,579 238,316 135,178 164,312 15 8,098 141,996 $6,537,308 $6,815,531 $5,001,934 $2,587,832 $ 580,058 $ 552,665 $ 648,068 $ 682,331 203,311 120,366 288,353 184,506 334,002 344,702 290,010 240,765 222.496 274,339 303,407 350,539 $1,339,867 $1,292,072 $1,529,838 $1,458,141 $1,214,752 243,741 118,490 $1,576,983 $ 539,944 70,411 138,766 292,694 $1,041,815 $7,877,175 $8,107,601 56,531,772 4 4 7 $2,618,798 Source: Construction Industry Research Board. (I) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and non-residential alterations and additions. Single Family Multi -Family TOTAL COUNTY OF RIVERSIDE NUMBER OF NEW DWELLING UNITS 2004 2005 2006 29,478 29,994 20,692 4,748 _4,140 4,519 2007 2008 9,763 3,815 2,690 2,104 34,226 34,134 25,211 12,443 5,919 Source: Construction Industry Research Board. The economy of the County is currently experiencing a slowdown as evidenced by an increased unemployment rate, a slowdown in total personal income and taxable sales, a drop in residential building permits, a decline in the rate of home sales and the median price of single- family homes and condominiums and an increase in notices of default on mortgage loans secured by homes and condominiums. 75783979.5 B-9 71 The following table sets forth a comparison of median housing prices for Los Angeles County, Riverside County and Southern California as of February 2008 and February 2009. COUNTY OF RIVERSIDE COMPARISON OF MEDIAN HOUSING PRICES February February Percent 2008 2009 Change County of Riverside $325,000 $190,000 (41.5)% Los Angeles County 460,000 299,000 (35.0) Southern California(I) 408,000 250,000 (38.7) Source: MDA DataQuick Information Systems. (I) Southern California comprises Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties. The following table sets forth a comparison of home and condominium foreclosures recorded in Los Angeles County, Riverside County, San Bernardino County and Southern California for the years and quarters indicated. COUNTY OF RIVERSIDE COMPARISON OF HOME FORECLOSURES San Southern Year/Qtr Los Angeles Riverside Bernardino California 2004 901 348 697 2,221 2005 585 304 402 1,702 2006 1,997 1,778 1,011 7,355 2007 12,466 12,497 7,746 46,086 2008 35,366 32,423 23,557 125,056 2009Q1 6,914 6,389 4,814 23,995 2009Q2 6,922 5,848 4,818 23,775 Source: MDA DataQuick Information Systems. oI Southern California comprises Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties. Agriculture Agriculture remains an important source of income in the County. Principal agricultural products are: nursery, milk, table grapes, eggs, avocados, grapefruit, alfalfa, bell peppers, dates, and lemons. Four areas in the County account for the major portion of agricultural activity: the Riverside/Corona and San Jacinto/Temecula Valley Districts in the western portion of the County, the Coachella Valley in the central portion and the Palo Verde Valley near the County's eastern border. The value of agricultural production in the County for the years 2004 through 2008 is set forth in the following table. 75783979.5 B-10 72 COUNTY OF RIVERSIDE VALUE OF AGRICULTURAL PRODUCTION 2004 2005 Citrus Fruits $ 123,574,100 $ 138,244,700 Trees and Vines 211,936,500 188,553,200 Vegetables, Melons, Misc. 174,866,300 261,019,500 Field and Seed Crops 75,219,000 77,687,300 Nursery 211,271,200 229,210,200 Apiculture 2,951,300 2,736,800 Aquaculture Products 15,579,100 13,367,300 Total Crop Valuation $ 815,397,500 $ 910,819,000 Livestock and Poultry Valuation 316,207,700 257 852,100 Grand Total $1,131,605,200 $1,168,671,100 Source: Riverside County Agricultural Commissioner. Transportation 2006 $ 107,897,000 191,321,200 213,643,300 68,611,700 270,992,800 3,554,300 13,367,300 $ 869,387,600 234,903,400 $1,104,291,000 2007 $ 121,387,100 189,286,500 234,854,700 94,492,000 272,326,200 3,948,900 9 829,200 $ 926,124,600 338,938,600 $1,265,063,200 2008 $ 135,759,000 173,678,000 266,414,900 123,545,400 230,416,200 5,637,000 12,077,700 $ 947,529,000 321,060,000 $1,268,589,900 Several major freeways and highways provide access between the County and all parts of Southern California. The Riverside Freeway (State Route 91) extends southwest through Corona and connects with the Orange County freeway network in Fullerton. Interstate 10 traverses the width of the County, the western -most portion of which links up with major cities and freeways in the southern part of San Bernardino County with the eastern part linking to the County's Desert cities and Arizona. Interstate 15 and 215 extend north and then east to Las Vegas, and south to San Diego. State Route 60 provides an alternate (to Interstate 10) east -west link to Los Angeles County. Currently, Metrolink provides commuter rail service to Los Angeles, San Bernardino and Orange Counties from several stations in the County. Transcontinental passenger rail service is provided by Amtrak with stops in Riverside and Indio. Freight service to major west coast and national markets is provided by three transcontinental railroads Union Pacific Railroad, Burlington Northern and Santa Fe Railway Company. Truck service is provided by several common carriers, making available overnight delivery service to major California cities. Transcontinental bus service is provided by Greyhound Lines. Intercounty, intercity and local bus service is provided by the Riverside Transit Agency to western County cities and communities. There arc also four municipal transit operators in the western County providing services within the cities of Banning, Beaumont, Corona and Riverside. The SunLine Transit Agency provides local bus service throughout the Coachella Valley, including the cities of Palm Springs and Indio. The Palo Verde Valley Transit Authority provided service in the far eastern portion of the County (City of Blythe and surrounding communities). The County seat, located in the City of Riverside, is within 20 miles of the Ontario International Airport in neighboring San Bernardino County. This airport is operated by the Los Angeles Department of Airports. Four major airlines schedule commercial flight service at Palm 75783979.5 B-11 73 Springs Regional Airport. County -operated general aviation airports include those in Thermal, Hemet, Blythe and French Valley. The cities of Riverside, Corona and Banning also operate general aviation airports. There is a military base at March Air Reserve Base, which converted from an active duty base to a reserve -only base on April 1, 1996. Plans for joint military and civilian use of the base thereafter are presently being formulated by the March AFB Joint Powers Authority, comprised of the County and the Cities of Riverside, Moreno Valley and Perris. Education There are four elementary school districts, one high school district, eighteen unified (K- 12) school districts and four community college districts in the County. Ninety-five percent of all K-12 students attend schools in the unified school districts. The three largest unified school districts are Riverside Unified School District, Moreno Valley Unified School District and Corona -Norco Unified School District. There are seven two-year community college campuses located in the communities of Riverside, Moreno Valley, Norco, San Jacinto, Menifee, Coachella Valley and Palo Verde Valley. There are also three universities located in the City of Riverside: the University of California at Riverside, La Sierra University and California Baptist University. 75783979.5 B-12 • 74 • • 75783979.5 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE C-1 75 APPENDIX D BOOK ENTRY SYSTEM The information in this Appendix D concerning The Depository Trust Company ("DTC'), New York, New York, and DTC's Book -Entry System has been obtained from DTC and the Commission, the Trustee and the Underwriters take no responsibility for the completeness or accuracy thereof. The Commission, the Trustee and the Underwriters cannot and do not give any assurances that DTC, DTC Participants or Indirect Participants or others will distribute any (a) payments of principal or purchase price or interest with respect to the $ principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series B (the "2009 Series B Bonds") and the $ principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series C (the "2009 Series C Bonds" and, together with the Series A Bonds and the Series B Bonds, the "2009 Bonds"), (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2009 Bonds, or (c) redemption, tender or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2009 Bonds, or that they will do so on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix D. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures"'of DTC to be followed in dealing with DTC Participants are on file with DTC. The Commission, the Trustee and the Underwriters are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a beneficial owner with respect to the 2009 Bonds or an error or delay relating thereto. DTC will act as securities depository for the 2009 Bonds. The 2009 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered certificate will be issued for each maturity of the 2009 Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, 75783979.5 D-1 76 National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information set forth on such websites is not incorporated by reference. Purchases of 2009 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2009 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2009 Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2009 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2009 Bonds, except in the event that use of the book -entry system for the 2009 Bonds is discontinued. To facilitate subsequent transfers, all 2009 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the 2009 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2009 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2009 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the 2009 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2009 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2009 Bond documents. For example, Beneficial Owners of the 2009 Bonds may wish to ascertain that the nominee holding the 2009 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 75783979.5 D-2 • • 77 • • Redemption and tender notices shall be sent to DTC. If less than all of the 2009 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2009 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. 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 Direct Participants to whose accounts the 2009 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal or purchase price of and interest on the 2009 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Commission or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest evidenced by the 2009 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commission or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the 2009 Bonds at any time by giving reasonable notice to the Commission or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, security certificates are required to be printed and delivered. The Commission may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, security certificates will be printed and delivered to DTC. 75783979.5 D-3 78 • • • 75783979.5 APPENDIX E PROPOSED FORM OF BOND COUNSEL OPINION E-1 79 75783979.5 APPENDIX F PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 80 ATTACHMENT 3 OH&S Draft 8/4/09 SECOND SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of October 1, 2009 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2009 SERIES A, 2009 SERIES B AND 2009 SERIES C (Supplementing the Indenture Dated as of June 1, 2008) OHS West260692447.6 81 OH&S Draft 8/4/09 ARTICLE XIX DEFINITIONS Section 19.01. Definitions 1 Section 19.02. Rules of Construction 8 ARTICLE XX FINDINGS, DETERMINATIONS AND DIRECTIONS Section 20.01. Findings and Determinations 8 Section 20.02. Recital in Bonds 8 Section 20.03. Effect of Findings and Recital 8 ARTICLE XXI AUTHORIZATION OF 2009 BONDS Section 21.01. Principal Amount, Designation and Series 8 Section 21.02. Purpose and Application of Proceeds 9 Section 21.03. Form, Denomination, Numbers and Letters 9 Section 21.04. Date, Maturities and Interest Rates 9 Section 21.05. Interest Rates on 2009 Bonds 11 ARTICLE XXII REDEMPTION AND PURCHASE OF 2009 BONDS Section 22.01. Optional Redemption of 2009 Bonds 22 Section 22.02. Mandatory Redemption of 2009 Bonds From Mandatory Sinking Account Payments 23 Section 22.03. Purchase In Lieu of Redemption 25 Section 22.04. Holder's Option to Tender 2009 Bonds for Purchase 25 Section 22.05. Mandatory Tender of 2009 Bonds for Purchase 26 Section 22.06. Delivery of Tendered 2009 Bonds 28 Section 22.07. 2009 Bonds Deemed Purchased 28 Section 22.08. Deposit of 2009 Bonds 29 Section 22.09. Remarketing of Tendered 2009 Bonds 29 Section 22.10. Deposits into Accounts in the 2009 Bonds Purchase Fund 32 Section 22.11. Disbursements from the 2009 Bonds Purchase Fund 33 Section 22.12. Delivery of 2009 Bonds 34 Section 22.13. 2009 Liquidity Facilities; Liquidity Facility Bonds 34 Section 22.14. Alternate Liquidity Facilities 36 Section 22.15. Remarketing Agents for the 2009 Bonds 38 ARTICLE XXIII PURCHASE OF 2009 BONDS AT DIRECTION OF COMMISSION Section 23.01. Mandatory Tender for Purchase of 2009 Bonds at Direction of Commission 38 Section 23.02. Delivery of Tendered 2009 Bonds 40 Section 23.03. 2009 Bonds Deemed Purchased 40 Section 23.04. Deposit of 2009 Bonds 41 Section 23.05. Payment of Optional Purchase Price of 2009 Bonds 41 OHS WesL260692447.6 i 82 Section 23.06. 2009 Bonds Owned by Commission 41 • ARTICLE XXIV ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 24.01. Funds and Accounts 42 Section 24.02. 2009 Costs of Issuance Fund 42 Section 24.03. Funding and Application of the 2009 Bonds Reserve Fund; Bond Reserve Requirement for the 2009 Bonds 42 Section 24.04. 2009 Bonds Purchase Fund 43 ARTICLE XXV MISCELLANEOUS Section 25.01. Severability 43 Section 25.02. Parties Interested Herein 44 Section 25.03. Headings Not Binding 44 Section 25.04. Notice Addresses 44 Section 25.05. Notices to Rating Agencies 44 Section 25.06. Notices to 2009 Liquidity Provider 45 Section 25.07. No Compensation of Trustee From Proceeds of 2009 Liquidity Facility 45 Section 25.08. Indenture to Remain in Effect 45 Section 25.09. Effective Date of Second Supplemental Indenture 45 Section 25.10. Execution in Counterparts 45 EXHIBIT A FORM OF 2009 BOND A-1 . EXHIBIT B NOTICE ADDRESSES B-1 OHS West:260692447.6 11 83 • • • SECOND SUPPLEMENTAL INDENTURE THIS SECOND SUPPLEMENTAL INDENTURE, dated as of October 1, 2009 (this "Second 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 Second 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 (i) a Series of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A" (the "2009 Series A Bonds"); (ii) a Series of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series B" (the "2009 Series B Bonds"); and (iii) a Series of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series C" ("the 2009 Series C Bonds" and, together with the 2009 Series A Bonds and the 2009 Series B Bonds, the "2009 Bonds") all for the purpose of retiring $ principal amount of the Commission's Outstanding Notes, refunding S126,395,000 principal amount of the Commission's Outstanding 2008 Bonds, to fund a reserve fund and to pay costs of issuance, all as provided in this Second Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE XIX DEFINITIONS Section 19.01. Definitions. (a) Definitions. Unless the context otherwise requires, or as otherwise provided in subsection (b) of this Section or in Appendix A to this Second Supplemental Indenture, all terms which are defined in Section 1.02 of the Indenture shall have the same meanings in this Second Supplemental Indenture. (b) Additional Definitions. Unless the context otherwise requires, the following terms shall, for all purposes of this Second Supplemental Indenture, have the following meanings: OHS West:260692447.6 84 • "Daily Rate Period" means any period during which a Series of 2009 Bonds bears interest at the Daily Rate. "Expiration" (and other forms of "expire") means, when used with respect to a 2009 Credit Enhancement or 2009 Liquidity Facility, the expiration of such 2009 Credit Enhancement or 2009 Liquidity Facility 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. "Fixed Rate" means the fixed rate home by any Series of 2009 Bonds from the Fixed Rate Conversion Date for such Series of Bonds, which rate shall be established in accordance with Section 21.05(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 Conversion to a Fixed Rate to and including the Business Day next preceding the proposed Fixed Rate Conversion Date. "Fixed Rate Conversion Date" means the Conversion Date on which the interest rate on any Series of 2009 Bonds shall be converted to a Fixed Rate. "Fixed Rate Period" means the period from and including the Fixed Rate Conversion Date of any Series of 2009 Bonds converted to a Fixed Rate to and including their maturity date or earlier date of redemption. "Interest Payment Date" means (a) with respect to the 2009 Bonds: (i) in the Daily Rate Period or the Weekly Rate Period, the first Business Day of each calendar month commencing , 2009; (ii) in the Commercial Paper Rate Period, the day immediately succeeding the last day of each Commercial Paper Rate Period for such 2009 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 2009 Bond. "Interest Rate Determination Method" means any of the methods of determining the interest rate on the 2009 Bonds from time to time as described in Section 21.05(a). "Issue Date" means, with respect to the 2009 Bonds, the date on which the 2009 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 interest rate established with respect to a Series of 2009 Bonds in accordance with Section 21.05(a)(iv). OHS Wesc260692447.6 3 86 "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 to and including the Business Day next preceding the proposed Long -Term Rate Conversion Date. "Long -Term Rate Continuation Notice" shall have the meaning given such term in Section 21.05(a)(iv)(B). "Long -Term Rate Conversion Date" means: (i) the Conversion Date on which the interest rate on a Series of 2009 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 Period" means any period during which a Series of 2009 Bonds bears interest at the Long -Term Rate. "Mandatory Tender Bonds" has the meaning specified in Section 22.09(c). "Optional Purchase Date" means each date on which the 2009 Bonds would be subject to optional redemption and therefore are subject to purchase at the option of the Commission pursuant to Article XXIII. "Optional Purchase Price" means, with respect to the 2009 Bonds to be purchased pursuant to Article XXIII on any Optional Purchase Date, the principal amount thereof, 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 such 2009 Bonds. "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 2009 Bonds. "Purchase Date" means any date on which any 2009 Bond is purchased pursuant to Section 22.04 or Section 22.05. "Purchase Price" means, with respect to any 2009 Bond tendered or deemed tendered to the Trustee for purchase pursuant to Section 22.04 or Section 22.05, an amount equal to 100% of the principal amount thereof. In addition, if the Purchase Date is not an Interest Payment Date, the Purchase Price for each 2009 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 any 2009 Bond, the interest rate applicable to such 2009 Bond as provided in this Second Supplemental Indenture. "Rate Index" means the Daily Rate Index, the Weekly Rate Index, or both, as the context may require. OHS West:260692447.6 4 • 87 • "Rate Period" means any Daily Rate Period, Weekly Rate Period, Commercial Paper Rate Period, Long -Term Rate Period or Fixed Rate Period. "Rating Confirmation" means written evidence from each rating agency then rating any Series of Bonds to the effect that, following the event which requires the Rating Confirmation, the then current rating for such Series of Bonds will not be lowered or withdrawn solely as a result of the occurrence of such event. "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. "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 any 2009 Bond 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 Second 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 22.15 and appointed by an Authorized Representative to serve as a Remarketing Agent for any 2009 Bonds. "Remarketing Agreement" means any agreement or agreements entered into by and between the Commission and a Remarketing Agent for 2009 Bonds. "Second Supplemental Indenture" means this Second Supplemental Indenture, between the Commission and the Trustee, as amended and supplemented from time to time. "Semi -Annual Interest Payment Date" means June 1 or December 1. "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 alternative 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 2009 Credit Enhancement or 2009 Liquidity Facility, the replacement, removal, surrender or other termination of such 2009 Credit Enhancement or 2009 Liquidity Facility, other than an OHS Wes1260692447.6 5 88 Expiration or an extension or renewal thereof; provided, however, that Termination does not include immediate suspension or automatic 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. "2009 Bonds" means, collectively, the 2009 Series A Bonds, the 2009 Series B Bonds and the 2009 Series C Bonds, authorized by Article XXI of this Indenture. "2009 Bonds Purchase Fund" means the fund by that name established pursuant to Section 24.01(c). "2009 Bonds Reserve Fund" means the fund by that name established pursuant to Section 24.01(b). "2009 Bonds Reserve Requirement" means, as of any date of calculation, an amount equal to the least of (i) ten percent (10%) of the original principal amount of the 2009 Bonds (or if the amount of original issue discount or original issue premium applicable to the 2009 Bonds exceeds two percent (2%), ten percent (10%) of the issue price of the 2009 Bonds), (ii) one hundred twenty-five percent (125%) of average Annual Debt Service on the Outstanding 2009 Bonds, and (iii) Maximum Annual Debt Service on the Outstanding 2009 Bonds; provided that with respect to a Series of variable rate Bonds for which an interest swap is not in place, the interest rate thereon, for periods where the rate has not yet been determined, for purposes of calculating the 2009 Bonds Reserve Requirement shall be assumed to be equal to the rate published in The Bond Buyer as the "Bond Buyer Revenue Bond Index" by the most recent date preceding the sale of such Series. "2009 Bonds Tax Certificate" means the Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2009 Bonds. "2009 Commission Account" means the account by that name within the 2009 Bonds Purchase Fund established pursuant to Section 24.01(c). "2009 Costs of Issuance Fund" means the fund by that name established pursuant to Section 24.01(a). "2009 Credit Enhancement" means any Credit Enhancement provided with respect to the 2009 Bonds. "2009 Credit Provider" means the Credit Provider issuing a 2009 Credit Enhancement. "2009 Liquidity Facility" means any Liquidity Facility provided with respect to a Series of 2009 Bonds pursuant to Section 22.13 or any Alternate Liquidity Facility provided with respect to a Series of 2009 Bonds pursuant to Section 22.14. The initial 2009 Liquidity Facility consists of [ ]. OHS West:260692447.6 6 • • 89 • • "2009 Liquidity Facility Bonds" means Liquidity Facility Bonds consisting of any 2009 Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a 2009 Liquidity Facility as provided in Section 22.11(a), but excluding any 2009 Bonds no longer considered to be 2009 Liquidity Facility Bonds in accordance with the terms of the applicable 2009 Liquidity Facility and Section 22.13(e). "2009 Liquidity Facility Purchase Account" means the account by that name within the 2009 Bonds Purchase Fund established pursuant to Section 24.01(c). "2009 Liquidity Provider" means the issuer of the 2009 Liquidity Facility or any successor Liquidity Provider providing liquidity for the Purchase Price of the 2009 Bonds pursuant to a 2009 Liquidity Facility. "2009 Remarketing Account" means the account by that name within the 2009 Bonds Purchase Fund established pursuant to Section 24.01(c). "2009 Series A Bonds" shall mean the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A, authorized by Article XXI of this Indenture. "2009 Series B Bonds" shall mean the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series B, authorized by Article XXI of this Indenture. "2009 Series C Bonds" shall mean the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series C, authorized by Article XXI of this Indenture. "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 2009 Bonds bearing interest at a Daily Rate or a Weekly Rate. "Weekly Put Bonds" shall have the meaning set forth in Section 22.09(b). "Weekly Rate" means the interest rate established with respect to a Series of 2009 Bonds from time to time in accordance with Section 21.05(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; provided, however, that if the Remarketing Agent Advises the Trustee and the Commission that the use of the SIFMA Swap Index would not result or no longer results in a market rate of interest on the Bonds, "Weekly Rate Index" shall mean, subject to a Favorable Opinion of Bond Counsel, an index agreed to by the Commission and the Remarketing Agent that would result in a market rate of interest on the Bonds. The Weekly Rate Index shall in no event exceed the Maximum Interest Rate. OHS Wesc260692447.6 7 90 "Weekly Rate Period" means each period during which a Series of 2009 Bonds bears interest at Weekly Rates. Section 19.02. Rules of Construction. Words of the masculine gender shalt 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 terms shall include any variant of the terms set forth in this Article XIX. The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this Second Supplemental Indenture, refer to the Indenture. ARTICLE XX FINDINGS, DETERMINATIONS AND DIRECTIONS Section 20.01. Findings and Determinations. The Commission hereby finds and determines that the 2009 Bonds shall be issued pursuant to Section 3.01 and upon the issuance of the 2009 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 20.02. Recital in Bonds. There shall be included in each of the definitive 2009 Bonds, and also in each of the temporary 2009 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 2009 Bond, and in the issuing of that 2009 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 2009 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 2009 Bond attached hereto as Exhibit A. Section 20.03. Effect of Findings and Recital. From and after the issuance of the 2009 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 2009 Bonds is at issue. ARTICLE XXI AUTHORIZATION OF 2009 BONDS Section 21.01. 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 $ . 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), 2009 Series A." OHS West260692447.6 8 91 • i • 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 $ . 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), 2009 Series B." 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 $ . 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), 2009 Series C." 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 each Series of 2009 Bonds in the aggregate principal amount set forth above. Section 21.02. Purpose and Application of Proceeds. The 2009 Bonds are issued for the purpose of retiring $ principal amount of the Commission's Outstanding Notes, refunding $126,395,000 principal amount of the Commission's Outstanding 2008 Bonds and to pay accrued interest thereon. In addition, a portion of the proceeds will be applied to fund the 2009 Bond Reserve Requirement and to pay Costs of Issuance of the 2009 Bonds. The net proceeds from the sale of the 2009 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 2009 Costs of Issuance Fund; (b) $ of such proceeds shall be deposited in the 2009 Bonds Reserve Fund in satisfaction of the 2009 Bonds Reserve Requirement; (c) $ of such proceeds shall be transferred to the Notes Trustee for deposit upon the order of the Commission; and (d) $ of such proceeds shall be deposited in the Redemption Fund for application to the redemption of the 2008 Bonds. Section 21.03. Form, Denomination, Numbers and Letters. Each Series of 2009 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 Series of 2009 Bonds 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 2009 Bonds and as the form of the certificate of authentication as such form shall be completed based on the terms of each Series of 2009 Bonds set forth herein. Section 21.04. Date, Maturities and Interest Rates. The 2009 Series A Bonds shall be dated their Issue Date. The 2009 Series A Bonds shall be issued in the aggregate principal OHS West:260692447.6 9 92 amount of $ and shallmature and be payable on June 1, 2029. The 2009 Series A Bonds shall be issued as Variable Rate Bonds and each 2009 Series A Bond shall bear interest at the rate or rates determined in accordance with Section 21.05. Each 2009 Series A Bond shall initially bear interest at a Weekly Rate, and the initial Interest Payment Date is November 2, 2009. The 2009 Series B Bonds shall be dated their Issue Date. The 2009 Series B Bonds shall be issued in the aggregate principal amount of $ and shall mature and be payable on June 1, 2029. The 2009 Series B Bonds shall be issued as Variable Rate Bonds and each 2009 Series B Bond shall bear interest at the rate or rates determined in accordance with Section 21.05. Each 2009 Series B Bond shall initially bear interest at a Weekly Rate, and the initial Interest Payment Date is November 2, 2009. The 2009 Series C Bonds shall be dated their Issue Date. The 2009 Series C Bonds shall be issued in the aggregate principal amount of $ and shall mature and be payable on June 1, 2029. The 2009 Series C Bonds shall be issued as Variable Rate Bonds and each 2009 Series C Bond shall bear interest at the rate or rates determined in accordance with Section 21.05. Each 2009 Series C Bond shall initially bear interest at a Weekly Rate, and the initial Interest Payment Date is November 2, 2009. Interest on each 2009 Bond shall be payable on each Interest Payment Date for such 2009 Bond until the principal sum of such 2009 Bond has been paid; provided, however, that if at the maturity date of any 2009 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 2009 Bond shall then cease to bear interest. Each 2009 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. As long as the 2009 Bonds are Book -Entry Bonds, principal of and interest on the 2009 Bonds shall be payable by wire transfer to DTC in lawful money of the United States of America. Principal of the 2009 Bonds shall be payable when due upon presentation and surrender thereof at the Principal Office of the Trustee. Each 2009 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 2009 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 2009 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 OHS West:260692447.6 10 • 93 • to the Holder at such Holder's address as it appears as of the Recoid Date on the bond registration books kept by the Trustee. Section 21.05. Interest Rates on 2009 Bonds. Except for 2009 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 2009 Liquidity Facility, the 2009 Bonds shall be Current Interest Bonds and, until converted to a Fixed Rate, the 2009 Bonds shall constitute Variable Rate Indebtedness and shall bear interest at a Variable Rate determined as provided in this Second Supplemental Indenture. Each 2009 Bond shall bear interest as provided herein from and including the Issue Date to but excluding the date of payment in full of such 2009 Bond (such interest to be computed on the basis of a 365/366-day year and actual days elapsed during any Daily Rate Period, Weekly Rate Period or Commercial Paper Rate Period; and to be 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 2009 Bonds from one Interest Payment Date to, but not including, the next Interest Payment Date. Upon Conversion of a Series of 2009 Bonds to a Fixed Rate, the 2009 Bonds of such Series shall bear interest from and including the Conversion Date to the date of payment in full of such 2009 Bonds (computed on the basis of a 360-day year of twelve (12) 30-day months). The interest rates on each 2009 Bond shall be determined as provided in Section 21.05(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 2009 Bond within a Series of 2009 Bonds shall have the same Interest Rate Determination Method and (except 2009 Bonds that are 2009 Liquidity Facility Bonds, 2009 Bonds during a Commercial Paper Rate Period, and 2009 Bonds of different maturities bearing interest at a Fixed Rate) shall bear interest at the same interest rate. Upon issuance, the 2009 Series A Bonds, 2009 Series B Bonds and the 2009 Series C Bonds shall bear interest at a Weekly Rate. 21.05(a) Interest Rate Determination Method. 21.05(a)(i) Daily Rate. Upon a successful Conversion of any Series of 2009 Bonds to bear interest at the Daily Rate pursuant to Section 21.05(b) and until such 2009 Bonds are successfully converted to another Interest Rate Determination Method pursuant to said Section 21.05(b), such 2009 Bonds shall bear interest at a Daily Rate. During each Daily Rate Period for any Series of 2009 Bonds, the Remarketing Agent for such Series shall set a Daily Rate for the 2009 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 2009 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 2009 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 2009 Bonds for which the Daily Rate is to be determined, be the lowest interest rate that would enable such Remarketing OHS Wese260692447.6 11 94 Agent to place such 2009 Bonds at a price equal to 100% of the aggregate principal amount of such 2009 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. 21.05(a)(ii) Weekly Rate. Upon issuance and until such 2009 Bonds are successfully converted to another Interest Rate Determination Method pursuant to Section 21.05(b), such 2009 Bonds shall bear interest at a Weekly Rate. During each Weekly Rate Period for any Series of 2009 Bonds, the Remarketing Agent for such Series shall set a Weekly Rate for such 2009 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 bome by such 2009 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 2009 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 for tender) of the 2009 Bonds for which the Weekly Rate is to be determined, be the lowest interest rate that would enable the Remarketing Agent to place such 2009 Bonds at a price equal to 100% of the aggregate principal amount of such 2009 Bonds (plus accrued interest, if any) on the first day of such Weekly Rate Period. 21.05(a)(iii) Commercial Paper Rate. Upon a successful Conversion of any Series of 2009 Bonds to bear interest at the Commercial Paper Rate pursuant to Section 21.05(b), and until such 2009 Bonds are successfully converted to another Interest Rate Determination Method pursuant to said Section 21.05(b), such 2009 Bonds shall bear interest at the Commercial Paper Rate or Rates applicable to such 2009 Bonds. The Remarketing Agent for such Series shall select the Commercial Paper Rate Period or Periods for each of such 2009 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 applicable 2009 Bonds, taking into account (A) all other Commercial Paper Rate Periods for all the 2009 Bonds of the same Series bearing interest at a Commercial Paper Rate, (B) general economic and market conditions relevant to such 2009 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 2009 Bond shall be selected with a last day later than the fifth (5th) Business Day prior to the expiration date of any 2009 Liquidity Facility then in effect with respect to such 2009 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 Series of 2009 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 21.05(b), the Remarketing Agent shall determine the Commercial Paper Rate Periods OHS West:260692447.6 12 • • 95 with respect to such 2009 Bonds in such manner that, as soon as possible, all Commercial Paper Rate Periods with respect to such 2009 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 2009 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 Series of 2009 Bonds. The Commercial Paper Rate applicable to each 2009 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 2009 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 2009 Bond. 21.05(a)(iv)(A) Long -Term Rate. Upon a successful Conversion of any Series of 2009 Bonds to a Long -Term Rate pursuant to Section 21.05(b), and until the establishment of a new Long -Term Rate Period and a new Long -Term Rate for such 2009 Bonds, or until such 2009 Bonds are successfully converted to another Interest Rate Determination Method pursuant to Section 21.05(b) or Section 21.05(a)(iv)(F), such 2009 Bonds shall bear interest at the Long -Term Rate specified for the Long -Term Rate Period so established upon such Conversion. The Commission shall select the duration of each Long -Term Rate Period for each Series of 2009 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 21.05(b) or the Long -Term Rate Continuation Notice given with respect to any new Long -Term Rate and Long -Term Rate Period for such 2009 Bonds. Each Long -Term Rate Period shall commence on the Long -Tenn 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 2009 Bonds. With respect to each Long -Term Rate Period, the Remarketing Agent will set the Long -Term Rate for the 2009 Bonds by 5:00 p.m., New York City time, on the applicable Long -Term Rate Computation Date. Subject to the provisions of Section 21.05(a)(iv)(G), each Long -Term Rate shall be the rate of interest that, if borne by the Series of 2009 Bonds for which the Long -Term Rate is to be determined, 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 the such 2009 Bonds, or Tax -Exempt Securities that arc competitive as to credit and maturity (or period for tender) with the credit and maturity (or period for tender) of such 2009 Bonds, be the lowest interest rate that would enable such Remarketing Agent to place such 2009 Bonds at a price equal to 100% of the aggregate principal amount of such 2009 Bonds on the first day of such Long -Term Rate Period. 21.05(a)(iv)(B) Long -Term Rate Continuation. As of the day following the last day of a Long -Term Rate Period for any Series of 2009 Bonds, unless the Commission has OHS West260692447.6 13 96 given a Conversion Notice with respect to the Conversion of such 2009 Bonds to another Interest Rate Determination Method pursuant to Section 21.05(b), the Commission may establish a new Long -Term Rate Period and Long -Term Rate for such 2009 Bonds with such right to be exercised by delivery of a written notice of an Authorized Representative containing the contents specified in Section 21.05(a)(iv)(D) (a "Long -Term Rate Continuation Notice") to the Notice Parties no less than twenty (20) days prior to the effective date of the new Long -Term Rate Period. The Long -Term Rate Continuation Notice must be accompanied by an Opinion of Bond Counsel stating that the new Long -Term Rate Period is authorized and permitted under this Second Supplemental Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the 2009 Bonds subject to such Long -Term Rate Continuation Notice. 21.05(a)(iv)(C) Limitations. Any establishment of a new Long -Term Rate and Long -Term Rate Period for any Series of 2009 Bonds pursuant to Section 21.05(a)(iv)(B) above must comply with the following: - the first day of such new Long -Tenn Rate Period must be an Interest Payment Date on which such 2009 Bonds are subject to mandatory tender pursuant to the applicable provisions of Section 22.05; the first day of such new Long -Term Rate Period must be a Business Day; and - no new Long -Term Rate shall become effective unless the Favorable Opinion of Bond Counsel referred to in Section 21.05(a)(iv)(B) is redelivered on (and as of) the first day of the new Long -Term Rate Period and all such Outstanding 2009 Bonds are successfully remarketed in the new Long -Term Rate Period at the new Long -Term Rate on the first day of the new Long -Term Rate Period. 21.05(a)(iv)(D) Contents of Long -Term Rate Continuation Notice. The Commission's Long -Term Rate Continuation Notice for a Series of 2009 Bonds must specify: (i) the proposed Long -Term Rate Period; (ii) whether any 2009 Credit Enhancement or 2009 Liquidity Facility then in effect for such 2009 Bonds will remain in effect during the proposed Long -Term Rate Period; and (iii) if new 2009 Credit Enhancement or a new 2009 Liquidity Facility for such 2009 Bonds will be provided to be effective during the proposed Long -Term Rate Period, the form of such 2009 Credit Enhancement or 2009 Liquidity Facility and the identity of such 2009 Liquidity Provider. 21.05(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 fifteen (15) days prior to the first day of the proposed Long -Term Rate Period, the Trustee shall give notice by first-class mail to the Holders of the 2009 Bonds of the applicable Series which notice shall state in substance: - that a new Long -Term Rate Period and Long -Term Rate is to be established for such 2009 Bonds on the applicable Long -Term Rate Conversion Date if the conditions specified in this Second Supplemental Indenture are satisfied on or before such date; OHS West:260692447.6 14 • 97 - that all 2009 Bonds of such Series are subject to mandatory tender for purchase on the fast day of the new Long -Term Rate Period (whether or not the proposed new Long -Term Rate Period becomes effective on such date, unless there is no Liquidity Facility for the existing Long -Term Rate Period and the proposed new Long -Term Rate Period does not become effective, in which case the mandatory tender will be cancelled) 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 Second Supplemental Indenture and will not, in and of itself, adversely affect the Tax -Exempt status of the interest on the 2009 Bonds of such Series; - that a new Long -Term Rate Period and Long -Term Rate for the 2009 Bonds of such Series shall not be established unless the Favorable 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 2009 Bonds are successfully remarketed in the new Long,Term Rate Period and at the new Long -Term Rate on the first day thereof; the CUSIP numbers or other identification information of such 2009 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, all such 2009 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. 21.05(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 2009 Bonds bearing interest at a Long -Term Rate at the time required by Section 21.05(a)(iv)(B) or Section 21.05(b), as applicable, or if the conditions to the effectiveness of (i) a new Long -Term Rate Period and new Long -Term Rate set forth in Section 21.05(a)(iv)(C) or (ii) Conversion to a new Interest Rate Determination Method sct forth in Section 21.05(b)(ii)(D), as applicable, are not satisfied, then on the day following the last day of the current Long -Term Rate Period, a Weekly Rate Period shall automatically commence for such 2009 Bonds; provided, however, that such 2009 Bonds shall not be subject to optional tender and shall bear interest at the lesser of the SIFMA Swap Index plus three percent (3%) and the Maximum Interest Rate until such time as such 2009 Bonds are successfully remarketed at an Interest Rate Determination Method in accordance with the provisions hereof, provided that notice of Conversion may be given five (5) Business Days prior to the Conversion Date. 21.05(a)(iv)(G) Sale at Premium or Discount. Notwithstanding the provisions of Section 21.05(a)(iv)(A) or 21.05(a)(v)(A), the Long -Tenn Rate or Fixed Rate, as OIiS West:260692447.6 15 98 the case may be, shall be the rate of interest per annum determined by the Remarketing Agent to be the interest rate which, if borne by the applicable Series of 2009 Bonds, would enable the Remarketing Agent to sell such 2009 Bonds at a price (without regard to accrued interest) which will result in the lowest net interest cost for such 2009 Bonds, after taking into account any premium or discount at which such 2009 Bonds are sold by the Remarketing Agent, provided that: - the Remarketing Agent certifies to the Trustee and the Commission that the sale of such 2009 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 2009 Bonds on the Long -Term Rate or Fixed Rate Conversion Date; - the Commission consents in writing to the sale of such 2009 Bonds by the Remarketing Agent at such premium or discount; - in the case of 2009 Bonds to be sold at a discount, either (a) a 2009 Liquidity Facility is in effect with respect to such 2009 Bonds and provides for the purchase of such 2009 Bonds at such discount, or (b) the Commission agrees to transfer to the Remarketing Agent on the Conversion Date, in immediately available funds for deposit in the 2009 Commission Account, an amount equal to such discount; in the case of 2009 Bonds to be sold at a premium, the Remarketing Agent shall transfer to the Trustee an amount equal to such premium, which amount shall either be used to pay costs associated with the Conversion or deposited in the Revenue Fund as specified by the Commission; and - on or before the date of the determination of the Long -Term Rate or Fixed 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 Conversion Date; and - on or before the Conversion Date, a Favorable Opinion of Bond Counsel shall have been received by the Trustee and confirmed to the Commission and the Remarketing Agent. 21.05(a)(v) Fixed Rate. 21.05(a)(v)(A) The Interest Rate Determination Method for any Series of 2009 Bonds may be converted from any Variable Rate to a Fixed Rate in accordance with the provisions of Section 21.05(b). After such Conversion, such 2009 Bonds shall bear interest at the Fixed Rate and shall not be subject to Conversion to another Interest Rate Determination Method. Subject to the provisions of Section 21.05(a)(iv)(G), the interest rate to be borne by such 2009 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 2009 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 2009 Bonds, be the lowest interest rate that would enable such Remarketing Agent to place such 2009 Bonds of such maturity for which the Fixed Rate is to be determined at a price equal OHS West:260692447.6 16 0 99 • to 100% of the aggregate principal amount of such 2009 Bonds on the Fixed Rate Conversion Date. 21.05(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 Series of 2009 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 2009 Bonds, redemption dates and redemption premiums, if any, to be paid upon the optional redemption of such 2009 Bonds which differ from such redemption dates and premiums as are set forth in Section 22.01(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 2009 Bonds, with respect to any 2009 Bond constituting a Term Bond, a new maturity date for any portion of such 2009 Bond; provided, however, that such new maturity date shall be a June I prior to the original maturity date; and provided further that such 2009 Bond shall continue to be subject to mandatory redemption from Mandatory Sinking Account Payments established for such 2009 Bond unless, on any Mandatory Sinking Account Payment due date for such 2009 Bond, such Mandatory Sinking Account Payment is applied to the payment of that portion of such 2009 Bond which now matures on such Mandatory Sinking Account Payment due date. 21.05(a)(vi) Failure to Determine Rate for Certain Rate Periods. 21.05(a)(vi)(A) If, for any reason, the Daily Rate or the Weekly Rate on any Series of 2009 Bonds is not established as provided herein by the Remarketing Agent pursuant to Section 21.05(a)(i) or (ii) or no Remarketing Agent shall be serving as such hereunder for such 2009 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. 21.05(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 2009 Bond or a court holds any Commercial Paper Rate Period or Commercial Paper Rate for any 2009 Bond to be invalid or unenforceable, a Commercial Paper Rate Period for such 2009 Bond shall last through the next day immediately preceding a Business Day (or until the earlier stated maturity thereof) and the interest rate applicable to such 2009 Bond shall be 100% of the Daily Rate Index on the first day of such Rate Period. 21.05(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, the Trustee, the 2009 Liquidity Provider, if any, and the 2009 Credit Provider, if any. Such notice shall also include details as to the principal amount of the 2009 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 2009 Bond being converted to a Fixed Rate notice of the Fixed Rate. OHS Wese260692447.6 17 100 21.05(a)(viii) Absence of Remarketing Agent; Binding Determination. If no Remarketing Agent shall be serving hereunder with respect to any Series of 2009 Bonds (other than 2009 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 2009 Bond, shall be conclusive and binding upon the Commission, the Trustee, the Remarketing Agent, each 2009 Credit Provider, each 2009 Liquidity Provider and the Holder of such 2009 Bond. 21.05(a)(ix) No Liability. In determining the interest rate that any 2009 Bond shall bear as provided in this Section 21.05, neither the Remarketing Agent nor the Trustee shall have any liability to the Commission or the Holder of such 2009 Bond, except for its negligence or willful misconduct. 21.05(b) Conversion of Interest Rate Determination Method. 21.05(b)(i) Right of Conversion. The Interest Rate Determination Method for any Series of 2009 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 containing the contents specified in Section 21.05(b)(iii) (each such notice being a "Conversion Notice") to the Notice Parties as follows (except as otherwise provided in Section 21.04(a)(iv)(F)): (1) at least two (2) Business Days prior to the fifteenth (15th) 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 three (3) Business Days prior to the fifteenth (15th) 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 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 2009 Bonds. 21.05(b)(ii) Limitations. Any Conversion with respect to a Series of 2009 Bonds pursuant to this Section 21.05(b) must comply with the following: 21.05(b)(ii)(A) the Conversion Date must be a date on which such 2009 Bonds are subject to mandatory tender pursuant to the applicable provisions of Section 22.05; OHS West:260692447.6 18 • 101 • 21.05(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 21.05(a)(iii); 21.05(b)(ii)(C) the 2009 Liquidity Facility for such 2009 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 2009 Bonds; provided that if the number of days of interest coverage provided by the applicable 2009 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 2009 Bonds; 21.05(b)(ii)(D) no Conversion shall become effective unless. the Favorable Opinion of Bond Counsel referred to in Section 21.05(b)(i) is redelivered on (and as of) the Conversion Date and all affected Outstanding 2009 Bonds are successfully purchased or deemed purchased and remarketed in the new Interest Rate Determination Method on the Conversion Date; and 21.05(b)(ii)(E) upon Conversion of any Series of 2009 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 2009 Liquidity Provider a request for termination of the 2009 Liquidity Facility with respect to such 2009 Bonds to be effective upon such Conversion. 21.05(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) whether any 2009 Credit Enhancement or 2009 Liquidity Facility then in effect will remain in effect after the proposed Conversion; (E) if new 2009 Credit Enhancement or an Alternate Liquidity Facility will be provided to be effective upon such Conversion, the form of such 2009 Credit Enhancement or 2009 Liquidity Facility and the identity of the 2009 Credit Provider or 2009 Liquidity Provider; and (F) if the Conversion is to a Long -Term Rate Period or Fixed Rate Period, the redemption dates and redemption prices applicable to such Long -Term Rate Period or Fixed Rate Period. 21.05(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 fifteen (15) days prior to the proposed Conversion Date, the Trustee shall give notice by first-class mail to the Holders of the affected 2009 Bonds, which notice shall state in substance: 21.05(b)(iv)(A) that the Interest Rate Determination Method for the applicable 2009 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 Second Supplemental Indenture are satisfied on or before such date; OHS WesC260692447.6 19 102 21.05(b)(iv)(B) the applicable Conversion Date; 21.05(b)(iv)(C) that the Commission 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 2009 Bonds; 21.05(b)(iv)(D) that the Interest Rate Determination Method for such 2009 Bonds shall not be converted unless the Favorable Opinion of Bond Counsel referred to above is redelivered to the Trustee on (and as of) the Conversion Date and all such 2009 Bonds are successfully purchased and remarketed in the new Interest Rate Determination Method on the Conversion Date; 21.05(b)(iv)(E) the CUSIP numbers or other identification information of such 2009 Bonds; 21.05(b)(iv)(F) that all such 2009 Bonds are subject to mandatory tender for purchase on the Conversion Date (whether or not the proposed Conversion becomes effective on such date, unless converting from a Long -Term Rate Period for which there is no Liquidity Facility and the proposed Conversion does not become effective, in which case the mandatory tender will be cancelled) at the applicable Purchase Price, which Purchase Price shall be specified in the notice; and 21.05(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 Price thereof, all 2009 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. 21.05(b)(v) Failure of Conditions to be Met. If the Commission fails to deliver the Favorable Opinion of Bond Counsel required by Section 21.05(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 2009 Bonds of a Series at the new Interest Rate Determination Method, the Interest Rate Determination Method shall not be converted, but such 2009 Bonds shall be deemed to have been tendered for purchase on the Conversion Date specified in the Conversion Notice (except if converting from a Long - Term Rate Period for which there is no Liquidity Facility) and shall be purchased on the Conversion Date specified in the Conversion Notice and, except as otherwise provided in Section 21.05(a)(iv)(F), such 2009 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 21.05, the rate of interest on such 2009 Bonds shall be determined on the proposed Conversion Date and, if sufficient funds are not available for the purchase of such 2009 Bonds, the provisions of Section 22.11(d) shall apply. In such event, the Commission and the Holders OHS West:260692447.6 20 • 103 • of such 2009 Bonds shall be restored (except as aforesaid with respect to the purchase of 2009 Bonds) to their former positions and rights hereunder with respect to such 2009 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 2009 Bonds had taken place. The Trustee shall immediately notify by Electronic Means the Notice Parties of each such failed Conversion. 21.05(b)(vi) Notice Failure No Bar. Failure of a Holder of a 2009 Bond to receive the notice described in Section 21.05(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 2009 Bonds or extend the period for tendering any of the 2009 Bonds for purchase, and the Trustee shall not be liable to any Holder of a 2009 Bond by reason of the failure of such Holder to receive such notice or any defect therein. 21.05(b)(vii) No Conversion During Continuance of Event of Default. No Conversion shall occur under this Section 21.05(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. 21.05(b)(viii) Notice to Remarketing Agent. The Commission may not elect a change in the Interest Rate Determination Method for any Series of 2009 Bonds without written notice to the Remarketing Agent for such 2009 Bonds. 21.05(b)(ix) Rescission of Election. Notwithstanding anything herein to the contrary, the Commission may rescind any Conversion Notice given pursuant to this Section 21.05(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 2009 Bonds pursuant to Section 21.05(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 2009 Bonds pursuant to Section 21.05(b)(iv), then such 2009 Bonds shall continue to be subject to mandatory tender for purchase on the Conversion Date specified in the Conversion Notice (unless, prior to the proposed Conversion Date, such 2009 Bonds were in a Long -Term Rate Period for which there was no Liquidity Facility), and the Rate Period for such 2009 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. 21.05(c) Conversion of 2009 Liquidity Facility Bonds. Notwithstanding anything to the contrary contained in the Indenture, if all of the Outstanding 2009 Bonds of any Series are 2009 Liquidity Facility Bonds, such 2009 Bonds may be converted to a Fixed Rate on such Conversion Date as shall be acceptable to the applicable 2009 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 OHS Wes1:260692447.6 21 104 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 2009 Bonds of the affected Series. ARTICLE XXII • REDEMPTION AND PURCHASE OF 2009 BONDS Section 22.01. Optional Redemption of 2009 Bonds. (a) Optional Redemption of 2009 Bonds. (1) Commercial Paper Rate Period. 2009 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 day following the end of any Commercial Paper Rate Period, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. (2) Daily Rate Period and Weekly Rate Period. 2009 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 -Term Rate Period. 2009 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 have been specified in the Conversion Notice with respect to the Long -Term Rate Period, delivered with a Favorable 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 21.05(a)(v)(B), any Series of 2009 Bonds bearing interest at a Fixed Rate is 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 or 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), 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 2009 Bonds is greater than eight years, then such 2009 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 2009 Bonds to a Fixed Rate. On such first June 1 or December 1, such 2009 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. OHS West.260692447.6 22 • • 105 • • • (b) If, on the Fixed Rate Conversion Date, the remaining term of such 2009 Bonds is less than eight years, then such 2009 Bonds will not be subject to optional redemption following Conversion. (b) Selection of Bonds for Optional Redemption. (1) 2009 Bonds. The Commission shall designate which maturities of any Series of 2009 Bonds are to be called for optional redemption pursuant to Section 22.01(a), provided that 2009 Liquidity Facility Bonds of such Series shall be redeemed prior to any other 2009 Bonds of such Series. If less than all 2009 Bonds of any Series maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2009 Bonds of such maturity date 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 2009 Bonds so selected for redemption. For purposes of such selection, 2009 Bonds of each Series 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 22.02(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 2009 Bonds and notice thereof may be conditional and 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 2009 Bonds called for redemption. (d) Notice of Optional Redemption; Rescission. Any notice of optional redemption of the 2009 Bonds shall be delivered in accordance with Section 4.02 and may be rescinded as provided in Section 4.02. Section 22.02. Mandatory Redemption of 2009 Bonds From Mandatory Sinking Account Payments. (a) Mandatory Redemption of 2009 Bonds. Except as otherwise provided in Section 21.05(a)(v)(B), the 2009 Bonds of each Series are Term Bonds and are subject to mandatory redemption from Mandatory Sinking Account Payments for such 2009 Bonds, on each date a Mandatory Sinking Account Payment for such 2009 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. OHS West:260692447.6 23 106 Mandatory Sinking Account Payments for 2009 Series A Bonds that are Term Bonds shall be due in such amounts and on such dates as follows: 2009 Series A Bonds Mandatory Redemption Mandatory Sinking Sinking Redemption Date Account Date Account (June I) Payment (June 1) Payment t Final Maturity Mandatory Sinking Account Payments for 2009 Series B Bonds that are Term Bonds shall be due in such amounts and on such dates as follows: Redemption Date (June I) Final Maturity OHS West:260692447.6 2009 Series B Bonds Mandatory Sinking Account Payment 24 Redemption Date (June 1) Mandatory Sinking Account Payment • • 107 • Mandatory Sinking Account Payments for 2009 Series C Bonds that are Term Bonds shall be due in such amounts and on such dates as follows: Redemption Date (June 1) t Final Maturity 2009 Series C Bonds Mandatory Sinking Account Payment Redemption Date (June 1) Mandatory Sinking Account Payment (b) Selection of Bonds for Mandatory Sinking Account Redemption. If less than all 2009 Bonds of any Series maturing by their terms on any one date are to be redeemed at any one time with Mandatory Sinking Account Payments, the Trustee shall select the 2009 Bonds of such maturity date to be redeemed by lot in any manner that it deems appropriate, provided that 2009 Liquidity Facility Bonds of such Series shall be redeemed prior to any other 2009 Bonds of such Series, and the Trustee shall promptly notify the Commission in writing of the numbers of the 2009 Bonds so selected for redemption. For purposes of such selection, 2009 Bonds of each Series shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. Section 22.03. Purchase In Lieu of Redemption. The Commission reserves the right at all times to purchase any of its 2009 Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2009 Bonds purchased on the open market, and such 2009 Bonds shall be cancelled by the Trustee. If any 2009 Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within such Series of the 2009 Bonds so purchased that are to be reduced as a result of such cancellation. Section 22.04. Holder's Option to Tender 2009 Bonds for Purchase. (a) During any Daily Rate Period, any 2009 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 2009 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 2009 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2009 OHS Wesc260692447.6 25 108 Bond to the Trustee on the Purchase Date in accordance with Section 22.06. The Trustee shall keep a written record of the notice described in clause (A) of this subsection (a). (b) Except as otherwise provided in Section 21.05(a)(iv)(F), during any Weekly Rate Period, any 2009 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 22.11 in immediately available funds, upon (A) delivery by the Holder or Beneficial Owner of such 2009 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 2009 Bond to be tendered for purchase and the Purchase Date, and (B) delivery of such 2009 Bond to the Trustee on the Purchase Date in accordance with Section 22.06. The Trustee shall keep a written record of the notice described in clause (A) of this subsection (b). (c) If any 2009 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 2009 Bond to which it relates, including any 2009 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 2009 Bonds specified therein shall not have any right to optionally tender for purchase such 2009 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 2009 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 2009 Bonds. Section 22.05. Mandatory Tender of 2009 Bonds for Purchase. (a) The 2009 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: (1) with respect to any Series of 2009 Bonds, on the Conversion Date for such 2009 Bonds to a new Interest Rate Determination Method specified in a Conversion Notice (whether or not the proposed Conversion becomes effective on such date, unless converting from a Long -Term Rate Period for which there is no Liquidity Facility and the proposed Conversion does not occur, in which case the mandatory tender will be cancelled); (2) with respect to 2009 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 OHS West:260692447.6 26 • 109 • Expiration of a 2009 Liquidity Facility or (ii) the Termination of a 2009 Liquidity Facility, at the election of the Commission as permitted by such 2009 Liquidity Facility; and (B) on the date of the provision of an Altemate Liquidity Facility for such 2009 Bonds pursuant to Section 22.14 and the resultant Termination of the existing 2009 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 2009 Bonds on the date of the provision of the Alternate Liquidity Facility pursuant to Section 22.14 and the resultant Termination of the existing 2009 Liquidity Facility; (3) with respect to each 2009 Bond bearing interest at a Commercial Paper Rate, on each Interest Payment Date immediately following each Commercial Paper Rate Period for such 2009 Bond; (4) with respect to each 2009 Bond bearing interest at a Long -Term Rate, on the Interest Payment Date immediately following each Long -Term Rate Period for such 2009 Bond; and (5) with respect to 2009 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 2009 Liquidity Provider for such 2009 Bonds that an event of default or an event of termination (other than an immediate termination or suspension) has occurred under the related 2009 Liquidity Facility with the effect that the obligations of such 2009 Liquidity Provider to purchase such 2009 Bonds or otherwise provide for the Purchase Price of such 2009 Bonds under such 2009 Liquidity Facility shall terminate on the date specified in such notice, in which event such 2009 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 2009 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 21.05(b)(iv). (c) The Trustee shall give notice by first class mail to the Holders of affected 2009 Bonds of each Termination of a 2009 Liquidity Facility and each Expiration of a 2009 Liquidity Facility making 2009 Bonds subject to mandatory tender pursuant to Section 22.05(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 2009 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. (d) No notice need be given to the Holders of any 2009 Bond bearing interest at a Commercial Paper Rate of the mandatory tender for purchase of such 2009 Bond on an Interest Payment Date for such 2009 Bond. OHS West260692447,6 27 110 (e) Upon the expiration of the then current Long -Term Rate Period for a Series of 2009 Bonds, the Trustee shall give notice by first class mail to the Holder of such 2009 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 2009 Bonds are subject to mandatory tender for purchase pursuant to Section 22.05(a)(4), which notice shall state that such 2009 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 2009 Liquidity Provider pursuant to Section 22.05(a)(5), to the Holders of the affected 2009 Bonds at their addresses shown on the bond registration books maintained by the Trustee which notice shall: (1) state such 2009 Bonds are subject to mandatory tender for purchase pursuant to Section 22.05(a)(5) at the applicable Purchase Price (which shall be specified in such notice); and (2) state the Purchase Date. Section 22.06. Delivery of Tendered 2009 Bonds. With respect to any 2009 Bond that is registered in book -entry form with a Securities Depository, delivery of such 2009 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to Section 22.04 or 22.05 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2009 Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such 2009 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 2009 Bond that is not registered in book -entry form with a Securities Depository, delivery of such 2009 Bond to the Trustee in connection with any optional or mandatory tender for purchase pursuant to Section 22.04 or 22.05 shall be effected by physical delivery of such 2009 Bond 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 22.07. 2009 Bonds Deemed Purchased. (a) If moneys sufficient to pay the Purchase Price of 2009 Bonds to be purchased pursuant to Section 22.04 or 22.05 shall be held by the Trustee on the applicable Purchase Date, such 2009 Bonds shall be deemed to have been purchased for all purposes of the Indenture, irrespective of whether or not such 2009 Bonds shall have been delivered to the Trustee or transferred on the books of a Securities Depository for such 2009 Bonds, and neither the former Holder or Beneficial Owner of such 2009 Bonds nor any other person shall have any claim thereon, under the Indenture or otherwise, for any amount other than the Purchase Price thereof. (b) In the event of non -delivery of any 2009 Bond to be purchased pursuant to Section 22.04 or 22.05, the Trustee shall segregate and hold uninvested the moneys for the Purchase Price of such 2009 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2009 Bond, who shall, except as provided in the following sentence, thereafter be restricted exclusively to such moneys for OHS Wesc260692447.6 28 • 111 • the satisfaction of any claim for the Purchase Price of such 2009 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Purchase Price of any 2009 Bond and remaining unclaimed for two (2) years after the date of purchase shall, subject to satisfaction of all amounts then due and payable to the 2009 Liquidity Provider (other than 2009 Liquidity Facility Bonds), be paid automatically to the Commission. After the payment of such unclaimed moneys to the Commission, the former Holder or Beneficial Owner of such 2009 Bond shall look only to the Commission for the payment thereof. Section 22.08. Deposit of 2009 Bonds. The Trustee agrees to accept and hold all 2009 Bonds delivered to it pursuant to Section 22.04 or 22.05 in trust for the benefit of the respective Holders or Beneficial Owners which shall have so delivered such 2009 Bonds until the Purchase Price of such 2009 Bonds shall have been delivered to or for the account of or to the order of such Holders or Beneficial Owners pursuant to Section 22.11. Any 2009 Bonds registered for transfer to new purchasers and delivered to the Trustee as described in Section 22.12 shall be held in trust by the Trustee for the benefit of such new purchasers until delivery to such new purchasers. Section 22.09. Remarketing of Tendered 2009 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 2009 Bond to be tendered pursuant to Section 22.04(a) (the "Daily Put Bonds"), and on each day any 2009 Bonds bearing interest at a Commercial Paper Rate are subject to mandatory tender pursuant to Section 22.05(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 2009 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 2009 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 22.13. (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 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 22.10. OHS West260692447.6 29 112 (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 2009 Liquidity Facility then in effect with respect to the tendered 2009 Bonds in sufficient time (as set forth by the terms of the 2009 Liquidity Facility) so as to provide by 2:30 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 2009 Bonds to be tendered pursuant to Section 22.04(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 2009 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 2009 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 22.13. (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 22.10. (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 2009 Liquidity Facility then in effect with respect to the Weekly Put Bonds in sufficient time (as set forth by the terms of the 2009 Liquidity Facility) so as to provide by 2:30 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 Weekly Put Bonds. The Trustee shall immediately after such demand OHS West:260692447.6 30 • 113 • 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 22.05 with the exception of subsection 22.05(a)(3), the Trustee shall give notice by Electronic Means to the Remarketing Agent and the Commission specifying the principal amount of all Outstanding 2009 Bonds that are subject to mandatory tender (the "Mandatory Tender Bonds") on such Purchase Date pursuant to any subsection of Section 22.05 except subsection 22.05(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 2009 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 22.13. (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 time) on the Purchase Date pursuant to Section 22.10. (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 2009 Liquidity Facility then in effect with respect to the Mandatory Tender Bonds in sufficient time (as set forth by the terms of the 2009 Liquidity Facility) so as to provide by 2:30 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 does not receive sufficient funds from, or has received notice from a 2009 Liquidity Provider that it will not provide sufficient funds from, draws on the applicable 2009 Liquidity Facility to pay the Purchase Price of all such 2009 Bonds that have not been remarketed by 2:00 p.m. OHS West:260692447.6 31 114 (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 2009 Bonds for which moneys will not be available in the 2009 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 2009 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 2009 Liquidity Facility is in effect with respect to a Series of 2009 Bonds, the Remarketing Agent with respect to such Series of 2009 Bonds shall not remarket any tendered 2009 Bonds to the Commission or any affiliate of the Commission. Each Remarketing Agent shall remarket the 2009 Bonds, as provided herein, at not less than the Purchase Price thereof, except for 2009 Liquidity Facility Bonds, which shall be remarketed pursuant to Section 22.13. Section 22.10. Deposits into Accounts in the 2009 Bonds Purchase Fund. (a) The terms of any sale by a Remarketing Agent of any 2009 Bond tendered or deemed tendered for purchase pursuant to Section 22.04 or 22.05 shall provide for the payment of the Purchase Price for such tendered or deemed tendered 2009 Bond by such Remarketing Agent to the Trustee for deposit in the 2009 Remarketing Account of the 2009 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 2009 Bonds all amounts representing proceeds of the remarketing of such 2009 Bonds, based upon the notice given by such Remarketing Agent pursuant to Section 22.09(a)(iii), 22.09(b)(iii), 22.09(c)(iii), as the case may be. All such amounts shall be deposited in the 2009 Remarketing Account. (b) The Trustee shall deposit in the 2009 Liquidity Facility Purchase Account all amounts received under a 2009 Liquidity Facility pursuant to Section 22.09(a)(iv), 22.09(b)(iv) or 22.09(c)(iv), as the case may be, and related to the 2009 Bonds. (c) Upon receipt of any notice from the Trustee pursuant to Section 22.09(d) that insufficient funds will be on deposit in the 2009 Bonds Purchase Fund to pay the full Purchase Price of all 2009 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 2009 Commission Account. (d) All funds received from the Commission pursuant to Section 22.09(d) shall be deposited in the 2009 Commission Account. (e) The Trustee shall hold amounts in the 2009 Bonds Purchase Fund uninvested and separate from all other funds and accounts. OHS West:260692447.6 32 • 115 Section 22.11. Disbursements from the 2009 Bonds Purchase Fund. (a) Application of Moneys. Moneys in the 2009 Bonds Purchase Fund (other than the proceeds of any remarketing of 2009 Liquidity Facility Bonds, which shall be paid to the 2009 Liquidity Provider on the remarketing date) shall be applied at or before 3:00 p.m. (New York City time) to the purchase of 2009 Bonds as provided herein by the Trustee, on each Purchase Date, as follows: First Moneys in the 2009 Remarketing Account representing proceeds of the remarketing of 2009 Bonds of a Series shall be used by the Trustee on any Purchase Date to purchase 2009 Bonds of such Series tendered or deemed tendered for purchase pursuant to Section 22.04 or 22.05 at the Purchase Price thereof. Second — In the event such moneys in the 2009 Remarketing Account on the Purchase Date are insufficient to purchase all 2009 Bonds of such Series, moneys in the 2009 Liquidity Facility Purchase Account on such Purchase Date shall be used by the Trustee at that time to purchase such remaining 2009 Bonds of such Series at the Purchase Price thereof. Third — If the amount of money in the 2009 Remarketing Account and 2009 Liquidity Facility Purchase Account on the Purchase Date is insufficient to pay in full the Purchase Price of all 2009 Bonds of such Series tendered or deemed tendered for purchase pursuant to Section 22.04 or 22.05 on such Purchase Date, moneys with respect to such Series in the 2009 Commission Account on such Purchase Date, if any, shall be used by the Trustee at that time to purchase such remaining 2009 Bonds of such Series at the Purchase Price thereof. Notwithstanding anything to the contrary in this Section, if the 2009 Bonds tendered or deemed tendered for purchase pursuant to Section 22.04 or 22.05 are registered in book -entry form, payment of the Purchase Price of such 2009 Bonds shall be made in accordance with the rules and procedures of the Securities Depository. (b) Nondeliveries. The Trustee shall, as to any 2009 Bonds that are not registered in book -entry form and that have not been delivered to it as required by Section 22.06, (i) notify the Remarketing Agent in writing of such nondelivery and (ii) place a stop transfer against an appropriate amount of 2009 Bonds registered in the name of the Holder of such 2009 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 2009 Bond registered in the name of such Holder until stop transfers have been placed against an appropriate amount of 2009 Bonds until the appropriate 2009 Bonds are delivered to the Trustee as required by Section 22.06. Upon such delivery, the Trustee shall make any necessary adjustments to such bond registration books. (c) Prior Commission Purchase. Notwithstanding anything contained herein to the contrary, while any 2009 Liquidity Facility is in effect with respect to a Series of 2009 Bonds, the Trustee shall, at the request of the Commission, use funds with respect to such Series on deposit in the 2009 Commission Account prior to funds in the 2009 Liquidity Facility Purchase Account to pay any portion of the Purchase Price of the tendered 2009 Bonds of such Series. In addition, such 2009 Bonds purchased with funds from the 2009 OHS West:260692447.6 33 116 Liquidity Facility Purchase Account may be purchased from the 2009 Liquidity Provider by the Commission. (d) Insufficient Funds. If sufficient funds are not available for the purchase of all 2009 Bonds of a Series tendered or deemed tendered and required to be purchased on any Purchase Date, all 2009 Bonds of such Series shall bear interest at the lesser of the SIFMA Swap Index plus three percent (3%) and the Maximum Interest Rate from the date of such failed purchase until all such 2009 Bonds are purchased as required in accordance with this Indenture, and all tendered 2009 Bonds of such Series 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 2009 Bonds. Section 22.12. Delivery of 2009 Bonds. (a) If the 2009 Bonds are not registered in book -entry form, a principal amount of 2009 Bonds equal to the amount of 2009 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 2009 Bonds shall be held available at the office of the Trustee and shall be picked up at a location designated by the Trustee to 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 2009 Remarketing Account of the 2009 Bonds Purchase Fund equal to the Purchase Price of the 2009 Bonds that have been remarketed. If the 2009 Bonds are registered in book -entry form, transfer of ownership of the remarketed 2009 Bonds shall be effected in accordance with the procedures of the Securities Depository against delivery of funds for deposit into the 2009 Remarketing Account of the 2009 Bonds Purchase Fund equal to the Purchase Price of the 2009 Bonds that have been remarketed. (b) Any 2009 Bonds purchased with funds in any 2009 Liquidity Facility Purchase Account of the 2009 Bonds Purchase Fund shall be delivered and held in accordance with Section 22.13. Any 2009 Bonds purchased with funds in any 2009 Commission Account of the 2009 Bonds Purchase Fund shall be delivered and held in accordance with the instructions of the Commission furnished to the Trustee. Such 2009 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 2009 Liquidity Provider or the Commission, as the case may be. Section 22.13. 2009 Liquidity Facilities; Liquidity Facility Bonds. (a) Unless all the Outstanding 2009 Bonds of any Series are 2009 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 2009 Liquidity Facility for such Series. The Commission shall not reduce the amount of a 2009 Liquidity Facility or permit a substitution of a 2009 Liquidity Provider thereunder without obtaining a Rating Confirmation with respect to such action unless such action is considered a substitution of a 2009 Liquidity OHS West260692447.6 34 • 117 • Facility subjecting the 2009 Bonds affected thereby to mandatory purchase pursuant to Section 22.05(a)(2). The Commission shall have the right at any time to provide, pursuant to Section 22.14, an Alternate Liquidity Facility for any 2009 Liquidity Facility then in effect. If there shall have been delivered to the Trustee (i) an Alternate Liquidity Facility meeting the requirements of Section 22.14 and (ii) the opinions and documents required by Section 22.14, then the Trustee shall accept such Alternate Liquidity Facility and, if so directed by the Commission, on or after the effective date of such Alternate Liquidity Facility promptly surrender the 2009 Liquidity Facility being so substituted in accordance with the respective terms thereof for cancellation; provided the Trustee shall not surrender any 2009 Liquidity Facility until all draws or requests to purchase 2009 Bonds made under such 2009 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 any Series of 2009 Bonds, such 2009 Bonds shall be subject to the mandatory tender provisions of Section 22.05(a)(2). Notwithstanding the foregoing, if at any time there shall cease to be any Outstanding 2009 Bonds of a Series or if all the Outstanding 2009 Bonds of a Series have been converted to a Fixed Rate Period or a Long -Term Rate Period, or a 2009 Liquidity Facility shall be terminated pursuant to its terms, the Trustee shall promptly surrender such 2009 Liquidity Facility in accordance with its terms for cancellation. The Trustee shall comply with the procedures set forth in each 2009 Liquidity Facility relating to the termination thereof. (b) In the event that a 2009 Liquidity Facility is in effect with respect to a Series of 2009 Bonds, the Trustee shall make a demand for payment under such 2009 Liquidity Facility, subject to and in accordance with its terms, in order to receive payment thereunder on each Purchase Date for such Series of 2009 Bonds as provided in Section 22.09(a)(iv), Section 22.09(b)(iv) or Section 22.09(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 2009 Liquidity Facility Purchase Account within the 2009 Bonds Purchase Fund and used in the order of priority established by Section 22.11. At the time of making any demand under a 2009 Liquidity Facility pursuant to Section 22.13(b), the Trustee shall direct the 2009 Liquidity Provider to pay the proceeds of such demand directly to the Trustee for deposit in the 2009 Liquidity Facility Purchase Account. The Trustee shall comply with all provisions of each 2009 Liquidity Facility in order to realize upon any demand for payment thereunder, and will not demand payment under any 2009 Liquidity Facility of any amounts for payment of: (i) 2009 Liquidity Facility Bonds; or (ii) 2009 Bonds held by the Commission or any affiliate of the Commission or any nominee of the Commission unless such 2009 Liquidity Facility specifically permits such demand. (d) Any 2009 Bonds purchased with payments made under a 2009 Liquidity Facility pursuant to Section 22.13(b) shall constitute 2009 Liquidity Facility Bonds and shall be registered in the name of, or as otherwise directed by, the applicable Liquidity Provider. The Trustee agrees, unless otherwise directed by the 2009 Liquidity Provider, to accept and hold any 2009 Liquidity Facility Bonds in trust for the benefit of the 2009 Liquidity Provider OHS West:260692447.6 35 118 until such time as the principal of and interest on such 2009 Liquidity Facility Bonds shall have been paid as described in Section 22.13(e). At the option of the Commission, it may provide funds to the 2009 Liquidity Provider to purchase 2009 Liquidity Facility Bonds, in which event such 2009 Bonds shall be held by the Trustee in accordance with instructions by the Commission. (e) Unless otherwise provided in a 2009 Liquidity Facility, 2009 Liquidity Facility Bonds of a Series shall be remarketed by the applicable Remarketing Agent prior to any other 2009 Bonds of such Series tendered for purchase pursuant to Section 22.04 or 22.05 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 2009 Liquidity Provider that a 2009 Liquidity Facility has been fully reinstated with respect to principal and interest and (ii) release by the 2009 Liquidity Provider of any 2009 Liquidity Facility Bonds that the Remarketing Agent has remarketed, such 2009 Bonds shall be made available to the purchasers thereof and shall no longer constitute 2009 Liquidity Facility Bonds for purposes of this Indenture. The proceeds of any remarketing of 2009 Liquidity Facility Bonds shall be paid to the 2009 Liquidity Provider by the Trustee on such remarketing date in immediately available funds with interest on the sale price being calculated as if such 2009 Bond were not a 2009 Liquidity Facility Bond; provided, however, if all such 2009 Bonds are 2009 Liquidity Facility Bonds, at the principal amount thereof plus accrued interest, and the remarketing date will be considered an Interest Payment Date. (f) The Trustee agrees that it will, promptly upon receipt, send to the 2009 Liquidity Provider (by Electronic Means) a copy of every notice received by it hereunder relating to any 2009 Liquidity Facility Bonds. (g) Notwithstanding anything to the contrary herein or in the 2009 Bonds, all obligations of the Commission under or in connection with any 2009 Liquidity Facility (including, without limitation, the payment of any reimbursement obligations to any 2009 Liquidity Provider and the payment of any 2009 Liquidity Facility Bonds) shall be governed by the terms of the applicable 2009 Liquidity Facility. (h) The Trustee shall provide to the Remarketing Agent and to each Rating Agency then rating any Series of 2009 Bonds written notice of the provision of a 2009 Liquidity Facility or the extension of any 2009 Liquidity Facility in effect with respect to such Series of 2009 Bonds. (i) Whenever requested in writing by the Commission, the Trustee shall submit to the 2009 Liquidity Provider a reduction certificate or other appropriate documentation necessary under the applicable 2009 Liquidity Facility to reduce the principal amount of the related Series of 2009 Bonds and related interest to reflect any purchase or redemption of such 2009 Bonds by the Commission and the cancellation of such 2009 Bonds. Section 2214. Alternate Liquidity Facilities. (a) So long as any 2009 Bonds of a Series bear interest at a Variable Rate (other than 2009 Bonds in a Long -Term Rate Period for which there is no Liquidity Facility or a OHS West.260692447.6 36 • • 119 • Fixed Rate Period), on or prior to the Expiration or termination of any existing 2009 Liquidity Facility with respect to such Series, including any renewals or extensions thereof (other than an Expiration of such 2009 Liquidity Facility at the final maturity of the 2009 Bonds to which such 2009 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 2009 Liquidity Facility for such Series of 2009 Bonds or an Alternate Liquidity Facility for such Series of 2009 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 a Series of 2009 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 2009 Liquidity Provider under an Alternate Liquidity Facility to purchase 2009 Bonds or otherwise provide for the Purchase Price of 2009 Bonds tendered or deemed tendered pursuant to Section 22.04 or Section 22.05 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 2009 Liquidity Provider to purchase 2009 Bonds or otherwise provide for the Purchase Price of such 2009 Bonds may be immediately suspended or terminated (A) without such notice upon the occurrence of such events as may be provided in a 2009 Liquidity Facility and which are disclosed to the Holders of such 2009 Bonds in connection with the provision of such 2009 Liquidity Facility or, (B) if applicable, upon the remarketing of such 2009 Bonds upon the mandatory tender thereof as a result of provision of such Altemate Liquidity Facility pursuant to Section 22.05(a)(2); (ii) such Alternate Liquidity Facility must take effect on or before the Purchase Date for the 2009 Bonds established pursuant to Section 22.05(a)(2); and (iii) such Altemate Liquidity Facility must be in an amount sufficient to pay the maximum Purchase Price of the affected 2009 Bonds which will be applicable during the Rate Period commencing on such substitution. (c) Prior to the date of the delivery of such Altemate 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 affected 2009 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 terms and (iii) if the affected 2009 Bonds are not subject to mandatory tender for purchase, the Rating Confirmation required by Section 22.05(a)(2). OnS Wesc260692447.6 37 120 (d) The Trustee shall give notice by first class mail to the Holders of the affected 2009 Bonds of the proposed substitution of a 2009 Liquidity Facility not later than the fifteenth (15th) day prior to the substitution date. Section 22.15. Remarketing Agents for the 2009 Bonds. The Commission hereby appoints as the initial Remarketing Agent for the 2009 Series A Bonds. The Commission hereby appoints as the initial Remarketing Agent for the 2009 Series B Bonds. The Commission hereby appoints as the initial Remarketing Agent for the 2009 Series C Bonds. The Commission shall appoint and employ one or more Remarketing Agents for 2009 Bonds of a Series in a Daily Rate Period, a Weekly Rate Period, a Commercial Paper Rate Period and a Long -Term Rate Period. All references in this Second 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 2009 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 five hundred thousand dollars ($500,000) 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 upon reasonable notice. ARTICLE XXIII PURCHASE OF 2009 BONDS AT DIRECTION OF COMMISSION Section 23.01. Mandatory Tender for Purchase of 2009 Bonds at Direction of Commission. (a) In addition to the provisions relating to the mandatory tender for purchase of 2009 Bonds pursuant to Section 22.05, the 2009 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 23.01 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 2009 Bonds on any Optional Purchase Date, the Commission shall provide the Trustee with written notice of such determination at least fifteen (15) days prior to the Optional Purchase Date, which notice shall specify the Series of 2009 Bonds and the principal amount of such 2009 Bonds of each maturity 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 2009 Bonds pursuant to subsection (a) of this Section, the Trustee OHS West:260692447.6 38 • 121 • • shall give notice, in the name of the Commission, of the mandatory tender for purchase of such 2009 Bonds, which notice shall be mailed, by first class mail, postage prepaid, not more than ninety (90) nor less than ten (10) days before the Optional Purchase Date to the Holders of any 2009 Bonds or portions of 2009 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 Series of 2009 Bonds and the maturities of such 2009 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 2009 Bonds of such Series and of like maturity are to be purchased, the letters and numbers or other distinguishing marks of such 2009 Bonds so to be purchased, and, in the case of 2009 Bonds to be purchased in part 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 2009 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 2009 Bonds to be purchased in part only, and that from and after such Optional Purchase Date interest on such 2009 Bond for the benefit of the current Holder of such 2009 Bond or the portion of such 2009 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 2009 Bonds and failure of any Holder of a 2009 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 2009 Bonds pursuant to this Section. (c) If at the time the Trustee sends any notice of mandatory tender for purchase of the 2009 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 2009 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 2009 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 2009 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 2009 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 2009 Bonds pursuant to the notice of mandatory tender for purchase. (d) If less than all of the Outstanding 2009 Bonds of any Series are to be called for mandatory tender for purchase pursuant to this Section, the principal amount and maturity of such 2009 Bonds to be purchased shall be selected by the Commission in its sole discretion, provided that 2009 Liquidity Facility Bonds of such Series shall be purchased prior to any other 2009 Bonds of such Series. If less than all of the 2009 Bonds of any Series and of like maturity shall be called for mandatory tender for purchase pursuant this Section, OHS Wesc260692447.6 39 122 except as otherwise provided by the Securities Depository, the particular 2009 Bonds or portions of 2009 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 2009 Bonds for purchase, the Trustee shall treat each 2009 Bond of the same Series as representing that number of 2009 Bonds of the minimum Authorized Denomination for the 2009 Bonds which is obtained by dividing the principal amount of such 2009 Bond by the minimum Authorized Denominationfor the 2009 Bonds. Section 23.02. Delivery of Tendered 2009 Bonds. With respect to any 2009 Bond that is registered in book -entry form, delivery of such 2009 Bond to the Trustee in connection with any mandatory tender for purchase pursuant to Section 23.01 shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for such 2009 Bond or any Participant thereof to reflect the transfer of the beneficial ownership interest in such 2009 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 2009 Bond that is not registered in book -entry form, delivery of such 2009 Bond to the Trustee in connection with any mandatory tender for purchase pursuant to Section 23.01 shall be effected by physical delivery of such 2009 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 23.03. 2009 Bonds Deemed Purchased. (a) If moneys sufficient to pay the Optional Purchase Price of 2009 Bonds to be purchased pursuant to Section 23.01 on an Optional Purchase Date shall be held by the Trustee on such Optional Purchase Date, such 2009 Bonds shall be deemed to have been purchased for all purposes of this Indenture, irrespective of whether or not such 2009 Bonds shall have been delivered to the Trustee or transferred on the books of the Securities Depository for the 2009 Bonds, and neither the former Holder or former Beneficial Owner of such 2009 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 2009 Bond to be purchased pursuant to Section 23.01, the Trustee shall segregate and hold uninvested the moneys for the Optional Purchase Price of such 2009 Bond in trust, without liability for interest thereon, for the benefit of the former Holders or Beneficial Owners of such 2009 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 2009 Bond. Any moneys that the Trustee shall segregate and hold in trust for the payment of the Optional Purchase Price of any 2009 Bond remaining unclaimed for one (1) year 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 2009 Bond shall look only to the Commission for the payment thereof. OHS West:260692447.6 40 • • 123 • Section 23.04. Deposit of 2009 Bonds. The Trustee agrees to accept and hold all 2009 Bonds delivered to it pursuant to Section 23.01 in trust for the benefit of the respective Holders or Beneficial Owners which shall have so delivered such 2009 Bonds until the Optional Purchase Price of such 2009 Bonds shall have been delivered to or for the account of or to the order of such Holders or Beneficial Owners pursuant to Section 23.05. Any 2009 Bonds purchased pursuant to Section 23.01 and registered for transfer to the Trustee shall be held in trust by the Trustee for the benefit of the Commission in accordance with the instructions of the Commission. Section 23.05. Payment of Optional Purchase Price of 2009 Bonds. (a) Moneys held by the Trustee for the payment of the Optional Purchase Price of 2009 Bonds subject to mandatory tender for purchase pursuant to Section 23.01 shall be applied at or before 3:00 p.m. (New York City time) to the purchase of such 2009 Bonds. Except as otherwise provided with respect to 2009 Bonds that are registered in book -entry from, payment of the Optional Purchase Price of 2009 Bonds tendered for purchase pursuant to Section 23.01 shall be made only upon the surrender of such 2009 Bonds to the Trustee. Notwithstanding anything to the contrary in this Section, if the 2009 Bonds to be tendered for purchase pursuant to Section 23.01 are registered in book -entry form, payment of the Optional Purchase Price for tendered 2009 Bonds shall be made in accordance with the rules and procedures of the Securities Depository. (b) The Trustee shall, as to any 2009 Bonds that are not registered in book -entry form and that have not been delivered to it as required by Section 23.02, place a stop transfer against an appropriate amount of 2009 Bonds registered in the name of the Holder of such 2009 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 2009 Bond registered in the name of such Holder until stop transfers have been placed against an appropriate amount of 2009 Bonds until the appropriate 2009 Bonds are delivered to the Trustee. Upon such delivery, the Trustee shall make any necessary adjustments to such bond registration books. Section 23.06. 2009 Bonds Owned by Commission. (a) Any 2009 Bonds purchased by the Commission pursuant to Section 23.01 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 2009 Bond purchased by the Commission pursuant to Section 23.01 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 OHS West:260692447.6 41 124 Outstanding 2009 Bonds, it will surrender or cause to be surrendered to the Trustee for cancellation any 2009 Bonds held by or on behalf of the Commission. ARTICLE XXIV ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 24.01. Funds and Accounts. The following funds and accounts are hereby established in connection with the 2009 Bonds: (a) To ensure the proper application of such portion of proceeds from the sale of the 2009 Bonds to be applied to pay the Costs of Issuance of the 2009 Bonds, there is hereby established the 2009 Costs of Issuance Fund, such fund to be held by the Trustee. (b) To provide for a reserve fund for the 2009 Bonds, there is hereby established and maintained with the Trustee a fund designated as the "2009 Bonds Reserve Fund." (c) To ensure proper application of funds to be applied to the purchase of 2009 Bonds tendered or deemed tendered for purchase pursuant to Section 22.04 or 22.05, there is hereby established the 2009 Bonds Purchase Fund, such fund to be held by the Trustee. There shall also be created and established three (3) separate accounts in the 2009 Bonds Purchase Fund designated the "2009 Remarketing Account," the "2009 Liquidity Facility Purchase Account' and the "2009 Commission Account." Section 24.02. 2009 Costs of Issuance Fund. The monies set aside and placed in the 2009 Costs of Issuance Fund shall be expended for the purpose of paying the Costs of Issuance of the 2009 Bonds. Before any payment from the 2009 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 2009 Costs of Issuance Fund and has not been previously paid from said fund. On February 1, 2010 any remaining amounts in the 2009 Costs of Issuance Fund shall be transferred to the Revenue Fund and the 2009 Costs of Issuance Fund shall be closed. Section 24.03. Funding and Application of the 2009 Bonds Reserve Fund; Bond Reserve Requirement for the 2009 Bonds. The Trustee shall hold the amount of S on deposit in the 2009 Bonds Reserve Fund, which amount is equal to the 2009 Bonds Reserve Requirement upon issuance of the 2009 Bonds. All amounts in the 2009 Bonds Reserve Fund (including all amounts which may be obtained from any Reserve Facility on deposit in the 2009 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 2009 Bonds; or, (ii) together with any other moneys available therefor, (x) for the payment of all of the 2009 Bonds then Outstanding, (y) for the defeasance or redemption of all or a portion of the 2009 OHS West:260692447.6 42 • 125 • Bonds then Outstanding, provided, however, that if funds on deposit in the 2009 Bonds Reserve Fund are applied to the defeasance or redemption of a portion of the 2009 Bonds, the amount on deposit in the 2009 Bonds Reserve Fund immediately subsequent to a partial defeasance or redemption shall equal the 2009 Bonds Reserve Requirement applicable to all 2009 Bonds Outstanding immediately subsequent to such partial defeasance or redemption, or (z) for the payment of the final principal and interest payment of the 2009 Bonds. Section 24.04. 2009 Bonds Purchase Fund. Moneys in the 2009 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 2009 Bonds pursuant to Section 22.10(a), other than the Commission, shall be (i) deposited in the 2009 Remarketing Account within the 2009 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 22.11. (b) Liquidity Facility Purchase Account. All moneys received by the Trustee as payments under any 2009 Liquidity Facility for the purchase of 2009 Bonds pursuant to Section 22.09(a)(iv), Section 22.09(b)(iv) or Section 22.09(c)(iv) shall be (i) deposited in the 2009 Liquidity Facility Purchase Account within the 2009 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 22.11. (c) Commission Account. All moneys received by the Trustee from the Commission for the purchase of 2009 Bonds pursuant to Section 22.10(c) shall be (i) deposited in the 2009 Commission Account within the 2009 Bonds Purchase Fund, (ii) held in trust in accordance with the provisions hereof and (iii) paid out in accordance with Section 22.11. The moneys in the 2009 Bonds Purchase Fund shall be used solely to pay the Purchase Price of 2009 Bonds as provided herein (or to reimburse a Liquidity Provider, if any, for payments made under the applicable 2009 Liquidity Facility for such purpose) and may not be used for any other purposes. All amounts held in the 2009 Bonds Purchase Fund, including the 2009 Remarketing Account, the 2009 Liquidity Facility Purchase Account and 2009 Commission Account therein, shall be held in trust by the Trustee for the benefit of the Holders or Beneficial Owners of 2009 Bonds to which such account relates tendered or deemed tendered for purchase pursuant to Section 22.04 and 22.05 (provided that any amounts held in the 2009 Remarketing Account that are derived from the remarketing of 2009 Liquidity Facility Bonds shall be held in trust for the benefit of the 2009 Liquidity Provider). Moneys in the 2009 Bonds Purchase Fund shall be held segregated from all other funds and accounts and uninvested pending application thereof as provided in this Section 24.04. ARTICLE XXV MISCELLANEOUS Section 25.01. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Second Supplemental Indenture, or the application thereof to any OHS West:260692447.6 43 126 person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Second Supplemental Indenture, and the application of any such covenant, agreement or provision, or portion thereof, to other Persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Second Supplemental Indenture and the 2009 Bonds issued pursuant hereto shall remain valid, and the Holders of the 2009 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 25.02. Parties Interested Herein. Nothing in this Second 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 Credit Provider, each 2009 Liquidity Provider and the Holders of the 2009 Bonds, any right, remedy or claim under or by reason of this Second Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this Second Supplemental Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the Commission, the Trustee, each Credit Provider, each 2009 Liquidity Provider and the Holders of the 2009 Bonds. Section 25.03. Headings Not Binding. The headings in this Second 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 Second Supplemental Indenture. Section 25.04. 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 confirmed. Section 25.05. Notices to Rating Agencies. The Trustee shall provide notice to the Rating Agencies of the following events with respect to the 2009 Bonds: (1) Change in Trustee or Remarketing Agent; (2) Amendments to the Indenture; (3) Provision, Expiration, Termination, substitution or extension of a 2009 Liquidity Facility or any 2009 Liquidity Provider thereunder; (4) Provision, Expiration, Termination, substitution or extension of a 2009 Credit Enhancement or any 2009 Credit Provider thereunder; (5) 2009 Bonds; Conversion of an Interest Rate Determination Method of any Series of (6) Redemption or defeasance of any 2009 Bonds; and OHS West:260692447.6 44 • • 127 • (7) Any mandatory tender of any 2009 Bonds. Section 25.06. Notices to 2009 Liquidity Provider. In the event that the Commission is required to provide written notice to a Credit Provider pursuant to Section 8.01(B) of the Indenture, the Commission shall provide a copy of such notice to the 2009 Liquidity Provider, if any. In the event that the Trustee is required to provide written notice or written acceptance, as applicable, to a Credit Provider pursuant to Sections 8.01(C) or 8.01(D) of the Indenture, the Trustee shall provide a copy of such notice or acceptance, as applicable, to the 2009 Liquidity Provider, if any. Section 25.07. No Compensation of Trustee From Proceeds of 2009 Liquidity Facility. The Trustee's compensation for services rendered by it in the exercise and performance of any of the powers and duties under the Indenture may not be paid using moneys drawn under (or otherwise obtained pursuant to the terms of) the 2009 Liquidity Facility or from any remarketing or other proceeds of 2009 Liquidity Facility Bonds. Section 25.08. Indenture to Remain in Effect. Save and except as amended and supplemented by this Second Supplemental Indenture, the Indenture shall remain in full force and effect. Section 25.09. Effective Date of Second Supplemental Indenture. This Second Supplemental Indenture shall take effect upon its execution and delivery. Section 25.10. Execution in Counterparts. This Second 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 Wesc260692447.6 45 128 IN WITNESS WHEREOF, the parties hereto have executed this Second 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 West:260692447.6 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 46 • 129 EXHIBIT A FORM OF 2009 BOND No. R— $ Riverside County Transportation Commission Sales Tax Revenue Bond (Limited Tax Bond) 2009 Series INTEREST RATE MATURITY ISSUE DATE Variable June 1, 20_ , 2009 CUSIP REGISTERED OWNER: Cede & Co. 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 Ratc 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 OHS West260692447.6 A-1 130 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 Second Supplemental Indenture, dated as of October 1, 2009 (the "Second Supplemental Indenture"), each between the Conunission 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 provisions, as in the Indenture provided. Capitalized terms 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 IS NOT 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 West:260692447.6 A-2 • 131 • • • 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 and any moneys made available under the Liquidity Facility, if any, relating to 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 Weekly Rate Period and during such initial Rate Period this Bond shall bear interest at Weekly 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 2009 Series _ Bond shall have the same Interest Rate Determination Method and shall bear interest at the same rate, except for 2009 Series Bonds during a Commercial Paper Rate Period and 2009 Series _ 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 2009 Series _ 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:260692447.6 A-3 132 During each Daily Rate Period, this Bond shall bear interest at the Daily Rate, determined by the Remarketing Agent on each Business Day. Except as otherwise provided in the Indenture, 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 Bonds on a Business Day selected by the Remarketing Agent not more than five (5) Business Days prior to the fist 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 -Term 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 date selected by the Commission, which date is a minimum of 180 days after commencement of such Long -Term Rate Period, but in no event later than the maturity date of this Bond. This Bond shall initially bear interest at a Weekly Rate and the initial Interest Payment Date shall be , 20 . 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 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 "Purchase Date" means any date on which this Bond is purchased pursuant to the provisions of the Indenture. OHS West:260692447.6 A-4 • 133 • "Purchase Price" means an amount equal to 100% of the principal amount of this Bond (or the portion hereof) tendered or deemed tendered to the Trustee for purchase pursuant to the Indenture, plus if such Purchase Date is not an Interest Payment Date, accrued interest to but not including the Purchase Date; provided, however, if the 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 on the applicable Record Date. This Bond shall be subject to mandatory tender for purchase at the applicable Purchase Price: (a) on the Conversion Date for the 2009 Series Bonds to a new Interest Rate Determination Method specified in a Conversion Notice; (b) if this Bond is bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, (1) on the fifth (5th) Business Day preceding (A) the scheduled Expiration of an applicable 2009 Liquidity Facility or (B) the Termination of such 2009 Liquidity Facility, at the election of the Commission as permitted by such 2009 Liquidity Facility; and (2) on the date of the provision of an applicable Alternate Liquidity Facility for this Bond and the resultant Termination of the existing 2009 Liquidity Facility; provided, however, that, notwithstanding any other provision of the Indenture to the contrary, no mandatory tender for purchase shall be required as described in this clause (b)(2) if a Rating Confirmation shall be delivered by each Rating Agency then rating this Bond on the date of the provision of the Alternate Liquidity Facility and the resultant Termination of the existing 2009 Liquidity Facility; (c) if this Bond is bearing interest at a Commercial Paper Rate, on the Interest Payment Date immediately following each Commercial Paper Rate Period for this Bond; (d) if this Bond is bearing interest at a Long -Term Rate, on the Interest Payment Date immediately following each Long -Term Rate Period for this Bond; (e) if this Bond is bearing interest at a Weekly Rate or a Daily Rate, on any Business Day; and (f) if this Bond is bearing interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, and if the Trustee has received written notice from the applicable 2009 Liquidity Provider that an event of default or event of Termination has occurred under the applicable 2009 Liquidity Facility with the effect that the obligations of such 2009 Liquidity Provider to purchase this Bond or otherwise provide for the Purchase Price of this Bond shall terminate on the date specified in such notice, on a Business Day selected by the Trustee in accordance with the Indenture. Except as otherwise provided in the Indenture, during any Daily Rate Period or Weekly Rate Period, this Bond or any portion hereof shall be subject to tender at the option of the Holder or Beneficial Owner of this Bond, as specified in the Indenture. If this Bond is registered in book -entry form with a Securities Depository, delivery of this Bond to the Trustee in connection with any optional or mandatory tender for purchase shall be effected by the making of, or the irrevocable authorization to make, appropriate entries on the books of the Securities Depository for this Bond or any Participant of such Securities Depository to reflect the transfer of the beneficial ownership interest in such 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 Bond that is not registered in book -entry form with a Securities Depository, delivery of such Bond to the Trustee in connection with any optional or mandatory tender for purchase shall be effected by physical delivery of such Bond 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 OHS Wes1:260692447.6 A-5 134 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. If moneys sufficient to pay the Purchase Price of 2009 Series _ Bonds to be purchased pursuant to an optional or mandatory tender shall be held by the Trustee on the applicable Purchase Date, such 2009 Series _ Bonds shall be deemed to have been purchased for all purposes of the Indenture, irrespective of whether or not such 2009 Series _ Bonds shall have been delivered to the Trustee or transferred on the books of a Securities Depository for such 2009 Series _ Bonds, and neither the former Holder or Beneficial Owner of such 2009 Series _ Bonds nor any other person shall have any claim thereon, under the Indenture or otherwise, for any amount other than the Purchase Price thereof. Optional and Mandatory Redemption 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 be subject to optional redemption, at the option of the Commission, in whole or in part, on the day following the end of any Commercial Paper Rate Period for this Bond, at a redemption price equal to the principal amount thereof, plus accrued interest, if any, without premium. 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 for this Bond and on such other dates specified in the Conversion Notice with respect to such Long -Term Rate Period, delivered with a Favorable Opinion of Bond Counsel, 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 and changes redemption provisions as provided in the Indenture, any 2009 Series _ 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), at the option of the Commission, on the dates and at such redemption prices as provided in the Indenture. Except as otherwise provided in the Indenture, the 2009 Series _ Bonds that are Term Bonds 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 Wes1:260692447.6 A-6 • 135 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 2009 Series _ 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 2009 Series _ Bonds subject to mandatory tender for purchase are held by the Trustee on the Optional Purchase Date, all 2009 Series _ 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, or by his or her duly authorized attomey, 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 OHS Wesc260692447.6 A-7 136 evidenced by this Bond, and in the issuing of this Bond, exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California and 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 Wesc260692447.6 A-8 • • 137 • • • 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. (Seal) Attest: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Chair of the Board of Commissioners Auditor -Controller [FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2009 Series Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: OHS West:260692447.6 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer A-9 138 [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 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. SIGNATURE GUARANTEED: Notice: Signature must be guaranteed by an eligible guarantor firm. OHS West:260692447.6 A-10 • 139 INDEX TO EXHIBITS EXHIBIT B NOTICE ADDRESSES To the Commission: Riverside County Transportation Commission Street Address: 4080 Lemon Street, 3`d Floor Riverside, Califomia 92501 Mailing Address: P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 To the 2009 Liquidity Provider: Attention: Telephone: Fax: OHS Wesc260692447.6 1 B-1 To the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, Califomia 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.: 212-438-2000 Facsimile No.: 212-438-2157 pubfin_structured@standardandpoors.com Moody's Investors Service MSPG Surveillance 7 World Trade Center, 25th Floor 250 Greenwich Street New York, New York 10007 Fitch Ratings One State Street Plaza New York, New York 10004 140 ATTACHMENT 4 Hawkins Delafield & Wood LLP Draft of 8-4-09 $[PAR AMOUNT] RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2009 SERIES A, 2009 SERIES B AND 2009 SERIES C BOND PURCHASE AGREEMENT [Purchase Date] Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Ladies and Gentlemen: The undersigned, Barclays Capital Inc., as representative (the "Representative"), acting on behalf of itself, E.J. De La Rosa & Co. Inc. and Backstrom McCarly Berry & Co., LLC (collectively, the "Underwriters"), offers to enter into this Bond Purchase Agreement (the "Purchase Agreement") with the Riverside County Transportation Commission (the "Commission"), for the purchase by the Underwriters of the Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A (the "Series A Bonds"), 2009 Series B (the "Series B Bonds") and 2009 Series C (the "Series C Bonds," and together with the Series A Bonds and the Series B Bonds, the "Bonds"), to be issued by the Commission and authenticated by U.S. Bank National Association, a national banking association, Los Angeles, California, as trustee (the "Trustee") under that certain Indenture, dated as of June 1, 2008 between the Commission and the Trustee (the "Original Indenture"), as supplemented by the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture"), and the Second Supplemental Indenture, dated as of October 1, 2009 (the "Second Supplemental Indenture"). The Original Indenture, the First Supplemental Indenture and the Second Supplemental Indenture are collectively referred to herein as the "Indenture." The offer made hereby is subject to its written acceptance by the Commission, and delivery of an executed counterpart of this Purchase Agreement to us at or before 11:59 p.m., Pacific Standard Time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriters upon notice from the Representative delivered to the Commission's Executive Director at any time before acceptance. Upon acceptance, this Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the Commission and the Underwriters. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Indenture. The proceeds of the Bonds will be used to (i) refund all of the Commission's Sales Tax Revenue Bonds (Limited Tax Bonds) Series 2008, currently outstanding in the aggregate principal amount of $126,395,000, (ii) retire a portion of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds), Series A and Series B in the outstanding principal amount of $ , (iii) fund a portion of the reserve fund for the Bonds, and (iv) pay costs of issuance of the Bonds. 56350.3 033083 AGMT 141 1. On the basis of the representations, warranties and covenants and upon the terms and conditions set forth in this Purchase Agreement, the Underwriters hereby agree to purchase and the Commission hereby agrees to issue and cause the Trustee to authenticate and deliver to the Underwriters all (but not less than all) of the Bonds in the aggregate principal amount of $[Par Amount]. The Bonds shall be dated the Closing Date. The Underwriters agree to purchase the Bonds at the aggregate purchase price of $[Purchase Price] (consisting of the aggregate principal amount of the Bonds less $ Underwriters' discount). The Bonds shall be substantially in the form described in the Indenture, and shall be issued and secured under the provisions of and shall be payable and subject to redemption as provided in the Indenture. The initial Weekly Rate on the Bonds shall be %. The Bonds shall be special limited obligations of the Commission payable from Revenues. The Sales Tax Revenues of the Commission are pledged to the payment of the principal of, interest and premium, if any, on the Bonds as provided in the Indenture. 2. The Underwriters have designated the undersigned as their representative. The undersigned represents that it has been duly authorized by the Underwriters to execute this Purchase Agreement. The Underwriters agree to make an initial public offering of all of the Bonds, at prices not in excess of the initial public offering yields or prices set forth on the cover page of the Official Statement. Subsequent to the initial public offering, the Underwriters reserve the right to change the public offering prices (or yields) as they deem necessary in connection with the marketing of the Bonds, provided that the Underwriters shall not change the initial interest rate on the Bonds. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. 3. The Commission delivered to the Underwriters a final Official Statement, dated , 2009 (the "Official Statement"), executed on behalf of the Commission by an authorized representative of the Commission, in sufficient quantities as the Underwriters required in order to meet potential customer requests for copies of the Official Statement. The Official Statement, including the cover page, the appendices thereto and all information incorporated therein by reference is hereinafter referred collectively to as the "Official Statement." The Commission hereby authorizes the Underwriters to use and distribute the Official Statement and all other documents, certificates and statements furnished by the Commission to the Underwriters in connection with the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of the Bonds. The Representative agrees to (1) provide the Commission with final pricing information on the Bonds on a timely basis, (2) disseminate to the Underwriters copies of the final Official Statement, including any supplements prepared by the Commission, and (3) promptly file a copy of the final Official Statement, including any supplements prepared by the Commission, with a nationally recognized municipal securities information repository. 4. The Closing. At 8:00 o'clock a.m., California time, on , 2009, or at such other time or on such other date as the Commission and the Representative may agree (the "Closing Date"), the Commission shall deliver, or cause to be delivered the Bonds in book -entry form through the Trustee via the F.A.S.T. delivery book -entry system of The Depository Trust Company ("DTC") on behalf of the Underwriters. Concurrently with the delivery of the Bonds to 2 56350.3 033083 AGMT • 142 • • • the Underwriters, the Commission will deliver the documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP, San Francisco, California ("Bond Counsel") or another place to be mutually agreed upon by the Commission and the Representative. The Representative, on behalf of the Underwriters, will accept such delivery and pay the aggregate purchase price set forth in paragraph 1 hereof, in immediately available funds to or on the order of the Commission. This payment for and delivery of the Bonds, together with the delivery of the aforementioned documents, is herein called the "Closing." The Commission represents, warrants and covenants to the Underwriters (and it shall be a condition of the obligation of the Underwriters to purchase and accept delivery of the Bonds) that the representations and warranties contained herein shall be true and correct on the date hereof and at the Closing Date, as if made on and at the Closing. The Commission so represents and warrants that: (a) the Commission is, and will be on the date of Closing, a county transportation commission organized and existing under the laws of the State, with full legal right, power and authority to cause the execution, sale and delivery of the Bonds, to execute, deliver and perform its obligations under this Purchase Agreement, the Continuing Disclosure Agreement and the Indenture (collectively, the "Commission's Documents") and to carry out and consummate all other transactions contemplated by each of the aforesaid and to execute and deliver the Official Statement; (b) by all necessary official action, the Commission has duly adopted Ordinance 02-001, imposing the Sales Tax, which was approved by at least two-thirds of the electors in the County voting on the Sales Tax on November 5, 2002 ( the "Ordinance"); (c) the Official Statement (excluding therefrom the information under the caption "Underwriting," information concerning DTC, the book -entry system, the 2009 Liquidity Provider and the 2009 Liquidity Facility, and the information in Appendices B through E, as to which no representations or warranties are made), in the form delivered to the Underwriters, does not, as of the date delivered to the Underwriters, and will not at the time of Closing (if supplemented or amended prior to the Closing, then as so supplemented or amended), contain any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; (d) when delivered to and paid for by the Underwriters on the Closing Date in accordance with the provisions of this Purchase Agreement, the Bonds will have been duly authorized, executed and delivered and will constitute valid and binding limited obligations of the Commission in conformity with and entitled to the benefit and security of the Indenture; (e) the Commission, by all necessary official action prior to or concurrently with the acceptance hereof, has duly authorized the execution and delivery of the Commission's Documents and the Official Statement, and the Commission's Documents, when executed and delivered, assuming due authorization, execution and delivery by the 3 563503 033083 AGMT 143 other parties thereto, will constitute the legally valid and binding obligations of the Commission enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State; (0 the Commission is not in breach or default under any applicable law or administrative regulation of the State of California or the United States of America or any applicable judgment, decree, resolution, contract or other instrument or any agreement to which the Commission is a party or is otherwise subject the breach of which would materially affect its ability to perform its obligations under the Commission's Documents, and the execution and delivery of the Commission's Documents and compliance with the provisions thereof will not in any material respect conflict with or constitute a material breach of or default under any applicable law, regulation, decree, writ, order or injunction or any agreement, resolution, contract or other instrument or any agreement to which the Commission is subject and which is material to the Commission's ability to perform its obligations under the Commission's Documents, nor will such execution, delivery and compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Commission under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the Indenture; (g) at the Closing, the Commission will be in compliance in all respects with the covenants and agreements contained in the Commission's Documents, and no event of default and no event which, with the lapse of time or giving of notice, or both, would constitute an event of default thereunder shall have occurred and be continuing; (h) as of the date hereof, no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, government agency, public board or body, is pending or, to the best of the Commission's knowledge, threatened against the Commission: (i) in any way affecting the existence of the Commission or in any way challenging the respective powers of the several offices or the titles of the officials of the Commission to such offices; or (ii) affecting or seeking to prohibit, restrain or enjoin the issuance, sale or delivery of any of the Bonds, the application of the proceeds of the sale of the Bonds, the proceedings authorizing and approving the Sales Tax, the levy or collection of the Sales Tax, or in any way contesting or affecting, as to the Commission, the validity or enforceability of the Act, the proceedings authorizing the Sales Tax, Resolution No. 09-017 of the Commission adopted on August 12, 2009 (the "Bond Resolution") the Bonds or the Commission's Documents or contesting the powers of the Commission or its authority with respect to issuance or delivery of the Bonds or the execution and delivery of the Commission's Documents or contesting the power or authority to levy the Sales Tax or contesting the completeness or accuracy of the Official Statement, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby or which might materially adversely affect the ability of the Commission to perform and satisfy its obligations under the Commission's 4 56350.3 033083 AGMT • • • 144 • • • Documents or the Bonds; nor to the best of the Commission's knowledge is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the Act, the proceedings authorizing the Sales Tax or the Commission's Documents or the performance by the Commission of its obligations thereunder, or the authorization, execution, delivery or performance by the Commission of the Bonds or the Commission's Documents; (i) the Commission will furnish such information, execute such instruments and take such other action not inconsistent with law in cooperation with the Underwriters which the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will continue to take such action so long as required for distribution of the Bonds; provided, however, that in no event shall the Commission be required to take any action which would subject it to service of process in any jurisdiction in which it is not now so subject or be required to register as a dealer or broker or qualify to do business as a foreign corporation or be subject to any other similar requirements deemed by the Commission to be unduly burdensome; a) all approvals, consents and orders of any governmental authority or agency having jurisdiction in the matters which would constitute a condition precedent to the due performance by the Commission of its obligations under the Commission's Documents have been duly obtained or made, and are, and will be on the date of Closing, in full force and effect; (k) if, subsequent to the date hereof, and prior to the Closing, an event occurs, or information becomes known, affecting the Commission which is materially adverse for the purpose for which the Official Statement, as then supplemented or amended is to be used and such event is not disclosed in the Official Statement, the Commission shall notify the Representative thereof, and if in the mutual opinion of the Commission and the Representative such event requires a supplement or amendment to the Official Statement, the Commission will supplement or amend the Official Statement in a form and manner approved by the Representative; (1) for a period of 25 days subsequent to the Closing Date (the "Delivery Period"), if an event occurs which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Commission shall promptly notify the Representative thereof and if, in the opinion of the Representative, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Commission shall prepare and deliver to the Underwriters (at the Commission's expense for 25 days from the date of the Closing), as many copies of an amendment or supplement which will correct such statement or omission as the 5 56350.3 033083 AGMT 145 Underwriters may reasonably request. During the Delivery Period, the Commission shall furnish such information as the Representative may from time to time reasonably request; (m) if the Official Statement is amended or supplemented pursuant to paragraph 4(k) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement as so supplemented or amended (excluding therefrom the information under the caption "Underwriting", information concerning DTC, the book -entry system, and the information in Appendices B through E, as to which no representations or warranties are made) will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (n) after the Closing, the Commission will not participate in the issuance of any amendment of or supplement to the Official Statement, to which, after being furnished with a copy, the Representative shall reasonably object in writing and which shall be disapproved by Hawkins Delafield & Wood LLP ("Underwriters' Counsel") or Bond Counsel; and (o) between the date of this Purchase Agreement and the date of Closing, except for issuances of commercial paper under the Commission's existing commercial paper program, the Commission will not, without the prior written consent of the Representative, except as disclosed in the Official Statement and except in the course of normal business operations of the Commission, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent. 5. The Representative, on behalf of itself and the Underwriters, has entered into this Purchase Agreement in reliance upon the representations and warranties of the Commission contained herein and the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Commission of its obligations both on and as of the date hereof and as of the Closing Date. Accordingly, the Underwriters' obligations under this Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be subject, at the sole option of the Representative, to the accuracy in all material respects of the representations and warranties of the Commission contained herein as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the Commission made in any certificate or other document furnished pursuant to the provisions hereof, to the performance by the Commission of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, and to the following additional conditions: (a) Prior to the Closing, the Commission's Documents shall have been duly authorized, executed and delivered and none of such documents shall have been amended, modified or repealed, except to the extent to which the Representative has given its written consent; 6 56350.3 033083 AGMT • 146 (b) At the time of Closing all official action of the Commission related to the Commission's Documents, and the sale of the Bonds, shall be in frill force and effect and shall not have been amended, modified, supplemented or repealed in any material respect; (c) At the time of Closing the Commission shall have made timely payment of principal and/or interest when due on all of its respective outstanding bonds, notes or other obligations; (d) As of the date hereof and at Closing, trading of securities in general shall not have been suspended on any national securities exchange; nor shall any proceeding be pending or threatened by the Securities Exchange Commission against the Commission; (e) Subsequent to the date hereof, up to and including the Closing, there shall not have occurred any change in or particularly affecting the Commission, the Act, the Ordinance, the Sales Tax, the Sales Tax Revenues, the Bonds or the Commission's Documents as the foregoing matters are described in the Official Statement, which in the reasonable professional judgment of the Underwriters materially impairs the investment quality of the Bonds; (f) Subsequent to the date hereof, up to and including the Closing, the Califomia State Board of Equalization ("BOE") shall not have suspended or advised the Commission of suspension of the collection of the Sales Tax or the escrow of any proceeds thereof by the BOE, and counsel to the Commission shall not have been advised of the suspension of the collection of the Sales Tax or the escrow of any proceeds thereof by the BOE or have any question as to the validity of the Sales Tax; (g) The Commission shall perform, or have performed at or prior to the time of the Closing, all of its obligations required under or specified in the Commission's Documents, as amended to the date of Closing, to be performed at or prior to the Closing; (h) At or prior to the Closing, the Underwriters shall receive, among other items, the following, in each case reasonably satisfactory in form and substance to the Representative and Underwriters' Counsel: (i) Executed copies of each of the Commission's Documents; (ii) The approving opinion of Bond Counsel, substantially in the form attached to the Official Statement as Appendix E; (iii) A supplemental opinion of Bond Counsel, addressed to the Commission and the Underwriters, stating the Underwriters may rely upon the opinion referred to in subparagraph (ii) hereof as though addressed to them and to the following effect: (A) The information contained in the Official Statement in the sections entitled "THE 2009 BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE 2009 BONDS" (other than the information under the heading "Existing Swap Agreements"), "TAX 7 56350.3 033083 AGMT 147 MATTERS," "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" and "APPENDIX E - PROPOSED FORM OF BOND COUNSEL OPINION" insofar as such information purports to summarize certain provisions of the Bonds (except information with respect to the pricing, as to which no opinion need be given), the Indenture and such counsel's opinion relating to the tax exemption of interest on the Bonds, are accurate in all material respects; and (B) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (iv) The opinion of Fulbright & Jaworski L.L.P. ("Disclosure Counsel") addressed to the Underwriters, to the effect that while they have not independently verified the fairness, correctness and completeness of the statements and representations set forth in the Official Statement or referred to therein or the financial statements and the appendices thereto, as a result of their participation in the preparation of the Official Statement and their review of certain documents referred to therein, nothing has come to their attention which gives them reason to believe that the Official Statement or any amendment or supplement thereto as of their respective issue dates, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading (except for the financial statements and other financial and statistical data included therein, including Appendices A, C, D and E thereto, as to which no view need to be expressed); (v) An opinion, dated the date of the Closing and addressed to the Underwriters, of Best, Best & Krieger LLP, General Counsel to the Commission, to the effect that: (i) the Commission is a county transportation commission duly organized under the laws of the State; (ii) the resolution or resolutions of the Commission approving and authorizing the execution and delivery of the Commission's Documents by the Commission (the "Resolutions") were duly adopted at meetings of the Commission, which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting at the time of adoption; (iii) to the best knowledge of such counsel, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the Commission, to restrain or enjoining the enforcement of the Commission's Documents or in any way contesting or affecting the validity of the Commission's Documents; (iv) the execution and delivery of the Commission's Documents by the Commission, the adoption of the Resolutions, and compliance by the Commission with the provisions of the foregoing, as appropriate, under the circumstances contemplated thereby, does not and will not in any material respect conflict with or constitute on the part of the Commission a breach or default under any agreement or other instrument to which the Commission is a party or by which it is bound (and of which such counsel is reasonably aware) or any existing law, regulation, court order or consent decree to which the Commission is subject; (v) the Commission's Documents have been duly authorized, executed and delivered, by the Commission and, assuming due authorization, execution and delivery by the other parties thereto, the Commission's Documents constitute legal, valid and binding agreements of the Commission, enforceable in accordance with their respective terms, subject in each case to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights 8 56350.3 033083 AGMT • • • 148 • generally and the application of equitable principles if equitable remedies are sought; (vi) except as described in the Official Statement, no authorization, approval, consent, or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Commission is required for the valid authorization, execution, delivery and performance by the Commission of the Commission's Documents which has not been obtained; and (vii) without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement and based upon the information made available to such counsel in the course of its participation in the preparation of the Official Statement as counsel for the Commission, nothing has come to such counsel's attention which would cause them to believe that the Official Statement (excluding therefrom the financial statements and the statistical data included in the Official Statement, as to which no opinion need be expressed), as of the date thereof and as of the Closing Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (vi) a certificate or certificates, dated the Closing Date, signed by a duly authorized official of the Commission to the effect that, to the best of such official's knowledge, (i) the representations and warranties of the Commission contained in this Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) no event affecting the Commission has occurred since the date of the Official Statement which has the effect of causing the Official Statement (excluding the information under the caption "Underwriting," information concerning DTC, the book -entry system, the 2009 Liquidity Provider and the 2009 Liquidity Facility, and the information in Appendices B through E) to contain any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements and information therein, in light of the circumstances under which they were made not misleading; (iii) the Commission is duly organized and existing under the provisions of the Act; (iv) the Commission has, and at the time of the Closing will have, full legal right, power and authority (A) to execute and enter into the Commission's Documents, (B) to adopt the Bond Resolution, (C) to sell and deliver the Bonds to the Underwriters pursuant to the Constitution and laws of the State, (D) to issue the Bonds, (E) to cause the Sales Tax to be levied and collected, (F) to pledge the Sales Tax Revenues to the payment of the Bonds and (G) to carry out and to consummate the transactions contemplated by, and to perform all of its obligations under, the Bond Resolution, the Commission's Documents, the Bonds and the Official Statement; (v) the Commission has (A) duly authorized and approved the Official Statement, (B) duly authorized and approved the execution and delivery of, and performance by the Commission of its obligations under, the Bonds and the Commission's Documents, (C) duly adopted the Bond Resolution and (D) duly authorized and approved the use of the proceeds of the sale of the Bonds, as contemplated by the Official Statement; (vi) at or prior to the time and date the Closing, the Bonds will have been duly executed and delivered by the Commission, and each of them and the Bond Resolution and the Commission's Documents will constitute legal, valid and binding obligations of the Commission enforceable against the Commission in accordance with their respective terms, except to the extent that the enforceability may be limited by bankruptcy, insolvency, arrangement, moratorium or other laws affecting the rights of creditors generally, equitable remedies, judicial discretion and the limitations on legal remedies against local transportation authorities in the State; (vii) the Bond Resolution, the Commission's Documents and the Bonds conform in all material respects to the descriptions thereof in the Official Statement; (viii) the financial data relating to the Commission 9 56350.3 033083 AGMT 149 and the financial statements of the Commission contained in the Official Statement present fairly the financial condition and results of the operation of the Commission at the dates and for the periods therein specified and such financial data relating to the Commission and the financial statements of the Commission contained in the Official Statement are presented in confomvty with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements of the Commission except as otherwise specifically noted in the Official Statement; (ix) no litigation of any nature is now pending or, to the best of the Commission's knowledge, threatened in any court or before any governmental agency: (A) restraining or enjoining, or seeking to restrain or enjoin, the issuance, sale, execution or delivery of the Bonds; or (B) in any way contesting or affecting (1) the validity or enforceability of the Bonds, or (2) any proceedings of or on behalf of the Commission taken with respect to the issuance or sale of the Bonds, or (3) adoption of the Bond Resolution or the execution and delivery of the Commission's Document, or (4) the levy and collection of the Sales Tax, or (5) the pledge of Sales Tax Revenues effected by the Indenture, as described in the Official Statement, or (6) the proceedings authorizing and approving the Sales Tax or the levy or collection of the Sales Tax, or (7) the existence or powers of the Commission; or (C) in any manner questioning (1) the proceedings or authority for the issuance of the Bonds, or (2) any provision made or authorized for the payment of the Bonds, or (3) the existence or operations of the Commission, or (4) the power of the Commission to issue the Bonds, or (5) the power of the Commission to undertake any other transactions necessary in connection with this proposed financing; or (D) which would have a material adverse effect upon the operations of the Commission relating to the Bonds or to the contemplated use of the proceeds thereof; (x) none of the Commission's proceedings or authority for the issuance, sale, execution and delivery of the Bonds, or the execution and delivery of the Commission's Documents, or the adoption of the Bond Resolution as described in the Official Statement has been repealed, modified, amended, revoked or rescinded; (xi) no approval, permit, consent or authorization of any governmental or public agency, authority or person having jurisdiction over the Commission not already obtained and no proceedings not already had are required in connection with (A) the issuance and sale of the Bonds, (B) the execution and delivery by the Commission of, or the performance by it of its obligations under, the Bonds, the Commission's Documents and the Bond Resolution or (C) except as contemplated by the Official Statement, the issuance and sale of the Bonds or the application of the proceeds of the sale thereof; (xii) there is no material adverse change in the condition or affairs of the Commission that would make it unreasonable for the Underwriters or other purchasers of the Bonds to rely upon the Official Statement in connection with the resale of the Bonds, and the Underwriters are hereby authorized to distribute copies of the Official Statement in connection with the resale of the Bonds; and (xiii) the Commission has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the date of issuance of the Bonds with respect to the issuance of the Bonds; (vii) A certificate, dated the Closing Date, signed by a duly authorized official of the Trustee, that: (A) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States of America, having the full power and being qualified to enter into and perform its duties under the Indenture and the Continuing Disclosure Agreement (together, the "Trustee Documents"); 10 56350.3 033083 AGMT s • 150 • • • (B) the Trustee is duly authorized to enter into the Trustee Documents and Trustee has duly executed and delivered the Trustee Documents; (C) the execution and delivery of the Trustee Documents and compliance with the provisions on the Trustee's part contained therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which Trustee is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the Trustee Documents under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Trustee Documents; (D) to the best of the knowledge of the Trustee, it has not been served with any action; suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, nor is any such action or other proceeding threatened against the Trustee, as such but not in its individual capacity, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the collection of Sales Tax Revenues to be applied to pay the principal, premium, if any, and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Indenture, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Trustee Documents; and the Indenture. (E) the Trustee will apply the proceeds from the Bonds as provided in (viii) an opinion of counsel to the Trustee, addressed to the Underwriters, in form and substance satisfactory to the Representative, to the effect that the Trustee is a national banking association with due power and authority to execute the Indenture, and that the Indenture is in effect and is valid and binding upon the Trustee; (ix) a copy of the Official Statement, executed on behalf of the Commission by a person duly authorized to sign on behalf of the Commission; (x) a certified copy of the general resolution or resolutions of the Trustee authorizing the execution and delivery of the Indenture and the Bonds; (xi) certified copies of the resolution or resolutions of the Commission authorizing the execution and delivery of the Commission's Documents; (xii) a copy of the Preliminary Blue Sky Memorandum with respect to the Bonds, prepared by Underwriters' Counsel; 56350.3 033083 AGMT 151 (xiii) 8038-G. Evidence that the federal tax information form 8038-G relating to the Bonds has been prepared for filing; (xiv) Tax Certificate. A tax certificate relating to the Bonds in form satisfactory to Bond Counsel and the Underwriters; (xv) CDIAC Statements. A copy of the Notices of Sale required to be delivered to the California Debt Investment and Advisory Commission pursuant to Sections 8855(g) and 53583 of the California Government Code; (xvi) Ratings. Evidence that any ratings on the Bonds described in the Official Statement are in full force and effect as of the date of the Closing; (xvii) A Certificate, dated the Closing Date, signed by an authorized representative of Fieldman Rolapp & Associates, Financial Advisor to the Commission, to the effect that no information came to such representative's attention which gives such representative reason to believe that the statements and information in the Official Statement under the caption "PLAN OF REFUNDING" contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; (xviii) A certified copy of the proceedings relating to authorization and approval of the Sales Tax, including: (i) a certified copy of the Ordinance; and (ii) a certification from the Registrar of Voters in the County of Riverside concerning results of the November 5, 2002 election; (xix) A copy of the executed Agreement for State Administration of Transactions and Use Tax, between the Commission and the California State Board of Equalization, including all amendments thereto; (xx) A copy of the Blanket Letter of Representation to DTC relating to the Bonds signed by DTC and the Commission; (xxi) On or prior to the Closing Date, the 2009 Liquidity Facility shall have been delivered to the Trustee; (xxii) A certificate or certificates, dated the Closing Date, in form and substance acceptable to the Underwriters and the Commission, of an authorized officer or officers of the 2009 Liquidity Provider, to the effect that the information in the Official Statement under the caption "THE LIQUIDITY PROVIDER" is true and correct in all material respects as of its date; (xxiii) An opinion or opinions of counsel to the 2009 Liquidity Provider, dated the Closing Date, addressed to the Underwriters and the Commission, in form and substance acceptable to the Underwriters and the Commission, and satisfactory to Bond Counsel, (i) relating to the authority of the 2009 Liquidity Provider to issue the 2009 Liquidity Facility, (ii) to the effect that the 2009 Liquidity Facility has been executed and issued and is valid and binding on the 2009 Liquidity Provider enforceable in accordance with its terms, and (iii) 12 56350.3 033083 AGMT • s • 152 • confirming the accuracy of the disclosure contained under the caption "LIQUIDITY FACILITY" in the Official Statement; (xxiv) A verification report by f (xxv) A defeasance opinion from Bond Counsel, dated the Closing Date and addressed to the Trustee, the 2009.Liquidity Provider and the Underwriters to the effect that the obligations of the Commission with respect to the 2008 Bonds have ceased, terminated, become void and be completely discharged and satisfied except as expressly set forth in the Indenture; (xxvi) An executed copy of the Continuing Disclosure Agreement; and (xxvii) Such additional certificates, legal opinions of Bond Counsel, Disclosure Counsel or other counsel and such other instruments or documents as Underwriters' Counsel, Disclosure Counsel or Bond Counsel reasonably request to evidence the truth and accuracy as of the date hereof and as of the Closing Date of information contained in the Official Statement and the representations and warranties contained herein and in the Official Statement and the due satisfaction as or prior to the Closing Date of all conditions then to be satisfied in connection with the transaction contemplated hereby. 6. To the extent permitted by law, the Commission agrees to indemnify and hold harmless the Underwriters and each person, if any, who controls (within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended) the Underwriters and the officers, agents and employees of the Underwriters (each such person, an "Indemnified Party") against any and all losses, claims, damages, liabilities and expenses arising out of any untrue statement of a material fact contained in the Official Statement except for those portions under the captions "THE LIQUIDITY FACILITY," "THE LIQUIDITY PROVIDER," "REMARKETING AGENTS," "UNDERWRITING" and APPENDIX D — "BOOK -ENTRY SYSTEM," (the "Excluded Information") or the omission (other than omissions in the Excluded Information) to state in the Official Statement a material fact necessary to make the statements therein relating to the Commission in light of the circumstances under which they were made not misleading. The Commission shall not be liable for any settlement of any such action effected without its consent by any Indemnified Party, which consent shall not be unreasonably withheld, but if settled with the consent of the Commission or if there be a final judgment for the plaintiff in any such action against the Commission or any Indemnified Party, the Commission agrees to indemnify and hold harmless such Indemnified Party to the extent provided herein. In case any claim shall be made or action brought against an Indemnified Party for which indemnity may be sought against the Commission, as provided above, the Underwriters shall promptly notify the Commission in writing setting forth the particulars of such claim or action and the Commission shall assume the defense thereof, including at its option the retaining of counsel acceptable to the Underwriters and including the payment of all expenses. The Indemnified Party shall not have the right to retain separate counsel unless (i) the Commission shall have specifically authorized the retaining of such counsel or (ii) the parties to such suit include the Indemnified Party and one or more legal defenses may be available to it which may 13 56350.3 033083 AGMT 153 not be available to the Commission, in which case the Commission shall not be entitled to assume the defense of the suit but the Underwriters shall bear the fees and expenses of such counsel. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Commission, its employees and its officers, but only with reference to liability in connection with false statements and information in the Official Statement furnished to the Commission in writing by such Underwriter for inclusion in the Official Statement. 7. The Underwriters shall have the right to cancel their obligation hereunder to purchase the Bonds (and such cancellation shall not constitute a default hereunder by the Underwriters) by the Representative notifying you in writing or by telegram of its election so to do between the date hereof and the Closing, if at any time hereafter and prior to the Closing: (i) any event occurring, or information becoming known that, in the reasonable judgment of the Representative, makes untrue in any material respect any statement or information contained in the Official Statement or results in an omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (ii) an amendment to the Constitution of the United States of America or by any legislation in or by the Congress of the United States of America or by the State of California, or the amendment of legislation pending as of the date of this Purchase Agreement in the Congress of the United States of America, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States of America, the Treasury Department of the United States of America, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States of America, or the favorable reporting for passage of legislation to either House of the Congress of the United States of America by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or State of California court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State of California authority materially adversely affecting, in the reasonable judgment of the Representative, the federal or State of California tax status of the Commission, or the status of the interest on bonds or notes or obligations of the general character of the Bonds; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State of California, or a decision by any court of competent jurisdiction within the State of California or any court of the United States of America shall be rendered which, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds; or 14 56350.3 033083 AGMT • 154 • • (iv) legislation shall be enacted by the Congress of the United States of America, or a decision by a court of the United States of America shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the execution, delivery, offering or sale of obligations of the general character of the Bonds, or the execution, delivery, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (v) the imposition by the New York Stock Exchange or other national securities exchange or any governmental authority or any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or securities generally or the material increase of any such restrictions now in force, including those relating to the extension of credit by or the charge to the net capital requirements of, the Underwriters, which, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds; or (vi) the declaration of a general banking moratorium by federal, New York or , California authorities or a major financial crisis or a material disruption in commercial banking or securities settlement or clearances services shall have occurred, or the general suspension of trading or minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges or prices for securities shall have been required and be in force on the New York Stock Exchange on any national securities exchange by a determination by that exchange or by order of the Securities and Exchange Commission or any other governmental agency having jurisdiction, which, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds; or (vii) any new outbreak or escalation of hostilities, declaration by the United States of America of a national emergency or war or other calamity or crisis affecting the financial markets which, in the reasonable opinion of the Representative, materially adversely affects the market price or marketability of the Bonds; or (viii) any rating of securities of the Commission payable from or secured by Revenues reflecting the creditworthiness of the Commission, or any rating relating to the 2009 Liquidity Provider, shall have been withdrawn or reduced, placed on credit watch, assigned a negative outlook or announced to be under review by a rating agency, which, in the Representative's reasonable opinion, materially adversely affects the market price or marketability of the Bonds; or (ix) the commencement of any action, suit or proceeding described in Section 4(h) hereof which, in the reasonable judgment of the Representative, materially adversely affects the market price of the Bonds; or 15 56350.3 033083 AGMT 155 (x) there shall be in force a general suspension of trading on the New York Stock Exchange; or (xi) a material adverse change has occurred or becomes known in the operations or finances of the Commission. 8. The Underwriters shall be under no obligation to pay and the Commission shall pay or cause to be paid from the proceeds of the Bonds or other funds available to it the expenses incident to the performance of the obligations of the Commission hereunder, including but not limited to (a) the cost of printing or engraving, and mailing or delivering the definitive Bonds and the Official Statement in reasonable quantities and all other documents or the cost of recording and filing such documents (other than as set forth in the next succeeding paragraph) prepared in connection with the transactions contemplated hereby; (b) the fees and disbursements of the Trustee, in connection with the execution, sale and delivery of the Bonds; (c) the fees and disbursements of the Bond Counsel, Disclosure Counsel, General Counsel, and any other experts or consultants retained by the Commission in connection with the transactions contemplated hereby; (d) the costs related to obtaining ratings on the Bonds. The Underwriters shall pay (a) California Debt and Investment Advisory Commission fees; (b) the cost of preparation and printing of any Blue Sky Memorandum to be used by them; (c) all advertising expenses in connection with the public offering of the Bonds; (d) the fees and expenses of Underwriters' Counsel; and (e) CUSIP number costs. Any meals or traveling expenses of the Issuer paid by the Underwriters were included as reimbursement of expenses as part of the Underwriters' discount. 9. No covenant or agreement contained in this Purchase Agreement shall be deemed to be a covenant or agreement of any member, officer, agent or employee of the Commission nor shall such persons be liable personally under this Purchase Agreement or be subject to any personal liability or accountability solely by reason of the execution of this Purchase Agreement or solely by reason of the breach or attempted alleged breach hereof by the Commission. 10. Any notice to be given to the Commission under this Purchase Agreement may be given by delivering the same to the office thereof c/o Riverside County Transportation Commission, P.O. Box 12008, Riverside, California 92502, and any such notice to be given to the Representative or the Underwriters may be given by delivering the same to Barclays Capital Inc., 555 California Street, 30th Floor, San Francisco, California 94104. 11. The Commission hereby authorizes the Official Statement and the information therein contained to be used by the Underwriters in connection with the public sale of the Bonds. 12. This Purchase Agreement shall be governed by, and construed in accordance with, the laws of the State of California. 13. The representations and warranties of the Commission set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations or statements as to the results thereof made by or on behalf of the Underwriters and regardless of delivery of and payment for the Bonds. 16 56350.3 033083 AGMT • 156 • 14. This Purchase Agreement, when accepted by the Commission, shall constitute the entire agreement between the Commission and the Underwriters and is made solely for the benefit of the Commission and the Underwriters (including the successors of the Underwriters). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. 15. This Purchase Agreement is made solely for the benefit of the Commission and the Underwriters (including the successors thereof), and no other person, partnership or association shall acquire or have any right hereunder or by virtue hereof. All representations and agreements by the Commission in this Purchase Agreement shall remain operative and in full force and effect except as otherwise provided herein, regardless of any investigations made by or on behalf of the Underwriters and shall survive the issuance of and payment of the Bonds. 16. This Purchase Agreement may be executed simultaneously in several counterparts each of which shall be an original and all of which shall constitute but one and the same instrument. 17. The Representative, in its sole discretion, may waive any condition or requirement imposed upon the Commission as set forth in this Purchase Agreement. 18. This Purchase Agreement shall become effective upon the execution of the acceptance hereby by the Commission, and shall be valid and binding and enforceable as of the time of such acceptance. 19. The rights and obligations created by this Purchase Agreement shall not be subject to assignment by the Underwriters or the Commission without the prior written consent of the other parties hereto. 20. In case any one or more of the provisions, contained herein shall for any reason to be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not effect any other provisions hereof. 21. The validity, interpretation, and performance of this Purchase Agreement shall be governed by the laws of the State of California. BARCLAYS CAPITAL INC., on behalf of itself and as Representative of the Underwriters By: The foregoing is hereby agreed to and accepted as of the date first above written: RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: 17 157 56350.3 033083 AGMT ATTACHMENT 5 Hawkins Delafield & Wood LLP Draft of 8-5-09 REMARKETING AGREEMENT Between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and [NAME OF REMARKETING AGENT] Remarketing Agent Dated as of October 1, 2009 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2009 SERIES 56357.5 033083 AGMT 158 • • • This REMARKETING AGREEMENT, dated as of October 1, 2009 (the "Agreement"), between RIVERSIDE COUNTY TRANSPORTATION COMMISSION (the "Commission") and [NAME OF REMARKETING AGENT] (the "Remarketing Agent"). WITNESSETH: WHEREAS, the Commission has issued its $ in aggregate principal amount of Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series (the "Bonds") pursuant to an Indenture, dated as of June 1, 2008, between the Commission and U.S. Bank National Association, as trustee (the "Trustee"), as supplemented, including by a Second Supplemental Indenture, dated as of October 1, 2009, between the Commission and the Trustee (as supplemented, the "Indenture"); and WHEREAS, the party identified in Section 14 hereof (the "2009 Liquidity Provider") has delivered a Standby Bond Purchase Agreement, dated as of October 1, 2009 (the "2009 Liquidity Facility") with respect to the Bonds to the Trustee in accordance with the terms of the Indenture and the 2009 Liquidity Facility; and WHEREAS, the Indenture provides for optional and mandatory tenders for purchase of the Bonds by the registered owners (the "Owners") of the Bonds, all in accordance with the terms of the Indenture; and WHEREAS, the Indenture provides for the appointment of a remarketing agent to perform certain duties, including the remarketing of any Bonds tendered or deemed tendered by the Owners thereof for purchase; and WHEREAS, the Remarketing Agent has agreed to accept the duties and responsibilities of the Remarketing Agent with respect to the Bonds under the Indenture and this Agreement; NOW, THEREFORE, for and in consideration of the mutual covenants made herein and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Definitions. Unless otherwise defined herein, all capitalized terms shall have the meanings ascribed to them in the Indenture. Section 2. Appointment of Remarketing Agent. Subject to the terms and conditions contained herein, the Commission hereby appoints [Name of Remarketing Agent] as exclusive Remarketing Agent for the Bonds, and the Remarketing Agent hereby accepts such appointment. Section 3. Responsibilities of Remarketing Agent. (a) Subject to the terms and conditions set forth in this Agreement, the Remarketing Agent agrees to perform the duties of Remarketing Agent set forth in the Indenture and in this Agreement. It is understood that in undertaking to perform such duties, and in the performance thereof, it is the intention of the parties that the Remarketing Agent will act solely as an agent and not as a principal, except as expressly provided in Section 12 hereof. The duties of the Remarketing Agent shall include the following: l 56357.5 033083 AGMT 159 (i) Determination of Interest Rates. The Remarketing Agent shall determine the interest rates on the Bonds in the manner and at the times specified therefor in the Indenture. (ii) Remarketing of Tendered Bonds. (A) The Remarketing Agent shall use its best efforts to remarket the applicable Bonds tendered under the terms and conditions provided for in the Indenture. [to be revised once Liquidity Provider is in place] (B) Prior to any remarketing of Bonds in connection with a conversion of the Bonds from one Interest Rate Determination Method to another, the Commission and the Remarketing Agent shall enter into a mutually agreeable contract for the purchase by the Remarketing Agent of such Bonds for reoffering to the public or for a "best efforts" remarketing by the Remarketing Agent of such Bonds (a "Remarketing Contract"). The Remarketing Contract shall contain usual and customary terms and conditions, which shall be substantially similar to the terms and conditions contained in the Bond Purchase Agreement, dated as of October _, 2009, between the Commission and the Remarketing Agent (the "Purchase Agreement") as modified to reflect the facts and circumstances then in existence, and shall provide for a mutually agreeable fee to the Remarketing Agent in connection with such remarketing. (iii) Furnishing of Disclosure Material. The Commission shall timely furnish to the Remarketing Agent at the Commission's expense the disclosure materials contemplated by this Agreement, and the Remarketing Agent shall, in turn, furnish such materials to potential purchasers of the Bonds. (iv) Other Duties. The Remarketing Agent shall perform such other duties as are specifically sdt forth in this Agreement and the Indenture for the Remarketing Agent. (b) Notwithstanding anything to the contrary contained herein, the Remarketing Agent: (i) will suspend its remarketing efforts upon the receipt of notice of the occurrence of an event of default under the Bonds, the Indenture, or the 2009 Liquidity Facility; and (ii) may, in its sole discretion, suspend its remarketing efforts with respect to the Bonds immediately upon the occurrence of any of the following events, which suspension will continue so long as, in the Remarketing Agent's reasonable judgment, such event continues to exist as to the Bonds: (1) suspension or material limitation in trading in Bonds generally on the New York Stock Exchange, or material disruptions in commercial banking or securities settlement or clearance services; 2 56357.5 033083 AGMT • 160 (2) a general moratorium on commercial banking activities in New York is declared by either federal or New York State authorities; (3) the engagement or escalation by the United States in hostilities or the occurrence of a calamity or crisis if the effect of such event, in the Remarketing Agent's judgment, makes it impractical or inadvisable to proceed with the solicitation of offers to purchase the Bonds; (4) legislation shall be introduced by committee, by amendment or otherwise, in, or be enacted by, the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the United States Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the offering or sale of obligations of the general character of the Bonds, as contemplated hereby, is or would be in violation of any provision of the Securities Act of 1933, as amended (the "Securities Act") as then in effect, or the Securities Exchange Act of 1934, as amended (the "Exchange Act") as then in effect, or with the purpose or effect of otherwise prohibiting the offering or sale of obligations of the general character of the Bonds, or the Bonds themselves, as contemplated hereby; (5) any event shall occur or information shall become known, which, in the Remarketing Agent's reasonable opinion, makes untrue, incorrect or misleading in any material respect any statement or information contained in any disclosure documents provided to the Remarketing Agent in connection with the performance of its duties hereunder, whether provided pursuant to Section 5 hereof or otherwise, or causes such documents to contain an untrue, incorrect or misleading statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (6) any governmental authority shall impose, as to the Bonds, or. obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force; (7) any of the representations and warranties of the Commission made hereunder or in the Purchase Agreement shall not have been true and correct on the date made; (8) the Commission fails to observe any of the covenants or agreements made herein; (9) any of the rating agencies then rating the Bonds or the 2009 Liquidity Provider shall either (i) downgrade the ratings assigned to either 3 56357.5 033083 AGMT 161 the Bonds or the 2009 Liquidity Provider so that such Bonds are not "Eligible Bonds" as defined under Rule 2a-7 of the Investment Company Act of 1940, as amended or (ii) suspend or withdraw the then current ratings assigned to either the Bonds or the 2009 Liquidity Provider; or (10) an actual or imminent default or a moratorium in respect of payment of any U.S. Treasury bills, bonds or notes the effect of which in the Remarketing Agent's judgment makes it impractical to market the Bonds or to enforce contracts for the sale of the Bonds. Section 4. Resignation and Removal of Remarketing Agent. The Remarketing Agent may at any time resign and be discharged of its duties and obligations hereunder upon providing the Commission, the Trustee and the 2009 Liquidity Provider with fifteen (15) days' prior written notice. The Remarketing Agent may be removed at any time, at the direction of the Commission upon fifteen (15) days' prior written notice to the Remarketing Agent, the Trustee, and the 2009 Liquidity Provider. Upon removal or resignation of the Remarketing Agent, the Commission shall promptly cause the Trustee to give notice thereof by mail to all Owners and to any rating agency which has assigned a rating to the Bonds. Section 5. Furnishing of Disclosure Materials. (a) The Commission agrees to furnish the Remarketing Agent with as many copies as the Remarketing Agent may reasonably request of the Official Statement of the Commission relating to the Bonds dated , 2009 (the "Official Statement"), and such other information with respect to the Commission and the Bonds as the Remarketing Agent shall reasonably request from time to time. (b) The Commission agrees to cooperate with the Remarketing Agent in the preparation from time -to -time of a new official statement, reoffering document or other disclosure material for the Bonds in the event the Remarketing Agent determines that the preparation and distribution of such official statement, reoffering document or other disclosure material is necessary or desirable in connection with remarketing the Bonds and to furnish or to cause to be furnished to the Remarketing Agent as many copies of such new official statement or other reoffering materials as the Remarketing Agent shall request. (c) If, at any time during the term of this Remarketing Agreement, any event shall occur or facts become known to either party that might affect the correctness or completeness of any statement of a material fact contained in the Official Statement, reoffering document or other disclosure material, such party shall promptly notify the other in writing of the circumstances and details of such event. The Commission agrees to promptly furnish to the Remarketing Agent a copy of each filing or notice made to anyone (whether in connection with the Bonds or not) pursuant to any undertaking or other agreement of the Commission made under any provision of Rule 15c2-12 promulgated by the Securities and Exchange Commission. (d) In connection with the remarketing of the Bonds as a result of, or in anticipation of (i) the occurrence of the conversion of the Bonds to a different Interest Rate Determination Method, (ii) the occurrence of a material adverse change in the financial condition 4 56357.5 033083 AGMT • 162 • • • of the Commission, including, but not limited to, a change in the long-term or short-term credit ratings of the Commission, (iii) the delivery of an Altemate Liquidity Facility, or (iv) one of the events mentioned in (c) above, the Commission shall prepare or cause to be prepared at its expense any disclosure documents that in the reasonable opinion of the Remarketing Agent or the Commission are necessary or desirable. (e) In order to comply with the requirements of Rule 15c2-12 as promulgated by the Securities and Exchange Commission (as amended, "Rule 15c2-12"), in the event the Remarketing Agent is asked to remarket Bonds in one or more of the following circumstances: [to be modified pending changes to Rule 15c2-12] (i) where the Bonds are to be converted from variable rate bonds to the Long - Term Rate or Fixed Rate; or (ii) where the authorized denomination of the Bonds will be reduced (because of a change in Interest Rate Determination Method or otherwise) from $100,000 to less than $100,000; or (iii) where the Bonds are otherwise not exempt from the requirements of Rule 15c2-12 (as they are on the date hereof by virtue of being in the Weekly Rate Period and in minimum authorized denominations of $100,000); then (1) the Commission, at the expense of the Commission, shall provide the Remarketing Agent, prior to the date the Remarketing Agent is to bid for, offer or sell any Bonds or remarket any Bonds, a reoffering statement the Commission deems final as of its date (exclusive of pricing and other sales information permitted to be excluded by Rule 15c2-12); (2) if a preliminary reoffering statement or other disclosure document is prepared, the Commission, at the expense of Commission, shall provide the Remarketing Agent with such number of copies thereof as the Remarketing Agent may need to supply at least one copy thereof to each potential customer who requests it; (3) the Commission, at the expense of the Commission, shall provide the Remarketing Agent within seven (7) Business Days after the date upon which the interest rate on the Bonds is determined or by the time "money confirmations" are to be sent to customers, whichever is earlier, with a number of copies of the final reoffering statement or disclosure document adequate to supply at least one copy of such final reoffering statement or disclosure document to any customer or any potential customer for a period commencing on the date such final reoffering statement or disclosure document is available and extending for a period of twenty-five (25) days after the end of the initial offering period with respect to the Bonds in the Long -Term Rate or Fixed Rate or with the denomination of less than $100,000. During such period, the Commission agrees to update the final reoffering statement or disclosure document in the same way as provided in paragraph 3(b) above. The Commission hereby agrees to cooperate fully with the 5 56357.5 033083 AGMT 163 Remarketing Agent in the preparation of such disclosure documents. All costs incurred in connection with the preparation of such disclosure documents and the printing and shipping of such disclosure documents shall be home by the Commission; and (4) where then required by Rule 15c2-12, the Commission agrees to adopt a continuing disclosure undertaking complying with paragraph (b)(5) of Rule 15c2-12 which will become effective prior to any such remarketing. (f) Notwithstanding anything to the contrary contained herein, the Commission may, to the extent permitted by law, include, through incorporation by reference in any disclosure material furnished pursuant to this Section, such relevant reports, official statements, continuing disclosure statements and other documents as are filed with the Securities and Exchange Commission, any nationally recognized municipal securities information repository recognized by said Commission, any state information depository or the Municipal Securities Rulemaking Board. Section 6. Reserved. Section 7. Fees and Expenses. For the Remarketing Agent's services under this Agreement and the Indenture, the Commission will pay the Remarketing Agent a fee of 0.10% per annum of the weighted average of the principal amount of Bonds outstanding during each three month period. The Commission will pay the fee quarterly in arrears commencing December 1, 2009, and each March 1, June 1, September 1 and December 1 thereafter. When Bonds are remarketed in connection with the conversion of the interest rate to a different Mode or to a Term Rate or a Fixed Rate, the Commission and the Remarketing Agent will agree on a fee specifically for such remarketing. If the Remarketing Agent is unable to remarket Bonds, no fee will be owed or paid with respect to Bonds purchased by the 2009 Liquidity Provider pursuant to the 2009 Liquidity Facility. The Commission will reimburse the Remarketing Agent for all direct, out-of-pocket expenses incurred by it as Remarketing Agent, including reasonable counsel fees and disbursements. Section 8. Representations, Warranties, Covenants and Agreements of the Remarketing Agent. The Remarketing Agent, by its acceptance hereof, represents, warrants and covenants and agrees with the Commission as follows: (a) the Remarketing Agent is a member of the National Association of Bonds Dealers, having a capitalization of at least $500,000, and otherwise meets the requirements for the Remarketing Agent set forth in the Indenture; (b) the Remarketing Agent has been duly incorporated, is validly existing and is in good standing under the laws of the State of [Delaware], and is authorized by law to perform all the duties and obligations imposed upon it as Remarketing Agent by this Agreement and the Indenture; and 6 56357.5 033083 AGMT • • 164 • (c) the Remarketing Agent has full power and authority to take all actions required or permitted to be taken by the Remarketing Agent by or under, and to perform and observe the covenants and agreements on its part contained in, this Agreement and the Indenture. Section 9. Representations, Warranties, Covenants and Agreements of the Commission. The Commission, by its acceptance hereof, represents, warrants, covenants, and agrees with the Remarketing Agent that: (a) it is a county transportation commission of the State of California; (b) it has full power and authority to take all actions required or permitted to be taken by the Commission by or under, and to perform and observe the covenants and agreements on its part contained in, this Agreement and any other instrument or agreement relating thereto to which the Commission is a party; (c) it has, on or before the date hereof, duly taken all action necessary to be taken by it prior to such date to authorize (i) the execution, delivery and performance of this Agreement, the Indenture, the 2009 Liquidity Facility and any other instrument or agreement to which the Commission is a party and which has been or will be executed in connection with the transactions contemplated by the foregoing documents; and (ii) the carrying out, giving effect to, consummation and performance of the transactions and obligations contemplated by the foregoing agreements and by the current disclosure material relating to the Bonds; (d) it will provide The Remarketing Agent at the address noted in Section 14 hereof, within 210 days of the end of each fiscal year, with a copy of its annual audited financial statements for that fiscal year; and (e) it will promptly notify the Remarketing Agent by Electronic Means of any material adverse changes that may affect the remarketing of the Bonds or any fact or circumstance which may constitute, or with the passage of time will constitute, an event of default under the Bonds, the Indenture, or the 2009 Liquidity Facility. (f) all disclosure material, including, without limitation, preliminary and final official statements, reoffering documents, and supplements, amendments and updates to any thereof, furnished by the Commission and used by the Remarketing Agent (including amendments, supplements and replacements thereof), shall not contain any untrue, incorrect or misleading statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Section 10. Term of Agreement. This Agreement shall become effective on the date hereof and shall continue in full force and effect until the payment in full of the Bonds or the earlier conversion of all Bonds to the Long -Term Rate or Fixed Rate, subject to the right of suspension and termination as provided herein. Section 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 7 56357.5 033083 AGMT 165 Section 12. Dealing in Bonds by the Remarketing Agent; No Obligation to Purchase Bonds. (a) The Remarketing Agent, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Bonds, including, without limitation, any Bonds offered and sold by the Remarketing Agent pursuant to this Agreement, and may join in any action which any Owner may be entitled to take with like effect as if it did not act in any capacity hereunder. The Remarketing Agent, in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Commission and may act as depository or agent for any committee or body of Owners of Bonds or other obligations of the Commission as freely as if it did not act in any capacity hereunder. (b) Nothing in this Agreement shall be deemed to constitute the Remarketing Agent an underwriter of the Bonds or to obligate the Remarketing Agreement to purchase any Bonds at any time. Section 13. Intention of Parties. It is the express intention of the parties hereto that any purchase, sale or transfer of any Bonds, as herein provided, including to the Commission, shall not constitute or be construed to be the extinguishment of any Bonds or the indebtedness represented thereby or the reissuance of any Bonds. Section 14. Miscellaneous. (a) Except as otherwise specifically provided in this Agreement, all notices, demands and formal actions under this Agreement shall be in writing and either (i) hand -delivered, (ii) sent by Electronic Means, or (iii) mailed by registered or certified mail, return receipt requested, postage prepaid, to: The Remarketing Agent: [Name of Remarketing Agent] [Address] Attention: Telephone: With a copy to: The Commission: for delivery by overnight courier: Riverside County Transportation Commission 4080 Lemon Street, 3'd Floor Riverside, CA 92501 Attention: Chief Financial Officer Telephone: 951-787-7926 Facsimile: 951-787-7920 E-mail: ttrevino@rctc.org 8 56357.5 033083 AGMT 166 • for delivery by U.S. Mail: P.O. Box 12008 Riverside, CA 92502 The Trustee: U.S. Bank National Association 633 West Fifth Street, 24t Floor Los Angeles, CA 90071 Attention: Ashraf Almurdaah Telephone: 213-615-6002 Facsimile: 213-615-6199 E-mail: ashraf.almurdaah@usbank.com The 2009 Liquidity Provider: JP Morgan Chase Bank, N.A. 270 Park Avenue, 6t Floor Mail Code: NY1-K934 New York, NY 10017 Attention: Timothy Self, Executive Director Telephone: 212-270-4946 Facsimile: 917-463-0126 E-mail: timothy.a.self@jpmchase.com Each party hereto may, by notice given under this Agreement to the other parties described above, designate other addresses to which subsequent notices, requests, reports or other communications shall be directed. (b) This Agreement shall inure to the benefit of and be binding only upon the parties hereto and their respective successors and assigns. The terms "successors" and "assigns" shall not include any purchaser of any of the Bonds merely because of such purchase. Neither the 2009 Liquidity Provider nor any Owner or other third party shall have any rights or privileges hereunder. (c) All of the representations and warranties of the Commission and the Remarketing Agent in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of the Remarketing Agent or the Commission, (ii) the offering and sale of and any payment for any Bonds hereunder, or (iii) suspension, termination or cancellation of this Agreement. (d) This Agreement and each provision hereof may be amended, changed, waived, discharged or terminated only by an instrument in writing signed by the parties hereto. 9 56357.5 033083 AGMT 167 (e) Nothing herein shall be construed to make any party an employee of the other or to establish any fiduciary relationship between the parties except as expressly provided herein. (f) If any provision of this Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever. (g) This Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. 10 56357.5 033083 AGMT • 168 • IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: [NAME OF REMARKETING AGENT] By: Name: Title: 56357.5 033083 AGMT 169 ATTACHMENT 6 NP DRAFT DATED 7/24/09 STANDBY BOND PURCHASE AGREEMENT by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION Dated as of , 2009 $1 1 Riverside County Transportation Commission 2009 Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A-1 12629579.4 170 • TABLE OF CONTENTS ARTICLE I DEFINITIONS 2 Section 1.1. Specific Terms 2 Section 1.2. Incorporation of Certain Definitions by Reference 11 Section 1.3. Accounting Matters 11 Section 1.4. Interpretation 11 ARTICLE II THE COMMITMENT; FEES 11 Section 2.1. Commitment to Purchase Bonds 11 Section 2.2. Bank Bonds 12 Section 2.3. Method of Purchasing 12 Section 2.4. Mandatory Reductions of Available Commitment; Termination; Substitution 13 Section 2.5. Sale of Bank Bonds 14 Section 2.6. Rights of Bank Owners 16 Section 2.7. Commitment Fees and Other Fees 16 Section 2.8. Net of Taxes, Etc 17 Section 2.9. Increased Costs 18 Section 2.10. Computations; Payments 20 Section 2.11. Nature of Obligations 21 ARTICLE III BANK BONDS 21 Section 3.1. Maturity; Interest 21 ARTICLE IV CONDITIONS PRECEDENT TO EFFECTIVENESS 23 ARTICLE V REPRESENTATIONS AND WARRANTIES 26 Section 5.1. Due Organization; Power and Authority 26 Section 5.2. Due Authorization; No Violation 26 Section 5.3. Enforceability 26 Section 5.4. Disclosure 27 Section 5.5. No Litigation 27 Section 5.6. Consents 27 Section 5.7. No Proposed Legal Changes 27 Section 5.8. No Sovereign Immunity 28 Section 5.9. Incorporation of Representations and Warranties 28 Section 5.10. Bank Bonds 28 Section 5.11. Financial Statements 28 Section 5.12. Compliance with Laws and Contracts 28 Section 5.13. Complete and Correct Information 29 Section 5.14. Federal Reserve Board Regulations 29 Section 5.15. Investment Company Act 29 Section 5.16. Trustee and Remarketing Agent 29 Section 5.17. Tax Exempt Status 30 12629579.4 -i- 171 Section 5.18. Permitted Investments 30 Section 5.19. Compliance with this Agreement 30 Section 5.20. Pledge of Sales Tax Revenues 30 Section 5.21. Bonds 30 Section 5.22. Related Documents 30 ARTICLE VI CONDITIONS PRECEDENT TO PURCHASE 31 Section 6.1. Conditions 31 ARTICLE VII COVENANTS 32 Section 7.1. Affirmative Covenants of the Commission 32 Section 7.2. Negative Covenants of the Commission 38 ARTICLE VIII EVENTS OF DEFAULT 39 Section 8.1. Payments 39 Section 8.2. Other Payments 39 Section 8.3. Representations 39 Section 8.4. Certain Covenants 39 Section 8.5. Other Covenants 39 Section 8.6. Judgments 40 Section 8.7. Insolvency 40 Section 8.8. Invalidity 40 Section 8.9. Ratings Downgrade 41 Section 8.10. Cross Default 42 Section 8.11. Remedies 42 ARTICLE IX OBLIGATIONS ABSOLUTE 45 Section 9.1. Obligations Absolute 45 ARTICLE X MISCELLANEOUS 46 Section 10.1. Liability of the Bank 46 Section 10.2. Covenant of the Bank 47 Section 10.3. Costs and Taxes; Expenses; Indemnification 47 Section 10.4. Notices 48 Section 10.5. Successors, Participants and Assigns 49 Section 10.6. Governing Law; Waiver of Trial by Jury; Miscellaneous 50 Section 10.7. No Waivers, Amendments, Etc 50 Section 10.8. Counterparts 51 Section 10.9. Source of Funds 51 Section 10.10. Term of the Agreement; Survival 51 Section 10.11. Headings 51 Section 10.12. Complete and Controlling Agreement 52 Section 10.13. Beneficiaries 52 Section 10.14. Severability 52 Section 10.15. Patriot Act 52 12629579.4 • 172 • SCHEDULE 1 EXHIBIT A - NOTICE OF BANK PURCHASE (Optional Tender) A-1 EXHIBIT B - NOTICE OF BANK PURCHASE (Mandatory Tender) B-1 EXHIBIT C - FORM OF REQUEST FOR EXTENSION OF EXPIRATION DATE C-1 EXHIBIT D — FORM OF LETTER FROM TRUSTEE D-1 SCHEDULE I S-1 12629579.4 173 • STANDBY BOND PURCHASE AGREEMENT This STANDBY BOND PURCHASE AGREEMENT, dated as of [ ], 2009 (this "Agreement"), by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION (the "Commission") and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (the "Bank"). WITNESSETH: WHEREAS, the Commission has previously issued the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) Series 2008, currently outstanding in the aggregate principal amount of $126,395,000 (the "2008 Bonds") pursuant to an Indenture, dated as of June 1, 2008 (the "2008 Indenture"), the First Supplemental Indenture, dated as of June 1, 2008 (the "First Supplemental Indenture"), and the Second Supplemental Indenture, dated as of October 1, 2009 (the "Second Supplemental Indenture" and, together with the 2008 Indenture and the First Supplemental Indenture, the "Indenture"), each between the Commission and U.S. Bank National Association, as trustee (the "Trustee"); WHEREAS, the Commission is issuing $[ ] principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A-1 (the "2009 Series A -I Bonds"), $[ ] principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A-2 (the "2009 SeriesA-2 Bonds") and $[ ] principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A-3 (the "2009 Series A-3 Bonds" and, together with the Series A-1 Bonds and the Series A-2 Bonds, the "2009 Bonds") for the purpose of refunding $[ ] principal amount of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds), Series A and Series B, of refunding all of the Commission's 2008 Bonds, [and to pay accrued interest thereon, to fund interest on the 2009 Series A-1 Bonds to [ ], 20[ ], [to pay swap termination payments, if any,] to fund a reserve fund and to pay costs of issuance, all as provided in the Second Supplemental Indenture; WHEREAS, the Commission wishes to ensure the liquidity of the 2009 Series A-1 Bonds by providing for the purchase by the Bank of the 2009 Series A-1 Bonds which are not remarketed upon certain tenders by the owners thereof on or prior to the last day of the Commitment Period (as defined below), as provided herein; WHEREAS, the Bank is willing, upon the occurrence of certain events, to purchase 2009 Series A-1 Bonds tendered by the owners thereof but not remarketed, upon the terms and conditions set forth in this Agreement; and NOW, THEREFORE, the parties hereto agree as follows: 12629579.4 174 ARTICLE I DEFINITIONS Section 1.1. Specific Terms. As used herein, the following terms have the meanings indicated below or in the referenced Section of this Agreement, unless the context clearly indicates otherwise: "Act" has the meaning assigned to that term in the Indenture. "Affiliate" means any other Person controlling or controlled by or under common control with the Commission. For purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, .by contract or otherwise. "Agreement' means this Standby Bond Purchase Agreement, including any and all amendments and supplements hereto. The Commission hereby agrees that, for all purposes of the Indenture, this Agreement shall constitute and be treated as a "Liquidity Facility," as such term is defined in the Indenture. "Alternate Liquidity Facility" has the meaning assigned to such term in the Indenture. "Amendment Fee" has the meaning assigned to such term in Section 2.7(b) hereof. "Authorized Representative" has the meaning assigned to such term in the Indenture. "Available Commitment' as of any day means the sum of the Available Principal Commitment and the Available Interest Commitment, in each case, as of such day. "Available Interest Commitment" means an amount equal to $[ 1 (which amount equals [34] days' interest on the Available Principal Commitment for the 2009 Series A- 1 Bonds based upon an assumed rate of interest of [12.00]% per annum and a 365-day year calculated on the basis of the actual number of days elapsed), as such amount shall be adjusted from time to time as follows: (A) downward by an amount that bears the same proportion to such amount as the amount of any reduction in the Available Principal Commitment, in accordance with clause (a) or (b) of the definition herein of Available Principal Commitment, bears to the initial Available Principal Commitment; and (B) upward by an amount that bears the same proportion to such initial amount as the amount of any increase in the Available Principal Commitment, in accordance with clause (c) of the definition herein of Available Principal Commitment, bears to the initial Available Principal Commitment. 12629579.4 -2- 175 • • "Available Principal Commitment" means initially the aggregate principal amount of the 2009 Series A-1 Bonds outstanding of $[ ] and, thereafter, means such initial amount adjusted from time to time as follows: (a) downward by the amount of any mandatory reduction of the Available Principal Commitment pursuant to Section 2.4 hereof; (b) downward by the principal amount of any 2009 Series A-1 Bonds purchased by the Bank pursuant to Section 2.1 hereof; and (c) upward by the principal amount of any 2009 Series A-1 Bonds theretofore purchased by the Bank pursuant to Section 2.1 hereof which are remarketed (or deemed to be remarketed) pursuant to Section 2.5(c) hereof by the Remarketing Agent and for which the Bank Owner has received immediately available funds equal to the principal amount thereof and accrued interest thereon; provided, however, that the sum of (i) the Available Principal Commitment plus (ii) the aggregate principal amount of Bank Bonds shall never exceed $[ 1. Any adjustment to the Available Principal Commitment pursuant to clause (a), (b) or (c) hereof shall occur simultaneously with the occurrence of the events described in such clauses. "Bank" has the meaning assigned to such term in the introductory paragraph, and includes any successor or assign permitted hereby. The Commission hereby agrees that, for all purposes of the Indenture, the Bank shall constitute and be treated as a "Liquidity Provider," as such term is defined in the Indenture. "Bank Bond Amortization Period" means the period commencing on the first to occur of (a) the one hundred eighty-first (181') day immediately following the Purchase Date and (b) the last day of the Commitment Period, and ending, subject to satisfaction of the conditions set forth in Section 6.2 hereof, on the first to occur of (i) the third (3rd) anniversary of the date on which the Bank Bond Amortization Period commenced, (ii) the date on which the related Bank Bond is redeemed, defeased, accelerated or otherwise paid in accordance with its terms, (iii) the date of the remarketing of such Bank Bond, (iv) the date on which such Bank Bond matures in accordance with its terms, (v) the Substitution Date, (vi) the Conversion Date, and (vii) the date on which the Available Commitment has been reduced to zero or terminated in its entirety pursuant to Section 2.4 or Section 8.11 hereof. "Bank Bond Amortization Rate" means the Base Rate plus one percent (1.0%) per annum; provided, however, this rate shall not exceed the Maximum Rate. "Bank Bonds" means each 2009 Series A-1 Bond purchased by the Bank pursuant to Section 2.1 hereof and held by or for the account of the Bank or a subsequent Bank Owner in accordance with the terms of this Agreement, until purchased or retained in accordance with Section 2.5(c) or redeemed in accordance with Section 3.1 or otherwise paid in full. The Commission hereby agrees that, for all purposes of the Indenture, Bank Bonds hereunder shall constitute and be treated as "Liquidity Facility Bonds," as such term is defined in the Indenture. 12629579.4 "Bank Information" has the meaning assigned to such term in Section 10.2 hereof. -3- 176 "Bank Owner" means the Bank (but only in its capacity as owner (which, as used herein, shall mean beneficial owner if, at the relevant time, Bank Bonds are Book Entry Bonds) of Bank Bonds pursuant to this Agreement) or any other Person to whom the Bank or a subsequent Bank Owner has sold Bank Bonds in accordance with Section 2.5(a) hereof. "Bank Rate" means, for each period specified below, beginning with and including the date funds are advanced hereunder and ending on but excluding the date they are repaid in full with interest thereon as provided herein, the interest rate specified with respect to such period, which interest rates shall be computed on the basis set forth in Section 2.10(a) hereof: Period I. Purchase Date through the earlier to occur of the last day of the Commitment Period and the 90`h day immediately following the Purchase Date II. The earlier to occur of the last day of the Commitment Bank Bond Period and the 91a day immediately following the Amortization Rate Purchase Date and thereafter Rate Base Rate provided, however, that (a) upon and following the occurrence of an Event of Default hereunder, all amounts due hereunder shall bear interest in an amount equal to the Default Rate, (b) at no time shall the Bank Rate exceed the Maximum Rate and (c) notwithstanding the time periods set forth above, the Bank Bond Amortization Rate shall be applicable with respect to all Eligible Bonds purchased by the Bank on the last day of the Commitment Period from and including such day. "Banking Arrangements" means (a) the agreements of the Bank and the Commission set forth in this Agreement and the transactions contemplated thereby, including, without limitation, (i) any commitment to extend credit, to issue any credit or liquidity facility, to purchase any obligation of or for the benefit of the Commission, or to extend any other financial accommodation, (ii) any issuance, extension or maintenance of any of the foregoing, and (iii) any pledge, purchase or carrying of any obligation of or for the benefit of the Commission, and (b) any participation agreement or similar arrangement entered into in connection with the foregoing. "Base Rate" means, for any day, the higher of (a) the Bank's U.S. prime commercial lending rate in effect for such day (as such U.S. prime commercial lending rate is announced from time to time by the Bank at its principal New York office) plus 1.50% per annum, (b) the Federal Funds Rate plus 2.00% per annum and (c) 8.50% per annum. Each change in the Base Rate shall take effect at the time of such change in such U.S. prime commercial lending rate or the Federal Funds Rate, as the case may be. Each determination of the Base Rate by the Bank will be conclusive and binding on the Commission, absent manifest error. "Bond Counsel" means Orrick, Herrington & Sutcliffe LLP (or another nationally recognized bond counsel selected by the Commission and approved in writing by the Bank). 12629579.4 - 4 - • 177 "Bond Purchase Agreement" means the bond purchase agreement between the Commission and the initial underwriter(s) and/or purchasers of the 2009 Series A-1 Bonds. "Bond Register" has the meaning assigned to such term in the Indenture. "Bondholder" has the meaning assigned to such term in the Indenture. "Book Entry Bonds" means the 2009 Series A-1 Bonds so long as the book entry system with DTC is used for determining beneficial ownership of the 2009 Series A-1 Bonds. "Business Day" means any day other than (a) 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, (b) a day upon which commercial banks in the city in which is located the office of the Bank at which advances will be paid are authorized or obligated bylaw or executive order to be closed or (c) a day on which The New York Stock Exchange is closed. "Change of Law" means the adoption, after the Effective Date, of or change in any law, rule, regulation, statute, treaty, guideline or directive of any Governmental Authority or the occurrence of the effective date of any of the foregoing if adopted prior to the Effective Date or any change after the Effective Date in the application, interpretation or enforcement, of any of the foregoing. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commission" has the meaning assigned to such term in the introductory paragraph hereto, and includes any successor or assign permitted hereby. "Commitment Fee" has the meaning assigned to such term in Section 2.7(a) hereof. "Commitment Period" means the period from the Effective Date hereof to and including the earliest of (a) the Expiration Date, (b) the date on which no Eligible Bonds are Outstanding, (c) the close of business on the Business Day immediately following the Conversion Date, (d) the close of business on the thirtieth (30`h) day following the date on which a Notice of Termination Date is received by the Commission and the Trustee pursuant to Section 8.11(c) hereof, or if such thirtieth (30'h) day is not a Business Day, the next succeeding Business Day, and (e) the date on which the Available Commitment has been reduced to zero or terminated in its entirety pursuant to Section 2.4 (including a Substitution Date) or Section 8.11 hereof (other than as set forth in clause (d) above). "Conversion Date" means the effective date of a conversion of all the 2009 Series A-1 Bonds to bear interest at a rate of interest other than a Covered Rate. "Covered Rate" means, with respect to the 2009 Series A-1 Bonds, the Daily Rate or the Weekly Rate. "Daily Rate" has the meaning assigned to such term in the Second Supplemental Indenture. 12629579.4 - 5 - 1 7 8 "Default" means any occurrence, circumstance or event, or any combination thereof, which, with the lapse of time and/or the giving of notice, or both, would constitute an Event of Default. "Default Rate" means the Base Rate from time to time in effect plus three percent (3.0%) per annum; provided, however, this rate shall not exceed the Maximum Rate. "Default Tender" means a mandatory tender of the 2009 Series A-1 Bonds as a result of the Bank's delivery of a Notice of Termination Date to the Trustee. "Differential Interest Amount" means the excess of (a) interest which has accrued and could actually be paid at the Bank Rate (subject to the Maximum Rate), as determined in accordance with Section 3.1 hereof, up to but excluding the Sale Date or the Business Day on which the Bank Owner elects not to sell Bank Bonds pursuant to Section 2.5(c) hereof, less (b) the interest accrued on such 2009 Series A-1 Bonds which is received by the Bank Owners as part of the Sale Price. "DTC" means The Depository Trust Company, and any successor or assign. "DTC Book -Entry Account" has the meaning assigned to such term in Exhibit D, attached hereto. "DTC-VRDO Notice" has the meaning assigned to such term in Exhibit D, attached hereto. "Effective Date" has the meaning assigned to such term in the introductory paragraph of Article IV hereof. "Eligible Bonds" has the meaning assigned to such term in Section 2.1 hereof. "Event of Default" has the meaning assigned to such term in Article VIII hereof. "Excess Bank Bond Interest" has the meaning assigned to such term in Section 2.2 hereof. "Expiration Date" means the later of (a) 5:00 p.m., New York time, on , 2011 or, if such day is not a Business Day, the Business Day next preceding such day, and (b) 5:00 p.m., New York time, on the last day of any extension of such date pursuant to Section 10.10(b) hereof or, if such last day is not a Business Day, the Business Day next preceding such day. "FAST Eligible Bond" has the meaning assigned to such term in Exhibit D, attached hereto. "Federal Funds Rate" means for any day the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be the rate applicable to such transactions on the next 12629579.4 - 6 - • • • 179 • preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Bank on such day by three Federal funds brokers selected by the Bank. Each determination of the Federal Funds Rate by the Bank shall be conclusive and binding on the Commission absent manifest error. "Fee and Expenses Fund" has the meaning assigned to that term in the Indenture. "Fitch" means Fitch Inc., or its successors or assigns. "Governmental Authority" means any national, state or local domestic government, any political subdivision thereof or any other governmental, quasi -governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including, with respect to the Bank, any zoning authority, the Federal Deposit Insurance Corporation or the Federal Reserve Board, any central bank or any comparable authority), or any arbitrator with authority to bind a party at law. "Indemnified Party" has the meaning assigned to such term in Section 10.3 hereof. "Indenture" has the meaning assigned to such term in the recitals to this Agreement. "Indenture Event of Default" means an "Event of Default" as defined in the Indenture. "Interest Component' has the meaning assigned to such term in Section 2.1 hereof. "Interest Payment Date" with respect to the 2009 Series A-1 Bonds which are not Bank Bonds, has the meaning assigned to such term in the Indenture and, with respect to Bank Bonds, means each of the days described in Section 3.1(a) hereof. "Interest Rate Swap Agreement" has the meaning assigned to that term in the Indenture. "Mandatory Tender" means the mandatory tender of the 2009 Series A-1 Bonds on any date on which the 2009 Series A-1 Bonds are subject to mandatory tender for purchase in accordance with Section 22.05(a)(1), (a)(2) and (a)(6) of the Second Supplemental Indenture. [TBD — WHETHER AND TO WHAT EXTENT THIS AGREEMENT 1S AVAILABLE TO HANDLE MANDATORY TENDERS DESCRIBED IN SUB -CLAUSES (a)(3), (a)(4) and (a)(5) OF SECTION 22.05 OF THE SECOND SUPPLEMENTAL INDENTURE.] "Maximum Rate" means, with respect to Bank Bonds, the lesser of (i) the maximum lawful rate of interest permitted by applicable law and (ii) [25.00%] per annum. "Moody's" means Moody's Investors Service, Inc., and any successor rating agency. "Notice of Bank Purchase" means (a) in the case of a purchase of 2009 Series A-1 Bonds by the Bank as a result of an Optional Tender, a notice in the form of Exhibit A attached hereto and incorporated herein by this reference, or (b) in the case of a purchase of 2009 Series A-1 Bonds by the Bank as a result of a Mandatory Tender, a notice in the form of Exhibit B attached hereto and incorporated herein by this reference. 12629579.4 -7- 180 "Notice of Termination Date" has the meaning assigned to such term in Section 8.11(c) hereof. "Obligations" means all amounts owed by the Commission to the Bank under this Agreement and the Bank Bonds. "Official Statement" means the final Official Statement relating to the 2009 Series A-1 Bonds (including the cover page and all summary statements, appendices and other materials included or incorporated by reference or attached thereto), as amended or supplemented, or any other final official statement of the Commission used with respect to the remarketing of the 2009 Series A-1 Bonds or any supplement thereto. "Optional Tender" means the optional tender of any of the 2009 Series A-1 Bonds in accordance with Section 22.04 of the Second Supplemental Indenture. "Other Liquidity Facilities" means, collectively, the 2009 Series A-2 Liquidity Facility and the 2009 Series A-3 Liquidity Facility. "Other Taxes" has the meaning assigned to such term in Section 2.8(a) hereof. "Parity Obligations" means, without duplication, (a) all obligations of the Commission for borrowed money, (b) all obligations of the Commission evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of the Commission to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) all obligations of the Commission as lessee under capital leases and (e) each Interest Rate Swap Agreement (excluding fees and expenses and termination payments on Interest Rate Swap Agreements) entered into in connection with the 2009 Series A -I Bonds, in each case, incurred in accordance with Section 3.05(C) of the Indenture and having a lien and charge upon the Sales Tax Revenues that is on parity with the 2009 Series A -I Bonds. "Participant(s)" means any banlc(s) or other financial institutions that may purchase from the Bank a participation interest in this Agreement, any Bank Bonds pursuant to a participation agreement between the Bank and the Participant(s). "Payment Due Date" means any of the dates described in Section 3.1(a) relating to the repayment of any Bank Bonds. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a joint venture, a trust, a business trust or any other entity or organization, including a governmental or political subdivision or an agency or instrumentality thereof. "Purchase Date" has the meaning assigned to such term in Section 2.3 hereof. "Purchase Notice" has the meaning assigned to such term in Section 2.5(b) hereof. "Purchase Price" means, with respect to any Eligible Bond as of any date, 100% of the principal amount of such Eligible Bond plus (if the Purchase Date is not an Interest Payment Date) accrued and unpaid interest thereon to the Purchase Date, but in no event to exceed the 12629579.4 - 8 - • 181 • Available Commitment; provided, however, if the Purchase Date for any Eligible Bond is also an Interest Payment Date for such Eligible Bond, the Purchase Price for such Eligible Bond shall not include accrued but unpaid interest on such Eligible Bond; and provided, further, in no event shall the Purchase Price of any 2009 Series A-1 Bond include any premium owed with respect to any 2009 Series A-1 Bond. "Purchaser" has the meaning assigned to such term in Section 2.5(b) hereof. "Rating Agency" means, initially, Moody's and Standard & Poor's, and subsequent to the Effective Date, means any other nationally recognized rating agency or rating agencies designated by the Commission to maintain a rating or ratings on the 2009 Series A-1 Bonds and Parity Obligation other than Moody's and Standard & Poor's. "Related Documents" means this Agreement, the 2009 Series A-1 Bonds, the 2009 Series A-2 Bonds, the 2009 Series A-3 Bonds, the Other Liquidity Facilities, the Indenture and the Remarketing Agreement. "Remarketing Agent" means Barclays Capital Inc., and its successors and assigns. "Remarketing Agreement" means the Remarketing Agreement, dated as of [ ], 2009, between the Commission and the Remarketing Agent. "Revenue Fund" has the meaning assigned to such term in the Indenture. "Revenues" has the meaning assigned to such term in the Indenture. "Sale Date" has the meaning assigned to such term in Section 2.5(b) hereof. "Sale Price" has the meaning assigned to such term in Section 2.5(b) hereof. "Sales Tax Law" means the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Califomia Revenue and Taxation Code as supplemented and amended from time to time. "Sales Tax Revenues" has the meaning assigned to such term in the Indenture. "Second Supplemental Indenture" means the Second Supplemental Indenture, dated as of [ ], 2009 between the Commission and the Trustee. "Special Event of Default" means any Event of Default specified in Section 8.1(a), 8.6, 8.7(a), 8.7(d), 8.7(e), 8.8(a), 8.8(b), 8.8(c), 8.8(0, 8.9 or 8.10(b) hereof, subject to any limitations thereon as provided in Sections 8.11(a) and 8.11(b) hereof. "State" means the State of California. "Standard & Poor's" means Standard & Poor's Rating Services, a Division of The McGraw- Hill Companies Inc., and any successor rating agency. 12629579.4 -9- 182 "Substitution Date" means the date that an Alternate Liquidity Facility has been delivered to the Trustee and become effective with respect to the 2009 Series A-1 Bonds in replacement of this Agreement. "Subordinate Obligations" has the meaning assigned to such term in the Indenture. "Suspension Event" means an Event of Default as described in Section 8.1(b), 8.7(b)(i), 8.8(d) or 8.8(e) hereof or a Default as described in Section 8.7(b)(ii) or 8.7(c) hereof, subject to the provisions of Section 8.11(b) hereof. "Taxes" has the meaning assigned to such term in Section 2.8(a) hereof. "Termination Date" has the meaning assigned to such term in Section 8.11(b)(i) hereof. "Termination Fee" has the meaning assigned to such term in Section 2.7(d) hereof. "Trustee" has the meaning assigned to such term in the recitals to this Agreement. "2008 Bonds" means the Riverside Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) Series 2008, currently outstanding in the aggregate principal amount of $126,395,000 that are being refunded with the proceeds of the 2009 Bonds. "2009 Bonds" means, collectively, the Series 2009A-1 Bonds, the Series 2009A-2 Bonds and the Series 2009A-3 Bonds. "2009 Series A-1 Bonds" has the meaning assigned to such term in the recitals to this Agreement. "2009 Series A-2 Bonds" has the meaning assigned to such term in the recitals to this Agreement. "2009 Series A-3 Bonds" has the meaning assigned to such term in the recitals to this Agreement. "2009 Series A-2 Liquidity Facility" means the Standby Bond Purchase Agreement dated as of , 2009 among the Commission and the Bank related to the $ Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A-2. "2009 Series A-3 Liquidity Facility" means the Standby Bond Purchase Agreement dated as of , 2009 among the Commission and the Bank related to the S Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A-3. "U.S. Dollars" means the lawful currency of the United States of America. "Weekly Rate" has the meaning assigned to such term in the Second Supplemental Indenture. 12629579 4 -10- • 183 "written" or "in writing' means any form of written communication or a communication by means of telex, telecopier device or telegraph (but shall not include email or any other form of electronic mail unless otherwise provided in this Agreement). Section L2. Incorporation of Certain Definitions by Reference. Each capitalized term used herein and not defined herein shall have the meaning provided therefor in the Indenture, unless the context otherwise requires. Section 1.3. Accounting Matters. All accounting terms used herein without definition shall be interpreted in accordance with generally accepted accounting principles and, except as otherwise expressly provided herein, all accounting determinations required to be made pursuant to this Agreement shall be made in accordance with generally accepted accounting principles. Section 1.4. Interpretation. All words used herein shall be construed to be of such gender or number as the circumstances require. Reference to any document means such document as amended or supplemented from time to time as permitted pursuant to its terms and the terms hereof ARTICLE II THE COMMITMENT; FEES Section 2.1. Commitment to Purchase Bonds. Subject to the terms and conditions of this Agreement, including Article VI hereof, the Bank hereby agrees from time to time during the Commitment Period to purchase, at the Purchase Price, with immediately available funds, Bonds which bear interest at a Covered Rate and which are not Bank Bonds or Bonds owned by or held on behalf of, for the benefit of or for the account of, the Commission or any Affiliate of the Commission ("Eligible Bonds") which are tendered pursuant to (i) an Optional Tender or (ii) a Mandatory Tender and which, in either case, the Remarketing Agent has been unable to remarket. The Bank will pay said Purchase Price with its own funds. The aggregate principal amount (or portion thereof) of any Eligible Bond purchased on any Purchase Date shall be in an authorized denomination required by the terms of the Indenture and, in any case, the aggregate principal amount of all the 2009 Series A-1 Bonds purchased on any Purchase Date, together with the aggregate principal amount of all Bank Bonds then Outstanding, shall not exceed the Available Principal Commitment (calculated without giving effect to any purchase of the 2009 Series A-1 Bonds by the Bank on such date) at 10:00 a.m., New York City time, on such date. The aggregate amount of the Purchase Price comprising interest on the 2009 Series A-1 Bonds (the "Interest Component") purchased on any Purchase Date shall not exceed the lesser of (a) the Available Interest Commitment on such date and (b) the actual aggregate amount of interest accrued on each such 2009 Series A-1 Bond to but excluding such Purchase Date. 12629579.4 -11- 184 Section 2.2. Bank Bonds. Any 2009 Series A-1 Bonds purchased by the Bank pursuant to Section 2.1 hereof shall thereupon constitute Bank Bonds and have all of the characteristics of Bank Bonds as set forth herein and in the Indenture and shall be deemed and treated by the Commission and the Trustee like the 2009 Series A-1 Bonds that are not Bank Bonds, except with any different characteristics as set forth herein and in the Indenture. All Bank Bonds shall bear interest at the Bank Rate. In the event that the average Bank Rate accruing on any Bank Bonds during any period exceeds the Maximum Rate for such period, the Bank shall receive interest on account of Bank Bonds only at the Maximum Rate for such period (the difference between (a) the interest payable to the Bank if the Bank Bonds had continuously borne interest at the Bank Rate and (b) the interest actually paid to the Bank at the Maximum Rate is referred to below as the "Excess Bank Bond Interest'. Notwithstanding any subsequent reduction in the Bank Rate, Bank Bonds shall bear interest from and after the date on which any Excess Bank Bond Interest is accrued at the Maximum Rate until the date on which the interest paid to the Bank on Bank Bonds in excess of the Bank Rate equals such Excess Bank Bond Interest; provided, that, upon termination of this Agreement, in consideration for the limitation of the rate of interest otherwise payable hereunder, the Commission shall pay from the sources described in Section 2.11 hereof, to the extent permitted by law, the Bank a fee equal to the amount of all unpaid Excess Bank Bond Interest. To the extent permitted by law, interest shall accrue on, and be payable by the Commission with respect to, all unpaid Excess Bank Bond Interest at a rate per annum equal to the Bank Rate. The Commission shall pay to the Bank Owner accrued interest, including any accrued but unpaid Excess Bank Bond Interest, on Bank Bonds as provided in Section 3.1 hereof. On any date on which Excess Bank Bond Interest is due and payable, the Bank shall notify the Commission and the Trustee as to the amount of such Excess Bank Bond Interest due on such date, together with any interest accrued and payable thereon; provided, that the failure of the Bank to so notify the Commission or the Trustee shall not affect the accrual of or obligation of the Commission to pay such Excess Bank Bond Interest. All amounts owed to the Bank hereunder with respect to Bank Bonds shall be calculated in accordance with Section 2.10 hereof and shall become due and payable as set forth in Section 3.1 hereof. Section 2.3. Method of Purchasing. (a) The Trustee shall give notice by telecopier promptly confirmed by a written notice in the form of Exhibit A or Exhibit B, as applicable, to the Bank, pursuant to an Optional Tender or a Mandatory Tender, no later than 12:00 noon, New York City time, on the Business Day on which Bonds are subject to an Optional Tender or Mandatory Tender. If the Bank receives such notice as provided above, and subject, in each case, to the satisfaction of the conditions set forth in Article VI hereof, the Bank will transfer to the Trustee not later than 2:30 p.m., New York City time, on such date (a "Purchase Date"), in immediately available funds, an amount equal to the aggregate Purchase Price of all or such portion of such Eligible Bonds as requested from the Trustee. A Notice of Bank Purchase shall be irrevocable after receipt thereof by the Bank. The Bank shall have no responsibility for, nor incur any liability in respect of, any act, or any failure to act, by the Trustee which results in the failure of the Trustee to effect the purchase of 2009 Series A-1 Bonds for the account of the Bank with such funds 12629579.4 -12- • • 185 • provided pursuant to this Section 2.3(a) or otherwise. The 2009 Series A-1 Bonds purchased pursuant to this Section 2.3(a) shall be registered in the name of the Bank or, if directed in writing by the Bank, its nominee or designee on the pond Register and shall be held in trust by the Trustee for the benefit of the Bank. If the 2009 Series A-1 Bonds purchased pursuant to this Section 2.3(a) are Book Entry Bonds, the beneficial ownership of such 2009 Series A-1 Bonds shall be credited on the records maintained by DTC to the account of the Bank or, if directed in writing by the Bank, a nominee or designee of the Bank, maintained at DTC, and prior to the sale of any Bank Bond by the Bank as provided in Section 2.5(a) hereof, the Bank agrees to give all notices in the manner and by the time required by DTC to exclude such Bank Bond(s) from the Mandatory Tender of the 2009 Series A-1 Bonds. The Interest Component of the Purchase Price paid for such 2009 Series A-1 Bonds shall be paid to the Bank as provided in Section 3.1 hereof. (b) If the Bank receives a Notice of Bank Purchase after 12:00 noon, New York City time, on a Purchase Date from the Trustee, the Bank, subject to satisfaction of the conditions provided in Article VI hereof, will transfer to the Trustee at or before 2:30 p.m., New York City time, on the Business Day immediately following the Purchase Date specified in such notice, in immediately available funds, an amount equal to the aggregate Purchase Price of Eligible Bonds tendered or deemed tendered on such Purchase Date. In such event, all other provisions of Section 2.3(a) shall apply to the purchase and registration of Bank Bonds after the delivery of a Notice of Bank Purchase and transfer of funds as set forth herein. (c) In the event that any funds paid by the Bank to the Trustee pursuant to Section 2.3(a) or (b) hereof shall not be required to be applied to purchase 2009 Series A-1 Bonds as provided herein, such funds shall be held and be returned to the Bank as soon as practicable by the Trustee and, until so returned, shall be held uninvested and in trust by the Trustee for the account of the Bank. In the event that such funds are not returned to the Bank in immediately available funds as provided in Section 2.10(a) hereof by 4:00 p.m., New York City time, on the same day on which such funds were advanced, the Commission shall pay or cause to be paid to the Bank interest on such funds payable on demand and, in any event, on the date on which such funds are returned, at a rate equal to the Bank Rate for the day such funds were advanced through the date which is two (2) days after the day such funds were advanced, and, thereafter, at the Default Rate. (d) Notwithstanding any provisions of this Section 2,3 to contrary, the Bank and DTC may cause the transfer of funds and the transfer of any Bank Bond as described in this Section 2.3 on the basis of delivery versus payment or by such other means as shall be acceptable to the Bank, the Trustee and DTC and not contrary to the Indenture. Section 2.4. Mandatory Reductions of Available Commitment; Termination; Substitution. (a) Upon (i) any redemption, repayment or other payment of all or any portion of the principal amount of the 2009 Series A-1 Bonds so that such 2009 Series A-1 Bonds shall cease to be Outstanding, the aggregate Available Principal Commitment shall, subject to Section 2.4(d) below, be reduced by the principal amount of such 2009 Series A-1 Bonds so redeemed, repaid or otherwise deemed paid, as the case may be, or (ii) the close of business no sooner than the Business Day immediately following the Conversion Date, the aggregate Available Principal 12629579.4 -13- 186 Commitment shall, subject to Section 2.4(d) below, be reduced to zero and, in the case of either clause (i) or (ii) above, the Available Interest Commitment shall also be simultaneously reduced as provided in the definition thereof in Article I hereof; provided, however, that in the event any action described in clause (i) or (ii) above results in a reduction of the Available Commitment to zero, all Obligations, including without limitation, all principal and interest evidenced by Bank Bonds and all amounts payable under Article III hereof, shall be paid to the Bank up to and including the time of said reduction as described in the notice set forth in Section 2.4(d) below. (b) The Available Commitment shall, subject to Section 2.4(d) below, terminate at the close of business on the Business Day immediately following the Substitution Date. The Commission shall comply with the requirements of the Indenture with respect to the delivery of an Alternate Liquidity Facility. (c) Subject to satisfaction of the requirements of Section 2.7(d) hereof, the Commission may terminate this Agreement at any time following no less than sixty (60) days' prior written notice to the Bank and the Trustee. (d) In connection with any reduction or termination of the Available Commitment as described in Sections 2.4(a) and (b) above, the Trustee shall provide the Bank with written notice of the effective date of such reduction or termination and, unless and until said notice is received by the Bank, the Available Commitment shall not be deemed reduced and/or terminated pursuant to the terms of Sections 2.4(a) and (b). (e) Except as specifically provided in this Section 2.4, the Commission shall have no right to reduce or terminate the Available Commitment. Section 2.5. Sale of Bank Bonds. (a) Right to Sell Bank Bonds. The Bank expressly reserves the right to sell, at any time, Bank Bonds subject, however, to the express terms of this Agreement. The Bank agrees that such sales (other than sales made pursuant to Section 2.5(c) hereof) will be made only to institutional investors or other entities or individuals which customarily purchase commercial paper or tax-exempt securities in large denominations, all in accordance with applicable securities laws. The Bank agrees to notify the Commission, the Trustee and the Remarketing Agent promptly of any such sale (other than a sale made pursuant to Section 2.5(c) hereof) and, if such Bank Bond is a Book Entry Bond, specifying in accordance with DTC guidelines the account at DTC to which such Bank Bond is credited; and to notify the transferee in writing that (i) such 2009 Series A-1 Bond is no longer an Eligible Bond so long as it remains a Bank Bond; and (ii) there may not be a short-term investment rating assigned to such 2009 Series A-1 Bond so long as it remains a Bank Bond. Any Bank Owner purchasing a Bank Bond from the Bank shall acknowledge in writing its agreement (y) not to sell such Bank Bond to any Person except the Bank or a Purchaser identified by the Remarketing Agent pursuant to Section 2.5(b) hereof and (z) if such Bank Bond is a Book Entry Bond, to give all notices in the manner and by the time required by DTC to exclude such Bank Bond from Mandatory Tenders of 2009 Series A-1 Bonds while it remains a Bank Bond. 12629579.4 -14- • • 187 • (b) Purchase Notices. Prior to 12:00 noon, New York City time, on any Business Day on which a Bank Owner holds Bank Bonds, the Remarketing Agent may deliver a notice (a "Purchase Notice") to a Bank Owner as registered on the Bond Register and to the Bank, stating that it has located a purchaser (the "Purchaser") for some or all of such Bank Bonds and that such Purchaser desires to purchase on the Business Day following the Business Day on which a Bank Owner receives, prior to 12:00 noon, New York City time, a Purchase Notice (a "Sale Date') an authorized denomination of such 2009 Series A-1 Bonds at a price equal to the principal amount thereof, plus accrued interest thereon (calculated as if such 2009 Series A-1 Bonds were not Bank Bonds) (the "Sale Price"); provided, however, that the Remarketing Agent shall not remarket Bank Bonds following the delivery of a Notice of Termination Date unless the Purchaser shall have received written notice stating that a Notice of Termination Date is in effect with respect to the Bank Bonds which are the subject of such Purchase Notice. (c) Sale of Bank Bonds. A Bank Owner shall decide whether to sell any Bank Bonds to any Purchaser and shall give notice of such decision to the Commission, the Trustee and the Remarketing Agent by 3:00 p,m., New York City time, on the Business Day preceding the Sale Date. In the event such notice is not timely delivered by a Bank Owner, such Bank Owner shall be deemed to have determined to sell such Bank Bonds to a Purchaser on the Sale Date (subject to receipt by it of the funds called for by the next following sentence). If a Bank Owner determines or is deemed to have determined to sell such Bank Bonds to a Purchaser, such Bank Owner shall deliver such Bank Bonds to the Trustee (or, in the case of Bank Bonds which are Book Entry Bonds, shall cause the beneficial ownership thereof to be credited to the account of the Remarketing Agent at DTC) by 10:00 a.m., New York City time, on the Sale Date against receipt of the Sale Price therefor in immediately available funds or at the Bank Owner's address listed in the Bond Register, and such 2009 Series A-1 Bonds shall thereupon no longer be considered Bank Bonds; provided that, in the event that the Bank Owner has not delivered Bank Bonds as provided above and the Sale Price therefor has been delivered as provided above, such Bank Bonds shall be deemed to have been delivered and such 2009 Series A-1 Bonds shall no longer be considered Bank Bonds. When Bank Bonds are purchased in accordance with this Section 2.5(c), the Trustee shall, upon receipt of such Bank Bonds and upon receipt by such Bank Owner of the Sale Price, notify the Commission and the Remarketing Agent that such 2009 Series A-1 Bonds are no longer Bank Bonds. Any interest accrued on the Bank Bonds shall be paid to the Bank Owner as provided in Section 3.1 hereof and the Differential Interest Amount, if any, shall be paid to such Bank Owner by the Commission on the applicable Sale Date; provided, however, that, to the extent permitted by law, any amount representing Differential Interest Amount shall, until paid in full, accrue interest thereon at the Bank Rate and said interest may be paid on the next succeeding Interest Payment Date for Bank Bonds as set forth in Section 3.1 hereof; provided further, however, that said interest on any Differential Interest Amount shall, until paid in full, continue to accrue interest thereon at the Bank Rate (notwithstanding repayment of the Differential Interest Amount). Any sale of a Bank Bond pursuant to this Section 2.5 shall be without recourse to the seller and without representation or warranty of any kind. If a Bank Owner notifies the Commission, the Trustee and the Remarketing Agent, as provided in the first sentence of this Section 2.5(c), that it will not sell its Bank Bonds, the Trustee shall notify the Commission, the Remarketing Agent, the Bank and such Bank Owner that, as of the Sale Date, such 2009 Series A-1 Bond or 2009 Series A-1 Bonds shall no longer 12629579.4 -15- 188 constitute Bank Bonds and such 2009 Series A-1 Bonds shall be deemed to have been remarketed and the Available Commitment shall be appropriately increased. (d) Continuing Obligation. Following any sale of Bank Bonds pursuant to Section 2.5(c) or otherwise or any election to retain Bonds pursuant to Section 2.5(c), the Bank and each Bank Owner shall retain the right to receive payment from the Commission of any accrued Differential Interest Amount as provided in Section 3.1 hereof and in the Indenture. (e) Delivery Versus Payment. Notwithstanding any provisions of this Section 2.5 to contrary, the Bank and DTC may cause the transfer of any Bank Bond and the transfer of any funds described in this Section 2.5 on the basis of delivery versus payment or by such other means as shall be acceptable to the Bank, the Trustee and DTC and not contrary to the Indenture. Section 2.6. Rights of Bank Owners. Upon purchasing Bank Bonds, Bank Owners shall be entitled to and, where necessary, shall be deemed assigned all rights and privileges accorded Bondholders under the Indenture, other than as provided in Section 2.5 hereof, and any additional rights and privileges as to payment of interest and principal that are provided by this Agreement with respect to Bank Bonds. Upon purchasing Bank Bonds, Bank Owners shall be recognized by the Commission and the Trustee as the true and lawful owners (or, in the case of Book Entry Bonds, beneficial owners) of the Bank Bonds, free from any claims, liens, security interests, equitable interests and other interests of the Commission, except as such interests might exist under the terms of the Bank Bonds with respect to all Owners (or, in the case of Book Entry Bonds, beneficial owners) of the 2009 Series A-1 Bonds. Section 2.7. Commitment Fees and Other Fees. (a) Commitment Fee. The Commission hereby agrees to pay to the Bank a commitment fee with respect to the commitment of the Bank at the rate of 1.25% per annum of the Available Commitment as may be adjusted from time to time pursuant to Schedule I attached hereto (the "Commitment Fee") of the Bank commencing on the Effective Date and continuing for the duration of the Commitment Period. Such fee shall be payable in immediately available funds in arrears commencing on the first Business Day of January, 2010, with respect to the period from the Effective Date to such first Business Day of January, 2010, and, thereafter, on the first Business Day of each April, July, October and January and upon the last day of the Commitment Period, in all cases, covering the period from the date of the immediately preceding payment to such Business Day. If the Available Commitment is terminated in its entirety, the accrued but unpaid Commitment Fee shall be payable on the effective date of such termination in addition to any other amounts required hereunder. The Bank's determination of the Commitment Fee pursuant hereto shall be conclusive absent manifest error. (b) Amendment/Transfer Fee. In connection with the written request by the Commission or the Trustee for (i) any amendment, supplement, waiver, consent or other modification of this Agreement, the Indenture or any other Related Document requiring any action on the part of the Bank, or (ii) any transfer of the rights and obligations under this Agreement by the Commission or the Trustee, the Commission shall pay or cause to be paid to 12629579.4 -16- • 189 • the Bank a fee of $5,000 (the "Amendment Fee"), plus reasonable fees and expenses of counsel to the Bank, for each amendment, supplement, waiver, consent or other modification hereof; provided however, an amendment of this Agreement that entails nothing more than an extension of the term shall not require the payment of the Amendment Fee. (c) Purchase Fee. The Commission shall pay to the Bank a purchase fee in an amount equal to $500 for each purchase of 2009 Series A-1 Bonds by the Bank, which amount shall be payable on each date that the Commission shall pay the Commitment Fee due pursuant to Section 2.7(a). (d) Termination Fee. In the event the Commission replaces or terminates this Agreement prior to the Expiration Date, then the Commission shall pay to the Bank, in addition to all other Obligations that may be due and payable at such time, a termination fee equal to the Commitment Fee for the Commitment Period, less any Commitment Fees paid during such period pursuant to Section 2.7(a) hereof (the "Termination Fee"). Notwithstanding the foregoing provisions of this Section 2.7(d), no Termination Fee will be required to be paid by the Commission if (i) the 2009 Series A-1 Bonds are then rated by Moody's, Moody's shall have lowered or withdrawn the short-term rating on the 2009 Series A-1 Bonds below "P-1," as a result of the reduction by Moody's of the senior, unsecured short-term rating of the Bank; or (ii) the 2009 Series A-1 Bonds are then rated by Standard & Poor's, Standard & Poor's shall have lowered or withdrawn the short-term rating on the 2009 Series A-1 Bonds below "A-1," as a result of the reduction by Standard Poor's of the senior, unsecured short-term rating of the Bank; or (iii) the 2009 Series A-1 Bonds are then rated by Fitch, Fitch shall have lowered or withdrawn the short-term rating on the 2009 Series A-1 Bonds below "F-1," as a result of the reduction by Fitch of the senior, unsecured short-term rating of the Bank; provided, however, all Obligations including, without limitation, all principal and interest evidenced by Bank Bonds and all amounts payable under Article III hereof, shall be paid to the Bank at or prior to the time of termination. In addition, the Commission shall comply with the requirements of the Indenture with respect to terminating this Agreement. (e) non-refundable. Final Payment. All amounts payable pursuant to this Section 2.7 shall be Section 2.8. Net of Taxes, Etc. (a) Taxes. Any and all payment to the Bank by the Commission hereunder shall be made free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges, withholdings or liabilities imposed as a result of a Change of Law, excluding, however, taxes imposed on or measured by the net income or capital of the Bank by any jurisdiction or any political subdivision or taxing authority thereof or therein solely as a result of a connection between the Bank and such jurisdiction or political subdivision (all such non -excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being referred to below as "Taxes"). If as a result of a Change of Law, the Commission shall be required by law to withhold or deduct any Taxes imposed by the United States or any political subdivision thereof from or in respect of any sum payable hereunder to the Bank, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including, deductions applicable to additional sums payable under this Section 2.8), the Bank 12629579.4 -17- 190 receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Commission shall make such deductions, and (iii) the Commission shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. If the Commission shall make any payment under this Section 2.8 to or for the benefit of the Bank with respect to Taxes and if the Bank shall claim any credit or deduction for such Taxes against any other taxes payable by the Bank to any taxing jurisdiction in the United States, then the Bank shall pay to the Commission an amount equal to the amount by which such other taxes are actually reduced; provided that the aggregate amount payable by the Bank pursuant to this sentence shall not exceed the aggregate amount previously paid by the Commission with respect to such Taxes. In addition, the Commission, agrees to pay any present or future stamp, recording or documentary taxes and, if as a result of a Change of Law, any other excise or property taxes, charges or similar levies that arise under the laws of the United States of America or the State of New York from any payment made hereunder or from the execution or delivery or otherwise with respect to this Agreement (referred to below as "Other Taxes"). The Bank shall provide to the Commission within a reasonable time a copy of any written notification it receives with respect to Other Taxes owing by the Commission to the Bank hereunder; provided that the Bank's failure to send such notice shall not relieve the Commission of its obligation to pay such amounts hereunder. (b) Notice. Within thirty (30) days after the date of any payment of Taxes by the Commission, the Commission shall furnish to the Bank, the original or a certified copy of a receipt evidencing payment thereof. To the extent permitted by law, the Commission shall compensate the Bank for all reasonable losses and expenses sustained by the Bank as a result of any failure by the Commission to so furnish such copy of such receipt. (c) Survival of Obligations. The obligations of the Commission under this Section 2.8 shall survive the termination of this Agreement. Section 2.9. Increased Costs. (a) Costs. In the event that after the date of the execution hereof the application, enactment or adoption of, or any change in, any law, rule, regulation, treaty, guideline or directive, or the occurrence of the effective date of any law, rule, regulation, treaty, guideline or directive, or any provision thereof enacted or adopted on the date of the execution hereof but which has not yet become effective, or the application, interpretation or enforcement of any of the foregoing by any court, central bank, administrative or other Governmental Authority having jurisdiction over the Bank or a Participant or the transactions contemplated by this Agreement (whether or not having the force of law) shall either: (i} limit the deductibility of interest on funds obtained by the Bank to pay any of its liabilities or subject the Bank to any tax, duty, charge, deduction or withholding on or with respect to payments relating to the 2009 Series A-1 Bonds or any Banking Arrangements, or any amount paid or to be paid by the Bank hereunder (other than any tax measured by or based upon the overall net income of the Bank imposed by any jurisdiction having control over the Bank); 12629579.4 -18- • • 191 • (ii) impose, modify, require, make or deem applicable to the Bank any reserve requirement, capital requirement, special deposit requirement, insurance assessment or similar requirement against any assets held by, deposits with or for the account of, or loans or commitments by, a domestic office of the Bank; (iii) change the basis of taxation of payments due the Bank under this Agreement, the 2009 Series A-1 Bonds or any Banking Arrangements (other than by a change in taxation of the overall net income of the Bank); or (iv) impose upon the Bank any other condition with respect to any amount paid or payable to or by the Bank or with respect to this Agreement, the 2009 Series A-1 Bonds or any Banking Arrangements; and the result of any of the foregoing shall be to increase the cost to the Bank of extending, issuing or maintaining any of the Banking Arrangements or to reduce any amount (or the effective return on any amount) received or receivable by the Bank in connection with the Banking Arrangements (which increase in cost or reduction in yield shall be the result of the Bank's reasonable allocation, in a nondiscriminatory manner among borrowers having obligations to the Bank similar to those of the Commission, of the aggregate of such cost increases or yield reductions resulting from such event), then, within forty-five (45) days of written demand by the Bank, the Commission shall pay to the Bank, from time to time as specified by the Bank, additional amounts which shall be sufficient to compensate the Bank for all such increased costs or reductions in yield. Notwithstanding the foregoing, no Participant shall be entitled to any such additional amount from the Commission in excess of that to which the Bank would have been entitled had the Bank not granted such Participant a participation in this Agreement. The Bank shall submit to the Commission, at or prior to the making of each such demand, a certificate setting forth in reasonable detail such increased costs or yield reduction incurred by the Bank or such Participant as a result of any of the foregoing. (b) Capital Adequacy. If the Bank shall have determined that the adoption after the date hereof of any applicable law, rule, regulation or guideline adopted pursuant to or arising out of the August 1988 report of the Basle Committee on Banking Regulations and Supervisory Practices entitled "International Convergence of Capital Measurement and Capital Standards," or the adoption of any other law, rule, regulation or guideline (whether or not having the force of law) regarding capital adequacy by any Governmental Authority having regulatory jurisdiction over the Bank, or any change in applicable law, rule, regulation or guideline, as the case may be, or any change in the enforcement or interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by the Bank (or any lending office thereof) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, has or would have the effect of reducing the rate of return on capital of the Bank as a consequence of its obligations hereunder or its purchase or holding of Bank Bonds to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration the policies of the Bank with respect to capital adequacy) by an amount deemed by the Bank to be material, then within thirty (30) days after demand by the Bank, the Commission shall pay to the Bank from time to time, as specified by the Bank, such additional amount or amounts as will compensate the Bank for such reduction from the date of such adoption, change 12629579.4 -19- 192 or compliance with respect to such law, rule, regulation, guideline, request or directive, together with interest on each such amount from the date payment is due until the earlier of the date of payment in full thereof or the thirtieth (30a') day after which such payment is due, at the Bank Rate and, thereafter, at the Default Rate. (c) Payment. Each demand for compensation pursuant to Section 2.9(a) or 2.9(b) shall be accompanied by a certificate of the Bank in reasonable detail setting forth the computation of such compensation (including the reason therefor), which certificate shall be conclusive, absent manifest error, as against all other Persons, including, without limitation, the Commission and any Participant. The amounts owed by the Commission as compensation to the Bank pursuant to this Section 2.9 shall be calculated as though the Bank were the holder of all Bank Bonds and without regard to any sales of Bank Bonds by the Bank pursuant to Section 2.5 or to any assignments or participations made by the Bank with regard to its obligations or rights hereunder or with regard to Bank Bonds. (d) Continuing Costs. If such costs are to be incurred on a continuing basis and the Commission shall be so notified by the Bank in writing as to the amount thereof, then such costs shall be payable by the Commission to the Bank on each Interest Payment Date to the extent therefore incurred. (e) Survival of Obligations. The obligations of the Commission under this Section 2.9 shall survive the termination of this Agreement and the payment in full of the Bank Bonds and the other Obligations of the Commission hereunder. Section 2.10. Computations; Payments. (a) Computations. Interest, fees and other amounts payable to the Bank hereunder shall be computed on the basis of a 365-day year and actual days elapsed; provided, however, that interest calculated with respect to any Bank Bonds shall be on the basis applicable to the interest rate mode then in effect with respect to such 2009 Series A-1 Bonds as determined pursuant to Section 21.05 of the Second Supplemental Indenture; provided further, that the Commitment Fee shall be computed on the basis of a 360-day year and actual days elapsed. Any payments received by the Bank later than 4:00 p.m., New York City time, on any day shall be deemed to have been paid on the next succeeding Business Day. If any payment due hereunder is due on a day that is not a Business Day, then such amount shall be due on the next succeeding Business Day and, in the case of the computation of any fees described in Section 2.7 hereof, such extension of time shall in such case be included in the computation of the payment due hereunder. All payments to the Bank hereunder shall be made in U.S. Dollars and in immediately available funds. Unless the Bank shall otherwise direct, all such payments shall be made by means of wire transfer of funds through the Federal Reserve Wire System to the Bank's account c/o JPMorgan Chase Bank, N.A., Attention: [Account Manager, ABA No.: [ 1, Account No.: [ 1, Account Name: Riverside County Transportation Commission Series 2009 Series A-1 Bonds]. (b) Transfer Costs. The Commission agrees to pay to the Bank on each Purchase Date or Sale Date, as applicable, an amount equal to any charge imposed on the Bank pursuant to the Indenture in connection with the transfer or exchange of the 2009 Series A-1 12629579.4 -20- • 193 • • Bonds. The Commission agrees to cause the Trustee to give the Bank timely notice of each such charge, including the amount thereof. (c) Application of Payments. Payments made to the Bank under this Agreement shall first be applied to any fees, costs, charges or expenses payable to the Bank hereunder, next to any past due interest, next to any current interest due, and then to outstanding principal. (d) Survival of Obligation. The obligations of the Commission under this Section 2.10 shall survive the termination of this Agreement. Section 2.11. Nature of Obligations. (a) The interest due on Bank Bonds (including any Differential Interest Amount and Excess Bank Bond Interest that is not a fee as described in Section 2.2) shall be payable from, and secured by, the Sales Tax Revenues, on a parity with the payment of interest on the 2009 Series A-1 Bonds and the payment of interest on all other Parity Obligations, and any unpaid Excess Bank Bond Interest that is a fee as described in Section 2.2 hereof shall be an obligation of the Commission under the Agreement, payable from Revenues, but subordinate to payment of principal and interest on the 2009 Series A-1 Bonds (including Bank Bonds) and any amount payable on a parity therewith. (b) The maturing principal and sinking fund requirements due and payable in connection with Bank Bonds shall be payable from, and secured by, the Sales Tax Revenues, on a parity with the payment of maturing principal and sinking fund requirements due on the 2009 Series A-1 Bonds and all other Parity Obligations. (c) The obligation of the Commission to pay the Commitment Fee and all other amounts set forth herein as fees (including, but not limited to, the amounts described in Sections 2.7, 2.8, 2.9 and 10.3 hereof) shall be payable from the Fee and Expenses Fund of the Revenue Fund, pursuant to Section 5.02(A)(5) of the Indenture, if and to the extent that such amounts are not paid by the Commission from other moneys. (d) Notwithstanding any other provision of this Agreement to the contrary, all obligations of the Commission to the Bank hereunder are special, limited obligations of the Commission payable solely from the Sales Tax Revenues and other funds available for such purposes under the Indenture. ARTICLE III BANK BONDS Section 3.1. Maturity; Interest. (a) Bank Bonds. Notwithstanding anything to the contrary contained in such 2009 Series A-1 Bond, the Commission agrees that, each purchase of an Eligible Bond by the Bank pursuant to Section 2.3 hereof shall result in the creation of a Bank Bond. Interest on any 12629579.4 -21- 194 Bank Bond will be due and payable on the first Business Day of each month and each Bank Bond, and the accrued interest thereon, shall be repaid by or on behalf of the Commission on the earliest to occur of (A) if the conditions described in Section 6.2 are not satisfied on the related Purchase Date, the second Business Day immediately following the Purchase Date on which such Bank Bond was purchased pursuant to Section 2.3 hereof; and (B) if the conditions described in Section 6.2 have been satisfied on the related Purchase Date, (i) the date on which such Bank Bond is redeemed, defeased, accelerated or otherwise paid in accordance with its terms, (ii) the date of the remarketing of such Bank Bond, (iii) the date on which such Bank Bond matures in accordance with its terms, (iv) the Substitution Date, (v) the Conversion Date and (vi) the final day of the Bank Bond Amortization Period (any one of the foregoing payment dates constituting a "Payment Due Date"). The Bank shall be under no obligation to purchase any Eligible Bond pursuant to Section 2.3 hereof unless the conditions set forth in Section 6.1 hereof have been satisfied. The Commission may prepay any Bank Bond as provided in Section 3.1(c) below. The Bank shall use its best efforts to notify the Commission and the Trustee of the amount of accrued interest on each Bank Bond on the Business Day prior to the date on which such amount is due. (b) Redemption of Bank Bonds. Subject to the prepayment of any Bank Bond as provided in Section 3.1(a) and Section 3.1(c) hereof, each Bank Bond, and the accrued interest thereon, shall be subject to redemption from the sources described in Section 2.11 hereof in six (6) equal semi-annual installments, the first of which will occur on the first day of the related Bank Bond Amortization Period, with each subsequent installment being payable, together with interest accrued thereon, one hundred eighty (180) days thereafter, and with the final installment being due and payable no later than the final day of the Bank Bond Amortization Period. The Bank shall use its best efforts to notify the Commission and the Trustee of the amount of accrued interest on each Bank Bond on the Business Day prior to the date on which such amount is due. (c) Prepayment of Bank Bonds. Any Bank Bond may be prepaid by the Commission, without premium or penalty, upon one (1) Business Day's prior written, electronic or telephonic notice to the Bank (which notice, if electronic or telephonic, shall be promptly confirmed in writing), in whole or in part but, if in part, in a minimum aggregate principal amount of $100,000 and integral multiples of $5,000 in excess thereof. Any prepayment of principal by the Commission of a Bank Bond (including any prepayment pursuant to the sinking fund requirements associated with the related Bank Bond) shall be credited against the next succeeding payment due on the Bank Bond. (d) CUSIPs and Ratings for Bank Bonds. On or prior to the Effective Date, the Commission will provide, or cause to be provided, at its expense, (i) a CUSIP number different from any CUSIP number assigned to the Bonds that are not Bank Bonds and (ii) a long- term rating from Moody's, Standard & Poor's or Fitch, specifically assigned to such Bank Bonds. Furthermore, the Commission will ensure (at its expense) that, for so long as there remain any Bank Bonds Outstanding, the CUSIP number and the long-term rating assigned to such Bank Bonds are available on the Bloomberg Municipal Bond Description Screen (or are otherwise available electronically to the Bank pursuant to a third -party provider of such information). 12629579 4 -22- • • 195 • ARTICLE IV CONDITIONS PRECEDENT TO EFFECTIVENESS This Agreement shall become effective as of [ ], 2009 (the "Effective Date") provided that each of the following conditions have been fulfilled to the satisfaction of the Bank: (a) On the Effective Date, the Bank shall have received executed copies of each of the following documents, which documents shall be in full force and effect on the Effective Date and in form and substance satisfactory to the Bank: (i) the Indenture, including the Second Supplemental Indenture; (ii) the Official Statement; (iii) the Remarketing Agreement; (iv) the Bond Purchase Agreement; (v) the Other Liquidity Facilities; (vi) this Agreement; and (vii) the form of the 2009 Series A-1 Bonds, which may be marked as a "specimen" or otherwise marked as "void". (b) There shall have been delivered to the Bank such information and copies of documents, approvals (if any) and records (certified, where appropriate) of corporate and legal proceedings as the Bank may have requested relating to the entering into and performanceby each of the parties (other than the Bank) thereto, of each of the Related Documents, the Bond Purchase Agreement and the Official Statement and the transactions contemplated thereby, and the tax exempt status of the Bonds. . (c) The approving opinion of bond counsel, together with a reliance letter addressed to the Bank with respect thereto, and the opinion of counsel to the Commission regarding the enforceability of this Agreement and related matters, in each case, in form satisfactory to the Bank and dated the Effective Date. (d) There shall have been delivered to the Bank such information and copies of documents, approvals (if any) and records certified, where appropriate, of corporate and legal proceedings as the Bank may have requested relating to the Commission entering into, performing, accepting and/or agreeing to this Agreement and the other Related Documents, and the transactions contemplated hereby and thereby. Such documents shall, in any event, include: (i) a certificate of the [Secretary] of the Commission, attaching the following and certifying that such are in full force and effect on the Effective Date: 12629579.4 -23- 196 (A) copies of (y) a resolution of the Commission approving this Agreement and the other matters contemplated hereby and (z) all other documents evidencing any other necessary corporate action; (B) the bylaws of the Commission; (C) a copy of the Commission's investment policy applicable to the 2009 Bonds; (D) a copy of the Interest Rate Swap Agreement applicable to the 2009 Bonds; and (ii) an incumbency certificate with respect to the officers or agents of the Commission who are authorized to execute and deliver this Agreement. (e) A certificate signed by an Authorized Representative, dated the Effective Date, stating that: (i) the representations and warranties of the Commission contained in Article V hereof, the Indenture and the other Related Documents to which it is a party are true and correct on and as of the Effective Date as though made on and as of such date; (ii) no petition by or against the Commission has at any time been filed under the United States Bankruptcy Code or under any similar act; (iii) no Default or Event of Default hereunder has occurred and is continuing, or would result, from the execution and performahce of this Agreement; (iv) the Indenture and the other Related Documents have not been amended, supplemented or modified in any way since their respective effective dates; (v) except as described in the Official Statement or any other documents provided by the Commission to the Bank or except as approved by the Bank prior to the Effective Date, no material adverse change shall have occurred in the condition (financial or otherwise) or operations of the Commission between the date of the Commission's most recent audited financial statements and the Effective Date, and no transactions or obligations having a material adverse effect on the condition (financial or otherwise) or operations of the Commission, whether or not arising from transactions in the ordinary course of the Commission's business, shall have been entered into by the Commission subsequent to the date of the Commission's most recent audited financial statements; and (vi) except as described in the Official Statement or any other documents provided by the Commission to the Bank or except as approved by the Bank prior to the Effective Date, no transaction or event shall have occurred and no change shall have occurred in the condition (financial or otherwise) or operations of the Commission between the date of the Commission's most recent audited financial statements and the Effective Date which materially adversely affects the security for any of the 2009 Series A-1 Bonds, or the Commission's ability to repay when due its obligations under this Agreement, any of the 2009 Series A-1 Bonds and the Related Documents. (f) A certificate signed by duly authorized officer or officers of the Trustee stating that: (i) the officer or officers who executed and delivered the Indenture were authorized under the Trustee's goveming documents to do so and the titles or offices of the officer or officers who are authorized under the Trustee's governing documents to present Notices of Bank Purchase hereunder, (ii) no Indenture Event of Default has occurred, nor has there occurred any circumstance or event or any combination thereof which, with the lapse of time and/or the giving of notice, would constitute an Indenture Event of Default, (iii) the execution and delivery of the 12629579.4 -24- • 197 • Indenture by the Trustee, and the performance of the Trustee's obligations thereunder, did not, at all relevant times, and will not result in a default under any agreement or instrument to which the Trustee is a party, and (iv) such other matters as the Bank may reasonably request in a form satisfactory to the Bank and dated the Effective Date. (g) Payment of the Bank's fees and expenses (including attorney's fees and expenses described in Section 10.3 hereof) payable on the Effective Date. (h) Evidence satisfactory to the Bank that the 2009 Series A-2 Bonds and the 2009 Series A-3 Bonds are being executed and delivered concurrently with the 2009 Series A-1 Bonds and evidence that the proceeds of the 2009 Bonds are to be disbursed as described in the Official Statement. (i) Legal opinion of Nixon Peabody LLP, special counsel to the Bank, addressed to the Commission, the Trustee and the Remarketing Agent, dated the Effective Date, and as to such matters incident to this Agreement and the transactions contemplated hereby as the Bank shall have reasonably requested. (1) Evidence satisfactory to the Bank that (i) a CUSIP number has been obtained and reserved for any Bank Bonds and (ii) a long-term rating from any one of Moody's, Standard & Poor's or Fitch has been assigned to the Bank Bonds. (k) The Bank shall have received satisfactory evidence that the 2009 Bonds have long-term ratings of at least "[ ]" by Moody's, "[ ]" by Standard & Poor's and "[ ]" by Fitch. (1) An executed letter from the Trustee, in form and substance reasonably satisfactory to the Bank, in substantially the form attached hereto as Exhibit D. (m) Such other documents, instruments, approvals and, if requested by the Bank, certified duplicates of executed originals thereof, and opinions as the Bank may reasonably request. In addition, (A) the Bank shall have determined, as of the Effective Date, that no law, regulation, ruling or other action of the United States, the State of New York or the State of California or any political subdivision or other Governmental Authority therein or thereof shall be in effect or shall have occurred, the effect of which would be to prevent the Commission, the Trustee, the Remarketing Agent or the Bank from fulfilling their respective obligations under this Agreement or the other Related Documents to which such entity is a party and (B) no material adverse change in the laws, rules, guidelines, or regulations (or their interpretation or administration) currently in effect and applicable to the parties hereto, and the transactions contemplated hereby, as determined in sole discretion of the Bank, shall have occurred. 12629579.4 -25- 198 ARTICLE V REPRESENTATIONS AND WARRANTIES To induce the Bank to enter into this Agreement and to purchase 2009 Series A-1 Bonds as provided herein, the Commission makes the following representations and warranties to, and agreements with the Bank (which representations, warranties and agreements shall survive the execution and delivery of this Agreement and any purchases of 2009 Series A-1 Bonds by the Bank): Section 5.1. Due Organization; Power and Authority. The Commission is county transportation commission, duly organized and validly existing under the laws of the State of Califomia. The Commission has all requisite power and authority to adopt, execute, deliver and perform all of its obligations under the Related Documents, the Bond Purchase Agreement and to incur the indebtedness evidenced by the 2009 Series A-1 Bonds, and to adopt, execute and deliver any and all instruments and documents required to be adopted, executed or delivered pursuant to or in connection herewith or therewith and to perform each and all of the matters and things provided for herein and therein. Section 5.2. Due Authorization; No Violation. The execution, delivery and performance by the Commission of the Agreement, the Bond Purchase Agreement and the other Related Documents and any and all instruments or documents required to be adopted or executed in connection herewith or therewith have been or will by the Effective Date be duly authorized and do not and will not, in any material respect, (a) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to the Commission or (b) result in a breach of or constitute a default under any indenture, loan, credit agreement or any other agreement, lease or instrument to which the Commission is a party or by which the Commission is bound. Section 5.3. Enforceability. Each Related Document (other than the 2009 Series A-1 Bonds) and the Bond Purchase Agreement to which the Commission is a party constitutes a legal, valid and binding obligation of the Commission, enforceable against the Commission in accordance with its terms, except as such enforceability may be limited by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The 2009 Series A-1 Bonds have been duly issued, executed and delivered in conformity with the Act and the Indenture, and constitute legal, valid and binding special obligations of the Commission, enforceable in accordance with their terms, except as such enforceability may be limited by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and entitled to the benefit and security of the Indenture. 12629579.4 -26- • 199 • Section 5.4. Disclosure. All factual information provided to the Bank by or on behalf of the Commission is, and all other such factual information hereafter provided will be, to the knowledge of the Commission, accurate in all material respects on the date as of which such information is certified. The Official Statement (other than the financial statements included therein), true copies of which have heretofore been delivered to the Bank, and each amendment or supplement thereto prepared subsequent to the Effective Date (a true copy of which shall be fumished to the Bank), do not and will not as of the date thereof contain any untrue statement of a material fact and do not and will not as of the date thereof omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which made, not misleading, except no representation is made as to any information furnished by DTC or the Bank expressly for inclusion therein or as to any information concerning DTC or the book -entry system. Section 5.5. No Litigation. There is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, arbitrator, governmental or other board, body or official, pending with service of process accomplished or, to the best knowledge of the Commission after due inquiry, threatened against or affecting the Commission, which in any manner draws into question the validity or enforceability of any of the Related Documents and the Bond Purchase Agreement or in any way contests the existence, organization or powers of the Commission or any elected official thereof to adopt, execute and deliver any of the Related Documents and the Bond Purchase Agreement, to issue the 2009 Series A-1 Bonds or to perform the obligations thereunder or contemplated thereby or which, if determined adversely to the Commission, would have a material adverse effect on the Sales Tax Revenues or the ability of the Commission to perform its obligations under any of the Related Documents. Section 5.6. Consents. No authorization, consent, approval, license, exemption from or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than those which have been or will by the Effective Date be obtained, will be necessary for the valid adoption, execution, delivery and performance by the Commission of any of the Related Documents and the Bond Purchase Agreement; provided that no representation is made as to any "blue sky" or securities laws of any jurisdiction. Section 5.7. No Proposed Legal Changes. To the best knowledge of the Commission, there is no amendment, or proposed amendment certified for placement on a statewide ballot, to the Constitution of the State of California or any published administrative interpretation of the Constitution of the State of California or any State of California law, or any legislation which has passed either house of the State legislature, the effect of which (a) would be materially adversely affect the ability of the Commission to perform its obligations under this Agreement and the Bond Purchase Agreement or any of the other Related Documents or (b) would invalidate, eliminate or reduce the Sales Tax Law or Sales Tax Revenues. 12629579.4 -27- 200 Section 5.8. No Sovereign Immunity. The Commission is not entitled to immunity from legal proceedings to enforce this Agreement, the 2009 Series A-1 Bonds or any other Related Document (including, without limitation, immunity from service of process or immunity from jurisdiction of any court otherwise having jurisdiction) and is subject to claims and suits for damages in connection with its obligations under the Agreement pursuant to and in accordance with the laws of the State applicable to public entities such as the Commission. Section 5.9. Incorporation of Representations and Warranties. The Commission hereby makes to the Bank the same representations and warranties as were made by it in the Bond Purchase Agreement and the Related Documents to which it is a party. No amendment to such representations and warranties or defined terms made pursuant to the Indenture shall be effective to amend such representations and warranties or defined terms as incorporated by reference herein without the prior written consent of the Bank, except as otherwise provided in Section 7.2(b) hereof. Section 5.10. Bank Bonds. The Bank Bonds purchased pursuant to Article II will be transferred to the Bank, free and clear of all liens, security interests or claims of any Person other than the Bank, except for consensual liens or other security interests as may be created by the Bank. Section 5.11. Financial Statements. The audited financial statements of the Commission for each of its fiscal years ended June 30, [2007] and June 30, [2008], including balance sheets as of June 30 of each of said years, all examined and reported on by independent public accountants, prepared by the Commission, as heretofore delivered to the Bank correctly and fairly present the financial condition of the Commission as of said dates and the results of the operations of the Commission for each of such periods, respectively, and have been prepared in accordance with generally accepted accounting principles consistently applied except as stated in the notes thereto; and there has been no material adverse change in the condition, financial or otherwise, of the Commission since June 30, [2008] from that set forth in said financial statements as of and for the period ended on that date. Section 5.12. Compliance with Laws and Contracts. The execution, delivery and performance by the Commission of the Bond Purchase Agreement and the Related Documents to which it is a party do not and will not (a) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award as currently in effect to which the Commission is subject; (b) result in a breach of or constitute a default under the provisions of any resolution, indenture, loan or credit agreement or any other agreement, lease or instrument to which the Commission may be or is subject or by which it, or its property, is bound; or (c) result in, or require, the creation or imposition of any mortgage, deed of trust, assignment, pledge, lien, security interest or other charge or encumbrance of any nature or with respect to any of the properties of the Commission other than 12629579.4 -28- • 201 as provided herein and therein; and the transactions undertaken pursuant to the Indenture will not result in a material default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such resolution, indenture, agreement, lease or instrument. Section 5.13. Complete and Correct Information. No representation, warranty or other statement made by the Commission with respect to the Sales Tax Revenues in or pursuant to this Agreement, the Official Statement or any other Related Document or any other document or financial statement with respect to the 2009 Series A-1 Bonds provided by the Commission to the Bank in connection with this Agreement, the Official Statement or any other Related Document, except as disclosed to the Bank in writing, contains any untrue statement of a material fact or omits (as of the date made or furnished) any material fact necessary to make the statements not misleading in light of the circumstances under which they are made. All information, reports and other papers and data with respect to the Sales Tax Revenues and the Commission's Parity Obligations furnished to the Bank were, at the time the same were so furnished, accurate in all material respects. Any financial statements and cash flows furnished to the Bank with respect to the Sales Tax Revenues and the Commission's Parity Obligations were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of conditions existing at the time of the delivery of such financial statements and cash flows. No fact is known to the Commission that materially and adversely affects or, in the future may (so far as it can reasonably foresee) materially and adversely affect, the security for any of the 2009 Series A-1 Bonds or any other Parity Obligation, or the Commission's ability to repay when due its obligations under this Agreement, any of the 2009 Series A-1 Bonds, any Parity Obligations and the other Related Documents or in the financial statements and other documents referred to in this Section 5.13 or in such information, reports, papers and data or otherwise disclosed in writing to the Bank. Section 5.14. Federal Reserve Board Regulations.. No part of the proceeds of any 2009 Series A-1 Bonds will be used for the purpose, whether immediate, incidental or ultimate, to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended from time to time), or to extend credit to others for the purpose of purchasing or carrying any margin stock. Section 5.15. Investment Company Act. The Commission is not an "investment company" or a company "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. Section 5.16. Trustee and Remarketing Agent. U.S. Bank National Association is the duly appointed and acting Trustee and Barclays Capital Inc. (or a successor or assign meeting the requirements of the Indenture and Section 7.2(a) hereof) is the duly appointed and acting Remarketing Agent for the 2009 Series A-1 Bonds 12629579.4 -29- 202 Section 5.17. Tax Exempt Status. The Commission has not taken any action or omitted to take any action, and knows of no action taken or omitted to be taken by any other person or entity, which action, if taken or omitted, would cause interest on the 2009 Series A-1 Bonds to be subject to personal income taxes levied by the State. Section 5.18. Permitted Investments. As of the Effective Date, the Commission has no knowledge that it has made any material investment, or entered into any agreement for the purpose of effecting any such investment, which is not permitted to be made pursuant to the Act or the Indenture. Section 5.19. Compliance with this Agreement. The Commission is in compliance with the terms and conditions of this Agreement, and no breach of the terms hereof nor any Event of Default, Special Event of Default or Suspension Event has occurred and is continuing, and no event, act or omission has occurred and is continuing which, with the lapse of time, the giving of notice, or both, would constitute an Event of Default, Special Event of Default or Suspension Event or a breach of the terms hereof. Section 5.20. Pledge of Sales Tax Revenues. The Indenture creates a valid pledge in favor of the Trustee in the Sales Tax Revenues and, as of the Effective Date, all necessary actions on the part of the Commission have been taken as required to pledge the Sales Tax Revenues in favor of the Trustee under the Indenture. The Commission hereby pledges the Sales Tax Revenues, on a subordinated basis, to the payment of the Commitment Fees and all amounts due hereunder other than (a) principal and interest payments on the 2009 Series A-1 Bonds (including the Bank Bonds). Except as provided in the Indenture, the Commission has not pledged or granted a lien, security interest or other encumbrance of any kind on the Sales Tax Revenues. Section 5.21. Bonds. Each 2009 Series A-1 Bond (including each Bank Bond) is entitled to the benefits of the Indenture. Section 5.22. Related Documents. Each of the Related Documents (other than this Agreement) to which the Commission is a party is in full force and effect and none of the Related Documents has been amended or supplemented except by such amendments or supplements as have previously been delivered to the Bank. 12629579.4 -30- • 203 ARTICLE VI CONDITIONS PRECEDENT TO PURCHASE Section 6.1. Conditions. The obligation of the Bank to purchase Eligible Bonds hereunder on any date is subject to the satisfaction of the following conditions, unless waived in writing by the Bank: (a) No Special Event of Default or Suspension Event shall have occurred and be continuing and the Bank's obligations hereunder shall not otherwise have been terminated or suspended. If and to the extent that a Suspension Event shall have been cured as provided in Section 8.11(b) hereof, the condition described in this Section 6.1(a) will be deemed satisfied; and (b) The Bank shall have timely received the Notice of Bank Purchase(s) as provided in Section 2.3 hereof; provided, that if the Notice of Bank Purchase(s) is not received in a timely manner, the Bank will be obligated to purchase Eligible Bonds on the Business Day following receipt thereof. Each notification delivered pursuant to clause (b) of this Section 6.1 shall constitute a representation and warranty by the Commission on each Purchase Date that the condition described in the clause (a) of this Section 6.1 has been satisfied on such Purchase Date. As promptly as possible after satisfaction of the conditions set forth in (a) and (b) hereof, the Bank Bonds to be purchased by the Bank on such Purchase Date shall be executed, registered and, if applicable, delivered in accordance with the Indenture and this Agreement. Section 6.2. Conditions to Bank Bond Amortization Period. Bank Bonds will be eligible for the Bank Bond Amortization Period described in Section 3.1 hereof; provided that the following conditions are satisfied on the related Purchase Date: (a) No Event of Default shall have occurred and be continuing on the related Purchase Date; provided, however, that upon reinstatement of the Bank's obligation to purchase Eligible Bonds as provided in Section 8.11(b) hereof, then this condition of Section 6.2 shall be deemed satisfied; and (b) All representations and warranties of the Commission contained in, or incorporated by reference in, this Agreement are true and correct as of the related Purchase Date (excluding those representations and warranties which, by their terms, are no longer true and/or correct by virtue of the passage of time). Unless the Commission shall have previously advised the Bank in writing that any one of the above statements is no longer true, the Commission is deemed to have represented and warranted on such Purchase Date that the above statements are true and correct 12629579.4 -31- 204 ARTICLE VII COVENANTS Section 7.1. Affirmative Covenants of the Commission. So long as any of the 2009 Series A-1 Bonds bearing interest at a Covered Rate shall be outstanding (including any Bank Bonds) or any Obligations remain unpaid hereunder, the Commission covenants and agrees as follows, unless the Bank shall otherwise consent in writing: (a) Performance of This and Other Agreements. The Commission shall punctually pay or cause to be paid all amounts payable under this. Agreement, the Indenture and the other Related Documents and observe and perform all of the conditions, covenants and requirements of this Agreement, the Indenture and the other Related Documents. (b) Further Assurances. The Commission will at any and all times, insofar as it may be authorized so to do by law, authorize, make, do, execute, acknowledge and deliver every and all such further resolutions, acts, deeds, conveyances, assignments, recordings, filings, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning and confirming all and singular rights of the Bank hereunder or payment of the obligations of the Commission arising under or pursuant to this Agreement and the Bank Bonds, or intended so to be, or which the Commission may hereafter become bound to pledge or assign thereto, including the maintenance of the security interests in and pledge of the Sales Tax Revenues created pursuant to the Indenture. (c) Books and Records; Inspection Rights. To the extent permitted by law and with reasonable notice, the Commission will permit any person designated by the Bank to visit the offices of the Commission to examine the books and financial records, including minutes of meetings of any relevant governmental committees or agencies, and make copies thereof or extracts therefrom, and to discuss the affairs, finances and accounts of the Commission with its principal officials, all at such reasonable times and as often as the Bank may reasonably request on behalf of the Bank; provided, however that the Commission shall not disclose to the Bank any documents and information which are subject to confidentiality agreements and which are not public record or otherwise available under California law for public inspection; and provided further that the Commission acknowledges that its accounting and financial records are not subject to any confidentiality agreement and are available for inspection. The Bank agrees to maintain the confidentiality of all such books, records and information regarding the Commission which is not otherwise publicly available; provided, however, that the Bank shall not be precluded from disclosing such information or the contents of such books and records (i) to its officers, directors, employees, agents, attorneys and accountants who have a need to know such books, records or information in accordance with customary banking practices and who receive such books, records or information having been made aware of the restrictions set forth in this Section 7.1(c), (ii) to any actual or proposed Participant or Bank which has agreed in writing to be bound by the provisions of this Section 7.1(c), (iii) to the extent disclosure is required by law, statute, rule, regulation or judicial process or (iv) upon the lawful demand of any court or agency having jurisdiction over the Bank or any Participant. 12629579.4 -32- 205 • 12629579.4 (d) Reporting Requirements. The Commission shall furnish to the Bank: (i) as soon as available (and, in no event, later than one hundred eighty (180) days after the end of each fiscal year of the Commission), a copy of its audited annual financial statements, consisting of a balance sheet and a statement of revenues, expenditures and changes in fund balances of the Commission, including the Sales Tax Revenues for such fiscal year, setting forth in comparative form the corresponding figures (if any) for the preceding fiscal year, all in reasonable detail, and accompanied by an unqualified opinion of a nationally recognized independent certified public accounting firm stating that they have been prepared in accordance with generally accepted accounting principles consistently applied and accompanied by a certification from the Executive Director or the Chief Financial Officer of the Commission addressed to the Bank stating that neither an Event of Default, Special Event of Default or Suspension Event has occurred which was continuing at the end of such fiscal year or on the date of his certification, or, if such an event has occurred and was continuing at the end of such fiscal year or on the date of his certification, indicating the nature of such event and the action which the Commission proposes to take with respect thereto; (ii) as soon as available (and in no event later than ninety (90) days after the end of each June 30 and December 31), the unaudited financial statements of the Commission including the balance sheet as of each June 30 and December 31 and a statement of income and expenses, all in reasonable detail and accompanied by a certification from the Executive Director or the Chief Financial Officer of the Commission addressed to the Bank stating that neither an Event of Default, Special Event of Default or Suspension Event has occurred which was continuing at the end of such six-month period or on the date of his certification, or, if such an event has occurred and was continuing at the end of such six-month period or on the date of his certification, indicating the nature of such event and the action which the Commission proposes to take with respect thereto; (iii) as soon as available, and in any event within fifteen (15) days after the end of each March 31 (such quarterly period to include each day from and including January 1st of each year to and including March 31 st of each year), July 1 (such quarterly period to include each day from and including April 1st of each year to and including July 1st of each year), September 30 (such quarterly period to include each day from and including July 1st of each year to and including September 30th of each year) and January 1 (such quarterly period to include each day from and including October 1st of each year to and including January 1st of each year), the Commission shall provide to the Bank a statement of (a) the amount of all Sales Tax Revenues received by the Commission or the Trustee, on behalf of the Commission, during such fiscal quarter and all such amounts that are available to make debt service payments on the 2009 Bonds, (b) the amount of all Sales Tax Revenues received by the Commission or the Trustee, on behalf of the Commission, during the twelve (12) months ended as of the end of such fiscal quarter and all -33- 206 12629579.4 such amounts that are available to make debt service payments on the 2009 Bonds (such amounts available to make debt service payments, the "Annual Historical Sales Tax Revenues"), (c) the amount of all payments of principal and interest on the 2009 Bonds (the "Annual Historical Sales Tax Revenues Debt Service Payments") during the twelve (12) months ended as of the end of each January 1 and July 1, (d) a projection by the Commission of the amount of principal and interest coming due on the 2009 Bonds for the five (5) years after the end of each January 1 and July 1 (with respect to any 2009 Bonds bearing interest at variable rates of interest or with respect to which other payments may be made subject to the occurrence of contingencies, the Commission may provide for such assumptions as the Commission determines are reasonable under the circumstances), and (e) a calculation showing the ration that the Annual Historical Sales Tax Revenues bear to the Annual Historical Sales Tax Revenues Debt Service Payments after the end of each January 1 and July 1; (iv) as soon as possible after a closing, a copy of any official statement of the Commission in connection with any other debt offering by the Commission which is secured by Sales Tax Revenues; (v) as soon as possible and in any event within five (5) Business Days after the occurrence of each Event of Default or Default continuing on the date of such statement, a statement of an Authorized Representative setting forth details of such Event of Default or Default and the action which is being taken or proposed to be taken with respect thereto; (vi) promptly after the receipt or giving thereof, copies of all notices of resignation by or removal of the Trustee or Remarketing Agent which are received or given by the Commission; (vii) promptly after the adoption thereof, copies of any amendments or supplements to the Official Statement and each Related Document; (viii) with reasonable promptness, such otheeinformation and data with respect to the Sales Tax Revenues as from time to time may be reasonably and lawfully requested by the Bank; (ix) with reasonable promptness, a copy of its investment policy and Interest Rate Swap Agreement applicable to the 2009 Bonds; (x) within thirty (30) days of the adoption thereof, a copy of the annual budget of the Commission prior to the commencement of each fiscal year of the Commission, together with each amendment thereto as soon as the same becomes available; and (xi) such other information respecting the business, properties or the condition or operations, financial or otherwise, of the Commission as the Bank may from time to time reasonably request. -34- • 207 As and to the extent that any financial statement, audit report or other filing described in Section 7.1(d)(i), 7.1(d)(iii), 7.1(d)(vi) or 7.1(d)(ix) has been filed on a timely basis with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access system and the Commission has provided written notice thereof to the Bank, the requirements of such Sections 7.1(d)(i), 7.1(d)(iii), 7.1(d)(vi) or 7.1(d)(ix), with respect thereto shall be deemed satisfied. (e) Compliance with Documents. The Commission will take all necessary steps to assure that all 2009 Bonds will be issued in compliance with the Indenture. The Commission agrees that it will perform and comply with each and every covenant and agreement required to be performed or observed by it in the Related Documents. (f) Amendments to the Sales Tax Law or Proposed Legislation. The Commission shall furnish to the Bank (a) a copy of any amendments or modifications to the law or any other legislation, initiative or referendum of which the Commission is aware which could (i) annul, amend, modify, replace or otherwise adversely impact upon the Sales Tax Law or (ii) lead to the diminution or reallocation of the Sales Tax Revenues or any portion thereof; or (c) a written notice describing any other event which, in the reasonable judgment of the Commission, is likely to have a material adverse effect on the Sales Tax Revenues or affect the Commission's ability to perform its obligations under the 2009 Bonds or any of the Related Documents. (g) Changes to Law. The Commission shall vigorously oppose any rescission of or amendment to or any other action under or in connection with the Sales Tax Revenues (including, without limitation, any modification of the Sales Tax Law) which would or could materially reduce the amount of the Sales Tax Revenues or the allocation of such revenues to the payment of the 2009 Bonds or the obligations of the Commission hereunder or which would or could in any manner materially impair or adversely affect the rights of the Commission to any or all of the Sales Tax Revenues or to the security of the Bank or the owners of the 2009 Bonds. (h) Selection of 2009 Series A-1 Bonds for Redemption. The Commission shall select, or cause to be selected, for redemption any and all Bank Bonds subject to redemption prior to selecting, or causing to be selected, for redemption any 2009 Series A-1 Bonds that are not Bank Bonds. (i) Compliance With Law. The Commission shall comply with all laws, rules and regulations (including all federal, state and local environmental and health and safety laws, rules and regulations), and with all final orders, writs, judgments, injunctions, decrees or awards to which it may be subject; provided, however, that the Commission may contest the validity or application thereof and appeal or otherwise seek relief therefrom, and exercise any and all of the rights and remedies which it may have with regard thereto, so long as such acts do not affect the Commission's power and authority to execute and deliver this Agreement or any other Related Documents to which it is a party, to perform its obligations and pay all amounts payable by it hereunder and under the other Related Documents. 12629579.4 -35- 208 (i) Notices. The Commission will promptly furnish, or cause to be furnished, to the Bank (i) notice of the occurrence of any Event of Default or Default as defined herein or in the Indenture, (ii) notice of the failure by the Remarketing Agent to perform any of its obligations under the Remarketing Agreement or the Trustee to perform any of its obligations under the Indenture, (iii) notice of any proposed substitution of this Agreement, (iv) each notice required to be given to the Bank pursuant to the Indenture, (v) notice of any litigation, administrative proceeding, proposed or enacted legislation or business development which may reasonably be expected to materially adversely affect the Sales Tax Revenues, the transactions authorized pursuant to the Indenture or the ability of the Commission to perform its obligations as set forth hereunder, under the Indenture or under any of the other Related Documents to which it is a party, (vi) copies of any communications delivered or received by the Commission pursuant to the Indenture (unless, with respect to communication received by it under the Indenture, the same are required to be furnished by the sender thereof directly to the Bank under the terms of the Indenture), or copies of any communications to and from the Securities and Exchange Commission or the Internal Revenue Service with respect to the transactions contemplated hereby, (vii) notice of any downgrade, withdrawal, or suspension of the long-term rating assigned by a Rating Agency to the 2009 Bonds or any Parity Obligation or the placement of any such 2009 Bonds or Parity Obligation on credit watch by a Rating Agency or, if a Rating Agency then maintaining ratings on the 2009 Bonds and Parity Obligation expresses in writing a negative outlook as to the long-term rating of any such 2009 Series A-1 Bonds or Parity Obligation, and (viii) such further financial and other information with respect to the Sales Tax Revenues and the other transactions authorized pursuant to the Indenture as the Bank may reasonably request from time to time. (k) Liquidity. (1) Other than in connection with a Conversion Date, the Commission shall use its best efforts to obtain an Alternate Liquidity Facility to replace this Agreement in the event (A) the Bank shall decide not to extend the Expiration Date pursuant to Section 10.10(b) hereof or the Commission fails to request such an extension on a timely basis, (B) the Commission terminates this Agreement pursuant to Section 2.4 hereof, (C) the Bank shall furnish a Notice of Termination Date pursuant to Section 8.11(c) hereof or (D) a Default Tender shall have been effected with any funds made available hereunder. (ii) The Commission agrees that any Alternate Liquidity Facility will require, as a condition to the effectiveness of the Alternate Liquidity Facility, that the Commission or the issuer of the Alternate Liquidity Facility will provide funds to the extent necessary, in addition to other funds available, on the proposed Substitution Date, for the purchase of all Bank Bonds at par plus all accrued interest thereon (plus any Differential Interest Amount and Excess Bank Bond Interest) through the proposed Substitution Date. On such proposed Substitution Date, any and all amounts due hereunder to the Bank shall be payable in full to the Bank. (iii) The Commission shall not permit an Alternate Liquidity Facility to become effective with respect to less than all of the 2009 Series A-1 Bonds bearing interest at a Covered Rate without the prior written consent of the Bank. 12629579.4 -36- • 209 • (1) Preservation of Existence. To the fullest extent permitted by law, the Commission shall maintain its legal existence. (m) Disclosure of Participants. The Commission shall permit the Bank to disclose any information received by the Bank in connection herewith, including without limitation the financial information described in Section 7.1(d) hereof, to any Participants; provided, that the Bank shall require, as a condition to providing any such information to any Participant, an agreement on the part of said Participant to maintain the confidentiality of said information except for the reasons set forth in the second proviso to Section 7.1(c) hereof. (n) Other Covenants. For the benefit of the Bank, the Commission shall comply with, abide by and be restricted by all the agreements, covenants, obligations and undertakings contained in the provisions of the Indenture and the other Related Documents, all of which provisions, together with the related definitions, exhibits and ancillary provisions, are incorporated herein by reference and made a part hereof to the same extent and with the same force and effect as if the same had been herein set forth in their entirety and, without regard to giving effect to any amendment or modification of any provisions of the such documents or any waiver of compliance therewith, no such amendment, modification or waiver (except as expressly noted above) shall in any manner constitute an amendment, modification or waiver of the provisions thereof as incorporated herein unless consented to in writing by the Bank; provided, that no such consent shall be necessary in the event (i) the Bank shall have failed to honor its obligation to purchase Eligible Bonds hereunder or (ii) in the event no such consent is required pursuant to Section 7.2(b) hereof. (o) Conversions; Defeasance. The Commission shall promptly furnish, or cause to be furnished, to the Bank, not later than its furnishing the same to the Remarketing Agent, a copy of any written notice furnished by the Commission to the Remarketing Agent pursuant to the Indenture indicating a proposed conversion of the interest rate on the 2009 Series A-1 Bonds to a rate other than a Covered Rate. In addition, the Commission will not defease, nor allow the defeasance of, the 2009 Series A-1 Bonds without having contemporaneously satisfied all of its Obligations hereunder, including the Bank Bonds. (p) Trustee and Remarketing Agent. The Commission shall use reasonable efforts to cause the Trustee and each Remarketing Agent at all times to comply with the terms of the Indenture and the other Related Documents to which each is a party or by which such party is bound. In addition, the Commission will not permit the position of Remarketing Agent to be vacant without obtaining the prior written consent of the Bank thereto. (9) Use of Bond Proceeds. The Commission shall cause (i) the proceeds from moneys received hereunder to be used solely to pay the Purchase Price of 2009 Series A-1 Bonds as more fully described in Sections 2.1 and 2.3 hereof, and (ii) the proceeds of the 2009 Series A-1 Bonds to be used solely for the purposes set forth in the Indenture and the Official Statement. 12629579.4 -37- 210 Section 7.2. Negative Covenants of the Commission. So long as any of the 2009 Series A-1 Bonds (including any Bank Bonds) or any Obligations remain unpaid hereunder, the Commission shall not do any of the following, without the prior written consent of the Bank, which consent shall not be unreasonably withheld: (a) Successor Remarketing Agent and Remarketing Agreement. Appoint, permit or suffer to be appointed any successor Remarketing Agent unless (i) such successor meets the requirements for a remarketing agent under the Indenture; or (ii) the Commission provides at least ten (10) Business Days' notice to the Bank and obtains the prior written consent of the Bank to such replacement remarketing agent, which consent shall not be unreasonably withheld. (b) Amendments to the Indenture. Without the prior written consent of the Bank, (i) consent or agree to or permit any rescission of or amendment to the Act or the Sales Tax Law which would reduce the amount of the Sales Tax Revenues or the obligations of the Commission hereunder or which would in any manner materially impair or materially adversely affect the rights of the Commission to the Sales Tax Revenues or the security of the Indenture; or (ii) agree to the amendment of the Indenture such that payments to holders of 2009 Series A-1 Bonds are impaired or reduced or the priority of the obligations of the Commission under the Indenture or to the Bank hereunder is adversely affected in any way; or (iii) agree to any amendment of the Indenture whatsoever which will materially and adversely affect the rights or obligations of the Bank or the holders of 2009 Series A-1 Bonds in respect thereof; provided that no consent shall be required or impairment deemed or adverse affect assumed from the issuance of additional Bonds in accordance with the Indenture. (c) Bank Disclosure. Include in the Official Statement any information concerning the Bank that is not supplied in writing, or otherwise consented to, by the Bank expressly for inclusion therein, nor shall the Commission make any changes in any reference to the Bank in any amendment or supplement to the Official Statement. In addition, the Commission shall not include in any offering document for any debt secured by the Sales Tax Revenues (other than the 2009 Bonds) any information concerning the Bank that is not supplied in writing, or otherwise consented to, by the Bank expressly for inclusion therein; provided, that the Commission may include references to the existence of this Agreement, the Bank and its role with respect to the 2009 Series A-1 Bonds without the Bank's consent thereto in connection with (i) the preparation of an offering document for such debt (other than the 2009 Series A-1 Bonds), (ii) the Commission's satisfaction of its continuing disclosure requirements, (iii) the preparation of its annual financial statements; and (iv) compliance with any other legal or regulatory requirement applicable to the Commission. (d) Maintenance of Tax -Exempt Status of the 2009 Series A -I Bonds. Take any action or omit to take any action which, if taken or omitted, would adversely affect the exclusion from gross income of such interest on the 2009 Series A-1 Bonds for purposes of the exemption of such interest from Federal and State income taxes: 12629579.4 -38- 211 • (e) Federal Reserve Board Regulations. Use the moneys received hereunder, or permit the use of the moneys received hereunder, in violation of Regulation U, as amended, promulgated by the Board of Governors of the Federal Reserve System. (f) Accounting Method Materially change its method of accounting relating to Sales Tax Revenues, or the times of commencement or termination of fiscal years or other accounting periods relating to Sales Tax Revenues without first disclosing in writing such change to the Bank. ARTICLE VIII EVENTS OF DEFAULT Upon the occurrence of any of the following events (each an "Event of Default"): Section 8.L Payments. The Commission shall fail to pay when due (a)(i) any principal or sinking fund requirement due on any 2009 Series A-1 Bond (including any Bank Bond prior to the commencement of the Bank Bond Amortization Period) and (ii) any interest on any 2009 Series A-1 Bond (including any Bank Bond), (b) any principal payment due on any Bank Bond during the Bank Bond Amortization Period pursuant to Section 3.1(b) hereof, or (c) any other amount owed to the Bank pursuant to Section 2.2 or Section 3.1 hereof (other than amounts described in (a) and (b) above); or Section 8.2. Other Payments. The Commission shall fail to pay when due any amount owing under Section 2.7, Section 2.8, Section 2.9 or Section 10.3 hereof; or Section 8.3. Representations. Any material representation or warranty made by or on behalf of the Commission in this Agreement, the Indenture or in any other Related Document or in any certificate or statement delivered hereunder or thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made; or Section 8.4. Certain Covenants. The Commission shall default in the due performance or observance of any of the covenants set forth in Section 7.1(a), 7.1(h), 7.1(k), 7.1(1), 7.1(o), 7.1(q), or 7.2(b) or 7.2(d) hereof; or Section 8.5. Other Covenants. The Commission shall materially default in the due performance or observance of any other term, covenant or agreement contained in this Agreement (other than those referred to in Sections 8.1, 8.2, 8.3 and 8.4 hereof), the Indenture or any other Related Document and such 12629579.4 -39- 212 default shall remain unremedied for a period of thirty (30) days after the Commission shall have received notice thereof; or Section 8.6. Judgments. One or more final, unappealable judgment(s) against the Commission for the payment of money, which judgment(s) is not covered by insurance, and which judgment(s) is to be enforced pursuant to a lien upon, or an attachment against, any or all of the Sales Tax Revenues, the operation or result of which judgment(s), individually or in the aggregate, equal or exceed $15,000,000 and which judgment(s) shall remain unpaid, undischarged, unbonded or undismissed for a period of sixty (60) days; or Section 8.7. Insolvency. (a) The Commission shall commence any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding -up, liquidation, dissolution, composition or other relief with respect to it, or seeking to declare a moratorium with respect to the 2009 Series A-1 Bonds or the Parity Obligations, or (ii) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets or for all or any portion of the Sales Tax Revenues, or the Commission shall make a general assignment for the benefit of its creditors; or (b) there shall be commenced against the Commission any case, proceeding or other action of a nature referred to in clause (a) above which (i) results in an order for such relief or in the appointment of a receiver or similar official or (ii) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (c) there shall be commenced against the Commission, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets or for all or any portion of the Sales Tax Revenues, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (d) the Commission shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (a), (b) or (c) above; or (e) the Commission shall generally not, or shall be unable to, or shall admit in writing, its inability to, pay its debts; or Section 8.8. Invalidity. (a) Any provision of the Act, this Agreement, the Indenture or the 2009 Series A-1 Bonds relating to (i) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the 2009 Series A-1 Bonds (including any Bank Bonds) or on any Parity Obligation or (ii) the Sales Tax Revenues securing said 2009 Series A-1 Bonds and Parity Obligation, shall at any time, and for any reason, cease to be valid and binding on the Commission, or shall be declared to be null and void, invalid or unenforceable as the result of a final nonappealable judgment by any federal or state court or as a result of any legislative or administrative action by any Governmental Authority having jurisdiction over the Commission; or (b) the Commission repudiates or otherwise denies that it has any further liability or obligation 12629579.4 -40- • 213 under or with respect to any provision of the Act, this Agreement, the Indenture, the 2009 Series A-1 Bonds or the Parity Obligations relating to (i) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the 2009 Series A-1 Bonds (including any Bank Bonds) or on any Parity Obligation or (ii) the Sales Tax Revenues securing said 2009 Series A-1 Bonds and Parity Obligation; or (c) the State or the Commission shall have taken or pe> nutted to be taken any official action, or has duly enacted any statute, which would materially adversely affect the enforceability of any provision of this Agreement, the 2009 Series A-1 Bonds, the Act, the Indenture or any Panty Obligation relating to (i) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the 2009 Series A-1 Bonds (including any Bank Bonds) or on any Parity Obligation or (ii) the Sales Tax Revenues securing said 2009 Series A-1 Bonds (including any Bank Bonds) and Parity Obligation; or (d) any Governmental Authority with jurisdiction to rule on the validity or enforceability of this Agreement, the 2009 Series A-1 Bonds, the Act, the Indenture or any Parity Obligation shall find or rule, in a judicial or administrative proceeding, that any provision of this Agreement, the 2009 Series A-1 Bonds, the Act, the Indenture or any Parity Obligation, as the case may be, relating to (i) the ability or the obligation of the Commission to pay, when due, the principal of or interest on the 2009 Series A-1 Bonds (including any Bank Bonds) or on any Parity Obligation or (ii) the Sales Tax Revenues securing said 2009 Series A-1 Bonds (including any Bank Bonds) and Panty Obligation, is not valid or not binding on, or enforceable against, the Commission; or (e) the State or the Commission (i) makes a claim in a judicial or administrative proceeding that the Commission has no further liability or obligation hereunder, under the 2009 Series A-1 Bonds (including any Bank Bonds), the Act, the Indenture or any Parity Obligation to pay, when due, the principal of or interest on the 2009 Series A-1 Bonds (including any Bank Bonds) or on any Parity Obligation or (ii) contests in a judicial or administrative proceeding the validity or enforceability of any provision of this Agreement, the 2009 Series A-1 Bonds (including any Bank Bonds), the Act, the Indenture or any Parity Obligation relating to or otherwise affecting (A) the Commission's ability or obligation to pay, when due, the principal of or interest on the 2009 Series A-1 Bonds (including any Bank Bonds) or on any Parity Obligation or (B) the Sales Tax Revenues securing said 2009 Series A-1 Bonds (including any Bank Bonds) and Parity Obligation; or (f) a debt moratorium or comparable extraordinary restriction on repayment of principal or interest on any debt shall have been declared or imposed (whether or not in writing) with respect to the 2009 Series A-1 Bonds (including any Bank Bond) or on any Parity Obligation; or Section 8.9. Ratings Downgrade. Moody's, Standard & Poor's[, Fitch] and any other Rating Agency then rating the 2009 Series A-1 Bonds and any Parity Obligation shall have (a) assigned the 2009 Series A-1 Bonds or any Parity Obligation a long-term rating below "Baa3" by Moody's and "BBB-" by Standard & Poor's/Fitch (or comparable rating in the case of another Rating Agency), (b) withdrawn their long-term ratings of the 2009 Series A-1 Bonds or any Parity Obligation for any credit related reasons or (c) suspended their long-term ratings of the 2009 Series A-1 Bonds or any Parity Obligation for any credit related reasons; provided, however, that any downgrade, withdrawal or suspension described in any of the foregoing provisions of this Section 8.9 shall not be deemed an Event of Default hereunder if said downgrade, withdrawal or suspension, as the case may be, shall be attributable to the downgrade, withdrawal or suspension of the long-term ratings 12629579.4 -41 - 214 assigned to any bond insurance or other credit enhancement provided by a Person other than the Commission; or Section 8.10. Cross Default. (a) Except as otherwise provided in clause (b) below, any "Event of Default" as set forth in Section 7.01 of the Indenture shall occur and be continuing or any "Event of Default" shall occur and be continuing under any other agreement between the Conunission and the Bank regarding Parity Obligations, if any; or (b) the Commission shall fail to make any payment in respect of principal or interest on any Parity Obligation, issued and outstanding or to be issued, when due (i.e., whether upon said Parity Obligation's scheduled maturity, required prepayment, acceleration, upon demand or otherwise, except as such payments may be accelerated, demanded or required to be prepaid under this Agreement), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Parity Obligation. then, and in any such event, the Bank may take any one or more of the following actions: Section 8.11. Remedies. (a) In the case of any Special Event of Default, the Available Commitment shall immediately be reduced to zero, in which case the obligations of the Bank under Article II of this Agreement shall immediately terminate and expire without requirement of notice by the Bank; provided, that (i) the Event of Default described in Section 8.1(a) will not qualify as a "Special Event of Default" hereunder if the failure to pay the principal of, or interest on, a Bank Bond is due solely to an acceleration of all of the Bank Bonds by the Bank for any reason other than nonpayment as described in Section 8.1(a) hereof and (ii) the Suspension Events described in Section 8.11(b) hereof will not qualify as "Special Events of Default" unless and until the conditions described in said Section 8.11(b) for such qualification have been satisfied. After such termination or expiration, the Bank shall deliver promptly to the Commission, the Trustee and the Remarketing Agent written notice of such termination or expiration; provided, however, that failure to provide such written notice shall have no effect on the validity or enforceability of such termination or expiration. (b) In the case of a Suspension Event, the obligation of the Bank to purchase Eligible Bonds under this Agreement shall be immediately suspended without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds until the Available Commitment is reinstated as described below. Promptly upon the occurrence of any such Suspension Event, the Bank shall notify the Commission, the Trustee and the Remarketing Agent of such suspension and the effective date of such suspension in writing by facsimile, promptly confirmed by regular mail; provided, that the Bank shall incur no liability of any kind by reason of its failure to give such notice and such failure shall in no way affect the suspension of the Available Commitment or its obligation to purchase Eligible Bonds pursuant to this Agreement. (i) Upon the occurrence of an Event of Default described in Section 8.1(6), the Bank's obligations to purchase Eligible Bonds shall be suspended immediately and 12629579.4 -42- • 215 automatically and remain suspended until the Commission cures the Event of Default resulting in said suspension or the date on which the Bank's obligations hereunder have terminated or expired in accordance with the terms hereof, whichever is the first to occur (the "Termination Date"). If the Commission shall cure the Event of Default described in Section 8.1(b) prior to the Termination Date, then the Available Commitment and the obligations of the Bank under this Agreement shall thereupon be reinstated (unless the Commitment Period shall otherwise have been terminated, suspended or expired as provided in this Agreement). Notwithstanding the foregoing, if the Commission shall not have cured the Event of Default resulting in said suspension prior to the Termination Date, then the Available Commitment and the obligations of the Bank to purchase Eligible Bonds shall terminate on the Termination Date without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds. (ii) Upon the occurrence of an Event of Default described in Section 8.7(b)(i), the Bank's obligations to purchase Eligible Bonds shall be suspended immediately and automatically and remain suspended until said case, proceeding or other action referred to therein is either dismissed, discharged or bonded or the Termination Date occurs, whichever is first. In the event that said Event of Default shall have been dismissed, discharged or bonded prior to the Termination Date, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall be reinstated and the terms of this Agreement shall continue in full force and effect as if there had been no such suspension (unless the Commitment Period shall otherwise have been terminated, suspended or expired as provided in this Agreement). In the event that said Suspension Event shall not have been dismissed, discharged or bonded prior to the Termination Date, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall terminate on such Termination Date without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds. (iii) Upon the occurrence of a Default described in Section 8.7(b)(ii), the Bank's obligations to purchase Eligible Bonds shall be immediately and automatically suspended and remain suspended until the case, proceeding or other action referred to therein is either dismissed, discharged or bonded within sixty (60) days from the commencement of such case, proceeding or action, or the Termination Date occurs, whichever is first. In the event that said Suspension Event shall have been dismissed, discharged or bonded within the sixty (60) day period described therein and prior to the Termination Date, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall be reinstated and the terms of this Agreement shall continue in full force and effect as if there had been no such suspension (unless the Commitment Period shall otherwise have been terminated, suspended or expired as provided in this Agreement). In the event that said Suspension Event shall not have been dismissed, discharged or bonded within such sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall terminate on the Termination Date without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds. (iv) Upon the occurrence of a Default described in Section 8.7(c), the Bank's obligations to purchase Eligible Bonds shall be immediately and automatically suspended 12629579.4 - 43 - 216 and remain suspended until the case, proceeding or other action referred to therein is either vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the commencement of such case, proceeding or action, or the Termination Date occurs, whichever is first. In the event that said Suspension Event shall have been vacated, discharged, or stayed or bonded pending appeal within the sixty (60) day period described therein and prior to the Termination Date, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall be reinstated and the terms of this Agreement shall continue in full force and effect as if there had been no such suspension (unless the Commitment Period shall otherwise have been terminated, suspended or expired as provided in this Agreement). In the event that said Suspension Event shall not have been vacated, discharged, or stayed or bonded pending appeal within such sixty (60) day period when the Termination Date occurs, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall terminate on such Termination Date without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds. (v) Upon the occurrence of an Event of Default described in Section 8.8(d) or 8.8(e), the Bank's obligations to purchase Eligible Bonds shall be immediately and automatically suspended and remain suspended unless and until a court with jurisdiction to rule on such an Event of Default shall enter a final and nonappealable judgment that any of the material provisions of the Act or any other document described in Section 8.8(d) are not valid or not binding on, or enforceable against, the Commission or that a claim or contest described in Section 8.8(e) shall have been upheld in favor of the State or the Commission in accordance with a final and nonappealable judgment, then, in each such case, the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall immediately terminate without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds. If a court with jurisdiction to rule on such an Event of Default shall find or rule by entry of a final and nonappealable judgment that the material provision of the Act or any other document described in Section 8.8(d) is valid and binding on, or enforceable against, the Commission or that the claim or contest described in Section 8.8(e) shall have been dismissed pursuant to a final and nonappealable judgment, then the Available Commitment and the obligations of the Bank under this Agreement shall, in each such case, thereupon be reinstated (unless the Commitment Period shall otherwise have been terminated, suspended or expired as provided in this Agreement). Notwithstanding the foregoing, if the suspension of the obligations of the Bank pursuant to any Event of Default described in Section 8.8(d) or 8.8(e) remains in effect and litigation is still pending and a determination regarding same shall not have been dismissed or otherwise made pursuant to a final and non -appealable judgment, as the case may be, when the Termination Date occurs, then the Available Commitment and the obligation of the Bank to purchase Eligible Bonds shall terminate on the Termination Date without notice or demand and, thereafter, the Bank shall be under no obligation to purchase Eligible Bonds. In the case of each Suspension Event, the Trustee shall subsequently notify all Bondholders of the suspension and/or termination of both the Available Commitment and the obligation of the Bank to purchase Eligible Bonds. 12629579.4 -44- • • 217 • (c) Upon the occurrence of any Event of Default, the Bank shall have all remedies provided at law or equity, including, without limitation, specific performance; and in addition, the Bank, in its sole discretion, may do one or more of the following: (i) declare all obligations of the Commission to the Bank hereunder (other than payments of principal and redemption price of and interest on the Bank Bonds unless said Bank Bonds have otherwise become subject to acceleration pursuant to Section of the Indenture) to be immediately due and payable, and the same shall thereupon become due and payable without demand, presentment, protest, notice of intent to accelerate, notice of acceleration or further notice of any kind, all of which are hereby expressly waived; (ii) the Bank may give written notice of such Event of Default and termination of the Agreement (a "Notice of Termination Date") to the Trustee, the Commission and the Remarketing Agent requesting a Default Tender; provided, that the obligation of the Bank to purchase 2009 Series A-1 Bonds shall terminate on the thirtieth (30`h) day (or if such day is not a Business Day, the next following Business Day) after such Notice of Termination Date is received by the Trustee and, on such date, the Available Commitment shall terminate and the Bank shall be under no obligation hereunder to purchase 2009 Series A-1 Bonds; (iii) exercise any right or remedy available to it under any other provision of this Agreement; or (iv) exercise any other rights or remedies available under the Indenture and any other Related Document, any other agreement or at law or in equity; provided, further, however, the Bank shall not have the right to terminate its obligation to purchase 2009 Series A-1 Bonds except as provided in this Section 8.11. Notwithstanding anything to the contrary herein, no failure or delay by the Bank in exercising any right, power or privilege hereunder, under the Indenture and any other Related Document or under the 2009 Series A-1 Bonds and no course of dealing between the Commission and the Bank shall operate as a waiver hereof or thereof nor shall any single or partial exercise hereof or thereof preclude any other or further exercise hereof or thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies which the Bank would otherwise have. (d) In addition to the foregoing, upon the occurrence of any Event of Default hereunder, all Obligations due and payable hereunder (including any Bank Bonds) shall bear interest at the Default Rate. ARTICLE IX OBLIGATIONS ABSOLUTE Section 9.1. Obligations Absolute. The obligations of the Commission under this Agreement shall be absolute, unconditional and irrevocable and shall be paid or performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including, without limitation, the following circumstances: (a) any lack of validity or enforceability of this Agreement, the Indenture or any other Related Document or any other agreement or instrument delivered in connection herewith or therewith; 12629579.4 -45- 218 (b) any amendment or waiver of, or any consent to departure from, the terms of the Indenture or any other Related Document; (c) the existence of any claim, set-off, defense or other right which the Commission may have at any time against the Trustee, the Remarketing Agent, the Bank or any other Person, whether in connection with this Agreement, the Indenture, any other Related Document or any unrelated transaction; provided, however, that nothing, herein contained shall prevent the assertion of such claim by separate suit; (d) any statement or any other document presented other than by the Bank under this Agreement, the Indenture or any of the other Related Documents proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (e) the purchase of a Bank Bond after the delivery of a Notice of Bank Purchase that does not comply with the terms of this Agreement; or (f) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing. ARTICLE X MISCELLANEOUS Section 10.1. Liability of the Bank. (a) With respect to the Bank, the Commission assumes all risks of the acts or omissions of the Trustee, the Remarketing Agent and any of their agents in respect of their use of this Agreement or any amounts made available by the Bank hereunder. To the extent permitted by applicable law, neither the Bank nor any of it officers or directors shall be liable or responsible for: (i) the use which may be made of this Agreement or any amounts made available by the Bank hereunder or for any acts or omissions of the Trustee or Remarketing Agent or their agents in connection therewith, (ii) the validity, sufficiency or genuineness of documents (other than this Agreement), or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) any action, inaction or omission which may be taken by the Bank in good faith without gross negligence in connection with the Agreement; (iv) the validity, sufficiency or genuineness of documents (other than this Agreement), or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (v) payment by the Bank against presentation of documents which do not comply with the terms of this Agreement, including failure of any documents to bear any reference or adequate reference to this Agreement; or (vi) any other circumstances whatsoever in making or failing to make payment under this Agreement, except only that the Commission shall have a claim against the Bank and the Bank shall be liable to the Commission to the extent, but only to the extent, of any direct, as opposed to consequential, damages suffered by the Commission which the Commission proves were caused by the Bank's gross negligence or willful failure to make payment under this Agreement in accordance with the terms hereof. In furtherance and not in limitation of the 12629579.4 -46- • 219 • foregoing, the Bank may accept documents that the Bank in good faith determines appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. (b) The Commission assumes all risks associated with the acceptance by the Bank of documents received by telecommunication, it being agreed that the use of telecommunication devices is for the benefit of the Commission and that the Bank assumes no liabilities or risks with respect thereto. Section 10.2. Covenant of the Bank. The Bank during the term of this Agreement, shall, upon the written request and at the expense of the Commission, re -certify the accuracy of the information relating to the Bank presented in the Official Statement under heading "THE LIQUIDITY FACILITY" and "THE LIQUIDITY PROVIDER" (the "Bank Information"); provided, however, that the Bank shall have no obligation to update the Bank Information, except when and as such information modifying the Bank Information becomes available. Section 10.3. Costs and Taxes; Expenses; Indemnification. (a) The Commission shall pay to the Bank (i) on the Effective Date, all reasonable costs and expenses actually incurred by the Bank, the Bank's out-of-pocket expenses (not to exceed $1,500 in connection with the 2009 Bonds), and the fees and disbursements of the Bank's counsel in connection with the preparation, execution and delivery of this Agreement and any other documents and instruments that may be delivered in connection therewith, plus the reasonable out-of-pocket expenses of counsel to the Bank (said fees not exceed [$ ] in connection with the 2009 Bonds)), (ii) to the extent permitted by State law, all costs and expenses incurred by the Bank, including reasonable fees and out-of-pocket expenses of counsel for the Bank, otherwise arising in connection with this Agreement and the Related Documents, including, without limitation, in connection with any amendment hereto or thereto, the enforcement hereof or thereof or the protection of the rights of the Bank hereunder or thereunder, and (iii) to the extent permitted by State law, any and all stamp, excise or other similar tax and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with the execution, delivery and performance of, or any payment made under, this Agreement and any other documents or instruments that may be delivered in connection herewith. (b) To the extent permitted by applicable law, the Commission hereby indemnifies and holds harmless the Bank and its respective officers, directors, employees and agents (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever which any Indemnified Party may incur (or which may be claimed against the Indemnified Party by any person or entity whatsoever) by reason of or in connection with the offering and sale of the 2009 Series A-1 Bonds (including, without limitation, by reason of any inaccuracy in any material respect, or any untrue statement or alleged untrue statement of any material fact, contained in the Official Statement or any amendment or supplement thereto, or by reason of the omission or alleged omission to state therein a material fact necessary to make such statements, in light of the circumstances under 12629579.4 - 47 - 220 which they were made, not misleading), the execution and delivery of this Agreement by the Commission and the Bank or payment or failure to pay under this Agreement by the Bank or any other aspect of the transactions contemplated by this Agreement or any of the other Related Documents; provided, however, that the Commission shall not be required to indemnify any Indemnified Party for any claims, damages, losses, liabilities, costs or expenses (i) to the extent, but only to the extent, caused by the willful misconduct or gross negligence of the Indemnified Party or its respective officers, directors, employees or agents or (ii) with respect to the Bank Information. (c) To the extent permitted by applicable law and notwithstanding paragraph (b) above, unless there is an actual or potential conflict with respect to the legal defenses available to the Commission and an Indemnified Party, the Commission may discharge its obligation hereunder by diligently defending the Indemnified Parties. Each Indemnified Party will promptly notify the Commission upon becoming aware of any claims or liabilities giving rise to a right to indemnification hereunder and will cooperate with the Commission in the defense of such claims or liabilities. Notwithstanding the provisions of this subsection (c), the Bank shall have the right to employ its own counsel and to determine its own defense of such action in any such case, but the fees and expenses of such counsel shall be at the expense of the Bank unless (i) the employment of such counsel shall have been authorized in writing by the Commission or (ii) the Commission, after due notice of the action, shall have failed to employ counsel to take charge of such defense, in either of which events, the reasonable fees and expenses of counsel for the Bank shall be borne by the Commission. The Commission shall not be liable for any settlement of any such action effected without its consent. (d) Subject to applicable law, nothing in this Section 10.3 is intended to limit any other obligations of the Commission contained in Articles II and III hereof and the obligations of the Commission under this Section 10.3 shall be in addition to any and all rights of reimbursement, indemnification, subrogation or any other rights pursuant hereto or under law or equity. (e) The provisions of this Section 10.3 shall survive the termination of this Agreement. Section 10.4. Notices. Unless otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto or referred to herein shall be deemed to have been given (a) in the case of notice by letter, when delivered by hand or four (4) days after the same is deposited in the mails, first-class postage prepaid, and (b) in the case of notice by telecopier, when sent, receipt confirmed, addressed to them as follows or at such other address as any of the parties hereto may designate by written notice to the other parties hereto and to the Remarketing Agent: 12629579.4 -48- • • 221 • Commission: Riverside County Transportation Commission P.O. Box 12008 Riverside, CA 92502 [Tel: 951-787-7926 Fax: 951-787-7920] Bank: For imposes of Notices of Bank Purchase, billing and payment: JPMorgan Chase Bank, National Association 270 Park Avenue, 6th Floor Mail Code NY1-K934 New York, New York 10017] [Tel: Fax: ] For all other purposes: 383 Madison Avenue, 8th Floor Mail Code [ New York, New York 10017] Attention: Tax -Exempt Capital Markets -- Credit Origination [Tel: Fax: Remarketing Agent: [TEXT TO COME] Trustee: U. S. Bank National Association 633 West Fifth Street, 24h Floor Los Angeles, CA 90071 [Tel: 213-615-6002 Fax:213-615-6199] Section 10.5. Successors, Participants and Assigns. (a) This Agreement shall be binding upon and inure to the benefit of the Commission and the Bank and their respective successors, endorsees and assigns, except that (i) the Commission may not assign or transfer its rights or obligations hereunder without the prior written consent of the Bank; provided, however, that if and to the extent the rights and obligations of the Commission hereunder are assigned or transferred to a successor entity pursuant to State legislation, and such assignee or transferee assumes said rights and obligations in a written notice to the Bank, the consent of the Bank hereunder will not be required; and (ii) 12629579.4 -49- 222 the Bank may not assign or transfer its rights or obligations hereunder without obtaining written notice from Standard & Poor's, if the 2009 Series A -I Bonds are rated by Standard & Poor's, Moody's, if the 2009 Series A-1 Bonds are rated by Moody's[, and Fitch, if the 2009 Series A-1 Bonds are rated by Fitch] that such assignment will not result in a suspension, lowering or withdrawal of the rating on the 2009 Series A-1 Bonds. The Bank may grant a participation to any financial institution in all or any part of, or any interest (undivided or divided) in, the Bank's rights and benefits under this Agreement and any 2009 Series A-1 Bonds owned by it, and to the extent of that participation such Participant shall, except as set forth in the following clause (b), have the same rights and benefits against the Commission hereunder as it would have had if such Participant were the Bank hereunder; provided, that (a) no such participation shall affect the obligations of the Bank to purchase 2009 Series A-1 Bonds as herein provided; (b) the Commission shall be required to deal only with the Bank with respect to any matters under this Agreement and no such Participant shall be entitled to enforce directly against the Commission any provision hereunder; and (c) such Participant shall not be any Person registered as an investment company under the Investment Company Act of 1940, as amended, substantially all of the assets of which are invested in obligations exempt from federal income taxation under Section 103 or 103A of the Code or any similar or successor provision. The obligations of the Bank under this Agreement or any part hereof may be assigned by the Bank to any financial institution only with the prior written consent of the Commission. (b) The Bank may assign and pledge all or any portion of the obligations owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operation Circular issued by such Federal Reserve Bank; provided, that any payment in respect of such assigned obligations made by the Commission to the Bank in accordance with the terms of this Agreement shall satisfy the Commission's obligations hereunder in respect of such assigned obligation to the extent of such payment. No such assignment shall release the Bank from its obligations hereunder. Section 10.6. Governing Law; Waiver of Trial by Jury; Miscellaneous. (a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT UNDER, AND FOR ALL PURPOSES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE AUTHORIZATION OF THIS AGREEMENT AND THE OBLIGATIONS OF THE AUTHORITY HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA. (b) SUBJECT TO APPLICABLE LAW, THE PARTIES HERETO HEREBY IRREVOCABLY AGREE TO WAIVE TRIAL BY JURY. Section 10.7. No Waivers, Amendments, Etc. No provision of this Agreement shall be waived, amended or supplemented except by a written instrument executed by the parties hereto. This Agreement may not be amended or modified without the prior written consent of each party hereto and the Commission agrees to 12629579.4 -50- • 223 • • use its best efforts to deliver to the Trustee and each Rating Agency a copy of any amendment to this Agreement. Section 10.8. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10.9. Source of Funds. The Bank agrees that all funds provided by the Bank hereunder will be paid from funds of the Bank and not directly or indirectly from funds or collateral on deposit with or for the account of, or pledged with or for the account of, the Bank by the Commission. Section 10.10. Term of the Agreement; Survival. (a) Term. The term of this Agreement shall be until the later of (x) the last day of the Commitment Period and (y) the payment in full of the principal of and interest on all Bank Bonds and all Obligations due hereunder. (b) Extension of Term. Upon the written request of the Commission received by the Bank no earlier than ninety (90) days prior to the Expiration Date then in effect, or such other date to which the Bank may consent in writing, the Bank shall within thirty (30) days after its receipt of such request notify the Commission, the Trustee and the Remarketing Agent whether or not it will extend the current Expiration Date. Any extension shall be at the sole and absolute discretion of the Bank. If the Bank fails to notify the Commission of its decision within such 30-day period, the Bank shall be deemed to have rejected such request. Any such request by the Commission for an extension of the Expiration Date shall be substantially in the form of Exhibit C hereto (or in such other form to which the Bank may consent in writing) and, unless the Bank shall otherwise consent, shall include (i) a statement of the outstanding principal amount of the 2009 Series A-1 Bonds, (ii) a reasonably detailed description of any and all Events of Default and all conditions, events and acts which with notice or lapse of time or both would become an Event of Default, and (iii) any other pertinent information requested by the Bank. (c) Survival of Obligations. The obligations of the Commission under Sections 2.2, 2.7, 2.8, 2.9, 3.1 and 10.3 hereof, including all Obligations set forth herein, shall survive the termination of the Available Commitment. Section 10.11. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not have any effect for purposes of interpretation or construction of the terms of this Agreement. 12629579.4 -51- 224 Section 10.12. Complete and Controlling Agreement. This Agreement, the Indenture and the other Related Documents completely set forth the agreements between the Bank and the Commission and supersede all prior agreements, both written and oral, between the Bank and the Commission relating to the matters set forth herein. Section 10.13. Beneficiaries. This Agreement is made solely for the benefit of the Commission, the Trustee and the Bank, their successors and assigns, and no other Person (including, without limitation, any owners of the 2009 Series A-1 Bonds) shall have any right, benefit or interest under or because of the existence of this Agreement. Section 10.14. Severability. If any provision of this Agreement shall be held or deemed to be or shall in fact be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. Section 10.15. Patriot Act. The Bank hereby notifies the Commission that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act'), it is required to obtain, verify and record information that includes the name and address of the Commission and other information that will allow the Bank to identify the Commission in accordance with the Patriot Act. 12629579.4 Remainder of page intentionally left blank; signature page to follow. -52- • 225 • IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the Effective Date. 12457311 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION By: Name: Title: 226 EXHIBIT A NOTICE OF BANK PURCHASE (Optional Tender) The undersigned, a duly authorized officer of U.S. Bank National Association, as Trustee (the "Trustee'), hereby certifies to JPMorgan Chase Bank, National Association (the `Bank"), in accordance with the Amended and Restated Standby Bond Purchase Agreement (the "Standby Purchase Agreement') dated as of [ ], 2009, by and between Riverside County Transportation Commission and the Bank (all capitalized terms herein having the meanings ascribed thereto in the Standby Purchase Agreement), that: 1. Notice of a tender of Eligible Bonds for purchase having a Purchase Price of $ , pursuant to Section 22.04 of the Second Supplemental Indenture, has been received of which $ constitutes principal and $ constitutes accrued interest. 2. Amounts available for the payment of the Purchase Price of such Eligible Bonds is $ , of which $ is available to pay principal and of which $ is available to pay accrued interest. 3. The total principal amount requested hereby for the payment of the principal portion of the Purchase Price of Eligible Bonds is $ which amount does not exceed the Available Principal Commitment or the principal amount referred to in paragraph 1 above minus the principal amount referred to in 2 above. 4. The total amount requested hereby to pay the portion of the Purchase Price for Eligible Bonds constituting accrued interest is $ , which amount does not exceed the Available Interest Commitment or the amount of interest referred to in paragraph 1 above minus the amount of interest referred to in paragraph 2 above. 5. Eligible Bonds referred to above having a Purchase Price of $ [the amount in paragraph 3 plus the amount in paragraph 4] are hereby tendered to the Bank for purchase pursuant to the Standby Purchase Agreement on the date hereof. 6. Upon completion of purchase, the Trustee will [register such 2009 Series A-1 Bonds, or if a 2009 Series A-1 Bond for which notice of tender for purchase pursuant to the Indenture has been given is not delivered, a new 2009 Series A-1 Bond issued in replacement of the undelivered 2009 Series A-1 Bond, in the name of the Bank or if directed in writing by the Bank its nominee or designee on the Bond Register] [in the case of Book Entry Bonds, cooperate with the Bank and DTC to the extent necessary to ensure that the beneficial ownership of such 2009 Series A -I Bonds shall be credited to the account of the Bank or if directed in writing by the Bank its nominee or designee with DTC] [,and will hold such 2009 Series A-1 Bonds in trust for the benefit of the Bank]. 12629579.4 The Purchase Date is , 20 . A-1 227 8. The Purchase Price for such Eligible Bonds is to be paid to the Trustee as follows: [insert wire transfer instructions] 9. To the best of the Trustee's knowledge, no Special Event of Default or Suspension Event has occurred and is continuing on the date hereof. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of the _ day of , 20 . 12629579.4 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Name: Title: A-2 228 8. The Purchase Price for such 2009 Series A-1 Bonds is to be paid to the Trustee as follows: [insert wire transfer instructions] 9. To the best of the Trustee's knowledge, no Special Event of Default or Suspension Event has occurred and is continuing on the date hereof. IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of day of , 20 . 12629579.4 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Name: Title: B-2 i 230 • • EXHIBIT C FORM OF REQUEST FOR EXTENSION OF EXPIRATION DATE [Date] JPMorgan Chase Bank, National Association 270 Park Avenue, [ ] Floor New York, New York 10017 Attention: 1 Re: Request for Extension of Expiration Date Ladies/Gentlemen: Reference is hereby made to that certain Amended and Restated Standby Bond Purchase Agreement, dated as of [ ], 2009 (the "Agreement'), by and between Riverside County Transportation Commission (the "Commission") and JPMorgan Chase Bank, National Association (the "Bank"). All capitalized terms contained herein which are not specifically defined shall be deemed to have the definitions set forth in the Agreement. The Commission hereby requests, pursuant to Section 10.10(b) of the Agreement, that the Expiration Date for the Commitment Period be extended by [ ] days/[ ] year[s]. Pursuant to Section 10.10(b) of the Agreement, we have enclosed along with this request the following information: 1. The outstanding principal amount of the 2009 Series A-1 Bonds; 2. The nature of any and all Events of Default and all conditions, events and acts which with notice or lapse of time or both would become an Event of Default; and 3. Any other pertinent information previously requested by the Bank: The Bank is required to notify the Commission, the Trustee and the Remarketing Agent of its decision with respect to this request for extension within thirty (30) days of the date of receipt hereof. If the Bank fails to notify the Commission of its decision within such 30 day period, the Bank shall be deemed to have rejected such request. 12629579.4 Very truly yours, RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: Name: Title: C-1 231 EXHIBIT D FORM OF LETTER FROM TRUSTEE [Date] JPMorgan Chase Bank, National Association 270 Park Avenue, [ ] Floor New York, New York 10017 Attention: Re: DTC and Book Entry Ladies/Gentlemen: Reference is hereby made to that certain Amended and Restated Standby Bond Purchase Agreement, dated as of [ ], 2009 (the "Agreement"), by and between Riverside County Transportation Commission (the "Commission") and JPMorgan Chase Bank, National Association (the "Bank"). All capitalized terms contained herein which are not specifically defined shall be deemed to have the definitions set forth in the Agreement. Pursuant to Article IV, subparagraph (n) of the Agreement, the undersigned, a duly authorized officer of U.S. Bank National Association, as Trustee (the "Trustee') hereby agrees as follows: 1. The Trustee agrees to act as the agent of the Bank as owner of any Bank Bonds and agreeing to dispose of, and accept instructions with respect to, Bank Bonds only as directed by the Bank. 2. The Trustee agrees that so long as the 2009 Serics A-1 Bonds are issued in book - entry form and held by the Trustee as custodian of DTC as part of DTC's fast automated transfer program ("FAST Eligible Bond"), concurrently with the Trustee's receipt of the purchase price for each purchase of 2009 Series A-1 Bonds by the Bank hereunder, the Trustee, as a participant of DTC (or any other successor securities depository) or an eligible transfer agent, shall (A) credit the DTC account designated by the Bank as its account in which to hold Bank Bonds purchased by it (each, the "Bank Book -Entry Account") by the principal amount of the 2009 Series A-1 Bonds purchased under the Agreement by the Bank using the Bank Bond CUSIP number for such 2009 Series A-1 Bonds set forth below; and (B) debit the book -entry account of DTC for the 2009 Series A-1 Bonds (thereby reducing the principal balance of the global certificate representing the 2009 Series A-1 Bonds) (the "DTC Book -Entry Account") by the principal amount of the 2009 Series A -I Bonds purchased hereunder by the Bank. 3. The CUSIP number for Bonds that are Bank Bonds is 4. So long as the 2009 Series A-1 Bonds are FAST Eligible Bonds, upon a remarketing of Bank Bonds in accordance with the terms of the Agreement and the Trustee's receipt from the Remarketing Agent and/or the Commission of the amounts set forth in Section 12629579 4 D- I 232 • 2.3(a) of the Agreement, the Trustee, as a participant of DTC (or any other successor securities depository) or an eligible transfer agent, shall (A) debit the Bank Book -Entry Account of the Bank by the principal amount of the 2009 Series A -I Bonds so remarketed; and (B) credit the DTC Book -Entry Account for such 2009 Series A-1 Bonds (thereby increasing the principal balance of the global certificate representing such 2009 Series A-1 Bonds) by the principal amount of the 2009 Series A-1 Bonds so remarketed. 5. The Trustee also hereby acknowledges that it is familiar with, and in compliance with, the procedures and requirements set forth in a notice (the "DTGVRDO Notice") from DTC, dated April 4, 2008, respecting "Variable Rate Demand Obligations ("VRDO") Failed Remarketings and Issuance of Bank Bonds", as amended by DTC Notice number B3488-08 dated May 15, 2008, and agrees that, with respect to any and all Bank Bonds, it will follow the procedures and requirements set forth in the DTC-VRDO Notice, as the same may be amended from time to time. 6. The Trustee agrees that, following any amendment of the DTC-VRDO Notice, should the procedures and requirements therein become inconsistent with any aspect of the provisions of the Indenture, the Trustee shall promptly negotiate in good faith and consent to amendments as necessary to eliminate such inconsistency. 12629579.4 Very truly yours, U.S. BANK NATIONAL ASSOCIATION, solely in its capacity as Trustee and not in its individual capacity By: Name: Title: D-2 233 • • • SCHEDULE Level Commission Bond Rating* Commitment Fee Moody's Fitch/S&P I Aal or better AA+ or better 125 bppa II Aa2 AA 125 bppa III Aa3 AA- 145 bppa IV AI A+ 165 bppa V A2 A 185 bppa VI A3 A- 205 bppa VII Baal BBB+ 225 bppa VIII Baa2 BBB 245 bppa IX Baa3 BBB- 265 bppa X Below Baa3 Below BBB- 285 bppa The "Commitment Fee" for any date shall be determined by reference to the Commission Bond Ratings for such date. A) Improvements/Downgrades of Commission Bond Rating. If the Commission Bond Ratings assigned by all of the Rating Agencies, or by two of the three Rating Agencies, are at the same level, the Commitment Fee will be based on the level at which all of the Rating Agencies, or two of the three Rating Agencies, if applicable, have assigned their respective Commission Bond Rating(s). For example, if Fitch assigns an "AA" rating, Moody's assigns an "Aa2" rating and S&P assigns an "AA+" rating, the Commitment Fee will be determined in accordance with level II. If the Commission Bond Ratings assigned by each of the Rating Agencies is at a different level, the Commitment Fee will be based on the rating assigned to the level in the middle of the three rating levels. For example, if Fitch assigns an "AA" rating, Moody's assigns an "Aa3" rating and S&P assigns an "AA+" rating, the Commitment Fee will be determined in accordance with level II. However, if Fitch assigns an "AA-" rating, Moody's assigns an "A2" rating and S&P assigns an "AA" rating, the Commitment Fee will be determined in accordance with level III. The change in the Commitment Fee will be increased or reduced, as applicable, on such date that the Rating Agency or Rating Agencies in question shall have publicly announced its/their improvement/downgrade of its/their Commission Bond Rating(s) which improvement/downgrade affects the level or levels described above. ' "Commission Bond Rating" shall mean the long-term rating (without regard for any bond insurance or any other form of credit enhancement by a third -party provider) assigned to the Series 2009 Series A-1 Bonds or any Parity Obligation by each Rating Agency then under contract with the Commission to provide its long-term rating therefor. 12629579.4 1-1 234 B) Withdrawal or Suspension of Commission Bond Rating; Reduction below Investment Grade; Event of Default. In addition to the increases set forth above, if (y) one or more of the Rating Agencies shall withdraw or suspend its/their Commission Bond Rating(s) or reduce its/their Commission Bond Rating(s) below Investment Grade (whether or not such reduction results in a termination or suspension of the Bank's obligations under the Agreement) or (z) an Event of Default shall have occurred and be continuing under the Agreement, then the Commitment Fee shall increase automatically and immediately by 100 basis points per annum above the Commitment Fee in effect immediately prior to such withdrawal, suspension, reduction or Event of Default, and shall remain in effect for so long as such withdrawal, suspension or reduction remains in effect or, in the case of an Event of Default, for so long as said Event of Default has not been waived or cured to the Bank's satisfaction, in each case, as set forth below. The Commitment Fee will be increased or reduced on such date that the Rating Agency or Rating Agencies in question shall have publicly announced (i) a suspension, withdrawal or reduction of its/their Commission Bond Rating(s) as described in the immediately preceding paragraph or (ii) the reinstatement of its/their Commission Bond Rating(s) to that level which was applicable thereto prior to such suspension, withdrawal or reduction of its/their Commission Bond Rating(s). In the case of an Event of Default, the increase in the Commitment Fee as a result thereof will remain in effect for so long as Event of Default has not been waived or cured, in either case, in writing by the Bank. 12629579.4 1-2 e 235 ATTACHMENT 7 DRAFT RIVERSIDE COUNTY TRANSPORTATION COMMISSION 2009 Sales Tax Revenue Bonds - Variable Rate Bonds {Limited Tax Bonds} $185,000,000 The following table is an estimate of the costs associated with the financing Payee Purpose Fees & Expenses Riverside County Transportation Commission Commission Administration $ 10,000.00 Best, Best & Krieger Issuer's Counsel 20,000.00 McGladrey & Pullen RCTC Auditor 8,000.00 Orrick, Herrington & Sutcliffe Bond Counsel 198,500.00 Fieldman, Rolapp & Associates Financial Advisor 122,000.00 Fulbright & Jaworski Disclosure Counsel 55,000.00 Moody's Investor Services Rating Agency 70,000.00 Standard & Poor's Rating Agency 60,375.00 Fitch Ratings Rating Agency 55,000.00 U.S. Bank Trustee & Trustee's Counsel 10,000.00 Liquidity Providers Counsel Nixon Peabody 50,000.00 Image Master Printing 10,000.00 Geographies Printing / Production of Credit Presentation 5,000.00 Verification Agent TBD 3,000.00 Contingency Miscellaneous 23,125.00 TOTAL $ 700,000.00 preliminary, and subject to change 1 Estimate. 2 Estimate, a not -to -exceed amount per Mrunal MehtaShah. 3 Estimate, per Theresia on 7/27/09. 4 Per 7/28 email from Mary Collins. Includes a fee of $195K plus $3.5K for expenses. 5 Per proposed agreement from FRA and includes $110,000 for fees plus expenses. 6 Per their proposal. 7 Estimate. 9 Per John Tillapaugh on 7/28/09. Annual surveillance fee of $4K thereafter on each anniversary. 70 Estimate. 6 Per 7/28/09 phone conversation with Mary Fowler, fee of $60,375 includes both long-term and short-term ratings; annual surveillance f 1 2 3 4 5 6 7 a 9 10 11 12 13 14 11 Not -to -exceed amount, per term sheet. 12 Estimate. 13 Estimate. 14 Estimate. Last updated: 8/4/2009 236 FINANCING PROGRAM OVERVIEW O 2009 Measure A interim financing program • $185 million commercial paper (CP) program started in 2005 • Two forward starting swaps totaling $185 million executed in 2006 - Lehman Brothers' swap terminated in 2008 - New Deutsche Bank swap executed in 2008 • $126 million Series 2008 Bonds priced in May 2008 O Measure A financing being executed as planned • $185 million refinancing of interim debt: - To integrate with forward starting swaps - Pricing scheduled for September 2009 a MEASURE A SALES TAX RECEIPTS AS PRIMARY SOURCE OF FINANCING O Measure A receipts have been in place since 1989 • FY 2008/09 Measure A estimated revenues of $121.5 million O Long-term Measure A revenues reflect diversified local economy and population growth O Recent FY 2008/09 receipts indicate slowdown in economic activity • FY 2008/09 receipts of $124.7 million vs. FY 2007/08 receipts of $146.1 million CURRENT WESTERN COUNTY HIGHWAY PROJECTS NEAR TERM LONGER RANGE 238 ■• MP • I 1 RCTC - Board Leadership Bob Buster, Vice Chair RCTC - Executive Staff Anne Mayer, Executive Director Theresia Trevino, Chief Financial Officer Fieldrnan, Rolapp & Associates - Financial Advisor Daniel Wiles, Principal & General Counsel Barclays Capital x; Senior Managing Underwriter John McCray-Goldsmith, Director FINANCIA UPDATE & SERIES 2009 SALES TAX REVENUE BOND ■B of A Swap of $100MM ODB Swap of $85 MM 2009 MEASURE A COMMERCIAL PAPER PROGRAM O $185 million commercial paper authorization • Secured by a Letter of Credit from Bank of America that expires March 29, 2010 O $110 million of commercial paper outstanding as of August 2009 - Significant land mitigation acquisitions • Strategic partnership efforts • Local jurisdiction projects • Preliminary engineering on highway projects O 2009 Bonds to refinance approximately $50 million of commercial paper O Procurement of new liquidity facility to commence after the issuance of the 2009 Sales Tax Bonds (2009 Bonds) SERIES 2008 BONDS O $126.395 million of fixed rate bonds issued under a multimodal indenture • Mandatory tender on December 1, 2009 • Cash funded reserve in place • Capitalized interest through December 1, 2009 • No event of default for failed remarketing on December 1, 2009 - Penalty rate of 11% FORWARD STARTING SWAPS O $185 million notional amount • $100 million - Bank of America, N.A. (B of A) • $85 million - Deutsche Bank (DB) O B of A Swap: 3.679% for 20 years vs. 67% of 1-month LIBOR O DB Swap: 3.206% for 20 years vs. 67% of 1-month LIBOR O Effective date: October 1, 2009 EXISTING SWAPS AMORTIZATION $8.000.000 $7,000.000 - e $6,000.000 h $5,000.000 $4,000,000 o^� o^^ o^M1 o^'3 o^p o^ry o^6 o^M1 ? o^Po M1 o^9 oM10 oM1^ O 0`�� o'�p oM1� oM16 04‘ oM10 009 M1 M1 M1 M1 M1 M1 M1 M1 M1 M1 h 'L M1 M1 M1 M1 M1 M1 239 NEW FINANCING: 2009 BONDS O RCTC plans to issue $185 million of VRDBs by October 1, 2009 O Forward starting swaps require $185 million of variable rate debt for integration O Refinance $126 million of Series 2008 Bonds subject to mandatory tender on December 1, 2009 O Refinance approximately $50 million of commercial paper • Anticipated needs for Perris Valley Line, toll project engineering and planning, and ongoing Measure A projects 0 SECURITY AND STRUCTURE FOR 2009 BONDS O Series 2009 bonds are secured by a gross pledge of 100% of 2009 Measure A sales tax revenues • Collected by the California State Board of Equalization and paid directly to the Trustee • Trustee pays debt service prior to transfer to RCTC O Variable rate demand obligations with liquidity provided through a Standby Bond Purchase Agreement (SBPA) with JP Morgan Chase Bank, National Association (rated Aa1/AA-/AA-) • 2-year liquidity facility O Cash funded debt service reserve fund • Already partially funded through 2008 Bonds proceeds • Sized at the least of fi) 10% of par, (ii) 125% of average annual debt service, and (fill maximum annual debt service on the outstanding 2009 Bonds O Strong 1.5x ABT for Senior Lien parity bonds O 2009 Measure A Ordinance currently has a $500 million debt limit 0 JP MORGAN STANDBY BOND PURCHASE AGREEMENT O Liquidity Term: 2 Years O Ratings: P-1/A-1+/F1+ O Special Events of Default by RCTC • Failure to pay when due any principal or sinking fund requirement on any 2009 Bonds and any interest on any 2009 Bonds • Any final judgments against RCTC over $15,000,000 not covered by insurance, which remain unpaid, undischarged, unbonded or undismissed for a period of 60 days • An event of insolvency has occurred • The SBPA, the Indenture, or the 2009 Bonds cease to be valid and binding • The long-term unenhanced ratings of the 2009 Bonds or any parity bonds are withdrawn or suspended for credit related reasons by Moody's, S&P and Fitch or reduced below "Baa3" by Moody's, "BBB-" by S&P, and "BBB-" by Fitch O Events of Default Default in due performance or observance of any of the bond covenants, which default remains unremedied for a period of 30 days after receiving notice to that effect Any incorrect material representation made by or on behalf of RCTC in any of its 2009 Bonds documents O Remedies Upon the occurrence of a Special Event of Default, the obligation of the Bank to purchase 2009 Bonds terminates • Upon the occurrence of an Event of Default, the obligation of the Bank to purchase 2009 Bonds is suspended until the event is cured 240 MADS FY 2070'; ilevenu'e ;_ Eushion {2.0x) Base Case Scenario 1 Scenario 2 Scenario 3 $14,185;B40 " $23,OA5,960 $1 TIMELINE Date Description Commission Wednesday, Approves Financing August 12, 2009 Documents Thursday, Documents Sent to August 13, 2009 Rating Agencies Monday, August 24, 2009 Meetings with Rating Agencies in New York Tuesday, Meeting with Rating August 25, 2009 Agency in New York Thursday, Bond Ratings September 3, 2009 Received Tuesday, September 29, 2009 Bond Sale Thursday, October 1, 2009 Bond Closing 2009 MEASURE A COVERAGE & STRESS SCENARIOS O Ordinance limits outstanding debt to $500 million O Estimated FY 2008/09 revenues are $121.5 million O Base Case: Issue 2009 Bonds: $185 million senior lien • $185 million of VRDBs at the swap rates + 125 bps for liquidity + 10 bps for remarketing • 20 year level debt service amortization • Expected debt service coverage for 2009 Bonds is well over 8.0x (senior lien) O Stress Scenario 1: Issue 2009 Bonds and issue $185 million of CP • $185 million of VRDBs at the swap rates + 125 bps for liquidity + 10 bps for remarketing • $185 million of CP at the 10-year average SIFMA rate (2.40%) + 125 bps for liquidity • 20 year and 30 year level debt service amortization on the 2009 Bonds and the CP, respectively • Expected debt service coverage of 5.3x (senior and subordinate lien) O Stress Scenario 2: Issue 2009 Bonds and refund all CP: $247.71 million 2009 senior lien refunding • $185 million of VRDBs at the swap rates + 125 bps for liquidity+ 10 bps for remarketing • $62.71 million of fixed rate bonds at 6% • 20 year level debt service amortization • Expected debt service coverage of 6.2 x O Stress Scenario 3: Issue 2009 Bonds and refund all CP + new money to hit debt limit: $500 million senior lien issue in 2009 • $185 million of VRDBs at the swap rates + 125 bps for liquidity + 10 bps for remarketing $315 million of fixed rate bonds at 6% • 20 year level debt service amortization • Expected debt service coverage of 2.9 x O More modest utilization of debt and the ability to amortize debt up to 30 years add cushions that make these stress case coverage scenarios very conservative SUMMARY OF CREDIT STRENGTHS O 2009 Bonds do not add new indebtedness but refinance currently outstanding bonds and commercial paper O Strong economic foundation for continued sales tax receipts O Proactive organization and experienced leadership O $500 million debt limit ensures strong debt service coverage under any scenario O Broad access to capital markets and liquidity O Expected debt service coverage of over 8.0 x on outstanding senior lien debt after 2009 financing O Conservative additional bonds test and Commission coverage policy (2.0x) O Limited additional bonding plans 241 August 7, 2009 To: Commissioners From: Theresia Trevino, Chief Financial Officer(} S. John Standiford, Deputy Executive Director As a result of negotiations with our proposed liquidity facility provider, JP Morgan, our bond counsel has revised Section 3 of Resolution No. 09-017 (Attachment 1 to Agenda Item 9). Accordingly, pages 11 through 18 should be replaced with the revised attachment. AGENDA ITEM 9 Attachment 1: Resolution No. 09-017 (Draft) Replace pages 11 through 18 with this revised draft of Resolution No. 09-017. Revision is marked on page 14, Section 3. NO. 09-017 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $185,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) IN ONE OR MORE SERIES, THE EXECUTION AND DELIVERY OF A SUPPLEMENTAL INDENTURE, ONE OR MORE PURCHASE CONTRACTS, AN OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT, ONE OR MORE REMARKETING AGREEMENTS, AND ONE OR MORE LIQUIDITY FACILITIES, 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. 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; 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"); [OHS West:260692474.7 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 and there are currently outstanding interest rate swap agreements in an aggregate notional amount of $185 million (the "Existing Swaps"), which Existing Swaps have an effective date of October 1, 2009; WHEREAS, the Commission has heretofore issued its Sales Tax Revenue Bonds (Limited Tax Bonds) (the "Prior Bonds"), pursuant to an Indenture, dated as of June 1, 2008 (as amended and supplemented, the "Indenture"), and a First Supplemental Indenture, dated as of June 1, 2008, each by and between the Commission and U.S. Bank National Association, as trustee (the "Trustee"); 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 eighty-five million dollars ($185,000,000) is necessary in order to finance (i) the refunding of all of the outstanding Prior Bonds, (ii) the refunding of all or a portion of the outstanding CP Notes, (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), Series 2009" (the "Series 2009 Bonds"); WHEREAS, the Commission hereby further determines that the Series 2009 Bonds shall be issued pursuant to a Second Supplemental Indenture, amending and supplementing the Indenture (the "Second Supplemental Indenture"), by and between the Commission and the Trustee; WHEREAS, there has been prepared and presented to the Commission a proposed form of Second Supplemental Indenture; WHEREAS, in order to minimize debt service and maximize benefits to the Commission in connection with the issuance of the Series 2009 Bonds, it may be desirable to issue the Series 2009 Bonds as fixed rate bonds or as variable rate bonds (the "Variable Rate Bonds") and if the bonds are issued as Variable Rate Bonds to enter into remarketing agreements (the "Remarketing Agreements") with one or more remarketing agents to provide remarketing agent services with respect to the Series 2009 Bonds; [OHS West:260692474.7 WHEREAS, in order to set forth the terms of sale of the Series 2009 Bonds, the Commission proposes to enter into one or more bond purchase agreements (the "Purchase Contracts") with Barclays Capital Inc., E.J. De La Rosa & Co., Inc. and Backstrom McCarley Berry & Co., LLC (collectively, the "Purchasers"); WHEREAS, the Purchasers have caused to be prepared and submitted to the Commission proposed forms of the Purchase Contracts and the Remarketing Agreements; WHEREAS, in order to provide liquidity support for the Series 2009 Bonds that are Variable Rate Bonds, the Commission may enter into one or more standby bond purchase agreements or other liquidity support agreements (each a "Liquidity Facility" and, collectively, the "Liquidity Facilities"), containing such terms and conditions as the Executive Director of the Commission (the "Executive Director") or the Chief Financial Officer of the Commission (the "Chief Financial Officer") considers appropriate and with'a bank or other financial institution or association (each a "Liquidity Provider" and, collectively, the "Liquidity Providers") to be selected by the Executive Director or Chief Financial Officer in the event a Liquidity Facility is determined to be beneficial to the marketing of the Series 2009 Bonds; WHEREAS, a proposed form of the Liquidity Facilities has been prepared and submitted to the Commission; WHEREAS, in order to provide information about the Series 2009 Bonds and related matters to purchasers and potential purchasers of the Series 2009 Bonds, the Commission proposes to execute and deliver an official statement (the "Official Statement'); WHEREAS, there has been prepared and presented to the Commission a proposed form of Official Statement (the "Official Statement') and a proposed form of Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"); WHEREAS, the Commission has been presented with proposed forms of the Second Supplemental Indenture, the Purchase Contracts, the Continuing Disclosure Agreement, the Remarketing Agreements, the Liquidity Facilities and the Official Statement relating to the financing 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 issuance of the Series 2009 Bonds and 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 Second Supplemental Indenture, the Purchase Contracts, one or more Liquidity Facilities, the Official Statement, the Continuing Disclosure Agreement and the Remarketing Agreements for the purposes, in the manner and upon the terms provided; [OHS West:260692474.7 NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES: 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 $185,000,000 aggregate principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2009, 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 Second 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, 2029), fixed or variable interest rate or rates (such rates not to exceed a maximum of 12% per annum, except that the interest rate on any Series 2009 Bonds purchased by a Liquidity Provider and held pursuant to the terms of a Liquidity Facility shall not exceed 18% per annum) or methods of determining the same, interest payment dates, forms, registration privileges, place or places of payment, terns of redemption, tender, mandatory purchase, additional series designation and number thereof and other terms of the Series 2009 Bonds shall be (subject to the foregoing limitations) as provided in the Indenture and the Second 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 Second Supplemental Indenture, in substantially said form, with such changes therein, including without limitation changes necessary to issue the Series 2009 Bonds as fixed rate bonds, 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 the Purchase Contracts 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 2009 Bonds to the Purchasers pursuant to one or more Purchase Contracts with the Purchasers' compensation not to exceed 0.5% of the principal amount of the Series 2009 Bonds and to execute and deliver one or more Purchase Contracts, 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 proposed form of the Liquidity Facilities presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized to negotiate with Liquidity Providers one or more Liquidity Facilities for the Series 2009 Bonds, and, if the Executive Director, with the advice of Fieldman, Rolapp & Associates (the "Financial Advisor"), determines that doing so is in the best interests of the Commission, to enter into such Liquidity Facilities 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. [OHS West:260692474.7 Section 6. The proposed form of Official Statement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver to the Purchasers a certificate deeming the 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 Purchasers are hereby authorized to distribute the Official Statement in the form so deemed final by the Executive Director, including a preliminary form of the Official Statement, if the Executive Director determines such distribution is appropriate for the sale of the Series 2009 Bonds. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Official Statement, in final form, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. The proposed form of Continuing Disclosure Agreement presented to this meeting is hereby approved. If the Executive Director determines that doing so is in the best interests of the Commission, the Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver 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 proposed form of Remarketing Agreements presented to this meeting is hereby approved. If the Executive Director determines that issuing the Series 2009 Bonds as Variable Rate Bonds is in the best interests of the Commission, the Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver one or more Remarketing Agreements with such remarketing agents as the Executive Director shall designate 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 9. The Executive Director is hereby authorized to negotiate with fmancial institutions and/or insurance companies, as applicable, an irrevocable letter of credit, or a surety bond, or an insurance policy, and, if the Executive Director, with the advice of the Financial Advisor, determines that doing so is in the best interest of the Commission, to secure such irrevocable letter of credit, surety bond, or insurance policy on such terms as the Executive Director, with the advice of the Financial Advisor, determines are appropriate, in order to fund any bond reserve fund established pursuant to the Indenture or the Second Supplemental Indenture. Section 10. 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 Existing 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 Second Supplemental Indenture, on such terms as the Executive Director shall deem appropriate. Pursuant to Section 5922 of the California Government Code, [OHS West:260692474.7 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 Existing Swaps and the Series 2009 Bonds or enhance the relationship between risk and return with respect to investments. Section 11. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, the CP Notes or the Existing Swaps, whether before or after the issuance of the Series 2009 Bonds, including, without limitation, any amendment of any of the documents authorized by this Resolution or the Existing Swaps or other agreement related thereto, and any of the foregoing that may be necessary or desirable in connection with any Liquidity Facilities or the extension or replacement thereof, or any reserve facility, any investment of proceeds of the Series 2009 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 the Commission, and each Authorized Representative is hereby authorized and directed to give any such approval, consent, direction, notice, order, request, or other action and to execute such documents and take any such action which such Authorized Representative may deem necessary or desirable to further the purposes of this Resolution. Section 12. 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 2009 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 or the Chief Financial Officer 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 2009 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 or the Chief Financial Officer 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 or verification 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 2009 Bonds and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, this Resolution, the Series 2009 Bonds and the documents approved hereby. [OHS West260692474.7 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 August 12, 2009. By: Chairman, Board of Commissioners ATTEST: By: Clerk of the Board of the Commission [OHS West:260692474.7 CERTIFICATE 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 August 12, 2009, 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, California, 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, , 2009. By Clerk [OHS West:260692474.7 Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A, B and C Financing Program Overview • 2009 Measure A interim financing program — $185 million commercial paper (CP) program started In 2005 — Two forward starting swaps totaling $185 million executed in 2006 • Onginal counteapames: Bank of America and Lehman Brothers • Lehman Brothers' swap terminated in 2008 • New Deutsche Bank swap ($85 million) executed in 2008 — $126 million Series 2008 Bonds priced in May 2008 • Measure A financing being executed as planned — $185 million refinancing of interim debt: • To integrate with forward starting swaps • Pricing scheduled for September 2009 Measure A Sales Tax Receipts As Primary Source of Financing • Sales taxes through Measure A have been received since 1989 — 1989 Measure A expired June 30, 2009 — 2009 Measure A commenced July 1, 2009 • FY2008/09 receipts indicate slowdown in economic activity — FY2008/09 receipts of $124.7 million vs. FY2007-08 receipts of $146.1 million • Long term Measure A receipts reflectdiversified local economy and population growth — Receipts mirror the health of the County's overall economy 2009 Measure A Commercial Paper Program • $185 million commercial paper authorization — Secured by a Letter of Credit from Bank of America that expires March 29, 2010 • 110 million of commercial paper outstanding as of August 2009 — Significant land mitigation acquisitions — Preliminary engineering on highway projects • 2009 issue to retire approximately $50 million of commercial paper • Ongoing commercial paper program will requirea new letter of credit or liquidity facility before Bank of America letter of credit expires — Procurement to commence after the issuance of the 2009 Sales Tax Bonds 4 1 Series 2008 Bonds II 61 11 LL • $126.395 million of fixed rate bonds issued under a multimodal indenture -Mandatory tender on 12/1/2009 —Capitalized interest through 12/1/2009 —Cash funded reserve in place — No event of default for failed remarketing on 12/1/2009 • Failed remarketing rate of 11% New Financing: 2009 Bonds: It.'�b�" Ilii • RCTC plans to issue $185 million of Variable Rate Demand Bonds (VRDBs) by October 1, 2009 - Final maturity date of June 1, 2029 • Forward starting swaps require $185 million of variable rate debt for integration • Refund $126 million of Series 2008 bonds subject to mandatory tender on December 1, 2009 • Retire approximately $50 million of commercial paper - Anticipated needs for Perris Valley Line, toll project engineering and planning, and ongoing Measure A projects Forward Starting Swaps $185 million notional amount - $100 million - Bank of Amenca, N.A. (B of A) - $85 million - Deutsche Bank (DB) B of A swap: 3.679% for 20 years vs. 67% of 1-month LIBOR DB swap: 3.206% for 20 years vs. 67% of 1-month LIBOR • Effective date: October 1, 2009 ,v MO:.M/AO- PIPee", IIIIIIII/I/I a Integrating the Swaps Liquidity provider' RCTC 1'i$x 1' a `c3 a 7.678%/0.206% Fixed Rate Floating Rate Poked to 6T% of LIBOR) Variable Rate Bond Holders Counterparties (B of A and DB) ' Aueune•Met FIMLq Mee are equal. Releeeneelp between •@e could ••ry weekly Estimated.. en136 Cp 09E Ne 119.1,2 , ana toot remviosloO ...mama Int. wawa a railed twin.. Ma MmaM empnlen eem.tlene e 2 Security and Structure for 2009 Bonds Series 2009 bonds are secured by a gross pledge of 100% of 2009 Measure A sales tax revenues — Collected by the California State Board of Equalization and paid directly to the Trustee — Trustee pays debt service prior to transfer to ROTC • VRDBs with liquidity provided through a Standby Bond Purchase Agreement with JPMorgan Chase Bank, National Association — 2-year liquidity facility • Cash funded debt service reserve fund — Already partially funded through 2008 proceeds • Strong 1.5x ABT for Senior Lien panty bonds • 2009 Measure A Ordinance currently has a $500 million debt limit 9 Standby Bond Purchase Agreement • JPMorgan Chase Bank (JPM) two-year liquidity facility at 1.25% — Interest rate on bank bonds could vary from 8.5% to 18% — After bank bonds are held by JPM for 6 months, bonds are payable over three years • Liquidity facility can be terminated prior to 2011 — By RCTC In event of JPM rating downgrades below P-1/A-1/F-1 — By JPM due to special events of default • Any bank bonds outstanding become due and payable upon termination of facility — Can be suspended by JPM due to events of default 11 Remarketing Process and Liquidity Facility • Bondholders can tender VRDBs back to RCTC on any business day — Tendered bonds are typically sold by remarketing agents to new buyers — If no new buyers are available, RCTC may not have funds immediately available to purchase tendered bonds • Standby Bond Purchase Agreement (SBPA) provides bondholders with a buyer of last resort if new investors don't buy tendered bonds on a remarketing date — Bonds purchased under the SBPA are called "bank bonds" — Interest rate on bank fronds is usually much higher than market 10 Standby Bond Purchase Agreement (continued) • Special Events of Default — Failure to pay debt service when due — Final, unappealable judgment exceeding $15 million which is uninsured and to be enforced by a lien on sales tax revenues that remains outstanding after 60 days — Insolvency — Invalidity of bonds — Ratings downgrade below BBB- (S&P or Fitch) or Baa3 (Moody's) 12 3 Coverage & Stress Scenarios Demonstrate High Quality Credit ii • Ordinance limits outstanding debt to $500 million • Based on assumed FY2009 revenues of $121.500 million (actual receipts of $124.7 million) • Base Case: Issue 2009 bonds: $185.00 million senior lien • Stress Scenario 1: Issue 2009 bonds and issue $185.00 million of CP • Stress Scenario 2: Issue 2009 bonds and retire all CP: $247.71 million 2009 senior lien refunding • Stress Scenario 3: Issue 2009 Bonds and refund all CP + new money to hit debt limit: $500 million senior lien issue in 2009 1) Credit Strengths of RCTC and the 2009 Bonds • 2009 Bonds do not add to total debt but refinance currently outstanding bonds and commercial paper • Strong economic foundation for continued sales tax receipts • Proactive organization and experienced leadership • $500 million debt limit ensures strong debt service coverage under stressed revenue scenarios • Broad access to capital markets and liquidity • Conservative additional bonds test (1.5x) and Commission coverage policy (2.0x) Expected debt service coverage of over 8.0x on outstanding senior lien debt after 2009 financing 15 Coverage & Stress Scenarios Demonstrate High Quality Credit - , ri • More modest utilization of debt and the ability to amortize debt up to 30 years add cushions that make these stress case coverage scenarios very conservative Base Case Stress Scenario 1 Stress Scenario 2 Stress Scenario 3 $14,185,640 $23,045,960 519,597,640 $41.888,740 8.56 76.6% 5.27 621% 6.17 67.6% 2.90 31.0% 82.5% 71.5% 75.7% 48.3% 19 Summary of Issuance Documents • Resolution No. 09-017 authorizing issuance and sale of bonds • Second Supplemental Indenture - Relates to structure, maturity dates, interest rate, and other terms of RCTC Sales Tax Revenue Bonds, 2009 Series A, Series B,and Series C -Supplements original Indenture adopted June 2008 15 4 Summary of Issuance Documents (continued) • Official Statement — Required by securities laws for underwriters to sell and price bonds • Contains disclosure of matters material to an investor • Requires that there be no misstatement or omission of material facts that would cause statements made in OS to be misleading - Board authorization implies review of document and familiarity with information aboutRCTC — Includes voluntary Continuing Disclosure Agreement V Estimated Costs of Issuance (in 000s) • $1 million estimate — Includes underwriters' discount — Excludes annual liquidity fee of 1.250/0 and remarketing fee of .10% • Certain agreements may require amendments 19 Summary of Issuance Documents (continued) • Bond Purchase Agreement — Team of three underwriters • Barclays (Series A) • De La Rosa (Series B) • Backstrom (Series C) • Remarketing Agreement — Remarketing agents include Barclays, De La Rosa, and Backstrom • Standby Bond Purchase Agreement — Liquidity facility with JPMorgan Chase 18 Timeline I 1 I - 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Wednesday, August 12, 2009 Commission approves Financing Documents _ Thursday, August 13, 2009 Documents sent to ftabng Agencies Monday, August 24, 2009 Meetng with Rating Agencies in New York Tuesday, August 25, 2009 Meeting with Rating Agencies in New York Thursday, September 3, 2009 Bond Ratings Received Tuesday, September 29, 2009 Bond Sale Thursday. October 1, 2009 Bond posing 20 5 Maryann Edwards Mayor Jeff Comerchero Mayor Pro-Tem Michael S. Naggar Council Member Ronald H. Roberts Council Member Chuck Washington Council Member 951-506-5100 FAX 951-694-6499 City of Temecula 43200 Business Park Drive • Temecula, CA92590 • Mailing Address: P.O. Box9033 • Temecula,CA92589-9033 )951) 506-5100 • Fax (95I) 694-6499 • www.ciryoftemecula.org August 6, 2009 AUG `,?'? 2009 i;:rrATION COMMISSION Clerk of the Board Riverside County Transportation Commission P. O. Box 12008 Riverside, CA 92502-2208 Dear Clerk of the Board: I will be in Texas for a Transportation and Infrastructure Summit on August 12th so Council Member Jeff Comerchero will attend the Riverside County Transportation Commission meeting as my alternate. Sincerely, Ron Roberts Council Member cc: Council Member Comerchero Printed on Recycled Paper