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03 March 25, 2013 Budget & implementation• TIME: DATE: LOCATION: • • RECORDS RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE MEETING AGENDA 9:30a.m. Monday, March 25, 2013 BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside ~COMMITTEE MEMBERS ctqt Ella Zanowic, Chair I Jeff Hewitt, City of Calimesa Douglas Hanson, Vice Chair I Patrick Mullany, City of Indian Wells Roger Berg I David Castaldo, City of Beaumont Mary Craton I Randy Bonner, City of Canyon Lake Greg Pettis I Kathleen DeRosa, City of Cathedral City Steven Hernandez I Eduardo Garcia, City of Coachella Scott Matas I Yvonne Parks, City of Desert Hot Springs Larry Smith I Robert Youssef, City of Hemet Bob Magee I To Be Appointed, City of Lake Elsinore Rick Gibbs I Kelly Bennett, City of Murrieta Steve Adams I Andy Melendrez, City of Riverside Ron Roberts I Jeff Comerchero, City of Temecula John F. Tavaglione, County of Riverside, District II Jeff Stone, County of Riverside, District Ill ~STAFF ctqt Anne Mayer, Executive Director Theresia Trevino, Chief Financial Officer ~ AREAS OF RESPONSIBILITY ctqt Annual Budget Development and Oversight Competitive Federal and State Grant Programs Countywide Communications and Outreach Programs Countywide Strategic Plan Legislation Public Communications and Outreach Programs Short Range Transit Plans Comments are welcomed by the Committee. If you wish to provide comments to the Committee, please complete and submit a Speaker Card to the Clerk of the Board. Tara Byerly From: Sent: To: Cc: Subject: Importance: Tara Byerly Wednesday, March 20, 2013 3:40 PM Tara Byerly Jennifer Harmon RCTC-Budget and Implementation Committee Agenda 03.25.2013 High Good Afternoon Budget and Implementation Committee Members: Attached below is the link to the Budget and Implementation Committee agenda for the meeting scheduled @ 9:30 a.m. on Monday, March 25. http://www.rctc.org/uploads/media items/budget-and-implementation-committee-march-25-2013.original.pdf Please let me know if you have any questions. Respectfully, Tara S. Byerly Senior Administrative Assistant 4080 Lemon Street, 3rd Floor Riverside, CA 92501 (951) 787-7141 1 Riverside County Transportation Commission FROM: Jennifer Harmon, Office and Board Services Manager DATE: March 20, 2013 SUBJECT: Budget and Implementation Committee Agendas In an effort to reduce costs, the Commission will no longer be mailing printed copies of its agendas as of May 1 , 20 13. All agendas are posted at http://www .rctc.org under "QUICK LINKS, Agendas & Meetings". These agendas are posted the Thursday before the meeting. Please contact me at jharmon@rctc.org if you have any questions. • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:30a.m. Monday, March 25, 2013 BOARDROOM County Administrative Center 4080 Lemon Street, First Floor Riverside, California 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 aval'lable 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 Disabl'lities Act and Government Code Section 54954.2, if you need special assistance to participate in a Committee meeting, please contact the Clerk of the Board at (951) 787-7141. Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be made to provide accessibility at the meeting. 1 . CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. PUBLIC COMMENTS -Each individual speaker is limited to speak three (3) continuous minutes or less. The Committee may, either at the direction of the Chair or by majority vote of the Committee, waive this three minute time limitation. Depending on the number of items on the Agenda and the number of speakers, the Chair may, at his/her discretion, reduce the time of each speaker to two (2) continuous minutes. Also, the Committee may terminate public comments if such comments become repetitious. In addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Committee shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Budget and Implementation Committee March 25, 2013 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-FEBRUARY 25, 2012 6. ADDITIONS/REVISIONS (The Committee may add an item to the Agenda after making a finding that there is a need to take immediate action on the item and that the item came to the attention of the Committee subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Committee. If there are less than 2/3 of the Committee members present, adding an item to the agenda requires a unanimous vote. Added items will be placed for discussion at the end of the agenda.) 7. STATE ROUTE 91 CORRIDOR IMPROVEMENT PROJECT PLAN FINANCING Page 1 Overview This item is for the Committee to: 1) Receive and file the presentation regarding the issuance of the 2013 Series A Sales Tax Revenue Bonds (Sales Tax Bonds), issuance of the 2013 Series A (Current Interest Bonds) and Series B (Capital Appreciation Bonds) Toll Revenue Bonds (Toll Bonds), and receipt of a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan from the U.S. Department of Transportation (USDOT); 2) Adopt Resolution No. 13-003, "Resolution Authorizing Agreements Relating to the Sale of Not to Exceed $275,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Toll Revenue Bonds and the Issuance and Sale of Not to Exceed $475,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) in One or More Series, Including the Execution and Delivery of a Fifth Supplemental Indenture, a Purchase Contracts, Official Statements, and Continuing Disclosure Agreements, and a Loan Agreement Relating to Transportation Infrastructure Finance and Innovation Act Program Credit Assistance, and the Taking of All Other Actions Necessary in Connection Therewith"; 3) Approve the draft Official Statement for the issuance of $445 million in 2013 Sales Tax Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; • • • • • Budget and Implementation Committee March 25, 2013 Page 3 4) Approve the draft Continuing Disclosure Agreement related to the 2013 Sales Tax Bonds between the Riverside County Transportation Commission and Digital Assurance Certification, L.L.C., as dissemination agent, and authorize the Executive Director to approve and execute the final Continuing Disclosure Agreement; 5) Approve the draft Fifth Supplemental Indenture for the 2013 Sales Tax Bonds between the Riverside County Transportation Commission and U.S. Bank National Association (US Bank), as Trustee, and authorize the Executive Director to approve and execute the final Fifth Supplemental Indenture; 6) Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Bank of America Merrill Lynch (BAML) and Goldman, Sachs & Co. (Goldman), as Underwriter Representative acting on behalf of itself and J.P. Morgan Securities (JPM), Barclays Capital Inc. (Barclays), and E.J. De La Rosa & Co. Inc. (De La Rosa), (collectively the Underwriters), for the 2013 Sales Tax Bonds and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; 7) Approve the draft Official Statement for the issuance of $220 million in 2013 Toll Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; 8) Approve the draft Continuing Disclosure Agreement related to the 2013 Toll Bonds between the Riverside County Transportation Commission and Digital Assurance Certification, L.L.C., as dissemination agent, and authorize the Executive Director to approve and execute the final Continuing Disclosure Agreement; 9) Confirm the approval of, and ratify proposed changes to, the draft form of the Master Indenture, previously approved by the Commission at its July 2010 meeting, between the Riverside County Transportation Commission and Bank of New York Mellon Trust Company, N.A. (BNYM), as Trustee, related to the 2013 Toll Bonds and authorize the Executive Director to approve and execute the final Indenture; 1 0) Confirm the approval of, and ratify proposed changes to, the draft form of the First Supplemental Indenture, previously approved by the Commission at its July 2010 meeting, between the Riverside County Transportation Commission and Bank of New York Mellon Trust Company, N.A., as Trustee, related to the 2013 Toll Bonds and authorize the Executive Director to approve and execute the final First Supplemental Indenture; 11) Approve the draft Second Supplemental Indenture for the TIFIA loan between the Riverside County Transportation Commission and Bank of New York Mellon Trust Company, N.A., as Trustee, and authorize the Executive Director to approve and execute the final Second Supplemental Indenture; Budget and Implementation Committee March 25, 2013 Page 4 8. 1 2) Approve the draft Bond Purchase Agreement between the Riverside • County Transportation Commission and Bank of America Merrill Lynch and Goldman, Sachs & Co., as Underwriter Representative acting on behalf of itself and J.P. Morgan Securities, (collectively the Underwriters), for the 2013 Toll Bonds and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; 13) Approve the draft TIFIA Loan Agreement between the Riverside County Transportation Commission and the USDOT; 14) Authorize the Executive Director or Chief Financial Officer to reduce the authorized amount of the commercial paper program from $1 20 million to an amount sufficient to pay other 2009 Measure A costs for highway projects in the Western County and Coachella Valley and to terminate or reduce the letter of credit reimbursement agreements accordingly; 15) Approve the revised Debt Management Policy; 1 6) Approve the estimated costs of issuance to be paid from the bond proceeds and execution of related agreements, as required; and 17) Forward to the Commission for final action. 2013 SPECIALIZED TRANSIT CALL FOR PROJECTS -JOBS ACCESS REVERSE COMMUTE, NEW FREEDOM, AND MEASURE A SPECIALIZED TRANSIT GRANT AWARDS Page 366 Overview This item is for the Committee to: 1) Approve Agreement No. 13-26-115-00 with Care-A-Van Services, Inc. for the provision of directly operated transportation services (Care-A-Van Project) in an amount not to exceed $715,000 in Measure A Specialized Transit grant funds; 2) Approve Agreement No. 13-26-116-00 with Community Connect for the provision of transportation pass or voucher services (Transportation Access Program) in an amount not to exceed $368,632 in Measure A Specialized Transit grant funds; 3) Approve Agreement No. 13-26-117-00 with Riverside Transit Agency (RT A) for the provision of directly operated transportation services (Commuterlink Service, Routes 212 and 217) in an amount not to exceed $569,957 in Jobs Access Reverse Commute (JARC) grant funds and $182,386 in Measure A Specialized Transit grant funds; • 4) Approve Agreement No. 13-26-118-00 with the Independent Living Partnership for the provision of mileage reimbursement to volunteer drivers (Transportation Reimbursement and Information Project -TRIP • Western Riverside) in an amount not to exceed $1,173,759 in Measure A Specialized Transit grant funds; • • • Budget and Implementation Committee March 25, 2013 Page 5 5) Approve Agreement No. 13-26-119-00 with Care Connexxus, Inc. for the provision of directly operated transportation services (Specialized Transit Project) in an amount not to exceed $505,000 in Measure A Specialized Transit grant funds; 6) Approve. Agreement No. 13-26-120-00 with RTA for the provision of mobility management and travel training service (RTA Travel Training Project) in an amount not to exceed $475,536 in New Freedom grant funds; 7) Approve Agreement No. 13-26-121-00 with RTA for the provision of directly operated transportation services (Extended Service Project) in an amount not to exceed $871,930 in JARC funds and $279,018 in Measure A Specialized Transit grant funds; 8) Approve Agreement No. 13-26-122-00 with the Riverside County Regional Medical Center for the provision of directly operated transportation services (Specialized Non-Emergency Medical Transportation program) in an amount not to exceed $1 82,071 in New Freedom grant funds and $487,971 in Measure A Specialized Transit grant funds; 9) Approve Agreement No. 13-26-123-00 with Community Connect for the provision of transportation information services (211 Riverside One Call/One Click Project) in an amount not to exceed $158,400 in Measure A Specialized Transit grant funds; 1 0) Approve Agreement No. 13-26-124-00 with Operation SafeHouse, Inc. for the provision of directly operated transportation services (Main Street Transitional Living Program) in an amount not to exceed $49,872 in Measure A Specialized Transit grant funds; 11) Approve Agreement No. 13-26-125-00 with Inland Aids Project for the provision of directly operated transportation services (Inland Aids Project Transportation Program) in an amount not to exceed $164,932 in Measure A Specialized Transit grant funds; 12) Approve Agreement No. 13-26-126-00 with United States Veterans Initiative for the provision of directly operated transportation services (U.S. Vets Transportation Program) in an amount not to exceed $86,610 in Measure A Specialized Transit grant funds; 13) Approve Agreement No. 13-26-127-00 with the Friends of Moreno Valley Senior Center, Inc. for the provision of directly operated transportation services (Mo Van Transit Service) in an amount not to exceed $134,323 in Measure A Specialized Transit grant funds; 14) Approve Agreement No. 13-26-128-00 with Court Appointed Special Advocates for Riverside County, Inc. (C.A.S.A.) for Riverside County for the provision of mileage reimbursement to volunteer drivers (Specialized Transportation Service for Abused Children Program) in an amount not to exceed $144,245 in Measure A Specialized Transit grant funds; Budget and Implementation Committee March 25, 2013 Page 6 15) 16) 17) 18) 19) 20) 21) 22) 23) 24) Approve Agreement No. 13-26-129-00 with Boys and Girls Clubs of • Southwest County for the provision of directly operated transportation services (Before and After School Transportation Program) in an amount not to exceed $544, 1 70 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-130-00 with city of Norco Parks Department for the provision of directly operated transportation services (Norco Senior Shuttle Service Program) in an amount not to exceed $120,000 in Measure A Specialized Transit grant funds; Approve Agreement No. 1 3-26-1 31-00 with Blindness Support Services, Inc. for the provision of travel training services (Travel Training Program) in an amount not to exceed $159,826 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-110-00 with Sunline Transit Agency (Sunline) for the provision of directly operated transportation service (Sunline North Shore Bus Service) in an amount not to exceed $217,270 in JARC grant funds; Approve Agreement No. 13-26-111-00 with Sunline for the provision of directly operated transportation service (Sunline Commuter Service) in an amount not to exceed $65,856 in JARC grant funds and $43,863 in New Freedom grant funds; Approve Agreement No. 13-26-112-00 with the Independent Living • Partnership for the provision of mileage reimbursement to volunteer drivers (Transportation Reimbursement and Information Project -TRIP Coachella Valley) in an amount not to exceed $100,000 in New Freedom grant funds; Approve Agreement No. 13-26-113-00 with the Coachella Valley Association of Governments (CVAG) for the provision of directly operated transportation and mobility management (Transportation Program) in an amount not to exceed $110,000 in JARC grant funds; Approve Agreement No. 1 3-26-114-00 with the Desert Samaritans for Seniors for the prov1s1on of directly operated transportation (Senior Transportation Program) in an amount not to exceed $57,488 in New Freedom grant funds; Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf the Commission; and Forward to the Commission for final action. • • Budget and Implementation Committee March 25, 2013 Page 7 9. STATE LEGISLATIVE UPDATE Overview This item is for the Committee to: 1) Receive and file an update on the state legislation; 2) Adopt the following bill positions: a) AB 14 (Lowenthal) -Support; b) AB 1 79 (Bocanegra) -Oppose c) AB 266 (Biumenfield) -Oppose; d) AB 487 (Linder) -Support; e) AB 574 (Lowenthal) -Support; f) SB 337 (Emmerson) -Support; g) SB 731 (Steinberg) -Monitor/Work With Author; and 3) Forward to the Commission for final action. 10. COMMISSIONERS I STAFF REPORT Overview Page 372 • This item provides the opportunity for the Commissioners and staff to report on attended and upcoming meeting/conferences and issues related to Commission activities. • 11 . ADJOURNMENT AND NEXT MEETING The next Budget and Implementation Committee meeting is scheduled to be held at 9:30 a.m., Monday, April 22, 2013, Board Chambers, First Floor, County Administrative Center, 4080 Lemon Street, Riverside . RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE ROLL CALL MARCH 25, 2013 County of Riverside, District II County of Riverside, District Ill City of Beaumont City of Calimesa City of Canyon Lake City of Cathedral City City of Coachella City of Desert Hot Springs City of Hemet City of Indian Wells City of Lake Elsinore City of Murrieta City of Riverside City of Temecula Present ~ .~ ~ ~ ~ ~ ~ Absent Ll D Ll D Ll D Ll D Ll D Ll D D D RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE SIGN-IN SHEET MARCH 25, 2013 .1 NAME ...... AGENCY E MAIL ADDRESS ~eve~ fk~/1/t~~ ( ~ a "-It~ f/cr '!yy"-".r'-, \'L "-1. .s t'V\,l-r~ H-~<:r;r; Vi~ b~t41Ze I b.h tf/(J~L-0--- lJJ A_/ ((A_A:h~ ~(P~~ _£~ ~d RJ...A-1~.. s. 'J4.·J~I~ 6~--A-z~D~~ c.-· tJ~; ~A-- Vo1 .\,~ \-\-.;-.V"\ £ ~ ~ ,tt:A.... \A/~pJ \JJ ''"~tV~ ,. ) , '7 ""x "') ~ f.J L~ ··;··; i' <"" ...... , .--• ,,-;.;:."-· .A ·-._ ~ Orl <-j(o;Oti<J5 _,,- 7 5:tA1 r c.. ..., ur .. ~:;;/J 7T' /nM?'K.. J)!PS$rlA ~r ..53'..e/~<' ( -lR er:::-?--015 & n~ C:: 0 (LA. ( Q 7'7 It 0 ~}{_, 66VL~ P, t;./J U 1?\.orv-r / f(_ (Cf'L. CS/~IS-S I /t o AIL? f!7 72/0 • • • AGENDA ITEM 5 MINUTES • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE Monday, February 25, 2013 MINUTES 1 . CALL TO ORDER The meeting of the Budget and Implementation Committee was called to order by Chair Rick Gibbs at 9:30a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside, California, 92501. 2. PLEDGE OF ALLEGIANCE 3 . 4. At this time, Commissioner Ella Zanowic led the Budget and Implementation Committee in a flag salute. ROLL CALL Members/ Alternates Present Members Absent Roger Berg Steve Adams Mary Craton Rick Gibbs Douglas Hanson Steven Hernandez* Bob Magee Scott Matas Greg Pettis Ron Roberts Larry Smith Jeff Stone* John Tavaglione Ella Zanowic *Arrived after the meeting was called to order PUBLIC COMMENTS There were no requests to speak from the public . RCTC Budget and Implementation Committee Minutes February 25, 2013 Page 2 5. APPROVAL OF MINUTES-NOVEMBER 26, 2012 M/S/C (Hanson/Craton) to approve the minutes of November 26, 2012 meeting as submitted. Abstain: Gibbs 6. ADDITIONS I REVISIONS There were no additions or revisions to the agenda. At this time, Commissioners Steven Hernandez and Jeff Stone arrived at the meeting. 7. ELECTION OF OFFICERS At this time, Chair Gibbs opened nominations for the slate of officers. Commissioner Ron Roberts, seconded by Commissioner Bob Magee, nominated Commissioner Ella Zanowic for the Chair position for 2013. • Commissioner Zanowic, seconded by Commissioner Greg Pettis, nominated • Commissioner Douglas Hanson for the Vice Chair position for 2013. No other nominations were received. Chair Gibbs closed the nominations. Commissioners Ella Zanowic and Douglas Hanson were elected as the Budget and Implementation Committee's Chair and Vice Chair for 2013, respectively. At this time, Commissioner Zanowic assumed the Chair. 8. CONSENT CALENDAR -All matters on the Consent Calendar will be approved in a single motion unless a Commissioner(s) requests separate action on specific item(s). Items pulled from the Consent Calendar will be placed for discussion at the end of the agenda. M/S/C (Craton/Gibbs) to approve the following Consent Calendar item(s): • • • • RCTC Budget and Implementation Committee Minutes February 25, 2013 Page 3 SA. QUARTERLY FINANCIAL STATEMENTS 1) Receive and file the Quarterly Financial Statements for the period ended December 31, 2012; and 2) Forward to the Commission for final action. 9. PROPOSED POLICY GOALS AND OBJECTIVES FOR FISCAL YEAR 2013/14 BUDGET Michele Cisneros, Accounting and Human Resources Manager, presented the proposed Budget Policy Goals and Objectives for FY 2013/14, and discussed the following areas: • Budget development; • Commission policy goals -mobility, goods movement, economic development, system efficiencies, environmental stewardship, intermodalism and accessibility, communications, financial and administrative policies; and • Next steps. Commissioner Mary Craton expressed appreciation for the new goals that were added for FY 2013/14 and congratulated staff for a well written document. Commissioner Pettis recommended removing Amtrak as a specified provider for service and suggested staff begin discussions of the Commission's role to become more than an advocate for passenger rail service in Coachella Valley. He requested staff add language in the budget goals to work more closely with Coachella Valley Association of Governments (CVAG) and other entities to implement passenger rail service. Theresia Trevino stated staff will review the goals and as a management group establish suggested revisions and bring forward to the March Commission meeting. Commissioner Hanson concurred with Commissioner Pettis' comments and expressed the need to emphasize passenger rail service into the Coachella Valley to elevate awareness of the need for this service. He expressed appreciation for the stewardship by the staff in preparing this document. Anne Mayer, Executive Director, expressed apprecratron for the Commissioners' comments and stated the management group will discuss the language to address these concerns. She stated with respect to having Amtrak in the language, the Commission adopted a resolution that specifically .. RCTC Budget and Implementation Committee Minutes February 25, 2013 Page 4 highlights Amtrak service so staff will review the resolution. She explained the focus was on Amtrak because while there could be other types of passenger rail service, however, Metrolink would be very difficult to achieve. Anne Mayer stated with regard to advocating passenger rail service, the Commission will play a much larger role, however, staff tried not to over engage since this is a CVAG discussion and to be respectful of CVAG's decisions. Commissioner Pettis explained while CVAG continues its path towards, the Coachella Valley needs the Commission to be as aggressive as possible. He stated this rail service will also be provided to the Pass Area. He expressed the Coachella Valley requires this service in order for the residents to commute into Orange and Riverside Counties for work. Commissioner Roger Berg suggested the rail service become regional to include San Bernardino County and stated in looking at the federal budget, there may be changes coming in the Amtrak operations. He concurred the Commission needs to be the lead agency in planning and promoting the passenger rail service to the Coachella Valley. Anne Mayer clarified the language should include expanding passenger rail • service for the Pass Area and the Coachella Valley. She stated the • management group will craft new language to capture the ·Commissioners' direction and bring it back for further review. She explained the Union Pacific tracks do not travel into San Bernardino and discussed the issues with the routes and track connections. M/S/C (Gibbs/Craton) to: 1 ) Approve the proposed Commission Policy Goals and Objectives for the FY 2013/14 Budget; and 2) Forward to the Commission for final action. 10. STATUS OF STATE-LOCAL PARTNERSHIP PROGRAM-FORMULA FUNDS Shirley Medina, Programming and Planning Manager, provided an update for the Proposition 1 B State-Local Partnership Program allocations. M/S/C (Hernandez/Craton) to: 1 ) Receive and file the status report on Proposition 1 B State-Local Partnership Program (SLPP) allocations; and 2) Forward to the Commission for final action. • • • • RCTC Budget and Implementation Committee Minutes February 25, 2013 Page 5 11. FEDERAL SURFACE TRANSPORTATION PROGRAM 2013 CALL FOR REHABILITATION PROJECTS Shirley Medina provided an overview for the 2013 Surface Transportation Program Call for Rehabilitation Projects. M/S/C (Gibbs/Stone) to: 1) Approve the release of the 2013 Surface Transportation Program Call for Rehabilitation Projects ( 20 13 STP Call for Rehabilitation Projects) in the amount of $12.5 million in federal STP funds; and 2) Forward to the Commission for final action. At this time, Commissioners Steven Hernandez and Bob Magee left the meeting. 12. RIVERSIDE COUNTY TRANSPORTATION COMMISSION RIGHT OF WAY MANUAL RELATED TO RELOCATION ASSISTANCE APPEALS Will Von Klug, Right of Way Manager, provided an overview of the amended Section 7-3 of the Riverside County Transportation Commission Right of Way Manual related to relocation assistance appeals. At this time, Commissioner Jeff Stone left the meeting. At Commissioner Craton's request, Will Von Klug clarified the difference in the language for the last two paragraphs under Section 7-3.3 related to time extensions. Commissioner Craton expressed apprec1at1on to staff as this is a great improvement over the previous manual as it is much clearer. M/S/C (Hanson/Smith) to: 1) Approve the amendment to Section 7-3 of the Riverside County Transportation Commission Right of Way Manual; and 2) Forward to the Commission for final action . .. RCTC Budget and Implementation Committee Minutes February 25, 2013 Page 6 13. AGREEMENT WITH PACIFIC MUNICIPAL CONSULTANTS FOR TRIENNIAL PERFORMANCE AUDIT SERVICES Fina Clemente, Transit Manager, provided an overview of the scope of services for the agreement with Pacific Municipal Consultants for triennial performance audit services. M/S/C (Gibbs/Roberts) to: 1) Award Agreement No. 13-62-072-00 to Pacific Municipal Consultants (PMC) for triennial performance audit services for an initial term through December 31, 20 13 covering the triennial performance audits for FY 2009/10-FY 2011/12 with an option for a second term through December 31, 2016 covering FY 20 12/13 -FY 2014/15, for a total contract amount not to exceed $20 7, 7 40; 2) Authorize the Chair or Executive Director, pursuant to legal counsel review, to execute the agreements, including option years, on behalf of the Commission; and 3) Forward to the Commission for final action. 14. COMMISSIONERS I EXECUTIVE DIRECTOR REPORT 14A. Anne Mayer reported on the current financial issues with Metrolink' s budget. Metrolink established an advisory committee and the Commission's Chief Financial Officer Theresia Trevino is serving as a member on the advisory committee. 15. ADJOURNMENT AND NEXT MEETING There being no further business for consideration by the Budget and Implementation Committee, the meeting was adjourned at 10:12 a.m. The next meeting of the Budget and Implementation Committee is scheduled for March 25, 2013 at 9:30 a.m. Respectfully submitted, Jennifer Harmon Clerk of the Board .. • • • • AGENDA ITEM 7 • • • • • -----------------------------------------------, RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 25, 2013 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: John Standiford, Deputy Executive Director SUBJECT: State Route 91 Corridor Improvement Project Plan Financing STAFF RECOMMENDATION: After many years of planning and development related to the SR-91 Corridor Improvement Project (SR-91 CIP), the Commission is now poised to begin final design and construction following the award to a design-build team in May; however, the financing activities must be concluded first. The following staff recommendations are related to the issuance of toll road revenue bonds and sales tax revenue bonds. This item is for the Committee to: 1 ) 2) 3) Receive and file the presentation regarding the issuance of the 2013 Series A Sales Tax Revenue Bonds (Sales Tax Bonds), issuance of the 2013 Series A (Current Interest Bonds) and Series B (Capital Appreciation Bonds) Toll Revenue Bonds (Toll Bonds), and receipt of a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan from the U.S. Department of Transportation (USDOT); Adopt Resolution No. 13-003, "Resolution Authorizing Agreements Relating to the Sale of Not to Exceed $275,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Toll Revenue Bonds and the Issuance and Sale of Not to Exceed $475,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds) in One or More Series, Including the Execution and Delivery of a Fifth Supplemental Indenture, a Purchase Contracts, Official Statements, and Continuing Disclosure Agreements, and a Loan Agreement Relating to Transportation Infrastructure Finance and Innovation Act Program Credit Assistance, and the Taking of All Other Actions Necessary in Connection Therewith"; Approve the draft Official Statement for the issuance of $445 million in . 2013 Sales Tax Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; Agenda Item 7 1 4) Approve the draft Continuing Disclosure Agreement related to the • 2013 Sales Tax Bonds between the Riverside County Transportation Commission and Digital Assurance Certification, L.L.C., as dissemination 5) 6) 7) 8) agent, and authorize the Executive Director to approve and execute the final Continuing Disclosure Agreement; Approve the draft Fifth Supplemental Indenture for the 2013 Sales Tax Bonds between the Riverside County Transportation Commission and U.S. Bank National Association (US Bank), as Trustee, and authorize the Executive Director to approve and execute the final Fifth Supplemental Indenture; Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Bank of America Merrill Lynch (BAML) and Goldman, Sachs & Co. (Goldman), as Underwriter Representative acting on behalf of itself and J.P. Morgan Securities (JPM), Barclays Capital Inc. (Barclays), and E.J. De La Rosa & Co. Inc. (De La Rosa), (collectively the Underwriters), for the 2013 Sales Tax Bonds and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; Approve the draft Official Statement for the issuance of $220 million in 2013 Toll Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; Approve the draft Continuing Disclosure Agreement related to the 2013 Toll Bonds between the Riverside County Transportation Commission and Digital • Assurance Certification, L.L.C., as dissemination agent, and authorize the Executive Director to approve and execute the final Continuing Disclosure 9) Agreement; Confirm the approval of, and ratify proposed changes to, the draft form of the Master Indenture, previously approved by the Commission at its July 2010 meeting, between the Riverside County Transportation Commission and Bank of New York Mellon Trust Company, N.A. (BNYM), as Trustee, related to the 2013 Toll Bonds and authorize the Executive Director to approve and execute the final Indenture; 1 0) Confirm the approval of, and ratify proposed changes to, the draft form of the First Supplemental Indenture, previously approved by the Commission at its July 2010 meeting, between the Riverside County Transportation Commission and Bank of New York Mellon Trust Company, N.A., as Trustee, related to the 2013 Toll Bonds and authorize the Executive Director to approve and execute the final First Supplemental Indenture;. 11) Approve the draft Second Supplemental Indenture for the TIFIA loan between the Riverside County Transportation Commission and Bank of New York Mellon Trust Company, N.A., as Trustee, and authorize the Executive Director to approve and execute the final Second Supplemental Indenture; Agenda Item 7 2 • • • • 1 2) Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Bank of America Merrill Lynch and Goldman, Sachs & Co., as Underwriter Representative acting on behalf of itself and J.P. Morgan Securities, (collectively the Underwriters), for the 2013 Toll Bonds and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; 13) Approve the draft TIFIA Loan Agreement between the Riverside County Transportation Commission and the USDOT; 14) Authorize the Executive Director or Chief Financial Officer to reduce the authorized amount of the commercial paper program from $120 million to an amount sufficient to pay other 2009 Measure A costs for highway projects in the Western County and Coachella Valley and to terminate or reduce the letter of credit reimbursement agreements accordingly; 15) Approve the revised Debt Management Policy; 1 6) Approve the estimated costs of issuance to be paid from the bond proceeds and execution of related agreements, as required; and 17) Forward to the Commission for final action. BACKGROUND INFORMATION: The 2009 Measure A Expenditure Plan (Expenditure Plan) approved by Riverside County voters in November 2002, identified improvements related to SR-91 to be implemented with Measure A Western Riverside County (Western County) highway funds. As staff began planning highway projects for the first 10 years of the new measure, construction costs had been increasing significantly. Although the Expenditure Plan contemplated the need for state and federal funding to supplement Measure A revenues for highway projects, it was apparent innovative financing techniques would be necessary to fund some of the highway projects. Accordingly, in early 2006, the Commission engaged a strategic partnership advisory team knowledgeable in the area of transportation economics, federal transportation funding tools, and corporate equity investment evaluation to evaluate the feasibility of public/private partnerships and public delivery options to build additional transportation capacity and/or to speed the delivery of planned projects. The SR-91 corridor was identified by this team as a project with strong user demand that could be financed using toll revenues. In December 2006 the Commission approved the 1 0-Year Western Riverside County Highway Delivery Plan (Delivery Plan), which identified improvements including toll, or express, lanes (Riverside 91 Express Lanes) on the SR-91 corridor from the Orange County line to Interstate 15. Other improvements include a new general purpose lane in each direction and ramp and interchange improvements. Soon thereafter the Commission hired Parsons Brinckerhoff (PB) as the engineering firm to commence Agenda Item 7 3 development of a project report/environmental document. The Commission also obtained state and federal tolling authority in 2008 and 2009, respectively. At its • January 2010 workshop, the Commission approved the SR-91 CIP as a priority in the project reprioritization strategy for the Delivery Plan. Although preliminary engineering completion and state and federal environmental approval was not obtained until November 2012, the next phase of work for the procurement of final engineering and construction under a design-build contract commenced in February 2009 when the Commission approved delivering the SR-91 CIP using the design-build method of project delivery. The design-build procurement method was determined to be a key component of making the SR-91 Cl P and construction of the Riverside 91 Express Lanes viable from a financial perspective by providing for schedule acceleration, innovation, risk transfer, cost certainty, high quality delivery by collaboration of engineers and contractors, and other benefits. In anticipation of receiving design-build authority, the Commission hired Parsons Transportation Group (Parsons) as project and construction manager in October 2009 to assist the Commission in the preparation for a large, design-build contract as well as to oversee the design and construction work during the design-build phase. Some of the preparation activities consisted of developing and negotiating various agreements that will be required in connection with the design-build phase • as well as operations of the toll lanes following the completion of construction. Design-build authority was obtained in September 2010 under AB 2098, and four teams were prequalified in January 2011. A request for proposals for the SR-91 CIP was released in July 2012, and Commission award of a contract to one of the design-build teams is anticipated in May. While project development activities have been ongoing, staff also commenced various financing activities required to finance the project costs related to the design-build phase. An underwriting team was appointed in April 2010 from a group of underwriters selected in July 2009 following procurement for underwriter services in connection with future long-term debt financings. BAML and Goldman were appointed as the senior managing underwriters. The initial tasks for the senior underwriting team included the development of a financial model, evaluation of potential financing structures, and participation in the design-build procurement, planning and development. In July 2010, Stantec Consulting Services (Stantec) was awarded a contract to prepare an investment-grade traffic and revenue study (T&R Study) for the SR-91 CIP and to assist in the development of a toll policy for the Riverside 91 Express Lanes. The T&R Study is required for the successful sale of toll revenue bonds and Agenda Item 7 4 • • • • the TIFIA loan financing; it was critical to obtain a preliminary investment-grade rating assessment for the toll revenue bonds and TIFIA loan from Fitch Ratings (Fitch). Due to the long lead times and approval processes for the SR-91 CIP, the financing components were put in place beginning in July 2010. The issuance of toll revenue bonds was identified as a key element of the financing of the design-build phase, in addition to TIFIA financing. These bonds are secured by a first lien on toll revenues. Given the need for an accelerated schedule for the SR-91 CIP, the issuance of toll revenue bonds not to exceed $900 million was authorized in July 2010 in addition to the approval as to form of the related indentures and project agreements with other agencies. These toll revenue bonds are not subject to the 2009 Measure A debt limit of $500 million as these bonds are secured by a first lien on toll revenues; however, the Measure A debt limit constrained the ability to issue additional sales tax revenue bonds secured by a first lien on 2009 Measure A revenues. In November 201 0, a majority of the voters in Riverside County increased the 2009 Measure A debt limit to $975 million. Another critical financing component was receipt of a TIFIA loan. Following several submittals of letters of interest for credit assistance to TIFIA, the Commission finally received an invitation to submit an application to TIFIA in April 2012. The Commission submitted its application in August 2012, and a presentation of the SR-91 CIP financing was made to TIFIA in September 2012. In February the Commission received the news from TIFIA that the USDOT Credit Council approved a TIFIA loan with a maximum principal amount of $451 million and the approved application was being sent to the USDOT Secretary for final approval. While the final approval has not occurred yet, the team began negotiations regarding the loan agreement with TIFIA in March. The most recent financing structure includes a TIFIA loan with an estimated size of $435 million. Other financing activities include trust and investment management. BNYM was selected and awarded a contract as trustee for the administration of the 2013 Toll Bonds, TIFIA loan, and 2013 Sales Tax Bonds construction proceeds. US Bank will continue to serve as trustee for the sales tax revenue bonds and administer the debt service for the 2013 Sales Tax Bonds. A request for proposals for investment management services related to the bonds was released in February, and proposals were due on March 19. The evaluation process for investment management services is underway and selection and award of a contract is scheduled for the May Commission meeting . Agenda Item 7 5 Plan of Finance The financing team has maintained a quantitative model of the financing for the SR-91 CIP for more than two years. The most recent version of the model has been updated to refine market-based assumptions and reflect more precise estimates of overall capital and operating expenses. Current financing assumptions include the issuance of senior lien toll revenue bonds in the form of current interest bonds (CIBs) and capital appreciation bonds (CABs) (also known as zero coupon bonds), a subordinate level TIFIA loan secured by a third lien on toll revenues, the issuance of senior lien sales tax revenue bonds in the form of CIBs, and Measure A sales tax revenue on a pay-go basis. The following is a summary of the most current estimate of sources and uses for the SR-91 CIP financing: Debt sources: Par amount Debt uses: Construction Fund deposit Capitalized Interest Fund deposit Debt Service Reserve Fund deposit Retirement of commercial paper notes (development costs) Total debt uses $ $ $ (in thousands $) Bonds Sales Tax Toll Revenue TIFIA Loan Total 445,000 $ 220,000 $ 435,000 $ 1,100,000 296,000 $ 153,000 $ 435,000 $ 884,000 49,000 45,000 94,000 22,000 22,000 100,000 100,000 445,000 $ 220,000 $ 435,000 $ 1 '100,000 The 2013 Toll Bonds represent 17 percent of total SR-91 CIP costs, TIFIA loan represents 33 percent of total SR-91 CIP costs, and the Commission's equity contributions in the form of debt and pay-go represents 50 percent of total SR-91 CIP costs. Bonds and Commercial Paper Program The 2013 Toll and Sales Tax Bonds are proposed to be issued as fixed, long-term bonds. The 2013 Toll Bonds include CIBs with projected interest coupon rates ranging from 3.33 percent to 6.50 percent and maturities of principal beginning in July 2029 through July 2041. The 2013 Toll Bonds also include CABs with an investment return on an initial principal amount that accrues interest at a stated compounded rate until maturity beginning in July 2032 through July 2043. At • • maturity of the CABs, the bondholder receives a single payment for the maturity • value representing both the initial principal amount and the total investment return. Agenda Item 7 6 • • • The 2013 Sales Tax Bonds are callable CIBs, with projected interest coupon rates ranging from 2.98 percent to 5.74 percent and maturities of principal beginning in July 2018 through July 2039. Actual interest rates for the bonds will be determined in June upon the pricing of the bonds. Since the SR-91 CIP's substantial completion date and commencement of toll operations are currently assumed in the financial model to occur in November 2017, a portion of the toll revenue and sales tax bond proceeds will be used for capitalized interest payments during construction, as indicated in the table above. A portion of the 2013 Toll Bonds proceeds will be used to fund a debt service reserve fund; a debt service reserve fund requirement for the 2013 Sales Tax Bonds is not anticipated (consistent with the other outstanding sales tax revenue bonds). A portion of the toll revenue and sales tax bond proceeds will also be used to pay costs of issuance, which are limited to 2 percent per the Commission's debt management policy. A portion of the 2013 Sales Tax Bonds proceeds will also be used to retire the outstanding commercial paper notes, which amount to $40 million outstanding as of March 25. Additional commercial paper notes may be issued prior to the sale of the bonds in order to continue to pay SR-91 CIP project costs, including right of way acquisition . After the close of the SR-91 CIP financing, the amount of outstanding sales tax supported debt compared to the 2009 Measure A debt limit is projected as follows: Outstanding Sales Tax Supported Debt (projected as of June 30, 2013) 2005 Commercial Paper Program (authorization) 2009 Bonds 2010 Bonds 2013 Bonds Total projected outstanding sales tax supported debt 2009 Measure A debt limit Available debt capacity Amount $ 120,000,000 161,400,000 150,000,000 445,000,000 8 7 6,4001000 975,000,000 $ 98,600,000 Once the SR-91 CIP financing is in place, commercial paper program financing needs will be limited to financing certain other 2009 Measure A projects including the 1-15 CIP environmental phase and 1-215 Central Project construction in Western County and Coachella Valley projects included in the advance loan agreement approved in 2005. Staff anticipates the Series B authorized amount of $60 million will be eliminated, resulting in the termination of the letter of credit reimbursement agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., acting through its New York branch. This would leave the Series A program in place with an authorized Agenda Item 7 7 amount of $60 million and a letter of credit of reimbursement agreement with • Union Bank, N .A., that expires in October 2014. After the FY 2013/14 budget process is completed in June, staff may determine Series A authorized amount should be decreased to a lower amount. Staff recommends the Commission authorize the Executive Director or Chief Financial Officer to reduce the authorized amount of the commercial paper program from $1 20 million to an amount sufficient· to pay other 2009 Measure A costs for highway projects in the Western County and Coachella Valley and to terminate or reduce the letter of credit reimb'ursement agreements accordingly. Any decrease in the commercial paper program authorized amount would increase the amount of available debt capacity. Projected debt service coverage in the financial model based on projected toll and sales tax revenues is expected to exceed the Commission's 2x coverage policy for the sales tax supported debt and the toll bonds indenture (draft) requirement of 1 .5x coverage for senior level debt. The toll bonds coverage requirement is included in the updated debt management policy included with this staff report. TIFIA Loan The TIFIA Loan interest rate is currently estimated at 3.50 percent and is tied to the rate on a 30-year U.S. Treasury Bond plus 1 basis point (0.01 percent). The actual interest rate for the TIFIA loan will be determined in June upon the execution • of the TIFIA Loan Agreement. Interest on the TIFIA loan will be payable beginning in July 2022. During the first five years of repayment, only interest payments are required. To the extent that payments of interest result in debt service coverage of at least 1 .3x for all senior and subordinated toll revenue supported debt, the debt service is considered mandatory debt service. Mandatory debt service is required, and failure to pay results in a default. The TIFIA loan will also include payments during the period from July 2022 to July 2027 that fully fund all interest. The additional payments are considered scheduled debt service. Payment of scheduled debt service is only required if revenues are sufficient to allow its payment. The TIFIA loan maturities are projected to begin in July 2027 through July 2050, which is about 17 years before the expiration of toll authority. Key provisions of the TIFIA loan include the following: • A $20 million TIFIA loan reserve will be established from excess right of way sales proceeds, which are estimated at $29 million, or a 2009 Measure A Western County highway contribution if such proceeds are not sufficient; • Minimum 1 .3x coverage for all senior and subordinated toll revenue supported debt; • TIFIA loan to be drawn down pro rata with 2013 Toll Bonds proceeds for construction; • Additional bonds secured by toll revenues can be issued if the minimum coverage requirements are met and the TIFIA lender approves; Agenda Item 7 8 • • • • • After payment of the toll revenue bonds and the TIFIA loan, revenues can be applied to the 71 /91 interchange project and the 1 5/91 north connector (Deferred 91 CIP Projects); and • Revenues remaining after payment on bonds, the TIFIA loan, and the Deferred 91 CIP projects will be applied on a 50-50 ratio to prepayment of the TIFIA loan and to other Commission projects. Measure A Equity Contributions Since the inception of the SR-91 CIP, the Commission issued short and long term sales tax supported debt to cover project costs estimated at $21 0 million through June 2013. During construction, the Commission will be required to make additional pay-go contributions of $106 million to cover project costs. Prior to using 2009 Measure A Western County highway funds, the sources for these contributions will be State-Local Partnership Program funds of $37 million, State Transportation Improvement Program funds of $2 million, and 1989 Measure A Western County highway remaining funds of $40 million. Flow of Funds for Toll Operations Toil operations will be conducted in accordance with a three-party agreement between the Orange County Transportation Authority (OCTA), the Commission, and the 91 Express Lanes operator, Cofiroute USA. Commission approval of this agreement is expected at the May meeting. Deposits and other non-toll related revenues will be deposited by the operator into a master custodial account to be determined by OCTA and the Commission. Toll revenues will be transferred on a daily basis to individual trust accounts managed by each agency's trustee; for the Commission, this is BNYM. Other non-toll related revenues such as violation fees and minimum account fees will be transferred on a weekly or monthly basis, as appropriate. These revenues will be required to fund the following significant costs and reserves, which are listed in order of priority: • • • • • • • Operations and maintenance; 2013 Toll Bond interest; 2013 Toll Bond principal; 2013 Toll Bond debt service reserve replenishment, if required; Interest and principal as well as debt service reserve replenishment on second lien toll supported obligations, of which there currently are none anticipated; TIFIA loan mandatory debt service; TIFIA loan reserve (if the TIFIA loan reserve is applied to payment of TIFIA mandatory debt service); Agenda Item 7 9 • • Repair and rehabilitation reserve; TIFIA loan scheduled debt service; • Planned improvements reserve to fund deferred 91 CIP projects; and • Residual account. Events of default identified in the 2013 Toll Bond Indenture and First Supplemental Indenture (Indentures) are as follows: • Default in payment of any interest or principal on any bond when due; • Occurrence and continuance of a bankruptcy-related event of the Commission; and • Default in observance or performance of any other covenant or agreement of Commission contained in the Indentures for a period of 60 days after written notice. Should an event of default occur, the Indentures specify the application of revenue and other funds after default. Financing Team and Related Documents The financing team that participated in the development of this proposed plan of • finance, preparation, and negotiation of the required documents includes 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; • Special Counsel (TIFIA and Procurement) -Nossaman; • Senior Underwriters -BAML and Goldman; • Toll Bond Co-managing Underwriters -JPM; • Sales Tax Bond Co-managing Underwriters -JPM, Barclays, and De La Rosa; • Project and Construction Manager -Parsons; • Traffic and Revenue Consultant -Stantec; and • Trustees -BNYM (toll revenue bonds), US Bank (sales tax revenue bonds). The following is a summary of draft documents related to the SR-91 CIP Plan of Finance to be approved by the Commission: Agenda Item 7 10 • • • • 201 3 Toil Revenue Bonds 2013 Sales Tax Revenue Bonds TIFIA Loan <------------------------------------------Res o I utio n 1 3-00 3 -------------------------------------~ Official Statement Continuing Disclosure Agreement ! Official Statement ! Continuing Disclosure : Agreement Master, First, and Second Supplemental Indentures : Fifth Supplemental Indenture : Loan Agreement ' Bond Purchase Agreement : Bond Purchase Agreement ' ' ' Drafts of the documents for the proposed SR-91 CIP financing are included as attachments to this staff report for approval and consist of the following: • • Resolution No. 13-003 (draft) authorizing indenture agreements related to the sale of the toll revenue bonds initially approved in July 2010 and the execution and delivery of a purchase contract, official statement, and continuing disclosure agreement; the issuance and sale of a not to exceed amount of sales tax revenue bonds including the execution and delivery of a supplemental indenture, purchase contract, official statement, and continuing disclosure agreement; and a TIFIA loan agreement; and the taking of all other actions necessary in connection with this transaction (Attachment 1 ); Preliminary Official Statements (draft) for the 2013 Sales Tax Bonds and 2013 Toll Revenue Bonds (Attachments 3 and 6); • Fifth Supplemental Indenture between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of the 2013 Sales Tax Bonds (Attachment 2); • Master and First Supplemental Indentures between the Commission and the trustee (draft) regarding the terms and conditions of the issuance of the 2013 Toll Revenue Bonds (Attachments 4 and 5); and • TIFIA Loan Agreement between the Commission and USDOT (draft) regarding the terms and conditions of the TIFIA loan (Attachment 7). Drafts of the following documents are expected to be provided at the April Commission meeting: • Second Supplemental Indenture between the Commission and the trustee (draft) regarding the terms and conditions of the TIFIA loan; • Continuing Disclosure Agreements (draft) between the Commission and the dissemination agent for the 2013 Sales Tax Bonds and 2013 Toll Revenue Bonds; and • Purchase contracts (draft) between the Commission and the underwriters regarding the purchase of the 2013 Sales Tax Bonds and 2013 Toll Revenue Bonds. Agenda Item 7 1 1 Staff recommends the Commission also approve revisions to the debt management • policy (Attachment 8) primarily related to the issuance of toll revenue bonds. Additionally, estimated costs of issuance are being determined and will be provided at the April meeting for Commission approval of the costs as well as the execution of related agreements. As part of the action to authorize the issuance of the 2 013 Sales Tax Bonds and 2 0 13 Toil Revenue Bonds, the Commission will approve the form of the Preliminary Official Statement and authorize its distribution in connection with the sale of the bonds, as well as the preparation of a final Official Statement once the bonds have been priced. These offering documents are required under state and federal securities laws prohibiting the offer and sale of securities such as the 2013 Sales Tax Bonds and 2 0 13 Toil Revenue Bonds, unless all matters that would be material to an investor in the bonds have been adequately disclosed and that there is no omission of material facts. Furthermore, under rules of the Securities and Exchange Commission, the underwriters cannot purchase the bonds unless they have received a substantially final offering document, which discloses all material information that they reasonably believe to be true and correct. The Commissioners serving on the Board as the governing body of the issuer of the 2 0 13 Sales Tax Bonds and 2 0 13 Toil Revenue Bonds are expected to read and be familiar with the information described in the draft Preliminary Official Statement • included with this staff report. The Commissioners may employ the services of experts to take the lead in the drafting and review of the Official Statement and to provide financial projections included in 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 if they are 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 sue h questions. Anticipating approval for this transaction, the following is a schedule of subsequent activities related to the SR-91 Cl P financing: Rating agency meetings Investor calls/meetings Posting of preliminary official statements Pricing activities TIFIA Loan agreement execution Bond closing activities April 15-16 April 1 7, June 3 May 15 June 4-5 June 18 June 18-19 Changes to these documents may be necessary as a result of continuing • development by the financing team, meetings with the rating agencies, and Agenda Item 7 12 • • • continuing negotiations with TIFIA. 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. Financial Impact Proceeds from the 2013 Sales Tax Bonds and the 2013 Toll Bonds will be received upon issuance of the bonds; the TIFIA loan will be drawn upon monthly in connection with cost reimbursement requisitions. Costs of issuance, currently estimated at $10 million, will be paid from bond proceeds. Financial Information Yes FY 2012/13 $665 million bond proceeds, less $1 0 million costs of In Fiscal Year Budget: Year: Amount: issuance N/A FY 2013!14+ $435 million TIFIA loan Source of Funds: I Sales tax revenue bonds, toll Budget Adjustment: [ No revenue bonds, TIFIA loan N/A 305 31 59102 $665,000,000 Bond Proceeds GL!Project Accounting No.: 305 31 96103 $10,000,000 Costs of Issuance 305 31 59104 $435,000,000 TIFIA Loan Proceeds Fiscal Procedures Approved: ~~ I Date: I 03/19/13 Agenda Item 7 13 Attachments: 1) Resolution No. 13-003 (Draft) 2) Sales Tax Bonds Fifth Supplemental Indenture (Draft) • 3) Sales Tax Bonds Preliminary Official Statement (Draft) 4) Toll Bonds Master Indenture (Draft) 5) Toll Bonds First Supplemental Indenture (Draft) 6) Toll Bonds Preliminary Official Statement (Draft) 7) TIFIA Loan Agreement (Draft) 8) Revised Debt Management Policy (Draft) • • Agenda Item 7 14 • • • NO.l3-003 ATTACHMENT 1 OH&S Draft 3/1112013 RESOLUTION AUTHORIZING AGREEMENTS RELATING TO THE SALE OF NOT TO EXCEED $190,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION TOLL REVENUE BONDS AND THE ISSUANCE AND SALE OF NOT TO EXCEED $500,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) IN ONE OR MORE SERIES, INCLUDING THE EXECUTION AND DELIVERY OF A FIFTH SUPPLEMENTAL INDENTURE, PURCHASE CONTRACTS, OFFICIAL STATEMENTS, AND CONTINUING DISCLOSURE AGREEMENTS, AND A LOAN AGREEMENT RELATING TO TRANSPORTATION INFRASTRUCTURE FINANCE AND INNOVATION ACT PROGRAM CREDIT ASSISTANCE, 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.) (as amended, including by Chapter 714 of the California Statutes of2008 (Senate Bill No. 1316), the "Act"); 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 "Sales Tax 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 Sales Tax 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 one-half of one percent ( 112%) commencing July 1, 2009 and continuing 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 (collectively, the "Sales Tax Debt"), the proceeds of which will fund capital expenditures for various purposes, including to carry out the transportation projects described in the Riverside OHSUSA:753 I 58467.3 15 County Transportation Improvement Plan, adopted as part of the Ordinance, including any future amendments thereto (the "Expenditure Plan"); • WHEREAS, on July 14, 2010, the Commission adopted Ordinance No. 10-002 (the "2010 Ordinance") providing that the aggregate principal amount of Sales Tax Debt at any one time outstanding shall not exceed $975 million; WHERAS, by its terms, the 201 0 Ordinance became effective at the close of the polls on November 2, 2010, the day of the election at which the proposition relating to the 2010 Ordinance was approved by more than a majority of electors voting on the measure; WHEREAS, the Ordinance authorizes the Commission to apply proceeds of the Sales Tax (the "Sales Tax Revenues") for transportation purposes, including the construction, capital, acquisition, maintenance and operation of streets, roads, highways, including state highways, and for related purposes; WHEREAS, the Commission is further 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 Sales Tax Revenues; WHEREAS, the Act was amended by Chapter 714 of the California Statutes of 2008 (Senate Bill No. 1316), which, among other provisions authorizes the Commission to set, levy and collect tolls, user fees, or other similar charges, payable for use of the toll lanes and other • facilities on the portion of State Highway Route 91 (the "SR-91 ") between the Orange and Riverside County line and State Highway Route 15 (collectively, the "Toll Road"), and to issue one or more series of bonds (the "Toll Revenue Bonds") pursuant to the terms and conditions of a resolution adopted by a two-thirds vote of the Commission, which bonds are payable from the proceeds of such tolls (the "Toll Revenues") and any other source of revenues available to the Commission and pledged as security for the Toll Revenue Bonds; WHEREAS, the Act authorizes Toll Revenue Bonds to be issued for the purpose of financing the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance, or any combination of these, with respect to tolled and nontolled facilities, structures, onramps, connector roads, bridges, and roadways that are on, necessary for, or related to the construction or operation of the portion of the SR-91 between the Orange and Riverside County line to the west and State Highway Route 15 to the east (the "Riverside SR-91 Corridor Improvement Project"); WHEREAS, in accordance with that certain Estoppel Certificate and Assignment and Assumption Agreement, dated as of December 30, 2002 (the "Assignment Agreement"),. by and among California Private Transportation Company, L.P., the Orange County Transportation Authority (the "Authority"), and the California Department of Transportation ("Caltrans"), the Authority and Caltrans are parties to that certain Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements), dated as of June 30, 1993 (as it has been amended, the "Franchise Agreement"), as amended by that certain Amendment No. 1 to Amended and Restated Development Franchise Agreement (State Route 91 Median • OHSUSA:753158467.3 -2- 16 • • Improvements) dated as of July 16, 1993, and that certain Amendment No. 2 to Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements) dated as of December 30, 2002, pertaining to the construction and operation of tolled transportation facilities on the SR-91 within both Orange and Riverside Counties; WHEREAS, the Authority imposes tolls on certain SR-91 lanes m Orange County pursuant to the Franchise Agreement; WHEREAS, the Commission's authorization to levy tolls and issue Toll Revenue Bonds pursuant to the Act was conditioned upon the Authority amending or partially assigning the Franchise Agreement to exclude that portion ofSR-91 between the Orange and Riverside County line and State Highway Route 15 from such Franchise Agreement, which amendment has been effected pursuant to the Amendment No. 3 to Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements), dated as of December 12, 2011 (collectively, the "Amendment"), by and between the Authority and Caltrans; WHEREAS, in its Resolution 10-026 (the "2010 Resolution"), the Commission determined to set, levy, and collect tolls, user fees and similar charges for the use of the Toll Road, pursuant to a toll schedule to be adopted by the Commission, and to apply all or a portion of the Toll Revenues to the financing of the Riverside SR-91 Corridor Improvement Project's design, construction and operation; WHEREAS, in its 2010 Resolution, the Commission authorized the issuance pursuant to the Act of two or more series of Toll Revenue Bonds, entitled "Riverside County Transportation Commission Toll Revenue Bonds", in an aggregate principal amount not to exceed nine hundred million dollars $900,000,000, subsequent to the effectiveness of the Amendment and following the approval by a subsequent resolution of the Commission of certain documentation necessary for the sale of such Toll Revenue Bonds, including a bond purchase agreement, an official statement describing the Toll Revenue Bonds to potential investors and other customary or necessary documentation for the sale of such Toll Revenue Bonds to investors, together with completion of appropriate financial, regulatory and environmental review of the Riverside SR-91 Corridor Improvement Project, including review under the California Environmental Quality Act, (California Public Resources Code Section 21000 et seq. and Title 14 ofthe California Code of Regulations Section 15000 et seq.) ("CEQA") and other applicable environmental laws; WHEREAS, the Commission completed an Environmental Impact Statement/Environmental Impact Report for the Riverside SR-91 Corridor Improvement Project (the "EIR") and submitted the EIR to Cal trans in October 2011, and the Record of Decision was released on November 5, 2012, satisfying CEQA requirements for the financing of the Riverside SR -91 Corridor Improvement Project; WHEREAS, the Commission approved the Riverside SR-91 Corridor Improvement Project on November 14, 2012 in its Resolution No. 12-028; WHEREAS, in its 2010 Resolution, the Commission approved: (i) a proposed form of Cooperative Agreement for Design-Build of the State Route 91 Toll Facilities and Corridor • Improvement Project, by and between the Commission and Caltrans (the "Design-Build OHSUSA:753158467 .3 -3- 17 Agreement"), (ii) a proposed form of Cooperative Agreement for State Route 91 Express Lanes • and Corridor Improvements Between Riverside County Transportation Commission and Orange County Transportation Authority, by and between the Commission and the Authority (the "Cooperative Agreement"), providing guidelines for cooperation between the Commission and the Authority in the planning, design, construction and operation of the Riverside SR-91 Corridor Improvement Project following its approval, and (iii) a proposed form of master indenture and supplemental indentures, by and between the Commission and U.S. Bank National Association, as trustee (collectively, the "Toll Revenue Bond Indenture"), providing for the issuance of two series of Toll Revenue Bonds and the application of the proceeds thereof to (A) finance the planning, design, development, financing, potential construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, and maintenance ofthe Riverside SR- 91 Corridor Improvement Project, (B) apply for or otherwise obtain available federal, state and local matching· funds, loans and grants in order to make additional funds available for the Riverside SR-91 Corridor Improvement Project; and (C) finance the costs of issuance incurred in connection with such Toll Revenue Bonds; WHEREAS, on December 16, 2011, the Commission executed and delivered the Cooperative Agreement by and between the Commission and the Authority; WHEREAS, on July 25, 2012, the Commission executed and delivered the Design-Build Agreement by and between the Commission and Caltrans; WHEREAS, the Commission has submitted an application to the United States Department of Transportation (the "Department of Transportation") for Federal credit assistance under the Transportation Infrastructure Finance and Innovation Act, codified under Sections 601- 609 of title 23 of the United States Code, and the Commission has received approval for such credit assistance in the amount of four hundred fifty-one million dollars ($451 ,000,000) (the "TIFIA Loan"), to fund a portion of the Riverside SR-91 Corridor Improvement Project; WHEREAS, the Toll Revenue Bond Indenture will secure the Commission's obligation to repay the TIFIA Loan from Toll Revenues pursuant to the terms of a loan agreement to be entered into by and between the Commission and the Department of Transportation (the "TIFIA Loan Agreement"); WHEREAS, the Commission has heretofore issued its Sales Tax Revenue Bonds (Limited Tax Bonds) in the aggregate principal amount of $335,000,000 (the "Outstanding Sales Tax Bonds"), pursuant to an indenture, dated as of June 1, 2008, as amended and supplemented, including by a second supplemental indenture, dated as of October 1, 2009, and a third supplemental indenture, dated as of November 1, 2010 (collectively, and as subsequently amended from time to time, the "Sales Tax Revenue Bond Indenture"), each by and between the Commission and U.S. Bank National Association, as trustee (the "Sales Tax Trustee"); • WHEREAS, the Commission has heretofore authorized the issuance from time to time of not to exceed $120,000,000 in aggregate principal amount of its Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (the "CP Notes"), pursuant to an indenture, dated as of March 1, 2005, by and between the Commission and U.S. Bank National Association, as successor trustee and an issuing and paying agent agreement, dated as of March 1, 2005, and a • OHSUSA:753158467.3 -4- 18 • • • first supplement to issuing and paying agent agreement, dated as of April 1, 2012, each by and between the Commission and U.S. Bank Trust National Association, as issuing and paying agent; WHEREAS, the Commission hereby determines that one or more new series or subseries of bonds in an aggregate principal amount not to exceed five hundred million dollars ($500,000,000) and payable on a parity with the Outstanding Sales Tax Bonds is necessary in order to finance (i) funds for portions of the Riverside SR-91 Corridor Improvement Project authorized in the Expenditure Plan, (ii) the refunding of all or a portion of the outstanding CP Notes, (iii) capitalized interest and a reserve fund for such bonds, if any, and (iv) 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 2013" (the "'Series 2013 Sales Tax Bonds"); WHEREAS, the Commission hereby determines that an additional allocation of Sales Tax Revenues, in an aggregate amount not to exceed one hundred thirty-one million dollars ($131 ,000,000) (the "Additional Allocation"), to fund the costs of additional portions of the Riverside SR-91 Corridor Improvement Project authorized in the Expenditure Plan through no later than fiscal year 2018, is necessary and desirable in order to facilitate the financing and completion of the Riverside SR-91 Corridor Improvement Project, including with respect to obtaining federal support in the form of the TIFIA Loan; WHEREAS, in light of the additional sources of funding for the Riverside SR-91 Corridor Improvement Project available to the Commission as set forth above in this Resolution, including the TIFIA Loan, the Series 2013 Sales Tax Bonds and the Additional Allocation, the Executive Director of the Commission (the "Executive Director") has informed the Commission of her determination that it will be necessary initially to issue a single series of Toll Revenue Bonds and, pursuant to the authority granted to her by the Commission in the 2010 Resolution, the Executive Director anticipates requiring and approving changes to the form of Toll Revenue Bond Indenture presented to the Commission in connection with the 201 0 Resolution as are necessary (i) to provide for the initial issuance of such series of Toll Revenue Bonds, (ii) to include provisions relating to the security for the TIFIA Loan, and (iii) to make such other changes therein, including substituting The Bank ofNew York Mellon Trust Company, National Association, as trustee for the Toll Revenue Bonds (the "Toll Trustee"), as are necessary or desirable to issue such series of Toll Revenue Bonds pursuant to the authorization of the Commission in the 2010 Resolution; WHEREAS, the following documents have been prepared and presented to the Commission (collectively, the "Financing Documents"): (1) a proposed form of Fifth Supplemental Indenture (the "Fifth Supplemental Sales Tax Revenue Bond Indenture"), by and between the Commission and the Sales Tax Trustee, providing for the issuance of the Series 2013 Sales Tax Bonds; (2) a proposed form of TIFIA Loan Agreement, by and between the Commission and the Department of Transportation, providing the repayment terms for the TIFIA Loan; OHSUSA:753158467.3 -5- 19 (3) a proposed form of Toil Revenue Bond Indenture, by and between the Commission and the Toll Trustee, including a master indenture (the "Master Toll Revenue Bond Indenture") and a first supplemental indenture (the "First Supplemental Toll Revenue Bond Indenture"), each by and between the Commission and the Toll Trustee, and each incorporating changes therein that the Executive Director expects to require and approve in connection with the issuance of a single series of Toll Revenue Bonds (the "Series 2013 Toll Bonds") to be secured primarily by a first lien on Toil Revenues as authorized in the 201 0 Resolution; (4) a bond purchase agreement setting forth the terms of sale of the Series 2013 Sales Tax Bonds (the "Sales Tax Purchase Contract"), in an aggregate principal amount not to exceed five hundred million dollars ($500,000,000), which the Commission proposes to enter into with Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives, acting on behalf of themselves and Barclays Capital Inc., E.J. De La Rosa & Co., Inc. and J.P. Morgan Securities LLC (collectively, the "Sales Tax Bond Underwriters"); ( 5) a bond purchase agreement setting forth the terms of sale of the Series 2013 Toll Bonds (the "Toll Purchase Contract" and, together with the Sales Tax Purchase Contract, the "Purchase Contracts"), in an aggregate principal amount not to exceed one hundred ninety million dollars ($190,000,000), which the Commission proposes to enter into with Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives, acting on behalf of themselves and J.P. Morgan Securities LLC (collectively, the "Toll Bond Underwriters" and, together with the Sales Tax Underwriters, the "Underwriters"); ( 6) proposed forms of official statement in preliminary form to be distributed in connection with the offering and sale of the Series 2013 Sales Tax Bonds and the Series 2013 Toll Bonds, respectively (collectively, the "Official Statements"); and (7) proposed forms of Continuing Disclosure Agreements to be executed and delivered by the Commission to assist the Sales Tax Bond Underwriters and the Toll Bond Underwriters in satisfying their respective obligations under Rule 15c2.,. 12 promulgated by the Securities and Exchange Commission; and WHEREAS, the Commission has been presented with proposed forms of the Financing Documents 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 desires to confirm the Commission's authorization in the 201 0 Resolution of the issuance of the Series 2013 Toll Bonds and the execution and delivery of the Toll Revenue Bond Indenture, including the Master Toll Revenue Bond Indenture and First Supplemental Toll Revenue Bond Indenture, and to ratify the changes expected to be incorporated therein by the Executive Director pursuant to such authorization; OHSUSA:753158467.3 -6- 20 • • • • • • NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES: Section 1. The Commission finds and determines that the foregoing recitals are true and correct and makes them an effective part of this Resolution by incorporating them herein by reference. Section 2. The issuance by the Commission of not to exceed $500,000,000 aggregate principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), Series 2013, in accordance with the provisions set forth in the Sales Tax Revenue Bond Indenture and the Fifth Supplemental Sales Tax Revenue Bond Indenture, in one or more series or subseries, is hereby authorized and approved. Section 3. The proposed form of Fifth Supplemental Sales Tax Revenue Bond Indenture presented to this meeting and the terms and conditions thereof are hereby approved. The structure, date, maturity date or dates (not to exceed June 1, 2039), fixed interest rate or rates (such rates not to exceed a maximum of 6% per annum), interest payment dates, forms, registration privileges, place or places of payment, terms of redemption, mandatory purchase, additional series designation and number thereof and other terms of the Series 2013 Sales Tax Bonds shall be (subject to the foregoing limitations) as provided in the Sales Tax Revenue Bond Indenture and the Fifth Supplemental Sales Tax Revenue Bond 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 Fifth Supplemental Sales Tax Revenue Bond Indenture, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 4. The proposed form of TIFIA Loan Agreement presented to this meeting and the terms and conditions thereof are hereby approved. The principal amount borrowed for eligible costs payable from of the TIFIA Loan (not to exceed $451 ,000,000), the structure, date, maturity date (not to exceed the date that is thirty-five (35) years after the date of substantial completion of the Riverside SR-91 Corridor Improvement Project), fixed interest rate or rates (such rates not to exceed a maximum of 8% per annum), interest payment dates and provisions (including deferred and compounded interest), place or places of payment, terms of prepayment and other terms of the TIFIA Loan shall be (subject to the foregoing limitations) as provided in the TIFIA Loan Agreement 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 TIFIA Loan Agreement, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 5. The Commission's authorization and approval of the issuance by the Commission of Riverside County Transportation Commission Toll Revenue Bonds, Series 2013, in accordance with the provisions set forth in the Toll Revenue Bond Indenture, including the OHSUSA:753158467.3 -7- 21 Master Toll Revenue Bond Indenture and the First Supplemental Toll Revenue Bond Indenture, all as set forth in the 2010 Resolution, is hereby confirmed and approved. • Section 6. The Toll Revenue Bond Indenture authorized and approved in the 2010 Resolution, including the Master Toll Revenue Bond Indenture and the First Supplemental Toll Revenue Bond Indenture, each incorporating changes therein that the Executive Director expects, pursuant to the authority granted to her by the Commission in the 2010 Resolution, to require and approve in connection with the issuance ofthe Series 2013 Toll Bonds, as presented to this meeting, and the terms and conditions thereof are hereby ratified and approved and the authority of the Executive Director to make such changes pursuant to the authorization in the 2010 Resolution is confirmed. The structure, date, maturity date or dates (not to exceed 50 years following the date on which the Toll Road is opened for public use), 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 2013 Toll 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, terms of redemption, tender, mandatory purchase, additional series designation and number thereof and other terms of the Series 2013 Toll Bonds shall be (subject to the foregoing limitations as originally specified in the 2010 Resolution) as provided in the Toll Revenue Bond Indenture, as finally executed and delivered The Executive Director is hereby further authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Toll Revenue Bond Indenture, including the Master Toll Revenue Bond Indenture and the First Supplemental Toll Revenue Bond Indenture, in substantially said form, with such additional changes therein as the officer executing the same may require or approve, including, without limitation, changes as may be necessary to assign, pledge or mortgage the Commission's right, title and interest, to the extent permitted by law, in any agreements relating to the Toll Road, including, without limitation, the design, construction, operation and maintenance thereof, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. The proposed forms of 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 2013 Sales Tax Bonds to the Sales Tax Bond Underwriters and the Series 2013 Toll Bonds to the Toll Bond Underwriters pursuant to the respective Purchase Contracts, with the respective Underwriters' compensation not to exceed LJ% of the principal amount of the Series 2013 Sales Tax Bonds and not to exceed [_]% of the principal amount of the Series 2013 Toll Bonds, as applicable, and to execute and deliver the Purchase Contracts, in substantially said forms, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 8. The proposed forms of Official Statements presented to this· meeting are hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Official Statements in substantially said form with such changes, insertions and • deletions as may be approved by the Executive Director, said execution being conclusive • evidence of such approval; and the Executive Director is hereby authorized to execute a OHSUSA:753158467.3 -8- 22 • • • certificate confirming that the respective Official Statements in preliminary form are "deemed final" by the Commission for purposes of Securities and Exchange Commission Rule 15c2-12. The distribution by the Underwriters of copies of the applicable Official Statement in final form to all actual purchasers ofthe Series 2013 Sales Tax Bonds and the Series 2013 Toll Bonds, and the distribution by the Underwriters of the applicable Official Statement in preliminary form to potential purchasers of the Series 2013 Sales Tax Bonds and the Series 2013 Toll Bonds, are hereby authorized and approved. Section 9. The proposed forms of Continuing Disclosure Agreements presented to this meeting are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Continuing Disclosure Agreements 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 10. The Executive Director is hereby authorized to negotiate with financial institutions and/or insurance companies, as applicable, a surety bond or an insurance policy, and, if the Executive Director, with the advice of its financial advisor, determines that doing so is in the best interest of the Commission, to secure on such terms as the Executive Director, with the advice of the Commission's financial advisor, determines are appropriate such insurance policy or surety bond in order to secure payment of the principal of, or interest on, the Series 2013 Sales Tax Bonds or the Series 2013 Toll Bonds or to fund any bond reserve fund established pursuant to the Sales Tax Revenue Bond Indenture, including the Fifth Supplemental Sales Tax Revenue Bond Indenture, or the Toll Revenue Bond Indenture, including the Master Toll Revenue Bond Indenture and the First Supplemental Toll Revenue Bond Indenture. Section 11. The Executive Director is hereby authorized to enter into or to instruct the Sales Tax Trustee or the Toll Trustee or both to enter into one or more investment agreements (hereinafter collectively referred to as the "Investment Agreement") providing for the investment of moneys in any of the funds and accounts created under the Sales Tax Revenue Bond Indenture, including the Fifth Supplemental Sales Tax Revenue Bond Indenture, or the Toll Revenue Bond Indenture, including the Master Toll Revenue Bond Indenture and the First Supplemental Toll Revenue Bond Indenture, as applicable, 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 Investment Agreement will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Investment Agreement and 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 Series 2013 Sales Tax Bonds or the Series 2013 Toll Bonds or both, as applicable, or enhance the relationship between risk and return with respect to investments. Section 12. The Additional Allocation in an amount to be determined from time to time by the Executive Director (not to exceed an aggregate amount of $131 ,000,000), is hereby authorized and approved and the Executive Director is hereby authorized and directed to disburse such amounts (on any date on or prior to June 30, 2017) from Sales Tax Revenues in order to fund a portion of the costs of the Riverside SR-91 Corridor Improvement Project authorized in the Expenditure Plan. OHSUSA:753158467.3 -9- 23 Section 13. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution and the 2010 Resolution, whether before or after the issuance of the Series 2013 Sales Tax Bonds or the Series 2013 Toll Bonds or the execution of the TIFIA Loan Agreement, including, without limitation, any amendment of any of the documents authorized by this Resolution, the 2010 Resolution or other agreement related thereto or related to the CP Notes, and any of the foregoing that may be necessary or desirable in connection with any reserve facility, any investment of proceeds of the Series 2013 Sales Tax Bonds, the Series 2013 Toll Bonds or the TIFIA Loan Agreement, or in connection with the addition, substitution or replacement of underwriters, or any agreements with paying agents, escrow agents or verification agents, the removal or replacement of the Sales Tax Trustee or the Toll Trustee or any similar action may be given or taken by an Authorized Representative (as such term is defined in the Sales Tax Revenue Bond Indenture or the Toll Revenue Bond Indenture, as applicable) and, in the case of the TIFIA Loan Agreement, by the Executive Director, the Deputy Executive Director of the Commission or the Chief Financial Officer of the Commission (collectively, the "Authorized Officers"), without further authorization or direction by the Commission, and each Authorized Representative and Authorized Officer 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 or Authorized Officer may deem necessary or desirable to further the purposes of this Resolution. Section 14. 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 2013 Sales Tax Bonds and the Series 2013 Toll Bonds, including such changes as the Executive Director anticipates requiring and approving changes to the form of Toll Revenue Bond Indenture presented to the Commission in connection with the 2010 Resolution, 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 Chair of the Board or, in her absence, a Vice Chair of the Board, is hereby authorized to execute and deliver the Series 2013 Sales Tax Bonds and the Series 2013 Toll Bonds. The Chief Financial Officer of the Commission shall act as the Auditor-Controller of the Commission for execution of the Series 2013 Sales Tax Bonds and is hereby authorized to execute and attest to the execution of the Series 2013 Sales Tax Bonds and the Series 2013 Toll Bonds. The Clerk of the Board is hereby authorized to attest to the execution by an Authorized Officer of any of such documents as said officers deem appropriate. The 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 adopt written procedures relating to its bonds and 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, signature certificates, certificates concerning the contents of the Official Statements and the representations and warranties in the Purchase Contracts, any tax certificates or agreements, any insurance commitments or any agreements required in connection with obtaining a surety bond or an insurance policy, 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 2013 OHSUSA:753158467.3 -10- 24 • • • • • • Sales Tax Bonds and the Series 2013 Toll Bonds and otherwise to carry out, give effect to and comply with the terms and intent of the Ordinance, the 2010 Ordinance, this Resolution, the 2010 Resolution, the Act, the Sales Tax Act, the Series 2013 Sales Tax Bonds, the Series 2013 Toll Bonds, the TIFIA Loan Agreement and the other documents approved hereby. Section 15. This Resolution shall take effect immediately upon its adoption and approval. APPROVED AND ADOPTED by the Riverside County Transportation Commission at its meeting on AprillO, 2013. ATTEST: By: ________________________ _ Clerk of the Board of the Commission OHSUSA:753158467.3 By: ____________________________ _ -11- 25 Chair, Board of Commissioners 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 by at least a two-thirds vote of the Commission at a meeting of the governing board of said Commission duly and regularly held in Riverside, California, on April 10, 2013, of wl)ich 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, ____ ,2013. OHSUSA:753)58467.3 By ________________________________ _ -12- 26 Clerk • • • • • • OHSUSA:753163150.2 FIFTH SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of June 1, 2013 Relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION SALES TAX REVENUE BONDS (LIMITED TAX BONDS) 2013 SERIES A (Supplementing the Indenture Dated as of June 1, 2008) 27 A I I AL.H lVI t: 1\1 I L. OH&S Draft 3/11/2013 • • • Section 36.01. Section 36.02. Section 37.01. Section 37.02. Section 37.03. ARTICLE XXXVI DEFINITIONS Definitions ........................................................................................................ 1 Rules of Construction ...................................................................................... 3 ARTICLE XXXVII FINDINGS, DETERMINATIONS AND DIRECTIONS Findings and Determinations ........................................................................... 3 Recital in Bonds ............................................................................................... 3 Effect of Findings and Recital ......................................................................... 4 ARTICLE XXXVIII AUTHORIZATION OF 2013 SERIES A BONDS Section 38.01. Principal Amount, Designation and Series ...................................................... 4 Section 38.02. Purpose and Application of Proceeds .............................................................. 4 The net proceeds from the sale of the 2013 Series A Bonds in the amount of $[ ] shall be received by the Trustee, and the Trustee shall deposit or transfer such funds as follows: ........................................................ 4 Section 38.03. Form, Denomination, Numbers and Letters .................................................... 4 Section 38.04. . Date, Maturities and Interest Rates .................................................................. 5 Section 39.01. Section 39.02. Section 39.03. Section 39.04. ARTICLE XXXIX REDEMPTION AND PURCHASE OF 2013 SERIES A BONDS Optional Redemption of 2013 Series A Bonds ................................................ 6 Mandatory Redemption of2013 Series A Bonds From Mandatory Sinking Account Payments .............................................................................. 6 Selection of Bonds for Redemption ................................................................. 7 Purchase In Lieu of Redemption ...................................................................... 7 ARTICLE XL ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 40.01. Section 40.01. Section 40.02. Section 41.0 1. Section 41.02. Section 41.03. Section 41.04. Section 41.05. Section 41.06. Section 41.07. Section 41.08 . OHSUSA:753163150.2 Funds and Accounts ......................................................................................... 7 2013 Capitalized Interest Fund ........................................................................ 7 2013 Costs oflssuance Fund ........................................................................... 8 ARTICLE XLI MISCELLANEOUS Severability ...................................................................................................... 8 Parties Interested Herein .................................................................................. 8 Headings Not Binding ...................................................................................... 9 Notice Addresses ............................................................................................. 9 Notices to Rating Agencies .............................................................................. 9 Indenture to Remain in Effect.. ........................................................................ 9 Effective Date ofFifth Supplemental Indenture .............................................. 9 Execution in Counterparts ................................................................................ 9 28 EXHIBITS EXHIBIT A EXHIBITB OHSUSA:753163150.2 FORM OF 2013 SERIES A Bond ............................................................... A-1 NOTICE ADDRESSES ............................................................................... B-1 11 29 • • • • • • FIFTH SUPPLEMENTAL INDENTURE THIS FIFTH SUPPLEMENTAL INDENTURE, dated as of June 1, 2013 (this "Fifth 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 Fifth 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; WHEREAS, the Commission has heretofore issued its Sales Tax Revenue Bonds (Limited Tax Bonds), 2009 Series A, 2009 Series B, 2009 Series C, 2010 Series A and 2010 Series B, in the aggregate principal amount of $335,000,000, secured by the pledge of Revenues and other monies as set forth in the Indenture; and WHEREAS, the Commission desires to provide at this time for the issuance of an additional Series of Bonds to be designated "Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2013 Series A" (the "2013 Series A Bonds") for the purpose of providing funds to pay for a portion of the Costs of the Project, to retire $[ ] principal amount of the Commission's Outstanding Notes and to pay costs of issuance, all as provided in this Fifth Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: Section 36.01. Definitions. ARTICLE XXXVI DEFINITIONS (a) Definitions. Unless the context otherwise requires, or as otherwise provided in subsection (b) and (c) of this Section, all terms which are defined in Section 1.02, Section 19.01, Section 26.01 and Section 32.01 ofthe Indenture shall have the same meanings in this Fifth Supplemental Indenture. (b) Additional Definitions. Unless the context otherwise requires, the following terms shall, for all purposes of this Fifth Supplemental Indenture, have the following meamngs: OHSUSA:753163150.2 30 "Authorized Denominations" means, with respect to 2013 Series A Bonds, $5,000 and • any integral multiple thereof. "Interest Payment Date" means, with respect to 2013 Series A Bonds, June 1 and December 1 of each year until the redemption or maturity of such 2013 Series A Bonds, commencing with December 1, 2013. "Issue Date" means, with respect to the 2013 Series A Bonds, the date on which the 2013 Series A Bonds are first delivered to the purchasers thereof. "Record Date" means, with respect to the 2013 Series A Bonds, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. "Redemption Price" means, with respect to any 2013 Series A Bond or a portion thereof, 1 00% of the principal amount thereof to be redeemed, plus the applicable premium, if any, payable upon redemption thereof pursuant to such Bond or this Fifth Supplemental Indenture. "Fifth Supplemental Indenture" means this Fifth Supplemental Indenture, between the Commission and the Trustee, as amended and supplemented from time to time. "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. "Toll Revenue Bond Indenture" means that certain Master Indenture, dated as of June 1, 2013, by and between the Commission and the Toll Trustee, as amended and supplemented from time to time, including as amended and supplemented by that certain First Supplement to Master Indenture, dated as of June 1, 2013, by and between the Commission and the Toll Trustee. "Toll Trustee" means The Bank of New York Mellon Trust Company, National Association, as trustee under the Toll Revenue Bonds Indenture, and its successors and assigns. "2013 Bonds Tax Certificate" means the Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2013 Series A Bonds. "2013 Capitalized Interest Fund" means the 2013 Capitalized Interest Fund established pursuant to Section 40.01(a). OHSUSA:753163IS0.2 2 31 • • • • "2013 Costs of Issuance Fund" means the fund by that name established pursuant to Section 40.01(b). "2013 Credit Enhancement" means any Credit Enhancement provided with respect to the 2013 Series A Bonds. "2013 Credit Provider" means the Credit Provider issuing a 2013 Credit Enhancement. "2013 Series A Bonds" shall mean the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2013 Series A, authorized by Article XXXVIII of this Indenture. "2013 Series A Bonds Tax Certificate" means the Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2013 Series A Bonds. Section 36.02. Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. Defined terms shall include any variant of the terms set forth in this Article XXXVI. The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this Fifth Supplemental Indenture, refer to the Indenture . ARTICLE XXXVII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 37.01. Findings and Determinations. The Commission hereby finds and determines that the 2013 Series A Bonds shall be issued pursuant to Article XXVIII and Section 3.01, Section 3.02 and Section 3.03 of the Indenture, and upon the issuance of the 2013 Series A 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 37.02. Recital in Bonds. There shall be included in each of the definitive 2013 Series A Bonds, and also in each of the temporary 2013 Series A 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 2013 Series A Bonds, and in the issuing of that 2013 Series A Bonds, 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 2013 Series A Bonds, 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 2013 Series A Bonds attached hereto as Exhibit A . OHSUSA:753163!50.2 3 32 Section 37.03. Effect of Findings and Recital. From and after the issuance of the 2013 Series A 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 2013 Series A Bonds is at issue. ARTICLE XXXVIII AUTHORIZATION OF 2013 SERIES A BONDS Section 38.01. 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), 2013 Series A." At any time after the execution and delivery of this Supplemental Indenture, the Commission may execute and, upon the order of the Commission, the Trustee shall authenticate and deliver each 2013 Series A Bonds in the aggregate principal amount set forth above. Section 38.02. Purpose and Application of Proceeds. The 2013 Series A Bonds are issued for the purpose of providing funds to pay for a portion of the Costs of the Project and to retire $[ principal amount of the Commission's Outstanding Notes. In addition, a portion of the proceeds of the 2013 Series A Bonds will be applied to pay capitalized interest on the 2013 Series A Bonds through June 1, 2016 and Costs of Issuance of the 2013 Series A Bonds. The net proceeds from the sale of the 2013 Series A 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 transferred to the Toll Trustee for deposit into the Sales Tax Revenue Bonds Account with the Project Fund, each established pursuant to the terms of the Toll Revenue Bond Indenture, for application to Costs of the Project as set forth in the Toll Revenue Bond Indenture; (b) $[ ] of such proceeds shall be transferred to the Notes Trustee for deposit upon the order of the Commission; (c) $[ ____ _J of such proceeds shall be deposited in the 2013 Capitalized Interest Fund; and (d) $'--[ ____ __,] of such proceeds shall be deposited in the 2013 Costs of Issuance Fund. Section 38.03. Form, Denomination, Numbers and Letters. Each Series of 2013 Series A Bonds shall be issued as fully registered bonds without coupons in book-entry form and in Authorized Denominations and shall be numbered from one upward in consecutive numerical order preceded by the letter "R" prefixed to the number. Each Series of 2013 Series A Bonds OHSUSA:753163150.2 4 33 • • • • • and the certificate of authentication shall be substantially m the form attached hereto as Exhibit A. Section 38.04. Date, Maturities and Interest Rates. The 2013 Series A Bonds shall be issued as Current Interest Bonds in the aggregate principal amount of$[ ]. The 2013 Series A Bonds shall be dated their Issue Date, shall bear interest from that date at the following rates per annum, computed on the basis of a 360-day year comprised of twelve 30-day months, and shall mature on June 1 in the following years and in the following amounts: Maturity Date (June 1) * * Term Bond Final Maturity Principal Amount Interest Rate $[ 1 L._j% Interest on each 2013 Series A Bond shall be payable on each Interest Payment Date for such 2013 Series A Bond until the principal sum of such 2013 Series A Bond has been paid; provided, however, that if at the maturity date of any 2013 Series A 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 2013 Series A Bond shall then cease to bear interest. Each 2013 Series A 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 2013 Series A Bonds are Book-Entry Bonds, principal of and interest on the 2013 Series A Bonds shall be payable by wire transfer to DTC in lawful money of the United States of America. Principal of the 2013 Series A Bonds shall be payable when due upon presentation and surrender thereof at the Principal Office of the Trustee. Each 2013 Series A Bond shall be payable as provided in Section 2.1 0, including Section 2.1 O(E), or, in the event the use of the Securities Depository is discontinued, the principal of each 2013 Series A 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 2013 Series A Bond shall be payable in lawful money of the United States of America by the Trustee to the Holder thereof as of the close of business on the Record Date, such interest to be paid by the Trustee to such Holder in immediately available funds (by wire transfer or by deposit to the account of the Holder if such account is maintained with the Trustee), according to the instructions given by such Holder to the Trustee or, in the event no such instructions have been given, by check mailed by first class mail to the Holder at such Holder's address as it appears as of the Record Date on the bond registration books kept by the Trustee. OHSUSA:753163150.2 5 34 ARTICLE XXXIX REDEMPTION AND PURCHASE OF 2013 SERIES A BONDS Section 39.01. Optional Redemption of 2013 Series A Bonds. (a) Optional Redemption of 2013 Series A Bonds. The 2013 Series A Bonds maturing on or before June 1, 20L_J shall not be subject to redemption prior to their respective stated maturities. The 2013 Series A Bonds maturing on or after June 1, 20L] shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after June 1, 20L_J at the principal amount of 2013 Series A Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium. (b) Sufficient Funds Required for Optional Redemption. Any optional redemption of 2013 Series A Bonds and notice thereof shall 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 2013 Series A Bonds called for redemption. (c) Notice of Optional Redemption; Rescission. Any notice of optional redemption of the 2013 Series A Bonds shall be delivered in accordance with Section 4.02 and may be rescinded as provided in Section 4.02. • Section 39.02. Mandatory Redemption of 2013 Series A. Bonds From Mandatory • Sinking Account Payments. (a) Mandatory Redemption of 2013 Series A Bonds. The 2013 Series A Bonds maturing on June 1, 20L_J shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Mandatory Sinking Account Payments on each June 1 a Mandatory Sinking Account Payment is due as specified in this Section 39.02(a), in the principal amount equal to the Mandatory Sinking Account Payment due on such date and at a redemption price equal to 1 00% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. The Mandatory Sinking Account Payments for the 2013 Series A Term Bonds maturing on June 1, 20L_J shall be due in the amounts and on the dates as follows: *Final Maturity OHSUSA:753163150.2 Mandatory Sinking Account Payments Dates (June 1) * 6 35 Mandatory Sinking Account Payments $ • • • • Section 39.03. Selection of Bonds for Redemption . (a) Selection of 2013 Series A Bonds for Redemption. The Commission shall designate which maturities of any 2013 Series A Bonds are to be called for optional redemption pursuant to Section 39.01(a). If less than all 2013 Series A Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2013 Series A 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 2013 Series A Bonds so selected for redemption. For purposes of such selection, 2013 Series A Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. In the event of an optional redemption ofthe 2013 Series A Term Bonds pursuant to Section 39.01(a), the Commission shall designate the Mandatory Sinking Account Payments under Section 39.02(a), or portions thereof, in an aggregate amount equal to the principal amount of 2013 Series A Term Bonds so optionally redeemed, that are to be reduced as allocated to such redemption, and such Mandatory Sinking Account Payments shall be reduced accordingly. Section 39.04. Purchase In Lieu of Redemption. The Commission reserves the right at all times to purchase any of its 2013 Series A Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2013 Series A Bonds purchased on the open market, and such 2013 Series A Bonds shall be cancelled by the Trustee. If any 2013 Series A Bonds are so cancelled, the Commission may designate the Mandatory Sinking Account Payments or portions thereof within such Series of the 2013 Series A Bonds so purchased that are to be reduced as a result of such cancellation . ARTICLE XL ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 40.01. Funds and Accounts. The following funds and accounts are hereby established in connection with the 2013 Series A Bonds: (a) To ensure the proper application of such portion of proceeds from the sale of the 2013 Series A Bonds to be applied to pay capitalized interest on the 2013 Series A Bonds, there is hereby established the 2013 Capitalized Interest Fund, such account to be held by the Trustee. (b) To ensure the proper application of such portion of proceeds from the sale of the 2013 Series A Bonds to be applied to pay the Costs of Issuance of the 2013 Series A Bonds, there is hereby established the 2013 Costs of Issuance Fund, such fund to be held by the Trustee. Section 40.01. 2013 Capitalized Interest Fund. The monies set aside and placed in the 2013 Capitalized Interest Fund shall be transferred to the Interest Fund in the following amounts and on or before the following Interest Payment Dates, and shall be used solely for the purpose of paying interest on the 2013 Series A Bonds Outstanding as the same shall become due and payable (including accrued interest on any 2013 Series A Bonds purchased or redeemed prior to maturity): OHSUSA:753163150.2 7 36 December 1, 2013 June 1, 2014 December 1, 2014 June 1, 2015 December 1, 2015 Amount Any balance remaining on deposit in the 2013 Capitalized Interest Fund on May 31, 2016 shall be transferred, together with any interest earnings thereon, to the Interest Fund and applied to the payment on June 1, 2016 of interest on the 2013 Series A Bonds. Section 40.02. 2013 Costs of Issuance Fund. The monies set aside and placed in the 2013 Costs of Issuance Fund shall be expended for the purpose of paying the Costs of Issuance of the 2013 Series A Bonds. Before any payment from the 2013 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 2013 Costs of • Issuance Fund and has not been previously paid from said fund. On December 1, 2013 any remaining amounts in the 2013 Costs oflssuance Fund shall be transferred to the Revenue Fund and the 2013 Costs of Issuance Fund shall be closed. ARTICLE XLI MISCELLANEOUS Section 41.01. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Fifth Supplemental Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Fifth 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 Fifth Supplemental Indenture and the 2013 Series A Bonds issued pursuant here~o shall remain valid, and the Holders of the 2013 Series A 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 41.02. Parties Interested Herein. Nothing in this Fifth 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, if any, and the Holders of the 2013 Series A Bonds, any right, remedy or claim under or by reason of this Fifth Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, • stipulations, promises and agreements in this Fifth Supplemental Indenture contained by and on OHSUSA:753163150_2 8 37 • • • behalf of the Commission shall be for the sole and exclusive benefit of the Commission, the Trustee, each Credit Provider, if any, and the Holders ofthe 2013 Series A Bonds. Section 41.03. Headings Not Binding. The headings in this Fifth 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 Fifth Supplemental Indenture. Section 41.04. 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 41.05. Notices to Rating Agencies. The Trustee shall provide notice to the Rating Agencies of the following events with respect to the 2013 Series A Bonds: (1) Change in Trustee; (2) Amendments to the Indenture; (3) Provision, Expiration, Termination, substitution or extension of a 2013 Credit Enhancement, if any, or any 2013 Credit Provider thereunder; and (4) Redemption or defeasance of any 2013 Series A Bonds. Section 41.06. Indenture to Remain in Effect. Save and except as amended and supplemented by this Fifth Supplemental Indenture, the Indenture shall remain in full force and · effect. Section 41.07. Effective Date of Fifth Supplemental Indenture. Supplemental Indenture shall take effect upon its execution and delivery. This Fifth Section 41.08. Execution in Counterparts. This Fifth 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. OHSUSA:753163150.2 9 38 IN WITNESS WHEREOF, the parties hereto have executed this Fifth 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 OHSUSA:753163150.2 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: __________________________ __ Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: ____________________________ _ S-1 39 Authorized Officer • • • • • No. R------- INTEREST RATE % EXHIBIT A FORM OF 2013 SERIES A BOND Riverside County Transportation Commission Sales Tax Revenue Bond (Limited Tax Bond) 2013 Series A MATURITY June 1, 20_ ISSUE DATE ___ ,2013 REGISTERED OWNER: Cede & Co. PRINCIPAL AMOUNT: $ ____ _ CUSIP 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 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"), ofthe 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 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 A-1 OHSUSA:753163!50.2 40 as supplemented by a Fifth Supplemental Indenture, dated as of June I, 2013 (the "Fifth • Supplemental Indenture"), each between the Commission and the Trustee, hereinafter referred to collectively as the "Indenture." Said authorized issue of Bonds is not limited in aggregate principal amount and consists or may consist of one or more series of varying denominations, dates, maturities, interest rates and other 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 I, 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, 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. A-2 OHSUSA:753163150.2 41 • • • • This Bond shall be deliverable in the form of a fully registered Bond in denominations of $5,000 and any multiple thereof (such denominations being referred to herein as "Authorized Denominations"). Optional and Mandatory Redemption Provisions Bonds shall be subject to optional and mandatory redemption as specified m the Indenture. 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 attorney, upon surrender of this Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered Holder or his or her duly authorized attorney, and thereupon a new Bond or Bonds of the same series, maturity and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, upon payment of any charges therein prescribed. Persons Deemed Holders The person in whose name this Bond is registered shall be deemed and regarded as the absolute Holder hereof for all purposes, including receiving payment of, or on account of, the principal and any redemption premium and interest due hereon. It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, exist, have happened and have been 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 Revenues, is within every debt and other limit prescribed by the Constitution and statutes of the State of California and the Law . A-3 OHSUSA:753163150.2 42 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. 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 and its seal to be affixed hereto all as of the Issue Date set forth above. (Seal) Attest: Auditor-Controller RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: _____________ _ Chair of the Board of Commissioners [FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2013 Series Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: OHSUSA:753163150.2 ----------------- U.S. BANK NATIONAL ASSOCIATION, as Trustee By: _____________ ___ Authorized Officer A-4 43 • • • • • [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 appoints to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature: SIGNATURE GUARANTEED: Notice: Signature must be guaranteed by an eligible guarantor firm . OHSUSA:753163150.2 (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. A-5 44 • • • INDEX TO EXHIBITS EXHIBITB NOTICE ADDRESSES To the Commission: Riverside County Transportation Commission Street Address: 4080 Lemon Street, 3rd Floor Riverside, California 92501 Mailing Address: P.O. Box 12008 Riverside, California 92502 Attention: ChiefFinancial Officer Telephone: (951) 787-7926 Fax: (951) 787-7920 To the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Division Telephone: (213) 615-6023 Fax: (213) 615-6197 OHSUSA:753163150.2 B-1 45 To the Rating Agencies: Standard & Poor's Ratings Services 55 Water Street, 38th Floor New York, New York 1 0041 Telephone: (212) 438-2000 Fax: (212) 438-2157 Moody's Investors Service MSPG Surveillance 7 World Trade Center, 25th Floor 250 Greenwich Street New York, New York I 0007 Fitch Ratings One State Street Plaza New York, New York 10004 Telephone: (212) 908-0500 Fax: (212) 480-4421 • • • PRELIMINARY OFFICIAL STATEMENT DATED ___ , 2013 ATTACHMENT 3 DRAFT OF 03118113 NEW ISSUE-BOOK-ENTRY ONLY RATINGS: IDAC Logo) Moody's: " " S&P: "-" Fitch: "-" See "RATINGS" herein In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the 2013 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the 2013 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of or the accrual or receipt of interest on, the 2013 Bonds. See "TAX MATTERS. " $ ______ _ RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2013 Series A Dated: Date of Delivery As shown on inside cover The Sales Tax Revenue Bonds described above (the "20 13 Bonds") are being issued by the Riverside County Transportation Commission (the "Commission") 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 as supplemented by a Fifth Supplemental Indenture, dated as of June 1, 2013, between the Commission and the Trustee (collectively, the "Indenture"). The proceeds of the 2013 Bonds will be applied to (i) pay a portion of the costs of the Project (as defined herein), (ii) retire $[40,000,000] in principal amount of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (iii) pay capitalized interest on the 2013 Bonds through June 1, 2016 and (iv) pay costs of issuance ofthe 2013 Bonds. See "ESTIMATED SOURCES AND USES OF PROCEEDS." Interest on the 2013 Bonds will be payable on each June I and December 1, commencing December 1, 2013. The 2013 Bonds are initially being issued as fully registered bonds without coupons in the denominations of $5,000 and any integral multiple thereof. The 2013 Bonds will be registered in the name of Cede & Co., as holder of the 2013 Bonds and nominee for The Depository Trust Company ("DTC"). Purchasers will not receive physical certificates representing their interest in the 2013 Bonds purchased. The principal or redemption price of and interest on the 2013 Bonds are payable by wire transfer to DTC which, in turn, is obligated to remit such principal, redemption price or interest to DTC Participants for subsequent disbursement to the Beneficial Owners of the 2013 Bonds. The 2013 Bonds will be subject to optional and mandatory sinking fund redemption as described herein. See "THE 2013 BONDS" herein. The 2013 Bonds are special obligations of the Commission payable from and secured solely by a pledge ofthe Revenues (which is defined herein and which primarily consists of the receipts from the imposition in the County of Riverside, California of a ~-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 OR INTEREST ON THE 2013 BONDS. 90937971.3 I 1302319 46 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 2013 Bonds. The 2013 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of validity by Orrick, Herrington & Sutcliffe LLP as Bond Counsel to the Commission, and certain other conditions. Certain legal matters will be passed on for the Commission by Fulbright & Jaworski L.L.P., Los Angeles, California, as Disclosure Counsel, and by Best Best & Krieger LLP, Riverside, California, the Commission's General Counsel. Certain legal matters will be passed upon for the Underwriters by . It is anticipated that the 2013 Bonds will be available for delivery through the book-entry facilities ofDTC on or about -----' 2013. Bank of America Merrill Lynch Goldman, Sachs & Co. J.P. Morgan Barclays Capital De La Rosa & Co. Dated: ______ ,2013 * Preliminary; subject to change. 90937971.3 47 • • • • • Maturity Date (June 1) Maturity Schedule $ * RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2013 Series A $ ______ * Serial Bonds Principal Amount Interest Rate Price or Yield CUSIPt Number $_~~~~-* __ %Term Bonds due June 1, __ -Price: __ % CUSIPt: ~~~- * Preliminary, subject to change. t CUSIP is a registered trademark of the American Bankers Association. CUSIP data on the cover hereof and herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The Commission, the Financial Advisor and the Underwriters are not responsible for the selection or correctness of the CUSIP numbers set forth herein . 90937971.3 48 • • • No dealer, salesman or any other person has been authorized by the Riverside County Transportation Commission (the "Commission") or the underwriters of the 2013 Bonds listed on the cover page hereof (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 2013 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 2013 Bonds. Neither the delivery of this Official Statement nor the sale of any of the 2013 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, their 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 2013 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 2013 BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS . 90937971.3 49 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. 90937971.3 50 • • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Karen Spiegel, Chair Marion Ashley, 1st Vice Chair Daryl R. Busch, 2nd Vice Chair John J. Benoit Kevin Jeffries Jeff Stone John F. Tavaglione Bob Botts Roger Berg Joseph DeConinck Ella Zanowic Mary Craton Greg Pettis Steve Hernandez Scott Matas Adam Rush Larry Smith Douglas Hanson Glenn Miller MANAGEMENT Executive Director Anne Mayer Deputy Executive Director John Standiford Chief Financial Officer Theresia Trevino SPECIAL SERVICES Financial Advisor Fieldman, Rolapp & Associates Irvine, California Frank Johnston Terry Henderson Bob Magee Scott Mann Tom Owings Rick Gibbs Berwin Hanna Jan Harnik Ginny Foat Ted Weill Steve Adams Andrew Kotyuk Ron Roberts Ben Benoit Basem Muallem Bond Counsel Disclosure Counsel Orrick, Herrington & Sutcliffe LLP San Francisco, California Fulbright & Jaworski L.L.P. Los Angeles, California 90937971.3 Trustee U.S. Bank National Association Los Angeles, California 51 TABLE OF CONTENTS • Page INTRODUCTION ......................................................................................................................... 1 General ............................................................................................................................... 1 Authority for Issuance ........................................................................................................ 1 Purpose and Application of Proceeds ................................................................................ 1 The 2013 Bonds ................................................................................................................. 2 Security for the 2013 Bonds ·························································:···································· 2 No Reserve Fund for 2013 Bonds ...................................................................................... 2 Continuing Disclosure ....................................................................................................... 2 References .......................................................................................................................... 3 THE 2013 BONDS ........................................................................................................................ 3 General ............................................................................................................................... 3 Redemption of 2013 Bonds ............................................................................................... 3 Selection of 2013 Bonds for Redemption .......................................................................... 4 Notice of Redemption ........................................................................................................ 4 Purchase In Lieu of Redemption ........................................................................................ 4 PLAN OF FINANCE ..................................................................................................................... 5 ESTIMATED SOURCES AND USES OF PROCEEDS .............................................................. 5 DEBT SERVICE SCHEDULE ...................................................................................................... 6 • SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS .................................... 7 Limited Obligation ............................................................................................................. 7 Pledge of Revenues ............................................................................................................ 7 Revenue Fund; Allocation of Revenues ............................................................................ 8 No Reserve Fund for 2013 Bonds .................................................................................... 11 Additional Bonds and Parity Obligations ........................................................................ 11 OTHER SALES TAX OBLIGATIONS ...................................................................................... 13 Existing Bonds ................................................................................................................. 13 Existing Swap Agreements .............................................................................................. 14 Subordinate Obligations ................................................................................................... 15 Limitation on Outstanding Sales Tax Obligations ........................................................... 16 THE SALES TAX ....................................................................................................................... 16 General ............................................................................................................................. 16 Collection of Sales Tax Revenues .............. : .................................................................... 17 Historical Sales Tax Revenues ......................................................................................... 18 RIVERSIDE COUNTY TRANSPORTATION COMMISSION ................................................ 19 General ............................................................................................................................. 19 The Transportation Expenditure Plan .............................................................................. 20 Toll Road Bonds .............................................................................................................. 21 • Commissioners ................................................................................................................. 21 90937971.3 52 TABLE OF CONTENTS (continued) Page Executive Staff. ................................................................................................................ 21 THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT ....................................... 22 RISK FACTORS ......................................................................................................................... 22 Economic Recession and Financial Crisis ....................................................................... 22 Investments ...................................................................................................................... 23 Parity with Liquidity Facility Bonds ................................................................................ 23 The Sales Tax ................................................................................................................... 23 Impact of Bankruptcy of the Commission ....................................................................... 23 Proposition 218 ................................................................................................................ 24 Further Initiatives ............................................................................................................. 24 Loss of Tax Exemption .................................................................................................... 25 FINANCIAL STATEMENTS ..................................................................................................... 25 LITIGATION ............................................................................................................................... 25 TAX MATTERS .......................................................................................................................... 25 CERTAIN LEGAL MATTERS .................................................................................................. 27 RATINGS .................................................................................................................................... 28 • lJNDERWRITING ...................................................................................................................... 28 • FINANCIAL ADVISOR ............................................................................................................. 28 CONTINUING DISCLOSURE ................................................................................................... 29 MISCELLANEOUS .................................................................................................................... 29 APPENDIX A-COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JlJNE 30, 2012 .................................................... A-1 APPENDIX B -COlJNTY OF RIVERSIDE DEMOGRAPHIC AND ECONOMIC INFORMATION .......................................................................................... B-1 APPENDIX C -SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ......... C-1 APPENDIX D-FORM OF CONTINUING DISCLOSURE AGREEMENT ....................... D-1 APPENDIX E -BOOK-ENTRY SYSTEM ........................................................................... E-1 APPENDIX F -FORM OF BOND COlJNSEL OPINION··································'················ F-1 • 90937971.3 11 53 • • • OFFICIAL STATEMENT $ _____ _ RIVERSIDE COUNTY TRANSPORTATION COMMISSION Sales Tax Revenue Bonds (Limited Tax Bonds) 2013 Series A INTRODUCTION General This Official Statement, which includes the cover page and the appendices hereto, sets forth certain information in connection with the offering by the Riverside County Transportation Commission (the "Commission") of $ * principal amount of Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2013 Series A (the "20 I3 Bonds"). As used herein, the term "Bonds" means any Bonds, including the 2013 Bonds, issued pursuant to the Indenture (as defined below). All capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Authority for Issuance The 20 I3 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 more than two-thirds of electors of the County of Riverside (the "County") 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 I, 2008 (the "2008 Indenture"), as supplemented and amended to the date hereof, including as supplemented by a Fifth Supplemental Indenture, dated as of June I, 20 I3 (the "Fifth Supplemental Indenture" and, together with the 2008 Indenture, as supplemented and amended, the "Indenture"), each between the Commission and U.S. Bank National Association, as trustee (the "Trustee"). Purpose and Application of Proceeds The proceeds of the 2013 Bonds will be applied to (i) pay a portion of the costs of the Project (as defined herein), (ii) retire $[40,000,000] in principal amount of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (iii) pay capitalized interest on the 2013 Bonds through June I, 20I6 and (iv) pay costs of issuance ofthe 20I3 Bonds. See "PLAN OF FINANCE" and "ESTIMATED SOURCES AND USES OF PROCEEDS" herein. * Preliminary, subject to change . 90937971.3 I 54 The 2013 Bonds Interest on the 2013 Bonds will be payable on each June 1 and December 1, commencing December 1, 2013. The 2013 Bonds will be issued as fully registered bonds without coupons in the denominations of $5,000 and any integral multiple thereof. The 2013 Bonds will be registered in the name of Cede & Co., as holder of the 2013 Bonds and nominee for The Depository Trust Company ("DTC"). Purchasers will not receive physical certificates representing their interest in the 2013 Bonds purchased. The 2013 Bonds will be subject to optional and mandatory sinking fund redemption. See "THE 2013 BONDS -Redemption of 2013 Bonds." Security for the 2013 Bonds The 2013 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 Yz-cent sales tax that became effective on July 1, 2009 (the "Sales Tax"), imposed in 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 two-thirds of the electorate of the County 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 THE COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OFTHE 2013 BONDS. No Reserve Fund for 2013 Bonds The Commission is not funding a reserve fund for the 2013 Bonds. The Commission originally funded a reserve fund for its Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A, 2009 Series B and 2009 Series C (collectively, the "2009 Bonds"), but effective September 30, 2011 the 2009 Bonds Reserve Requirement was amended to be zero. Continuing Disclosure The Commission will covenant for the benefit of the beneficial owners of the 2013 Bonds to provide certain financial information and operating data relating to the Commission and notices of the occurrence of certain enumerated events, if material, to the Municipal Securities Rulemaking Board (the "MSRB") pursuant to a Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"). These covenants are being made in order to assist the Underwriters of the 2013 Bonds in complying with Rule 15c2-12 (the "Rule") of the U.S. Securities and Exchange Commission ("SEC") promulgated under the Securities Exchange Act • • of 1934, as amended. See "APPENDIX D -FORM OF CONTINUING DISCLOSURE • AGREEMENT." The Commission has not, within the past five years, failed to comply in all 90937971.3 2 55 • • • 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 the Indenture and various other 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 2013 BONDS General The 2013 Bonds will mature onJune 1 in the years and in the principal amounts shown on the inside cover of this Official Statement. Interest on the 2013 Bonds will be payable on each June 1 and December 1, commencing December 1, 2013, and will be computed on the basis of a 360-day year comprised of twelve 30-day months. The 2013 Bonds will be issued as fully registered bonds without coupons in the denominations of $5,000 and any integral multiple thereof. DTC will act as the initial securities depository for the 2013 Bonds, which will be issued initially pursuant to a book-entry only system. See "APPENDIX E -BOOK-ENTRY SYSTEM." Under the Indenture, the Commission may appoint a successor securities depository to DTC for the 2013 Bonds. The information under this caption, "THE 2013 BONDS," is subject in its entirety to the provisions described in "APPENDIX E-BOOK-ENTRY SYSTEM" while the 2013 Bonds are in DTC's book-entry system. Redemption of 2013 Bonds Optional Redemption. The 2013 Bonds maturing on or after June 1, 20_ shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after June 1, 20_ at the principal amount of2013 Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium. Sufficient Funds Required for Optional Redemption. Any optional redemption of2013 Bonds and notice thereof shall be conditional and rescinded and cancelled 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 2013 Bonds called for redemption. Mandatory Redemption of the 2013 Bonds from Mandatory Sinking Account Payments. The 2013 Bonds maturing on June 1, __ shall be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Mandatory Sinking Account Payments on each June 1 that a Mandatory Sinking Account Payment is due, in the principal amount equal to the Mandatory Sinking Account Payment due on such date and at a redemption 90937971.3 3 56 price equal to 100% of the principal amount thereof, plus accrued but unpaid interest to the • redemption date, without premium. t Final Maturity. Redemption Date (June 1) Selection of 2013 Bonds for Redemption Mandatory Sinking Account Payment t Selection of 2013 Bonds for Redemption. The Commission shall designate which maturities of any 2013 Bonds are to be called for optional redemption. If less than all 2013 Bonds maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 2013 Bonds of such maturity date to be redeemed in any matter that it deems appropriate and fair and shall promptly notify the Commission in writing of the numbers of the 2013 Bonds so selected for redemption. For purposes of such selection, 2013 Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. "Authorized Denomination" means, with respect to the 2013 Bonds, $5,000 and any integral multiple thereof. In the event of an optional redemption of • the 2013 Term Bonds, the Commission shall designate the Mandatory Sinking Account Payments, or portions thereof, in an aggregate amount equal to the principal amount of 2013 Term Bonds so optionally redeemed, that are to be reduced as allocated to such redemption, and such Mandatory Sinking Account Payments shall be reduced accordingly. Notice of Redemption Each notice of redemption is to be mailed by the Trustee not less than 20 nor more than 90 days prior to the redemption date, to DTC 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 2013 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. Purchase In Lieu of Redemption The Commission reserves the right at all times to purchase any of its 2013 Bonds on the open market. In lieu of mandatory redemption, the Commission may surrender to the Trustee for cancellation 2013 Bonds purchased on the open market, and such 2013 Bonds shall be cancelled • by the Trustee. If any 2013 Bonds are so cancelled, the Commission may designate the 90937971.3 4 57 • • • Mandatory Sinking Account Payments or portions thereof within such 2013 Bonds so purchased that are to be reduced as a result of such cancellation. PLAN OF FINANCE The proceeds of the 2013 Bonds will be applied to (i) to make a transfer the trustee for the Commission's Toll Revenue Bonds (the "Toll Trustee") to pay a portion of the costs of the Project, (ii) retire $[40,000,000] in principal amount of the Commission's outstanding Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (iii) pay capitalized interest on the 2013 Bonds through June 1, 2016 and (iv) pay costs of issuance of the 2013 Bonds. "Project" means certain improvements to State Route 91 within the County, including the extension of two tolled express lanes in each direction and the construction of a new general purpose lane in each direction, together with the construction of express lane connectors. See "THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT" herein. ESTIMATED SOURCES AND USES OF PROCEEDS The proceeds from the sale of the 2013 Bonds and certain other amounts are expected to be applied as follows: Sources of Funds: Principal Amount Net [Premium] [Original Issue Discount] Total Sources: Uses ofFunds: Transfer to Toll Trustee Transfer to Notes Trustee 2013 Capitalized Interest Fund Costs oflssuance(ll Total Uses: en Includes Underwriters' discount, Rating Agency fees, initial fees and expenses of the Trustee, printing costs, fees and expenses of Bond Counsel, Disclosure Counsel and the Financial Advisor and other miscellaneous costs of issuance. 90937971.3 [Remainder of page intentionally left blank.] 5 58 • Fiscal Year Ending June 30 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 Total 2009 Bonds0) • DEBT SERVICE SCHEDULE 2010 2010 2010 Series B Series A Bonds Series B Bonds Subsidy Payments(2) 2013 Bonds Principal Interest • Annual Net .Debt Service m Interest on the 2009 Bonds is calculated assuming the interest rates are equal to the fixed rates on the Existing Swaps, excluding remarketing and liquidity fees. See "OTHER SALES TAX OBLIGATIONS-Existing Swap Agreements." (2) Under the Indenture, Subsidy Payments are treated as an offset to Debt Service. 90937971.3 533 • • • SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS Limited Obligation THE 2013 BONDS ARE LIMITED TAX OBLIGATIONS OF THE COMMISSION PAY ABLE SOLELY FROM REVENUES AS DEFINED AND PROVIDED IN THE INDENTURE AND CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE COMMISSION IS NOT OBLIGATED TO PAY THE 2013 BONDS EXCEPT FROM REVENUES AND THOSE CERTAIN OTHER FUNDS PLEDGED UNDER THE INDENTURE. THE 2013 BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF 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 IN THE INDENTURE) OF THE COMMISSION IS NOT PLEDGED, FOR THE PAYMENT OF THE 2013 BONDS, THEIR INTEREST, OR ANY PREMIUM DUE UPON REDEMPTION OF THE 2013 BONDS. THE 2013 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. 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 2013 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) 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 2013 Bonds, and all Parity Obligations are no longer Outstanding. The Revenues pledged to the payment of the Bonds and Parity 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 . 9093 7971.3 . 7 60 For a detailed description of the Sales Tax and projected receipts of Sales Tax Revenues, • see "THE SALES TAX" herein. For a discussion of Swap Revenues, see "OTHER SALES TAX OBLIGATIONS-Existing Swap Agreements" 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 Sales Tax 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, including certain regularly scheduled payments pursuant to Interest Rate Swap Agreements that are payable on a parity with the 2013 Bonds, shall be made on a parity basis, as provided in the Indenture): 1. Interest Fund. The Indenture reqmres 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 on Outstanding Variable Rate Indebtedness, calculated, if the actual rate of interest is not known, at the interest rate specified in writing by the Commission, or if the Commission has not specified an interest rate in writing, calculated at the maximum interest rate borne by such Variable Rate Indebtedness during the month prior to the month of deposit plus one hundred (1 00) basis points (provided, however, that the amount of such deposit into the Interest Fund for any month may be reduced by the amount by which the deposit in the prior month exceeded the actual amount of interest accrued and paid during that month on said Outstanding Variable Rate Indebtedness and provided further that the amount of such deposit into the Interest Fund for any month will be increased by the amount by which the deposit in the prior month was less than the actual amount of interest accruing during that month on said Outstanding Variable Rate Indebtedness). No deposit need be made into the Interest Fund if the amount contained therein is at least equal to the interest to become due and payable on the Interest Payment Dates falling within the next six ( 6) months upon all of the Outstanding Bonds issued under the Indenture, and on June 1 and December 1 of each year any excess amounts in the Interest Fund not needed to pay interest on such date (and not held to pay interest on Bonds having Interest Payment Dates other than June 1 and December 1) will be transferred to 90937971.3 8 61 • • • • • the Commission (but excluding, in each case, any moneys on deposit in the Interest Fund from the proceeds of any Series of Bonds or other source and reserved as capitalized interest to pay interest on any future Interest Payment Dates following such Interest Payment Dates). All Swap Revenues received with respect to Interest Rate Swap Agreements that are Parity Obligations shall be deposited in the Interest Fund and credited to the above-required deposits, and 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. In addition, the Fifth Supplemental Indenture provides that amounts on deposit in the 2013 Capitalized Interest Fund shall be transferred to the Interest Fund, on or before the Interest Payment Dates and in the amounts specified therein, to be used solely for paying interest on the 2013 Bonds through June 1, 2016. 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 and 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 tile 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; provided that if the Commission certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from amounts on deposit in a Bond Reserve Fund that would be in excess of the Bond Reserve Requirement applicable to such Bond Reserve Fund upon such payment, no amounts are required to be set aside toward such principal to be so refunded or paid. All of the aforesaid deposits made in connection with future Mandatory Sinking Account Payments are to be made without priority of any payment into any one such Sinking Account over any other such payment. If the Sales Tax Revenues are not sufficient to make the required deposits so that moneys in the Principal Fund on any principal or mandatory redemption date are equal to the amount of Bond Obligation to become due and payable on the Outstanding Serial Bonds of all Series plus the Bond Obligation amount of and redemption premium on the Outstanding Term Bonds required to be redeemed or paid at maturity on such date, then such moneys will be applied on a Proportionate Basis and in such proportion as said Serial Bonds and said Term Bonds shall bear to each other, after first deducting for such purposes from said Term Bonds any of said Term Bonds required to be redeemed annually which will have been redeemed or purchased during the preceding 12-month period and any of said Term Bonds required to be redeemed semiannually which will have been redeemed or purchased during the six-month period ending on such date or the 90937971.3 9 62 immediately preceding six month period. In the event that the Sales Tax Revenues will not be sufficient to pay in full all Mandatory Sinking Account Payments required to be paid at any one time into all such Sinking Accounts, then payments into all such Sinking Accounts are to be made on a Proportionate Basis, in proportion that the respective Mandatory Sinking Account Payments required to be made into each Sinking Account during the then current 12-month period bear to the aggregate of all of the Mandatory Sinking Account Payments required to be made into all such Sinking Accounts during such 12-month period. No deposit must be made into the Principal Fund as long as such fund holds (i) moneys sufficient to pay the Bond Obligations of all then Outstanding Serial Bonds maturing by their terms within the next twelve ( 12) months plus (ii) the aggregate of all Mandatory Sinking Account Payments required to be made in such 12-month period, but less any amounts deposited into the Principal Fund during such 12-month period and theretofore paid from the Principal Fund to redeem or purchase Term Bonds during such 12-month period; provided that if the Commission certifies to the Trustee that any principal payments are expected to be refunded on or prior to their respective due dates or paid from amounts on deposit in a Bond Reserve Fund that would be in excess of the Bond· Reserve Requirement applicable to such Bond Reserve Fund upon such payment, no amounts need be on deposit with respect to such principal payments. At the beginning of each Fiscal Year and in any event not later than June 1 of each year, the Trustee is required to request from the Commission a Certificate of the Commission setting forth the principal payments for which deposits will not be necessary pursuant to the preceding sentence and the reason therefor. On June I of each year or as soon as practicable thereafter any excess amounts in the Principal Fund not needed to pay principal on such date (and not held to pay principal on Bonds having principal payment dates other than June 1) are required to be transferred to the Commission. 3. Bond Reserve Fund. The Indenture also requires the Trustee to make deposits to the Bond Reserve Fund, to the extent required. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS -No Reserve Fund for 2013 Bonds." 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 Notes Trustee in connection with the Commission's Commercial Paper Notes (Limited Tax Bonds), Series A and Series B. After the Notes Trustee has made the required deposit of Revenues under the Subordinate Indenture, the Notes 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 90937971.3 10 63 • • • • • • 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 Reve~ues 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. If, five (5) days prior to any principal payment date, Interest Payment Date or mandatory redemption date, the amounts on deposit in the Revenue Fund, the Interest Fund, the Principal Fund, including the Sinking Accounts therein, and, as and to the extent not required to satisfy the Bond Reserve Requirement, any Bond Reserve Fund established in connection with the 2013 Bonds with respect to the payments to be made on such upcoming date are insufficient to make such payments, the Trustee shall immediately notify the Commission, in writing, of such deficiency and direct that the Commission transfer the amount of such deficiency to the Trustee on or prior to such payment date. The Commission has covenanted and agreed to transfer to the Trustee from any Revenues in its possession the amount of such deficiency on or prior to the principal, interest or mandatory redemption date referenced in such notice. See "APPENDIX C -SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE -Definitions" and "-Allocation of Sales Tax Revenues" for a more complete discussion. No Reserve Fund for 2013 Bonds The Commission is not funding a reserve fund for the 2013 Bonds. In connection with the issuance of the 2009 Bonds, the Commission originally funded a reserve fund securing only the 2009 Bonds. Pursuant to the Fourth Supplemental Indenture, effective September 30, 2011 the 2009 Bonds Reserve Requirement was amended to be zero. Additional Bonds and Parity Obligations In addition to the 2013 Bonds, the Commission currently has $311,400,000 in aggregate principal amount of its 2009 Bonds and 2010 Bonds Outstanding, payable from Sales Tax Revenues on a parity with the 2013 Bonds. See "OTHER SALES TAX OBLIGATIONS - Existing Bonds." Under the Indenture, the Commission may issue other obligations payable in whole or in part from Sales Tax Revenues, subject to the limitations of the Act and 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 90937971.3 11 64 and secured by the pledge made under the Indenture equally and ratably with the 20 I 3 Bonds, but only upon compliance by the Commission with the provisions of the Indenture, including the conditions that: (I) No Event ofDefault shall have occurred and then be continuing. (2) The aggregate principal amount of Bonds issued pursuant to the Indenture may not exceed any limitation imposed by the Act. (3) 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 . . (4) The Commission shall place on file with the Trustee a Certificate of the Commission certifying that the amount of Sales Tax Revenues collected during the Fiscal Year for which audited financial statements are available preceding the date on which such additional Series of Bonds will become Outstanding shall have been at least equal to 1.5 times Maximum Annual Debt Service on all Series of Bonds and Parity Obligations then Outstanding and the • additional Series of Bonds then proposed to be issued, which Certificate shall also set forth the • computations upon which such Certificate is based. For purposes of determining Debt Service, interest on the 201 0 Series B Bonds will be calculated net of the Subsidy Payments. See "APPENDIX C -SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE - Definitions." 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 ( 4) "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 • 90937971.3 12 65 • • • satisfied, including satisfaction of the coverage test described in subsection ( 4) 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). The Commission's obligation to make regularly scheduled payments under the Existing Swap Agreements (as defined below) constitutes a Parity Obligation under the Indenture. The Ordinance, as amended, limits the amount of the Commission's bonds secured by Sales Tax Revenues to, initially established at a maximum aggregate principal amount of $975 million at any one time outstanding. See "OTHER SALES TAX OBLIGATIONS-Limitation on Outstanding Sales Tax Obligations." OTHER SALES TAX OBLIGATIONS Existing Bonds On October 1, 2009, the Commission issued $185,000,000 in original, aggregate principal amount of its Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A, 2009 Series Band 2009 Series C (collectively, the "2009 Bonds"), which are currently outstanding in the aggregate principal amount of $161,400,000. The 2009 Bonds mature on June 1, 2029 and are variable rate obligations currently bearing interest at a weekly rate. In order to hedge its variable rate exposure on the 2009 Bonds, the Commission entered into interest rate swap agreements with Bank of America, N.A. and Deutsche Bank AG, New York Branch, as described further in "Existing Swap Agreements" below. The 2009 Bonds are currently subject to optional tender by the holders thereof. The payment of the purchase price of tendered 2009 Bonds is payable from the proceeds of remarketing the 2009 Bonds and, to the extent remarketing proceeds are insufficient, from amounts available from Standby Bond Purchase Agreements relating to each series of the 2009 Bonds (each, a "2009 Bonds Liquidity Facility"), between the Commission and JPMorgan Chase Bank, National Association (the "2009 Bonds Liquidity Provider"), and from any Alternate Liquidity Facility that may be obtained by the Commission. Each 2009 Bonds Liquidity Facility expires on September 30, 2014, unless extended by the parties thereto. The obligation of the Commission to reimburse the 2009 Bonds Liquidity Provider or make any other payments under a 2009 Bonds Liquidity Facility is secured by a pledge of Sales Tax Revenues on a parity with the pledge securing the Bonds, including the 2013 Bonds. Under certain circumstances, 2009 Bonds purchased by the 2009 Bonds Liquidity Provider and not remarketed may become Liquidity Facility Bonds. Such Liquidity Facility Bonds shall bear interest as provided in the relevant 2009 Bonds Liquidity Facility and may be subject to 90937971.3 13 66 mandatory prepayment upon the occurrence of certain events of default described in such 2009 Bonds Liquidity Facility. • Existing Swap Agreements The Commission has entered into the following interest rate swap agreements (collectively, the "'Existing Swap Agreements"), in the· combined initial notional amount of $185,000,000 (subject to amortization corresponding to the amortization of the 2009 Bonds, which are currently Outstanding in the aggregate principal amount of $161 ,400,000), which Existing Swap Agreements have an effective date of October 1, 2009 and expire on June 1, 2029, and are designed to cause the total interest obligation with respect to the 2009 Bonds to accrue at a synthetic fixed rate: (i) An ISDA Master Agreement, dated as of August 22, 2006, between Bank of America, N.A. ("'BofA") and the Commission, as supplemented by the Schedule, dated as of August 22, 2006 and the confirmation of a transaction entered into on August 22, 2006 between BofA and the Commission (the "'BofA Swap Agreement"). (ii) 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"). 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 Bonds, including the 2013 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 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. The BofA Swap Agreement is currently in the notional amount of$87,200,000, subject to amortization as set forth therein, which corresponds to the combined amortization of the 2009 Series B Bonds and 2009 Series C Bonds. Pursuant to this agreement, BofA has agreed to pay the Commission a floating rate equal to 67% of USDLIBOR (One Month) and the Commission has agreed to pay BofA a fixed rate equal to 3.679%. The BofA 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 BofA below investment grade can also result in an early termination of the BofA Swap Agreement. The Commission has the option of terminating the BofA Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount . 90937971.3 14 67 • • • • • The DBAG Swap Agreement is currently in the notional amount of $74,200,000, subject to amortization as set forth therein, which corresponds to the amortization of the 2009 Series A Bonds. Pursuant to this agreement, DBAG has agreed to pay the Commission a floating rate equal to 67% of USDLIBOR (One Month) and the Commission has agreed to pay DBAG a fixed rate equal to 3.206%. The DBAG Swap Agreement is subject to early termination in the event that the unenhanced ratings on the 2009 Bonds issued by Moody's and S&P fall below investment grade or are withdrawn or suspended; a reduction in the unenhanced ratings of the long-term unsecured unsubordinated debt of DBAG below investment grade can also result in an early termination of the DBAG Swap Agreement. The Commission has the option of terminating the DBAG Swap Agreement upon two Business Days' notice provided it has sufficient funds to pay any early termination amount. In the event of an early termination of one or both of the Existing Swap Agreements, a termination payment will be payable by either the Commission or the swap counterparty depending on the then current market value of the Existing Swap Agreement subject to termination. Any such termination payment payable by the Commission could be substantial. As of [May] 1, 2013, the value of the termination payment, if each of the Existing Swap Agreements were terminated based on the mid-market swap curve and assuming functioning markets was estimated by the Commission's financial advisor to be approximately$ ____ _ payable by the Commission. Any early termination payments are payable from Sales Tax Revenues on a basis subordinate to the Bonds (including the 2013 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 Commission's Sales Tax Revenue Commercial Paper Notes (Limited Tax Bonds), Series A and Series B (collectively, 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 2013 Bonds, Parity Obligations and payment of principal of and interest on Subordinate Obligations. As of [May] 1, 2013, there was $[40,000,000] principal amount of Notes outstanding of an authorized $120,000,000 program. The program was initially established at a maximum of $185,000,000 in principal amount and has been reduced to a maximum of $120,000,000 in principal amount, divided between $60,000,000 of Series A Notes and $60,000,000 of Series B Notes. The Commission intends to retire all $[40,000,000] in principal amount of the Notes with a portion of the proceeds of the 2013 Bonds. See "ESTIMATED SOURCES AND USES OF PROCEEDS." The principal of and interest on the Series A Notes are payable from draws under an irrevocable, direct-pay letter of credit (the "Series A Letter of Credit") issued by Union Bank, N.A. (the "Series A Bank"). The principal of and interest on the Series B Notes are payable from draws under an irrevocable, direct-pay letter of credit (the "Series B Letter of Credit" and together with the Series A Letter of Credit, the "Letters of Credit") issued by The Bank of Tokyo-Mitsubishi UFJ (the "Series B Bank" and together with the Series A Bank, the "CP Banks"). The stated amount of each Letter of Credit is $60,750,000. Each Letter of Credit 90937971.3 15 68 expires October 17, 2014, unless terminated earlier as provided in the related reimbursement • agreement. The Commission's obligation to reimburse the CP Banks for draws under the Letters 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 Bonds, including the 2013 Bonds, and on parity with the obligation to pay Note holders. If the Commission is unable to extend or replace either Letter of Credit by its expiration date, the Commission may refund any related Notes and any related reimbursement obligations due to the CP Banks with the proceeds of an additional Series of Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS-Additional Bonds and Parity Obligations" herein. Limitation on Outstanding Sales Tax Obligations Under the Ordinance, the Commission has the power to sell or issue, from time to time, bonds or other evidence of indebtedness, including but not limited to capital appreciation bonds, secured solely by Sales Tax Revenues, in the aggregate principal amount at any one time outstanding of not to exceed $975 million. See "SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS-Additional Bonds and Parity Obligations" herein. 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. The Sales Tax commenced on July 1, 2009 and will be collected for a thirty-year period ending on June 30, 2039. The Sales Tax consists of a one- half of one percent (1/2%) sales tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use or other consumption in the County of such property purchased from any retailer for storage, use or other consumption in the County, subject to certain limited exceptions described below. See "RIVERSIDE COUNTY TRANSPORTATION COMMISSION -The Transportation Expenditure Plan" herein. The one-half of one percent sales tax imposed in the County for transportation purposes and administered by the Commission, is in addition to the sales tax levied statewide by the State of California (the "State"). Proposition 30, approved by the voters of the State in the November 2012 election, increased the statewide sales tax by one-quarter of one percent, from 7.25% to 7.5%, for a period of four years from January 1, 2013 to but excluding January 1, 2017. 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 90937971.3 16 69 • • • • • application of the use tax generally is to purchases made outside of the State for use within the State. 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 (liz%) of the gross receipts of retailers from the sales of all tangible personal property sold at retail in the county and a use tax at the same rate upon the storage, use or other consumption in the County of such property purchased from any retailer for storage, use or other consumption in the county, subject to certain limited exceptions (the "1988 Sales Tax"). The 1988 Sales Tax ceased to be effective on June 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 I, 2009. 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 ofthese 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 Board of Equalization. The Commission and the 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 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 National Association, as issuing and paying agent for the Notes (the "Issuing and Paying 90937971.3 17 70 Agent"). See "SECURITY AND SOURCES OF PAYMENT FOR THE 2013 BONDS" herein. The remaining unapplied Sales Tax Revenues, if any, are transferred to the Commission for use • for any purpose contemplated by the Ordinance. The fee that the Board of Equalization is authorized to charge for collection of the Sales Tax is determined by State legislation. The Board of Equalization fee for collection of the Sales Tax for fiscal year 2012~13 is estimated at $1,371,830. Historical Sales Tax Revenues The following table sets forth net sales tax revenues for the Fiscal Years indicated below. Net sales tax revenues through a portion of 2010 were received under the Prior Ordinance and were levied by the Commission at the same rate and on the same types of transactions as the Measure A Sales Tax. RIVERSIDE COUNTY TRANSPORTATION COMMISSION HISTORICAL SALES TAX REVENUES Fiscal Year Net Sales Ended June 30 Tax Revenues(!) 2003 $105,782,595 2004 120,564,890 2005 138,921,247 2006 157,236,314 2007 154,539,723 2008 142,537,548 2009 119,688,289 2010 114,526,254 2011 123,439,833 2012 134,984,307 (I) Net of Board of Equalization administrative fee. Source: The Commission. %Change From Prior Fiscal Year 13.97% 15.23 13.18 (1.71) (7.77) (16.03) ( 4.31) 7.78 9.35 Annual Measure A Sales Tax Revenues for the Fiscal Year ended June 30, 2012 were $134,984,307, representing an increase of 9.35% from the Measure A Sales Tax Revenues for the Fiscal Year ended June 30, 2011. Measure A Sales Tax Revenues for the first half of the First Year ending June 30, 2013 were approximately $69,889,000, representing an increase of 12.4% from Measure A Sales Tax Revenues for the first half of the Fiscal Year ended June 30, 2012. The Commission is unable to predict if annual Sales Tax Revenues will continue to increase. For a summary of historical taxable retail sales within the County, see the table entitled "County of Riverside, Taxable Sales Transactions" in "APPENDIX B -COUNTY OF RIVERSIDE DEMOGRAPHIC AND ECONOMIC INFORMATION." 90937971.3 18 71 • • • • • The following table sets forth the Maximum Annual Debt Service coverage on the Bonds based on Sales Tax Revenues for the Fiscal Year ended June 30, 2012. Sales Tax Revenues $134,984,307 Maximum Annual Debt Service on all Bonds<ll Coverage Ratio (J) Interest on variable rate debt is calculated assuming the interest rates are equal to the fixed rates on the Existing Swaps. Under the Indenture, the Subsidy Payments are treated as an offset to Debt Service. "See DEBT SERVICE SCHEDULE" herein. Source: The Commission and Fieldman, Rolapp & Associates. RIVERSIDE COUNTY TRANSPORTATION COMMISSION General The Commission is charged with a number of important responsibilities in serving the residents of the County. Administering the sales tax program, which has raised more than $1 billion, has been by far the most prominent of these responsibilities. The Commission, which has the 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 -597 call boxes along the County roadways and 21 FSP tow trucks providing assistance to more than 43,100 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 90937971.3 19 72 thirty. The Board expanded in 2008 with the addition of two members representing newly incorporated cities, in 201 0 with the addition of one member representing another newly incorporated city, and in 2011 with the addition of one member representing another newly incorporated city. The current Board now has 34 members. The expanded Commission ensures better representation throughout the County and provides the participatory framework for continued success in carrying out these responsibilities. 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 (the "Ordinance") which expressed the following concerns in its preamble: "The transportation system in Riverside County is rapidly deteriorating and our population and economy are growing rapidly. Maintenance and repairs of existing roadways and improvements to relieve congestion cannot be accomplished with available funds. Without additional funds, the system will bog down and pavement will crumble into permanent disrepair. . . . Local governments must either generate revenues to expand our system and maintain our investments or watch the system collapse and endanger the health, welfare and safety of all Riverside County residents." The goals ofthe Plan are as follows: (1) Maintain and improve the quality of life in Riverside County by supplementing existing funds for transportation; (2) provide for accountability in the expenditure of taxpayer funds; (3) provide for equity in the distribution of Measure "A" Revenues; and (4) provide for local control ofthe Transportation Improvement Program. To address the concerns as expressed in the preamble, and to accomplish its goals and policies, the Ordinance provided that sales tax revenues be distributed to the specific geographic areas of Riverside County (i.e., Western County, Coachella Valley, and Palo Verde Valley) based on their proportionate share of revenues generated in the County, and that funds (including proceeds of bonds secured by such sales tax revenues) 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, $3 70 million is to be used for new corridor projects, $1.020 billion 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. 90937971.3 20 73 • • • • • • Toll Road Bonds On April 10, 2013, the Commission adopted Resolution No. 13-003 authorizing the issuance and sale of not to exceed $190 million principal amount of Toll Revenue Bonds. The proceeds of the Toll Revenue Bonds will be applied to finance a portion of the costs of the Project. See "THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT." The Commission intends to secure the Toll Revenue Bonds by a first lien on Toll Revenues. The Toll Revenue Bonds will not be payable from or secured by any pledge of Sales Tax Revenues. Commissioners Section 130053 of the California Public Utilities Code specifies that the Commission consists of five members of the Riverside County Board of Supervisors, one member from each incorporated city in Riverside County (each of whom must be a mayor or member of the City Council) and one non-voting member appointed by the governor of the State of California. The role of the Commission is to act as the policy-making board for Riverside County transportation activities. Executive Staff The Commission's key staff members, the position held by each and a brief statement of the background of each staff member 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 ("CAL TRANS"). As District Director, she was responsible for management of the state highway system in San Bernardino and Riverside counties. With 27 years of experience in the public works field, Ms. Mayer was with CAL TRANS 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 governmental accounting and reporting at the University of Redlands. Ms. Trevino's 19-year public accounting career included 16 years with Ernst & Young LLP. As Senior Manager in its Assurance and Advisory Business Services practice serving government clients, she led the development of the Southern California practice and 90937971.3 21 74 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 RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT State Route 91 ("SR-91 ") is an east-west limited access highway running from the I-405 in Los Angeles at its western end to the interchange ofl-215 and SR -60 in Riverside County on its eastern end. The existing SR-91 cross section typically consists of four general purpose lanes, varying in width from 11 feet to 12 feet, as well as auxiliary lanes in each direction. In Orange County, two tolled express lanes ("OCTA SR-91 Express Lanes") are operated in each direction by the Orange County Transportation Authority ("OCTA"). The OCTA SR-91 Express Lanes are in the median area, beginning west of the SR-91/SR-55 interchange and terminating near the Riverside/Orange county line. These express lanes transition into one high occupancy vehicle ("HOV") lane in each direction in Riverside County. Three major freeway facilities intersect the Project: the 1-15, SR-241 and SR-71. The Project will extend the OCTA SR-91 Express Lanes and construct one general purpose lane in each direction in Riverside County from the Orange County line to 1-15 in Riverside County, a distance of approximately eight miles. The Project limits along 1-15 begin at the SR-91/1-15 interchange and extend south approximately three miles, ending near Ontario A venue in the City of Corona. The Project will also provide express lane connectors to south 1-15. Other Project improvements include reconstruction with geometric improvements of five local interchanges, addition of auxiliary lanes and other operational improvements, installation of an electronic toll collection ("ETC") system, construction of new and widened bridges, retaining walls, sound walls and aesthetics improvements, and the addition of a collector-distributor system with braided ramps in the vicinity of the SR-91/1-15 interchange. The existing OCT A SR -91 Express Lanes, operated by the OCT A, feature fully automated tolling, including the first application of managed lane variable pricing in the United States. The variable pricing approach adjusts toll rates based on the number of vehicles on the road to maintain "free flow" conditions and maximize throughput. Using the OCTA SR-91 Express Lanes as extended by the Project, commuters are expected to save 30 minutes on average on the eight-mile segment ofSR-91 in Riverside County. RISK FACTORS Economic Recession and Financial Crisis • • The amount of Sales Tax Revenues collected at any time is directly dependent upon the level of retail sales within the County. During the latter part of 2007 through 2010 the economy of the County was in a recession, as evidenced by a high unemployment rate, a decrease in total personal income and taxable sales, a drop in residential and commercial building permits, a decline in the rate of horne sales and the median price of single-family homes and • condominiums, an increase in notices of default on mortgage loans secured by homes and 90937971.3 22 75 • • • condominiums and an increase in foreclosures resulting from such defaults. Sales Tax Revenues have rebounded from the low point in 2010, growing 7.78% in fiscal year 2010-11 and 9.35% in fiscal year 2011-12. While the Commission's outlook for fiscal year 2012-13 continues to be cautiously optimistic, a further deterioration in economic activity within the County could have a material adverse impact upon the level of Sales Tax Revenues generated. For information relating to current economic conditions within the County and the State, see "APPENDIX B - COUNTY DEMOGRAPHIC AND ECONOMIC INFORMATION." Investments The Commission has significant holdings in a broad range of investments. Market fluctuations have affected and will continue to affect materially the value of those investments and those fluctuations may be and historically have been material. Recent market disruptions have exacerbated the market fluctuations, but as a result of stable investments in government securities, the Commission's portfolio has not suffered any major losses with respect to the principal amount of funds invested. The Commission has experienced a reduction in interest income on such investments as a result of current market conditions. Parity with Liquidity Facility Bonds The Indenture does not contain a provision allowing for acceleration of any Bonds, including the 2013 Bonds, in the event of a default in the payment of principal of and interest on the Bonds when due; provided, however, that if any 2009 Bonds become Liquidity Facility Bonds, such Liquidity Facility Bonds are subject to mandatory prepayment as set forth in the related 2009 Bonds Liquidity Facility. See "OTHER SALES TAX 0 BLI GA TI ONS -Existing Bonds." Upon a default by the Commission, each Holder of a 2013 Bond will have the rights to exercise the remedies set forth in the Indenture, subject to the limitations thereon. See "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." 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 ofthe Sales Tax, see "THE SALES TAX." Impact of Bankruptcy of the Commission As a municipal entity, the Commission may be qualified to file a petition under Chapter 9 of the United States Bankruptcy Code ("Chapter 9") under certain circumstances. Under Chapter 9, the pledge of Sales Tax Revenues is fully enforceable only if a bankruptcy court determines that the Sales Tax Revenues are special revenues under Chapter 9 ("Special Revenues") and that the pledge is valid and binding under Chapter 9. A bankruptcy court could determine that Sales Tax Revenues do not constitute Special Revenues if, among other reasons, it finds that the Sales Tax was not specifically levied to finance a project or is a general sales tax levied to finance the general purposes of the Commission. If a bankruptcy court were to hold the 90937971.3 23 76 pledge of Sales Tax Revenues to be unenforceable under Chapter 9, then the owners of the 2013 Bonds would no longer be entitled to any special priority to the Sales Tax Revenues and may be treated as general unsecured creditors of the Commission. In addition, the obligations of the Commission under the Indenture, including its obligation to pay principal of and interest on the 2013 Bonds, are non-recourse obligations payable solely from Sales Tax Revenues and certain · other amounts held by the Trustee under the Indenture. If the Commission filed a petition for bankruptcy relief under Chapter 9, the owners of the 2013 Bonds would have no recourse to any assets or revenues of the Commission other than Sales Tax Revenues and such other amounts held by the Trustee. The results of Chapter 9 proceedings are difficult to predict. A key consideration in a bankruptcy court's determination of whether the Sales Tax Revenues constitute Special Revenues is the fact that the Sales Tax was specifically levied to finance the Project. See "THE SALES TAX" and "RIVERSIDE COUNTY TRANSPORTATION COMMISSION -The Transportation Expenditure Plan" herein. In addition, the Bankruptcy Code provides that after commencement of a bankruptcy case any lien on Special Revenues derived from a project or system shall be subject to the necessary operating expenses of such project or system. If the Commission filed under Chapter 9 and the bankruptcy court ruled that the Sales Tax Revenues constitute Special Revenues, the bankruptcy court could further rule that the pledge of Sales Tax Revenues is subordinate to the payment of necessary operating expenses of the Project upon a determination that the Sales Tax Revenues • are derived from the Project, thereby converting the Indenture's gross pledge of Sales Tax • Revenues to a net pledge. 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 2013 Bonds, would violate the Contracts Clause of the United States Constitution and, accordingly, would be precluded. The interpretation and application ofProposition 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, 90937971.3 24 77 • • • 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 2013 Bonds could become includable in federal gross income, possibly from the date of issuance of the 2013 Bonds, as a result of acts or omissions of the Commission subsequent to the issuance of the 2013 Bonds. Should interest become includable in federal gross income, the 2013 Bonds are not subject to mandatory redemption by reason thereof and may remain outstanding until maturity. FINANCIAL STATEMENTS The financial statements of the Commission for the Fiscal Year ended June 30, 2012, included in APPENDIX A of this Official Statement, have been audited by McGladrey LLP, certified public accountants, as stated in their report therein. McGladrey LLP was not requested to consent to the inclusion of its report in APPENDIX A, nor has it undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by McGladrey 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, 2012 . LITIGATION There is not now pending any litigation restraining or enjoining the issuance or delivery of the 2013 Bonds or questioning or affecting the validity of the 2013 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 2013 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and exempt from State of California personal income taxes. Bond Counsel is also of the opinion that interest on the 2013 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is included herein as APPENDIX F. To the extent the issue price of any maturity of the 2013 Bonds is less than the amount to be paid at maturity of such 2013 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2013 Bonds), the difference constitutes "original issue 90937971.3 25 78 discount," the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the 2013 Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the 2013 Bonds is the first price at which a substantial amount of such maturity of the 2013 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 2013 Bonds accrues daily over the term to maturity of such 2013 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 2013 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2013 Bonds. Owners of the 2013 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2013 Bonds with original issue discount, including the treatment of purchasers who do not purchase such 2013 Bonds in the original offering to the public at the first price at which a substantial amount of such 2013 Bonds is sold to the public. 2013 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 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 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 purchaser's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such purchaser . Owners of Premium 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 2013 Bonds. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2013 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 2013 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the 2013 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 2013 Bonds may adversely affect the value of, or the tax status of interest on, the 2013 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. Although Bond Counsel is of the opinion that interest on the 2013 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 2013 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 • 90937971.3 26 79 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. • • Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2013 Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the 2013 Bonds. Prospective purchasers of the 2013 Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opmwn. 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 2013 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 2013 Bonds ends with the issuance of the 2013 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 2013 Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Commission and its 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 Internal Revenue Service, including but not limited to selection of the 2013 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 2013 Bonds, and may cause the Commission or the beneficial owners to incur significant expense. CERTAIN LEGAL MATTERS The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX F hereto. Bond Counsel undertakes 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 2013 Bonds. Certain 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 90937971.3 27 80 for the Commission. Certain legal matters will be passed upon for the Underwriters by RATINGS Moody's Investors Service, Inc., Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and Fitch Ratings have assigned each Series of the 2013 Bonds the long-term municipal bond credit ratings of"_," "_" and "_," respectively. 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 2013 Bonds. The Commission has furnished to the rating agencies certain information respecting the 2013 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, suspension 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 to oppose any such revision, suspension or withdrawal. Any downward revision, suspension or withdrawal of any rating may have an adverse effect on the market price of the 2013 Bonds or the ability to sell the 2013 Bonds. UNDERWRITING Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of itself, Goldman, Sachs & Co., J.P. Morgan Securities LLC, Barclays Capital Inc. and De La Rosa & Co., underwriters of the 2013 Bonds (collectively, the "Underwriters"), has agreed, subject to certain conditions, to purchase the 2013 Bonds at a price of$ (representing the aggregate principal amount of the 2013 Bonds, [plus premium] [less original issue discount] of $ , less an underwriters' discount of$ -----~ The Purchase Contract for the 2013 Bonds provides that the Underwriters will purchase all the 2013 Bonds if any are purchased. The 2013 Bonds may be offered and sold by the Underwriters to certain dealers and others at yields lower than the public offering yields indicated on the inside cover hereof, and such public offering yields may be changed, from time to time, by the Underwriters. FINANCIAL ADVISOR • • The Commission has retained Fieldman, Rolapp & Associates, Irvine, California, as Financial Advisor in connection with the issuance of the 2013 Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the 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 ofthe 2013 Bonds. 90937971.3 28 81 • • • 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 2013 Bonds to provide certain financial information and operating data relating to the Commission and the Sales Tax by not later than nine months 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 D-FORM OF CONTINUING DISCLOSURE AGREEMENT." The Commission has not, within the past five years, 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 2013 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. 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 2013 Bonds . 90937971_3 29 82 The execution and delivery of this Official Statement has been duly authorized by the Commission. 90937971.3 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: ______________________________ __ 30 83 Executive Director • • • • • • 90937971.3 APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2012 A-I 84 • • • APPENDIX B COUNTY OF RIVERSIDE DEMOGRAPHIC AND ECONOMIC INFORMATION Set forth below is certain demographic and economic information with respect to the County of Riverside (the "County"). Such information is provided as general information and has been obtained from sources that the Commission believes to be reliable, but the Commission makes no representation as to the accuracy or completeness of the information included. The weakness of the economy at the County, State and national levels may not be reflected in the data presented below, as more recent information has not been made available to the Commission. Population According to the United States Census Bureau, the County's population was 2,189,641 according to the 201 0 Census, representing a 41.6% increase since the 2000 Census or a simple annual average of 4.2%. According to the State Department of Finance, Demographic Research Unit estimated population of County as of July 1, 2012 was 2,244,399. The County's population grew by over half a million since 2000 to 2010, ranking it as one of the major growth areas in the nation. During this period, eleven cities and the unincorporated County area each grew by over 20,000 persons, with the city of Murrieta adding the most residents (over 59,000) to its population. Several areas in the unincorporated County area also grew rapidly. These include Eastvale, Temescal Canyon, the El Sobrante/Lake Mathews/Woodcrest area, Winchester, French Valley, and the unincorporated area north of Indio. Much of the growth in the city of Menifee occurred during this period while it was an unincorporated area. The cities of Menifee and Wildomar incorporated October 1, 2008 and July 1, 2008, respectively. Eastvale incorporated on October 1, 2010. The City of Jurupa Valley incorporated on July 1, 2011. Between January 1, 2011 and January 1, 2012, the County population increased by 0.99%. Although this rate is below the average for the preceding decade, it is above the State-wide average . 90937971.3 B-1 85 • • • 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: COUNTY OF RIVERSIDE POPULATION OF CITIES WITHIN THE COUNTY (As of January 1) CITY 2000 2008 2009 2010 2011 2012 Banning 23,562 28,148 28,457 29,603 29,723 29,965 Beaumont 11,384 31,317 32,403 36,877 38,034 38,851 Blythe 20,465 21,627 21,329 20,817 20,063 20,400 Calimesa 7,139 7,423 7,498 7,879 7,910 7,998 Canyon Lake 9;952 10,994 11 '128 10,561 10,606 10,689 Cathedral City 42,647 51,972 52,447 51,200 51,400 51,952 Coachella 22,724 40,317 41,000 40,704 41,339 41,904 Corona 124,966 146,698 148,597 152,374 153,047 154,520 Desert Hot 25,939 26,552 Springs 16,582 25,938 27,277 27,638 Hemet 58,812 73,205 74,361 78,657 79,309 80,089 Eastvale 54,090 55,602 Indian Wells 3,816 5,000 5,093 4,958 4,990 5,035 Indio 49,116 80,962 82,230 76,036 76,817 78,065 Jurupa Valley 96,456 Lake Elsinore 28,930 49,556 50,267 51,821 52,294 53,024 La Quinta 23,694 42,743 43,778 37,467 37,688 38,075 Menifee 67,705 77,519 79,139 80,589 Moreno Valley 142,379 182,945 186,301 193,365 194,451 196,495 Murrieta 44,282 99,576 100,714 103,466 104,051 104,985 Norco 24,157 27,143 27,160 27,063 26,968 27,053 Palm Desert 41,155 50,686 51,509 48,445 48,920 49,471 Palm Springs 42,805 47,019 47,601 44,552 44,829 45,279 Perris 36,189 53,340 54,323 68,386 69,506 70,180 Rancho Mirage 13,249 16,975 17,180 17,218 17,399 17,504 Riverside 255,166 296,191 300,430 303,871 306,069 308,511 San Jacinto 23,779 35,491 36,477 44,199 44,421 44,803 Temecula 57,716 99,873 102,604 100,097 101,255 103,092 Wildomar 31,321 32,176 32,414 32 719 TOTALS Incorporated 1,124,666 I ,525,140 1,648,465 1,685,249 1,754,009 1,870,894 Unincorporated 420,721 553,461 459,188 504,392(!) 451,722 356,633 County-Wide 1.545.387 2.078 601 2.107.653 2.179 692 2.205.731 2.227.557 California 33,873,086 37,883,992 38,292,687 37,253,956 37,427,946 37,678,653 Source: U.S. Census Bureau for 2000 and 2010, State Department of Finance, Demographic Research Unit for 2008-09 (with 2000 DRU Benchmark) and 2011-12 with 2010 DRU Benchmark). (J) Includes the city ofEastvale, which was incorporated in October 2010, and the city of Jurupa Valley, which was incorporated in July 2011. 90937971.3 B-2 86 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. The table on the following page sets forth an employment data comparison by industry for __ 2012 and __ 2013. RIVERSIDE-SAN BERNARDINO PMSA ANNUALAVERAGEEMPLOYMENT (In Thousands) INDUSTRY 2007 2008 2009 2010 2011(2) Agriculture 16.4 15.9 14.9 14.8 14.9 Construction 112.5 90.7 67.9 59.5 58.7 Finance, Insurance and Real Estate 49.8 46.1 42.5 41.1 48.9 Government 225.3 229.9 228.4 224.3 227.3 Manufacturing: 118.5 106.9 88.8 84.6 85.8 Nondurables 36.5 34.3 30.6 29.6 29.7 Durables 82.1 72.5 58.1 55.0 56.1 Mining 1.3 1.2 1.1 1.0 1.0 Retail Trade 175.6 168.6 156.2 154.6 157.2 Services 446.2 441.3 419.0 414.9 427.7 Transportation and Public Utilities 69.5 70.2 66.8 66.5 68.5 Wholesale Trade 56.8 54.1 48.9 48.8 49.4 Information, Publishing and Telecommunications 15.4 14.9 15.1 15.9 16.8 TOTAL 0 > 1,287.3 1,239.7 1,149.7 1,126.0 1,242.0 Source: State Employment Development Department, Labor Market Information Division. (I) The employment figures by industry which are shown above are not directly comparable to the "Total, All Industries" employment figures due to rounded data. (l) Most current year for which annual data is available. 90937971.3 B-3 87 • • • • • • The following table sets forth an employment data comparison by industry for the period 2012 and 2013. RIVERSIDE-SAN BERNARDINO-ONT ARlO PMSA EMPLOYMENT BY INDUSTRY FOR 2012 AND 2013(1) INDUSTRY Agriculture Construction Finance, Insurance and Real Estate Government Manufacturing: Nondurables Durables Mining Retail Trade Services Transportation and Public Utilities Wholesale Trade Information, Publishing and Telecommunications TOTAL(!) (In Thousands) 2012 2013 Change Source: State Employment Development Department, Labor Market Information Division. OJ Data not adjusted for seasonality. The employment figures by Industry which are shown above are not directly comparable to the "Total, All Industries" employment figures due to rounded data . 90937971.3 B-4 88 The following table sets forth certain of the ten major employers located in the County as of2011: COUNTY OF RIVERSIDE CERTAIN MAJOR EMPLOYERS (2011) (I) Company Name County ofRiverside March Air Reserve Base Stater Bros. Markets University of California, Riverside Wal-Mart Corona-Norco Unified School District Kaiser Permanente Riverside Medical Center Pechanga Resort & Casino Riverside Unified School District Moreno Valley Unified School District Source: Riverside County Economic Development Agency. (I) Most current year for which data is available. Product/Service County Government Military Reserve Base Supermarkets University Retailer School District Hospital Resort Casino School District School District No. ofLocal Employees 17,702 9,000 6,900 5,790 5,360 4,686 4,000 4,000 3,796 3,500 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 [Month] 2008 2009 2010 2011 2012 2013 County<!) 8.5% 13.4% 14.5% 13.6% California< 1 > 7.2 11.3 12.4 11.7 United States 5.8 9.3 9.6 8.9 8.1 Source: State of California Employment Development Department Labor Market Information Division; U.S. Bureau of Labor Statistics. Ol Data is not seasonally adjusted. The unemployment data for the County and the State is calculated using unrounded data . 90937971.3 B-5 89 • • • • • • 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 five regional shopping malls in the County: Galleria at Tyler (Riverside), Hemet Valley Mall, Westfield Palm Desert Shopping Center, Moreno Valley Mall, and The Promenade in Temecula. There are also two factory outlet malls (Desert Hills Factory Stores and Lake Elsinore Outlet Center) and over 200 area centers in the County . 90937971.3 B-6 90 • • • Taxable Sales Transactions The following table sets forth taxable transactions in the County for the years 2007 through 2010. Annual figures for 2011 are unavailable. Types ofBusiness<1l Apparel Stores Clothing and Clothing Accessories Stores Health and Personal Care Sporting Goods/Hobby/Book/Music Food Stores Food and Beverage Stores Food Services and Drinking Places Eating and Drinking Home Furnishings & Appliances Furniture and Home Furnishings Electronics and Appliances Building Materials Group Building Materials/Garden Equip/Supplies Automotive & Service Stations Automotive Group Service Station Motor Vehicle and Parts Dealers Gasoline Stations General Merchandise Specialty Stores Miscellaneous Store Retailers Nonstore Retailers Other Retail Stores Total Retail and Food Services Business & Personal Services All Other Outlets Total Taxable Sales COUNTY OF RIVERSIDE TAXABLE TRANSACTIONS (In Thousands) 2007 2008 $ 1,171,013 $ 1,121,543 1,352,609 1,254,366 2,388,039 2,340,554 843,945 816,379 1,961,911 1,435,337 4,301,385 3,115,036 2,835,690 3,011,476 3,389,936 3,389,936 924,809 2,749,790 I ,279,813 $21,242,516 $18,689,249 1,112,407 1,045,714 6,668,686 6,268,632 $29,023,609 $26,003,595 Source: California State Board of Equalization. (I) "Type of Business" categories revised by the California State Board of Equalization in 2009 . 90937971.3 B-7 91 2009 2010 $ 1,293,271 $ 1,391,174 389,620 400,207 411,301 428,121 1,251,220 1,267,758 2,266,853 2,317,486 381,643 412,325 476,455 470,784 1,237,518 1,232,145 2,449,747 2,620,568 2,300,247 2,685,840 2,855,733 2,947,905 641,954 652,273 101,925 92,916 6,170,390 6,233,280 $16,057,488 $16,919,500 6,170,390 6,233,280 $22,227,877 $23,152,780 The following table sets forth taxable transactions in the County for first three quarters of 2011. Fourth quarter 20 II and annual 2012 figures are unavailable. COUNTY OF RIVERSIDE 2011 TAXABLE SALES TRANSACTIONs0 > (In Thousands) Type of Business First Quarter Second Quarter Motor Vehicle and Parts Dealers $ 752,845 $ 737,035 Furniture and Home Furnishing Stores 113,733 103,348 Electronics and Appliances Stores 112,391 116,045 Building Materials and Garden Equipment and Supplies 322,194 343,145 Food and Beverage Stores 313,652 346,153 Health and Personal Care Stores 110,328 110,626 Gasoline Stores 772,871 874,877 Clothing and Clothing Accessories Store 351,759 356,788 Sporting Goods, Hobby, Book and Music Stores 1 19,289 100,039 General Merchandise Stores 704,325 720,520 Miscellaneous Store Retailers 175,842 170,149 Nonstore Retailers 26,226 26,417 Food Services and Drinking Places 640,803 626,643 Total Retail and Food Services $4,516,256 $4,631,784 All Other Outlets 1,599,655 1,799,336 Total Taxable Sales $6,115,911 $6,431,120 Third Quarter $ 760,781 99,327 102,931 314,637 315,009 102,844 831,989 333,287 97,376 667,710 161,436 19,469 575,181 $4,381,975 1,689,287 $6,071,262 Source: California State Board of Equalization, Research and Statistics Division. (I) 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. The categories for "Types of Business" are different from those in the prior table which sets forth taxable transactions in the County for the years 2007 through 2010. 90937971.3 B-8 92 • • • • 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 2008 through 2012. COUNTY OF RIVERSIDE BUILDING PERMIT VALUATIONS (In Thousands) 2008 2009 2010 2011 2012 RESIDENTIAL New Single-Family $1,214,752 $ 891,825 $881,091 $647,071 $849,092 New Multi-Family 243,741 76,717 71,152 113,170 99,578 Alterations and Adjustments 118490 85,148 94,428 119,708 83,264 Total Residential $1,576,983 $1,053,690 $1,046,671 $879,849 $1,031,934 NON-RESIDENTIAL New Commercial $ 539,944 $ 94,653 $191,323 $150,712 $316,593 New Industry 70,411 12,278 6,686 10,000 2,997 New Other0 l 138,766 107,334 97,865 100,748 76,354 Alterations & Adjustments 292,694 162,557 243,266 297,356 152,591 Total Nonresidential $1,041,815 $ 376,822 $539,140 $558,816 $548,535 TOTAL ALL BUILDING $2,618 798 $1,430,512 $1,585,811 $1,438 665 $1,580,469 • Source: Construction Industry Research Board for years 2008 and 2009; California Homebuilding Foundation/Con.struction Industry Research Board for years 20 I 0, 20 II and 2012. (!) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, and public works and utilities buildings. • COUNTY OF RIVERSIDE NUMBER OF NEW DWELLING UNITS 2008 2009 2010 2011 2012 Single Family 3,815 3,424 3,911 2,659 3,467 Multi-Family 2,104 784 ___21Q 1,061 _m TOTAL 5,919 4,208 4,437 3,720 4,296 Source: Construction Industry Research Board for years 2008 and 2009; California Homebuilding Foundation/Construction Industry Research Board for years, 2010,2011 and 2012 . 90937971.3 B-9 93 The following table sets forth a comparison of median housing prices for Los Angeles County, Riverside County and Southern California as ?f January 2012 and January 2013. • COUNTY OF RIVERSIDE COMPARISON OF MEDIAN HOUSING PRICES January January Percent 2012 2013 Change County of Riverside $180,500 $227,000 25.76% Los Angeles County 290,000 345,000 18.97 Southern California(!) 273,9I7 320,9I7 I7.16 Source: MDA DataQuick Information Systems. (J) 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 2007 through 20 II is set forth in the following table. COUNTY OF RIVERSIDE VALUE OF AGRICULTURAL PRODUCTION 2007 2008 Citrus Fruits $ 121,387,100 $ 135,759,000 Trees and Vines 189,286,500 173,678,000 Vegetables, Melons, Misc. 234,854,700 266,414,900 Field and Seed Crops 94,492,000 123,545,400 Nursery 272,326,200 230,416,200 Apiculture 3,948,900 5,637,000 Aquaculture Products 9,829,200 12,077,700 Total Crop Valuation $ 926,124,600 $ 947,529,000 Livestock and Poultry Valuation 338,938,600 321,060,000 Grand Total $1,265,063,200 $1,268,589,900 Source: Riverside County Agricultural Commissioner. (I) Most recent year for which data is available. 90937971.3 B-10 94 2009 2010 $ 101,652,000 $ 140,501,000 191 ,682,600 164,994,000 221,286,700 292,002,200 69,699,800 81,328,300 206,499,900 169,341,300 5,017,600 4,631,700 5,243,900 4,921,700 $ 801,082,500 $ 857,720,200 214,672,800 235,926,300 $1,015,755,300 $1,093,646,500 2011 11 ) $ 119,942,513 232,649,262 . 278,628,295 149,198,052 200,154,964 4,844,400 4,808,250 $ 990,225,736 292,030,380 $1 ,282,256,116 • • • • Transportation Several major freeways and highways provide access between the County and all parts of Southern California. The Riverside Freeway (State Route 9I) extends southwest through Corona and connects with the Orange County freeway network in Buena Park. Interstate I 0 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. Interstates I5 and 2I5 extend north and then east to Las Vegas, and south to San Diego. State Route 60 provides an alternate (to Interstate 1 0) 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 are 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 Agency provides service in the far eastern portion ofthe 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 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 I, 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 -I2 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 90937971.3 B-11 95 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. 90937971.3 B-12 96 • • • • • 90937971.3 APPENDIXC SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE C-1 97 90937971.3 APPENDIXD FORM OF CONTINUING DISCLOSURE AGREEMENT D-1 98 • • • • • • APPENDIXE BOOK ENTRY SYSTEM The information in this Appendix E concerning The Depository Trust Company, New York, New York ("DTC''), 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 (defined below), DTC Participants or Indirect Participants or others will distribute any (a) payments of principal or purchase price or interest with respect to the 2013 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2013 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2013 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 2013 Bonds or an error or delay relating thereto . The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the 2013 Bonds. The 2013 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 bond certificate will be issued for each maturity of each series of the 2013 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 17 A 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, 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 90937971.3 E-1 99 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 a Standard & Poor's rating of AA+. 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 these websites is not incorporated by reference herein. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2013 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2013 Bond ("Beneficial Owner") is in tum 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 2013 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 Bonds, except in the event that use of the book-entry system for the 2013 Bonds is discontinued. • To facilitate subsequent transfers, all 2013 Bonds deposited by Direct Participants with DTC are registered in the name ofDTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2013 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 2013 2013 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2013 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. Redemption notices shall be sent to DTC. If less than all of the 2013 2013 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2013 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy 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 2013 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). 90937971.3 E-2 100 • • • • Principal, premium, if any, and interest payments on the 2013 2013 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 Trustee, on a 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 nor its nominee, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of 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 2013 Bonds at any time by giving reasonable notice to the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Commission may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered . If DTC determines not to continue to act as securities depository by giving notice to the Commission and the Trustee, and discharges its responsibilities with respect thereto under applicable law and there is not a successor securities depository, or the Commission determines that it is in the best interest of the Beneficial Owners of the 2013 Bonds that they be able to obtain certificates, the Trustee will execute, transfer and exchange 2013 Bonds as requested by DTC and will deliver new 2013 Bonds in fully registered form in denominations of $5,000 principal amount or any integral multiple thereof in the names of Beneficial Owners or DTC Participants. In the event the book-entry system is discontinued, the principal amount of and premium, if any, payable with respect to the 2013 Bonds will be payable upon surrender thereof at the principal corporate trust office of the Trustee. The interest on 2013 Bonds will be payable by check mailed to the respective Owners thereof at their addresses as they appear on the books maintained by the Trustee. Any Bond may, in accordance with its terms, be transferred, upon the register required to be kept pursuant to the provisions of the Indenture, by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Trustee. The 2013 Bonds may be exchanged at the corporate trust office of the Trustee for a like aggregate principal amount of 2013 Bonds of other authorized denominations of the same series, tenor, maturity and interest rate by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation; 90937971.3 E-3 101 provided that no transfer or exchange may occur during the period established by the Trustee for • selection of 2013 Bonds for redemption, or of any Bond or portion of a Bond so selected for redemption. The Trustee shall require the Bondholder requesting such transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such exchange . 90937971_3 E-4 102 • • • • • 90937971_3 APPENDIXF FORM OF BOND COUNSEL OPINION F-1 103 • • • MASTER INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee OHSUSA:260935709.8 Dated as of June 1, 2013 Riverside County Transportation Commission Toll Revenue Bonds 104 A I I ACHIVIt:l\11 4 OH&S Draft 3/1112013 • • • Section 1.01 Section 2.01 Section 2.02 Section 2.03 Section 2.04 Section 2.05 Section 2.06 Section 2.07 Section 2.08 Section 2.09 Section 2.1 0 Section 2.11 TABLE OF CONTENTS ARTICLE I DEFINITIONS Page Definitions ........................................................................................................ 4 ARTICLE II THE BONDS Authorization and Purposes ........................................................................... 25 General Terms of Senior Lien Bonds ............................................................ 25 Execution ....................................................................................................... 26 Certificate of Authentication .......................................................................... 26 Forms of Senior Lien Bonds .......................................................................... 26 Issuance, Sale and Delivery of Senior Lien Bonds; Application of Proceeds ......................................................................................................... 27 Mutilated, Lost, Stolen or Destroyed Senior Lien Bonds .............................. 27 Exchangeability and Transfer of Senior Lien Bonds; Persons Treated as Holders ....................................................................................................... 27 Cancellation ................................................................................................... 28 Senior Lien Bonds Ratably Secured .............................................................. 28 Book-Entry Only System ............................................................................... 29 ARTICLE III ADDITIONAL BONDS, PARITY OBLIGATIONS, AND SUBORDINATED OBLIGATIONS Section 3.01 Section 3.02 Section 3.03 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 5.01 Section 5.02 Section 5.03 Section 5.04 Section 5.05 OHSUSA:260935709.8 Restrictions on Issuance of Additional Senior Lien Bonds and Parity Obligations ..................................................................................................... 30 Proceedings for Issuance of Additional Senior Lien Bonds and Parity Obligations ..................................................................................................... 31 Subordinated Obligations; TIFIA Loans ....................................................... 32 ARTICLE IV REDEMPTION Redemption and Purchase of Senior Lien Bonds .......................................... 32 Notice ofRedemption .................................................................................... 32 Conditional Notice of Redemption; Rescission ............................................. 33 Effect ofRedemption ..................................................................................... 33 Partial Redemption of Senior Lien Bonds ..................................................... 33 ARTICLE V PLEDGE; FUNDS AND ACCOUNTS Pledge of Revenue; Toll Revenue Fund ........................................................ 34 Establishment ofFunds and Accounts ........................................................... 35 Toll Revenue Fund; Priority of Deposits and Transfers ................................ 36 Project Fund ................................................................................................... 39 Commission Equity Deposit to Project.. ........................................................ 41 -1- 105 Section 5.06 Section 5.07 Section 5.08 Section 5.09 Section 5.1 0 Section 5.11 Section 5.12 Section 5.13 Section 5.14 Section 5.15 Section 5.16 Section 5.17 Section 5.18 Section 5.19 Section 5.20 Section 5.21 Section 5.22 Section 5.23 Section 5.24 Section 5.25 Section 6.01 Section 6.02 Section 6.03 Section 6.04 Section 6.05 Section 6.06 Section 6.07 Section 6.08 Section 6.09 Section 6.1 0 Section 6.11 Section 6.12 Section 6.13 Section 6.14 Section 6.15 Section 6.16 Section 6.17 Section 6.18 OHSUSA:260935709.8 TABLE OF CONTENTS (continued) Page Operation and Maintenance Fund .................................................................. 41 Capital Expenditures Fund ............................................................................. 41 Senior Lien Bond Reserve Fund .................................................................... 41 TIFIA Reserve Fund ...................................................................................... 43 Repair and Rehabilitation Fund ..................................................................... 43 Surplus Fund .................................................................................................. 44 Rebate Fund ................................................................................................... 44 Senior Lien Bond Interest Payment Account.. ............................................... 44 Senior Lien Bond Principal Payment Account .............................................. 44 Permitted Second Lien Obligations Interest Payment Account.. ................... 44 Permitted Second Lien Obligations Principal Payment Account .................. 44 TIFIA Payment Fund ..................................................................................... 45 Establishment and Application of the Redemption Fund .............................. 45 Lock-Up Account ........................................................................................... 45 Records ........................................................................................... , .............. 45 Investment by Trustee .................................................................................... 45 Subsidy Payments .......................................................................................... 4 7 Withdrawal and Application of Funds; Priority of Transfers from Funds and Accounts ....................................................................................... 47 Insufficient Funds; Application of Funds; Priority ........................................ 47 Effect of Bankruptcy-Related Event on TIFIA Obligations .............. ; ........... 48 ARTICLE VI COVENANTS OF THE COMMISSION Punctual Payment and Performance .............................................................. 48 Against Encumbrances ................................................................................... 48 Toll and Revenue Covenants ......................................................................... 49 Annual Budget ............................................................................................... 50 Operation and Maintenance of the Toll Road ................................................ 50 Retention of Assets ........................................................................................ 50 Insurance ........................................................................................................ 51 Payment of Claims ......................................................................................... 51 Receipt and Deposit of Cash Advances .............................................. , .......... 51 Design-Build Procurement and Construction ................................................ 51 Construction and Maintenance From Other Sources Permitted .................... 52 Tax Covenants ...................................................... : ........................................ 52 Accounting Records; Financial Statements and Other Reports ..................... 53 Protection of Revenue and Rights ofHolders ................................................ 53 Payment of Governmental Charges and Compliance with Governmental Regulations ............................................................................. 53 Maintenance of Powers .................................................................................. 53 Covenants Binding on Commission and Successors ..................................... 54 Continuing Disclosure ................................................................................... 54 -11- 106 • • • • • • Section 6.19 Section 7.01 Section 7.02 Section 7.03 Section 7.04 Section 7.05 Section 7.06 Section 8.01 Section 8.02 Section 8.03 Section 8.04 Section 8.05 Section 9.01 Section 9.02 Section 9.03 Section 9.04 Section 9.05 Section 10.01 Section I 0.02 Section 10.03 Section 11.01 Section 11.02 Section 11.03 Section 11.04 Section 11.05 Section 11.06 Section 11.07 Section 11.08 OHSUSA:260935709.8 TABLE OF CONTENTS (continued) Page Further Assurances ......................................................................................... 54 ARTICLE VII DEFAULT PROVISIONS AND REMEDIES Events of Default ........................................................................................... 54 Application of Revenue and Other Funds After Default ............................... 55 No Acceleration ............................................................................................. 57 Suits at Law or in Equity and Mandamus ...................................................... 57 Waivers .......................................................................................................... 57 Rights of Subordinate Lenders ....................................................................... 57 ARTICLE VIII THE TRUSTEE Trustee ............................................................................................................ 58 Compensation and Indemnification ofTrustee .............................................. 60 Qualifications ofTrustee; Resignation; Removal.. ........................................ 60 Instrument of Bondholders ............................................................................ 62 Issuing and Paying Agents ............................................................................. 63 ARTICLE IX AMENDMENTS Amendments to Indenture Not Requiring Consent of Bondholders .............. 63 Amendments to Indenture Requiring Consent of Bondholders and TIFIA ............................................................................................................. 64 Notice to and Consent of Bondholders .......................................................... 64 Execution and Effect of Supplemental Indentures ......................................... 65 Senior Lien Bonds Owned by Commission ................................................... 65 ARTICLE X DISCHARGE OF LIEN Discharge of Lien and Security Interest ......................................................... 66 Provision for Payment of Senior Lien Bonds ................................................ 66 Unclaimed Moneys ........................................................................................ 67 ARTICLE XI MISCELLANEOUS Liability of Commission Limited to Revenue ............................................... 67 Limitation of Rights; Third Party Beneficiary ............................................... 68 Rights of Credit Providers ............................................................................. 68 Severability .................................................................................................... 68 Notices ........................................................................................................... 69 Payments Due on Non-Business Days ........................................................... 69 Captions ......................................................................................................... 69 California Law ............................................................................................... 69 -lll- 107 Section 11.09 Section 11.10 OHSUSA:260935709.8 TABLE OF CONTENTS (continued) Page Effective Date ................................................................................................ 69 Execution in Several Counterparts ................................................................. 70 -IV- 108 • • • • • • This MASTER INDENTURE, dated as of June 1, 2013 (this "Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly existing under the laws of the State of California (the "Commission"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under the laws of the United States of America, as trustee (together with any successor thereto the "Trustee"); 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.) (as amended, including by Chapter 714 of the California Statutes of 2008 (Senate Bill No. 1316), the "Act"); 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 "Sales Tax 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 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 Sales Tax 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 ofPart 1.6 (commencing with Section 7251) of Division 2 of the California Revenue and Taxation Code at the rate of one-half of one percent (1/2%) commencing July 1, 2009 and continuing 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 authorizes the Commission to apply proceeds of the Sales Tax (the "Sales Tax Revenues") for transportation purposes, including the construction, capital, acquisition, maintenance and operation of streets, roads, highways, including state highways, and for related purposes; WHEREAS, the Act authorizes the Commission to set, levy and collect tolls, user fees, or other similar charges, payable for use of the toll lanes and other facilities on the portion of State Highway Route 91 (the "SR -91 ") between the Orange and Riverside County line and State Highway Route 15 (the "Toll Road"), and to issue one or more series of bonds (as further defined herein, the "Senior Lien Bonds") pursuant to the terms and conditions of a resolution adopted by a two-thirds vote of the Commission, which bonds may be payable from OHSUSA:260935709.8 109 (i) the proceeds of such tolls (the "Toll Revenues"), (ii) development impact fees, (iii) federal grant funds, and (iv) any other source of revenues available to the Commission; • WHEREAS, the Act authorizes the Senior Lien Bonds to be issued for the purpose of financing the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance, or any combination of these, with respect to tolled and nontolled facilities, structures, onramps, connector roads, bridges, and roadways that are on, necessary for, or related to the construction or operation of the portion of the SR-91 between the Orange and Riverside County line to the west and State Highway Route 15 to the east (the "Riverside SR-91 Corridor Improvement Project"); WHEREAS, pursuant to that certain Estoppel Certificate and Assignment and Assumption Agreement, dated as of December 30, 2002 (the "Assignment Agreement"), by and among California Private Transportation Company, L.P., the Orange County Transportation Authority ("OCT A"), and the California Department of Transportation ("Caltrans"), OCT A and Caltrans are parties to that certain Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements), dated as of June 30, 1993 (as it has been amended, the "Franchise Agreement"), as amended by that certain Amendment No. 1 to Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements) dated as of July 16, 1993, and that certain Amendment No. 2 to Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements) dated as of December 30, 2002, pertaining to the construction and operation of tolled transportation facilities within the SR-91 within both Orange and Riverside Counties; WHEREAS, OCTA imposes tolls on certain SR-91 lanes m Orange County • pursuant to the Franchise Agreement; WHEREAS, pursuant to an Amendment No. 3 to Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements), dated as of December 12, 2011, by and between OCT A and Cal trans, OCT A has amended the Franchise Agreement to exclude that portion of SR-91 between the Orange and Riverside County line and State Highway Route 15 from such Franchise Agreement; WHEREAS, the Commission submitted a Project Authorization Request to the California Transportation Commission (the "CTC") on January 1, 2010, describing transportation improvements relating to the Riverside SR-91 Corridor Improvement Project, including projected costs, the use of toll revenues, and a proposed completion schedule, and requesting authorization to employ the design-build method of procurement in connection with such improvements to reduce costs, expedite completion and achieve design features not achievable through the traditional design-bid-build method (the "CIP Plan"); WHEREAS, on April 7, 2010, the CTC authorized the Commission, pursuant to Chapter 6.5 (commencing with Section 6800) of Part 1 of Division 2 of the Public Contract Code, to employ the design-build method of procurement in connection with the CIP Plan and the proposed construction of the initial phase of the Riverside SR-91 Corridor Improvement Project; OHSUSA:260935709.8 2 110 • • • • WHEREAS, the timeline for project delivery set forth in the CTC application is based on use of the design-build method of procurement and the design-build procurement method is a key component of making the CIP Plan and construction of the initial phase of the Riverside SR-91 Corridor Improvement Project viable by providing for schedule acceleration, innovation, risk transfer, cost certainty and other benefits; WHEREAS, Caltrans and the Commission have negotiated the terms of the Cooperative Agreement for Design-Build of the State Route 91 Toll Facilities and Corridor Improvement Project, by and between the Commission and Caltrans (the "Design-Build Agreement"); WHEREAS, Riverside County Transportation Commission and Orange County Transportation Authority have on December 16, 2011 executed the Cooperative Agreement for State Route 91 Express Lanes and Corridor Improvements, by and between the Commission and OCTA (the "Cooperative Agreement"), setting forth, among other things, specific procedures and requirements for the Commission's proposed construction of the initial phase of the Riverside SR-91 Corridor Improvement Project as part of the CIP Plan, including a requirement that the Commission construct the Riverside SR-91 Corridor Improvement Project using the design-build method of procurement, and an agreement between the Commission and OCT A to engage a common toll operator; WHEREAS, the Commission in coordination with OCT A pursuant to the Cooperative Agreement will set, levy, and collect tolls, user fees and similar charges for the use of the Toll Road pursuant to the toll schedule adopted by the Commission, and to apply all or a portion of the Toll Revenues to the financing of the Riverside SR-91 Corridor Improvement Project's design, construction and operation, including reimbursement for the costs of environmental analysis and compliance in accordance with the CIP Plan; WHEREAS, the Commission determined that it is necessary to issue the Senior Lien Bonds in order to (i) finance the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, and maintenance of the Riverside SR-91 Corridor Improvement Project, (ii) apply for or otherwise obtain available federal, state and local matching funds, loans and grants in order to make additional funds available for the Riverside SR-91 Corridor Improvement Project; and (iii) finance the costs of issuance incurred in connection with the issuance of such bonds; WHEREAS, the Commission has determined to enter into this Indenture and one or more Supplemental Indentures in order to provide for the authentication and delivery of such Senior Lien Bonds, entitled "Riverside County Transportation Commission Toll Revenue Bonds," to establish and declare the terms and conditions upon which the Senior Lien Bonds and other obligations secured by toll revenues and other sources of funds shall be issued and secured and to secure the payment of the principal, premium (if any), and interest on the Senior Lien Bonds and other obligations secured by toll revenues on a parity with the Senior Lien Bonds (as more fully defined in Section 1.01, "Parity Obligations"); WHEREAS, the execution and delivery of this Indenture has in all respects been duly and validly authorized by resolution duly passed and approved by the Commission; and OHSUSA:260935709.8 3 1 1 1 WHEREAS, the Commission certifies that all acts that are necessary to make the • Senior Lien Bonds, when executed by the Commission and authenticated and delivered by the Trustee, duly issued and the valid, legal and binding obligations of the Commission payable in accordance with their terms, and to constitute this Indenture a valid and binding agreement of the parties hereto, have been done and taken, and the execution and delivery of this Indenture have been duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, in order to secure the payment of all Senior Lien Bonds Outstanding under this Indenture and to secure the performance of the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Senior Lien Bonds are to be issued, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Senior Lien Bonds by the owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the Commission does hereby covenant and agree with the Trustee, for the benefit of the owners from time to time of the Senior Lien Bonds and the Secured Creditors, as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. In addition to terms elsewhere defined in this Indenture, the following terms shall have the following meanings unless the context or use clearly indicates another meaning. These definitions shall apply to the singular and plural forms • of these defined terms. "Account" means each account established in accordance with the terms of this Indenture. "Act" means Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq.) as amended, including by Chapter 714 ofthe California Statutes of2008 (Senate Bill No. 1316), and as such may be amended from time to time hereafter. "Authorized Representative" means the Executive Director of the Commission, any Deputy Executive Director of the Commission, the Chief Financial Officer of the Commission, the Toll Program Director of the Commission or any other employee of the Commission at the time designated to act on behalf of the Commission in a Certificate of the Commission executed by any of the foregoing officers and filed with the Trustee, which Certificate shall contain such employee's specimen signature. "Bankruptcy Related Event" means (a) the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official for the Commission or for a substantial part of the assets of the Commission, or (b) the Commission shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official for the Commission or a substantial part of the assets of the Commission, or (ii) become unable generally to pay its debts as they become due, or (iii) make a general assignment for the benefit of creditors, or (iv) be adjudicated a bankrupt or insolvent, or (v) • OHSUSA:260935709.8 4 112 • • • commence a voluntary case under any law relating to insolvency, or file a voluntary petition seeking liquidation, reorganization, an arrangement with creditors or an order for relief, or otherwise seeking to take advantage of any law relating to insolvency, or (vi) take any action for the purpose of effecting any of the foregoing. "Beneficial Owner" means, with respect to any Book-Entry Bond, the beneficial owner of such Senior Lien Bond as determined in accordance with the applicable rules of the Securities Depository for such Book-Entry Bonds. "Board" means the Board of Commissioners of the Commission. "Bond Counsel" means a firm of nationally-recognized attorneys-at-law experienced in legal work relating to the issuance of municipal bonds selected by the Commission. "Bond Register" means the registration books for the ownership of Senior Lien Bonds maintained by the Trustee pursuant to Section 2.08. "Bondholder" or "Holder" or "Owner" means the record owner of any Senior Lien Bond shown on the books of registration kept by the Trustee, which, during any period when such Senior Lien Bond is a Book-Entry Bond, shall be the Securities Depository or its Nominee. "Book-Entry Bonds" means Senior Lien Bonds issued under a book-entry only depository system as provided in Section 2.11. "Business Day" means any day, other than a Saturday, Sunday or other day on which banks are authorized or obligated by law or executive order to be closed in the State of California or the State of New York or in any city in which the Principal Office of the Trustee or, with respect to any Senior Lien Bonds secured by a Credit Support Instrument, the office where draws are to be made on a Credit Provider is located. "Calculation Date" means each June 30 and December 31, or, if such day is not a Business Day, the next preceding Business Day, commencing with such date following the Substantial Completion Date. "Calculation Period" means a period of consecutive twelve (12) months. "Caltrans" means the California Department of Transportation. Section 5.02. "Capital Expenditures Fund" means the Fund by that name created pursuant to "Capital Expenditures Fund Permitted Expenditures" means the expenditures necessary in the reasonable judgment of the Commission to complete the projects specified in Schedule I hereto . OHSUSA:260935709.8 5 113 "Capital Expenditures Fund Required Balance" means the amount necessary to be on deposit in the Capital Expenditures Fund, as of the applicable Calculation Date, as reasonably budgeted by the Commission based on projections prepared by an engineer or engineering firm of the aggregate Capital Expenditures Fund Permitted Expenditures which, initially, is equal to [$571,000,000 in 2008 dollars]. "Certificate of the Commission" means an instrument in writing signed by an Authorized Representative ofthe Commission. ''CIP Plan" means the transportation improvements relating to the Riverside SR- 91 Corridor Improvement Project, including projected costs, the use of toll revenues, and a proposed completion schedule, and the use of the design-build method of procurement in connection with such improvements to reduce costs, expedite completion and achieve design features not achievable through the traditional design-bid-build method, as described in the Project Authorization Request the Commission submitted to the CTC on January 1, 2010, as it may be amended; "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. • "Commercial Paper Program" means a program of short-term Senior Lien Bonds having the characteristics of commercial paper in that (i) such Senior Lien Bonds have a stated maturity not later than 270 days from their date of issue and (ii) maturing Senior Lien Bonds of such program may be paid with the proceeds of renewal Senior Lien Bonds. • "Commission" means the Riverside County Transportation Commission, a public entity duly established and existing pursuant to the Act, and any successor thereto. "Continuing Disclosure Agreement" means, with respect to each Series of Senior Lien Bonds requiring an undertaking regarding disclosure under Rule 15c2-12, the Continuing Disclosure Agreement, entered into by the Commission, the Trustee and the Dissemination Agent, as the same may be supplemented, modified or amended in accordance with its terms. "Cooperative Agreement" means that certain Cooperative Agreement for State Route 91 Express Lanes and Corridor Improvements Between Riverside County Transportation Commission and Orange County Transportation Commission, dated as of December 16, 2011, by and between the Commission and OCT A, setting forth, among other things, the manner in which the initial phase of the Riverside SR-91 Corridor Improvement Project will be constructed in accordance with the CIP Plan using the design-build method of procurement as authorized by the CTC. "Cooperative Agreement" means that certain . Design-Build Construction Cooperative Agreement, dated as of [ , 20 _], by and between the Commission and Caltrans, setting forth, among other things, the manner in which the initial phase of the Riverside SR-91 Corridor Improvement Project will be constructed in accordance with the CIP Plan using • the design-build method of procurement as authorized by the CTC. OHSUSA:260935709.8 6 114 • • • "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Commission and related to the authorization, execution, sale and delivery of Senior Lien Bonds, including, but not limited to, advertising and printing costs, costs of preparation and reproduction of documents, filing and recording fees, initial fees_ and charges of the Trustee, legal fees and ·Charges, fees and disbursements of consultants and professionals, financial advisor fees and expenses, underwriting fees and discounts, rating agency fees, fees and charges for preparation, execution, transportation and safekeeping of Senior Lien Bonds, surety, insurance, liquidity and credit enhancements costs, and any other cost, charge or fee incurred in connection with the issuance of Senior Lien Bonds. "Coverage Calculation Date" has the meaning assigned in Section 6.03(b ). "Coverage Ratio" has the meaning assigned in Section 6.03(b). "Credit Provider" means any municipal bond insurance company, bank or other financial institution or organization or group of financial institutions or organizations providing a Credit Support Instrument for a Series of Senior Lien Bonds. "Credit Support Instrument" means a policy of insurance, letter of credit, line of credit, standby purchase agreement, revolving credit agreement or other credit arrangement pursuant to which a Credit Provider provides credit or liquidity support with respect to, or available for, the payment of interest, principal or Purchase Price of any Series of Senior Lien Bonds, as the same may be amended from time to time pursuant to its terms, and any replacement therefor. "CTC" means the California Transportation Commission. "CUSIP" means the Committee on Uniform Securities Identification Procedures of the American Bankers Association, or any successor to its functions. "Debt Service" for any period of calculation means the aggregate amount of payments due on Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations for that period, as calculated by the Commission, utilizing the assumptions about payments on Senior Lien Bonds, Parity Obligations and Permitted Second Lien Obligations listed in the definition ofMaximum Annual Debt Service. "Defeasance Securities" means: (i) U.S. Treasury Certificates, Notes and Bonds, including State and Local Government Series securities; (ii) direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself; (iii) Resolution Funding Corp. securities ("REFCORP"), provided, however, only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable; (iv) pre-refunded municipal bonds rated the same level as U.S. Treasury Notes and Bonds by Moody's and by Standard & Poor's, provided, however, that if such municipal bonds are rated only by Standard & Poor's, then such pre-refunded municipal bonds must have been pre-refunded with cash, direct United States or United States guaranteed obligations; (v) obligations issued by the following agencies, which are backed by the full faith and credit of the United States: (a) Farmers Home Administration (FmHA) -certificates of beneficial ownership; (b) General Services Administration -participation certificates; (c) U.S. OHSUSA:260935709.8 7 115 Maritime Administration -Guaranteed Title XI financing; (d) Small Business Administration • guaranteed participation certificates and guaranteed pool certificates; (e) GNMA guaranteed MSB and participation certificates; and (f) U.S. Department of Housing and Urban Development (HUD) Local Authority Bonds, or (vi) certain obligations of government-sponsored agencies that are not backed by the full faith and credit of the United States limited to: (a) Federal Home Loan Mortgage Corp. (FHLMC) debt obligations; (b) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives) consolidated system- wide bonds and notes; (c) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; (d) Federal National Mortgage Association (FNMA) debt obligations; (e) Student Loan Marketing Association (SLMA) debt obligations; and (f) Financing Corp. (FICO) debt obligations; and (g) other obligations approved by the Rating Agencies for defeasance escrows rated in the highest Rating Category. "Design-Build Agreement" means [to come]. "Dissemination Agent" means, with respect to each Series of Senior Lien Bonds requiring an undertaking regarding disclosure under Rule 15c2-12, the party (which may be the Commission) acting as dissemination agent under the Continuing Disclosure Agreement delivered in connection with such Series of Senior Lien Bonds, or any successor dissemination agent designated in writing by the Commission and which has filed a written acceptance with the Commission and the Trustee. "DTC" means The Depository Trust Company, New York, New York or any successor thereto. "Electronic" means, with respect to notice, notice through the internet or through a time-sharing terminal. "Event of Default" means any ofthe events specified in Section 7.01. "Financing Documents" means the TIFIA Loan Agreement, this Indenture, any Swaps or Qualified Swap Agreements, the TIFIA Note, and any documents and/or instruments evidencing, documenting, securing or otherwise relating to any or all of the obligations relating to the Parity Obligations or Permitted Second Lien Obligations, all as the same may from time to time be amended, modified, extended, renewed and/or restated, and each other document or instrument required to be executed and delivered by the aforementioned agreements. "Fiscal Year" means the period of twelve months terminating on June 30 of each year, or any other annual period hereafter selected and designated by the Commission as its Fiscal Year in accordance with applicable law. "Fitch" means Fitch Inc., and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Commission. "Fund" means each fund established in accordance with the terms of this Indenture. OHSUSA:260935709.8 8 116 • • • • • "Funds Transfer Certificate" means a certificate prepared by the Commission in accordance with the terms of this Indenture substantially in the form of Exhibit U attached hereto containing the certifications by the Commission required by this Indenture with respect to a requested transfer of funds from a Project Account. "Hedging Obligations" means, collectively, the payment of (a) all scheduled amounts payable to the Swap Parties by the Commission under the Swaps or Qualified Swap Agreements, as applicable (including interest accruing after the date of any filing by the Commission of any petition in bankruptcy), net of all scheduled amounts payable to the Commission by such Swap Parties, and (b) all other obligations, fees, indemnities and other amounts payable by the Commission to the Swap Parties under such Swaps or Qualified Swap Agreements, net of all other indebtedness, fees, indemnities and other amounts payable by the Swap Parties to the Commission under such Swaps or Qualified Swap Agreements; provided, that Hedging Obligations shall not include Hedging Termination Obligations. For the avoidance of doubt, all calculations of such amounts payable under the Swaps or Qualified Swap Agreements shall be made in accordance with the terms of the applicable Swaps or Qualified Swap Agreements. "Hedging Termination Obligations" means the aggregate amount payable to the Swap Parties by the Commission upon the early unwind of all or a portion of the Swaps or Qualified Swap Agreements, as applicable, net of all amounts payable to the Commission by such Swap Parties upon the early unwind of all or a portion of such Swaps or Qualified Swap Agreements. For the avoidance of doubt, all calculations of such amounts payable under the Swaps or Qualified Swap Agreements shall be made in accordance with the terms of the applicable Swaps or Qualified Swap Agreements. "Indenture" means this Master Indenture as the same may be amended or supplemented from time to time as permitted hereby. "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants appointed by the Commission, and who, or each of whom, is independent with respect to the Commission, pursuant to the Statement on Auditing Standards No. I of the American Institute of Certified Public Accountants. 5.02. "Lock-Up Account" means the account by that name created pursuant to Section "Maximum Annual Debt Service" means the highest amount of payments due on Senior Lien Bonds and Parity Obligations or Permitted Second Lien Obligations, as applicable, for any Calculation Period during the period from the date of such determination through the final maturity date of the Senior Lien Bonds and Parity Obligations or Permitted Second Lien Obligations, as applicable, then Outstanding and proposed to be issued, as calculated by the Commission, utilizing the following assumptions about payments on Senior Lien Bonds and Parity Obligations or Permitted Second Lien Obligations, as applicable (and if more than one of the following assumptions could apply to any such payment, the Commission shall select the assumption to be applied): OHSUSA:260935709.8 9 117 (i) in determining the principal amount of a Senior Lien Bond, Parity • Obligation or Permitted Second Lien Obligation due in each year, payment shall be assumed to be made in accordance with the amortization schedule established for such principal, including any minimum sinking fund or account payments; (ii) if 20 percent or more of the principal of a Series of Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations is not due until the final stated maturity of that Series of Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations, principal and interest may be treated as if such principal and interest were due based upon a level amortization of such principal and interest over the term of that Series of Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations; (iii) if the Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation is supported by a line of credit or a letter of credit, principal may be treated as if it were due based upon the level amortization of such principal over the maximum term of repayment of borrowings under such line of credit or letter of credit; (iv) if an Outstanding Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation bears a variable interest rate, the interest rate shall be assumed to be the greater of (a) the daily average interest rate during the 12 months ending with the month preceding the date of calculation, or such shorter period that the Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation has been Outstanding, or (b) the rate of interest on that Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation on the date of calculation; • (v) if Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations proposed to be issued will be variable interest rate obligations, the interest on which is excluded from gross income for federal income tax purposes, then such obligations shall be assumed to bear interest at an interest rate equal to the average SIFMA Index during the three months preceding the month of calculation, or if SIFMA Index is no longer published, at an interest rate equal to 75% of the average One Month USD LIBOR Rate during that three month period, or if the One Month USD LIBOR Rate is not available for such period, another similar rate or index selected by the Commission; (vi) if Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations proposed to be issued will be variable interest rate obligations the interest on which is included in gross income for federal income tax purposes, then such obligations shall be assumed to bear interest at an interest rate equal to the average One Month USD LIBOR Rate during the three months preceding the month of calculation, or if the One Month USD LIBOR Rate is not available for such period, another similar rate or index selected by the Commission; (vii) if Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations proposed to be issued are part of a Commercial Paper Program, the principal of such Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations may be treated as if such principal were due based upon a 30-year level amortization of principal from the date of calculation and the interest on such Senior Lien Bonds shall be calculated as if such Senior Lien OHSUSA:260935709.8 10 118 • • • • Bonds, Parity Obligations or Permitted Second Lien Obligations were variable interest rate Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations; (viii) if the variable interest on any Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation plus the variable payments due to the Commission and fixed payments due from the Commission under a Qualified Swap Agreement or a Swap designated by the Commission are treated by the Commission as synthetic fixed rate debt, the variable interest rate Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation may be treated as bearing such synthetic fixed rate for the duration of the synthetic fixed rate; (ix) if the fixed interest on any Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation plus the fixed payments due to the Commission and variable payments due from the Commission under a Qualified Swap Agreement or a Swap designated by the Commission are treated by the Commission as synthetic variable rate debt, the fixed interest rate Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation may be treated as bearing such synthetic variable rate for the duration of the synthetic variable rate and such synthetic variable rate shall be calculated using the principles of clauses (iv), (v) or (vi) hereof; (x) if any of the Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations are Short-Term Put Senior Lien Bonds, the principal of such obligations may be treated as if such principal were due based upon a 30-year level amortization of principal from the date of calculation and the interest on such obligations may be calculated as if such obligations were variable interest rate Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations; (xi) principal and interest payments on Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations may be excluded to the extent such payments are to be paid from amounts then currently on deposit with the Trustee or another fiduciary in escrow specifically therefor and interest payments on any Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations may be excluded to the extent that such interest payments are to be paid from capitalized interest held by the Trustee or another fiduciary specifically to pay such interest, including amounts held on deposit to pay capitalized interest on one or more Series of Senior Lien Bonds; (xii) if any of the Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations are, or upon issuance will be, obligations for which the Commission is entitled to receive Subsidy Payments, as evidenced by an Opinion of Bond Counsel delivered with respect to such Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations, the obligations may be treated as bearing an interest rate equal to the rate of interest borne or assumed to be borne, as applicable, by the obligations for the period of determination minus the Subsidy Payments to which the Commission is entitled for such period; (xiii) Any payment obligation under a Senior Lien Bond, Parity Obligation or Permitted Second Lien Obligation that was or is optional or contingent (such as the obligation to make a termination payment under a Qualified Swap Agreement or a Swap), whether or not the option is exercised or the contingency occurs, and any payments that are not scheduled payments, may be excluded; OHSUSA:260935709.8 11 119 (xiv) if any of the Senior Lien Bonds, Parity Obligations or Permitted Second Lien Obligations are, or upon issuance will be, obligations payable in a currency other than lawful currency of the United States of America, then such obligations shall be assumed to be payable in lawful currency of the United States at the rate payable by the Commission pursuant to the Commission's related currency swap or contract entered into in connection with such obligations or, in the absence of such swap or contract, at the rate determined by the Commission using a currency market conversion factor selected by the Commission. "Monthly Funding Date" means the last day of each calendar month or, if such day is not a Business Day, the next preceding Business Day. "Moody's" means Moody's Investors Service, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, the term "Moody's" shall be deemed to refer to any other nationally recognized statistical rating organization selected by the Commission. "MSRB" means the Municipal Securities Rulemaking Board, and its successors and assigns. Until otherwise designated by the MSRB, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB located at http://emma.msrb.org. "Net Revenue" means, for any Fiscal Year, Revenue less Operation and Maintenance Expenses for that Fiscal Year, as set forth in the audited financial statements of the • Commission for Fiscal Years for which audited financial statements are available or as projected • by the Commission for Fiscal Years for which audited financial statements are not yet available. Net Revenue shall not include any amount on deposit in the Senior Lien Bond Reserve Fund or any Subsidy Payments. "Nominee" means the nominee of the Securities Depository for the Book-Entry Bonds in whose name such Senior Lien Bonds are to be registered. The initial Nominee shall be Cede & Co., as the nominee ofDTC. "OCTA" means the Orange County Transportation Authority, a public agency duly formed and existing under the laws of the State of California, and any successor thereto. "OCT A Franchise Agreement" means the Amended and Restated Development Franchise Agreement, dated as of June 30, 1993, as amended and supplemented by Amendment 1, dated as of July 16, 1993, Amendment 2, dated December 30, 2002 and Amendment No.3 to Amended and Restated Development Franchise Agreement (State Route 91 Median Improvements), dated as of December 12, 2011, each by and between Caltrans and OCTA, as successor in interest to the California Private Transportation Company, L.P. ("CPTC") pursuant to the Estoppel Certificate and Assignment and Assumption Agreement, dated as of December 30, 2002, by and among CPTC, OCTA, and Caltrans, as it has been further amended and supplemented by the Cooperative Agreement for Riverside SR-91 Corridor Improvement Program, by and between the Commission and OCT A, as such agreement may be amended, modified and supplemented from time to time pursuant to its terms. OHSUSA:260935709.8 12 120 • • • • "One Month USD LIBOR Rate" means the British Banker's Association average of interbank offered rates in the London market for Dollar deposits for a one month period. "Operating Agreement" means the SR-91 Express Lanes Operating Agreement dated , 20_], by and among the Commission, OCTA and the Toll Operator, as amended, modified, supplemented in accordance with the terms of this Indenture and any applicable Credit Support Instrument, subject to the terms of Section 11.03(b) hereof, or any other operating agreement entered into by the Commission and one or more entities in accordance with the terms of such documents. "Operation and Maintenance Expenses" means all reasonable current expenses incurred and paid or payable by the Commission for the operation and maintenance of the Toll Road payable from Revenue, determined in accordance with generally accepted accounting principles, including, without limitation, payments with respect to financing leases and installment purchase agreements, all amounts paid under the Operating Agreement, the Police Services Agreement and similar agreements, costs for operation, maintenance and repair, consumables, payments under any lease or rental payments properly considered to be operating expenses, payments pursuant to agreements for the management of the Toll Road, taxes, premiums payable on any insurance, payments for oversight services, all administrative, engineering and policing costs, costs for any security, toll collection and enforcement expenses, fees and expenses of the Traffic Consultant, the Trustee, the TIFIA Lender, any rating agency, [credit, liquidity or remarketing fees relating to Senior Lien Bonds or Parity Obligations, and any other Secured Creditor (for the avoidance of doubt, such fees, administrative costs and expenses do not include any commitment fees, termination fees, fines or other penalties or any payments to be made by Swap Parties including Hedging Obligations and Hedging Termination Obligations), any insurance consultant, legal and accounting expenses, and any other reasonable and necessary expense paid for the operations and maintenance of the Toll Road, but excluding expenses paid from proceeds of Senior Lien Bonds or Parity Obligations, capital expenditures, expenditures for rehabilitation and operational improvement projects on the Toll Road, depreciation or obsolescence charges or reserves therefore, debt service for Senior Lien Bonds, Parity Obligations, Permitted Second Lien Obligations or TIFIA Obligations,] and any non-cash charges, such as depreciation, amortization of intangibles or other bookkeeping entries of a similar nature. "Operation and Maintenance Fund" means the Fund by that name created pursuant to Section 5.06. "Opinion of Bond Counsel" means a written opinion of Bond Counsel. "Ordinance" means Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance," adopted by the Commission on May 8, 2002, pursuant to the provisions of the Sales Tax Act. "Outstanding," when used with reference to Senior Lien Bonds and Parity Obligations means all Senior Lien Bonds and Parity Obligations that have been issued by the Commission, except Senior Lien Bonds and Parity Obligations: (i) canceled or delivered for OHSUSA:260935709.8 13 121 cancellation; (ii) deemed to be paid in accordance with Section 10.02 or any similar provisions in the constituent instruments defining the rights of the holders of Parity Obligations; (iii) in lieu of • which other Senior Lien Bonds or Parity Obligations have been authenticated under Sections 2.07 or 2.08 or any similar provisions in the constituent instruments defining the rights of the holders ofParity Obligations; and (iv) held by or for the account of the Commission. "Parity Obligations" means obligations of the Commission that are payable from Revenue on a parity with the payment of principal of and interest on Senior Lien Bonds, including payments to the holders of obligations of the Commission entered into pursuant to California Government Code section 5922 (or any similar statute), in each case to the extent the Commission has contracted to make those payments as Parity Obligations. "Participating Underwriter" means any of the original underwriters of any Series of Senior Lien Bonds required to comply with Rule 15c2-12. "Permitted Investments" means the following: (i) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any of the federal agencies and federally sponsored entities set forth in clause (iii) below to the extent unconditionally guaranteed by the United States of America; (ii) any certificates, receipts, securities or other obligations evidencing ownership of, or the right to receive, a specified portion of one or more interest payments or • principal payments, or any combination thereof, to be made on any bond, note, or other obligation described above in clause (i); (iii) obligations of the Federal National Mortgage Association, the Government National Mortgage Association, Federal Home Loan Banks, Farmers Home Administration and Federal Home Loan Mortgage Corporation; (iv) housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States of America; or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States of America; (v) obligations of any state, territory or commonwealth of the United States of America or any political subdivision thereof or any agency or department of the foregoing; provided that at the time of their purchase such obligations have a Threshold Rating; (vi) any bonds or other obligations of any state of the United States of America or any political subdivision thereof (a) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (b) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described above in clause (i) or (ii) which fund may be applied only to the payment OHSUSA:260935709.8 14 122 • • • • of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the interest payment dates and the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, (c) as to which the principal of and interest on the bonds and obligations of the character described above in clause (i) or (ii) which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay the principal of.and interest and redemption premium, if any, on the bonds or other obligations described in this clause (vi) on the interest payment dates and the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (a) of this clause (vi), as appropriate, and (d) which have a long-term Threshold Rating at the time of their purchase; (vii) bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by any corporation which are, at the time of purchase, have a short-term Threshold Rating, or, if the term of such indebtedness is longer than three (3) years, a long-term Threshold Rating; (viii) demand or time deposits or certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including the Trustee), provided that such certificates of deposit shall be purchased directly from such a bank, trust company or national banking association and shall be either (a) continuously and fully insured by the Federal Deposit Insurance Corporation, (b) continuously and fully secured by such securities and obligations as are described above in clauses (i) through (v), inclusive, which shall have a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit and shall be lodged with the Trustee, as custodian, by the bank, trust company or national banking association issuing such certificates of deposit, and the bank, trust company or national banking association issuing each such certificate of deposit required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such certificate of deposit will at all times be an amount equal to the principal amount of each such certificate of deposit and the Trustee shall be entitled to rely on each such undertaking, or (c) be issued by an institution the senior debt obligations of which are rated "A-" or higher by Standard & Poor's; (ix) taxable commercial paper, other than that issued by bank holding companies, or tax-exempt commercial paper assigned a short-term Threshold Rating at the time of purchase; (x) variable rate obligations required to be redeemed or purchased by the obligor or its agent or designee upon demand of the holder thereof secured as to such redemption or purchase requirement by a liquidity agreement with a corporation and as to the payment of interest and principal either upon maturity or redemption (other than upon demand by the holder thereof) thereof by an unconditional credit facility of a corporation, provided that the variable rate obligations themselves have a short-term Threshold Rating, if any, and a long-term Threshold Rating, if any, and that the corporations providing the liquidity agreement and credit facility have, at the date of acquisition of the variable rate obligation by the Trustee, an outstanding issue of unsecured, uninsured and unguaranteed debt obligations assigned a Threshold Rating; OHSUSA:260935709.8 15 123 (xi) any repurchase agreement with any bank or trust company organized • under the laws of any state of the United States or any national banking association (including the Trustee) having a minimum permanent capital of one hundred million dollars ($1 00,000,000) or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities and obligations described in clauses (i), (ii), (iii) or (iv) above, which shall have a market value (exclusive of accrued interest and valued at least monthly) at least equal to 103% of the principal amount of such investment and shall be lodged with the Trustee or other fiduciary, as custodian for the Trustee, by the bank, trust company, national banking association or bond dealer executing such repurchase agreement, and the entity executing each such repurchase agreement required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such repurchase agreement (as valued at least monthly) will be an amount equal to 103% of the principal amount of each such repurchase agreement and the Trustee shall be entitled to rely on each such undertaking; (xii) any cash sweep or similar account arrangement of or available to the Trustee, the investments of which are limited to investments described in clauses (i), (ii), (iii), (iv), (v) and (xi) of this definition of Permitted Investments and any money market fund, the · entire investments of which are limited to investments described in clauses (i), (ii), (iii), (iv), (v) and (xi) of this definition of Permitted Investments; provided that as used in this clause (xii) and clause (xiii) investments will be deemed to satisfy the requirements of clause (xi) if they meet the requirements set forth in clause (xi) ending with the words "clauses (i), (ii), (iii) or (iv) above" • and without regard to the remainder of such clause (xi); (xiii) any investment agreement with a financial institution or insurance company or whose obligations are guaranteed by a financial institution or insurance company which: (a) has at the date of execution thereof an outstanding issue of unsecured, uninsured and unguaranteed debt obligations or a claims paying ability assigned a Threshold Rating; or (b) is fully secured by obligations described in items (i), (ii), (iii) or (iv) of the definition of Permitted Investments which are (A) valued not less frequently than monthly and have a fair market value, exclusive of accrued interest, at all times at least equal to the principal amount of the investment, (B) held by the Trustee or other custodian acceptable to the Trustee, (C) subject to a perfected first lien in the Trustee, and (D) free and clear from all third party liens; (xiv) shares of beneficial interest in diversified management companies investing exclusively in securities and obligations described in clauses (i) through (xiii) of this definition of Permitted Investments and which companies have been assigned a long-term Threshold Rating or have an investment advisor registered with the Securities and Exchange Commission with not less than five (5) years experience investing in such securities and obligations and with assets under management in excess of $500,000,000; (xv) shares in a common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended; OHSUSA:260935709.8 16 124 • • • • (xvi) bankers' acceptances issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System, the short-term paper of which has a short- term Threshold Rating, which purchases may not exceed two hundred seventy (270) days maturity; (xvii) the pooled investment fund of the County of Riverside, California, which is administered in accordance with the investment policy of said County as established by the Treasurer/Tax Collector thereof, as permitted by Section 53601 of the Government Code of the State, copies of which policy are available upon written request to said Treasurer/Tax Collector; (xviii) the Local Agency Investment Fund or similar pooled fund operated by or on behalf of the State of California and which is authorized to accept investments of moneys held in any of the funds or accounts established pursuant to this Indenture; (xix) obligations of the Resolution Trust Corporation and interest obligations of the Resolution Funding Corporation; (xx) financial futures or financial option contracts with an entity the debt securities of which are assigned a Threshold Rating; and (xxi) any other forms of investments, including repurchase agreements, approved by the Board and consented to by each Credit Provider then providing a Credit Support Instrument, subject to the terms of Section 11.03(b) hereof, for a Series of Senior Lien Bonds . "Permitted Second Lien Obligations" means any indebtedness that is subordinated in right of payment and lien priority to the Senior Lien Bonds and Parity Obligations and, prior to a Bankruptcy Related Event, senior in right of payment and lien priority to the TIFIA Obligations, and any related Hedging Obligations. "Permitted Second Lien Obligations Account" means the account by that name created within the Project Fund pursuant to Section 5.02. "Permitted Second Lien Obligations Fund" means the Fund by that name created pursuant to Section 5.02. "Permitted Second Lien Obligations Interest Account" means the account by that name created within the Permitted Second Lien Obligations Fund pursuant to Section 5.02. "Permitted Second Lien Obligations Principal Account" means the account by that name created within the Permitted Second Lien Obligations Fund pursuant to Section 5.02. public body. "Person" means any natural person, firm, partnership, association, corporation, or "Police Services Agreement" means the Police Services Agreement, dated as of '-----' 20 _j, by and between the State of California, acting by and through the California Highway Patrol, and the Commission, as amended, modified and supplemented in accordance with its terms. OHSUSA:260935709.8 17 125 "Principal Office" means, with respect to the Trustee, the corporate trust office of the Trustee at 633 West Fifth Street, 24th Floor, Los Angeles, CA 90071, Attention: Corporate Trust Services, and solely for purposes of the presentation of Senior Lien Bonds for transfer, exchange or payment, such other or additional offices as may be designated by the Trustee from time to time. "Project Fund" means a fund by that name established pursuant to a Supplemental Indenture. "Purchase Price" means, with respect to Senior Lien Bonds, the amount set forth in the Indenture as the amount to be paid when such Senior Lien Bonds are tendered for purchase or deemed tendered for purchase in accordance with the provisions of the Indenture. • "Qualified Swap Agreement" means a contract or agreement, intended to place Senior Lien Bonds or such investments as the Commission shall specify on the interest rate, currency, cash flow or other basis desired by the Commission, payments (other than payments of fees and expenses and termination payments) with respect to which the Commission has specified shall be payable from Revenue on a parity with the payment of Senior Lien Bonds, including, without limitation, any interest rate swap agreement, currency swap agreement, forward payment conversion agreement or futures contract, any contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, any contract to exchange cash flows or a series of payments, or any contract, including, without limitation, an interest rate floor or cap, or an option, put or call, to hedge payment, currency, rate, spread or similar exposure, between the Commission and a Swap Party. • "Rating Agency" means, as and to the extent applicable to a Series of Senior Lien Bonds, each of Fitch, Moody's and Standard & Poor's then maintaining a rating on such Series of Senior Lien Bonds at the request of the Commission. "Rating Category" means: (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier; and (ii) with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier. "Rating Confirmation" means written evidence from each Rating Agency then rating any Series of Senior Lien Bonds at the request of the Commission to the effect that, following the event that requires the Rating Confirmation, the then current rating for such Series of Senior Lien Bonds will not be lowered to a lower Rating Category or suspended or withdrawn solely as a result of the occurrence of such event. "Rebate Fund" means the Fund by that name created pursuant to Section 5.02. "Redemption Fund" means the Fund by that name created pursuant to Section 5.18. OHSUSA:260935709.8 18 126 • • • • "Repair and Rehabilitation Fund" means the Fund by that name created pursuant to Section 5.02. "Repair and Rehabilitation Fund Permitted Expenditures" means expenditures reasonably necessary to maintain the Riverside SR-9 Corridor Improvement Project in a state of good repair and in a condition that meets the performance and maintenance standards established by Caltrans pursuant to the Toll Facility Agreement. "Repair and Rehabilitation Fund Required Deposit" means the amount budgeted by the Commission to be deposited in the Repair and Rehabilitation Fund, for the respective Fiscal Year, to adequately provide, as reasonably determined by the Commission based on projections prepared by an engineer or engineering firm for Repair and Rehabilitation Permitted Expenditures in a timely manner, including reasonable reserves therefor. "Representation Letter" means the letter or letters of representation from the Commission to, or other instrument or agreement with, a Securities Depository for Book-Entry Bonds, in which the Commission, among other things, makes certain representations to the Securities Depository with respect to the Book-Entry Bonds, the payment thereof and delivery of notices with respect thereto. "Reserve Facility" means a surety bond or insurance policy issued to the Trustee by a company licensed to issue a surety bond or insurance policy guaranteeing the timely payment of the principal of and interest on the Senior Lien Bonds supported by the Reserve Facility. "Reserve Facility Costs" means amounts owed with respect to repayment of draws on a Reserve Facility, including interest thereon at the rate specified in the agreement pertaining to such Reserve Facility and expenses owed to the Reserve Facility Provider in connection with such Reserve Facility. "Reserve Facility Provider" means any provider of a Reserve Facility, any successor thereto or any replacement therefor. "Restricted Payment Conditions" has the meaning set forth in Section 5.03(b). "Revenue" means: (i) Toll Revenues; (ii) all amounts on deposit in the funds and accounts established and held by the Trustee hereunder (excluding the Rebate Fund, any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument, and any Subsidy Payments deposited pursuant to Section 5.22); (iii) all interest or other income from investment of money in the funds and accounts established hereunder (excluding the Rebate Fund and any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument); and (iv) all Swap Revenues. "Riverside SR-91 Corridor Improvement Project" means the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance, or any combination of these, with respect to tolled and nontolled facilities, structures, onramps, connector roads, bridges, and roadways that are on, OHSUSA:260935709.8 19 127 necessary for, or related to the construction or operation of that portion of the SR-91 between the Orange and Riverside County line to the west and State Highway Route 15 to the east. "ROW Revenues" means revenues generated by the Commission from the sale of excess right-of-way property. "Rule 15c2-12" means Securities and Exchange Commission Rule 15c2-12, adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "S&P" means Standard & Poor's Ratings Services, a division of Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill Companies, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, the term "S&P" shall be deemed to refer to any other nationally recognized statistical rating organization selected by the Commission. "Sales Tax Act" means the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.). "Sales Tax Eligible Project Costs" means Project Costs that are permitted to be paid from Sales Tax Revenues or the proceeds of the 2013 Sales Tax Revenue Bonds in accordance with the provisions of the Sales Tax Act, the Ordinance, and the Sales Tax Revenue Bond Indenture, if applicable. "Sales Tax Revenue Bond Indenture" means that certain Indenture, dated as of June 1, 2008, as amended and supplemented, by and between the Commission and U.S. Bank National Association, as trustee. "Sales Tax Revenues" means the amounts available for distribution to the Commission on and after July 1, 2009 on account of the retail transactions and use tax imposed in the County of Riverside pursuant to the Sales Tax Act and the Ordinance after deducting amounts payable by the Commission to the State Board of Equalization for costs and expenses for its services in connection with the retail transactions and use taxes collected pursuant to the Sales Tax Act. "Secured Creditors" means, collectively, (i) the Trustee on behalf of the Bondowners, (ii) the TIFIA Lender, (iii) any Swap Party, (iv) any holder or creditor of any Permitted Second Lien Obligations, and (v) any holder or creditor of any Parity Obligations. "Securities Depository" means DTC or any other trust company or other entity that provides a book-entry system for the registration of ownership interests in securities and which is acting as security depository for Book-Entry Bonds. "Senior Lien Bond Fund" means the Fund by that name created pursuant to Section 5.02. •• • "Senior Lien Bond Interest Payment Account" means the account by that name • created within the Senior Lien Bond Fund pursuant to Section 5.02. OHSUSA:260935709.8 20 128 • • • "Senior Lien Bond Principal Payment Account" means the account by that name created within the Senior Lien Bond Fund pursuant to Section 5.02. "Senior Lien Bond Reserve Fund" means the Fund by that name created pursuant to Section 5.02. "Senior Lien Bond Reserve Requirement" for any Senior Lien Bonds means, as of any date of calculation, the amount specified by a Supplemental Indenture as the amount required to be held in the Reserve Fund for the payment of principal of and interest on those Senior Lien Bonds. "Senior Lien Bonds" means the bonds or commercial paper identified as the Riverside County Transportation Commission Toll Revenue Bonds authorized by, and at any time Outstanding pursuant to, this Indenture [and shall, for purposes of the pledge of Revenue include the TIFIA Loan]. "Senior Lien Bonds Account" means the account by that name created within the Project Fund pursuant to Section 5.02. "Series" means all Senior Lien Bonds identified m the Indenture or any Supplemental Indenture as a separate Series. "Short-Term Put Bond" means a Senior Lien Bond or Parity Obligation with a stated maturity of ten years or less, the principal of which the Commission determines on or before the date of issuance that it intends to pay from remarketing proceeds or proceeds of refunding obligations. "SIFMA Index" means Securities Industry and Financial Markets Association Municipal Swap Index as of the most recent date such index was published by the Securities Industry and Financial Markets Association or any successor thereto, or in the event such index is no longer published by the Securities Industry and Financial Markets Association or any successor thereto, such comparable replacement index as shall be published by the Securities Industry and Financial Markets Association or any successor thereto. In the event that such comparable replacement index is no longer published by the Securities Industry and Financial Markets Association or any successor thereto, an alternative index shall be selected by the Commission. "Sinking Fund Installment" means, with respect to any Series of Senior Lien Bonds, each amount so designated for the Term Bonds of such Series in the Supplemental Indenture providing for the issuance of such Series of Senior Lien Bonds requiring payments by the Commission to be applied to the retirement of such Series of Senior Lien Bonds on and prior to the stated maturity date thereof. "Special Project" shall mean any project which is so designated by the Commission in a resolution of the Board a copy of which is delivered to the Trustee. "SR-91" means State Highway Route 91. OHSUSA:260935709.8 21 129 "State" means the State of California. "Subsidy Payments" means, (a) with respect to a Series of Senior Lien Bonds or Parity Obligations issued under Section 54AA of the Code, the amounts relating to such Series of Senior Lien Bonds or Parity Obligations which are payable by the Federal government under Section 6431 of the Code, which the Commission has elected to receive under Section 54AA(g)(l) of the Code, and (b) with respect to a Series of Senior Lien Bonds or Parity Obligations issued under any other provision of the Code that creates a substantially similar direct-pay subsidy program, the amounts relating to such Series of Senior Lien Bonds or Parity Obligations which are payable by the Federal government under the applicable provision of the Code which the Commission has elected to receive under the applicable provisions of the Code. "Substantial Completion Date" means the date on which the Toll Road portion of the Riverside SR-91 Corridor Improvement Project opens for public use and toll operations. "Supplemental Indenture" means any indenture executed and delivered by the Commission and the Trustee that is stated to be a supplemental indenture hereto. "Surplus Fund" means the Fund by that name created pursuant to Section 5.02. "Swap" means any interest rate swap agreement, currency swap agreement, forward payment conversion agreement or futures contract, any contract providing for· payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, • any contract to exchange cash flows or a series of payments, or any contract, including, without • limitation, an interest rate floor or cap, or an option, put or call, to hedge payment, currency, rate, spread or similar exposure, between the Commission and a Swap Party, which is not a Qualified Swap Agreement. "Swap Party" means each entity that is a party to either a Qualified Swap Agreement or a Swap entered into with the Commission. "Swap Revenues" means any amount paid by a Swap Party to the Commission pursuant to any Qualified Swap Agreement or Swap, after any netting of payments required by such Qualified Swap Agreement or Swap, as applicable, and any payments paid to the Commission by a Swap Party as consideration for termination or amendment of a Qualified Swap Agreement or Swap, as applicable. "Tax Certificate" means the Tax Certificate delivered by the Commission at the time of the issuance of a Series of Senior Lien Bonds, as the same may be amended and supplemented in accordance with its terms. "Term Bonds" means Senior Lien Bonds of any Series that are payable on or before their specified maturity dates from Sinking Fund Installments established for that purpose in the Supplemental Indenture providing for the issuance of such Series of Senior Lien Bonds, which Sinking Fund Installments are calculated to retire such Senior Lien Bonds on or before their specified maturity dates. OHSUSA:260935709.8 22 130 • • • • "Threshold Rating" means a long term rating of either A3 or A-(or their equivalents) or higher or a short term rating of either P-2 or A-2 (or their equivalents) or higher from Moody's or Standard & Poor's, respectively. "TIFIA Account" means the account by that name created within the Project Fund pursuant to Section 5.02. "TIFIA Credit Assistance" or "TIFIA Loan" means the loan made to the Commission by TIFIA Lender pursuant to the TIFIA Loan Agreement. "TIFIA Financing Documents" means the TIFIA Loan Agreement, the Intercreditor Agreement, the Security Documents, and each other document or instrument required to be executed and delivered by the aforementioned agreements. "TIFIA Lender" means the United States Department of Transportation, acting by and through the Federal Highway Administrator, for the purpose of making one or more TIFIA Loans to the Commission. "TIFIA Loan Agreement" means that certain TIFIA Loan Agreement, dated as of __ , 20_ (as amended, supplemented and/or otherwise modified and in effect from time to time), by and between the Commission and the TIFIA Lender. "TIFIA Loan Documentation" means the TIFIA Loan Agreement and the Intercreditor Agreement, together with any related agreements and documents delivered therewith. "TIFIA Mandatory Debt Service" means the portion of the TIFIA Credit Assistance which is unconditionally required to be paid in accordance with, and pursuant to, the terms of the TIFIA Loan Agreement, as of the date of calculation of TIFIA Mandatory Debt Service (assuming, for purposes of projected debt service, that the full amount of the TIFIA Loan will be disbursed). "TIFIA Obligations" means any obligations of the Commission with respect to the TIFIA Credit Assistance under the TIFIA Loan Agreement. "TIFIA Payment Date" has the meaning specified for the term "Payment Date" (or any similar term) in the TIFIA Loan Agreement. Section 5.02. "TIFIA Payment Fund" means the account by that name created pursuant to Section 5.02. "TIFIA Reserve Fund" means the account by that name created pursuant to "TIFIA Reserve Fund Required Balance" means $20,000,000. "TIFIA Scheduled Debt Service" means, with respect to any TIFIA Payment Date occurring on or after the Debt Service Payment Commencement Date (as defined in the OHSUSA:260935709.8 23 131 TIFIA Loan Agreement), the total debt service to be made on such TIFIA Payment Date with • respect to the TIFIA Credit Assistance. "Toll Agreements" means the OCT A Franchise Agreement, the Operating Agreement, the Design-Build Agreement, the Cooperative Agreement and the Toll Facility Agreement. "Toll Facility Agreement" means that certain Toll Facility Agreement, dated as of May 14, 2012, by and between the Commission and Caltrans relating to the Commission's leasehold rights to Caltrans SR-91 right-of-way in Riverside County and Caltrans' role in oversight of the Project. "Toll_ Operator" means Cofiroute, or any successor, as operator of the Toll Road responsible for the collection of tolls and fees and the establishment and maintenance of customer accounts and records, pursuant to the Operating Agreement. "Toll Revenue Fund" means the Fund by that name created pursuant to Section 5.01. "Toll Revenues" means (i) toll revenues, user fees, fines, rents or other similar charges payable for use of the Toll Road, as well as fines and penalties and interest thereon collected as a result of a failure to pay any such amounts, (ii) all proceeds of insurance payable to or received by the Commission with respect to the Toll Road (whether by way of claims, return of premiums, ex gratia settlements or otherwise), including proceeds from business interruption insurance and loss of advance profits insurance, except for proceeds of fire and other casualty insurance, (iii) the proceeds of any condemnation awards with respect to the Toll Road, and (iv) any other incidental or related fees or charges; but excluding therefrom ROW Revenues. "Toll Road" means any of the following: (a) general purpose toll lanes, (b) lanes or facilities where the tolls may be levied and may vary according to levels of congestion anticipated or experienced or according to the occupancy of the vehicle, (c) facilities using any combination of (a) and (b), and (d) facilities using any other strategy the Commission may determine appropriate on a facility-by-facility basis, upon which the Commission has all right, power and authority pursuant to law to impose tolls, as such toll lanes and facilities may from time to time be expanded, improved, upgraded, enlarged, or enhanced, but only to the extent that the Commission irrevocably designates in writing that such toll lanes and facilities, and any expansion, improvement, upgrade, enlargement or enhancement constitutes a "Toll Road" generating Toll Revenues" hereunder. "Toll Road" shall not include any Special Project. Initially, "Toll Road" means any such toll lanes and facilities on the portion of SR-91 between the Orange and Riverside County line and State Highway Route 15 that constitute a part of the Riverside SR-91 Corridor Improvement Project. • "Total Debt Service Coverage Ratio" means, as of each applicable Calculation Date, the ratio of (a) annual Net Revenue to (b) annual Debt Service on Senior Lien Bonds and Parity Obligations plus annual Debt Service with respect to Permitted Second Lien Obligations plus annual TIFIA Mandatory Debt Service for each Calculation Date from and including such Calculation Date to the Final Maturity Date; provided that for purposes of such calculation • OHSUSA:260935709.8 24 132 • • • during the period prior to the Debt Service Payment Commencement Date (as defined in the TIFIA Loan Agreement), the TIFIA Mandatory Debt Service shall be deemed to be zero. "Traffic Consultant" means any traffic and revenue consultant or firm of nationally-recognized traffic and revenue consultants experienced in performing the duties for which a Traffic Consultant is required to be employed pursuant to the provisions of this Indenture selected by the Commission. "2013 Sales Tax Revenue Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2013 Series A. "Written Request of the Commission" means an instrument in writing signed by an Authorized Representative. ARTICLE II THE BONDS Section 2.01 Authorization and Purposes. Senior Lien Bonds may be issued hereunder, in book-entry form or otherwise, from time to time as the issuance thereof is approved by the Commission. The maximum principal amount of Senior Lien Bonds that may be issued hereunder is not limited; subject, however, to any limitations contained in the Act and to the right of the Commission, which is hereby reserved, to limit the aggregate principal amount of Senior Lien Bonds that may be issued or Outstanding hereunder. The Senior Lien Bonds are designated generally as "Riverside County Transportation Commission Toll Revenue Bonds," each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Senior Lien Bonds. The Senior Lien Bonds may be issued in such Series as from time to time shall be established and authorized by the Commission, subject to the covenants, provisions and conditions herein. Each separate Series of Senior Lien Bonds shall be authorized by the Commission in a Supplemental Indenture. No Senior Lien Bonds may be issued under the provisions of this Indenture except in accordance with this Article and Article III. Senior Lien Bonds may be issued for the purpose of financing the Riverside SR- 91 Corridor Improvement Project under the afore-mentioned design-build procurement process or for any other purpose authorized by the Act, as it may be amended from time to time hereafter. Section 2.02 General Terms of Senior Lien Bonds. Each Senior Lien Bond shall bear interest and be payable and be secured and have such other terms as shall be specified in its Supplemental Indenture, or if not specified therein, as specified by an Authorized Representative pursuant to Section 2.06. The principal and Purchase Price of, premium, if any, and interest on the Senior Lien Bonds shall be payable in lawful currency of the United States of America, except as otherwise specified in a Supplemental Indenture. During any period in which any Senior Lien Bonds are Book-Entry Bonds, payment of debt service on such Book-Entry Bonds shall be made to the Securities Depository, or its Nominee, and in accordance with arrangements among the OHSUSA:260935709.8 25 133 Commission, the Trustee and the Securities Depository. During any period in which any Senior • Lien Bonds are not Book-Entry Bonds, unless otherwise specified in a Supplemental Indenture, the principal and Purchase Price of and premium, if any, on all such Senior Lien Bonds shall be payable by wire or check at the Principal Office of the Trustee upon the presentation and surrender of such Senior Lien Bonds as the same become due and payable, and the interest on such Senior Lien Bonds shall be paid by wire or check drawn upon the Trustee and mailed on the applicable interest payment date to the persons in whose names the Senior Lien Bonds are registered on the registration books maintained by the Trustee at the close of business on the record date for such interest payment. Section 2.03 Execution. The Senior Lien Bonds shall be executed in the name and on behalf of the Commission by the facsimile or manual signature of the Chairperson of the Board or any Vice Chairperson of the Board and shall be countersigned by the facsimile or manual signature of the Chief Financial Officer of the Commission, and shall have the official seal of the Commission attached or affixed thereon in manual or facsimile form. Unless otherwise provided in any Supplemental Indenture, the Senior Lien Bonds shall then be delivered to the Trustee for authentication by the Trustee. In case any of the officers who shall have signed or attested any of the Senior Lien Bonds shall cease to be such officer or officers of the Commission before the Senier Lien Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the Commission, such Senior Lien Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Commission as though those who signed and attested the same had continued to be such officers of the Commission, and also any Senior Lien Bond may be signed • and attested on behalf of the Commission by such persons as at the actual date of execution of such Senior Lien Bond shall be the proper officers of the Commission although at the nominal date of such Senior Lien Bond any such person shall not have been such officer of the Commission. Section 2.04 Certificate of Authentication. No Senior Lien Bonds shall be secured hereby or entitled to the benefit hereof or shall be or become valid or obligatory for any purpose unless there shall be endorsed thereon a certificate of authentication, substantially in the form set forth in the form of Senior Lien Bond referred to in Section 2.05 hereof, executed by the Trustee; and such certificate on any Senior Lien Bond issued by the Commission shall be conclusive evidence that such Senior Lien Bond has been duly authenticated and delivered hereunder. Section 2.05 Forms of Senior Lien Bonds. The Senior Lien Bonds, the Trustee's certificate of authentication and the form of assignment shall be in substantially the forms specified in a Supplemental Indenture or if not specified therein, as specified by an Authorized Representative pursuant to Section 2.06, and may have such letters, numbers or other marks of identification (including, but not limited to, the Series designation provided for in Section 2.01) and such legends and endorsements placed thereon as may be required to comply with any applicable laws or rules or regulations, or as may, consistent herewith, be determined by an Authorized Representative. The Senior Lien Bonds shall be in either typewritten or printed form, as an Authorized Representative shall direct, provided that any expenses incurred in connection therewith shall be paid by the Commission. • OHSUSA:260935709.8 26 134 • • • Section 2.06 Issuance, Sale and Delivery of Senior Lien Bonds; Application of Proceeds. The Senior Lien Bonds of each Series shall be delivered by the Trustee in accordance with a Written Request of the Commission, which may be Electronic, in the manner specified herein. Said Written Request of the Commission shall specify the following terms for the Senior Lien Bonds then being issued to the extent such terms are not set forth in the Supplemental Indenture creating such Series of Senior Lien Bonds and are applicable to such Senior Lien Bonds: Series designation; Authorized Denominations; bond forms; book entry provisions, if any; maturity date or dates or maturity determination method, which may vary for Senior Lien Bonds within such Series; principal amount; issue date; interest rate or interest rate determination method, which may vary for Senior Lien Bonds within such Series; record date for interest payments; sinking fund provisions, if any; Senior Lien Bond Reserve Requirement, if any; redemption provisions, if any; tender provisions, if any; additional security, if any; and any other terms and conditions that are not inconsistent with this Indenture. Upon the delivery of each Series of Senior Lien Bonds, the proceeds shall immediately be applied and deposited as set forth in the applicable Supplemental Indenture. Section 2.07 Mutilated, Lost, Stolen or Destroyed Senior Lien Bonds. If any Senior Lien Bond is mutilated, lost, stolen or destroyed, the Commission shall execute and the Trustee shall authenticate and deliver a new Senior Lien Bond of the same Series, maturity date, principal amount and tenor in lieu of and in substitution for the Senior Lien Bond mutilated, lost, stolen or destroyed; provided that there shall be first furnished to the Trustee evidence satisfactory to the Trustee of the ownership of such Senior Lien Bond and of such loss, theft or destruction (or, in the case of a mutilated Senior Lien Bond, such mutilated Senior Lien Bond shall first be surrendered to the Trustee), together with indemnity satisfactory to the Trustee and compliance with such other reasonable regulations as the Commission and Trustee may prescribe. Subject to the proviso set forth in the preceding sentence, if any such Senior Lien Bond shall have matured or a redemption date pertaining thereto shall have passed, instead of issuing a new Senior Lien Bond, the Commission may pay the same without surrender thereof. The Commission and the Trustee may charge the Holder of such Senior Lien Bond with their reasonable ' in this connection. Section 2.08 Exchangeability and Transfer of Senior Lien Bonds; Persons Treated as Holders. The Commission hereby directs the Trustee, which is hereby constituted and appointed the bond registrar for the Senior Lien Bonds, to keep books for the registration of the Senior Lien Bonds and for the registration of transfer of the Senior Lien Bonds as provided herein. Any registered owner of a Senior Lien Bond, in person or by its duly authorized attorney, may transfer title to its Senior Lien Bond on the books of registration kept by the Trustee, upon surrender thereof at the Principal Office of the Trustee, together with a written instrument of transfer (in substantially the form of assignment attached to the Senior Lien Bond or as provided in its Supplemental Indenture) executed by the registered owner or its duly authorized attorney, and upon surrender for registration of transfer of any Senior Lien Bond, the Commission shall execute, and the Trustee shall authenticate and deliver in the name of the transferee or transferees, a new Senior Lien Bond or Senior Lien Bonds of the same Series, maturity date, aggregate principal amount and tenor as the Senior Lien Bond surrendered . OHSUSA:260935709.8 27 135 Senior Lien Bonds may be exchanged upon surrender thereof at the Principal Office of the Trustee for Senior Lien Bonds of the same Series, maturity date, aggregate principal amount and tenor as the Senior Lien Bonds being exchanged. The Commission shall execute and the Trustee shall authenticate and deliver Senior Lien Bonds that the registered owner making the exchange is entitled to receive, bearing numbers not contemporaneously then outstanding. Such registrations of transfers or exchanges of Senior Lien Bonds shall be without charge to the registered owner of such Senior Lien Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the registered owner of the Senior Lien Bond requesting such registration of transfer or exchange as a condition precedent to the exercise of such privilege. Any service charge made by the Trustee for any such registration, transfer or exchange shall be paid by the Commission. The Trustee shall not register any transfer of any Senior Lien Bond after notice calling such Senior Lien Bond (or portion thereof) for redemption or partial redemption or notice of mandatory tender with respect thereto has been given and prior to such redemption or mandatory tender, as the case may be, except, in the case of any Senior Lien Bond to be redeemed in part, the portion thereof not to be redeemed. • The person in whose name any Senior Lien Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of either principal, premium, if any, or interest shall be made only to or upon the order of the registered owner thereof or his duly authorized attorney; but such registration may be • changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Senior Lien Bond to the extent of the sum or sums so paid. All Senior Lien Bonds issued upon any transfer or exchange of Senior Lien Bonds shall be legal, valid and binding obligations of the Commission, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Senior Lien Bonds surrendered upon such transfer or exchange. Section 2.09 Cancellation. All Senior Lien Bonds that have been surrendered to the Trustee pursuant to Section 2.07 or 2.08 of this Indenture and all Senior Lien Bonds that have been paid or redeemed, either at or prior to maturity, except as otherwise provided in a Supplemental Indenture, shall be cancelled and destroyed by the Trustee and a certificate of destruction shall be delivered to the Commission. Section 2.10 Senior Lien Bonds Ratably Secured. All Senior Lien Bonds issued hereunder that by their terms are stated to be equally and ratably secured by this Indenture without preference, priority or distinction on account of the Series or the actual time or times of the authentication, delivery or maturity of such Senior Lien Bonds shall be so equally and ratably secured so that, subject to any differences specified in this Indenture, all such Senior Lien Bonds at any time Outstanding hereunder shall have the same right, lien and preference under and by virtue of this Indenture and shall all be equally and ratably secured hereby with like effect as if they were of the same Series and they had all been executed, authenticated and delivered OHSUSA:260935709.8 28 136 • • • • simultaneously on the date hereof, whether the same, or any of them, shall actually be disposed of at such date, or whether they, or any of them, shall be disposed of at some future date. Section 2.11 Book-Entry Only System. Unless an Authorized Representative shall otherwise direct or unless otherwise specified in a Supplemental Indenture, all Senior Lien Bonds issued hereunder shall be issued as Book-Entry Bonds in fully registered form. Book- Entry Bonds shall be registered in the name of the Securities Depository or its Nominee as directed by such Securities Depository. DTC shall act as the initial Securities Depository and has designated Cede & Co. as its Nominee. Beneficial Owners of Senior Lien Bonds will not receive physical delivery of bond certificates except as provided hereinafter. For so long as DTC shall continue to serve as Securities Depository for the Senior Lien Bonds as provided herein, all transfers of beneficial ownership interests will be made by book-entry only, and no person purchasing, selling or otherwise transferring beneficial ownership of Senior Lien Bonds is to receive, hold or deliver any Senior Lien Bond certificate. With respect to Senior Lien Bonds registered in the name of Cede & Co., as Nominee of DTC, the Commission and the Trustee shall have no responsibility or obligation to any participant in DTC (each, a "DTC Participant") or to any person on whose behalf a DTC Participant holds an interest in the Senior Lien Bonds. Without limiting the immediately preceding sentence, the Commission and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Senior Lien Bonds, (ii) the delivery to any DTC Participant or any other person, other than a registered owner of the Senior Lien Bonds, as shown on the registration books, of any notice with respect to the Senior Lien Bonds, including any notice of redemption or mandatory tender, or (iii) the payment to any DTC Participant or any other person, other than a registered owner of the Senior Lien Bonds, as shown in the registration books, of any amount with respect to principal or Purchase Price of, or premium, if any, or interest on, the Senior Lien Bonds. Replacement Senior Lien Bonds may be issued directly to Beneficial Owners of Senior Lien Bonds other than DTC, or its Nominee, but only in the event that: (i) DTC determines not to continue to act as Securities Depository for the Senior Lien Bonds (which determination shall become effective no less than 90 days after written notice to such effect to the Commission and the Trustee); or (ii) an Authorized Representative has advised DTC of its determination (which determination is conclusive as to DTC and Beneficial Owners of the Senior Lien Bonds) that DTC is incapable of discharging its duties as Securities Depository for the Senior Lien Bonds; or (iii) the Commission has determined (which determination is conclusive as to DTC and the Beneficial Owners of the Senior Lien Bonds) that the interests of the Beneficial Owners of the Senior Lien Bonds might be adversely affected if such book-entry only system of registration and transfer is continued. Upon occurrence of any of the foregoing events, the Commission shall use its best efforts to attempt to locate another qualified Securities Depository. If the Commission fails to locate another qualified Securities Depository to replace DTC, the Commission shall cause to be authenticated and delivered replacement Senior Lien Bonds, in certificate form, to the Beneficial Owners of the Senior Lien Bonds. In the event that the Commission makes the determination noted in (ii) or (iii) above (provided that the Commission undertakes no obligation to make any investigation to determine the occurrence of any events that would permit the Commission to make any such determination), and has made OHSUSA:260935709.8 29 137 provisions to notify the Beneficial Owners of Senior Lien Bonds of such determination by • mailing an appropriate notice to DTC and its Nominee, the Commission shall cause to be issued replacement Senior Lien Bonds in certificate form to Beneficial Owners of the Senior Lien Bonds as shown on the records of DTC provided to the Commission. Whenever, during the term of the Senior Lien Bonds, the Beneficial Ownership thereof is determined by book-entry at DTC, (i) the requirements in this Indenture of holding, delivering or transferring Senior Lien Bonds shall be deemed modified to require the appropriate person or entity to meet the requirements of DTC as to registering or transferring the book entry to produce the same effect and (ii) delivery of the Senior Lien Bonds and notices to Bondholders will be in accordance with arrangements among the Commission, the Trustee and DTC notwithstanding any provision of this Indenture to the contrary. The Trustee and the Commission, acting by and through an Authorized Representative, are authorized to enter into a letter of representations with DTC to implement the book-entry only system of Senior Lien Bond registration described above and all payments of principal, Purchase Price, interest and premium, if any, shall be made in accordance with the letter of representations with DTC. If at any time, DTC ceases to hold the Senior Lien Bonds in book-entry form, all references herein to DTC shall be of no further force or effect. ARTICLE III ADDITIONAL BONDS, PARITY OBLIGATIONS, AND SUBORDINATED OBLIGATIONS Section 3.01 Restrictions on Issuance of Additional Senior Lien Bonds and Parity Obligations. Subsequent to the initial issuance of Senior Lien Bonds pursuant to this Indenture, additional Senior Lien Bonds or Parity Obligations may be issued if the requirements of(a) or (b) below are met. (a) the Senior Lien Bonds or Parity Obligations are issued for refunding purposes to provide funds for the payment of any or all of the following: (1) · The principal or redemption price of the Outstanding Senior Lien Bonds or Parity Obligations to be refunded; (2) All expenses incident to the calling, retiring or paying of such Outstanding Senior Lien Bonds or Parity Obligations, the Costs of Issuance of such refunding Senior Lien Bonds or Parity Obligations, and any termination payments or other payments to the holders of obligations of the Commission entered into pursuant to California Government Code Section 5922 (or any similar statute) related to such Outstanding Senior Lien Bonds or Parity Obligations; • (3) Interest on all Outstanding Senior Lien Bonds or Parity Obligations to be refunded to the date such Senior Lien Bonds or Parity Obligations will • be called for redemption or paid at maturity; OHSUSA:260935709.8 30 138 • • • (4) Interest on the refunding Senior Lien Bonds or Parity Obligations from the date thereof to the date of payment or redemption of the Senior Lien Bonds or Parity Obligations or to be refunded; provided that the Commission delivers a Certificate of the Commission to the effect that the Commission expects Debt Service in each Fiscal Year during which the refunded Parity Obligations would have been outstanding following such refunding to be less than or equal to Debt Service in the respective Fiscal Years prior to such refunding (including in such calculations expected credit and liquidity and hedging costs associated with the debt); and provided further that if the maturity date of such Additional Senior Lien Bonds or Parity Obligations to be issued extend to a date later than the final maturity date of the Parity Obligations being refunded that the Debt Service payable in each Fiscal Year after such refunded maturity date is projected to be not less than 1.30:1. (b) the Commission delivers a Certificate of the Commission to the effect that, as of the date of issuance of the additional Senior Lien Bonds or Parity Obligations, either: (1) the ratio of (A) Net Revenue for the most recent Fiscal Year for which audited financial statements are available to (B) Maximum Annual Debt Service, calculated as of the date of sale of, and including, such Senior Lien Bonds or Parity Obligations, will not be less than 1.30:1; or (2) (i) the ratio of (A) projected Net Revenue for each of thirty consecutive Fiscal Years (beginning with the 2017-18 Fiscal Year or if later the current Fiscal Year or the Fiscal Year after the current Fiscal Year, and not to exceed the final maturity date of all Parity Obligations or Permitted Second Lien Obligations to be outstanding after such issuance) to (B) Debt Service for each such Fiscal Year, calculated as of the date of sale of, and including, such Senior Lien Bonds or Parity Obligations, will not be less than 1.30:1. In calculating projected Net Revenue, the Commission shall take into account amounts projected to be received from any adopted toll increase or increases and any additional toll lanes and facilities to be designated as included within the definition of Toll Road; and, unless the TIFIA Loan has been repaid in full pursuant to the terms of the TIFIA Loan Agreement, the Commission has received the written consent of TIFIA to such issuance. Section 3.02 Proceedings for Issuance of Additional Senior Lien Bonds and Parity Obligations. Whenever the Commission determines to issue Senior Lien Bonds or Parity Obligations subsequent to the initial issuance of Senior Lien Bonds pursuant to this Indenture and all Supplemental Indentures executed as of the same date, the Commission shall, in addition to fulfilling the requirements of Article II, file with or provide to the Trustee: (a) a certificate of the Commission stating that no Event of Default specified in Section 7.01 has occurred and is then continuing; (b) a certificate of the Commission stating that the applicable requirements of Section 3.01 have been satisfied; OHSUSA:260935709.8 31 139 (c) such amount, in cash or in the form of a Reserve Facility, as shall equal • the Senior Lien Bond Reserve Requirement, if any, for such Series of Senior Lien Bonds for deposit in the Senior Lien Bond Reserve Fund; and (d) an Opinion of Bond Counsel to the effect that the Supplemental Indenture creating such Series of Senior Lien Bonds has been executed and delivered by the Commission in accordance with this Indenture and that such Series of Senior Lien Bonds, when duly executed by the Commission and authenticated and delivered by the Trustee, will be valid and binding obligations of the Commission. Section 3.03 Subordinated Obligations; TIFIA Loans. Except to the extent restricted by a Supplemental Indenture, the Commission may issue or incur Permitted Second Lien Obligations and TIFIA Loans payable out of Revenue on a basis junior and subordinate to the payment of the principal, interest and reserve fund requirements for the Senior Lien Bonds and any Parity Obligations. TIFIA Loan Agreements, to the extent required by federal law, may contain provisions providing for a lien on Revenue on a parity with the Senior Lien Bonds and Parity Obligations upon the occurrence and during the continuance of a Bankruptcy Related Event of the Commission. ARTICLE IV REDEMPTION Section 4.01 Redemption and Purchase of Senior Lien Bonds. Each Series • of Senior Lien Bonds may be made subject to mandatory or optional redemption or mandatory or optional tender and purchase prior to their respective stated maturities, as a whole or in part, at such time or times, upon such terms and conditions, at such prices, upon such notice and with such effect as may be provided in the Supplemental Indenture creating such Series of Senior Lien Bonds. Section 4.02 Notice of Redemption. Unless otherwise specified in a Supplemental Indenture creating a Series of Senior Lien Bonds, each notice of redemption shall be mailed by the Trustee, not less than twenty (20) nor more than sixty (60) days prior to the redemption date, to each Owner and to the MSRB. Notice of redemption to the Owners shall be given by first class mail. Each notice of redemption shall state the date of such notice, the date of issue of the Series of Senior Lien Bonds to which such notice relates, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, in the case of a Series of Senior Lien Bonds to be redeemed in part only, the identity of the Senior Lien Bonds to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Senior Lien Bonds the redemption price thereof, together with interest accrued thereon to the date fixed for redemption, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Senior Lien Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Neither the Commission nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Senior Lien Bond or in any redemption notice with • respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP OHSUSA:260935709.8 32 140 • • • numbers have been assigned by an independent service for convenience of reference and that neither the Commission nor the Trustee shall be liable for any inaccuracy in such numbers. Failure of any Owner to receive any notice of redemption or any defect therein shall not affect the sufficiency of any proceedings for redemption. Section 4.03 Conditional Notice of Redemption; Rescission. Any notice of optional redemption of the Senior Lien Bonds delivered in accordance with Section 4.02 may be conditional, and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice shall be of no force and effect and the Commission shall not be required to redeem the Senior Lien Bonds thereby called for redemption, and the redemption shall be cancelled and the Trustee shall within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled. In addition, the Commission may, at its option, on or prior to the date fixed for optional redemption in any notice of redemption of the Senior Lien Bonds, rescind and cancel such notice of redemption by Written Request of the Commission to the Trustee, and any optional redemption of Senior Lien Bonds and notice thereof shall be rescinded and cancelled and the Trustee shall mail notice of such cancellation to the recipients of the notice of redemption being cancelled pursuant to the provisions of Section 4.02. Any optional redemption of Senior Lien Bonds and notice thereof shall be rescinded and cancelled if for any reason on the date fixed for optional 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 Senior Lien Bonds called for optional redemption and such failure to optionally redeem the Senior Lien Bonds called for redemption shall not be a default hereunder. Section 4.04 Effect of Redemption. Notice of redemption having been duly given as aforesaid or as otherwise provided in a Supplemental Indenture, and moneys for payment of the redemption price of, together with interest accrued to the redemption date on, the Senior Lien Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Senior Lien Bonds (or portions thereof) so called for redemption shall become due and payable at the redemption price specified in the Indenture, together with interest accrued thereon to the date fixed for redemption, interest on the Senior Lien Bonds so called for redemption shall cease to accrue, said Senior Lien Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said Senior Lien 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. Section 4.05 Partial Redemption of Senior Lien Bonds. Upon surrender of any Senior Lien Bond to be redeemed in part only, the Commission shall execute, and the Trustee shall authenticate and deliver to the Owner of such Senior Lien Bond, at the expense of the Commission, a new Senior Lien Bond or Senior Lien Bonds of Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Senior Lien Bond surrendered, of the same Series, maturity and terms as the surrendered Senior Lien Bond . OHSUSA:260935709.8 33 141 ARTICLE V • PLEDGE; FUNDS AND ACCOUNTS Section 5.01 Pledge of Revenue; Toll Revenue Fund. (a) There are hereby pledged to secure the punctual payment of the principal of and interest on the Senior Lien Bonds, Parity Obligations, Reserve Facility Costs, Permitted Second Lien Obligations and TIFIA Obligations, all Revenue and all amounts (including the proceeds of Senior Lien Bonds, Permitted Second Lien Obligations or TIFIA Obligations, as applicable) held by the Trustee in each Fund and Account established under this Indenture (except for amounts on deposit in the Rebate Fund and amounts on deposit in any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument), subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein. Said pledge shall constitute a lien on such amounts, shall be valid and binding without any physical delivery or further act and shall be irrevocable until all Senior Lien Bonds, Parity Obligations, Reserve Facility Costs, Permitted Second Lien Obligations and TIFIA Obligations are no longer Outstanding. The pledge to secure payment of Reserve Facility Costs set forth in this Section 5.01 is on a basis subordinate to the pledge of such amounts to the Trustee for payment of the Senior Lien Bonds and Parity Obligations. The pledge to secure payment of Permitted Second Lien Obligations set forth in this Section 5.01 is on a basis subordinate to the pledge of such amounts to the Trustee for payment of the Senior Lien Bonds, Parity Obligations and Reserve Facility Costs. The pledge to secure payment of TIFIA Obligations set forth in this Section 5.01 is on a basis subordinate to the pledge of such • amounts to the Trustee for payment of the Senior Lien Bonds, Parity Obligations, Reserve Facility Costs and Permitted Second Lien Obligations, subject to the provisions of Section 5.25. (b) All Senior Lien Bonds and Parity Obligations shall be of equal rank without preference, priority or distinction of any Senior Lien Bonds and Parity Obligations over any other Senior Lien Bonds and Parity Obligations. All Permitted Second Lien Obligations shall be of equal rank without preference, priority or distinction of Permitted Second Lien Obligations over any other Permitted Second Lien Obligations. All TIFIA Obligations shall be of equal rank without preference, priority or distinction of TIFIA Obligations over any other TIFIA Obligations. The Senior Lien Bonds, Parity Obligations, Permitted Second Lien Obligations, and TIFIA Obligations are special obligations of the Commission and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from Revenue and other funds pledged hereunder and in the priority set forth herein. (c) As long as any Senior Lien Bonds, Parity Obligations, Reserve Facility Costs, Permitted Second Lien Obligations, or TIFIA Obligations remain unpaid, the Commission hereby assigns and shall cause Toll Revenues to be transmitted by the Toll Operator on at least a weekly basis directly to the Trustee for deposit in a trust fund, designated as the "Toll Revenue Fund," which fund the Trustee shall establish and maintain in trust. Investment income on amounts held by the Trustee in the Toll Revenue Fund, shall also be deposited in the Toll Revenue Fund. All moneys at any time held in the Toll Revenue Fund shall be held in trust for the benefit of the holders of the Senior Lien Bonds, Parity Obligations, Permitted Second Lien OHSUSA:260935709.8 34 142 • • • • Obligations, and TIFIA Obligations and shall be disbursed, allocated and applied solely for the uses and purposes set forth in this Indenture. Section 5.02 Establishment of Funds and Accounts. (a) In addition to the Toll Revenue Fund that is herein established, the following Funds and Accounts are hereby established and created and shall be maintained in trust by the Trustee: (1) the Project Fund, and within the Project Fund, the Senior Lien Bonds Account, the Permitted Second Lien Obligations Account, the TIFIA Account, the Sales Tax Revenue Bonds Account and the Commission Equity Account; (2) the Operations and Maintenance Fund; (3) the Rebate Fund; (4) the Senior Lien Bond Fund and, within the Senior Lien Bond Fund, the Senior Lien Bond Interest Payment Account and the Senior Lien Bond Principal Payment Account; (5) the Senior Lien Bond Reserve Fund; ( 6) the Permitted Second Lien Obligations Fund and, within the Permitted Second Lien Obligations Fund, the Permitted Second Lien Obligations Interest Account and the Permitted Second Lien Obligations Principal Account; (7) the TIFIA Payment Fund; (8) the TIFIA Reserve Fund; (9) the Repair and Rehabilitation Fund; ( 1 0) the Capital Expenditures Fund; (11) the Lock-Up Account; and (12) the Surplus Fund. In addition, upon the written request of the Commission, the Trustee shall establish and maintain additional temporary funds or accounts or sub-accounts for the purposes specified in any such request. (b) All of the Funds and Accounts (other than the Surplus Fund) shall be under the control of the Trustee and, except as expressly provided herein, the Commission shall not have any right to withdraw funds from any Fund or Account established pursuant to Section 5.02(a). The Commission hereby irrevocably authorizes the Trustee to credit funds to or deposit funds in, and to withdraw and transfer funds from, each Project Account in accordance with the terms of this Indenture. OHSUSA:260935709.8 35 143 Section 5.03 Toll Revenue Fund; Priority of Deposits and Transfers . (a) After the Substantial Completion Date, except for amounts to be deposited in other Funds or Accounts pursuant to this Article, the Commission shall promptly deposit or cause to be deposited into the Toll Revenue Fund all Revenue and transfers from other Funds or Accounts as required by the terms of this Indenture. Subject only to the provisions of this Indenture permitting the application thereof for or to the purposes and on the terms and conditions set forth herein and therein, the Trustee shall be entitled to and shall collect and receive all of the Revenue, and any Revenue collected or received by or on behalf of the Commission shall be deemed to be held, and to have been collected or received, by or on behalf of the Commission as the agent of the Trustee and shall forthwith be paid by the Commission to the Trustee. (b) After the Substantial Completion Date, subject to Sections 5.23 and 5.24 hereof, including the delivery of a Funds Transfer Certificate by the Commission (to the extent required by such Section 5.23), the Trustee shall make the following withdrawals, transfers and payments from the Toll Revenue Fund in the amounts, at the times and only for the purposes specified below and in the following order of priority (it being agreed that no amount shall be withdrawn on any date pursuant to any clause below until amounts sufficient as of that date (to the extent applicable) for all the purposes specified under the prior clauses shall have been withdrawn or set aside): • First, on each Monthly Funding Date, to the Operation and Maintenance Fund, the amount necessary to increase the balance of the Operation and Maintenance Fund to an amount • equal to the Operation and Maintenance Expenses then due and payable, plus one-sixth of the Operation and Maintenance Expenses projected in accordance with the annual budget of the Commission to be due and payable during the next succeeding calendar year; Second, on each Monthly Funding Date, any payments then due and payable by the Commission to the Rebate Fund or any similar rebate fund established with respect to any future tax-exempt borrowing transaction; Third, on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, (x) to the Senior Lien Bond Interest Payment Account the sum of (A)( 1) in the case of outstanding Senior Lien Bonds with semiannual interest payment dates, one-sixth (1/6) of the amount of the interest payable on such Senior Lien Bonds on the next interest payment date; and (2) in the case of outstanding Senior Lien Bonds with monthly interest payment dates, the amount of interest payable on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made on any preceding Monthly Funding Date and any amounts transferred from the Senior Lien Bond Interest Payment Account pursuant to Section 5.24 and not repaid; plus (C) if such Monthly Funding Date is also an interest payment date or the last Monthly Funding Date before an interest payment date, any other amount required to make the amount credited to the Senior Lien Bond Interest Payment Account equal to the amount payable on the Senior Lien Bonds on such interest payment date, and (y) to holders of any Parity Obligations, an amount equal to the interest portion due on such Parity Obligations and Hedging Obligations due and payable under any related Swaps or Qualified Swap Agreements, as the case may be; OHSUSA:260935709.8 36 144 • • • • Fourth, on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, (x) commencing twelve months before the first annual principal payment date (including any mandatory sinking fund redemption date), to the Senior Lien Bond Principal Payment Account, the sum of (A) one-twelfth (1112) ofthe principal and mandatory sinking fund redemptions due on the Senior Lien Bonds; and (B) the sum of any shortfall in transfers required to have been made on any previous Monthly Funding Date, plus any amounts transferred from the Senior Lien Bond Principal Payment Account pursuant to Section 5.24 and not repaid; and (C) if the Monthly Funding Date is also a principal payment date (or mandatory sinking fund redemption date) or the last Monthly Funding Date before a principal payment date (or mandatory sinking fund redemption date), any other amount required to make the amount credited to the Senior Lien Bond Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date, and (y) to holders of any Parity Obligations, an amount equal to the principal portion due on any such Parity Obligations (including any mandatory redemption payments thereon); Fifth, on each Monthly Funding Date, to the Senior Lien Bond Reserve Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the Senior Lien Bond Reserve Requirement calculated as of the most recent Calculation Date; Sixth, (x) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, to the Permitted Second Lien Obligations Interest Payment Account the sum of (A)(l) in the case of outstanding Permitted Second Lien Obligations with semiannual interest payment dates, one-sixth (1/6) of the amount ofthe interest payable on such Permitted Second Lien Obligations on the next interest payment date; and (2) in the case of outstanding Permitted Second Lien Obligations with monthly interest payment dates, the amount of interest payable on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made on any preceding Monthly Funding Date and any amounts transferred from the Permitted Second Lien Obligations Interest Payment Account pursuant to Section 5.24 and not repaid; plus (C) if such Monthly Funding Date is also an interest payment date or the last Monthly Funding Date before an interest payment date, any other amount required to make the amount credited to the Permitted Second Lien Obligations Interest Payment Account equal to the amount payable on the Permitted Second Lien Obligations on such interest payment date, and (y) on each Calculation Date, to the applicable Swap Parties, scheduled payments due under any Hedging Obligations, if any, net of any scheduled amounts payable to the Commission with respect to such scheduled Hedging Obligations, under any Swaps entered into in connection with such Permitted Second Lien Obligations; Seventh, (x) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, commencing twelve months before the first annual principal payment date (including any mandatory sinking fund redemption date), to the Permitted Second Lien Obligations Principal Payment Account, the sum of (A) one-twelfth (1112) of the principal and mandatory sinking fund redemptions due on the Permitted Second Lien Obligations; and (B) the sum of any shortfall in transfers required to have been made on any previous Monthly Funding Date, plus any amounts transferred from the Permitted Second Lien Obligations Principal Payment Account pursuant to Section 5.24 and not repaid; and (C) if the Monthly Funding Date is also a principal payment date (or mandatory sinking fund redemption OHSUSA:260935709.8 37 145 date) or the last Monthly Funding Date before a principal payment date (or mandatory sinking • fund redemption date), any other amount required to make the amount credited to the Permitted Second Lien Obligations Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date, and (y) on each Calculation Date, to the applicable Swap Parties, any Hedging Termination Obligations related to mandatory prepayments or mandatory redemptions of any Permitted Second Lien Obligations, if any; Eighth, on each Monthly Funding Date, to the trustee of any Permitted Second Lien Obligations, the amount, if any, necessary to fund any reserve fund established in connection with such Permitted Second Lien Obligation so that the balance therein (taking into account amounts then on deposit therein) equals the applicable reserve requirement; Ninth, on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, to the counterparties to Qualified Swap Agreements, an amount equal to any Hedging Termination Obligations payable upon a termination of any such Qualified Swap Agreements; Tenth, on each Calculation Date (commencing on the Calculation Date that is six months or less prior to the date on which TIFIA Mandatory Debt Service is first due and payable), to the TIFIA Payment Fund, an amount such that the amount on deposit therein equals the TIFIA Mandatory Debt Service due on the immediately succeeding TIFIA Payment Date; Eleventh, on each Calculation Date (commencing June 30, 2020), to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Tenth clauses, to the TIFIA Reserve Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the TIFIA Reserve Fund Required Balance; Twelfth, on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior clauses First through Eleventh, to the Repair and Rehabilitation Fund, an amount equal to the Repair and Rehabilitation Deposit for such Fiscal Year until such deposit is made in full; Thirteenth, (commencing on the Calculation Date that is six months or less prior to the date on which TIFIA Scheduled Debt Service is first due and payable) on each Calculation Date, to the TIFIA Payment Fund, an amount which equals the TIFIA Scheduled Debt Service (excluding any amounts to be applied to TIFIA Mandatory Debt Service in accordance with the Tenth clause above) due on the immediately succeeding TIFIA Payment Date; Fourteenth, on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Thirteenth clauses, to the Capital Expenditures Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the Capital Expenditures Fund Required Balance; • Fifteenth, on any Calculation Date, if the conditions specified in Sections LJ of • the TIFIA Loan Agreement (the "Restricted Payment Conditions") have not been satisfied, to the OHSUSA:260935709.8 38 146 • • • Lock-up Account all funds then available after application of funds for the purposes specified in the prior First through Fourteenth clauses; and Sixteenth, on each Calculation Date on which all of the Restricted Payment Conditions have been satisfied (as evidenced by a certificate of the TIFIA Lender) or the TIFIA Loan has been repaid in full pursuant to the terms of the TIFIA Loan Agreement, on such Calculation Date, to the Surplus Fund, all remaining amounts, if any. For the avoidance of doubt, for the purposes of this Section 5.03(b), if a Calculation Date is not a Business Day, then such transfers and withdrawals to and from such Funds or Accounts pursuant to this Section 5.03(b) shall occur on the immediately following Business Day. (c) To the extent that on any Calculation Date or any other date of determination requested by the Commission amounts on deposit in the Senior Lien Bond Reserve Fund are in excess of the Senior Lien Bond Reserve Requirement, or amounts on deposit with the trustee of any Permitted Second Lien Obligations are in excess of the applicable reserve requirement, or amounts in the TIFIA Reserve Fund are in excess of the TIFIA Reserve Requirement, or amounts in the Repair and Rehabilitation Fund are in excess of the Repair and Rehabilitation Fund Required Balance, or amounts in the Capital Expenditures Fund are in excess of the Capital Expenditures Fund Required Balance, as applicable, such excess amounts will be transferred into the Toll Revenue Fund . Section 5.04 Project Fund. (a) Sub-Accounts. Pursuant to Section 5.02(a) hereof, the Trustee is to establish and create and maintain in trust the following separate sub-accounts within the Project Fund: ( 1) the Senior Lien Bonds Account; (2) the Permitted Second Lien Obligation Account; (3) the TIFIA Account; ( 4) the Sales Tax Revenue Bonds Account; and (5) the Commission Equity Account. Prior to the Substantial Completion Date, Project Costs shall be paid from the Project Fund and its sub-accounts, including the Senior Lien Bonds Account, the Permitted Second Lien Obligation Account, the TIFIA Account, the Sales Tax Revenue Bonds Account and the Commission Equity Account as described below. The Commission shall be entitled to open new sub-accounts of the Project Fund by providing to the Trustee instructions in respect of the same for the purpose of depositing the proceeds of any Parity Obligations or Permitted Second Lien Obligations permitted to be incurred by the Financing Documents and contemplated in this Section 5.04 . OHSUSA:260935709.8 39 147 (b) Senior Lien Bonds Account. The net proceeds of each Series of the Senior • Lien Bonds shall be deposited into the applicable sub-account of the Senior Lien Bonds Account as provided by the applicable Subordinate Indenture. The Senior Lien Bonds Account and all sub-accounts therein shall be maintained in order to account for the receipt and disbursement of proceeds (and all earnings thereon) of the Senior Lien Bonds, including but not limited to, the payment of, or reimbursement for a prior payment of, Costs of Issuance of Senior Lien Bonds and Project Costs incurred prior to the Substantial Completion Date, as permitted by the Code and in compliance with the Tax Certificate. Funds therein shall be disbursed [pursuant to a Funds Transfer Certificate] in accordance with the provisions of Section 5.23. (c) Permitted Second Lien Obligation Account. The proceeds of any Permitted Second Lien Obligations will be deposited by the Trustee into the Permitted Second Lien Obligations Account and will be used to pay Project Costs in accordance with the provisions of the applicable Permitted Second Lien Obligations. The Commission shall comply with Section 5.23, including the delivery of a Funds Transfer Certificate (to the extent required by such Section 5.23) in requesting a disbursement of funds from time to time from the Permitted Second Lien Obligations Account. (d) TIFIA Account. The net proceeds of each draw under the TIFIA Credit Assistance shall be deposited on the respective funding date of such draw in the TIFIA Account in accordance with, and used for the purposes set forth in, the TIFIA Loan Agreement. The Commission shall comply with Section 5.23, including the delivery of a Funds Transfer Certificate (to the extent required by such Section 5.23) in requesting a disbursement of funds from the TIFIA Account from time to time. Notwithstanding anything to the contrary set forth • herein, the lien on the TIFIA Account (and all earnings thereon) shall apply only to the TIFIA Loan Agreement and the related interest of the TIFIA Lender with respect to amounts on deposit in such sub-account from time to time, and such amounts shall be solely for the benefit of the TIFIA Lender until such funds have been disbursed in accordance with this Section. (e) Sales Tax Revenue Bonds Account. The proceeds of the 2013 Sales Tax Revenue Bonds will be transferred to the Trustee and deposited by the Trustee into the Sales Tax Revenue Bonds Account and will be used to pay Sales Tax Eligible Project Costs in accordance with the provisions hereof and of the Sales Tax Revenue Bond Indenture. The Commission shall comply with Section 5.23, including the delivery of a Funds Transfer Certificate (to the extent required by such Section 5.23), and with the applicable provisions of the Sales Tax Revenue Bond Indenture in requesting a disbursement of funds from time to time from the Sales Tax Revenue Bonds Account. (f) Commission Equity Account. Equity contributions provided by the Commission from time to time will be deposited by the Trustee into the Commission Equity Account and will be used to pay Sales Tax Eligible Project Costs. The Commission shall comply with Section 5.23, including the delivery of a Funds Transfer Certificate (to the extent required by such Section 5.23) in requesting a disbursement of funds from time to time from the Commission Equity Account. OHSUSA:260935709.8 40 148 • • • • (g) Except as otherwise required by any applicable Law, to the extent that on the Substantial Completion Date there shall be any funds remaining on deposit in the Project Fund (or any sub-account thereof), such funds will be deposited into the Toll Revenue Fund. Section 5.05 Commission Equity Deposit to Project. The Commission hereby covenants to deposit the following amounts into the Commission Equity Account or provide for expenditures that would otherwise be required to be made from the Project Fund as follows: $39,765,000 for each of the 2014, 2015 and 2016 Fiscal Years and $13,070,000 for Fiscal Year 2017. Such deposits or expenditures are expected to be made by the Commission from Sales Tax Revenues or other available revenues of the Commission. Section 5.06 Operation and Maintenance Fund. (a) The Commission shall establish and maintain the Operation and Maintenance Fund in accordance herewith. (b) The Commission may transfer to the Operation and Maintenance Fund any amounts available for such transfer under Article V of this Indenture and shall thereafter apply such funds in the Operation and Maintenance Fund for the payment of Operation and Maintenance Expenses in accordance with the terms of this Indenture. Section 5.07 Capital Expenditures Fund . (a) The Trustee shall, in accordance with Section 5.03(b), cause amounts in the Toll Revenue Fund, to the extent available, to be deposited into the Capital Expenditures Fund from time to time as shall be necessary to build and thereafter maintain the Capital Expenditures Fund Required Balance. Any amounts on deposit in the Capital Expenditures Fund in excess of the Capital Expenditures Fund Required Balance shall be applied in accordance with Section 5.03(c) ofthis Indenture. (b) On any date on which Capital Expenditures Fund Permitted Expenditures are due and payable or reasonably expected to become due and payable, monies on deposit in the Capital Expenditures Fund shall be applied by the Trustee pursuant to a Written Request of Commission to pay such Capital Expenditures Fund Permitted Expenditures. Section 5.08 Senior Lien Bond Reserve Fund. (a) On the date of issuance of any Series of Senior Lien Bonds that has a Senior Lien Bond Reserve Requirement, the Senior Lien Bond Reserve Requirement for those Senior Lien Bonds shall be deposited in the Senior Lien Bond Reserve Fund in an account solely for the benefit of those Senior Lien Bonds. Alternatively, the Supplemental Indenture for any Series of Senior Lien Bonds may establish a pooled Senior Lien Bond Reserve Requirement for that Series of Senior Lien Bonds and any one or more subsequently issued Series of Senior Lien Bonds with the same pooled Senior Lien Bond Reserve Requirement, in which case the Senior Lien Bond Reserve Requirement for the initial such Series of Senior Lien Bonds shall be deposited in the Senior Lien Bond Reserve Fund in an account solely for the benefit of those Senior Lien Bonds and any additional Senior Lien Bonds with the same pooled Senior Lien Bond Reserve Requirement, and on the date of issuance of any such additional Senior Lien OHSUSA:260935709.8 41 149 Bonds, there shall be deposited in the account the amount necessary to increase the balance in the account to an amount equal to the Senior Lien Bond Reserve Requirement for all Senior Lien Bonds secured by that account. Thereafter, the Trustee shall cause amounts in the Project Fund or any sub-account thereof or the Toll Revenue Fund, as applicable, to the extent available, to be deposited in accordance with Article V into the Senior Lien Bond Reserve Fund as shall be necessary to maintain the Senior Lien Bond Reserve Requirement. (b) Monies on deposit in the Senior Lien Bond Reserve Fund shall be applied by the Trustee as follows: (1) If on any interest payment date for the Senior Lien Bonds, principal payment date for the Senior Lien Bonds or redemption date on which the Senior Lien Bonds are subject to mandatory sinking fund redemption, the amount on deposit in any applicable account of the Senior Lien Bond Fund, determined after taking into account all amounts transferred to the Senior Lien Bond Fund in accordance with Article V, or any other provision of this Indenture on or prior to such date, is not sufficient to pay interest and/or principal and/or the redemption price (excluding any redemption premium) due on the Senior Lien Bonds, then moneys shall be transferred to the Senior Lien Bond Interest Payment Account and/or the Senior Lien Bond Principal Payment Account, as applicable, from the Senior Lien Bond Reserve Fund which, together with • moneys then on deposit in the applicable account of the Senior Lien Bond Fund, will be sufficient to pay interest and/or principal and/or the redemption price (excluding any redemption premium) due on the Senior Lien Bonds on such date. Moneys shall be .• transferred first to the Senior Lien Bond Interest Payment Account until such account, together with any available funds then on deposit in the Senior Lien Bond Interest Payment Account of the Senior Lien Bond Fund, is sufficiently funded and thereafter, to the Senior Lien Bond Principal Payment Account until such account, together with any available funds then on deposit in the Senior Lien Bond Principal Payment Account of the Senior Lien Bond Fund, is sufficiently funded. (2) At maturity of the Senior Lien Bonds or upon earlier redemption of all or any portion of the Outstanding Senior Lien Bonds secured by funds on deposit in the Senior Lien Bond Fund, the Commission may direct the Trustee to transfer such funds on deposit in the Senior Lien Bond Reserve Fund to the Senior Lien Bond Principal Payment Account of the Senior Lien Bond Fund to be applied to the final payment of principal of all or a portion of the Senior Lien Bonds secured by such funds or to an escrow account established for defeasance of such Senior Lien Bonds pursuant to Article X hereof, provided that, if less than all of the Senior Lien Bonds mature or are redeemed, the amount on deposit in the Senior Lien Bond Reserve Fund following such transfer shall not be less than the Senior Lien Bond Reserve Requirement applicable to any Senior Lien Bonds to remain Outstanding following such maturity or redemption of Senior Lien Bonds. (3) Any amounts on deposit in the Senior Lien Bond Reserve Fund in excess of the Senior Lien Bond Reserve Requirement shall be applied in accordance with Section 5.03(c) ofthis Indenture. OHSUSA:260935709.8 42 150 • • • • (c) The Senior Lien Bond Reserve Requirement for any Series of Senior Lien Bonds may be permitted or required by the Supplemental Indenture establishing the Senior Lien Bond Reserve Requirement to be funded in whole or in part with a Reserve Facility. The terms and conditions for any Reserve Facility shall be set forth in the Reserve Facility or the Supplemental Indenture establishing the Senior Lien Bond Reserve Requirement to be met in whole or in part by the Reserve Facility, provided that those terms and conditions shall conform to and be consistent with the provisions set forth in this Section 5.08. The Trustee shall withdraw cash (and liquidate investments to produce cash) and draw on Reserve Facilities in any account in the Senior Lien Bond Reserve Fund to fund payments of principal of and interest on Senior Lien Bonds supported by such account in the Senior Lien Bond Reserve Fund in the manner and in the order specified in the applicable Supplemental Indenture or Supplemental Indentures. This Indenture shall not be discharged until all Reserve Facility Costs owing to a Reserve Facility Provider shall have been paid in full. Section 5.09 TIFIA Reserve Fund. (a) If, on any Calculation Date immediately preceding a TIFIA Payment Date when TIFIA Mandatory Debt Service shall be due and payable, the amounts available in the TIFIA Payment Fund for the payment of TIFIA Mandatory Debt Service, after taking into account any transfers made into such account in accordance with clause Tenth of Section 5.03(b) on such Calculation Date, are not sufficient to pay the TIFIA Mandatory Debt Service payable on such TIFIA Payment Date, then moneys shall be transferred to the TIFIA Payment Fund from the TIFIA Reserve Fund to pay such insufficient amounts . (b) The Lien on the TIFIA Reserve Fund (and all earnings thereon) shall apply only to the TIFIA Loan Agreement and the related interest of the TIFIA Lender with respect to amounts on deposit in such account from time to time, and such amounts shall be solely for the benefit of the TIFIA Lender until such funds have been disbursed in accordance with this Section. (c) On the date that the TIFIA Loan is paid in full the amounts remaining on deposit in the TIFIA Reserve Fund on such date will be transferred to the Surplus Fund. For the avoidance of doubt, any prepayment of the TIFIA Obligations made in accordance with this clause (d) will be in addition to any other payment obligation of the Commission to the TIFIA Lender or on the TIFIA Obligations due and payable on such date and shall not function to set-off or otherwise impact the quantum of such payment obligations. Section 5.10 Repair and Rehabilitation Fund. (a) The Trustee shall, in accordance with Section 5.03(b), cause amounts in the Toll Revenue Fund, to the extent available, to be deposited into the Repair and Rehabilitation Fund from time to time as shall be necessary to build and thereafter maintain the Repair and Rehabilitation Fund Required Balance. Any amounts on deposit in the Repair and Rehabilitation Fund in excess of the Repair and Rehabilitation Fund Required Balance shall be applied in accordance with the requirements of Section 5.03(c) hereof. OHSUSA:260935709.8 43 151 (b) On any date on which Repair and Rehabilitation Fund Permitted • Expenditures are due and payable or reasonably expected to become due and payable, monies on deposit in the Repair and Rehabilitation Fund shall be applied by the Trustee pursuant to a Written Request of Commission to pay such Capital Expenditures Fund Permitted Expenditures. Section 5.11 Surplus Fund. (a) The Surplus Fund shall be funded in accordance with and subject to clause Sixteenth of Section 5.03(b) ofthis Indenture and in compliance with the provisions of the TIFIA Loan Agreement. (b) Funds on deposit in the Surplus Fund and funds credited to such account will not be subject to the security interest granted pursuant to the Security Agreement in favor of the Secured Parties and the Commission will have the exclusive right to withdraw or otherwise dispose of or transfer funds on deposit in the Surplus Fund to any account (or to such Person) as directed by the Commission in writing in its sole discretion on any Calculation Date; provided that all of the Restricted Payment Conditions are satisfied on or as of such Calculation Date. Section 5.12 Rebate Fund. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to each Tax Certificate and the Code. All money at any time deposited in the Rebate Fund shall be held by the Trustee to satisfy the Rebate Requirement (as defined in the Tax Certificate) for payment to the United States of America. The Trustee shall have no responsibility with respect to the Rebate Fund or the Rebate • Requirement except to follow the written instructions of the Commission. Section 5.13 Senior Lien Bond Interest Payment Account. On each date when the interest portion of Debt Service on the Senior Lien Bonds shall be due and payable, monies on deposit in the Senior Lien Bond Interest Payment Account shall be applied pro rata to the payment of such interest due on Senior Lien Bonds in accordance with this Indenture. Section 5.14 Senior Lien Bond Principal Payment Account. On each date when the principal portion of Debt Service (including any mandatory sinking fund redemption payments ) on the Senior Lien Bonds shall be due and payable, monies on deposit in the Senior Lien Bond Principal Payment Account shall be applied pro rata to the payment of such principal portion of Senior Lien Bonds in accordance with this Indenture. Section 5.15 Permitted Second Lien Obligations Interest Payment Account. On the· Business Day prior to each date when the interest portion of debt service on the Permitted Second Lien Obligations shall be due and payable, monies on deposit in the Permitted Second Lien Obligations Interest Payment Account shall be transferred pro rata to the trustee for such interest due on Permitted Second Lien Obligations in accordance with this Indenture. OHSUSA:260935709.& 44 152 • • • • Section 5.16 Permitted Second Lien Obligations Principal Payment Account. On the Business Day prior to the date when the principal portion of debt service (including any mandatory sinking fund redemption payments) on the Permitted Second Lien Obligations shall be due and payable, monies on deposit in the Permitted Second Lien Obligations Principal Payment Account shall be transferred pro rata to the trustee for such principal portion of the Permitted Second Lien Obligations in accordance with this Indenture. Section 5.17 TIFIA Payment Fund. (a) Funds will be deposited in the TIFIA Payment Fund in accordance with clauses Tenth and Thirteenth of Section 5.03(b). (b) On each date when TIFIA Mandatory Debt Service, TIFIA Scheduled Debt Service, TIFIA Revenue Sharing Amounts and/or any prepayment of the TIFIA Credit Assistance as may be contemplated in the TIFIA Loan Agreement, shall be due and payable, monies on deposit in the TIFIA Payment Fund shall be transferred to the TIFIA Lender in accordance with a Funds Transfer Certificate delivered by the Commission pursuant Section 5.23. Section 5.18 Establishment and Application of the Redemption Fund. The Trustee shall establish, maintain and hold in trust a special fund designated as the "Redemption Fund." All moneys deposited by the Commission with the Trustee for the purpose of redeeming Senior Lien Bonds of any Series shall, unless otherwise provided in the Supplemental Indenture establishing the terms and conditions for such Series of Senior Lien Bonds, be deposited in the Redemption Fund. All amounts deposited in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose of redeeming Senior Lien Bonds of such Series and maturity as shall be specified by the Commission in a Written Request of the Commission delivered to the Trustee, in the manner, at the times and upon the terms and conditions specified in the Supplemental Indenture pursuant to which such Series of Senior Lien Bonds was issued. Such Written Request of the Commission may specify that amounts on deposit in the Redemption Fund that remain unclaimed for a specified period of time shall be paid to the Commission, and the Trustee shall pay such unclaimed amounts to the Commission in accordance with the Written Request of the Commission. Section 5.19 Lock-Up Account. The Lock-Up Account shall be funded in accordance with and subject to Section 5.03(b). All funds held by the Trustee in the Lock-Up Account may be released to the Surplus Fund upon the satisfaction of the Restricted Payment Conditions by the Commission on any Calculation Date, as evidenced by a written notice of TIFIA. To the extent required under the TIFIA Loan Agreement, the Trustee shall transfer funds from the Lock-Up Account to the TIFIA Payment Fund in the amount of any prepayment of the TIFIA Obligations required under the TIFIA Loan Agreement. Section 5.20 Records. The Trustee shall cause to be kept and maintained records pertaining to each fund and account held by it and all disbursements therefrom and shall deliver monthly to the Commission statements of activity with respect to such funds and accounts, provided that the Trustee shall not be obligated to report as to any fund or account that (a) has a balance of zero and (b) has not had any activity since the last reporting date. OHSUSA:260935709.8 45 153 Section 5.21 Investment by Trustee. Moneys held by the Trustee in the Funds and Accounts created hereunder shall be invested and reinvested in Permitted Investments in accordance with the written instructions of an Authorized Representative. Unless otherwise specified in the Supplemental Indenture creating a Series of Senior Lien Bonds, all Permitted Investments shall be held by or under the control of the Trustee and shall be deemed at all times to be a part of the Fund or Account that was used to purchase the Permitted Investment. Unless otherwise provided by a Written Request of the Commission or in a Supplemental Indenture, all interest, profits and other income received from the investment of moneys in any Fund or Account held by the Trustee, other than the Rebate Fund or each Project Fund, shall be transferred to the Toll Revenue Fund when received. All interest, profits and other income received from the investment of moneys in the Rebate Fund shall be deposited in the Rebate Fund. Unless otherwise provided in a Supplemental Indenture establishing a Project Fund, all interest, profits and other income received from the investment of moneys in a Project Fund shall be deposited in such Project Fund. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Permitted Investment equal to the amount of accrued interest, if any, paid as part of the purchase price of such Permitted Investment shall be credited to the fund or account from which such accrued interest was paid. The Trustee is authorized to cause to be sold or redeemed and reduced to cash a sufficient amount of Permitted Investments whenever the cash balance in any Fund or Account is • or will be insufficient to make any required disbursement. The Trustee shall not be responsible • for any depreciation in the value of any Permitted Investment or for any loss resulting from such sale or redemption. Absent a Written Request of the Commission instructing the Trustee how to invest the cash balance in a Fund or Account held by the Trustee hereunder, the Trustee shall hold such cash balances uninvested pending its receipt of such a Written Request of the Commission. All Permitted Investments credited to the Senior Lien Bond Reserve Fund shall be valued as of April 1 of each year (or the next succeeding Business Day if such day is not a Business Day). All Permitted Investments credited to the Senior Lien Bond Reserve Fund shall be valued at their fair market value determined to the extent practical by reference to the closing bid price thereof published in The Wall Street Journal or any other financial publication or generally recognized pricing information service selected by the Trustee in its discretion. The Trustee may use and rely conclusively and without liability upon any generally recognized pricing information service (including brokers and dealers in securities) available to it. The Commission acknowledges that regulations of the Comptroller of the Currency grant the Commission the right to receive brokerage confirmations of the security transactions as they occur, at no additional cost. To the.extent permitted by law, the Commission specifically waives compliance with 12 C.F.R. 12 and hereby notifies the Trustee that no brokerage confirmations need be sent relating to the security transactions as they occur. The Trustee or its affiliates may act as sponsor, advisor, principal or agent in the acquisition or disposition of any investment with the prior written approval of an Authorized Representative. The Trustee may commingle any of the moneys held by it pursuant to this OHSUSA:260935709.8 46 154 • • • • Indenture (except for amounts on deposit in the Rebate Fund and amounts on deposit in any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument) for investment purposes only; provided, however, that the Trustee shall account separately for the moneys belonging to each fund or account established pursuant to this Indenture and held by it. Section 5.22 Subsidy Payments. The Commission irrevocably directs that all Subsidy Payments with respect to Senior Lien Bonds be made directly to the Trustee for deposit in the Senior Lien Bond Interest Payment Account pursuant to this Indenture. Any such Subsidy Payments received by the Commission shall be promptly remitted to the Trustee. The Trustee shall deposit all such Subsidy Payments to the Senior Lien Bond Interest Payment Account upon receipt thereof. The Trustee shall file such forms with the Internal Revenue Service and take all other such actions as the Commission has notified it in writing may be necessary to request and receive such Subsidy Payments on the Commission's behalf, and the Trustee shall have no responsibility therefor other than following the Commission's written instructions. Section 5.23 Withdrawal and Application of Funds; Priority of Transfers from Funds and Accounts. (a) Except as provided in Sections 5.04, 5.13, 5.14, 5.15, 5.16, 5.24 and 5.25 and clause (d) of this Section 5.23, each withdrawal or transfer of funds from the Funds and Accounts by the Trustee on behalf of the Commission in accordance herewith shall be made pursuant to an executed Funds Transfer Certificate, which certificate shall be provided and prepared by the Commission in accordance with the terms hereof and shall contain a certification by the Commission that such withdrawal or transfer complies with the requirements of this Indenture. Each Funds Transfer Certificate executed and delivered with respect to a transfer of funds to the Surplus Fund must also comply with the Restricted Payment Conditions. (b) The Funds Transfer Certificate relating to each applicable Project Account shall be delivered to the Trustee (with a copy to the Permitted Second Lien Obligations Trustee and the TIFIA Lender) no later than two (2) Business Days prior to each date on which funds are proposed to be withdrawn from the applicable Project Account or transferred from a Project Account to another Project Account in accordance with this Indenture. The Trustee shall comply with any such Funds Transfer Certificate; provided, that if the Permitted Second Lien Obligations Trustee or TIFIA Lender provides written notice to the Trustee, the Commission and the Secured Parties that any payment, withdrawal or transfer of funds is not in compliance with this Indenture or the other Financing Documents and specifies such non-compliance in such notice, the Commission shall not be entitled to cause such proposed withdrawal until such time as it has submitted a revised Funds Transfer Certificate which complies with the terms hereof or thereof. (c) For the avoidance of doubt, the Commission shall have the right to withdraw or cause to be transferred funds from the Operation and Maintenance Fund, the Capital Expenditures Fund and the Repair and Rehabilitation Fund solely for the purpose of payment of Operation and Maintenance Expenses, Capital Expenditures Fund Permitted Expenditures or Repair and Rehabilitation Fund Permitted Expenditures, respectively, at any time without any approval or consent of the Trustee or any other person . OHSUSA:260935709.8 47 155 Section 5.24 Insufficient Funds; Application of Funds; Priority . Notwithstanding any other provision to the contrary herein or in any Financing Document, should the amount on deposit in any of the Funds or Accounts listed in the First through Fifteenth clauses in Section 5.03(b) ofthis Indenture be insufficient to pay when due obligations payable from such Fund or Account pursuant to the terms of this Indenture, the Trustee shall transfer to such Fund or Account moneys held in other Funds and Accounts listed in the First through Sixteenth clauses in Section 5.03(b); provided that: (i) such transfers will be made from Funds and Accounts in inverse order of the deposits set forth in Section 5.03(b), (ii) no such transfers will be made from a Fund or Account earlier in the order of deposits set forth in Section 5.03(b) to a Fund or Account later in such order of deposits; and (iii) no such transfers shall be made from the Rebate Fund, the Senior Lien Bond Reserve Fund, the TIFIA Reserve Fund, or any reserve fund established in connection with such Permitted Second Lien Obligation (unless the funds on deposit therein are in excess of the applicable reserve requirement, in which case an amount equal to such excess funds on deposit shall be transferred from such account), or any Redemption Fund or other Fund or Account not referenced in the deposits set forth in Section 5.03(b). Amounts in the Senior Lien Bond Reserve Fund and the TIFIA Reserve Fund shall only be used to make payments on the Senior Lien Bonds and TIFIA Loans, respectively, and are not available for other purposes. Section 5.25 Effect of Bankruptcy-Related Event on TIFIA Obligations. Notwithstanding any other provision to the contrary herein or in any Financing Document, upon the occurrence and during the continuance of any Bankruptcy Related Event of the Commission, the TIFIA Obligations shall, if the owner of such TIFIA Obligations is the TIFIA Lender at such time, automatically and without action on the part of the TIFIA Lender or any other person, · immediately become Parity Obligations, and be of equal rank and on a parity with the Senior Lien Bonds and other Parity Obligations, and the TIFIA Lender shall become and be entitled to all rights of an owner of Senior Lien Bonds hereunder (including, without limitation, the right of payment pro rata with other Senior Lien Bonds and Parity Obligations hereunder). Upon such event, the money and investments held in the TIFIA Fund shall be transferred by the Trustee to the Senior Lien Bond Debt Service Fund, and the money and investments held in the TIFIA Reserve Fund shall be transferred by the Trustee to the Senior Lien Bond Debt Service Reserve Fund. ARTICLE VI COVENANTS OF THE COMMISSION Section 6.01 Punctual Payment and Performance. The Commission will punctually pay the principal of and the interest on (and redemption premiums, if any) to become due on the Senior Lien Bonds in strict conformity with the terms of the Act, the Indenture and the Senior Lien Bonds, and will faithfully observe and perform all of the agreements and covenants contained in the Indenture and the Senior Lien Bonds. Section 6.02 Against Encumbrances. The Commission will not create or cause or permit to be created any pledge, lien, charge or encumbrance having priority over the • • lien of the Senior Lien Bonds and Parity Obligations upon any of the Revenue. The Commission • will not create or cause or permit to be created any pledge, lien, charge or encumbrance having OHSUSA:260935709.8 48 156 • • • parity with the lien of the Senior Lien Bonds and Parity Obligations upon any of the Revenue except Senior Lien Bonds and Parity Obligations and the TIFIA Loan following a Bankruptcy- Related Event. The Commission will not create or permit to be created or issue any bonds, notes or other obligations secured by a pledge of or charge or lien upon Revenue except Senior Lien Bonds and Parity Obligations and the TIFIA Loan, provided that the Commission may at any time, or from time to time, issue or incur subordinated obligations as provided in Section 3.03. Section 6.03 Toll and Revenue Covenants. (a) The Commission covenants that it will at all times following the Substantial Completion Date establish and maintain tolls on the Toll Road at rates projected by it to generate sufficient Revenue to pay, as and when due, amounts due on all Outstanding Senior Lien Bonds and Parity Obligations, Operation and Maintenance Expenses, and other obligations of the Commission payable from Revenue, and to otherwise comply with the Act. (b) Beginning in the second Fiscal Year following the commencement of toll collections by the Commission for use of the Toll Road pursuant to the Cooperative Agreement, the Commission covenants to: (i) compute projected Net Revenue for each Fiscal Year (by excluding from such calculations any extraordinary or one-time expenses from Operation and Maintenance Expenses when determining Net Revenue for such Fiscal Year), and the ratio produced by dividing projected Net Revenue by projected Debt Service for that Fiscal Year (such ratio being hereinafter referred to as the "Coverage Ratio") within ten Business Days after the beginning of that Fiscal Year (such date of computation being hereinafter referred to as a "Coverage Calculation Date"); (ii) to promptly furnish to the Trustee a Certificate of the Commission setting forth the results of such computations; and (iii) if the Coverage Ratio is less than 1.50:1, to take such action as promptly as practicable after the Coverage Calculation Date (including, without limitation, increasing Toll Revenues through toll increases) as the Commission projects is necessary to cause the projected Coverage Ratio for that Fiscal Year to equal or exceed 1.5: 1. ( 1) Within 60 days after the end of each Fiscal Year (beginning with the second Fiscal Year following the commencement of toll collections by the Commission for use of the Toll Road pursuant to the Cooperative Agreement), the Commission will file with the Trustee a report setting forth the Net Revenues for such Fiscal Year. The failure of toll rates to yield an amount sufficient to achieve the Coverage Ratio described in Section 6.03(b) shall not be deemed to constitute an Event of Default so long as the Commission complies with the requirements set forth below in this Section 6.03( c). If any such report indicates that the Net Revenues for such Fiscal Year were less than the amount required pursuant to Section 6.03(b ), then as soon as practicable after delivering such report to the Trustee, the Commission shall employ a Traffic Consultant to review and analyze the operations of the Toll Road and to submit to the Board, as soon as practicable (but not later than such date as will enable the Board to act upon it within 180 days after the end of the Fiscal Year in question), a written report which shall include the actions that the Traffic Consultant recommends should be taken by the Commission with respect to (i) revising the toll rates, (ii) altering its methods of operation, or (iii) taking other action projected to produce the amount so required in the following twelve month period (or, if less, the maximum amount deemed feasible by the OHSUSA:260935709.8 49 157 Traffic Consultant and that the Traffic Consultant estimates will not adversely affect the • amount of Net Revenues). Promptly upon its receipt of such written report (and, in any case, within 180 days after the end of the Fiscal Year in question), after giving due consideration thereto, the Commission will revise the toll rates, as permitted by law, alter its methods of operation, or take such other action as it deems appropriate. Such revisions, alterations, or actions need not comply with the recommendations of the Traffic Consultant so long as Net Revenues projected by the Traffic Consultant to be produced by the revisions, alterations or actions then taken by the Commission are at least equal to the amount required hereinabove. The Trustee shall have no responsibility to review any written report received pursuant to this Section 6.03(b ). (c) The Commission further covenants that such toll rates for traffic using the Toll Road will be established and maintained in a reasonable way to cover all traffic (other than vehicles used for maintaining the Toll Road; police, fire, and other public emergency vehicles; buses owned and operated by any public agency; vehicles with multiple passengers or which allow for a limited numbers of passengers, including motorcycles, according to policies determined by the State or the Commission; electric, hybrid-electric and other vehicles that meet emission-reduction policies determined by the State or the Commission; vehicles which are otherwise exempt from payment of tolls under State or federal law; and any vehicles during a public emergency declared by the Commission) consistent with the requirements hereof, but with such classifications as the Commission may deem appropriate. (d) Notwithstanding any provision to the contrary, nothing in this Section 6.03 shall be deemed to require the _Commission to collect tolls and other fees with respect to which • the Commission has determined, based upon a report from a Traffic Consultant, that the costs of collection would exceed the amount of tolls and other fees expected to be collected; and provided further that nothing contained in this Section 6.03 shall prevent the Commission from temporarily reducing or eliminating tolls and other fees in connection with programs which it intends to use to increase Net Revenues. Section 6.04 Annual Budget. The Commission covenants that, for each Fiscal Year, it will take such actions as may be required of it to prepare and adopt an annual budget in accordance with applicable law, including the Act and the Toll Agreements and that it will provide a copy of such budget to the Trustee promptly upon such adoption. Section 6.05 Operation and Maintenance of the Toll Road. The Commission covenants and agrees that it has taken, and, so long as any Senior Lien Bonds are Outstanding, that it will take, all steps necessary to ensure that it will continue to have lawful right and lawful power to operate and maintain the Toll Road as a revenue-producing facility consistent with its obligations under the Act and the Toll Agreements. The Commission covenants and agrees to at all times operate the Toll Road in accordance with the requirements of the Act and the Toll Agreements. The Commission further covenants and agrees that it will pay all Operation and Maintenance Expenses in accordance with customary business practices. The Commission further covenants that, should any Senior Lien Bonds remain Outstanding following the expiration of the Commission's authorization to impose tolls on the Toll Road, or should the Commission project that, within five calendar years such authorization will expire with Senior OHSUSA:260935709.8 50 158 • • • Lien Bonds remaining Outstanding, the Commission will petition the Legislature of the State to extend its authorization to impose such tolls. Section 6.06 Retention of Assets. Subject to the provisions of the Act and the Toil Agreements, the Commission covenants not to dispose of assets necessary to operate the Toll Road in the manner and at the levels of activity required to enable it to perform its covenants contained herein, including, without limitation, the covenants contained in Section 6.03; provided that the Commission may pledge and use ROW Revenues to pay or pledge as security for a TIFIA Loan. Section 6.07 Insurance. The Commission covenants to carry at all times insurance (including reasonable self-insurance) or cause insurance to be carried with responsible insurance and/or reinsurance companies authorized and qualified to do business in (or with companies duly authorized and qualified to do business in) the State and to assume the risks thereof consistent with insurance requirements of all agreements entered into by the Commission in connection with the construction, operation and maintenance of the Toll Road. Nothing contained herein shall be deemed or construed to prevent the Commission from maintaining policies of insurance with respect to the Toll Road in which other parties are named as dual obligee beneficiaries, provided that such other parties shall be limited to Caltrans, OCT A, contractors constructing Special Projects and persons supplying toll collection and revenue management system equipment or facilities. Section 6.08 Payment of Claims. The Commission will pay and discharge any and all lawful claims that, if unpaid, might become a charge or lien upon the Revenue or any part thereof, or upon any funds in the hands of the Commission or on deposit with the Trustee, prior to or on a parity with the charge and lien upon the Revenue securing the Senior Lien Bonds and any Parity Obligations. Section 6.09 Receipt and Deposit of Cash Advances. The Commission covenants and agrees that, immediately upon receipt of cash advances representing deposits against future toll payments from users or potential users of the Toll Road, it will (i) deposit and hold such moneys in a special account, separate from other assets of the Commission, or cause such moneys to be deposited with and held by a bank or trust company (which may be the Trustee), (ii) invest such moneys only in Permitted Investments of the type described in clauses (i), (ii), (iii), (iv), (v), (vi), (ix), (xii), (xvii) or (xviii) of the definition thereof, maturing within thirty (30) days from the date of the investment, and (iii) promptly, and in any event within seven Business Days after such deposits become tolls, transfer or cause the transfer of moneys from such account for credit to the Toll Revenue Fund. The Commission further covenants and agrees that it will not enter into any agreement pursuant to which cash advances received by any other person, business organization or governmental entity may be applied to the payment of tolls unless such person, business organization or governmental entity, as the case may be, has agreed to take such actions as the Commission may determine are reasonably necessary to assure that the Commission will receive timely payment of such tolls. Section 6.10 Design-Build Procurement and Construction. The Commission • hereby covenants and agrees to employ the design-build method of procurement in connection OHSUSA:260935709.8 51 159 with the construction of the initial phase of the Riverside SR-91 Corridor Improvement Project, • in accordance with the CIP Plan. The Commission further covenants and agrees that it has all lawful right and power to enter into the Toll Agreements and that it shall exercise all of the powers granted to it thereunder as the Commission may, in its reasonable judgment, determine are necessary to complete or cause the completion of the construction of the toll facilities portion of the Riverside SR-91 Corridor Improvement Project in accordance with the CIP Plan and to commence collection of tolls established pursuant to Section 6.03 of this Indenture. Section 6.11 Construction and Maintenance From Other Sources Permitted. Notwithstanding any provision to the contrary in this Indenture, the Commission may, in accordance with the Act and other applicable laws, construct, reconstruct, rehabilitate, improve, acquire, lease, operate, or maintain, or any combination of these, both tolled and nontolled facilities, structures, onramps, connector roads, bridges, and roadways that are on, necessary for, or related to the construction or operation of the Toll Road using any funds legally available therefore, including, without limitation and as applicable, Sales Tax Revenues and federal, State and local grants, loans and matching funds. Notwithstanding any other provision of this Indenture, the United States of America, the State or any of their respective agencies, departments or political subdivisions may construct, reconstruct, rehabilitate, improve, acquire, lease, operate, maintain, or any combination of these, both tolled and nontolled facilities, structures, onramps, connector roads, bridges, and roadways related to or competing with the SR-91 or to pay for all or any part of the cost thereof. The Commission has no power or authority to grant, permit or interfere with any such actions. Section 6.12 Tax Covenants. (a) The Commission shall not use or permit the use of any proceeds of the Senior Lien Bonds or any funds of the Commission, directly or indirectly, to acquire any. securities or obligations that would cause the interest on Senior Lien Bonds intended by the Commission to be exempt from federal income taxation to become subject to federal income taxation, and shall not take or permit to be taken any other action or actions that would cause any such Senior Lien Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable regulations promulgated from time to time thereunder. The Commission shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Commission shall comply with all requirements of Sections 148 and 149(b) of the Code to the extent applicable to Senior Lien Bonds. In the event that at any time the Commission is of the opinion that for purposes of this Section 6.03(a) it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under this Indenture, the Commission shall so instruct the Trustee under this Indenture in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (b) The Commission covenants to comply with the provisions and procedures of each Tax Certificate. (c) The Commission shall not, and shall not cause the Trustee to, use or • permit the use of any proceeds of the Senior Lien Bonds or any funds of the Commission (so long as such proceeds or other funds are under its control), directly or indirectly, in any manner, • OHSUSA:260935709.8 52 160 • • • and shall not take or omit to take any action that would cause any of the Senior Lien Bonds to be treated as an obligation not described in Section I 03(a) of the Code if such Senior Lien Bonds were, when originally issued, intended by the Commission to be obligations described in Section 103(a) ofthe Code. (d) Notwithstanding any provlSlons of this Section 6.12 or any Tax Certificate, if the Commission shall provide to the Trustee an Opinion of Bond Counsel to the effect that any specified action required under this Section 6.12 is no longer required or that some further or different action is required to maintain the exclusion from gross income for federal income tax purposes of interest on any Senior Lien Bonds, the Trustee and the Commission may conclusively rely on such opinion in complying with the requirements of this Section, and, notwithstanding any other provision of this Indenture or any Tax Certificate, the covenants hereunder shall be deemed to be modified to that extent. (e) The Trustee shall follow the directions of the Commission given pursuant to the Tax Certificate, and shall have no liability or responsibility to enforce compliance by the Commission with the terms of the Tax Certificate. Section 6.13 Accounting Records; Financial Statements and Other Reports. (a) The Commission will keep appropriate accounting records in accordance with generally accepted accounting principles. Such accounting records shall at all times during business hours be subject to the inspection of the Trustee or of any Holder (or its representative authorized in writing). (b) The Commission will prepare and file with the Trustee annually within 21 0 days after the close of each Fiscal Year financial statements of the Commission for such Fiscal Year, together with an audit report thereon prepared by an Independent Certified Public Accountant. Section 6.14 Protection of Revenue and Rights of Holders. The Commission will preserve and protect the security of the Senior Lien Bonds and Parity Obligations and the rights of the Bondholders and the holders of Parity Obligations and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any of the Senior Lien Bonds by the Commission, the Senior Lien Bonds shall be incontestable by the Commission. Section 6.15 Payment of Governmental Charges and Compliance with Governmental Regulations. The Commission will pay and discharge all taxes or payments in lieu of taxes, assessments and other governmental charges or liens that may be levied, assessed or charged upon the Revenue, or any part thereof, promptly as and when the same shall become due and payable, except that the Commission shall not be required to pay any such governmental charges so long as the application or validity thereof shall be contested in good faith and the Commission shall have set aside reserves to cover such payments. Section 6.16 Maintenance of Powers. The Commission covenants that it will at all times use its best efforts to maintain the powers, functions, duties and obligations now reposed on it pursuant to the Act and all other laws and will not at any time voluntarily do, suffer OHSUSA:260935709.8 53 161 or permit any act or thing the effect of which would be to hinder, delay or imperil either the • payment of the indebtedness evidenced by any of the Senior Lien Bonds, Parity Obligations or Credit Support Instruments relating thereto or the performance or observance of any of the covenants herein contained. Section 6.17 Covenants Binding on Commission and Successors. All covenants, stipulations, obligations and agreements of the Commission contained in this Indenture shall be deemed to be covenants, stipulations, obligations and agreements of the Commission to the full extent authorized or permitted by law. If the powers or duties of the Commission shall hereafter be transferred by amendment of the Act or a new act or any provision of the Constitution or any other law of the State or in any other manner there shall be a successor to the Commission, and if such transfer shall relate to any matter or thing permitted or required to be done under this Indenture by the Commission then the entity that shall succeed to such powers or duties of the Commission shall act and be obligated in the place and stead of the Commission as in this Indenture provided, and all such covenants, stipulations, obligations and agreements shall be binding upon the successor or successors thereof from time to time and upon any officer, board, body or commission to whom or to which any power or duty affecting such covenants, stipulations, obligations and agreement shall be transferred by or in accordance with law. Section 6.18 Continuing Disclosure. Upon the issuance of any Series of Senior Lien Bonds, or upon conversion of any Series of Senior Lien Bonds to an interest rate period, requiring an undertaking regarding continuing disclosure under Rule 15c2-12, the • Commission and the Trustee hereby covenant and agree that they will execute and deliver a Continuing Disclosure Agreement with respect to such Series of Senior Lien Bonds and comply with and carry out all of the provisions of such Continuing Disclosure Agreement applicable to each such party. Notwithstanding any other provision of this Indenture, failure of the Commission or the Trustee to comply with the provisions of any Continuing Disclosure Agreement shall not constitute an Event of Default under this Indenture; provided, however, that the Trustee, at the request of any Participating Underwriter or the Owners of at least twenty-five percent (25%) aggregate principal amount of any Series of Senior Lien Bonds then Outstanding, shall (but only to the extent that the Trustee is indemnified to its satisfaction from any liability or expense, including fees and expenses of its attorneys) or any Owner or Beneficial Owner of a Senior Lien Bond may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order to cause the Commission or the Trustee, as applicable, to comply with its obligations under this Section. Section 6.19 Further Assurances. The Commission will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Holders of the rights and benefits provided herein. OHSUSA:260935709.8 54 162 • • • • ARTICLE VII DEFAULT PROVISIONS AND REMEDIES Section 7.01 Events of Default. Any one of the following and any other event specified in a Supplemental Indenture as an Event of Default shall constitute an Event of Default hereunder: (a) default in the payment of any interest on any Senior Lien Bond when and as the same shall have become due; (b) default in the payment of the principal of or premium, if any, on any Senior Lien Bond when and as the same shall become due, whether at the stated maturity or redemption date thereof or otherwise; (c) the occurrence and continuance of a Bankruptcy-Related Event of the Commission; or (d) default in the observance or performance of any other covenant or agreement of the Commission contained in this Indenture and the continuance thereof for a period of sixty (60) days after written notice thereof to the Commission given by the Trustee. The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default of the type described in clause (c) above unless the Trustee shall be specifically notified in writing of such default by the Commission, or by means of a written notice delivered at the Principal Office of the Trustee by (i) the Owners of at least 25% in aggregate principal amount of all Senior Lien Bonds then Outstanding, or, (ii) following a Bankruptcy-Related Event and prior to repayment of the TIFIA Loan in full pursuant to its terms, a combination of the TIFIA Lender together with Owners representing at least 25% in aggregate principal amount of (X) the TIFIA Loan, calculated as if fully drawn upon by and in the amount then available to the Commission, plus (Y) all Senior Lien Bonds then Outstanding. Section 7.02 Application of Revenue and Other Funds After Default. If an Event of Default shall occur and be continuing, all Revenue pledged hereunder and any other funds then held or thereafter received by the Trustee under any of the provisions of this Indenture shall be under the control of and applied by the Trustee as follows and in the following order: (a) first, to the pro rata payment of all fees, costs and other expenses (including the reasonable fees, costs and expenses of counsel) owed to the Trustee, the TIFIA Lender and any trustee for any Permitted Second Lien Obligations in connection with the performance of their obligations under the Financing Documents to which they are a party and the consummation of the transactions contemplated thereby (in each case to the extent not previously satisfied); (b) second, to the payment of Operation and Maintenance Expenses; (c) third, to the pro rata payment of all accrued and unpaid interest (but not default interest, if any) on all Senior Lien Bonds and Parity Obligations and, from and after the OHSUSA:260935709.8 55 163 occurrence of a Bankruptcy Related Event, on the TIFIA Credit Assistance held by the TIFIA • Lender if the TIFIA Obligations are then outstanding, in each case in the order of maturity of the payments thereof; (d) fourth, to the pro rata payment of all unpaid principal amounts of any Senior Lien Bonds and Parity Obligations then due (by acceleration or otherwise) and, from and after the occurrence of a Bankruptcy Related Event, any unpaid principal amounts of the TIFIA Credit Assistance, if the TIFIA Obligations are then outstanding and held by the TIFIA Lender, then due; (e) fifth, to the pro rata payment of all accrued and unpaid default interest then due, if any, with respect to any Senior Lien Bonds and Parity Obligations and any Hedging Termination Obligations related to any Senior Lien Bonds or Parity Obligations and, if the TIFIA Obligations are then outstanding, from and after the occurrence of a Bankruptcy Related Event, with respect to the TIFIA Credit Assistance held by the TIFIA Lender; (f) sixth, to the pro rata payment of all accrued and unpaid redemption or prepayment premium then due, if any, with respect to any Senior Lien Bonds or Parity Obligations and, if the TIFIA Obligations are then outstanding, from and after the occurrence of a Bankruptcy Related Event, with respect to the TIFIA Credit Assistance held by the TIFIA Lender; (g) sixth, to the pro rata payment of all other amounts, if any, due and payable under any Financing Document with respect to any Senior Lien Bonds or Parity Obligations and, • if the TIFIA Obligations are then outstanding, from and after the occurrence a Bankruptcy Related Event, on the TIFIA Credit Assistance held by the TIFIA Lender; (h) seventh, to the pro rata payment of all accrued and unpaid interest (but not default interest, if any) on all Permitted Second Lien Obligations and scheduled payments due under any related Hedging Obligations, if any, net of any scheduled amounts payable to the Commission with respect to scheduled Hedging Obligations under Swaps; (i) eighth, if any unpaid principal of any Permitted Second Lien Obligations has become due (by acceleration or otherwise), to the pro rata payment of such unpaid principal amounts and (unless otherwise agreed with the TIFIA Lender), any related Hedging Termination Obligations; G) ninth, to the pro rata payment of all accrued and unpaid default interest then due, if any, with respect to any Permitted Second Lien Obligations; (k) tenth, to the pro rata payment of all accrued and unpaid redemption or prepayment premium then due, if any, with respect to any Permitted Second Lien Obligations; (I) eleventh, to the pro rata payment of all other amounts, if any, due and payable under any Financing Document with respect to any Permitted Second Lien Obligations; (m) twelfth, if the TIFIA Obligations are then outstanding, to the pro rata • payment of (except from and after the occurrence of a Bankruptcy Related Event) all amounts OHSUSA:260935709.8 56 164 • • • due under the TIFIA Loan Agreement to the TIFIA Lender (to the extent not previously paid); and (n) thirteenth, upon the payment in full of all Secured Obligations in accordance with clauses first through twelfth hereof, to pay to the Commission, or as may be directed by the Commission, or as a court of competent jurisdiction may direct, any Revenue then remaining. Section 7.03 No Acceleration. There shall be no right of acceleration with respect to the Senior Lien Bonds. Section 7.04 Suits at Law or in Equity and Mandamus. In case one or more Events of Default shall occur, then and in every such case the Trustee may, and shall at the request of the Holders of not less than a majority of the aggregate principal amount of any Series of Senior Lien Bonds then Outstanding (or such greater percentage of the Holders of Senior Lien Bonds of any Series as may be specified in the Supplemental Indenture creating such Series) upon receiving adequate indemnity, potentially including indemnity provided by such Holders, proceed to protect and enforce Bondholder rights by such appropriate judicial proceeding as the Trustee shall deem most effectual to protect and enforce any such right, either by suit in equity or by action at law, whether for the specific performance of any covenant or agreement contained in this Indenture, or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Bondholders by this Indenture or the Senior Lien Bonds or by law. The provisions of this Indenture shall constitute a contract with each and every Bondholder and the duties of the Commission shall be enforceable by the Trustee on behalf of any Bondholder by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Bondholder any plan of reorganization, arrangement, adjustment, or composition affecting the Senior Lien Bonds or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Bondholder in any such proceeding without the approval of the Bondholders so affected. Section 7.05 Waivers. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any Event of Default hereunder shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent thereon. Section 7.06 Rights of Subordinate Lenders. (a) Nothing in this Article VII or elsewhere in this Indenture shall be construed to limit or preclude the exercise of any rights or remedies reserved by the trustee for the Permitted Second Lien Obligations or by the TIFIA Lender in the TIFIA Loan Agreement; (b) From and after the occurrence of a Bankruptcy Related Event, if the TIFIA Obligations are then outstanding the TIFIA Lender may request, and the Trustee shall, upon receiving adequate indemnity, potentially including indemnity provided by such TIFIA OHSUSA:260935709 .8 57 165 Lender, proceed to protect and enforce the TIFIA Lender's rights by such appropriate judicial proceeding as the Trustee shall deem most effectual to protect and enforce any such right, either • by suit in equity or by action at law, whether for the specific performance of any covenant or agreement contained in this Indenture, or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the TIFIA Lender as a third- party beneficiary by this Indenture or by law. The provisions of this Indenture shall constitute a contract with the TIFIA Lender and the duties of the Commission shall be enforceable by the Trustee on behalf of the TIFIA Lender by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of the TIFIA Lender any plan of reorganization, arrangement, adjustment, or composition affecting the TIFIA Loan or the rights of the TIFIA Lender, or to authorize the Trustee to vote in respect of the claim of the TIFIA Lender in any such proceeding without the approval of the TIFIA Lender . ARTICLE VIII THE TRUSTEE Section 8.01 Trustee. (a) The Bank of New York Mellon Trust Company, N .A., will serve as the Trustee under this Indenture. The Trustee shall be required to perform such duties and only such duties as are specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default (that has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as reasonable persons would exercise or use under the circumstances in the conduct of their own affairs. The Trustee accepts the duties imposed upon it hereunder and agrees, particularly: (i) to hold all sums held by it for the payment of the principal and Purchase Price of, premium, if any, or interest on the Senior Lien Bonds in trust for the benefit of the Holders of the Senior Lien Bonds as provided herein until such sums shall be paid to such Holders of the Senior Lien Bonds or otherwise disposed of as herein provided; (ii) to authenticate and cancel Senior Lien Bonds as provided herein; (iii) to perform its obligations under this Indenture; and (iv) to keep such books and records relating to its duties as Trustee as shall be consistent with reasonable industry practice and to make such books and records available for inspection by the Commission at all reasonable times upon reasonable notice. The Commission shall cause the necessary arrangements to be made and to be thereafter continued whereby: (i) funds derived from the sources specified in this Indenture will be made available at the Principal Office of the Trustee for the timely payment of principal and Purchase Price of, premium, if any, and interest on the Senior Lien Bonds; (ii) Senior Lien Bonds shall be made available for authentication, exchange and registration of transfer by the Trustee at the Principal Office of the Trustee; and (iii) the Trustee shall be furnished such records and other information, at such times, as shall be required to enable the Trustee to perform the duties and obligations imposed upon it hereunder. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action or its own negligent failure to act, except that, at all • times regardless of whether or not any Event of Default shall exist: (i) the duties and obligations • of the Trustee shall be determined solely by the express provisions of this Indenture, and the OHSUSA:260935709.8 58 166 • • • Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate, notice, order, requisition, request, consent or opinion furnished to the Trustee conforming to the requirements of this Indenture; but in the case of any such certificate, notice, order, requisition, request, consent or opinion which by any provision hereof is specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not it, on its face, conforms to the requirements of this Indenture; (iii) the Trustee shall not be liable for any error of judgment made in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (iv) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority, or such larger or smaller percentage as may be required hereunder, in aggregate principal amount of the Senior Lien Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee under this Indenture. The permissive right of the Trustee to do things enumerated in this Indenture as a right shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful misconduct. (c) None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. Before taking any action under this Indenture relating to an Event of Default, the Trustee may require that adequate indemnity be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability. (d) No delivery of Senior Lien Bonds to the Trustee or purchase of Senior Lien Bonds by the Trustee shall constitute a redemption of Senior Lien Bonds or any extinguishment of the debt represented thereby, unless such Senior Lien Bonds are surrendered by the Commission to the Trustee for cancellation pursuant to Section lO.Ol(b). (e) The Trustee shall not be accountable for the use or application by the Commission of the proceeds of the Senior Lien Bonds or for the use or application of any money paid over to the Commission by the Trustee in accordance with the provisions of this Indenture. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Senior Lien Bonds other than information provided by the Trustee for use therein, if any. (f) Whenever in the administration of this Indenture the Trustee shall deem it necessary or desirable that a matter be provided or established prior to taking or suffering any action to be taken hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by a Certificate of the Commission and delivered to the Trustee and such certificate, in the absence of negligence or OHSUSA:260935709.8 59 167 willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. (g) The Trustee may elect to accept and act upon instructions or directions pursuant to this Indenture sent by facsimile or Electronic means, provided, however, that, the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the Commission elects to give the Trustee facsimile or Electronic instructions and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shall be deemed controlling in the absence of its negligence or willful misconduct. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. In the absence of negligence or willful misconduct by the Trustee, the Commission agrees to assume all risks arising out of the use of such facsimile or Electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. Section 8.02 Compensation and Indemnification of Trustee. The Commission shall: (i) pay the Trustee reasonable compensation (which, to the extent permitted by applicable law, shall not be limited by any law limiting the compensation of the trustee of an • express trust); (ii) pay or reimburse the Trustee upon request for all reasonable fees, expenses, • disbursements and advances incurred or made in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ), except to the extent that any such expense, disbursement or advance is due to its own negligence or willful misconduct; and (iii) to the extent permitted by applicable law, indemnify the Trustee and its officers, directors, agents and employees for, and to hold it harmless against, any loss, liability, cost, suit, claim, judgment, damage or expense incurred by it, arising out of or in connection with the acceptance or administration of this Indenture or the performance of its duties hereunder, including legal fees and expenses and the costs and expenses of defending itself against or investigating any claim of liability or expense, except to the extent that any such liability or expense was due to its own negligence or willful misconduct. The obligations of the Commission under this Section 8.02 shall survive the satisfaction and discharge of this Indenture and the earlier removal or resignation of the Trustee. When the Trustee incurs expenses or renders services after the occurrence of an Event of Default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relieflaw. Section 8.03 Qualifications ofTrustee; Resignation; Removal. (a) There shall at all times be a trustee hereunder that is a commercial bank, trust company or national association organized and doing business under the laws of the United States or of a state thereof, authorized under such laws to exercise corporate trust powers, having (or if such bank, trust company or national association is a member of a bank holding company • system, its holding company has) a combined capital and surplus of at least five hundred million OHSUSA:260935709.8 60 168 • • dollars ($500,000,000), and subject to supervision or examination by federal or state authority. If such banks, trust companies, or banking associations publish reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then, for the purposes of this Section 8.03, the combined capital and surplus of such banks, trust companies or banking associations shall be deemed to be their combined capital and surplus as set forth in their most recent reports of conditions so published. (b) The Trustee may at any time resign by giving at least thirty (30) days' written notice to the Commission. Upon receiving such notice of resignation, the Commission, shall promptly appoint a successor trustee by an instrument in writing. If no successor trustee shall have been so appointed and have accepted appointment within thirty (30) days after the giving of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide Holder of a Senior Lien Bond for at least six months may, on behalf of itself and any others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (c) In case at any time either of the following shall occur: (i) the Trustee shall cease to be eligible in accordance with the provisions of this Section 8.03 and shall fail to resign after written request therefor by the Commission or by any Holder who has been a bona fide Holder of a Senior Lien Bond for at least six months; or (ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Commission may remove the Trustee and appoint a successor trustee by an instrument in writing executed by an Authorized Representative, or any Holder who has been a bona fide Holder of a Senior Lien Bond for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. If no successor trustee shall have been so appointed by the Commission and have accepted appointment within thirty (30) days after such removal, the Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide Holder of a Senior Lien Bond for at least six months may, on behalf of itself and any others similarly situated, petition any such court for the appointment of a successor trustee. (d) The Commission or Holders of a majority in aggregate principal amount of the Senior Lien Bonds at the time Outstanding may at any time remove the Trustee and appoint a successor trustee by an instrument or concurrent instruments in writing signed by an Authorized Representative of the Commission or by such Holders, as the case may be. (e) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 8.03 shall become effective upon written acceptance of appointment by the successor trustee acceptable to the Commission. Any successor trustee shall execute, acknowledge and deliver to the Commission and to its • predecessor trustee an instrument accepting such appointment hereunder, and thereupon the OHSUSA:260935709.8 61 169 resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, • powers, trusts, duties and obligations of its predecessor in the trusts hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the Written Request of the Commission or the request of the successor trustee, the predecessor trustee ceasing to act shall execute and deliver an instrument transferring to such successor trustee, upon the trusts herein expressed, all the rights, powers and trusts of the trustee so ceasing to act. Upon request of any such successor trustee, the Commission shall execute any and all instruments in writing necessary or desirable for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and duties. No successor trustee shall accept appointment as provided in this Section 8.03 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of this Section 8.03. Upon acceptance of appointment by a successor trustee as provided in this Section 8.03, the Commission or such successor trustee shall give Holders notice of the succession of such trustee to the trusts hereunder. (f) Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under this Section 8.03 and acceptable to the Commission, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. (g) In the event of the resignation or removal of the Trustee, the Trustee shall • deliver any money and any Senior Lien Bonds and its related books and records held by it in such capacity to its successor. (h) The Trustee may execute any of the trusts or powers hereof and perform any of its duties and responsibilities hereunder by or through attorneys, agents or receivers, including issuing and paying agents as provided in Section 8.05, and the Trustee shall not be answerable for the conduct of the same if appointed with due care hereunder, provided that the Trustee shall remain responsible for its duties hereunder. The Trustee may consult with counsel and the advice or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in the absence of negligence and willful misconduct and in accordance with such advice or opinion of counsel. Section 8.04 Instrument of Bondholders. Any instrument required by this Indenture to be executed by Bondholders may be in any number of writings of similar tenor and may be executed by Bondholders in person or . by agent appointed in writing. Proof of the execution of any such instrument or of the writing appointing any such agent and of the ownership of Senior Lien Bonds given in any of the following forms shall be sufficient for any of the purposes of this Indenture: (i) a certificate of any officer in any jurisdiction who by law has power to take acknowledgements within such jurisdiction that the person signing such writing acknowledged before him the execution thereof; or (ii) a certificate executed by any trust company or bank stating that at the date thereof the party named therein did exhibit to an officer of such trust company or bank, as the property of such party, the Senior Lien Bonds therein mentioned. OHSUSA:260935709.8 62 170 • • • • The Trustee may rely on such an instrument of Bondholders unless and until the Trustee receives notice in the form specified in (i) or (ii) above that the original such instrument is no longer reliable. In the event that the Trustee shall receive conflicting directions from two or more groups of Bondholders, each with combined holdings of not less than twenty-five percent (25%) of the principal amount of Outstanding Senior Lien Bonds, the directions given by the group of Bondholders that holds the largest percentage of Senior Lien Bonds shall be controlling and the Trustee shall follow such directions to the extent required herein. The Trustee shall have no liability provided it is following the instructions of such Bondholders permitted to direct the Trustee pursuant to this Indenture. Section 8.05 Issuing and Paying Agents. The Commission may appoint and at all times have one or more issuing and paying agents in such place or places as the Commission may designate, for the payment of a Series of Senior Lien Bonds. Such issuing and paying agent shall meet the qualifications for the Trustee and the procedures and conditions for removal and resignation set forth in Section 8.03 hereof. It shall be the duty of the Trustee to make such arrangements with any such issuing and paying agent as may be necessary to assure, to the extent of the moneys held by the Trustee for such payment, the prompt payment of Senior Lien Bonds presented at either place of payment. ARTICLE IX AMENDMENTS Section 9.01 Amendments to Indenture Not Requiring Consent of Bondholders. Except to the extent restricted by a Supplemental Indenture, the Commission and the Trustee, without the consent of or notice to any Bondholders, may execute Supplemental Indentures amending this Indenture for one or more of the following purposes: (a) to grant to or confer upon the Bondholders of any Series any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders; (b) to grant or pledge to the Bondholders of any Series any additional security; (c) to amend this Indenture in such manner as may be necessary or convenient in connection with the book-entry system for payments, transfers and other matters relating to the Senior Lien Bonds; (d) to cure any ambiguity or to correct or supplement any provision of the Indenture that, in the Opinion of Bond Counsel, is defective or inconsistent with any other provision of the Indenture; (e) to make any change therein necessary, in the Opinion of Bond Counsel, to maintain the exclusion from gross income for federal income tax purposes of the interest on any Outstanding Senior Lien Bonds intended by the Commission to bear federally tax-exempt interest; OHSUSA:260935709.8 63 171 (f) to make modifications or adjustments necessary in order to accommodate • a Credit Support Instrument or a Reserve Facility; (g) to modify, alter, amend or supplement this Indenture if (1) all of the Senior Lien Bonds to be affected thereby are variable interest rate bonds, (2) the modification, alteration, amendment or supplement shall not become effective until written notice thereof shall have been given to Bondholders of the affected Series by the Trustee, and (3) thirty (30) days shall have passed during which time such Bondholders shall have had the opportunity to tender their variable interest rate bonds for purchase; (h) to make any change therein that does not materially and adversely affect Bondholders (and the absence of a material or adverse effect may, but is not required to, be evidenced by a Certificate of the Commission or an Opinion of Bond Counsel delivered pursuant to Section 9.04); and (i) to issue additional Senior Lien Bonds hereunder in accordance with the terms hereof; provided, that no such amendment may permit, or be construed as permitting, (i) an extension of the maturity of the principal of, or the mandatory redemption date of, or interest on, any Senior Lien Bond, or (ii) a reduction in the principal amount of, or the redemption premium or the rate of interest on, any Senior Lien Bond, or (iii) a preference or priority of any Senior Lien Bond or Senior Lien Bonds over any other Senior Lien Bond or Senior Lien Bonds, or (iv) a reduction in the aggregate principal amount of the Senior Lien Bonds required for any consent to any • amendment pursuant to Section 9.02. Section 9.02 Amendments to Indenture Requiring Consent of Bondholders and TIFIA. Exclusive of amendments authorized by Section 9.01 and subject to the terms and provisions contained in this Section 9.02 and in any Supplemental Indenture, and further subject at all times prior to repayment of the TIFIA Loan in full pursuant to its terms to receipt of written consent from the TIFIA Lender, the Holders of not less than a majority of the aggregate principal amount of the then Outstanding Senior Lien Bonds, or if less than all of the Outstanding Senior Lien Bonds are affected, the Holders of not less than a majority of the aggregate principal amount of the Outstanding Senior Lien Bonds affected, shall have the right, from time to time, anything contained in this Indenture to the contrary notwithstanding, to consent to such other amendments hereto for the purpose of modifying, altering, amending, or supplementing any of the terms or provisions contained in this Indenture or in any Supplemental Indenture; provided, however, that nothing in this Section 9.02 shall permit, or be construed as permitting (i) an extension of the maturity of the principal of, or the mandatory redemption date of, or interest on, any Senior Lien Bond, or (ii) a reduction in the principal amount of, or the redemption premium or the rate of interest on, any Senior Lien Bond, or (iii) a preference or priority of any Senior Lien Bond or Senior Lien Bonds over any other Senior Lien Bond or Senior Lien Bonds, or (iv) a reduction in the aggregate principal amount of the Senior Lien Bonds required for any consent to any amendment. Section 9.03 Notice to and Consent of Bondholders. If consent of the Bondholders is required under the terms of this Indenture for the amendment of this Indenture or • OHSUSA:260935709.8 64 172 • • • for any other similar purpose, the Commission shall cause notice of the proposed amendment to be given by first-class mail to the Holders of the Outstanding Senior Lien Bonds then shown on the registration books for the Senior Lien Bonds. Such notice shall briefly set forth the nature of the proposed amendment or other action and shall state that copies of any such amendment are on file at the office of the Commission and the Principal Office of the Trustee for inspection by all Bondholders. If, within sixty (60) days or such longer period as shall be prescribed by the Commission following the mailing of such notice, the Holders of the requisite principal amount of the Senior Lien Bonds Outstanding by instruments filed with the Commission shall have consented to the amendment or other proposed action, then the Commission may adopt or execute, as appropriate, such amendment or take such proposed action and the consent of the Bondholders shall thereby be conclusively presumed. Such instruments filed with the Commission may include documents, including Certificates of the Commission, stating that Holders of Senior Lien Bonds have consented to an amendment by purchasing such Senior Lien Bonds if the official statement or other disclosure document related to such purchase disclosed that the purchase of the Senior Lien Bonds was deemed to mean that the Holders consented to the amendment. Section 9.04 Execution and Effect of Supplemental Indentures. Prior to executing any Supplemental Indenture hereunder, the Trustee shall be entitled to receive and rely upon an Opinion of Bond Counsel to the effect that such Supplemental Indenture is authorized or permitted hereunder. The Trustee is not obligated to execute any Supplemental Indenture adversely affecting its rights, duties protections and immunities hereunder. The Trustee shall not execute any Supplemental Indenture materially affecting the priority of payment of or rights or obligations of the holders of Permitted Second Lien Obligations without the prior written consent of such holders in accordance with the instrument pursuant to which such Permitted Second Lien Obligations are incurred. The Trustee shall not execute any Supplemental Indenture materially affecting the priority of payment of the TIFIA Obligations or the rights or obligations of the TIFIA Lender without the prior written consent of the TIFIA Lender in accordance with the provisions of the TIFIA Loan Agreement and hereof. Upon the execution and delivery of any Supplemental Indenture pursuant to this Article IX, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Commission, the Trustee and all Owners of Outstanding Senior Lien Bonds shall thereafter be determined, exercised and enforced subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 9.05 Senior Lien Bonds Owned by Commission. (a) For purposes of this Article IX, Senior Lien Bonds owned or held by or for the account of the Commission shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Senior Lien Bonds provided for in this Article IX, and the Commission shall not be entitled with respect to such Senior Lien Bonds to give any consent or take any other action provided for in this Article IX; except that in determining whether the Trustee shall be protected in relying upon any such approval or consent of a Holder, only Senior Lien Bonds which the Trustee actually knows to be owned by the Commission shall be disregarded unless all Senior Lien Bonds are owned or held by or for the account of the Commission, in which case such Senior Lien Bonds shall be considered Outstanding for the purpose of such determination. Upon OHSUSA:260935709.8 65 173 request of the Trustee, at the time of any consent or other action is to be taken under this Article • IX, the Commission shall furnish the Trustee a Certificate of the Commission, upon which the Trustee may rely, describing all Senior Lien Bonds so to be excluded. (b) The purchase or other acquisition of Senior Lien Bonds by or on behalf of the Commission shall not cancel, extinguish, or otherwise affect the Senior Lien Bonds unless such Senior Lien Bonds are surrendered by the Commission to the Trustee for cancellation in accordance with Section 10.01(b). ARTICLE X DISCHARGE OF LIEN Section 10.01 Discharge of Lien and Security Interest. (a) At the election of the Commission, upon payment in full of all the Senior Lien Bonds and of all other amounts payable under this Indenture, the pledge and lien on the Revenue arising under this Indenture shall cease, determine and be void; provided, however, such discharge of this Indenture shall not terminate the powers and rights granted to the Trustee with respect to the payment, transfer and exchange of the Senior Lien Bonds, and Section 8.02 shall survive hereunder. (b) The Commission may at any time surrender to the Trustee for cancellation any Senior Lien Bonds previously authenticated and delivered hereunder that the Commission at its option may have acquired in any manner whatsoever and such Senior Lien Bonds upon such surrender and cancellation shall be deemed to be paid and retired. • (c) Notwithstanding any provision in the Indenture to the contrary, if the principal of or interest on any Senior Lien Bonds shall be paid by a Credit Provider, those Senior Lien Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Commission within the meaning of this Section 10.01, and the pledge of the Revenue and all covenants, agreements and other obligations of the Commission as herein provided shall continue to exist and shall run to the benefit of such Credit Provider, and such Credit Provider shall be subrogated to the rights of the Holders. Section 10.02 Provision for Payment of Senior Lien Bonds. Senior Lien Bonds (or any portion of the Senior Lien Bonds) shall be deemed to have been paid within the meaningofSection 10.01 if: (a) there shall have been irrevocably deposited with the Trustee or other fiduciary in trust either (i) lawful money of the United States of America in an amount that shall be sufficient, or (ii) Defeasance Securities, the principal and interest on which when due, together with the moneys, if any, deposited with the Trustee at the same time, shall be sufficient (as confirmed by a report of an Independent Certified Public Accountant), to pay when due the principal amount of, redemption premium (if any) and all unpaid interest on such Senior Lien Bonds (or any portion thereof) to the maturity or the redemption date thereof, as the case may be; and (b) if any such Senior Lien Bonds are to be redeemed on any date prior to • their maturity, (i) the Trustee shall have received (not less than 25 days prior to the proposed OHSUSA:260935709.8 66 174 • • • redemption date) in form satisfactory to it irrevocable written instructions from an Authorized Representative to redeem such Senior Lien Bonds on such date and (ii) notice of such redemption shall have been given or provision satisfactory to the Trustee shall have been irrevocably made for the giving of such notice. Limitations elsewhere specified herein regarding the investment of money held by the Trustee shall not be construed to prevent the depositing and holding of the Defeasance Securities described in Section 1 0.02(a)(ii) for the purpose of defeasing the lien of this Indenture as to Senior Lien Bonds that have not yet become due and payable. In addition, all money so deposited with the Trustee as provided in Section 1 0.02(a)(i) may also be invested and reinvested, at the written direction of an Authorized Representative, in Defeasance Securities, maturing in the amounts and times as hereinbefore set forth, subject to the confirming report of an Independent Certified Public Accountant as to the sufficiency thereof as provided in Section 10.02(a)(ii), and all income from all Defeasance Securities in the hands ofthe Trustee pursuant to this Section 1 0.02, that is not required for the payment of the principal of the Senior Lien Bonds and interest and redemption premium, if any, thereon with respect to which such money shall have been so deposited, shall be deposited in the Toll Revenue Fund as and when realized and applied as is other money deposited in the Toll Revenue Fund, or, in the event there are no longer any Senior Lien Bonds Outstanding under this Indenture, such income shall be automatically paid over to the Commission. Notwithstanding any other provision of this Indenture, no Senior Lien Bond that is subject to optional or mandatory tender in accordance with the provisions of the Supplemental Indenture pursuant to which such Senior Lien Bond was issued, shall be deemed to be paid within the meaning of this Indenture, unless arrangements shall have been made to assure that such Senior Lien Bond, if tendered for purchase prior to the date of its redemption or maturity in accordance with the provisions of the applicable Supplemental Indenture, could be paid and redeemed from such moneys or Defeasance Securities as are provided pursuant to this Section 10.02. Section 10.03 Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Senior Lien Bonds that remain unclaimed for two (2) years after the date when such Senior Lien Bonds shall have become due and payable (during which period the Trustee shall hold such moneys without liability for interest), either at their stated maturity dates, tender for purchase or by call for redemption, if such moneys were held by the Trustee at such date, or for two (2) years after the date of deposit of such moneys, if deposited with Trustee after the date when such Senior Lien Bonds or the Purchase Price thereof became due and payable, shall automatically be repaid by the Trustee to the Commission as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Holders shall look only to the Commission for the payment of the principal or Purchase Price of, the redemption premiums, if any, and interest on such Senior Lien Bonds . OHSUSA:260935709.8 67 175 ARTICLE XI MISCELLANEOUS Section 11.01 Liabilitv of Commission Limited to Revenue. Notwithstanding anything contained herein, the Commission shall not be required to advance any money derived from any source of income other than Revenue as provided herein for the payment of the principal of or redemption premium, if any, or interest on the Senior Lien Bonds or for the performance of any agreements or covenants contained herein. The Commission may, however, advance funds for any such purpose so long as such funds are derived from a source legally available for such purpose and may be used by the Commission for such purpose without incurring an indebtedness prohibited hereby. The Senior Lien Bonds are special obligations of the Commission payable, as to principal thereof, and redemption premium, if any, upon the redemption of any thereof, and interest thereon, solely from Revenue as provided herein and the Commission is not obligated to pay them except from Revenue. The Senior Lien Bonds do not constitute a debt or liability of the State or of 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. Section 11.02 Limitation of Rights; Third Party Beneficiary. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Senior Lien Bonds is intended or shall be construed to give to any Person other than the Bondholders and each Secured Creditor any legal or equitable right, remedy or claim under or in respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the cover{ants, conditions and provisions herein being· intended to be and being for the sole and exclusive benefit of the Bondholders and each Secured Creditor. Section 11.03 Rights of Credit Providers. (a) A Supplemental Indenture authorizing a Series of Senior Lien Bonds may provide that any Credit Provider providing a Credit Support Instrument with respect to Senior Lien Bonds of such Series may exercise any right under this Indenture given to the Owners of the Senior Lien Bonds to which such Credit Support Instrument relates. (b) All provisions under this Indenture authorizing the exercise of rights by a Credit Provider with respect to consents, approvals, directions, waivers, appointments, requests or other actions, shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Provider were not mentioned therein during any period during which there is a default by such Credit Provider under the applicable Credit Support Instrument or after the applicable Credit Support Instrument shall at any time for any reason cease to be valid and binding on the Credit Provider, or shall be declared to be null and void by final judgment of a court of competent jurisdiction, or after the Credit Support Instrument has been rescinded, repudiated by the Credit Provider or terminated, or after a receiver, conservator or liquidator has been appointed for the Credit Provider or if the • • Credit Provider is rated below Baa3 by Moody's or BBB-by S&P. All provisions relating to the • rights of a Credit Provider shall be of no further force and effect if all amounts owing to the OHSUSA:260935709.8 68 176 • • • Credit Provider under a Credit Support Instrument have been paid and the Credit Support Instrument provided by such Credit Provider is no longer in effect. Section 11.04 Severability. If any provision of this Indenture is held to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. If any one or more of the provisions contained in this Indenture or in the Senior Lien Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Commission hereby declares that it would have executed this Indenture and each and every other section, paragraph, sentence, clause or phrase hereof, and authorized the issuance of the Senior Lien Bonds pursuant to this Indenture, irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. Section 11.05 Notices. 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 as follows: If to the Commission: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: ChiefFinancial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 If to the Trustee: [to come] The Commission and the Trustee by notice given hereunder may designate any different addresses to which subsequent notices, certificates or other communications shall be sent, or addresses or other instructions for the giving of Electronic notice, but no notice directed to any one such entity shall be thereby required to be sent to more than two addresses. Section 11.06 Payments Due on Non-Business Days. Except as specifically provided otherwise in a Supplemental Indenture, any payment or transfer that would otherwise become due on a day that is not a Business Day need not be made on such day but shall be made on the next succeeding Business Day, with the same force and effect as if made on the date due, and no interest shall accrue for the period from and after the date due . OHSUSA:260935709.8 69 177 Section 11.07 Captions. The captions or headings in this Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Indenture. Section 11.08 California Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. Section 11.09 Effective Date. This Indenture shall become effective upon its execution and delivery. Section 11.10 Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Commission and Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. OHSUSA:260935709.8 70 178 • • • • • • IN WITNESS WHEREOF, the parties hereto have caused this Subordinate Indenture to be executed by their officers thereunto duly authorized as of the day and year first written above. Countersigned: Clerk of the Board OHSUSA:260935709.8 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By ------------------------------ Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By ---------------------------- 71 179 Authorized Officer • • • FIRST SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and ATTACHMENT 5 OH&S Draft 2/19/2013 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee OHSUSA:260941335.4 Dated as of June 1, 2013 Relating to the Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series A and 2013 Series B (Supplementing the Master Indenture Dated as of June 1, 2013) B 180 • • • Section 12.01. Section 12.02. Section 13.01. Section 13.02. Section 13.03. Section 14.01. Section 14.02. Section 14.03. Section 14.04 . Section 14.05. Section 14.06. Section 15.01. Section 15.02. Section 15.03. Section 15.04. Section 15.05. TABLE OF CONTENTS ARTICLE XII DEFINITIONS Page Definitions ........................................................................................................ 1 Rules of Construction ...................................................................................... 3 ARTICLE XIII FINDINGS, DETERMINATIONS AND DIRECTIONS Findings and Determinations ........................................................................... 3 Recital in Bonds ............................................................................................... 3 Effect of Findings and Recital ......................................................................... 3 ARTICLE XIV AUTHORIZATION OF 2013 BONDS Principal Amount, Designation and Series ...................................................... 4 Purpose ............................................................................................................. 4 Form, Denomination, Numbers and Letters .................................................... 4 Date, Maturities and Interest Rates .................................................................. 4 Conditions To Delivery of2013 Bonds ........................................................... 5 Disposition of Proceeds of2013 Bonds ........................................................... 6 ARTICLE XV REDEMPTION OF 2013 BONDS Optional Redemption of 2013 Series A Bonds ................................................ 6 Mandatory Redemption of2013 Series A Bonds From Sinking Fund Installments ...................................................................................................... 6 Selection of2013 Series A Bonds for Redemption ......................................... 8 Purchase In Lieu of Redemption ...................................................................... 8 No Redemption of2013 Series B Bonds ......................................................... 8 ARTICLE XVI ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 16.0 1. Section 16.02. Section 16.03. Section 16.04 . OHSUSA:260941335A Funds and Accounts ......................................................................................... 8 2013 Bonds Project Fund ................................................................................. 9 2013 Bonds Costs oflssuance Account.. ......................................................... 9 2013 Bonds Reserve Account.. ...................................................................... 1 0 -1- 181 Section I7.01. Section 17.02. Section 17.03. Section I7.04. Section 17.05. Section 17.06. Section I7.07. Section 17.08. Exhibit A Exhibit B OHSUSA:260941335.4 TABLE OF CONTENTS (continued) ARTICLE XVII MISCELLANEOUS Page Severability .................................................................................................... I 0 Parties Interested Herein ................................................................................ 11 Headings Not Binding .................................................................................... II Notice Addresses ........................................................................................... 11 Notices to Rating Agencies ............................................................................ 11 Indenture to Remain in Effect.. ...................................................................... II Effective Date of First Supplemental Indenture ............................................ 11 Execution in Counterparts .............................................................................. 11 Form of2013 Series A Bond ....................................................................... A-1 Notice Addresses ......................................................................................... B-1 -11- 182 • • • • • • THIS FIRST SUPPLEMENTAL INDENTURE, dated as of June 1, 2013 (this "First Supplemental Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly existing under the laws of the State of California (the "Commission") and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under the laws of the United States of America, as trustee (together with any successor thereto, the "Trustee"). WITNESSETH: WHEREAS, this First Supplemental Indenture is supplemental to the Master Indenture, dated as of June 1, 2013 (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 Revenue and certain other amounts, including such other sources as may be specified with respect to a particular Series of Bonds in the Supplemental Indenture authorizing such Series; and WHEREAS, the Commission desires to provide at this time for the issuance of Bonds secured by the pledge of Revenue under the Indenture, such Bonds to be designated "Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series A," and "Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series B," for the purpose of providing funds to pay for the costs of the initial phase of the Riverside SR-91 Corridor Improvement Project, all as provided in this First Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE XII DEFINITIONS Section 12.01. Definitions. (a) Definitions. Unless the context otherwise requires, or as otherwise provided in subsection (b) of this Section, all terms defined in the Indenture shall have the same meanings, respectively, in this First Supplemental Indenture. (b) Additional Definitions. Unless the context otherwise requires, the following terms shall, for all purposes of this First Supplemental Indenture, have the following meanings: "Authorized Denominations" means, with respect to 2013 Series A Bonds, $5,000 piincipal amount and any integral multiple thereof and, with respect to 2013 Series B Bonds, $5,000 Maturity Value and any integral multiple thereof. OHSUSA:260941335.4 183 "Capita] Appreciation Bonds" means Bonds that do not bear current interest but instead increase in value by the accumulation of earned interest from their respective initial • principal amounts on the Issue Date to the Maturity Value thereof at maturity. "Current Interest Bonds" means Bonds the interest rate on which is fixed on the date of issuance of such Bonds at a single numerical rate for the entire term of the Bonds and that pay interest semiannually to the Owners thereof excluding the first payment of interest thereon. "First Supplemental Indenture" means this First Supplemental Indenture, dated as of June 1, 2013. "Interest Payment Date" means, with respect to the 2013 Series A Bonds, January 1 and July 1 of each year until the redemption or maturity of such 2013 Series A Bonds, commencing with January 1, 2014, and, for purposes of compounding interest on the 2013 Series B Bonds, January 1 and July 1 of each year until the maturity of such 2013 Series B Bonds, commencing with January 1, 2014. "Issue Date" means, with respect to the 2013 Bonds, the date on which the 2013 Bonds are first delivered to the purchasers thereof. "Maturity Value," with respect to any Capital Appreciation Bond, shall mean the principal amount of such Bond plus accrued interest at the maturity thereof. "Record Date" means, with respect to the 2013 Bonds, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest • Payment Date occurs. "2013 Bonds" means, collectively, the 2013 Series A Bonds and the 2013 Series B Bonds. ["2013 Bonds Tax Certificate" shall mean that certain Tax Certificate executed on behalf of the Commission in connection with the issuance of the 2013 Bonds and relating to the requirements of the Code.] "2013 Bonds Costs of Issuance Account" means the 2013 Bonds Costs of Issuance Account established within the 2013 Bonds Project Fund pursuant to Section 16.0 1. "2013 Bonds Project Fund" means the 2013 Bonds Project Fund established pursuant to Section 16.01. "2013 Bonds Reserve Account" means the 2013 Bonds Reserve Account established within the Reserve Fund pursuant to Section 16.0 1. "2013 Bonds Reserve Requirement" means, as of any particular date of calculation, with respect to the 2013 Bonds, an amount equal to the least of (i) Maximum Annual Debt Service on the 2013 Bonds, (ii) one hundred twenty-five percent (125%) of average annual Debt Service on the 2013 Bonds, or (iii) ten percent ( 1 0%) of the original principal amount of the 2013 Bonds. • OHSUSA:26094 I 335.4 -2- 184 • • • "2013 Series A Capitalized Interest Account" means the 2013 Series A Capitalized Interest Account established within the 2013 Bonds Project Fund pursuant to Section 16.01. "2013 Series A Bonds" means the Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series A, authorized by Article XIV of this Indenture. "2013 Series B Bonds" means the Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series B, authorized by Article XIV ofthis Indenture. Section 12.02. Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. Defined terms shall include any variant of the terms set forth in this Article XII. The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this First Supplemental Indenture, refer to the Indenture. ARTICLE XIII FINDINGS, DETERMINATIONS AND DIRECTIONS Section 13.01. Findings and Determinations. The Commission hereby finds and determines that the 2013 Bonds shall be issued pursuant to Article XIV hereof and upon the issuance of the 2013 Bonds, any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the issuance thereof, will exist, will have happened and will have been performed, in due time, form and manner, as required by the Constitution and statutes of the State. Section 13.02. Recital in Bonds. There shall be included in each of the definitive 2013 Bonds, and also in each of the temporary 2013 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 2013 Bond, and in the issuing of that 20 13 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 2013 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 and the Act, and that such certification and recital shall be in such form as is set forth in the forms of the 2013 Bonds attached hereto as Exhibit A. Section 13.03. Effect of Findings and Recital. From and after the issuance of the 2013 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 2013 Bonds is at issue, and no bona fide purchaser of any such 2013 Bond OHSUSA:260941335.4 -3- 185 containing the certification and recital shall be required to see to the existence of any fact, or to the performance of any condition, or to the taking of any proceeding, required prior to such issuance, or to the application of the purchase price for such 2013 Bonds. ARTICLE XIV AUTHORIZATION OF 2013 BONDS Section 14.01. Principal Amount, Designation and Series. Pursuant to the provisions of this Indenture and the provisions of the Act, a Series of Bonds entitled to the benefit, protection and security of such provisions, including without limitation the pledge of Revenue and other amounts in Article V hereof, is hereby authorized in the aggregate principal amount of $ . Such Bonds shall be issued as Current Interest Bonds and shall be designated as, and shall be distinguished from the Bonds of all other Series by the title, "Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series A." 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, including without limitation the pledge of Revenue and other amounts in Article V hereof, is hereby authorized in the [aggregate principal amount] of$ . Such Bonds shall be issued as Capital Appreciation Bonds and shall be designated as, and shall be distinguished from the Bonds of all other Series by the title, "Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series B." • Section 14.02. Purpose. The 2013 Bonds are issued for the purpose of financing the Riverside SR-91 Corridor Improvement Project, funding the required deposit to the • 2013 Reserve Account, funding capitalized interest on the 2013 Series A Bonds and paying costs of issuance. Section 14.03. Form, Denomination, Numbers and Letters. The 2013 Bonds shall be issued as Book-Entry Bonds in fully registered form in Authorized Denominations and shall be numbered from one upward in consecutive numerical order preceded by the letter "R" prefixed to the number. The 2013 Series A Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A-1, which form is hereby approved and adopted as the form of the 2013 Series A Bonds and as the form of the certificate of authentication. The 2013 Series B Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A-2, which form is hereby approved and adopted as the form of the 2013 Series B Bonds and as the form of the certificate of authentication. Section 14.04. Date, Maturities and Interest Rates. (a) The 2013 Series A Bonds shall be issued as Current Interest Bonds in the aggregate principal amount of$ . The 2013 Series A Bonds shall be dated their Issue Date, shall bear interest from that· date at the following rates per annum, computed on the basis of a 360-day year comprised of twelve 30-day months, and shall mature on July 1 in the following years and in the following amounts: OHSUSA:260941335.4 -4- 186 • • • • Maturity Date (July 1) * Term Bond Final Maturity Principal Amount t Priced to first call date of July 1, 20_ at par. Interest Rate (b) Each 2013 Series A 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 (c) As long as the 2013 Series A Bonds are Book-Entry Bonds, principal of and premium, if any, and interest on the 2013 Series A Bonds shall be payable by wire transfer to the Securities Depository in lawful money of the United States of America. (d) If the 2013 Series A Bonds cease to be Book-Entry Bonds, principal of and premium, if any, on the 2013 Series A Bonds shall be payable when due upon presentation and surrender thereof at the Principal Office of the Trustee and interest shall be payable by first class mail on each interest payment date to the Owners thereof as of the close of business on the Record Date; provided, however, that Owners of $1,000,000 or more in aggregate principal amount of2013 Series A Bonds may, at any time prior to a Record Date, give the Trustee written instructions for payment of such interest on each succeeding interest payment date by wire transfer. (e) The 2013 Series B Bonds shall be issued in the principal amounts and mature on July 1 in each of the years and Maturity Values shown below: [TO COME] The 2013 Series B Bonds shall not bear current interest; each 2013 Series B Bond shall increase in value by the accumulation of earned interest from its initial principal amount shown in the table above on the date of issuance thereof to the Maturity Value thereof at maturity, assuming in any period that the value increases in equal daily amounts on the basis of a 360-day year of twelve 30-day months. The interest on the 2013 Series B Bonds shall be compounded commencing on January 1, 2014, and thereafter on January 1 and July 1 in each year to maturity or the date of redemption prior thereto. Section 14.05. Conditions To Delivery of 2013 Bonds. Each of the 2013 Bonds shall be executed and delivered as authorized by this First Supplemental Indenture and the OHSUSA:260941335.4 -5- 187 Indenture, including Articles II and III thereof, upon the receipt of payment therefor from the purchaser thereof. Section 14.06. Disposition of Proceeds of 2013 Bonds. The net proceeds from the sale of the 2013 Bonds shall be received by the Trustee and transferred and deposited by the Trustee as follows: (i) Deposit$ into the 2013 Bonds Costs oflssuance Account; ----- (ii) Deposit $ , representing the 2013 Bonds Reserve Requirement at the time of issuance ofthe 2013 Bonds, into the 2013 Bonds Reserve Account; (iii) Deposit $ _____ into the 2013 Series A Capitalized Interest Account; and (iv) Deposit the remaining amount of$ into the 2013 Bonds Project Fund. ----- ARTICLE XV REDEMPTION OF 2013 BONDS Section 15.01. Optional Redemption of 2013 Series A Bonds. • (a) The 2013 Series A Bonds maturing on or before July 1, 20_ shall not be subject to redemption prior to their respective stated maturities. The 2013 Series A Bonds • maturing on or after July 1, 20_ shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any source of available funds, as a whole or in part, on any date on or after July 1, 20_ at the principal amount of 2013 Series A Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium. The Commission shall give the Trustee written notice at least thirty (30) days (or such lesser time period acceptable to the Trustee) before any date fixed for the redemption of the 2013 Series A Bonds to be redeemed pursuant to this subsection (a), designating the maturity or maturities of the 2013 Series A Bonds to be redeemed, the portions thereof to be redeemed and the fact and date of such redemption. (b) Any optional redemption of 2013 Series A Bonds and notice thereof shall be rescinded and cancelled pursuant to the provisions of Section 4.03 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 2013 Series A Bonds called for redemption. Section 15.02. Mandatory Redemption of 2013 Series A Bonds From Sinking Fund Installments. (a) The 2013 Series A Bonds maturing on July 1, 20_, July 1, 20_, July 1, 20_ and July 1, 20_, respectively, shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Sinking Fund Installments on each July 1 a • Sinking Fund Installment is due as specified in Section 15.02(b), in the principal amount equal to OHSUSA:260941335.4 -6- 188 • • • the Sinking Fund Installment due on such date and at a redemption price equal to 100% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premmm. (b) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on July 1, 20_ shall be due in the amounts and on the dates as follows: *Final Maturity Sinking Fund Installment Dates (July 1) Sinking Fund Installments (c) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on July 1, 20_ shall be due in the amounts and on the dates as follows: *Final Maturity Sinking Fund Installment Dates (July 1) Sinking Fund Installments (d) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on July 1, 20_ shall be due in the amounts and on the dates as follows: *Final Maturity Sinking Fund Installment Dates (July 1) Sinking Fund Installments (e) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on July 1, 20_ shall be due in the amounts and on the dates as follows: OHSUSA:260941335.4 -7- 189 *Final Maturity Sinking Fund Installment Dates (July 1) Sinking Fund Installments On or before the date such Sinking Fund Installments are due, the Trustee shall deposit such amounts to the Principal Account and amounts so transferred shall be applied as provided in Section 5.02 and this Section 15.02. Section 15.03. Selection of 2013 Series A Bonds for Redemption. The • Commission shall designate which maturities of 2013 Series A Bonds are to be called for redemption pursuant to Section 15.01 and what Sinking Fund Installments are to be reduced as allocated to such redemptions. Whenever provision is made in this Indenture for the redemption ofless than all ofthe 2013 Series A Bonds maturing on a specific maturity date, the Trustee shall select the Bonds of such maturity to be redeemed, from the Outstanding Bonds of such maturity and Series not previously called for redemption, in minimum denominations of $5,000 (of principal), by lot in any manner which the Trustee in its sole discretion shall deem appropriate. In the event Term Bonds are designated for redemption, the Commission may designate the Sinking Fund Installments under Section 15.02, or portions thereof, that are to be reduced as • allocated to such redemption. The Trustee shall promptly notify the Commission in writing of the Bonds of such Series so selected for redemption. Section 15.04. Purchase In Lieu of Redemption. In lieu of mandatory redemption from Sinking Fund Installments, the Commission may surrender to the Trustee for cancellation 2013 Series A Term Bonds purchased on the open market and such 2013 Series A Term Bonds shall be cancelled by the Trustee. If any 2013 Series A Term Bonds are so cancelled, the Commission may designate the Sinking Fund Installments or portions thereof that are to be reduced as allocated to such cancellation. Section 15.05. No Redemption of 2013 Series B Bonds. The 2013 Series B Bonds are not subject to redemption prior to maturity. ARTICLE XVI ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF Section 16.01. Funds and Accounts. To ensure the proper application of such portion of proceeds from the sale of the 2013 Bonds to be applied to pay Costs of the Riverside SR-91 Corridor Improvement Project, Costs of Issuance of the 2013 Bonds and capitalized interest on the 2013 Series A Bonds, there is hereby established the 2013 Bonds OHSUSA:260941335.4 -8- 190 • • • • Project Fund and the 2013 Bonds Costs of Issuance Account and 2013 Series A Capitalized Interest Account therein, which shall be held by the Trustee. To ensure the proper application of such proceeds from the sale of the 2013 Bonds to be applied to satisfy the 2013 Bonds Reserve Requirement, there is hereby established the 2013 Bonds Reserve Account within the Reserve Fund, such account to be held by the Trustee. Section 16.02. 2013 Bonds Project Fund. The monies set aside and placed in the 2013 Bonds Project Fund shall be expended for the purpose of paying the costs of the Riverside SR-91 Corridor Improvement Project and shall not be used for any other purpose whatsoever. Pursuant to Section 5.07, all interest, profits and other income received from the investment of morieys in the 2013 Bonds Project Fund shall be deposited in the 2013 Bonds Project Fund. (a) Before any payment from the 2013 Bonds Project Fund shall be made by the Trustee, the Commission shall file or cause to be filed with the Trustee a requisition of the Commission in the form attached hereto as Exhibit C (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 2013 Bonds Project Fund and has not been previously paid from said fund. [Provisions for Parity Draws on TIFIA Project Account to come.] (b) When the Commission determines that the Riverside SR-91 Corridor Improvement Project has been completed, a Certificate of the Commission shall be delivered to the Trustee by the Commission stating: (i) the fact and date of such completion; (ii) that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in the 2013 Bonds Project Fund is to be maintained in the full amount of such claims until such dispute is resolved); and (iii) that the Trustee is to transfer the remaining balance in the 2013 Bonds Project Fund, less the amount of any such retention, to the 2013 Bonds Reserve Account, to the extent of any deficiency therein, and then to the Bond Fund. Section 16.03. 2013 Bonds Costs of Issuance Account. The monies set aside and placed in the 2013 Bonds Costs of Issuance Account shall remain therein until ._[ __ _ 20_] and expended for the purpose of paying the Costs oflssuance of the 2013 Bonds. Before any payment from the 2013 Bonds Costs oflssuance Account shall be made by the Trustee, the Commission shall file or cause to be filed with the Trustee a requisition ofthe 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 OHSUSA:260941335.4 -9- 191 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 2013 Bonds Costs of Issuance Account and has not been previously paid from said fund. On [ , 20 _j, any amounts remaining in the 2013 Bonds Costs of Issuance Account shall be transferred to the [Bond Fund] and the 2013 Bonds Costs of Issuance Account shall be closed. Section 16.04. 2013 Bonds Reserve Account. The monies set aside and placed in the 2013 Bonds Reserve Account on account of the 2013 Bonds Reserve Requirement shall be held solely for the benefit of the 2013 Bonds and shall be used, withdrawn, and replenished as provided herein and in Section 5.03. If, on any date of valuation of Permitted Investments credited to the 2013 Bonds Reserve Account pursuant to Section 5.07, the amount on deposit in the 2013 Bonds Reserve Account exceeds the 2013 Bonds Reserve Requirement as of such date, the Trustee shall transfer such excess amount to the Bond Fund or as otherwise directed pursuant to a Written Request of the Commission, provided that such Written Request of the Commission is accompanied by an Opinion of Bond Counsel to the effect that such transfer shall not cause the interest on any of the 2013 Bonds to be included in gross income for federal income tax purposes. Section 16.05. 2013 Series A Capitalized Interest Account. Moneys in the 2013 Series A Capitalized Interest Account, including investment earnings thereon, shall be transferred to the Interest Account in the following amounts and on or before the following Interest Payment Dates, and shall be used solely for the purpose of paying interest on the 2013 • Series A Bonds Outstanding as the same shall become due and payable (including accrued • interest on any 2013 Series A Bonds purchased or redeemed prior to maturity): Amount Any balance remammg on deposit in the 2013 Series A Capitalized Interest Account on [ , 20 _j shall be transferred, together with any interest earnings thereon, to the Interest Fund and applied to the payment on [ , 20_] of interest on the 2013 Series A Bonds. ARTICLE XVII MISCELLANEOUS Section 17.01. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this First Supplemental Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this First Supplemental Indenture, and the application of any such covenant, agreement or OHSUSA:260941335.4 L__---------------~--~ -~ -10- 192 • • • • provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this First Supplemental Indenture shall remain valid. Section 17 .02. Parties Interested Herein. Nothing in this First Supplemental Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Commission, the Trustee, and the Owners of the 2013 Bonds, any right, remedy or claim under or by reason of this First Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this First Supplemental Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the Commission, the Trustee, and the Owners. Section 17.03. Headings Not Binding. The headings in this First Supplemental Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this First Supplemental Indenture. Section 17 .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 . Section 17.05. Notices to Rating Agencies. The Trustee shall provide notice to the Rating Agencies of the following events with respect to the 2013 Bonds: (1) Change in Trustee; (2) Amendments to the Indenture; and (3) Redemption or defeasance of the 2013 Bonds. Section 17.06. Indenture to Remain in Effect. Save and except as amended and supplemented by this First Supplemental Indenture, the Master Indenture shall remain in full force and effect. Section 17.07. Effective Date of First Supplemental Indenture. This First Supplemental Indenture shall take effect upon its execution and delivery. Section 17.08. Execution in Counterparts. This First Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHSUSA:260941335.4 -11- 193 IN WITNESS WHEREOF, the parties hereto have executed this First Supplemental Indenture by their officers thereunto duly authorized as of the day and year first written above. Countersigned: Clerk of the Board OHSUSA:260941335.4 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: ------------~---------------- Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: ------------------------------ Authorized Officer 194 • • • • • • No. R--A- INTEREST RATE EXHIBIT A-1 FORM OF 2013 SERIES A BOND Riverside County Transportation Commission Toll Revenue Bond (Fixed Rate Bond), 2013 Series A MATURITY July 1, 20_ ISSUE DATE [ ],201_ REGISTERED OWNER: Cede & Co. PRINCIPAL AMOUNT: Dollars $ ____ _ CUSIP 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 Revenue as hereinafter referred to) in lawful money of the United States of America, to the registered owner or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount specified above, until the principal hereof shall have been paid, at the interest rate per annum specified above based on a 360-day year of twelve 30-day months, payable on January 1, 2014 and semiannually thereafter on January 1 and July 1 and at maturity or upon the prior redemption thereof (each, an "Interest Payment Date"). 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. As long as 2013 Series A Bonds are Book-Entry Bonds, principal of and premium, if any, and interest on the 2013 Series A Bonds shall be payable by wire transfer to the Securities Depository in lawful money of the United States of America. If the 2013 Series A Bonds cease to be Book-Entry Bonds, principal of and premium, if any, on the 2013 Series A Bonds shall be payable when due upon presentation and surrender thereof at the Principal Office of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") and interest shall be payable by first class mail on each interest payment date to the Owners thereof as of the close of business on the Record Date; provided, however, that Owners of $1,000,000 or more in aggregate principal amount of 2013 Series A Bonds may, at any time prior to a Record Date, give the Trustee written instructions for payment of such interest on each succeeding interest payment date by wire transfer. As used herein, "Record Date" means the A-1 OHSUSA:260941335.4 195 fifteenth day (whether or not a Business Day) of the month preceding such Interest Payment • Date. This Bond is one of a duly authorized issue of bonds of the Commission, designated as "Riverside County Transportation Commission Toll Revenue Bonds" (the "Bonds"), ofthe series designated above, all of which are being issued pursuant to the provisions of Division 12 of the Public Utilities Code of the State of California (the "Act") and a Master Indenture, dated as of June 1, 2013 (the "Master Indenture"), as supplemented, including as supplemented by a First Supplemental Indenture, dated as of 1, 201_ (the "First Supplemental Indenture"), each between the Commission and the Trustee. The Master Indenture, as supplemented and amended from time to time pursuant to its terms, including as supplemented by the First Supplemental Indenture, is hereinafter referred to 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 SPECIAL OBLIGATION OF THE COMMISSION PAYABLE SOLELY FROM REVENUE AS DEFINED AND PROVIDED IN THE INDENTURE AND THE COMMISSION IS NOT OBLIGATED TO PAY THIS BOND EXCEPT FROM REVENUE. THIS BOND DOES NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OF THE STATE OTHER THAN THE COMMISSION. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY POLITICAL • SUBDIVISION OF THE SATE OF CALIFORNIA IS PLEDGED TO THE PAYMENT OF PRINCIPAL OR INTEREST OF THIS BOND. Reference is hereby made to the Indenture and the Act 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 Revenue and the rights of the registered owners of the Bonds and all the terms of the Indenture are hereby incorporated herein and constitute a contract between the Commission and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner 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 both as to principal and interest, and as to any premium upon the redemption hereof, solely from Revenue as defined in the Indenture, subject only to the provisions of the Indenture permitting application thereof for the purposes and on the terms and conditions set forth therein, and the Commission is not obligated to pay this Bond except from Revenue. The Bonds of the Series of Bonds of which this Bond is a part maturing on or before July 1, 20_ are not subject to redemption prior to their respective stated maturities. The Bonds of the Series of Bonds of which this Bond is a part maturing on or after July 1, 20_ shall be subject to • redemption prior to their respective stated maturities, at the option of the Commission, from any A-2 OHSUSA:260941335.4 196 • • • source of available funds, as a whole or in part (and if in part, in such order of maturity as the Commission shall specify and within a maturity by lot or by such other method as the Trustee determines to be fair and reasonable and in Authorized Denominations), on any date on or after July 1, 20_, at the principal amount of such Bonds called for redemption, plus accrued interest to the date fixed for redemption, without premium. The Bonds of the Series of Bonds of which this Bond is a part maturing on July 1, 20L] shall be subject to mandatory redemption prior to their stated maturity, in part, from Sinking Fund Installments required by and as specified in the Indenture, at a redemption price equal to the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium, on July 1, 20_ and on each July 1 thereafter. The rights and obligations of the Commission and of the holders and registered owners of the Bonds of the Series of Bonds of which this Bond is a part 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 owners of Bonds. This Bond is transferable or exchangeable as provided in the Indenture, only upon the Bond Register at the Principal Office of the Trustee, by the registered owner hereof in person, or by such owner's duly authorized attorney, upon surrender of this Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or such owner's duly authorized attorney, and thereupon a new Bond or Bonds of the same series, maturity, interest rate 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. The person in whose name this Bond is registered shall be deemed and regarded as the absolute owner hereof for all purposes, including receiving payment of, or on account of, the principal of and premium and interest due hereon. It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, exist, have happened and have been 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 . A-3 OHSUSA:260941335.4 197 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) Countersigned: By: ____________ _ Chief Financial Officer OHSUSA:260941335.4 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By:. ______________ _ Chair of the Board of Commissioners A-4 198 • • • • • (FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2013 Series A Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: ---------------------- THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: _______________ _ Authorized Officer [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 . A-5 OHSUSA:260941335.4 199 [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 appoints to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature: SIGNATURE GUARANTEED: (Signature of Assignor) Notice: The signature on this assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Notice: Signature must be guaranteed by an eligible guarantor firm. A-6 OHSUSA:260941335.4 200 • • • • • • No. R--B- ACCRETION RATE EXHIBIT A-2 FORM OF 2013 SERIES B BOND Riverside County Transportation Commission Toll Revenue Bond (Capital Appreciation Bond), 2013 Series B MATURITY July 1, 20_ ISSUE DATE [ ], 201_ REGISTERED OWNER: Cede & Co. PRINCIPAL AMOUNT: MATURITY VALUE: $ ____ _ CUSIP Dollars 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 Revenue as hereinafter referred to) in lawful money of the United States of America, to the registered owner or registered assigns, on the maturity date set forth above, the "accreted value" hereof on the maturity date specified above, consisting of the principal amount hereof plus interest earned thereon and accumulated from the date hereof to such date (in accordance with the Master Indenture and First Supplemental Indenture hereinafter defined and as reflected in the Table of Accreted Values hereinafter set forth; provided, that any accreted value determined in accordance with the First Supplemental Indenture shall prevail over any accreted values given in the Table of Accreted Values), compounded on January 1 and July 1 of each year commencing on January 1, 2014, assuming in any such semiannual period that this bond shall increase in value by the accumulation of earned interest in equal daily amounts on the basis of a 360-day year of twelve 30-day months, until the obligation represented hereby shall have been discharged. As long as 2013 Series B Bonds are Book-Entry Bonds, principal of and interest on the 2013 Series B Bonds shall be payable by wire transfer to the Securities Depository in lawful money of the United States of America. If the 2013 Series B Bonds cease to be Book-Entry Bonds, principal of and premium, if any, on the 2013 Series B Bonds shall be payable when due upon presentation and surrender thereof at the Principal Office of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") and interest shall be payable by first class mail on each interest payment date to the Owners thereof as of the close of business on the Record Date; provided, however, that Owners of $1,000,000 or more in aggregate Maturity Value of 2013 Series B Bonds may, at any time prior to a Record Date, give the Trustee written instructions for payment of such interest on each succeeding interest payment date by wire transfer. As used herein, "Record Date" means the A-7 OHSUSA:260941335.4 201 fifteenth day (whether or not a Business Day) of the month preceding such Interest Payment ~-• This Bond is one of a duly authorized issue of bonds of the Commission, designated as "Riverside County Transportation Commission Toll Revenue Bonds" (the "Bonds"), ofthe series designated above, all of which are being issued pursuant to the provisions of Division 12 of the Public Utilities Code of the State of California (the "Act") and a Master Indenture, dated as of June 1, 2013 (the "Master Indenture"), as supplemented, including as supplemented by a First Supplemental Indenture, dated as of 1, 20 1_ (the "First Supplemental Indenture"), each between the Commission and the Trustee. The Master Indenture, as supplemented and amended from time to time pursuant to its terms, including as supplemented by the First Supplemental Indenture, is hereinafter referred to 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 SPECIAL OBLIGATION OF THE COMMISSION PAYABLE SOLELY FROM REVENUE AS DEFINED AND PROVIDED IN THE INDENTURE AND THE COMMISSION IS NOT OBLIGATED TO PAY THIS BOND EXCEPT FROM REVENUE. THIS BOND DOES NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OF THE STATE OTHER THAN THE COMMISSION. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OF THE SATE OF CALIFORNIA IS PLEDGED TO THE PAYMENT OF PRINCIPAL OR INTEREST OF THIS BOND. Reference is hereby made to the Indenture and the Act 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 Revenue and the rights of the registered owners of the Bonds and all the terms of the Indenture are hereby incorporated herein and constitute a contract between the Commission and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner 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 both as to principal and interest, and as to any premium upon the redemption hereof, solely from Revenue as defined in the Indenture, subject only to the provisions of the Indenture permitting application thereof for the purposes and on the terms and conditions set forth therein, and the Commission is not obligated to pay this Bond except from Revenue. The Bonds of the Series of Bonds of which this Bond is a part are not subject to redemption prior to maturity. A-8 OHSUSA:26094 1335.4 202 • • • • • The rights and obligations of the Commission and of the holders and registered owners of the Bonds of the Series of Bonds of which this Bond is a part 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 owners of Bonds. This Bond is transferable or exchangeable as provided in the Indenture, only upon the Bond Register at the Principal Office of the Trustee, by the registered owner hereof in person, or by such owner's duly authorized attorney, upon surrender of this Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or such owner's duly authorized attorney, and thereupon a new Bond or Bonds of the same series, maturity, interest rate 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. The person in whose name this Bond is registered shall be deemed and regarded as the absolute owner hereof for all purposes, including receiving payment of, or on account of, the principal of and premium and interest due hereon. It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, exist, have happened and have been 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 . A-9 OHSUSA:260941335.4 203 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) Countersigned: By: ____________ _ ChiefFinancial Officer OHSUSA:260941335.4 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By:. ____________________________ __ Chair of the Board of Commissioners A-10 204 • • • • [FORM OF CERTIFICATE OF AUTHENTICATION] This Bond is one of the 2013 Series B Bonds described in the within mentioned Indenture and was authenticated on the date set forth below. Date of Authentication: ---------------------- THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: ______________________________ ___ Authorized Officer [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 . A-ll OHSUSA:260941335.4 205 [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 appoints to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature: SIGNATURE GUARANTEED: (Signature of Assignor) Notice: The signature on this assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Notice: Signature must be guaranteed by an eligible guarantor firm. A-12 OHSUSA:260941335.4 206 • • • • • • EXHIBIT B NOTICE ADDRESSES To the Commission: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: (951) 787-7141 Fax: (951) 787-7920 To the Trustee: The Bank ofNew York Mellon Trust Company, N.A. [Address to come] 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 99 Church Street, 91h Floor New York, New York 10007 Fitch Ratings One State Street Plaza New York, New York 10004 OHSUSA:260941335.4 B-1 207 PRELIMINARY OFFICIAL STATEMENT DATED ___ , 2013 .EW ISSUE-BOOK-ENTRY ONLY (DAC Logo) ~I I ~'-1 IIVIL...I.., I V DRAFT OF 03/18/13 RATINGS: Fitch: " " S&P:" " See "RATINGS" herein. In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Series 20 I 3 Bonds is excluded from gross income for federal income tax purposes under Section I 03 of the Internal Revenue Code of I 986 and exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 20 I 3 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series 20 I 3 Bonds. See "TAX MATTERS." RIVERSIDE COUNTY TRANSPORTATION COMMISSION $ . $ --=--::---::-:::-::-= Toll Revenue Bonds, 2013 Series A Toll Revenue Bonds, 2013 Series B (Current Interest Bonds) (Capital Appreciation Bonds) Dated: Date of Delivery Due: as shown on inside cover The Toll Revenue Bonds described above (individually, the "Series 20I 3A Bonds" and the "Series 201 3B Bonds," and collectively, the "Series 20I 3 Bonds") will be issued as fully-registered obligations by the Riverside County Transportation Commission (the "Commission"). The Commission is issuing the Series 2013 Bonds pursuant to the Master Indenture, dated as of June I, 2013 (the "Master Indenture"), and the First Supplemental Indenture, dated as of June I, 2013 (the "First Supplemental indenture"), each by and between the Commission and The Bank ofNew York Mellon Trust Company, N.A., as trustee (the "Trustee"). The Series 2013 Bonds, and any Parity Obligations, constitute special, limited obligations of the Commission secured by and payable solely from a first lien on, pledge of, and security interest in the Revenue, which consists primarily of Toll Revenues of the Toll Road (as defined herein) . • apitalized terms used on the cover page hereof and not otherwise defined shall have the meaning assigned thereto in "APPENDIX C- UMMARY OF CERTAIN PROVISIONS OF THE INDENTURE-Definitions." The Series 2013A Bonds are being issued as Current Interest Bonds and the Series 2013B Bonds are being issued as Capital Appreciation Bonds. Interest on the Series 20 13A Bonds will accrue from the date of initial delivery thereof, and will be payable on each June I and December I, commencing December I, 2013. Interest on the Series 2013B Bonds will accrue from the date of the initial delivery thereof until stated maturity and will compound on June I and December I of each year, commencing December I, 2013, and will be payable only at stated maturity. The "Maturity Value" of the Series 2013B Bonds means the principal amount thereof plus accrued interest at maturity. Interest accruing on the Series 2013 Bonds will be calculated on the basis of a 360-day year of twelve 30-day months. The Series 2013 Bonds are initially issuable only to Cede & Co., the nominee of The Depository Trust Company, New York, New York ("DTC'), pursuant to the Book-Entry System described herein. Beneficial ownership may be acquired in principal denominations of $5,000, or any integral multiple thereof, with respect to the Series 2013 Series A Bonds and in Maturity Values of $5,000, or any integral multiple thereof, with respect to the Series 2013B Bonds. Debt service payments on the Series 2013 Bonds will be payable by the Trustee to DTC, which will make distribution of the amounts so paid to the beneficial owners thereof. See "THE SERIES 2013 BONDS-Book-Entry System" and "APPENDIX F-BOOK-ENTRY SYSTEM" herein. The Series 20 13A Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as described herein. The Series 20I3B Bonds are not subject to redemption prior to maturity. See "THE SERIES 2013 BONDS-Redemption." A portion of the proceeds of the Series 2013 Bonds, together with certain other funds described herein, will be used to finance a portion of the costs of designing, engineering, developing and constructing the Riverside SR-9I Corridor Improvement Project, which includes the creation of two tolled express lanes in each direction as well as creation of a new general purpose Jane in each direction on the existing SR-91 corridor between Riverside and Orange counties, as more particularly described in the Riverside County 9I Express Lanes Extension Investment Grade Study attached hereto as APPENDIX B. The remaining proceeds of the Series 2013 Bonds will be used to (i) pay capitalized interest on the Series 2013A Bonds, (ii) make deposit to the Bond Reserve Fund, and (iii) pay certain Costs of Issuance of the Series 20 I3 Bonds, all as more fully described herein. See "ESTIMATED SOURCES AND USES OF BOND PROCEEDS." This cover page contains information for quick reference only. It is not a summary of the Series 2013 Bonds. Potential Anvestors must read the entire Official Statement to obtain information essential to making an informed investment decision. Investment .n the Series 2013 Bonds is subject to certain investment considerations. See "RISK FACTORS" herein. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THAT OF THE 57023390.3 208 COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUE, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE SERIES 2013 BONDS. The Series 2013 Bonds are offered when, as and if issued and received by the Underwriters, subject to the approval of validity by Orrick, Herrington & Sutcliffe LLP as Bond Counsel to the Commission, and certain other conditions. Certain legal matters will be passed on for the Commission by Fulbright & Jaworski L.L.P., Los Angeles, California, as Disclosure Counsel, and by Best. Krieger LLP, Riverside, California, the Commission's General Counsel. Certain legal matters will be passed upon for the Unde s by . lt is anticipated that the Series 2013 Bonds will be available for delivery through the book-entry facilities of DTC on or about , 2013. Bank of America Merrill Lynch Goldman, Sachs & Co. J.P. Morgan Dated: ____ , 2013 * Preliminary; subject to change. • • 57023390.3 209 • • • Maturity Date (June I) $ __ _ $ __ _ Maturity (June I) MATURITY SCHEDULE* SERIES 2013A BONDS CUSIP0 l Principal Amount Interest Rate Yield Price (Base ) ___ % Term Bond due June I, 20_-Yield-___ %-CUSIP _ __ %Term Bond due June I, 20_-Yield-%-CUSIP Original Principal Amount SERIES 2013B BONDS Yield to Maturity Maturity Value Initial Offering Price per $5,000 in Maturity Amount CUSIP<1l *Preliminary, subject to change. (J) CUSIP numbers have been assigned to these issues by CUSIP Global Services, managed by Standard & Poor's Services LLC on behalf of The American Bankers Association, and are included solely for the convenience of the owners of the Series 20 I 3 Bonds. Neither the Commission nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Series 2013 Bonds as a result of various subsequent actions, including but not limited to, a refunding in whole or in part of such maturity, or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of the Series 2013 Bonds. 57023390.3 210 57023390.3 Riverside SR-91 Corridor Improvement Project [INSERT MAP OF TOLL ROAD SECTION] 211 • • • • • • 57023390.3 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Karen Spiegel, Chair Marion Ashley, 1st Vice Chair Daryl R. Busch, 2nd Vice Chair John J. Benoit Kevin Jeffries Jeff Stone John F. Tavaglione Bob Botts Roger Berg Joseph DeConinck Ella Zanowic Mary Craton Greg Pettis Steven Hernandez Scott Matas Adam Rush Larry Smith Douglas Hanson Glenn Miller Frank Johnston Terry Henderson Bob Magee Scott Mann Tom Owings Rick Gibbs MANAGEMENT Executive Director Anne Mayer Deputy Executive Director John Standiford Chief Financial Officer Theresia Trevino Toll Program Director Michael Blomquist SPECIAL SERVICES Financial Advisor Fieldman, Rolapp & Associates Irvine, California Bond Counsel Orrick, Herrington & Sutcliffe LLP San Francisco, California Disclosure Counsel Fulbright & Jaworski L.L.P. Los Angeles, California Trustee The Bank ofNew York Mellon Trust Company, N.A. Los Angeles, California 212 Berwin Hanna Jan Harnik Ginny Foat Ted Weill Steve Adams Andrew Kotyuk Ron Roberts Ben Benoit Basem Muallem • No dealer, salesman or any other person has been authorized by the Riverside County Transportation Commission e "Commission") or the Underwriters of the Series 2013 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 Series 2013 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 Series 2013 Bonds. Neither the delivery ofthis Official Statement nor the sale of any of the Series 2013 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, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, .t 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 SERIES 2013 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREY AIL ON THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE SERIES 2013 BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE INSIDE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS . • 57023390.3 213 FORWARD-LOOKING STATEMENTS Certain statements included or incorporated by reference in this Official Statement constitute forward-look. 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 DO OR DO NOT OCCUR. • • 57023390.3 214 TABLE OF CONTENTS • Page INTRODUCTION ....................................................................................................................................... ! General ............................................................................................................................................ ! Sources of Payment and Security ................................................................................................... I The Com1nission ............................................................................................................................. 2 The Project ...................................................................................................................................... 2 Investment Risks ............................................................................................................................. 2 PLAN OF FINANCE ................................................................................................................................... 3 Project Sources and Uses ofFunds ................................................................................................. 3 2013 Sales Tax Revenue Bonds ...................................................................................................... 4 TIFIA Loan ..................................................................................................................................... 4 ESTIMATED SOURCES AND USES OF BOND PROCEEDS ................................................................ 5 THE SERIES 2013 BONDS ........................................................................................................................ 5 General ............................................................................................................................................ 5 Book-Entry System ......................................................................................................................... 6 Redemption ..................................................................................................................................... 6 Debt Service RequireJnents ............................................................................................................. 9 • SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS .................................... 9 Sources of Payment. ........................................................................................................................ 9 Funds and Accounts; Flow of Funds ............................................................................................. 10 Rate Covenant ............................................................................................................................... 18 Additional Bonds and Parity Obligations ..................................................................................... 19 Subordinated Obligations; TIFIA Loan ........................................................................................ 20 RIVERSIDE COUNTY TRANSPORTATION COMMISSION .............................................................. 20 Genera1 .......................................................................................................................................... 20 The Transportation Expenditure Plan ........................................................................................... 21 Commissioners .............................................................................................................................. 21 Executive Staff. ............................................................................................................................. 22 THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT ..................................................... 22 Construction of the Project ........................................................................................................... 23 Right-of-Way ................................................................................................................................ 24 Environmental Studies .................................................................................................................. 24 Maintenance and Operations ......................................................................................................... 24 TRAFFIC AND REVENUE ESTIMATES ....................................................................................... .-....... 25 ESTIMATED CASH FLOW AND DEBT SERVICE COVERAGE ........................................................ 27 • RISK FACTORS ....................................................................................................................................... 29 Genera1 .......................................................................................................................................... 29 57023390.3 215 TABLE OF CONTENTS (continued) Page Forward-Looking Statements ........................................................................................................ 29 Costs of Project and Construction Delays ..................................................................................... 30 Conditions to Drawing on the TIFIA Loan Agreement.. .............................................................. 30 Payment and Performance Bonds ................................................................................................. 30 Liquidated Damages ..................................................................................................................... 31 Events of Force Majeure ............................................................................................................... 31 Limited Insurance Coverage ......................................................................................................... 31 Operating Risks ............................................................................................................................. 32 Motor Fuel Prices and Taxes ........................................................................................................ 32 Traffic and Revenue Report Assumptions .................................................................................... 32 Maintenance Costs ........................................................................................................................ 32 Dilution of Senior Lien Security Upon Bankruptcy Related Event .............................................. 32 Limited Obligations ...................................................................................................................... 33 Limitation and Enforceability of Remedies .................................................................................. 33 FINANCIAL STATEMENTS ................................................................................................................... 33 LITIGATION ............................................................................................................................................. 34 LEGAL MATTERS ................................................................................................................................... 34 TAX MATTERS ........................................................................................................................................ 34 CONTINUING DISCLOSURE ................................................................................................................. 36 RATINGS .................................................................................................................................................. 36 FINANCIAL ADVISOR ........................................................................................................................... 36 UNDERWRITING .................................................................................................................................... 37 OTHER MATTERS ................................................................................................................................... 37 APPENDIX A-COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2012 ................................................................................. A-1 APPENDIX B-RIVERSIDE COUNTY 91 EXPRESS LANES EXTENSION INVESTMENT GRADE STUDY ............................................................................. B-1 APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ........................ C-1 APPENDIX D-SUMMARY OF CERTAIN PROVISIONS OF THE 2013 TIFIA LOAN AGREEMENT ........................................................................................................... D-1 APPENDIX E-FORM OF CONTINUING DISCLOSURE AGREEMENT ...................................... E-1 APPENDIX F -BOOK-ENTRY SYSTEM ......................................................................................... F-1 APPENDIX G-FORM OF BOND COUNSEL OPINION .................................................................. G-1 57023390.3 II 216 • • • • • • OFFICIAL STATEMENT relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION $-=-----=-----o Toll Revenue Bonds, 2013 Series A (Current Interest Bonds) $-=--::-----,- Toll Revenue Bonds, 2013 Series B (Capital Appreciation Bonds) INTRODUCTION General This Official Statement (the "Official Statement") contains certain information relating to the offering and sale by the Riverside County Transportation Commission (the "Commission") of its Toll Revenue Bonds, Series 2013A (the "Series 2013A Bonds") and its Toll Revenue Bonds, 2013 Series B (the "Series 2013B Bonds" and, together with the Series 2013A Bonds, the "Series 2013 Bonds"). References to "Bonds" herein shall mean all bonds or commercial paper identified as the Riverside County Transportation Commission Toll Revenue Bonds authorized by, and at any time Outstanding pursuant to the Indenture. As used in this Official Statement, the "Indenture" shall mean the Master Indenture, dated as of June 1, 2013 (the "Master Indenture"), by and between the Commission and The Bank ofNew York Mellon Trust Company, N.A., as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated as of June 1, 2013 (the "First Supplemental Indenture," and together with the Master Indenture, the "Indenture"), by and between the Commission and the Trustee, as the same may be amended or supplemented from time to time in accordance with the terms of the Master Indenture. Capitalized terms used in this Official Statement that are not otherwise defined herein have the meanings assigned to them in "APPENDIX C -SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and matters of opinion, or that they will be realized. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Sources of Payment and Security The Series 2013 Bonds are special, limited obligations of the Commission payable solely from and secured solely by a first lien on, pledge of and security interest in the Revenue on an equal and ratable basis with any Parity Obligations issued in the future in accordance with the provisions of the Indenture. The Series 2013 Bonds will also be secured by certain of the respective proceeds thereof held in certain Funds and Accounts under the Indenture and invested by the Commission pursuant to the terms of the Indenture. See "SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS." Revenue consists primarily of Toll Revenues generated from the Toll Road (as defined herein). NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION OR PUBLIC AGENCY THEREOF, OTHER THAN THAT OF THE COMMISSION TO THE EXTENT OF THE *Preliminary; subject to change. 57023390.3 217 PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, • PURCHASE PRICE, OR INTEREST ON THE SERIES 2013 BONDS. The Commission Riverside County Transportation Commission is a county transportation comm1ss1on duly organized and existing pursuant to the County Transportation Commissions Act, being Division 12 ofthe Public Utilities Code of the State of California (Section 130000 et seq.) (as amended, the "Act"). The Commission was established in 1977 to oversee the funding and coordination of all public transportation services within the County of Riverside (the "County"). The Commission serves as the tax authority and implementation agency for the voter-approved Measure A Transportation Improvement Program, which imposes a half-cent sales tax within the County to fund transportation improvements. 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 -597 call boxes along the County roadways and 21 FSP tow trucks providing assistance to more than 43,100 motorists annually -are among the most visible of the Commission's programs. For additional information regarding the Commission, see "THE COMMISSION." The Project State Route 91 ("SR-91") is an east-west limited access highway running from the I-405 in Los Angeles at its western end to the interchange of 1-215 and SR-60 in Riverside County on its eastern end. • The existing SR-91 cross section typically consists of four general purpose lanes, varying in width from 11 feet to 12 feet, as well as auxiliary lanes in each direction. In Orange County, two tolled express Janes ("OCTA SR-91 Express Lanes") are operated in each direction by the Orange County Transportation Authority ("OCTA"). The OCT A SR-91 Express Lanes are in the median area, beginning west of the SR- 91/SR-55 interchange and terminating near the Riverside/Orange county line. These express Janes transition into one high occupancy vehicle ("HOV'') lane in each direction in Riverside County. Three major freeway facilities intersect the Project: the I-15, SR-241 and SR-71. The Riverside SR-91 Corridor Improvement Project (the "Project") will extend the OCTA SR-91 Express Lanes and construct one general purpose Jane in each direction in Riverside County from the Orange County line to 1-I 5 in Riverside County, a distance of approximately eight miles. The Project limits along 1-15 begin at the SR-91/1-15 interchange and extend south approximately three miles, ending near Ontario Avenue in the City of Corona. The Project will also provide express lane connectors to south J-15. For additional information regarding the Project, see "THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT." Investment Risks Investment in the Series 2013 Bonds involves certain risks, some of which are discussed throughout this Official Statement. The statements contained in this Official Statement, and in other information provided by the Commission, that are not purely historical, are forward-looking statements, including statements regarding the Commission's expectations, hopes, intentions or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking 57023390.3 2 218 • • • • statements included in this Official Statement are based on information available to the Commission on the date hereof, and the Commission assumes no obligation to update any such forward-looking statements. See "RISK FACTORS" for a discussion of several investment considerations that should also be considered in evaluating an investment in the Series 2013 Bonds. PLAN OF FINANCE The total cost of the Project is estimated at $[ 1.35] billion. The Project will be financed with (i) State Transportation Improvement Program funds of the Commission along with direct cash contribution from the Measure A Sales Tax, (ii) a portion of the proceeds of the Series 2013 Bonds, (iii) a portion of the proceeds of the Commission's Sales Tax Revenue Bonds (Limited Tax Bonds) 2013 Series A (the "2013 Sales Tax Revenue Bonds"), and (iv) proceeds of the TIFIA Loan, all as more fully described below. All of these funding sources will be available at the time of delivery of the Series 2013 Bonds. Project Sources and Uses of Funds [To be revised with tables describing sources and uses of funds during different phases: financial close, during construction period and operations after completion of construction.] The estimated sources and uses of funds for the Project are summarized in the following table, in nominal [2012] dollars (with all amounts in thousands). The proceeds of the Series 2013 Bonds will provide approximately [12.5]% of the total funding needed for the Project. See "ESTIMATED SOURCES AND USES OF BOND PROCEEDS." 57023390.3 Riverside SR-91 Corridor Improvement Project Sources (Nominal-$000's) Toll Revenue Bonds Series 2013A Bonds $ Series 2013B Bonds TIFIA Loan 2013 Sales Tax Revenue Bonds RCTC Annual Contributions of Sales Tax RCTC Pre-Development Contribution Investment Earnings STIP Funds Total Sources $ Uses (Nominal-$000's) Construction Fund Deposit 1 $ Capitalized Interest Fund Toll Revenue Bonds Deposit Sales Tax Bonds Deposit Debt Service Reserve Fund (Toll Revenue Bonds) Total Pre-Development Costs2 Total Uses $ Includes costs of issuance 3 219 109,790 59,118 445,835 44.9,132 132,366 95,143 12,582 2,000 1,355,966 1,011,806 31,077 81,197 16,891 214,995 1,355,966 2 Includes retirement of$[40,000,000] of outstanding commercial paper notes. [INSERT TABLE SHOWING SOURCES OF FUNDING IN DIFFERENT PHASES - FINANCIAL CLOSE, CONSTRUCTION, OPERATION, ETC.] 2013 Sales Tax Revenue Bonds On April 10, 2013, the Commission authorized the issuance of not to exceed $500,000,000 in principal amount of its Sales Tax Revenue Bonds (Limited Tax Bonds), 2013 Series A (the "2013 Sales Tax Revenue Bonds"). Proceeds of the 2013 Sales Tax Revenue Bonds in the approximate amount of $[449,132,000] will be used to finance a portion of the costs of the Project. The 2013 Sales Tax Revenue Bonds are special obligations of the Commission payable from and secured solely by a pledge of certain revenues consisting primarily of receipts from the imposition in the County of a Yz-cent sales tax that became effective on July I, 2009, less certain administrative fees paid to the California State Board of Equalization. The 2013 Sales Tax Revenue Bonds are not payable from or secured by any Revenue securing the Series 2013 Bonds. TIFIALoan Pursuant to the Transportation Infrastructure Finance and Innovation Act of 1998, codified as 23 United States Code, Section 181, et seq. ("TIFJA"), and the Second Supplemental Indenture, dated as of June 1, 2013 (the "Second Supplemental Indenture"), between the Commission and the Trustee, the Commission has entered into the TIFIA Loan Agreement with the United States Department of Transportation ("USDOT'), acting by and through the Federal Highway Administrator (the "TIFIA Loan Agreement"), pursuant to which the Commission will borrow up to $[451] million for the purpose of • financing a portion of the costs of the Project. The Commission's obligation to repay the TJFIA Loan is • secured by a lien on, pledge of and security interest in the Revenue that is subordinate and junior to the lien on and pledge of the Revenue securing the Senior Lien Bonds; provided, however, that upon the occurrence of a Bankruptcy Related Event, the TIFIA Loan will become a Parity Obligation payable from and secured by the Revenue on a parity with the Senior Lien Bonds. See "SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS-Subordinated Obligations; TIFIA Loan" and "APPENDIX D -SUMMARY OF CERTAIN PROVISIONS OF THE TJFJA LOAN AGREEMENT." See also "RISK FACTORS -Dilution of Senior Lien Security Upon Bankruptcy Related Event." Debt service on the TIFIA Loan is payable semiannually on each ____ 1 and 1, commencing 1, 20_. The final maturity date of the TIFIA Loan is 1, 20_. _ . 57023390.3 4 220 • ESTIMATED SOURCES AND USES OF BOND PROCEEDS • The proceeds from the sale of the Series 20 13 Bonds are estimated to be applied as set forth in the following table: • • Sources of Funds: Principal Amount Net [Premium] [Original Issue Discount] Total Sources of Funds Uses ofFunds: 2013 Bonds Project Fund 2013 Series A Capitalized Interest Account 2013 Bonds Reserve Account 2013 Bonds Costs of Issuance Account(!) (including Underwriters' Discount) Total Uses of Funds Series 2013A Bonds Series 2013B Bonds Total (l) Costs oflssuance include Underwriters' discount, fees and expenses of Bond Counsel, Disclosure Counsel and the Financial Advisor, initial fees and expenses of the Trustee, printing expenses, rating agency fees and other costs. THE SERIES 2013 BONDS General The Series 2013A Bonds will be dated their date of delivery, will bear interest from that date at the rates per annum, computed on the basis of a 360-day year comprised of twelve 30-day months, and will mature on June 1 in the years shown on the inside cover of this Official Statement. Each Series 201 3A Bond will bear interest from the latest of: (i) its delivery 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 Series 201 3A 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. The Series 201 3B Bonds will not bear current interest; each Series 20 13B Bond will increase in value by the accumulation of earned interest from its initial principal amount shown on the inside cover of this Official Statement on the date of issuance thereof to the Maturity Value thereof at maturity, assuming in any period that the value increases in equal daily amounts on the basis of a 360-day year of twelve 30- day months. The interest on the Series 2013B Bonds will be compounded commencing on December 1, 2013, and thereafter on June 1 and December I in each year to maturity. The principal of, premium, if any, and interest on the Series 2013 Bonds will be payable in lawful currency of the United States of America. While the Series 2013 Bonds are Book-Entry Bonds, payment of debt service will be made to the Securities Depository or its Nominee, and in accordance with arrangements among the Commission, the Trustee and the Securities Depository. During any period in which the Series 2013 Bonds are not Book-Entry Bonds, the principal of and premium, if any, on all such 57023390.3 5 221 Series 2013 Bonds will be payable by wire or check at the Principal Office of the Trustee upon the presentation and surrender of such Series 2013 Bonds as the same become due and payable, and the interest on such Series 2013 Bonds will be paid by wire or check drawn upon the Trustee and mailed on the applicable interest payment date to the persons in whose names the Series 2013 Bonds are registered on the registration books maintained by the Trustee at the close of business on the record date for such interest payment. Book-Entry System DTC will act as securities depository for the Series 2013 Bonds. The Series 2013 Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Series 2013 Bond will be issued for each maturity of the Series 2013 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. Ultimate purchasers of Series 2013 Bonds will not receive physical certificates representing their interest in the Series 2013 Bonds. Payment of the principal of and interest on the Series 20 13 Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee so long as DTC or Cede & Co. is the registered owner of the Series 2013 Bonds~ Disbursement of such payments to DTC's Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC's Participants and Indirect Participants. See "APPENDIX F-BOOK-ENTRY SYSTEM." Redemption Optional Redemption of Series 2013A Bonds. The Series 2013A Bonds maturing on or before June 1, 20 _ shall not be subject to redemption prior to their respective stated maturities. The Series 20 13A Bonds maturing on or after June 1, 20 _ shall be subject to redemption prior to their respective • stated maturities, at the option of the Commission, from any source of available funds, as a whole or in • part, on any date on or after June 1, 20 _ at the principal amount of Series 20 13A Bonds called for redemption plus accrued interest to the date fixed for redemption, without premium. Mandatory Sinking Fund Redemption of Series 2013A Bonds. The Series 2013A Bonds maturing on June 1, 20_ and June 1, 20_, respectively, shall also be subject to mandatory redemption prior to their respective stated maturities, in part, by lot, from Sinking Fund Installments on each June 1 a Sinking Fund Installment is due as specified below, in the principal amount equal to the Sinking Fund Installment due on such date and at a redemption price equal to I 00% of the principal amount thereof, plus accrued but unpaid interest to the redemption date, without premium. 57023390.3 Series 20 13A Bonds Maturing June 1, __ _ Sinking Fund Installment Dates (June 1) (I) (I) Final Maturity. 6 222 Sinking Fund Installments • • • • Series 2013A Bonds Maturing June I, __ Sinking Fund Installment Dates (June I) (1) <1) Final Maturity. Sinking Fund Installments Series 2013B Bonds Not Subject to Redemption. The Series 2013B Bonds are not subject to redemption prior to maturity. Selection of Series 2013A Bonds to be Redeemed The Commission will designate which maturities of Series 2013A Bonds are to be called for redemption and what Sinking Fund Installments are to be reduced as allocated to such redemptions. Whenever provision is made in the Indenture for the redemption of less than all of the Series 2013A Bonds maturing on a specific maturity date, the Trustee will select the Series 20 13A Bonds of such maturity to be redeemed, from the Outstanding Series 20 I 3A Bonds of such maturity not previously called for redemption, in minimum denominations of $5,000 (of principal), by lot in any manner which the Trustee in its sole discretion will deem appropriate. In the event Series 2013A Term Bonds are designated for redemption, the Commission may designate the Sinking Fund Installments, or portions thereof, that are to be reduced as allocated to such redemption . The Trustee will promptly notifY the Commission in writing of the Series 20 13A Bonds so selected for redemption. Notwithstanding the foregoing paragraph, so long as the Series 2013A Bonds are registered in the name of Cede & Co., as nominee ofDTC, and less than all of such Series 2013A Bonds within a maturity are being redeemed, the Series 2013A Bonds to be redeemed will be determined by DTC. DTC's current practice is to determine by lot the amount of the interest of each DTC Participant in such maturity to be called for redemption and each DTC Participant is to then select by lot the ownership interest in each maturity to be redeemed. Neither the Commission nor the Trustee will have any responsibility to Direct Participants, Indirect Participants, or the persons for whom Direct Participants act as nominees, with respect to the providing of notice of redemption or the selection of Series 20 13A Bonds for redemption. See"-Book-Entry System" herein. Notice and Conditional Redemption. Unless otherwise specified in a Supplemental Indenture creating a Series of Bonds, each notice of redemption will be mailed by the Trustee, not less than twenty (20) nor more than sixty (60) days prior to the redemption date, to each Owner and to the MSRB. Notice of redemption to the Owners will be given by first class mail. Each notice of redemption will state the date of such notice, the date of issue of the Series 20 13A Bonds to which such notice relates, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, in the case of Series 2013A Bonds to be redeemed in part only, the identity of the Series 2013A Bonds to be redeemed. Each such notice will also state that on said date there will become due and payable on each of said Bonds the redemption price thereof, together with interest accrued thereon to the date fixed for redemption, and that from and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Neither the Commission nor the Trustee will have any responsibility 57023390.3 7 223 for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect • thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neith~r the Commission nor the Trustee will be liable for any inaccuracy in such numbers. Failure of any Owner to receive any notice of redemption or any defect therein will not affect the sufficiency of any proceedings for redemption. Any notice of optional redemption of the Bonds may be conditional, and if any condition stated in the notice of redemption will not have been satisfied on or prior to the redemption date, said notice will be of no force and effect and the Commission will not be required to redeem the Series 2013A Bonds thereby called for redemption, and the redemption will be cancelled and the Trustee will within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled. In addition, the Commission may, at its option, on or prior to the date fixed for optional redemption in any notice of redemption ofthe Series 2013A Bonds, rescind and cancel such notice of redemption by Written Request of the Commission to the Trustee, and any optional redemption of Series 20 13A Bonds and notice thereof will be rescinded and cancelled and the Trustee will mail notice of such cancellation to the recipients of the notice of redemption being cancelled. Any optional redemption of Series 2013A Bonds and notice thereof will be rescinded and cancelled if for any reason on the date fixed for optional 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 Series 2013A Bonds called for optional redemption and such failure to optionally redeem the Series 2013A Bonds called for redemption will not be a default hereunder. Purchase In Lieu of Redemption. In lieu of mandatory redemption from Sinking Fund Installments, the Commission may surrender to the Trustee for cancellation Series 2013A Term Bonds • purchased on the open market and such Series 2013A Term Bonds will be cancelled by the Trustee. If any Series 2013A Term Bonds are so cancelled, the Commission may designate the Sinking Fund Installments or portions thereof that are to be reduced as allocated to such cancellation. 57023390.3 8 224 • Debt Service Requirements • The following table is the annualized debt service schedule for the Series 2013 Bonds assuming no redemption other than mandatory sinking fund redemption. • • Fiscal Year Ending June 30 Series 2013A Bonds Principal Interest Series 2013B Bonds Maturity Value Total Debt Service SOURCES OF PA YMENTAND SECURITY FOR THE SERIES 2013 BONDS Sources of Payment Limited Obligations. The Series 2013 Bonds are special, limited obligations of the Commission payable solely from, and secured on an equal and ratable basis with other Senior Lien Bonds and Parity Obligations issued in the future solely by a first lien on and pledge of all Revenue, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in 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 PLEDGE OF THE REVENUES, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE SERIES 2013 BONDS . 57023390.3 9 225 Revenue. "Revenue" means (i) Toll Revenues; (ii) all amounts on deposit in the funds and accounts established and held by the Trustee under the Indenture (excluding the Rebate Fund, any fund or • account established to hold the proceeds of a drawing on any Credit Support Instrument, and any Subsidy Payments deposited pursuant to the Indenture); (iii) all interest or other income from investment of money in the funds and accounts established under the Indenture (excluding the Rebate Fund and any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument); and (iv) all Swap Revenues. Toll Revenues. "Toll Revenues" means (i) toll revenues, user fees, fines, rents or other similar charges payable for use of the Toll Road, (ii) all proceeds of insurance payable to or received by the Commission with respect to the Toll Road (whether by way of claims, return of premiums, ex gratia settlements or otherwise), including proceeds from business interruption insurance and loss of advance profits insurance, except for proceeds of fire and other casualty insurance, (iii) the proceeds of any condemnation awards with respect to the Toll Road, and (iv) any other incidental or related fees or charges; but excluding therefrom ROW Revenues (revenues from sale of excess right-of-way property). Toll Road. "Toll Road" means any of the following: (a) general purpose toll lanes, (b) lanes or facilities where the tolls may be levied and may vary according to levels of congestion anticipated or experienced or according to the occupancy ofthe vehicle, (c) facilities using any combination of(a) and (b), and (d) facilities using any other strategy the Commission may determine appropriate on a facility-by- facility basis, upon which the Commission has all right, power and authority pursuant to law to pursue tolls, as such toll lanes and facilities may from time to time be expanded, improved, upgraded, enlarged, or enhanced, but only tot the extent that the Commission irrevocably designates in writing that such toll lanes and facilities and any expansion, improvement, upgrade, enlargement or enhancement constitutes a "Toll Road" generating "Toll Revenues" under the Indenture. "Toll Road" shall not include any Special Project. Initially, "Toll Road" means any such toll lanes and facilities on the portion of SR-91 between • the Orange and Riverside County line and State Highway Route 15 that constitute a part of the Riverside SR-91 Corridor Improvement Project. Priority of Liens. The Series 2013 Bonds constitute Senior Lien Bonds under the Indenture. All Senior Lien Bonds and Parity Obligations shall be of equal rank without preference, priority or distinction of any Senior Lien Bonds and Parity Obligations over any other Senior Lien Bonds and Parity Obligations. The Senior Lien Bonds and Parity Obligations are special obligations of the Commission and are payable as to both principal and interest, and any premium upon redemption thereof, exclusively from Revenue and other funds pledged under the Indenture. The Commission's obligation to repay the TIFIA Loan is secured by a lien on, pledge of and security interest in the Revenue that is subordinate and junior to the lien on, pledge of and security interest in the Revenue securing the Series 2013 Bonds; provided, however, that upon the occurrence of a Bankruptcy Related Event under the Indenture, the TIFIA Loan will become a Parity Obligation payable from and secured by the Revenue on a parity with the Series 2013 Bonds. See "RISK FACTORS-Dilution of Senior Lien Security Upon Bankruptcy Related Event." Funds and Accounts; Flow of Funds The Indenture establishes the following Project Accounts, which are established and created and maintained in trust by the Trustee: • Toll Revenue Fund 57023390.3 10 226 • • • • • Project Fund, and within the Project Fund, the Senior Lien Bonds Account, the Permitted Second Lien Obligations Account, the TIFIA Account, the Sales Tax Revenue Bonds Account and the Commission Equity Acount • Operations and Maintenence Fund • RebateFund • Senior Lien Bond Fund and, within the Senior Lien Bond Fund, the Senior Lien Bond Interest Payment Account and the Senior Lien Bond Principal Payment Account • Senior Lien Bond Reserve Fund • Permitted Second Lien Obligations Fund and, within the Permitted Second Lien Obligations Fund, the Permitted Second Lien Obligations Interest Payment Account and the Permitted Second Lien Obligations Principal Payment Account • TIFIA Payment Fund • TIFIA Reserve Fund • Repair and Rehabilitation Reserve Fund • Capital Expenditures Fund • Lock-Up Account • Surplus Fund Toll Revenue Fund. After the Substantial Completion Date, except for amounts to be deposited in other Funds or Accounts pursuant to the Indenture, the Commission will promptly deposit or cause to be deposited into the Toll Revenue Fund all Revenue and transfers from other Funds or Accounts as required by the terms of the Indenture. Subject only to the provisions of the Indenture permitting the application thereof for or to the purposes and on the terms and conditions set forth in the Indenture, the Trustee shall be entitled to and shall collect and receive all of the Revenue, and any Revenue collected or received by or on behalf of the Commission shall be deemed to be held, and to have been collected or received, by or on behalf of the Commission as the agent of the Trustee and shall forthwith be paid by the Commission to the Trustee. After the Substantial Completion Date, subject to certain restrictions set forth in the Indenture, including the delivery of a Funds Transfer Certificate by the Commission (to the extent required), the Trustee shall make the following withdrawals, transfers and payments from the Toll Revenue Fund in the amounts, at the times and only for the purposes specified below and in the following order of priority (it being agreed that no amount shall be withdrawn on any date pursuant to any clause below until amounts sufficient as of that date (to the extent applicable) for all the purposes specified under the prior clauses shall have been withdrawn or set aside): First, on each Monthly Funding Date, to the Operation and Maintenance Fund, an amount necessary to increase the balance of the Operations and Maintenance Fund to an amount equal to the Operation and Maintenance Expenses then due and payable, plus one-sixth of the Operations and Maintenance Expenses projected in accordance with the budget of the Commission to be due and payable during the next succeeding Calendar Year; 57023390.3 11 227 Second, on each Monthly Funding Date, any payments then due and payable by the Commission to the Rebate Fund or any similar rebate fund established with respect to any future tax-exempt borrowing transaction; Third, on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, (x) to the Senior Lien Bond Interest Payment Account the sum of(A)(l) in the case of outstanding Senior Lien Bonds with semiannual interest payment dates, one-sixth (1/6) of the amount of the interest payable on such Senior Lien Bonds on the next interest payment date; and (2) in the case of outstanding Senior Lien Bonds with monthly interest payment dates, the amount of interest payable on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made on any preceding Monthly Funding Date and any amounts transferred from the Senior Lien Bond Interest Payment Account and not repaid; plus (C) if such Monthly Funding Date is also an interest payment date or the last Monthly Funding Date before an interest payment date, any other amount required to make the amount credited to the Senior Lien Bond Interest Payment Account equal to the amount payable on the Senior Lien Bonds on such interest payment date, and (y) to holders of any Parity Obligations, an amount equal to the interest portion due on such Parity Obligations and Hedging Obligations due and payable under any related Swaps or Qualified Swap Agreements, as the case may be; • Fourth, on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, (x) commencing twelve months before the first annual principal payment date (including any mandatory sinking fund redemption date), to the Senior Lien Bond Principal Payment Account, the sum of (A) one-twelfth (1 /12) of the principal and mandatory sinking fund redemptions due on the Senior Lien Bonds; and (B) the sum of any shortfall in transfers required to have been made on any previous Monthly Funding Date, plus any amounts transferred from the Senior Lien Bond Principal Payment Account and not repaid; and (C) if the Monthly Funding Date is also a principal payment date . (or mandatory sinking fund redemption date) or the last Monthly Funding Date before a principal • payment date (or mandatory sinking fund redemption date), any other amount required to make the amount credited to the Bond Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date, and (y) to holders of any Parity Obligations, an amount equal to the principal portion due on any such Parity Obligations (including any mandatory redemption payments thereon); Fifth, on each Monthly Funding Date, to the Senior Lien Bond Reserve Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the Senior Lien Bond Reserve Requirement calculated as of the most recent Calculation Date; Sixth, (x) on each Monthly Funding Date or on such other date on which the following amounts shall be due and payable, to the Permitted Second Lien Obligations Interest Payment Account the sum of (A)(l) in the case of outstanding Permitted Second Lien Obligations with semiannual interest payment dates, one-sixth (1/6) ofthe amount of the interest payable on such Permitted Second Lien Obligations on the next interest payment date; and (2) in the case of outstanding Permitted Second Lien Obligations with monthly interest payment dates, the amount of interest payable on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made on any preceding Monthly Funding Date and any amounts transferred from the Permitted Second Lien Obligations Interest Payment Account pursuant to the Indenture and not repaid; plus (C) if such Monthly Funding Date is also an interest payment date, any other amount required to make the amount credited to the Permitted Second Lien Obligations Interest Payment Account equal to the amount payable on the Permitted Second Lien Obligations on such interest payment date, and (y) on each Calculation Date, to the applicable Swap Parties, scheduled payments due under any Hedging Obligations, if any, net of any scheduled amounts 57023390.3 12 228 • • payable to the Commission with respect to such scheduled Hedging Obligations, under any Swaps entered into in connection with such Permitted Second Lien Obligations; Seventh, (x) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, commencing twelve months before the first annual principal payment date (including any mandatory sinking fund redemption date), to the Permitted Second Lien Obligations Principal Payment Account, the sum of (A) one-twelfth (1112) of the principal and mandatory sinking fund redemptions due on the Permitted Second Lien Obligations; and (B) the sum of any shortfall in transfers required to have been made on any previous Monthly Funding Date, plus any amount transferred from the Permitted Second Lien Obligations Principal Payment Account pursuant to the Indenture and not repaid; and (C) if the Monthly Funding Date is also a principal payment date (or a mandatory sinking fund redemption date) or the last Monthly Funding Date before a principal payment date (or mandatory sinking funding redemption date), any other amount required to make the amount credited to the Permitted Second Lien Obligations Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date, and (y) on each Calculation Date, to the applicable Swap Parties, any Hedging Termination Obligations related to mandatory prepayments or mandatory redemptions of any Permitted Second Lien Obligations, if any; Eighth, on each Monthly Funding Date, to the trustee of any Permitted Second Lien Obligations, the amount, if any, necessary to fund any reserve fund established in connection with such Permitted Second Lien Obligation so that the balance therein (taking into account amounts then on deposit therein) equals the applicable reserve requirement; Ninth, on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, to the counterparties to Qualified Swap Agreements, an amount equal to any Hedging • Termination Obligations payable upon a termination of any such Qualified Swap Agreements; • Tenth, on each Calculation Date (commencing on the Calculation Date that is six months or less prior to the date on which TIFIA Mandatory Debt Service is first due and payable), to the TIFIA Payment Fund, an amount such that the amount on deposit therein equals the TIFIA Mandatory Debt Service due on the immediately succeeding TIFIA Payment Date; Eleventh, on each Calculation Date (commencing June 30, 2020), to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Tenth clauses, to the TIFIA Reserve Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the TIFIA Reserve Fund Required Balance; Twelfth, on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Eleventh clauses, to the Repair and Rehabilitation Reserve Fund an amount equal to the Repair and Rehabilitation Deposit for such Fiscal Year until such deposit is paid in full; Thirteenth, (commencing on the Calculation Date that is six months or less prior to the date on which TIFIA Scheduled Debt Service is first due and payable) on each Calculation Date, to the TIFIA Payment Fund, an amount which equals the TIFIA Scheduled Debt Service (excluding any amounts to be applied to TIFIA Mandatory Debt Service in accordance with the Tenth clause above) due on the immediately succeeding TIFIA Payment Date; Fourteenth, on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Thirteenth clauses, to the Capital 57023390.3 13 229 Expenditures Fund to extent necessary to fund such amount so that the balance therein (taking into • account amounts then on deposit therein) equals the Capital Expenditures Fund Required Balance Fifteenth, on any Calculation Date, if the conditions specified in Sections_ of the TIFJA Loan Agreement (the "Restricted Payment Conditions") have not been satisfied, to the Lock-Up Account all funds then available after application of funds for the purposes specified in the prior First through Fourteenth clauses; and Sixteenth, on each Calculation Date on which all of the Restricted Payment Conditions have been satisfied (as evidenced by a certificate of the TIFIA Lender) or the TIFIA Loan has been repaid in full pursuant to the terms of the TIFIA Loan Agreement, on such Calculation Date, to the Surplus Fund, all remaining amounts, if any. To the extent that on any date of determination amounts on deposit in the Senior Lien Bond Reserve Fund are in excess of the Senior Lien Bond Reserve Requirement, or amounts in the Subordinate Debt Reserve Fund are in excess of the Subordinate Debt Reserve Requirement, or amounts in the TIFIA Reserve Fund are in excess of the TIFIA Reserve Requirement, or amounts in the Repair and Rehabilitation Reserve Fund are in excess of the Repair and Rehabilitation Reserve Fund Required Balance, or amounts in the Capital Expenditures Fund are in excess of the Capital Expenditures Fund Required Balance, as applicable, such excess amounts will be transferred into the Toll Revenue Fund. Fund: Project Fund. The following separate sub-accounts are established and created within the Project • Senior Lien Bonds Account • Permitted Second Lien Obligation Account • TIFIA Account • Sales Tax Revenue Bonds Account • Commission Equity Account Prior to the Substantial Completion Date, Project Costs shall be paid from the Project Fund and its sub-accounts, including the Senior Lien Bonds Account, the Permitted Second Lien Obligation Account, the TIFIA Account, the Sales Tax Revenue Bonds Account and the Commission Equity Account, as described below. Senior Lien Bonds Account. The net proceeds of each Series of the Senior Lien Bonds shall be deposited into the applicable sub-account of the Senior Lien Bonds Account as provided by the applicable [Supplemental] Indenture. The Senior Lien Bonds Account and all sub-accounts therein shall be maintained in order to account for the receipt and disbursement of proceeds (and all earnings thereon) of the Senior Lien Bonds, including but not limited to, the payment of, or reimbursement for a prior payment of, Costs of Issuance of Senior Lien Bonds and Project Costs incurred prior to the Substantial Completion Date, as permitted by the Code and in compliance with the Tax Certificate. Funds therein shall be disbursed [pursuant to a Funds Transfer Certificate] in accordance with the provisions of the Indenture. • Permitted Second Lien Obligation Account. The proceeds of any Permitted Second Lien Obligations will be deposited by the Trustee into the Permitted Second Lien Obligations Account and will be used to pay Project Costs in accordance with the provisions of the applicable Permitted Second Lien • Obligations. 57023390.3 14 230 • • • TIFIA Account. The net proceeds of each draw under the TIFIA Credit Assistance shall be deposited on the respective funding date of such draw in the TIFIA Account in accordance with, and used for the purposes set forth in, the TIFIA Loan Agreement. Notwithstanding anything to the contrary set forth in the Indenture, the lien on the TIFIA Account (and all earnings thereon) shall apply only to the TIFIA Loan Agreement and the related interest of the TIFIA Lender with respect to amounts on deposit in such sub-account from time to time, and such amounts shall be solely for the benefit of the TIFIA Lender until such funds have been disbursed in accordance with the Indenture. Sales Tax Revenue Bonds Account. The proceeds of the 2013 Sales Tax Revenue Bonds will be transferred to the Trustee and deposited by the Trustee into the Sales Tax Revenue Bonds Account and will be used to pay Sales Tax Eligible Project Costs in accordance with the provisions of the Indenture and of the Sales Tax Revenue Bond Indenture. The Commission shall comply with the applicable provisions of the Indenture, including the delivery of a Funds Transfer Certificate (to the extent required by the Indenture), and with the applicable provisions of the Sales Tax Revenue Bond Indenture m requesting a disbursement of funds from time to time from the Sales Tax Revenue Bonds Account. Commission Equity Account. Equity contributions provided by the Commission from time to time will be deposited by the Trustee into the Commission Equity Account and will be used to pay Sales Tax Eligible Project Costs. The Commission shall comply with the applicable provisions of the Indenture, including the delivery of a Funds Transfer Certificate (to the extent required by the Indenture) in requesting a disbursement of funds from time to time from the Commission Equity Account. Operation and Maintenance Fund. The Commission may transfer to the Operation and Maintenance Fund any amounts available for such transfer under the Indenture and shall thereafter apply such funds in the Operation and Maintenance Fund for the payment of Operation and Maintenance Expenses, Capital Expenditures Fund Permitted Expenditures and Repair and Rehabilitation Reserve Fund Permitted Expenditures in accordance with the terms of the Indenture. Capital Expenditures Fund. The Trustee shall cause amounts in the Toll Revenue Fund, to the extent available, to be deposited into the Capital Expenditures Fund from time to time as shall be necessary to build and thereafter maintain the Capital Expenditures Fund Required Balance. On each date on which Capital Expenditures Fund Permitted Expenditures are due and payable or reasonably expected to become due and payable, monies on deposit in the Capital Expenditures Fund shall be applied by the Trustee pursuant to a Written Request of the Commission to pay such Capital Expenditures Fund Permitted Expenditures. Senior Lien Bond Reserve Fund. On the date of issuance of any Series of Senior Lien Bonds that has a Senior Lien Bond Reserve Requirement, the Senior Lien Bond Reserve Requirement for those Senior Lien Bonds shall be deposited in the Senior Lien Bond Reserve Fund in an account solely for the benefit of those Senior Lien Bonds. Alternatively, the Supplemental Indenture for any Series of Senior Lien Bonds may establish a pooled Senior Lien Bond Reserve Requirement for that Series of Senior Lien Bonds and any one or more subsequently issued Series of Senior Lien Bonds with the same pooled Senior Lien Bond Reserve Requirement, in which case the Senior Lien Bond Reserve Requirement for the initial such Series of Senior Lien Bonds shall be deposited in the Senior Lien Bond Reserve Fund in an account solely for the benefit of those Senior Lien Bonds and any additional Senior Lien Bonds with the same pooled Senior Lien Bond Reserve Requirement, and on the date of issuance of any such additional Senior Lien Bonds, there shall be deposited in the account the amount necessary to increase the balance in the account to an amount equal to the Senior Lien Bond Reserve Requirement for all Senior Lien Bonds secured by that account. Thereafter, the Trustee shall cause amounts in the Project Fund or any sub- account thereof or the Toll Revenue Fund, as applicable, to the extent available, to be deposited into the 57023390.3 15 231 Senior Lien Bond Reserve Fund as shall be necessary to maintain the Senior Lien Bond Reserve Requirement. Monies on deposit in the Senior Lien Bond Reserve Fund shall be applied by the Trustee as follows: (I) If on any interest payment date for the Senior Lien Bonds, principal payment date for the Senior Lien Bonds or redemption date on which the Senior Lien Bonds are subject to mandatory sinking fund redemption, the amount on deposit in any applicable account of the Senior Lien Bond Fund, determined after taking into account all amounts transferred to the Senior Lien Bond Fund in accordance with the Indenture, or any other provision of the Indenture on or prior to such date, is not sufficient to pay interest and/or principal and/or the redemption price (excluding any redemption premium) due on the Senior Lien Bonds, then moneys shall be transferred to the Senior Lien Bond Interest Payment Account and/or the Senior Lien Bond Principal Payment Account, as applicable, from the Senior Lien Bond Reserve Fund which, together with moneys then on deposit in the applicable account of the Senior Lien Bond Fund, will be sufficient to pay interest and/or principal and/or the redemption price (excluding any redemption premium) due on the Senior Lien Bonds on such date. Moneys shall be transferred first to the Senior Lien Bond Interest Payment Account until such account, together with any available funds then on deposit in the Senior Lien Bond Interest Payment Account of the Senior Lien Bond Fund, is sufficiently funded and thereafter, to the Senior Lien Bond Principal Payment Account until such account, together with any available funds then on deposit in the Senior Lien Bond Principal Payment Account of the Senior Lien Bond Fund, is sufficiently funded. • (2) At maturity of the Senior Lien Bonds or upon earlier redemption of all of the • Outstanding Senior Lien Bonds secured by funds on deposit in the Senior Lien Bond Fund, the Commission may direct the Trustee to transfer the funds on deposit in the Senior Lien Bond Reserve Fund to the Senior Lien Bond Principal Payment Account of the Senior Lien Bond Fund to be applied to the final payment of principal of the Senior Lien Bonds or to an escrow account established for defeasance of the Senior Lien Bonds pursuant to the Indenture; provided, that if less than all of the Senior Lien Bonds mature or are redeemed, the amount on deposit in the Senior Lien Bond Reserve Fund following such transfer shall not be less the Senior Lien Bond Reserve Requirement applicable to any Senior Lien Bonds to remain Outstanding following such maturity or redemption of Senior Lien Bonds (3) Any amounts on deposit in the Senior Lien Bond Reserve Fund in excess of the Senior Lien Bond Reserve Requirement shall be applied in accordance with the Indenture. The Reserve Requirement for any Series of Senior Lien Bonds may be permitted or required by the Supplemental Indenture establishing the Reserve Requirement to be funded in whole or in part with a Reserve Facility. The terms and conditions for any Reserve Facility shall be set forth in the Reserve Facility or the Supplemental Indenture establishing the Reserve Requirement to be met in whole orin part by the Reserve Facility, provided that those terms and conditions shall conform to and be consistent with the provisions set forth in the Indenture. The Trustee shall withdraw cash (and liquidate investments to produce cash) and draw on Reserve Facilities in any account in the Senior Lien Bond Reserve Fund to fund payments of principal of and interest on Senior Lien Bonds supported by such account in the Senior Lien Bond Reserve Fund in the manner and in the order specified in the applicable Supplemental Indenture or Supplemental Indentures. The Indenture shall not be discharged until all Reserve Facility Costs owing to a Reserve Facility Provider shall have been paid in full. 57023390.3 16 232 • • • • TIFIA Reserve Fund. lf, on any Calculation Date immediately preceding a TIFIA Payment Date when TIFIA Mandatory Debt Service shall be due and payable, the amounts available in the TIFIA Payment Fund for the payment of TIFIA Mandatory Debt Service, after taking into account any transfers made into such account in accordance with clause Tenth of the flow of funds and other provision under the Indenture on such Calculation Date, are not sufficient to pay the TIFIA Mandatory Debt Service payable on such TIFIA Payment Date, then moneys shall be transferred to the TIFIA Payment Fund from the TIFIA Reserve Fund to pay such insufficient amounts. The Lien on the TIFIA Reserve Fund (and all earnings thereon) shall apply only to the TIFIA Loan Agreement and the related interest of the TIFIA Lender with respect to amounts on deposit in such account from time to time, and such amounts shall be solely for the benefit of the TIFIA Lender until such funds have been disbursed in accordance with the Indenture. On the date that the TIFIA Loan is paid in full the amounts remaining on deposit in the TIFIA Reserve Fund on such date will be transferred to the Surplus Fund. For the avoidance of doubt, any prepayment of the TIFIA Obligations will be in addition to any other payment obligation of the Commission to the TIFIA Lender or on the TIFIA Obligations due and payable on such date and shall not function to set-off or otherwise impact the quantum of such payment obligations. Repair and Rehabilitation Fund. The Trustee shall cause amounts in the Toll Revenue Fund, to the extent available, to be deposited into the Repair and Rehabilitation Fund from time to time as shall be necessary to build and thereafter maintain the Repair and Rehabilitation Fund Required Balance . On each date on which Repair and Rehabilitation Fund Permitted Expenditures are due and payable or reasonably expected to become due and payable prior to the next succeeding Monthly Funding Date, monies on deposit in the Repair and Rehabilitation Fund shall applied by the Trustee pursuant to a Written Request of the Commission to pay such Repair and Rehabilitation Fund Permitted Expenditures. Surplus Fund. The Surplus Fund shall be funded in accordance with and subject to clause Sixteenth of the flow of funds ofthe Indenture and in compliance with the TIFIA Loan Agreement. Funds on deposit in the Surplus Fund and funds credited to such account will not be subject to the security interest granted pursuant to the Security Agreement in favor of the Secured Parties and the Commission will have the exclusive right to withdraw or otherwise dispose of or transfer funds on deposit in the Surplus Fund to any account (or to such Person) as directed by the Commission in writing in its sole discretion on any Calculation Date; provided that all of the Restricted Payment Conditions are satisfied on or as of such Calculation Date. Lock-Up Account. All funds held by the Trustee in the Lock-Up Account may be released to the Surplus Fund upon the satisfaction of the Restricted Payment Conditions by the Commission on any Calculation Date, as evidenced by a Written Notice ofTIFIA. To the extent required under the TIFIA Loan Agreement, the Trustee shall transfer funds from the Lock-Up Account to the TIFIA Payment Fund in the amount of any prepayment of the TIFIA Obligations required under the TIFIA Loan Agreement. 57023390.3 17 233 Rate Covenant The Commission covenants that it will at all times following the Substantial Completion Date establish and maintain tolls on the Toll Road at rates projected by it to generate sufficient Revenue to pay, as and when due, amounts due on all Outstanding Bonds and Parity Obligations, Operation and Maintenance Expenses, and other obligations of the Commission, and to otherwise comply with the Act. Beginning in the second Fiscal Year following the commencement of toll collections by the Commission for use of the Toll Road pursuant to the Cooperative Agreement, the Commission covenants to: (i) compute projected Net Revenue for each Fiscal Year (by excluding form such calculations any extraordinary or one-time expenses from Operations and Maintenance Expenses when determining Net Revenue for such Fiscal Year) and the ratio produced by dividing projected Net Revenue by projected Debt Service for that Fiscal Year (such ratio being hereinafter referred to as the "Coverage Ratio") within ten Business Days after the beginning of that Fiscal Year (such date of computation being hereinafter referred to as a "Coverage Calculation Date"); (ii) to promptly furnish to the Trustee a Certificate of the Commission setting forth the results of such computations; and (iii) if the Coverage Ratio is less than 1.50:1, to take such action as promptly as practicable after the Coverage Calculation Date (including, without limitation, increasing Toll Revenues through toll increases) as the Commission projects is necessary to cause the projected Coverage Ratio for that Fiscal Year to equal or exceed 1 .5: 1. • Within 60 days after the end of each Fiscal Year (beginning with the second Fiscal Year following the commencement of toll collections by the Commission for use of the Toll Road pursuant to the Cooperative Agreement), the Commission will file with the Trustee a report setting forth the Net Revenues for such Fiscal Year. The failure of toll rates to yield an amount sufficient to achieve the required Coverage Ratio will not be deemed to constitute an Event of Default so long as the Commission complies with the following requirements: • (a) The Commission shall employ a Traffic Consultant to review and analyze the operations of the Toll Road and to submit to the Board, as soon as practicable (but not later than such date as will enable the Board to act upon it within 180 days after the end of the Fiscal Year in question), a written report which shall include the actions that the Traffic Consultant recommends should be taken by the Commission with respect to (i) revising the toll rates, (ii) altering its methods of operation, or (iii) taking other action projected to produce the amount so required in the following twelve month period (or, ifless, the maximum amount deemed feasible by the Traffic Consultant and that the Traffic Consultant estimates will not adversely affect the amount ofNet Revenues). (b) Promptly upon its receipt of such written report (and, in any case, within 180 days after the end ofthe Fiscal Year in question), after giving due consideration thereto, the Commission will revise the toll rates, as permitted by Jaw, alter its methods of operation, or take such other action as it deems appropriate. Such revisions, alterations, or actions need not comply with the recommendations of the Traffic Consultant so long as Net Revenues projected by the Traffic Consultant to be produced by the revisions, alterations or actions then taken by the Commission are at least equal to the required amount. The Commission further covenants that such toll rates for traffic using the Toll Road will be established and maintained in a reasonable way to cover all traffic (other than vehicles used for maintaining the Toll Road; police, fire, and other public emergency vehicles; buses owned and operated by any public agency; vehicles with multiple passengers or which allow for a limited number of passengers, including motorcycles, according to policies determined by the State or the Commission; electric, hybrid-electric and other vehicles that meet emission-reduction policies determined by the State of the Commission; vehicles which are otherwise exempt from payment of tolls under State or federal 57023390.3 18 234 • • • • law; and any vehicles during a public emergency declared by the Commission) consistent with the requirements hereof, but with such classifications as the Commission may deem appropriate. Notwithstanding any provision to the contrary, nothing in the Indenture shall be deemed to require the Commission to collect tolls and other fees with respect to which the Commission has determined, based upon a report from a Traffic Consultant, that the costs of collection would exceed the amount of tolls and other fees expected to be collected; and provided further that nothing contained in the Indenture shall prevent the Commission from temporarily reducing or eliminating tolls and other fees in connection with programs which it intends to use to increase Net Revenues. Additional Bonds and Parity Obligations Subsequent to the initial issuance of Bonds pursuant to the Indenture, additional Bonds or Parity Obligations may be issued if the following requirements are met. (a) the Bonds or Parity Obligations are issued for refunding purposes to provide funds for the payment of any or all of the following: (1) The principal or redemption price of the Outstanding Bonds or Parity Obligations to be refunded; (2) All expenses incident to the calling, retiring or paying of such Outstanding Bonds or Parity Obligations, the Costs of Issuance of such refunding Bonds or Parity Obligations, and any termination payments or other payments to the holders of obligations of the Commission entered into pursuant to California Government Code Section 5922 (or any similar statute) related to such Outstanding Bonds or Parity Obligations; (3) Interest on all Outstanding Bonds or Parity Obligations to be refunded to the date such Bonds or Parity Obligations will be called for redemption or paid at maturity; and (4) Interest on the refunding Bonds or Parity Obligations from the date thereof to the date of payment or redemption of the Bonds or Parity Obligations or to be refunded. (b) an Authorized Representative determines and certifies, as of the date of issuance of the additional Bonds or Parity Obligations, that either: (1) [the ratio of (A) Net Revenue for the most recent Fiscal Year for which audited financial statements are available to (B) Maximum Annual Debt Service, calculated as of the date of sale of, and including, such Bonds or Parity Obligations, will not be less than 1.30:1; or (2) the ratio of(A) projected Net Revenue for each of thirty consecutive Fiscal Years (beginning with the 2017-18 Fiscal Year or if later the current Fiscal Year or the Fiscal Year after the current Fiscal Year and not to exceed the final maturity date of all Parity Obligations or Permitted Second Lien Obligations to be outstanding after such issuance) to (B) Debt Service for such Fiscal Year, calculated as of the date of sale of, and including, such Senior Lien Bonds or Parity Obligations, for each such Fiscal Year, will not be less than 1.30:1, and of (X) projected Net Revenue for the third such consecutive Fiscal Year to (Y) Maximum Annual Debt Service, calculated as of the date of sale of, and including, such Bonds or Parity Obligations, will not be less than 1.30:1. In calculating projected Net Revenue, the Commission shall take into account amounts projected to be received from any adopted toll increase or increases and any additional toll facilities to be constructed on the Toll Road; 57023390.3 19 235 and, unless the TIFlA Loan has been repaid in full pursuant to the terms of the TIFIA • Loan Agreement, the Commission has received the written consent ofTIFIA to such issuance. Subordinated Obligations; TIFIA Loan Except to the extent restricted by a Supplemental Indenture, the Commission may issue or incur Permitted Second Lien Obligations and other subordinate obligations, such as the TIFIA Loan, payable out of Revenue on a basis junior and subordinate to the payment of the principal, interest and reserve fund requirements for the Senior Lien Bonds and any Parity Obligations. The TIFIA Loan Agreement contains provisions providing for a lien on Revenue on a parity with the Bonds and Parity Obligations in the event of bankruptcy, insolvency or liquidation of the Commission. RIVERSIDE COUNTY TRANSPORTATION COMMISSION General The Commission was established in 1977 to oversee the funding and coordination of all public transportation services within the County. The Commission serves as the tax authority and implementation agency for the voter-approved Measure A Transportation Improvement Program, which imposes a half-cent sales tax to fund transportation improvements. 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-594 call boxes along the County roadways and 21 FSP tow trucks providing assistance to more than 43,100 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 30. The Board expanded in 2008, 20 I 0 and 2011 with the addition of total of four members representing newly incorporated cities. The current Board now has 34 members. The expanded Commission ensures better representation throughout the County and provides the participatory framework for continued success in carrying out these responsibilities. 57023390.3 20 236 • • • • • The Transportation Expenditure Plan On November 5, 2002, 69.2% of the voters ofthe County approved Measure "A"-The Riverside County Transportation Commission Transportation Expenditure Plan (the "Plan") and Retail Transaction and Use Tax Ordinance which expressed the following concerns in its preamble: "The transportation system in Riverside County is rapidly deteriorating and our population and economy are growing rapidly. Maintenance and repairs of existing roadways and improvements to relieve congestion cannot be accomplished with available funds. Without additional funds, the system will bog down and pavement will crumble into permanent disrepair. ... Local governments must either generate revenues to expand our system and maintain our investments or watch the system collapse and endanger the health, welfare and safety of all Riverside County residents." The goals of the Plan are as follows: (I) Maintain and improve the quality of life in Riverside County by supplementing existing funds for transportation; (2) provide for accountability in the expenditure of taxpayer funds; (3) provide for equity in the distribution of Measure "A" Revenues; and (4) provide for local control of the Transportation Improvement Program. To address the concerns as expressed in the preamble, and to accomplish its goals and policies, the ordinance provided that sales tax revenues be distributed to the specific geographic areas of Riverside County (i.e., Western County, Coachella Valley, and Palo Verde Valley) based on their proportionate share of revenues generated in the County, and that funds be allocated for highway and regional arterial projects, local streets and roads, transit and commuter rail, new corridors and economic development. In the Western County, $370 million is to be used for new corridor projects, $1.020 billion 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, 50 percent is to be earmarked for its highway and regional arterial system, 35 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. Commissioners Section 130053 of the California Public Utilities Code specifies that the Commission consists of five members of the County Board of Supervisors, one member from each incorporated city in County (each of whom must be a mayor or member ofthe City Council) and one non-voting member appointed by the governor of the State of California. The role of the Commission is to act as the policy-making board for Riverside County transportation activities. Executive Staff The Commission's key staff members, the position held by each and a brief statement of the background of each staff member 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 57023390.3 21 237 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 ("CAL TRANS"). 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 master's 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 governmental accounting and reporting at the University of Redlands. Ms. Trevino's 19- year public accounting career included 16 years with Ernst & Young LLP. As Senior Manager in its Assurance and Advisory Business Services practice serving government clients, she led the development of the Southern California practice and served as a national technical resource. She is a Certified Public Accountant in California and completed the Executive Management Program at the University of California, Riverside. Ms. Trevino received a bachelor of science degree in accounting· from Loyola Marymount University with Magna Cum Laude Honors. • THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT State Route 91 ("SR-91") is an east-west limited accesshighway running from the 1-405 in Los Angeles at its western end to the interchange ofl-215 and SR-60 in Riverside County on its eastern end. The existing SR-91 cross section typically consists of four general purpose ("GP") lanes, varying in width from 1 1 feet to 12 feet, as well as auxiliary lanes in each direction. In Orange County, two tolled express lanes ("OCTA SR-91 Express Lanes") are operated in each direction by the Orange County Transportation Authority ("OCTA"). The OCT A SR-91 Express Lanes are in the median area, beginning west of the SR- 91/SR-55 interchange and terminating near the Riverside/Orange county line. These express lanes transition into one high occupancy vehicle ("HOV'') lane in each direction in Riverside County. Three major freeway facilities intersect the Project, including 1-15, SR-241, and SR-71, respectively. The Project will extend the OCTA SR-91 Express Lanes and construct one GP lane in each direction in Riverside County from the Orange County line to 1-15 in Riverside County, a distance of approximately eight miles. The Project limits along 1-15 begin at the SR-91/1-15 interchange and extend south approximately three miles, ending near Ontario Avenue in the City of Corona. The Project will also provide express lane connectors to south I-1 5. Other Project improvements include reconstruction with geometric improvements of five local interchanges, addition of auxiliary lanes and other operational improvements, installation of an electronic toll collection ("ETC') system, construction of new and widened bridges, retaining walls, sound walls and aesthetics improvements, and the addition of a collector-distributor system with braided ramps in the vicinity of the SR-91/1-15 interchange. 57023390.3 22 238 • • • • The extstmg OCTA SR-91 Express Lanes, operated by the OCTA, feature fully automated tolling, including the first application of managed lane variable pricing in the United States. The variable pricing approach adjusts toll rates based on the number of vehicles on the road to maintain "free flow" conditions and maximize throughput. Using the OCTA SR-91 91 Express Lanes as extended by the Project, commuters are expected to save 30 minutes on average on the eight-mile segment of SR-91 m Riverside County. Construction of the Project The Project has been divided into two major phases for delivery-Phase I (Project Development) and Phase II (Design-Build). The Project Development phase covers the activities prior to financial close and issuance of the full notice-to proceed ("NTP") to the design-builder. These activities generally include performing preliminary studies, obtaining the required environmental and other Project approvals, beginning of early right-of-way ("ROW'') acquisitions, development of the design-build procurement documents, selection of the design-build contractor, award of the contract and issue of the limited NTP, and securing of Project funding. The Design-Build phase includes the activities that begin with financial close and issuance of the full NTP and conclude upon Project final acceptance. These activities generally include the completion of the ROW acquisitions, the design and construction of the Project, commencement of toll operations and revenue collection, and project closeout. Parsons Transportation Group, acting as the Commission's project and construction manager, has provided estim_ated costs for the Project derived from its detailed design work and analysis of current costs for comparable components. Federal Highway Administration and California Department of Transportation ("Caltrans") conducted a Cost Estimate Review ("CER") that examined the projected Project costs and concluded that there was a 99.5% confidence level in the estimate under their established methodology. The Commission and (the "Design-Builder") have entered into that certain Design-Build Contract (the "DB Contract"), a lump sum design-build contract pursuant to which the Design-Builder has agreed to perform all work necessary to obtain completion of the Project by the deadlines specified in the DB Contract. The DB Contract incorporates the following specific terms and provisions: Contract Amount. As full compensation for the work and all other obligations to be performed by the Design-Builder, the Commission will pay to the Design-Builder a lump sum "Contract Price" of $ . Payments are to be made on the basis of progress by the Design-Builder, subject to a cap on the aggregate amount of payments which may be made to the Design-Builder at any specified time. Completion Deadline. The Design-Builder is required to achieve substantial completion within __ days after the effective date of the notice to proceed, which is expected to be issued by ____ _ If the issuance of such notice to proceed is delayed due to acts or omissions of the Design-Builder or any of its related entities, the Design-Builder is required to achieve substantial completion within _ days after close of the financing for the Project (including the Series 2013 Bonds). Liquidated Damages. The Design-Builder will be liable for and pay the Commission liquidated damages with respect to any failure to achieve substantial completion, completion and final acceptance by the application deadline. The amount of such liquidated damages are as follows: 57023390.3 23 239 • $95,000 for each day after the substantial completion deadline through the date of substantial completion, not to exceed 365 days; • $8,000 for each day after the completion deadline through the date of completion, not to exceed 365 days; and • $5,000 for each day after the final acceptance deadline and through the final acceptance date, not to exceed 365 days. Performance and Payment Bond. On or before the issuance by the Commission of the initial notice to proceed, the Design-Builder is requirement to deliver to the Commission a performance bond and a payment bond, each in the initial amount of $50 million. Upon the issuance of the final notice to proceed, the amount of each of the performance bond and the payment bond will increase to $250 million. Insurance. The Design-Builder is required to obtain and maintain a construction insurance program with project-specific limits for commercial general liability, pollution liability, professional liability, and builder's risk. All such policies are required to be procured from insurance companies with an A.M. Best and Company rating level of A-: Class VI or better, or as approved by the Commission and authorized or approved to do business in the State. [ANY OPINION AS TO WHETHER THE AMOUNTS OF COVERAGE AND THE DEDUCTIBLES ARE WITHIN INDUSTRY RANGE?] Right-of-Way • The Project will require the acquisition of 57.77 acres of right-of-way, consisting of 237 parcels at an estimated cost of $138,248,000. As of the date of this Official Statement, the Commission has • acquired __ parcels at a cost of$ ------- Environmental Studies Preliminary engineering and environmental studies were initiated on the Project in September 2007. The studies determined that a full Environmental Impact Statement ("EIS'') and Environmental Impact Report ("EIR") were required. Those documents were prepared by Parson Brinckerhoff ("P B"). Cal trans is the lead agency for the environmental process under National Environmental Policy Act ("NEPA") delegation. The draft EIS/EIR was circulated in June 2011, and the Commission submitted the final EIS/EIR to Caltrans in October 201 1. The Project is included in the 2012 Regional Transportation Plan (RTP) update that was adopted by the regional metropolitan planning organization, the Southern California Association of Governments ("SCAG"), on April4, 2012. Completion of the environmental review through a Record of Decision (''ROD") occurred in November 2012. Maintenance and Operations The Commission will use the services of the existing OCTA SR-91 Express Lanes operator, Cofiroute, to serve as operator of the new SR-91 Tolled Express Lanes. Cofiroute currently is responsible for managing the OCT A Express Lanes operation, which includes revenue collection, customer accounts, violation enforcement, violation processing, incident management and response, and first line maintenance of tolling and traffic equipment. Cofiroute will have the same responsibilities for the new SR-91 Tolled Express Lanes. Cofiroute will be contracted through a three-party agreement with the Commission and OCT A. This will be a modified agreement to the existing 2011 OCT A/Cofiroute O&M agreement to include the Commission, providing interoperability between the two adjacent toll facilities. • 57023390.3 24 240 • • • The Commission is responsible for maintenance of the new SR-91 Tolled Express Lanes infrastructure (pavement, barriers, channelizers, sign structures, etc.) pursuant to terms of the Toll Facilities Agreement between the Commission and Caltrans. The Commission will enter into an agreement with Caltrans to perform this maintenance. Caltrans is responsible for the operations and maintenance for all SR-91 roadway elements outside the tolled express lanes area. Cofiroute will monitor the daily operations of the toll collection system, communications network, internet, phone system, and toll collection equipment to ensure that all system components are fully functional. Specific activities include: • Occupancy Determination • In-Lane Mobile Violation Enforcement • Incident Handing • Traffic Operations • Emergency Services Coordination Cofiroute will actively monitor the volume and traffic flow to ensure proper congestion management toll pricing and display. It will ensure that the toll rate, set quarterly, is an accurate reflection of actual conditions, and that the correct toll rate is posted on the changeable message signs. Cofiroute is also responsible for maintenance of all elements of the toll collection system. It will provide 24/7 coverage for all maintenance-related activities for the toll collection system, providing customer assistance as needed. This includes all hardware, equipment, software, and also firmware maintenance for the toll points, changeable message signs, cameras, communications network hardware, and connections from the network hub to the toll operator's central toll collection system. Cofiroute's back office responsibilities include toll collection system applications software, system servers, system administration, and related peripheral equipment. TRAFFIC AND REVENUE ESTIMATES Stantec Consulting Services Inc. ("Stantec"), as traffic consultant for the Project, has prepared the "Riverside County 91 Express Lanes Extension Investment Grade Study" dated September 27, 2011 (the "Study," which is attached hereto as APPENDIX B). Stantec is one of the top global design firms as ranked by the Engineering News Record, having a professional staff of some 10,500 employees and 160 offices throughout North America and has been serving public and private clients since 1954. Stantec has a group of over 100 transportation professionals of which more than 20 professionals are actively involved with toll facility clients. Stantec's toll facility experience is both broad and diverse, having worked with more than 100 clients in more than 20 states and internationally. Stantec's investment grade traffic and revenue reports have been the basis for the sale of over $25 billion in revenue bonds. The Study includes discussions of existing travel patterns; the study methodology, including the development, validation and application ofthe traffic forecasting model; the socioeconomic forecasts; and the highway networks that were used as input to the model. All of this information was used as the foundation for the traffic and revenue forecasts contained in the Study . 57023390_3 25 241 As part of the study, traffic and revenue streams were estimated for two different tolling policies: (1) implementing the existing OCTA toll policy and (2) implementing an "enhanced" toll policy that is • based on the OCTA policy, but allows for the increase of off-peak toll rates once certain volume thresholds are exceeded. The enhanced policy is similar to the OCTA policy as it ties toll increases to traffic volumes, though it allows greater toll flexibility during non-peak periods. In addition, a sensitivity analysis was performed for a "revenue maximization" toll policy. Using the data and methodologies outlined throughout the Study, 50-year traffic and revenue streams were estimated for both the OCT A and enhanced toll policies. The Study found that where the OCTA toll policy grows just under four percent per year, the enhanced toll policy leads to revenue growth of six percent per year. 57023390.3 26 242 • • • • • ESTIMATED CASH FLOW AND DEBT SERVICE COVERAGE The table on the following page shows the estimated Toll Revenues of the Toll Road for the years ending December31, 20_through December31, 20_, both inclusive, as estimated by Stantec. See "APPENDIX B-RIVERSIDE COUNTY 91 EXPRESS LANES EXTENSION INVESTMENT GRADE STUDY -Table 9-1 (Traffic and Revenue Estimates, Revenue Maximization Toll Policy." Based on such projections for estimated Toll Revenues, the table on the following page has been compiled to show estimated coverage of debt service (for the Series 2013 Bonds and the 2013 TIFIA Bond) after deducting estimated Operation and Maintenance Expenses for the Toll Road . 57023390.3 27 243 Year Ending December 31 Toll Revenues<ll Estimated Cash Flow and Debt Service Coverage Table Operation and Maintenance Expenses<2l Net Revenues Available for Debt Service Series 2013 Bonds Debt Service TIFIA Bond Debt Service (ll The Commission's authority to levy tolls continues for __ years after the final maturity date of the Series 2013 Bonds. (Zl Estimates were prepared by Stantec in their Riverside County 91 Express Lanes Extension Investment Grade Study attached hereto as APPENDIX B. Source: The Commission. 57023390.3 • • Total Debt Service Coverage Surplus • • • • RISK FACTORS The following is a discussion of certain risk factors that should be considered in evaluating an investment in the Series 2013 Bonds. This discussion does not purport to be either comprehensive or definitive. The order in which risks are presented is not intended to reflect either the likelihood that a particular event will occur or the relative significance of such an event. Moreover, there may well be other risks associated with an investment in the Series 2013 Bonds in addition to those set forth herein. General The financial forecasts in this Official Statement are based generally upon certain assumptions relating to the timing and costs of the Project, and upon projections as to estimated Toll Revenues, Operation Maintenance Expenses. Inevitably, some underlying assumptions and projections used to develop the forecasts will not be realized, and unanticipated events and circumstances may occur. Therefore, the actual results achieved during the forecast periods will vary from the forecasts, and such differences may be material. Forward-Looking Statements This Official Statement and Appendices hereto contain "forward-looking statements," which generally can be identified with words or phrases such as "anticipates," believes," "could," "estimates," "expects," "foresees," "may," "plan," "predict," "should," "will" or other words or phrases of similar import. All statements included in this Official Statement and Appendices hereto that any person expects or anticipates will, should or may occur in the future, including but not limited to, the projections in the Riverside County 91 Express Lanes Extension Investment Grade Study, are forward-looking statements . These statements are based on assumptions and analysis made by the Commission and Stantec, as applicable, in light of their experience and perception of historical trends, current conditions and expected future developments as well as other factors they believe are appropriate in the circumstances. However, whether actual results and developments will conform with expectations and predictions is subject to a number of risks and uncertainties, including, without limitation, the information discussed under this "RISK FACTORS" caption of this Official Statement as well as additional factors beyond the Commission's control. The important risk factors and assumptions described under that caption and elsewhere in this Official Statement could cause actual results to differ materially from those expressed in any forward-looking statement. All of the forward-looking statements made in this Official Statement and any Appendices hereto are qualified by these cautionary statements. There can be no assurance that the actual results or developments anticipated will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Commission's revenues or operations. All subsequent forward-looking statements attributable to the Commission or persons acting on their behalf are expressly qualified in their entirety by the factors and assumptions described above and in any documents containing those forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the Commission and the other aforementioned entities on the date hereof, and neither the Commission nor any of such other aforementioned entities assumes any obligation to update any such forward-looking statements. The forward-looking statements herein are necessarily based on various assumptions and estimates that are inherently subject to numerous risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, 57023390.3 29 245 future economic, compettttve and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and, therefore, there can be no assurance that the forward- looking statements included in this Official Statement will prove to be accurate. Costs of Project and Construction Delays Generally, in construction projects of the magnitude of the Project, there is a possibility of time delays and cost increases resulting from (i) design and construction problems and resulting change orders, (ii) escalation of prices or wages or shortages of labor or materials, (iii) environmental litigation or environmental administrative matters, (iv) the unavailability or cost of acquiring right-of-way, (v) utility relocation problems, (vi) archaeological, historic and unidentified or misidentified subsurface conditions, (vii) hazardous materials, (viii) force majeure events, and (ix) litigation. As a result, there can be no assurance that the costs of the Project will not exceed current estimates, or that the completion of the Project will not be delayed beyond the estimated completion dates. Variations in costs estimates and delays in construction could be material. While Substantial Completion Date for the Project is scheduled for , interest on the Series 2013 Bonds has been capitalized through . No assurances can be given that the amount of capitalized interest will be sufficient to pay debt service on the Series 2013 Bonds if Substantial Completion ofthe Project is significantly delayed. Conditions to Drawing on the TIFIA Loan Agreement • The Commission expects to draw funds under the TIFIA Loan Agreement to finance the Project. Failure to meet certain disbursement conditions set forth in the TIFIA Loan Agreement as well as an • event of default under the TIFIA Loan Agreement may result in the suspension or delay in the disbursement of proceeds of the TIFIA Loan Agreement. No assurances can be given that the amount of capitalized interest will be sufficient to pay debt service on the Series 2013 Bonds if Substantial Completion of the Project is significantly delayed by suspended or delayed funding under the TIFIA Loan Agreement. Payment and Performance Bonds A potential purchaser of the Series 2013 Bonds can have no assurance that any contractor or subcontractor, guarantor, surety or property insurer will be willing or capable of meeting its responsibilities in connection with the Project, or that the issuer of any performance or payment bond, any guarantee or any property insurance policy will honor or will be able to honor a claim in a timely manner. The total contract price under the Construction Contract is $ , and the Construction Contract requires payment and performance bonds in an amount equal to $50 million at the time of the initial notice to proceed and $250 million each upon the issuance of the final notice to proceed. See "THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT-Construction of the Project." Although the Commission does not expect its payment obligations outstanding at any one time under the aforementioned construction contracts to exceed the amount of the payment bonds provided by the respective contractor, there can be no assurance that the payment and performance bonds provided by any contractor will be sufficient to satisfY the Commission's payment or performance obligations under the respective construction contract. Not all events are covered under such payment and performance bonds. The issuer of payment and performance bonds is not guaranteeing payment or performance under all circumstances, and the issuer of such bonds may assert any defenses it may have for payment or performance. Moreover, in the event that a default occurs under any construction contract, there is a 57023390.3 30 246 • • • • possibility of litigation between the Commission and the respective contractor, or between the Commission and the providers of the performance bonds and payment bonds, which could further delay the construction and opening of the respective Project. In addition, there can be no assurance that the Commission could recover any amounts under any performance bonds or payment bonds. Liquidated Damages The amount of liquidated damages that the Design-Builder will be required to pay pursuant to the DB Contract for each calendar day that Substantial Completion is not met in connection with opening of the Project to traffic will be limited by contract and may not be sufficient to cover all of the Commission's losses in the event of a delay or a failure to complete the required work in accordance with the plans and specifications, and other requirements of the contract documents. Liquidated damages, if paid, may not be sufficient to enable the Commission to pay the principal and interest on the Series 2013 Bonds and the other amounts required to be paid under the Indenture. There are numerous events that could cause an extension of the respective construction schedule and that could result in increased costs for the Project. Liquidated damages are payable only under certain circumstances and even if paid, may not be sufficient to cover debt service payments on the Series 2013 Bonds. In addition, collection of liquidated damage may require extensive litigation and no assurance can be provided that such amounts will in fact be collected. In addition, the Design-Builder has not waived its rights to contest a demand for payment of liquidated damages. Events of Force Majeure Construction and operation of the Project are at risk from events of force majeure, such as earthquakes, or other natural disasters, epidemics, blockades, rebellions, war, riots, acts of sabotage, terrorism or civil commotion, and spills of hazardous materials, among other events. Construction or operations may also be stopped or delayed from non-casualty events such as discovery of additional archaeological artifacts, changes in law, delays in obtaining or renewing Commission-provided permits, revocation of such permits and approvals and litigation, among other things. Limited Insurance Coverage Although the Contractor is required to provide certain types of insurance coverage during construction of the Project, such required insurance policies do not cover damage and delay from all events that could interrupt construction. Risks that may not be insurable/insured include the following risks that may delay the project without causing property damage: epidemics, blockades, strikes and riots. Other risks that may not be insured/insurable include war, nuclear events, criminal or intentional acts of the insured, pollution, unforeseeable environmental or geological conditions, discovery of archaeological artifacts, changes in Jaw, bankruptcy and acts of terrorism. Insurance policies may not be maintained or obtainable in amounts that would be sufficient or be paid in sufficient time in all events to pay all of the Commission's expenses under the Indenture, including debt service on the Series 2013 Bonds. For a description of the types and amounts of insurance coverage to be provided during construction of the Project, see "THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT-Construction of the Project." For a description of the covenants of the Commission to maintain insurance for the Toll Road, see "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE-Covenants of the Commission -Insurance." 57023390.3 31 247 Operating Risks The ability for the operations of the Toll Road to generate Toll Revenues in amounts sufficient to pay debt service on the Series 2013 Bonds when due will be subject to and could be materially and adversely affected by the risks inherent in the operation of any toll facility. The ability to repay the Series 2013 Bonds will be dependent on the volume of traffic that utilizes the Toll Road, as well as the ability of the Commission and its vendor's computer systems to accurately process data. Revenues to be generated through such use will be influenced by numerous factors, including, among others, the ability to manage toll evasion; the ability to control expenses; the availability of adequately-trained personnel; population, employment and income trends within the region; the congestion on alternative freeways, highways, and streets; time savings experienced by utilizing the Toll Road; the toll rates; the availability and price of fuel; and the construction of new or improved competitive roadways or other transit facilities. Motor Fuel Prices and Taxes There is no assurance that motor fuel will remain in adequate supply or that motor fuel prices and federal and State motor fuel taxes will not increase. Increases in motor fuel prices could negatively impact the Roll Revenues of the Commission. Additionally, if motor fuel prices increase, it could have a material adverse effect on the economy of the regions served by the Project and the Toll Revenues ofthe Commission. Traffic and Revenue Report Assumptions • The revenue forecasts (the "Revenue Forecasts") in the Riverside County 91 Express Lanes Extension Investment Grade Study are based upon certain assumptions described in such reports and upon • certain additional assumptions described above. See "APPENDIX B -RIVERSIDE COUNTY 91 EXPRESS LANES EXTENSION INVESTMENT GRADE STUDY." Based upon such assumptions, Stantec has expressed its opinion that such revenue forecasts are reasonable and have been prepared in accordance with accepted practice for such studies. As provided in therein, however, such reports are not a guarantee of any future events or trends and the forecasts therein are subject to future economic and social conditions and demographic developments that cannot be predicted with certainty. Further, any of the estimates and assumptions in such reports are inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of the Commission. Failure to achieve or realize any of the assumptions described above may have a materially adverse effect upon the Toll Revenues actually realized. Maintenance Costs Successful operation of the Toll Road will require timely and complete maintenance and replacement of components of the Toll Road. Although the Commission has covenanted in the Indenture to maintain the Toll Road, no assurance can be given that sufficient funds will be available to adequately maintain the Toll Road. Any significant deterioration in the Toll Road may result in increased operating costs and in reduced usage (or even in temporary lane closures) and may adversely affect the amount of funds available to pay debt service on the Series 2013 Bonds. Dilution of Senior Lien Security Upon Bankruptcy Related Event Upon the occurrence of a Bankruptcy Related Event while USDOT owns the 2013 TIFIA Bond, the 2013 TIFIA Bond will be deemed to be a Parity Obligation. In such event, the 2013 TIFIA Bond would be secured by and payable from the Revenue on a parity with other Outstanding Bonds. • 57023390.3 32 248 • • • Limited Obligations The Series 2013 Bonds are special, limited obligations of the Commission payable solely from, and secured solely by a first lien on and pledge ofthe Revenue. Other than the pledge of the Revenue, the Commission has not mortgaged, assigned or pledged any interest in any real or personal property or improvements, including any interest in the Toll Road or any expansions or extensions thereto, as security for payment of the Series 2013 Bonds. See "SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS-Sources of Payment-Limited Obligations." Limitation and Enforceability of Remedies Limitation of Remedies Under the Indenture. The remedies available to Owners of the Series 201 3 Bonds upon an Event of Default under the Indenture are limited to the seeking of specific performance or a writ of mandamus or other suit, action or proceeding compelling and requiring the Commission and its officers to observe and perform any covenant, condition or obligation prescribed in the Indenture. No Right to Accelerate Debt Service. NO ACCELERATION REMEDY IS AVAILABLE TO OWNERS OF THE SERIES 2013 BONDS. Owners ofthe Series 2013 Bonds will, therefore, be able to collect principal and interest that become due after an Event of Default only from the Revenues (after payment of Operation and Maintenance Expenses) or other property included in the pledge under the Indenture and only when such principal and interest are scheduled to be paid . Enforceability of Remedies. The remedies available under the Indenture are in many respects dependent upon regulatory and judicial actions that are often subject to discretion and delay. Under existing law, such remedies may not be readily available. In addition, enforcement of such remedies (i) may be subject to general principles of equity which may permit the exercise of judicial discretion, (ii) are subject to the exercise in the future by the State and its agencies and political subdivisions of the police power inherent in the sovereignty of the State, (iii) are subject, in part, to the provisions of the United States Bankruptcy Act and other applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect, and (iv) are subject to the exercise by the United States of the powers delegated to it by the federal Constitution. The various legal opinions to be delivered concurrently with the delivery of the Series 2013 Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Series 2013 Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. FINANCIAL STATEMENTS The financial statements of the Commission for the Fiscal Year ended June 30, 2012, included in APPENDIX A of this Official Statement, have been audited by McGladrey LLP, certified public accountants, as stated in their report therein. McGladrey LLP was not requested to consent to the inclusion of its report in APPENDIX A, nor has it undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by McGladrey 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, 2012 . 57023390.3 33 249 LITIGATION There is not now pending any litigation restraining or enjoining the issuance or delivery of the Series 2013 Bonds or questioning or affecting the validity of the Series 2013 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. LEGAL MATTERS The validity of the Series 2013 Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX G hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Compensation paid to Bond Counsel, Disclosure Counsel and Underwriters' Counsel is conditioned upon the successful issuance of the Series 2013 Bonds. Certain 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 ________ _ TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Commission ("Bond Counsef'), 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 Series 2013 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and exempt from State of California personal income taxes. Bond Counsel is also of the opinion that interest on the Series 2013 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is included herein as APPENDIX G. To the extent the issue price of any maturity of the Series 2013 Bonds is less than the amount to be paid at maturity of such Series 2013 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2013 Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the Series 2013 Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2013 Bonds is the first price at which a substantial amount of such maturity of the Series 2013 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 Series 2013 Bonds accrues daily over the term to maturity of such Series 2013 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 Series 2013 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2013 Bonds. Owners of the Series 2013 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2013 Bonds with original issue discount, including the treatment of purchasers who do not purchase such Series 2013 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2013 Bonds is sold to the public. 57023390.3 34 250 • • • • • • Series 2013 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 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 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 purchaser's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such purchaser. Owners of Premium 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 Ser.ies 2013 Bonds. The Commission has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2013 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 Series 2013 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2013 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 Series 2013 Bonds may adversely affect the value of, or the tax status of interest on, the Series 2013 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. Although Bond Counsel is of the opinion that interest on the Series 2013 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 Series 2013 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. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2013 Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2013 Bonds. Prospective purchasers of the Series 2013 Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express 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 Series 2013 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 . 57023390.3 35 251 Bond Counsel's engagement with respect to the Series 2013 Bonds ends with the issuance ofthe Series 2013 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 Series 2013 Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Commission and its 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 Internal Revenue Service, including but not limited to selection of the Series 2013 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 Series 2013 Bonds, and may cause the Commission or the beneficial owners to incur significant expense. 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 Series 2013 Bonds to provide certain financial infonnation and operating data relating to the Commission and the Toll Revenues by not later than nine months 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 E -FORM OF CONTINUING DISCLOSURE AGREEMENT." The Commission has not, within the past five years, 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. RATINGS The Series 2013 Bonds have received ratings of" ___ " from Fitch Ratings ("Fitch") and " ___ "from Standard & Poor's Ratings Services ("S&P"). An explanation of the significance of each such rating may be obtained from the company furnishing the rating. The ratings reflect only the views of such companies at the time such ratings are given, and the Commission makes no representation as to the appropriateness of the ratings. The Commission and the Commission's Financial Advisors furnished Fitch and S&P with certain information and materials relating to the Series 2013 Bonds that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies, and assumptions by the rating agencies. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. Except as described under the caption "CONTINUING DISCLOSURE" herein, neither the Commission nor the Underwriters has undertaken any responsibility to bring to the attention of the registered owners of the Series 2013 Bonds any proposed revision or withdrawal of the rating of the Series 2013 Bonds or to oppose any such proposed revision or withdrawal. Any such change in or withdrawal of such rating could have an adverse effect on the market price or marketability of the Series 2013 Bonds. FINANCIAL ADVISOR The Commission has retained Fieldman, Rolapp & Associates, Irvine, California, as Financial Advisor in connection with the authorization and delivery of the Series 2013 Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or • • assume responsibility for the accuracy, completeness or fairness of the information contained in this • 57023390.3 36 252 • • • 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 Series 2013 Bonds. UNDERWRITING Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of itself, Goldman, Sachs & Co. and J.P. Morgan Securities LLC (collectively, the "Underwriters"), as the Underwriters of the Series 2013 Bonds, has agreed to purchase the Series 2013A Bonds and the Series 2013B Bonds from the Commission at an underwriting discount of$ and $ , respectively, from the initial public offering prices therefor set forth on inside cover of this Official Statement. The Underwriters will be obligated to purchase all of the Series 2013 Bonds if any such obligations are purchased. The obligation of the Underwriters to purchase either series of the Series 2013 Bonds from the Commission is subject to certain customary conditions to delivery, including the sale and purchase of the other series of the Series 2013 Bonds to and by the Underwriters. The Series 2013 Bonds may be offered and sold to certain dealers and others at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriters. OTHER MATTERS The financial data and other information contained herein have been obtained from the Commission's records, financial statements, and other sources that are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. Copies may be obtained from the Commission. 57023390.3 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: ______________________________ __ 37 253 Executive Director 57023390.3 APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2012 A-1 254 • • • • • • 57023390.3 APPENDIXB RIVERSIDE COUNTY 91 EXPRESS LANES EXTENSION INVESTMENT GRADE STUDY B-1 255 57023390.3 APPENDIXC SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE C-1 256 • • • • • • 57023390.3 APPENDIXD SUMMARY OF CERTAIN PROVISIONS OF THE 2013 TIFIA LOAN AGREEMENT D-1 257 57023390.3 APPENDIXE FORM OF CONTINUING DISCLOSURE AGREEMENT E-1 258 • • • • • • APPENDIXF BOOK-ENTRY SYSTEM The information in this Appendix F concerning The Depository Trust Company, New York, New York ("DTC''), and DTC's book-entry system has been obtained from DTC and the Commission and the Trustee take no responsibility for the completeness or accuracy thereof. The Commission and the Trustee cannot and do not give any assurances that DTC, Direct Participants (as defined below) or Indirect Participants (as defined below) will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Series 2013 Bonds, (b) certificates representing ownership interest in or other confirmation of ownership interest in the Series 2013 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Series 2013 Bonds, or that they will do so on a timely basis, or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Appendix E. The Commission and the Trustee are not responsible or liable for the failure of DTC or any DTC Direct or Indirect Participant to make any payment or give any notice to a Beneficial Owner with respect to the Series 2013 Bonds or an error or delay relating thereto. 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's Direct and Indirect Participants are on file with DTC. DTC will act as securities depository for the Series 2013 Bonds. The Series 2013 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 Series 2013 Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC . DTC, the world's largest securities depository, 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 17 A 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, 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 a Standard & Poor's rating of AA+. The DTC Rules applicable to Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated herein by reference. Purchases of Series 2013 Bonds under the DTC book-entry system must be made by or through Direct Participants, which will receive a credit for the Series 2013 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2013 Bond ("Beneficial Owner") is in turn to 57023390.3 F-1 259 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 Series 2013 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 certificat~s representing their ownership interests in the Series 2013 Bonds, except in the event that use of the book-entry system for the Series 2013 Bonds is discontinued. To facilitate subsequent transfers, all Series 2013 Bonds deposited by Direct Participants with DTC are registered in the name ofDTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2013 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 Series 2013 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2013 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 Series 2013 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2013 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2013 Bond documents. For example, Beneficial Owners of the Series 2013 Bonds may wish to ascertain that the nominee holding the Series 2013 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. Redemption notices (if applicable) shall be sent to DTC. If less than all of the Series 2013 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 Series 2013 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 Series 2013 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). • Payments ofprincipal of, premium, if any, and interest on the Series 2013 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 the payable date in accordance with their respective holdings shown on DTC's records. Payments by Direct or Indirect 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 on the Series 2013 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 57023390.3 F-2 260 • • • 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 securities depository with respect to the Series 2013 Bonds at any time by giving notice to the Trustee and the Commission. Under certain circumstances, in the event that a successor depository is not obtained, Series 2013 Bond certificates are required to be printed and delivered. The Commission may decide to discontinue use of the system of book-entry transfers for the Series 2013 Bonds through DTC (or a successor securities depository). In that event, Series 2013 Bond certificates will be printed and delivered as provided in the Indenture. In addition, the following provisions would apply: the principal or redemption price of the Series 2013 Bonds will be payable upon presentation thereof, at the principal corporate trust office of the Trustee, in San Francisco, California; interest on the Series 2013 Bonds will be payable by check mailed on each interest payment date to the registered owners thereof as shown on the registration books of the Trustee as of the close of business on the 15 1 h day of the calendar month immediately preceding the applicable interest payment date (the "record date"), except that in the case of an owner of $1,000,000 or more in aggregate principal amount of Series 2013 Bonds, upon written request of such owner to the Trustee received at least 1 0 days prior to the record date for the payment of interest, specifYing the account or accounts to which such payment shall be made (which request shall remain in effect until revoked by such owner in a subsequent writing delivered to the Trustee), such interest shall be paid in immediately available funds by wire transfer to such account or accounts on the following interest payment date; and the Series 2013 Bonds will be transferable and exchangeable on the terms and conditions provided in the Indenture. The information in this Appendix F concerning DTC and DTC's book-entry system has been obtained from sources the Commission believes to be reliable, but the Commission takes no responsibility for the accuracy thereof. 57023390.3 F-3 261 57023390.3 APPENDIXG FORM OF BOND COUNSEL OPINION G-1 262 • • • • • • ATTACHMENT7 DRAFT NO.1-3/11/13 UNITED STATES DEPARTMENT OF TRANSPORTATION TIFIA LOAN AGREEMENT For Up to [$451,000,000) With RIVERSIDE COUNTY TRANSPORTATION COMMISSION 14352874.4 For the SR-91 CORRIDOR IMPROVEMENT PROJECT (TIFIA-2013-) Dated as of June_, 2013 Error! Unknown document property name. 263 • • • TABLE OF CONTENTS SECTION 1. Definitions .................................................................................................... } SECTION 2. Interpretation ............................................................................................. .22 SECTION 3. TIFIA Loan Amount .................................................................................. 22 SECTION 4. Disbursement Conditions ............................. : ............................................ .23 SECTION 5. Term ........................................................................................................... 24 SECTION 6. Interest Rate ............................................................................................... 24 SECTION 7. Outstanding TIFIA Loan Balance and Revisions to Exhibit G and the Loan Amortization Schedule ............................................................... 24 SECTION 8. Security and Priority; Flow ofFunds ......................................................... 25 SECTION 9. Payment of Principal and Interest .............................................................. 29 SECTION 10. Prepayment. ............................................................................................... 32 SECTION 11. Compliance with Laws .............................................................................. 33 SECTION 12. Conditions Precedent ................................................................................. 33 SECTION 13. Representations and Warranties of Borrower ........................................... .35 SECTION 14. Representations, Warranties, and Covenants ofTIFIA Lender ................. 37 SECTION 15. Borrower Covenants .................................................................................. 37 SECTION 16. Indemnification ......................................................................................... .45 SECTION 17. Sale ofTIFIA Loan ................................................................................... .46 SECTION 18. Events ofDefault and Remedies ............................................................... .47 SECTION 19. Accounting and Audit Procedures; Inspections; Reports and Records ...................................................................................................... 49 SECTION 20. Financial Plan, Statements, and Reports .................................................... 50 SECTION 21. Project Oversight and Monitoring ............................................................. 53 SECTION 22. No Personal Recourse ............... , ................................................................ 55 SECTION 23. No Third Party Rights ................................................................................ 55 SECTION 24. Borrower's Authorized Representative ...................................................... 56 SECTION 25. TIFIA Lender's Authorized Representative .............................................. 56 SECTION 26. Servicer .......................................................................................... , ........... 56 SECTION 27. Fees and Expenses ..................................................................................... 56 SECTION 28. Amendments and Waivers ......................................................................... 5& SECTION 29. Governing Law .......................................................................................... 5& SECTION 30. Severability ............................................................................................... 58 SECTION 31. Successors and Assigns .............................................................................. 58 SECTION 32. Remedies Not Exclusive ............................................................................ 5& SECTION 33. Delay or Omission Not Waiver. ................................................................. 58 SECTION 34. Counterparts ............................................................................................... 58 SECTION 35. Notices; Payment Instructions ................................................................... 58 SECTION 36. Effectiveness .............................................................................................. 60 SECTION 37. Termination ................................................................................................ 60 14352874.4 - 1 - Error! Unknown document property name. 264 SCHEDULE I -Project Budget SCHEDULE II -TIFIA Eligible Project Costs SCHEDULE III -Project Construction Schedule EXHIBIT A -Form ofTIFIA Bond EXHIBIT B ~ Anticipated TIFIA Loan Disbursement Schedule EXHIBIT C -Non-Debarment Certification EXHIBIT D -Requisition Procedures EXHIBIT E -Compliance with Laws EXHIBIT F -High Profile Project Operating Agreement for SR-91 Corridor Improvement Project EXHIBIT G -TIFIA Debt Service Schedule EXHIBIT H -TIFIA Debt Service Structure EXHIBIT I -Forms of Opinions of Counsel to Borrower 14352874.4 -11 - Error! Unknown document property name. 265 • • • • • • TIFIA LOAN AGREEMENT THIS TIFIA LOAN AGREEMENT (this "Agreement"), dated as of June_, 2013, by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly existing under the laws of the State of California, with an address of (the "Borrower"), and UNITED STATES DEPARTMENT OF TRANSPORTATION, an agency of the United States of America, acting by and through the Federal Highway Administrator (together with its successors and assigns, the "TIFIA Lender"), with an address of 1200 New Jersey Avenue, S.E., Washington, DC 20590. RECITALS: WHEREAS, the Congress of the United States of America has found that a well- developed system of transportation infrastructure is critical to the economic well-being, health and welfare of the people of the United States and, in furtherance thereof, has enacted the Transportation Infrastructure Finance and Innovation Act of 1998 ("TIFIA"), § 1501 et seq. of Public Law 105-178 (as amended by the Public Law 105-206, Public Law 109-59 and Public Law 112-141) (the "Act"), as codified as 23 U.S.C. § 601, et seq.; WHEREAS, Section 603 of the Act authorizes the TIFIA Lender to enter into agreements with one or more obligors to make secured loans; WHEREAS, the Borrower has requested that the TIFIA Lender make the TIFIA Loan (as defined herein) in a principal amount not to exceed [$451 ,000,000] (the "TIFIA Loan") to be used to pay a portion of the Eligible Project Costs (as defined herein) related to the Project (as defined herein) pursuant to an application for TIFIA credit assistance dated August 31, 2013 (the "Application"); WHEREAS, on , the Secretary (as defined herein) approved TIFIA credit assistance for the Project in the form of a direct loan in an aggregate principal amount not to exceed [$451 ,000,000]; WHEREAS, the Borrower agrees to repay any amount due pursuant to this Agreement and the TIFIA Bond (as defined herein) in accordance with the terms and provisions hereof and thereof; and WHEREAS, the TIFIA Lender has entered into this Agreement in reliance upon, among other things, the Traffic and Revenue Study (as defined herein) and the Base Case Projections (as defined herein) delivered by the Borrower. NOW, THEREFORE, the premises being as stated above, and for good and valuable consideration, the receipt and sufficiency of which are acknowledged to be adequate, and intending to be legally bound hereby, it is hereby mutually agreed by and between the Borrower and the TIFIA Lender as follows: SECTION 1. Definitions. Unless the context otherwise requires, capitalized terms used in this Agreement shall have the meanings set forth below in this Section 1 or as otherwise defined in this Agreement. Any term used in this Agreement which is defined by reference to 14352874.4 1 266 any other agreement shall continue to have the meaning specified in such agreement on the date hereof whether or not such agreement remains in effect. ["Accreted Value" means _______________ .] "Act" means the Transportation Infrastructure Finance and Innovation Act of 1998, § 1501 et seq. ofPublic Law 105-178 (as amended by the Public Law 105-206, Public Law 109- 59 and Public Law 112-141), as codified as 23 U.S.C. § 601, et seq. "Additional Project Contracts" means any contract, agreement, letter of intent, understanding or instrument entered into by the Borrower after the execution and delivery of this Agreement, providing for the design, construction, testing, start-up, safety, financial services, operation or maintenance of the Project, or otherwise relating to the Project; provided, however, that a contract or agreement shall not constitute an Additional Project Contract if it (a) is entered into (i) in the ordinary course of business in connection with the furnishing of goods or the performance of services or (ii) for necessary Project-related expenditures, (b) commits the Borrower to spend, or is reasonably expected to involve expenditures by the Borrower in one contract or a series of related contracts of, no more than [$2,500,000] in the aggregate for any such contract or series of related contracts and (c) is for a term not exceeding two years. "Administrator" means the Administrator of the FHW A. "Agreement" has the meaning provided in the preamble hereto. "Annual Operating Budget" means the annual budget required by Section 6.04 of the Master Indenture provided to the TIFIA Lender in accordance with Section 21 (b )(iii) of this Agreement. "Anticipated TIFIA Loan Disbursement Schedule" means the schedule set forth as Exhibit B to this Agreement, as such schedule may be amended from time-to-time pursuant to Section 4. "Bank Lending Margin" means • • "Bankruptcy Related Event" means (a) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of its debts, or of a substantial part of the assets of the Borrower, under anyinsolvency Law, or (ii) the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official for the Borrower for a substantial part of the assets of the Borrower, and, in any case referred to in the foregoing subclauses (i) and (ii), such proceeding or petition shali continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (b) the Borrower shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official for the Borrower or for a substantial part of the assets of the Borrower, or (ii) generally not be paying its debts as they become due unless such debts are the subject of a bona fide dispute, or become unable to pay its debts generally as they become due, or (iii) make a general assignment for the benefit of creditors, or (iv) consent to the institution of, or fail to contest in a • timely and appropriate manner, any proceeding or petition with respect to it described in 14352874.4 2 267 • • • clause (a) of this definition, or (v) commence a voluntary proceeding under any Insolvency Law, or file a voluntary petition seeking liquidation, reorganization, an arrangement with creditors or an order for relief under any Insolvency Law, or (vi) file an answer admitting the material allegations of a petition filed against it in any proceeding referred to in the foregoing subclauses (i) through (v), inclusive, of this clause (b), or (vii) take any action for the purpose of effecting any of the foregoing (c) (i) all or a substantial part of the Trust Estate shall be sold or otherwise disposed of in a public or private sale or disposition pursuant to a foreclosure of the Liens thereon securing any Senior Obligations, or (ii) all or a substantial part of the Trust Estate shall be transferred pursuant to a sale or disposition of such Trust Estate in lieu of foreclosure; [or (d) the Trustee shall transfer funds on deposit in any of the Trust Estate Accounts or Subaccounts upon the occurrence and during the continuation of an Indenture Event of Default under the Master Indenture for application to the prepayment or repayment of any principal amount of any Senior Obligations and for other purposes pursuant to Article V of the Master Indenture]. "Base Case Financial Model" means a financial model prepared by the Borrower forecasting the revenues and expenditures of the Project (including any revenues and expenditures collected or incurred prior to the Effective Date) for time periods through the final maturity of the TIFIA Loan and based upon assumptions and methodology provided by the Borrower and acceptable to the TIFIA Lender which shall be provided to the TIFIA Lender as a fully functional Microsoft Excel ___: based financial model. "Base Case Financial Plan" means the Financial Plan submitted within 60 days after the Effective Date as set forth in Section 20(a). "Base Case Projections" means the initial forecast for the Project prepared as of the Effective Date using the Base Case Financial Model. "Bonds" means Bonds issued pursuant to Section 3.01 or 3.02 ofthe Master Indenture. "Bond Fund" means the fund by that name created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Bond Reserve Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Bond Reserve Requirement" [for any Bonds, means, as of any date of calculation, the amount specified by a Supplemental indenture as the amount required to be held in the Bond Reserve Fund for the payment of principal of and interest on those Bonds.] "Bondholder" has the meaning set forth in the Master Indenture. "Borrower" means the Riverside County Transportation Commission, a public entity duly existing under the laws of the State of California, or its respective governmental successor or assignee under State law . 14352874.4 3 268 "Borrower Fiscal Year" means, (a) the period oftwelve months terminating on June 30 • of each year or (b) or such other annual period selected and designated by the Borrower as its Fiscal Year in accordance with applicable law and with prior written notice to the TIFIA Lender. "Borrower's Authorized Representative" means any Person designated as such pursuant to Section 24. "Business Day" means any day other than a Saturday, a Sunday or other day on which the Government or banks are authorized or obligated by law or executive order to be closed in the State or the State of New York or in any city in which the Principal Office (as such term is defined in the Master Indenture) of the Trustee or the office where draws are to be made on a Credit Provider (as such term is defined in the Master Indenture) is located. "Calculation Date" means each June 30 and December 31, commencing December 31, 2013. "Calculation Period" means a twelve month period ending on the day pnor to a Calculation Date. "Caltrans" means the California Department of Transportation. "Capital Appreciation Bond" means _____________ _ "Capitalized Interest Period" means the period beginning on the Effective Date and • ending on the day prior to the Debt Service Payment Commencement Date. "CIP Plan" means the transportation improvements relating to the Project, including projected costs, the use of toll revenues, and a proposed completion schedule, and the use of the design-build method of procurement in connection with such improvements to reduce costs, expedite completion and achieve design features not achievable through the traditional design- bid-build method, as described in the Project Authorization Request the Borrower submitted to the CTC on January 1, 2010. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. "Construction Period" means the period commencing on the Effective Date and ending on the Substantial Completion Date. "Construction Schedule" means the schedule on which the proposed construction timetable for elements of the Project is set forth and attached as Schedule III to this Agreement. "Consulting Engineer" means an independent engineer or engineering firm, or an affiliate thereof, nationally recognized as being experienced with determining the costs of construction, operation, maintenance, repair, and/or replacement of facilities similar to the System. 14352874.4 4 269 • • • • "Cooperative Agreement" means that certain Cooperative Agreement for State Route 91 Express Lanes and Corridor Improvements Between Riverside County Transportation Commission and Orange County Transportation Commission, dated as of December 16, 2011, by and between the Borrower and OCT A, setting forth, among other things, the manner in which the initial phase of the Project will be constructed in accordance with the CIP Plan using the design-build method of procurement as authorized by the CTC. "Coverage Calculation Date" has the meaning assigned to such term in Section 15( o ). "Coverage Ratio" has the meaning assigned to such term in Section 15( o ). "Covenant Cross Default" has the meaning set forth in Section 18(a)(v). "CPI" means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84= I 00 (not seasonally adjusted), or its successor, published by the Bureau of Labor Statistics, with, unless otherwise specified herein, January 2013 as the base period. "CTC" means the California Transportation Commission. "Credit Facility" means a policy of insurance, letter of credit, line of credit, standby purchase agreement, revolving credit agreement or other credit arrangement pursuant to which a Credit Provider (as such term is defined in the Master Indenture) provides credit or liquidity support with respect to, or available for, the payment of interest, principal or purchase price of any series of Bonds, as the same may be amended from time to time pursuant to its terms, and any replacements therefor. "Debt Service Payment Commencement Date" means the fifth (5 1h) anniversary ofthe date of Substantial Completion or, if such date doe not fall on a Semi-Annual Payment Date, then the Debt Service Payment Commencement Date shall be the first Semi-Annual Payment Date to occur prior to the fifth (5 1h) anniversary of the Substantial Completion Date. "Design-Build Agreement" means that certain Design-Build Construction Cooperative Agreement, dated as of , by and between the Borrower and Caltrans, setting forth, among other things, the manner in which the initial phase of the Project will be constructed in accordance with the CIP Plan using the design-build method of procurement as authorized by the CTC. "Design-Build Contract" means the Design-Build Contract, dated , 2013, between the Borrower and the Design-Build Contractor and any replacement contracts entered into by the Borrower following any termination of such agreement, [each in a form approved by the FHWA California Division Office.] 14352874.4 "Design-Build Contractor" means ________ and any successor thereto. "Development Default" has the meaning set forth in Section 18(a)(iii) . 5 270 "Discretionary Capital Expenditures Permitted Expenditures" means "Disbursements and Contributions Certificate" means a certificate (i) demonstrating that the proceeds of the TIFIA Loan to be disbursed on the relevant date of disbursement do not exceed the TIFIA Pro Rata Share, (ii) indicating the amount of proceeds which as of the date of the Disbursements and Contributions Certificate have been utilized by the Borrower for purposes of funding Project Costs, (iii) indicating that, following the disbursement of the TIFIA Loan proceeds being requisitioned, the amount of TIFIA proceeds to be disbursed, together with all previous disbursements of TIFIA Loan proceeds do not exceed 33% of Eligible Project Costs for the Project which have been paid or to be paid with amounts being requisitioned, (iv) executed by the Borrower's Authorized Representative, and (v) delivered pursuant to Section 4 of this Agreement. "Effective Date" means June_, 2013. "Eligible Project Costs" means amounts identified as Eligible Project Costs in the Project Budget attached to this Agreement as Schedule I, subject to the proviso below, substantially all of which are paid by or for the account of the Borrower in connection with the Project, which may include prior Project expenditures for the three-year period preceding the application date, all of which shall arise from the following: (a) development phase activities, including planning, feasibility analysis, • revenue forecasting, environmental review, permitting, preliminary engineering and design • work, and other preconstruction activities; (b) construction, reconstruction, rehabilitation, replacement, and acquisition of real property (including land related to the Project and improvements to land), environmental mitigation, construction contingencies, and acquisition of equipment; and (c) capitalized interest necessary to meet market requirements, reasonably required reserve funds, capital issuance expenses, and other carrying costs during construction; provided, however, that the TIFIA Lender confirms to the extent consistent with Federal law that cost categories affirmatively indicated as "Eligible Project Costs" in Schedule II to this Agreement fall within this definition of"Eligible Project Costs". "Event of Default" has the meaning set forth in Section 18. "FHW A" means the Federal Highway Administration, an agency of US DOT. "FHW A California Division Office" means the California Division Office of the FHW A headquartered in Sacramento, California. "Final Maturity Date" means July 1, 2049 or the last Payment Date occurring no later than 32 years after the Substantial Completion Date, whichever date is earlier. 14352874.4 6 271 • • • • "Financial Plan" means (a) the Base Case Financial Plan and (b) the annual updates thereto required pursuant to Section 20(a) of this Agreement. "Financing Documents" means this Agreement, the Master Indenture, the First Supplemental Indenture and the Second Supplemental Indenture. "First Supplemental Indenture" means the First Supplemental Indenture, by and between the Borrower and the Trustee, dated as of June 1, 2013, relating to the Initial Senior Obligations. "Franchise Agreement" means the Amended and Restated Development Franchise Agreement, dated as of June 30, 1993, as amended and supplemented by Amendment 1, dated as of July 16, 1993, Amendment 2, dated December 30, 2002, [additional amendments?] each by and between Caltrans and OCT A, as successor in interest to the California Private Transportation Company, as it has been further amended and supplemented by the Cooperative Agreement for Riverside SR-91 Corridor Improvement Program, by and between the Borrower and OCTA, as such agreement may be amended, modified and supplemented from time to time pursuant to its terms. ["GAAP" means generally accepted accounting principles as defined by the American Institute of Certified Public Accountants or such other nationally recognized professional body, in effect from time to time in the United States of America.] or ["GASB" means generally accepted accounting principles for state and local governments, which are the uniform minimum standards of and guidelines for financial accounting and reporting prescribed by the Governmental Accounting Standards Board.] "Government" means the United States of America and its departments and agencies. "Government Obligations" means (a) direct obligations of, or obligations the principal of and the interest on which are unconditionally guaranteed by, the Government, (b) bonds, debentures or notes issued by any of the following Federal Agencies: Banks for Cooperatives, Federal Intermediate Credit Banks, Federal Home Loan Banks, Export-Import Bank of the United States, Government National Mortgage Association or Federal Land Banks, (c) obligations issued or guaranteed by an agency of the United States of America or Person controlled or supervised by and acting as an instrumentality of the United States of America pursuant to authority granted by the Congress, and (d) evidences of ownership of proportionate interests in future interest or principal payments on obligations specified in clauses (a), (b) and (c) of this definition held by a bank or trust company as custodian and which underlying obligations are not available to satisfy any claim of the custodian or any Person claiming through the custodian or to whom the custodian may be obligated. "Governmental Approval" means all authorizations, consents, approvals, waivers, exceptions, variances, filings, permits, orders, licenses, exemptions and declarations of or with any Governmental Authority . "Governmental Authority" means any federal, state, provincial, county, city, town, village, municipal or other government or governmental department, commission, council, court, 14352874.4 7 272 board, bureau, agency, authority or instrumentality (whether executive, legislative, judicial, • administrative or regulatory), of or within the United States of America or its territories or possessions, including, without limitation, the State and its counties and municipalities, and their respective courts, agencies, instrumentalities and regulatory bodies, or any entity that acts "on behalf of' any of the foregoing, whether as an agency or authority of such body. "Hedge Deposit" has the meaning set forth in Section 15(s)(vii)(A). "Hedge Documents" has the meaning set forth in Section 15(s)(ii). "Hedging Acquisition Account" has the meaning set forth in Section 15(s)(vii)(A). "Hedging Agreement" means the ISDA Master Agreement(s) and the related schedules and confirmations, to be entered into by the Borrower and a Hedging Bank and any other agreement entered into, or to be entered into, by the Borrower and a Hedging Bank for a Hedging Transaction, in each case in form acceptable to the TIFIA Lender. "Hedging Banks" means any Qualified Hedge Provider that becomes a party to a Hedging Agreement and their respective successors and assigns. "Hedging Obligations" means, collectively, the payment of (a) all scheduled amounts payable to the Hedging Banks by the Borrower under the Hedging Agreements (including interest accruing after the date of any filing by the Borrower of any petition in bankruptcy or the commencement of any bankruptcy, insolvency or similar proceeding with respect to the • Borrower), net of all scheduled amounts payable to the Borrower by such Hedging Banks, and (b) all other indebtedness, fees, indemnities and other amounts payable by the Borrower to the Hedging Banks under such Hedging Agreements, net of all other indebtedness, fees, indemnities and other amounts payable by the Hedging Banks to the Borrower under such Hedging Agreements; provided, that Hedging Obligations shall not include Hedging Termination Obligations. For the avoidance of doubt, all calculations of such amounts payable under the Hedging Agreements shall be made in accordance with the terms of the applicable Hedging Agreements. "Hedging Termination Obligations" means the aggregate amount payable to the Hedging Banks by the Borrower upon the early unwind of all or a portion of the Hedging Agreements, net of all amounts payable to the Borrower by such Hedging Banks upon the early unwind of all or a portion of such Hedging Agreements. For the avoidance of doubt, all calculations of such amounts payable under the Hedging Agreements shall be made in accordance with the terms of the applicable Hedging Agreements. "Hedging Transaction" means any interest rate protection agreement, interest rate swap transaction, interest rate "cap", "collar" or "floor" transaction, interest rate future, interest rate option or other hedging arrangement. "Indenture Debt Service" for any period of calculation means the aggregate amount of payments due on Other Indenture Obligations and the TIFIA Bond for that period, as calculated by the Commission, utilizing the assumptions about payments on Other Indenture Obligations • and the TIFIA Bond listed in the definition of Maximum Annual Debt Service. 14352874.4 8 273 "Indenture Event of Default" means an event of default set forth in Section 7.01 of the • Master Indenture. • • "Initial Senior Obligations" means the Borrower's Toll Revenue Bonds, 2013 Series A and Toll Revenue Bonds, 2013 Series B. "Insolvency Laws" means the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., as from time-to-time amended and in effect, and any state bankruptcy, insolvency, receivership or similar law now or hereafter in effect. "lntercreditor Agreement" means any Subordination and Intercreditor Agreement to be entered into among the TIFIA Lender, the Trustee or other fiduciary on behalf of Bondholders and [any Senior Lender] and any replacements, amendments or supplements thereto, to the extent required by the provisions of this Agreement. "Interim Payment Date" means any day occurring during the Payment Period that (a) is a date on which interest on or principal of any Other Indenture Obligations is payable and (b) is not a Semi-Annual Payment Date. "Investment Grade Rating" means a rating assigned by a Nationally Recognized Rating Agency which is no lower than "BBB-" or "Baa3". "Lease Agreement" means ----------------------------------- "Lien" means any mortgage, pledge, hypothecation, assignment, mandatory deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement of any kind or nature whatsoever, including, without limitation, any sale-leaseback arrangement, any conditional sale or other title retention agreement, any financing lease having substantially the same effect as any of the foregoing, and the filing of any financing statement or similar instrument under applicable law. "Loan Amortization Schedule" means the Loan Amortization Schedule attached as Appendix Two to the TIFIA Bond, a copy of which is attached hereto as Exhibit A, delivered pursuant to Section 9(g), as amended from time-to-time in accordance with Section 7 and Section 9(g). "Loan Underwriting Rate" means for any period and with respect to any Variable Interest Rate Senior Obligations, the initial rate equal to the sum of the long-term fixed swap rate, plus the swap margin, plus the applicable Bank Lending Margin, contemplated in an Updated Base Case Financial Model prepared by the Borrower in respect of such Variable Interest Rate Senior Obligations, and to be set forth in each certificate delivered pursuant to Section 15(s) of this Agreement. "Lock-Up Account" means the account by that name created pursuant to and designated as such in Section 5.02 of the Master Indenture. 14352874.4 "Long-Dated Qualified Hedge" has the meaning set forth in Section 18(s)(vii)(A) . 9 274 "Master Indenture" means the Master Indenture between the Borrower and the Trustee, dated as of June 1, 2013, as supplemented or amended by any Supplemental Indenture as defined • in the Master Indenture, including without limitation, the First Supplemental Indenture and the Second Supplemental Indenture. "Material Adverse Effect" means a material adverse change in (a) the Project or the business, property or financial condition of the Toll Road, (b) the ability of the Borrower to perform or comply with any of its material obligations under the Master Indenture or the TIFIA Loan Documents or the Principal Project Contracts to which it is a party, (c) the validity or priority of the Lien on the Trust Estate in favor of the TIFIA Lender or (d) the TIFIA Lender's rights or benefits available under this Agreement. ["Maximum Annual Debt Service" means the highest amount of payments due on Other Indenture Obligations [and the TIFIA Bond], as applicable, for any Fiscal Year during the period from the date of such determination through the final maturity date of the Other Indenture Obligations [and the TIFIA Bond], as applicable, then Outstanding and proposed to be issued, as calculated by the Borrower, utilizing the following assumptions about payments on Other Indenture Obligations [and the TIFIA Bond], as applicable (and if more than one of the following assumptions could apply to any such payment, the Borrower shall select the assumption to be applied): (a) in determining the principal amount of an Other Indenture Obligation due in each year, payment shall be assumed to be made in accordance with the amortization schedule established for such principal, including any minimum sinking fund or account payments; (b) [in determining the principal amount of the TIFIA Bond due in each year, payment shall be assumed to be made in accordance with the amortization schedule set forth in Exhibits G and H, as amended in accordance with Section 9]; (c) if 20 percent or more of the principal of a Series of Other Indenture Obligations is not due until the final stated maturity of that Other Indenture Obligations, principal and interest may be treated as if such principal and interest were due based upon a level amortization of such principal and interest over the term of that Series of Other Indenture Obligation; (d) if the Other Indenture Obligation is supported by a line of credit or a letter of credit, principal may be treated as if it were due based upon the level amortization of such principal over the maximum term of repayment of borrowings under such line of credit or letter of credit; (e) if an Outstanding Other Indenture Obligation bears a variable interest rate, the interest rate shall be assumed to be the greater of (a) the daily average interest rate during the 12 months ending with the month preceding the date of calculation, or such shorter period that the Other Indenture Obligation has been Outstanding, or (b) the rate of interest on that Other Indenture Obligation on the date of calculation; • (f) if Other Indenture Obligations proposed to be issued will be variable • interest rate obligations, the interest on which is excluded from gross income for federal income 14352874.4 10 275 • tax purposes, then such obligations shall be assumed to bear interest at an interest rate equal to the average SIFMA Index during the three months preceding the month of calculation, or if SIFMA Index is no longer published, at an interest rate equal to 75% of the average One Month USD LIB OR Rate during that three month period, or if the One Month USD LIBOR Rate is not available for such period, another similar rate or index selected by the Borrower; (g) if Other Indenture Obligations proposed to be issued will be variable interest rate obligations the interest on which is included in gross income for federal income tax purposes, then such obligations shall be assumed to bear interest at an interest rate equal to the average One Month USD LIBOR Rate during the three months preceding the month of calculation, or if the One Month USD LIBOR Rate is not available for such period, another similar rate or index selected by the Borrower; (h) if Other Indenture Obligations proposed to be issued are part of a Commercial Paper Program, the principal of such Other Indenture Obligations may be treated as if such principal were due based upon a 30-year level amortization of principal from the date of calculation and the interest on such obligations shall be calculated as if such Other Indenture Obligations were variable interest rate Other Indenture Obligations; (i) if the variable interest on any Other Indenture Obligation plus the variable payments due to the Borrower and fixed payments due from the Borrower under a Hedge Agreement designated by the Borrower are treated by the Borrower as synthetic fixed rate debt, the variable interest rate Other Indenture Obligation may be treated as bearing such synthetic • fix.ed rate for the duration of the synthetic fixed rate; • (j) if the fixed interest on any Other Indenture Obligation plus the fixed payments due to the Borrower and variable payments due from the Borrower under a Hedge Agreement designated by the Borrower are treated by the Borrower as synthetic variable rate debt, the fixed interest rate Other Indenture Obligation may be treated as bearing such synthetic variable rate for the duration of the synthetic variable rate and such synthetic variable rate shall be calculated using the principles of clauses (v), (vi) or (vii) hereof; (k) if any of the Other Indenture Obligations are Short-Term Put Bonds (as such term is defined in the Master Indenture), the principal of such obligations may be treated as if such principal were due based upon a 30-year level amortization of principal from the date of calculation and the interest on such obligations may be calculated as if such obligations were variable interest rate Other Indenture Obligations; (1) principal and. interest payments on Other Indenture Obligations may be excluded to the extent such payments are to be paid from amounts then currently on deposit with the Trustee or another fiduciary in escrow specifically therefor and interest payments on any Other Indenture Obligations may be excluded to the extent that such interest payments are to be paid from capitalized interest held by the Trustee or another fiduciary specifically to pay such interest; (m) if any of the Other Indenture Obligations are, or upon issuance will be, obligations for which the Borrower is entitled to receive Subsidy Payments, as evidenced by an 14352874.4 11 276 Opinion of Bond Counsel delivered at the time of issuance of such Other Indenture Obligations, • the obligations may be treated as bearing an interest rate equal to the rate of interest borne or assumed to be borne, as applicable, by the obligations for the period of determination minus the Subsidy Payments to which the Borrower is entitled for such period; (n) Any payment obligation under a Other Indenture Obligation that was or is optional or contingent (such as the obligation to make a termination payment under a Hedging Hedging Agreement), whether or not the option is exercised or the contingency occurs, and any payments that are not scheduled payments, may be excluded; ( o) if any of the Other Indenture Obligations are, or upon issuance will be, obligations payable in a currency other than lawful currency of the United States of America, then such obligations shall be assumed to be payable in lawful currency of the United States at the rate payable by the Borrower pursuant to the Borrower's related currency swap or contract entered into in connection with such obligations or, in the absence of such swap or contract, at the rate determined by the Borrower using a currency market conversion factor selected by the Borrower.] "Misrepresentation Cross Default" has the meaning set forth in Section 18(a)(v). "Nationally Recognized Rating Agency" means Standard & Poor's Rating Group, Moody's Investors Services, Inc., Fitch Ratings or another nationally recognized statistical rating organization, identified by the Securities and Exchange Commission. "[Net Revenue" means for any Fiscal Year, Revenue less Operating and Maintenance Expenses for that Fiscal Year, as set forth in (a) the audited financial statement of the Borrower for Fiscal Years for which audited financial statements are available, (b) to the extent that audited financial statements are not available, the unaudited financial statements of the Borrower for Fiscal Years for which unaudited financial statements are available or (c) to the extent that neither audited financial statements nor unaudited financial statements are available, the projections of the Borrower as set forth in the most recent Financial Plan. Net Revenue shall not include any amount on deposit in the Bond Reserve Fund or any Subsidy Payments.] "OCTA" means the Orange County Transportation Authority, a public agency duly formed and existing under the laws of the State of California, and any successor thereto. "OFAC" means the Office of Foreign Assets Control ofthe United States Department of the Treasury and its successors. "Operating Agreement" means the SR-91 Express Lanes Operating Agreement, dated r , 20_j, by and among the Borrower, OCTA and the Toll Operator, as amended, modified, supplemented in accordance with the terms of the Master Indenture and any applicable Credit Support Instrument, subject to the terms of the Master Indenture, or any other operating agreement entered into by the Borrower and one or more entities in accordance with the terms of such documents. • "Operating and Maintenance Expenses" means all reasonable current expenses • incurred and paid or payable by the Borrower for the operation and maintenance of the Toll Road 14352874.4 12 277 • • • payable from Revenue, determined in accordance with generally accepted accounting principles, including, without limitation, payments with respect to financing leases and installment purchase agreements, all amounts paid under the Operating Agreement, [the Police Services Agreement] and similar agreements, costs for operation, maintenance and repair, consumables, payments under any lease or rental payments properly considered to be operating expenses, payments pursuant to agreements for the management of the Toll Road, taxes, premiums payable on any insurance, payments for oversight services, all administrative, engineering and policing costs, costs for any security, toll collection and enforcement expenses, fees and expenses of the Traffic Consultant, any insurance consultant, legal and accounting expenses, and any other reasonable and necessary expense paid for the operation and maintenance of the Toll Road, but excluding any extraordinary or one-time expenses, expenses paid from proceeds of Senior Obligations, capital expenditures, expenditures for obsolescence charges or reserves therefore, credit, liquidity or remarketing fees relating to Senior Obligations, debt service for Senior Obligations or TIFIA Obligations, and any non-cash charges, such as depreciation, amortization of intangibles or other bookkeeping entries of a similar nature. "Operating and Maintenance Fund" means the fund created pursuant to and designated as such in Section 5.05 of the Master Indenture. "Ordinance" means Ordinance No. 02-001, named the "Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance," adopted by the Borrower on May 8, 2002, pursuant to the provisions of the Sales Tax Act. "Other Indenture Obligations" means any borrowings or indebtedness permitted, including Senior Obligations and Permitted Second Lien Obligations, or not prohibited under Section 15(b) of this Agreement and under the Master Indenture; provided, however, that Other Indenture Obligations shall not include the TIFIA Bond. "Other Loan Documents" has the meaning set forth in Section 18(a)(v). "Other Material Indebtedness" means the Senior Obligations [and the Sales Tax Bonds]. "Outstanding TIFIA Loan Balance" means the aggregate principal amount drawn by the Borrower and then outstanding with respect to the TIFIA Loan, as determined in accordance with Section 7. "Oversight Agreement" means the High Profile Project Operating Agreement for the SR-91 Corridor Improvement Project, dated , by and among the Borrower, Caltrans and the FHW A California Division Office. "Parity Obligations" means obligation of the Borrower that are payable from Revenue on a parity with the payment of the principal of and interest on Bonds, including payments to the holders of obligations of the Borrower entered into pursuant to California Government Code section 5922 (or any similar statute), in each case, to the extent the Borrower has contracted to make those payments as Parity Obligations . 14352874.4 "Payment Date" means each Semi-Annual Payment Date or Interim Payment Date. 13 278 "Payment Default" has the meaning set forth in Section 18(a)(i). "Permitted Hedging Termination" means the early termination, in whole or in part, of any Hedging Transaction (a) at the request of the Borrower as a result of a determination by the Borrower that such (or any part of such) Hedging Transaction is no longer necessary or required under the terms of this Agreement or (b) pursuant to the terms of any Hedging Agreement evidencing such Hedging Transaction which provides for the notional amount of such Hedging Transaction to amortize or otherwise be reduced from time to time. "Permitted Debt" means any bond, note, certificate, warrant, lease, contract or other financial obligation or security that is not secured, in whole or in part, by Revenue, and the following obligations that are secured by Revenue: (a) Senior Obligations, including the Initial Senior Obligations and any other Senior Obligations that meet the requirements of Section 3. 01 and 3. 02 of the Master Indenture and consented to by the TIFIA Lender; (b) the TIFIA Loan and the TIFIA Bond; (c) Permitted Second Lien Indebtedness that meets the requirements of [Section 3.03] and consented to by the TIFIA Lender; and (d) indebtedness incurred in respect of any Hedge Agreement. • "Permitted Investments" means with respect to the investment of amounts on • deposit in accounts and subaccounts referred to in Section 8( d) of this Agreement, and the TIFIA Payment Account and the TIFIA Reserve Fund: (a) Government Obligations; (b) certificates of deposit where the certificates are collaterally secured by securities of the type described in clause (a) of this definition and held by a third party as escrow agent or custodian, of a market value not less than the amount of the certificates of deposit so secured, including interest, but this collateral is not required to the extent the certificates of deposit are insured by an agency of the Government; (c) repurchase agreements when collateralized by securities of the type described in clause (a) of this definition and held by a third party as escrow agent or custodian, of a market value not less than the amount of the repurchase agreement so collateralized, including interest; (d) money market funds that invest solely in obligations of the United States, its agencies and instrumentalities, and having a rating by a Nationally Recognized Rating Agency at least equivalent to, or higher than, the rating of the United States Government; and (e) collateralized investment agreements or other contractual agreements with corporations, financial institutions or national associations within the United States, provided 14352874.4 14 279 • • • • that the senior long-term debt of such corporations, institutions or associations is rated "'AAA" or its equivalent by a Nationally Recognized Rating Agency. "Permitted Liens" means: (a) the TIFIA Lien; (b) other Liens imposed pursuant to the Master Indenture; (c) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 15(u); (d) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance, and other social security laws or regulations; (e) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (f) judgment liens in respect of judgments that do not constitute an Event of Default under Section 18(a)(vi); (g) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower; (h) any Lien on any property or asset of the Borrower existing on the Effective Date hereof; provided that (i) such Lien shall not apply to any other property or asset of the Borrower and (ii) such Lien shall secure only those obligations which it secures on the Effective Date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; (i) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, (ii) such Lien shall not apply to any other property or assets of the Borrower and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; and (j) purchase money security interests in equipment acquired on or after the Effective Date hereof by the Borrower, provided that (i) such security interests secure indebtedness for borrowed money permitted by Section 15(a), (ii) such security interests are incurred, and the indebtedness secured thereby is created, within 90 days after such acquisition, (iii) the indebtedness secured thereby does not exceed the fair market value of such real property, improvements or equipment at the time of such acquisition and (iv) such security interests do not apply to any other property or assets (other than accessions to such equipment) of the Borrower. 14352874.4 15 280 "Permitted Second Lien Obligations" means any indebtedness that is subordinated in • right of payment and lien priority to the Bonds and Parity Obligations and, prior to a Bankruptcy Related Event, senior in right of payment and lien priority to the TIFIA Bond and any related Hedging Obligations. "Person" means and includes an individual, a general or limited partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and any Governmental Authority. "Principal Project Contracts" means (a) the Design-Build Contract, any contract entered into by the Borrower required under the Design-Build Contract, requiring payments by the Borrower in excess of $2,500,000 (inflated annually by CPI) per annum, (b) the Cooperative Agreement, (c) the Operating Agreement, (d) the Lease Agreement, (e) the Toll Facility Agreement, (f) the Franchise Agreement, (g) the Design-Build Agreement, (h) any other contract entered into by the Borrower relating to the Project designated as a Principal Project Contract by the TIFIA Lender and the Borrower, and (i) any document that replaces or supplements any of the foregoing agreements. "Project" means the SR-91 Corridor Improvement Project, including (a)the construction of a new general purpose lane along an 8-mile stretch of SR-91 between the Orange County border and 1-15; (b) the conversion of the current HOV lane to two tolled express lanes and (c) improvements to bridges and intersections, some of which will gain auxiliary lanes or merge lanes for improved access. "Project Budget" means the budget for the Project in the aggregate amount of $ attached to this Agreement as Schedule I showing a summary of all Eligible Project Costs and the estimated sources and uses of funds for the Project, as amended from time- to-time with the approval of the TIFIA Lender. "Project Costs" means (a) the costs paid or incurred (to the extent paid, such costs shall be reimbursed to the Person who paid such costs) or to be paid or incurred by the Borrower in connection with or incidental to the acquisition, design, construction and equipping of the Project, including legal, administrative, engineering, planning, design, insurance and financing costs, provided such costs were expended no earlier than ; (b) amounts, if any, required by the Master Indenture to be paid into any fund or account upon the incurrence of the Senior Obligations; (c) payments when due (whether at the maturity of principal, the due date of interest, or upon optional or mandatory prepayment) on any indebtedness of the Borrower (other than the TIFIA Loan) incurred for the Project; (d) costs of equipment and supplies and initial working capital and reserves required by the Borrower for the commencement of operation of the Project, including general administrative expenses and overhead ofthe Borrower other than to the extent such amounts constitute direct or indirect costs unallowable to the Borrower and its contractors under 18 C.F .R. Part 31; and (e) the repayment of obligations incurred by the Borrower, the proceeds of which obligations were used to pay items (a) through (d) of this definition. • "Project Fund" means the fund created pursuant to and designated as such in Section • 5.02 ofthe Master Indenture. 14352874.4 16 281 • • • "Qualified Hedge Provider" means (a) the initial Hedge Providers and (b) an entity, other than any affiliate of the Borrower, whose senior long term obligations, other senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, or whose payment obligations under an interest rate exchange agreement are guaranteed by an entity whose senior long term debt obligations, other senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, are rated at the time of the execution of the Hedging Agreement at least as high as the second highest Rating Category of any Nationally Recognized Rating Agency then maintaining a rating for the Qualified Hedge Provider. "Rate Covenant" has the meaning set forth in Section 15( o ). "Rating Category" or "Categories" means one of the generic rating categories of a Nationally Recognized Rating Agency without regard to any refinement or gradation of such rating by a numerical modifier or otherwise. "RCTC Act" means Division 12 of the Public Utilities Code of the State of California (Section 130000 et seq) as amended, including by Chapter 714 of the California Statutes of 2008 (Senate Bill No. 1316), and as such may be amended from time to time hereunder. "Related Documents" means the TIFIA Loan Documents, Hedging Agreements, the Principal Project Contracts [and the Borrower Equity Contribution Agreement]. "Remedial Plan" has the meaning set forth in Section 18(a)(iii) . "Repair and Rehabilitation Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Repair and Rehabilitation Fund Permitted Expenditures" means "Repair and Rehabilitation Reserve Fund" means the Fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Requisition" has the meaning provided in Section 4. "Revenue" means: (a) Toll Revenues; (b) all amounts on deposit in the funds and accounts established and held by the Trustee hereunder (excluding the Rebate Fund, any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument, and any Subsidy Payments in accordance with the Master Indenture); (c) all interest or other income from investment of money in the funds and accounts established hereunder (excluding the Rebate Fund and any fund or account established to hold the proceeds of a drawing on any Credit Support Instrument); and (d) all Swap Revenues. ["Revenues Available for TIFIA Loan Prepayment" means ____ ] "ROW Revenues" means revenues generated by the Borrower from the sale of excess right-of-way property. 14352874.4 17 282 "Sales Tax Act" means the Riverside County Transportation Sales Tax Act, being Division 25 of the Public Utilities Code of the State of California (Section 240000 et seq.). "Sales Tax Bonds" means the bonds of the Borrower issued pursuant to, and outstanding under, the Sales Tax Revenue Bond Indenture. "Sales Tax Revenue Bond Indenture" means that certain Indenture, dated as of June 1, 2008, as amended and supplemented, by and between the Borrower and U.S. Bank National Association, as trustee. "Sales Tax Revenues" means the amounts available for distribution to the Borrower on and after July 1, 2009 on account of the retail transactions and use tax imposed in the County of Riverside pursuant to the Sales Tax Act and the Ordinance after deducting amounts payable by the Borrower to the State Board of Equalization for costs and expenses for its services m connection with the retail transactions and use taxes collected pursuant to the Sales Tax Act. "Sculpted Payment Commencement Date" means the Payment Date following the end of the [ ] consecutive Payment Period. "Sculpted Payment Period" means the period commencing on the Sculpted Payment Commencement Date and ending on the Final Maturity Date (or on such earlier date as the TIFIA Loan shall be paid in full). "Second Supplemental Indenture" means the Second Supplemental Indenture, by and between the Borrower and the Trustee, dated as of June 1, 2013, relating to the Riverside County Transportation Commission Toll Revenue Bonds, [Series 2013-1] (TIFIA Loan). "Secretary" means the United States Secretary of Transportation. "Semi-Annual Payment Date" means each [January 1] and [July 1] or if such day is not a Business Day, then the Business Day following such [January 1] or [July 1]. "Senior Obligations" means any borrowings or indebtedness permitted, including Bonds and Parity Obligations issued under the Master Indenture. "Servicer" means such entity or entities as the TIFIA Lender shall designate from time- to-time to perform, or assist the TIFIA Lender in performing, certain duties hereunder. "Short-Term Qualified Hedge" has the meaning set forth in Section 18(s)(vii)(A). "State" means the State of California. "Subordinated Hedging Termination Obligations" means Hedging Termination Obligations under the Hedging Agreements other than those arising as a result of a Permitted Hedging Termination or as a result of a tax or illegality event or upon failure of the Borrower to pay any Hedging Obligations when due. 14352874.4 "Subsequent Qualified Hedge" has the meaning set for the in Section 15(5)(iii). 18 283 • • • • • • "Subsidy Payments" means, (a) with respect to a Series of Senior Obligations issued under Section 54AA of the Code, the amounts relating to such Series of Senior Obligations which are payable by the Federal government under Section 6431 of the Code, which the Borrower has elected to receive under Section 54 AA(g)(l) of the Code, and (b) with respect to a Series of Senior Obligations issued under any other provision of the Code that creates a substantially similar direct-pay subsidy program, the amounts relating to such Series of Senior Obligations which are payable by the Federal government under the applicable provision of the Code which the Borrower has elected to receive under the applicable provisions of the Code. "Substantial Completion" [means the opening of the Project in its entirety to vehicular traffic.] "Substantial Completion Date" means the date on which the Project is open in its entirety to vehicular traffic, as specified in the Base Case Projections, as such date may be revised as reflected in a Financial Plan pursuant to clause (ii) of Section 20( a) hereof. "Supplemental Indenture" means any resolution, agreement or similar document which supplements or amends the Master Indenture. "Surplus Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Swap Revenues" means any amount paid by a Hedging Bank to the Borrower pursuant to any Hedging Agreement, after any netting of payments required by such Hedging Agreement and any payments paid to the Borrower by a Hedging Bank as consideration for termination or amendment of a Hedging Agreement. "TIFIA Account" means the Subaccount created within the Project Fund pursuant to and designated as such in Section 5.02 of the Master Indenture. "TIFIA Bond" means the Bond in substantially the form of Exhibit A issued by the Borrower to the TIFIA Lender pursuant to the Second Supplemental Indenture to evidence the payment obligations of the Borrower on the TIFIA Loan. "TIFIA Default Rate" means an interest rate of 200 basis points above the TIFIA Interest Rate. "TIFIA Fund" means the fund created and designated as such in Section 502 of the Master Indenture. "TIFIA Interest Rate" has the meaning set forth in Section 6. "TIFIA Lender" means USDOT, acting by and through the Administrator, and its successors and assigns. "TIFIA Lender's Authorized Representative" means any Person who shall be designated as such by the Administrator pursuant to Section 25 . 14352874.4 19 284 "TIFIA Lien" means the right, pledge, charge, preference and priority with respect to Trust Estate granted by the Borrower under the Master Indenture to secure the TIFIA Bond and TIFIA Loan and created without physical delivery, filing or any other act. "TIFIA Loan" means the secured loan made by the TIFIA Lender to the Borrower hereunder, pursuant to the Act, in a principal amount not to exceed [$451 ,000,000] (excluding capitalized interest), to be used to pay Eligible Project Costs of this Agreement. "TIFIA Loan Documents" means this Agreement, the TIFIA Bond, any Intercreditor Agreement, the Master Indenture and the Second Supplemental Indenture. ["TIFIA Loan Prepayment Amount" means ["TIFIA Loan Prepayment Commencement Date" means ["TIFIA Loan Prepayment Date" means ["TIFIA Loan Prepayment Percentage" means .] .] .] .] "TIFIA Mandatory Debt Service" means with respect to any Payment Date occurring after the Debt Service Payment Commencement Date and prior to the Sculpted Payment Commencement Date, the principal and/or interest required to be paid on the TIFIA Loan on such Payment Date as shown on Exhibits G and H in accordance with the provisions of Section 9( c). "TIFIA Payment Account" means the account created within the TIFIA Fund pursuant to and designated as such in Section 5.02 of the Master Indenture. "TIFIA Pro Rata Share" means on a relevant date of disbursement, [ ] % of the sum of (i) the aggregate amount of disbursements under this Agreement and (ii) the aggregate amount of disbursements under the Indenture. "TIFIA Reserve Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. ["TIFIA Reserve Fund Required Balance" shall mean $20,000,000.] "TIFIA Scheduled Debt Service" means with respect to any Payment Date occurring after the Debt Service Payment Commencement Date and prior to the Sculpted Payment Commencement Date, the interest scheduled to be paid on the TIFIA Loan on such Payment Date as showing on Exhibits G and H in accordance with the provisions of Section 9( c). "TIFIA Sculpted Debt Service" means with respect to any Payment Date occurring after the Sculpted Payment Commencement Date and prior to the Final Maturity Date, the principal and/or interest required to be paid on the TIFIA Loan on such Payment Date as shown on Exhibits G and H in accordance with the provisions of Section 9( e). 14352874.4 20 285 • • • • • • "Toll Operator" means Cofiroute, or any successor, as operator of the Toll Road responsible for the collection of tolls and fees and the establishment and maintenance of customer accounts and records, pursuant to the Operating Agreement. "Toll Revenue Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Toll Revenues" means (a) toll revenues, user fees, fines, rents or other similar charges payable for use of the Toll Road, as well as fines and penalties and interest thereon collected as a result of a failure to pay any such amounts, (b) all proceeds of insurance payable to or received by the Borrower with respect to the Toll Road (whether by way of claims, return of premiums, ex gratia settlements or otherwise), including proceeds from business interruption insurance and loss of advance profits insurance, except for proceeds of fire and other casualty insurance, (c) the proceeds of any condemnation awards with respect to the Toll Road, and (d) any other incidental or related fees or charges; but excluding therefrom ROW Revenues [and any portion thereof derived from the vehicular usage of a Special Project (as such term is defined in the Master Indenture) that is required to be paid to a contractor pursuant to a contract for the acquisition or construction of such Special Project as a result of the early completion of such Special Project or any segment thereof]. ["Toll Road" means (a) general purpose toll lanes, (b) lanes or facilities where the tolls may be levied and may vary according to levels of congestion anticipated or experienced or according to the occupancy of the vehicle, (c) facilities using any combination of (a) and (b), and (d) facilities using any other strategy the Borrower may determine appropriate on a facility-by- facility basis, on the portion of SR-91 between the Orange and Riverside County line and State Highway Route 15, as such toll lanes and facilities may from time to time be expanded, improved, upgraded, enlarged, or enhanced (but only to the extent that the Borrower designates in writing that such expansion, improvement, upgrade, enlargement or enhancement constitutes a "Toll Road" generating "Toll Revenues" under the Master Indenture and certifies that such expansion, improvement, upgrade, enlargement or enhancement will not have a material adverse effect on the TIFIA Bond).] ["Total Debt Service Coverage Ratio" means, as of each applicable Calculation Date, the ratio of (a) annual Net Revenue to (b) annual Indenture Debt Service, as applicable, for each Calculation Date from and including such Calculation Date to the Final Maturity Date; provided that for purposes of such calculation during the period prior to the Debt Service Payment Commencement Date, the debt service on the TIFIA Loan shall be deemed to be zero.] "Traffic Consultant" means Stantec Consulting Services and any other traffic and revenue consultant or firm of nationally-recognized traffic and revenue consultants experienced in performing the duties for which a Traffic Consultant is required to be employed pursuant to the provisions of this Indenture selected by the Borrower and reasonably acceptable to the TIFIA Lender. "Traffic and Revenue Study" means the Final Traffic and Revenue Study for the Project, dated , prepared for the Borrower by Stantec Consulting Services, and any amendments, supplements or updates thereto. 14352874.4 21 286 "Trust Estate" means ----------------------------------- "Trustee" means The Bank of New York Mellon Trust Company, N.A. and any successor thereto designated pursuant to the Master Indenture. "Uncontrollable Force" means any cause beyond the control ofthe Borrower, including but not limited to: (a) a tornado, flood or similar occurrence, landslide, earthquake, fire or other casualty, strike or labor disturbance, freight embargo, act of a public enemy, explosion, war, blockade, terrorist act, insurrection, riot, general arrest or restraint of government and people, civil disturbance or similar occurrence, or sabotage; or act of God provided that the Borrower shall not be required to settle any strike or labor disturbance in which it may be involved or (b) the order or judgment of any federal, state or local court, administrative agency or governmental officer or body, if it is not also the result of willful or negligent action or a lack of reasonable diligence of the Borrower and the Borrower does not control the administrative agency or governmental officer or body; provided that the diligent contest in good faith of any such order or judgment shall not constitute or be construed as a willful or negligent action or a lack of reasonable diligence ofthe Borrower. "US DOT" means the United States Department of Transportation. "Variable Interest Rate Senior Obligations" means any Senior Obligations under a Senior Loan Agreement that accrue interest at a Variable Interest Rate. "Variable Interest Rate" means SECTION 2. Interpretation. Unless the context shall otherwise require, the words "hereto," "herein," "hereof' and other words of similar import refer to this Agreement as a whole. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders and vice versa. Words importing the singular number shall include the plural number and vice versa unless the context shall otherwise require. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." Unless the context shall otherwise require, references to any Person shall be deemed to include such Person's successors and permitted assigns. Unless the context shall otherwise require, references to sections, subsections, and provisions are to the applicable sections, subsections and provisions of this Agreement. The headings or titles of this Agreement and its sections, schedules or exhibits, as well as any table of contents, are for convenience of reference only and shall not define or limit its provisions. Unless the context shall otherwise require, all references to any resolution, contract, agreement, lease or other document shall be deemed to include any amendments or supplements to, or modifications or restatements or replacements of, such documents that are approved from time-to-time in accordance with the terms thereof and hereof. Every request, order, demand, application, appointment, notice, statement, certificate, consent or similar communication or action hereunder by any party shall, unless otherwise specifically provided, be delivered in writing in accordance with Section 35 and signed by a duly authorized representative of such party. • • SECTION 3. TIFIA Loan Amount. The principal amount of the TIFIA Loan shall not exceed [$451 ,000,000] (excluding any interest that is capitalized in accordance with the terms • 14352874.4 22 287 • • • hereof); provided, however, in no event shall the maximum principal amount of the TIFIA Loan disbursed by the TIFIA Lender, together with the amount of any other credit assistance provided under the Act, exceed the lesser of (i) 33% of Eligible Project Costs, excluding any interest that is capitalized in accordance with the terms hereof, or (ii) if the TIFIA Loan does not receive an Investment Grade Rating, the amount of the Initial Senior Obligations. TIFIA Loan proceeds shall be disbursed from time-to-time in accordance with Section 4. SECTION 4. Disbursement Conditions. (a) TIFIA Loan proceeds shall be disbursed solely to pay directly for, or to reimburse the Borrower for its prior payment of, Eligible Project Costs incurred in connection with the Project. Each disbursement of the TIFIA Loan shall be made pursuant to a requisition and certification (a "Requisition") in the form set forth in Appendix One to Exhibit D submitted by the Borrower to, and approved by, the TIFIA Lender, all in accordance with the procedures of Exhibit D and subject to the conditions set forth therein and the additional conditions set forth below in this Section 4. Disbursements of TIFIA Loan proceeds shall be made no later than one year after the Substantial Completion Date. As a condition to each disbursement of the TIFIA Loan, the Borrower shall provide to the TIFIA Lender a Disbursements and Contributions Certificate prior thereto. (b) Copies of each Requisition, each of which shall be accompanied by a Distribution and Contribution Certificate, shall be delivered to the TIFIA Lender, the FHW A TIFIA Joint Program Office, any Servicer and the FHW A California Division Office on or before the 15th day of the month preceding such month for which a disbursement is requested, or the next succeeding Business Day if such 15th day is not a Business Day. If the TIFIA Lender shall expressly approve a Requisition or shall not expressly deny a Requisition, disbursements of funds shall be made on the 1st day of the month for which a disbursement has been requested, or on the next succeeding Business Day if such 1st day is not a Business Day. Express TIFIA Lender approval or denial shall be substantially in the form attached hereto as Appendix Three to Exhibit D. In no event shall disbursements be made more than once each month. At the time of any disbursement, the sum of all prior disbursements of TIFIA Loan proceeds and the disbursement then to be made shall not exceed the cumulative disbursements through the end of the then-current year set forth in the Anticipated TIFIA Loan Disbursement Schedule, as amended from time-to-time pursuant to paragraph (c) in this Section. (c) The Borrower may amend the Anticipated TIFIA Loan Disbursement Schedule by submitting revisions to the TIFIA Lender no later than thirty days prior to the proposed effective date thereof, a revised Schedule, together with a detailed explanation of the reasons for such revisions. Such revised Schedule shall become effective upon the TIFIA Lender's approval thereof, which approval shall not be unreasonably withheld. (d) [As conditions to the initial disbursement of the TIFIA Loan, the Borrower shall provide the TIFIA Lender with evidence satisfactory to the TIFIA Lender that prior thereto, or simultaneously therewith, (i) the Initial Senior Obligations and the Sales Tax Bonds shall have issued by the Borrower no later than June_, 2013, (ii) [the Design-Build Contract and any other Principal Project Contracts for each portion of the Project to be financed with proceeds of the TIFIA Loan have been executed and are effective and, based on the Design-Build Contract 14352874.4 23 288 prices, funding is sufficient to complete the Project, (iii) the TIFIA Lender has been made an "additional insured" party for each policy of insurance as described in Section 15(h) other than any policy of business interruption insurance and (iv) the State's approved transportation improvement program and approves statewide transportation improvement program pursuant to §§134 and 135 have been amended to include the TIFIA Loan.] SECTION 5. Term. The term of the TIFIA Loan shall ex;tend from the Effective Date to the Final Maturity Date or to such earlier or later date as all amounts due or to become due to the TIFIA Lender hereunder have been paid. SECTION 6. Interest Rate. The interest rate with respect to the TIFIA Loan (the "TIFIA Interest Rate") shall be __ % per annum. Interest will be computed on the Outstanding TIFIA Loan Balance (as well as on any past due interest) from time-to-time on the basis of a 365-day or 366-day year, as appropriate, for the actual number of days elapsed and will be compounded semi-annually; provided, however, in the event of a Payment Default, the Borrower shall pay interest on any overdue amount from its due date to the date of actual payment at the TIFIA Default Rate. Upon the occurrence of an Event of Default described in Section 18 (a)(iii) or (ix) hereof, the interest rate on the Outstanding TIFIA Loan Balance shall be the TIFIA Default Rate and shall continue to bear interest at such rate until, with respect to (a) an Event of Default described in Section 18 (a)(iii), the Development Default has been cured and (b) an Event of Default described in Section 18 (a)(viii), the TIFIA Loan has been paid in full. SECTION 7. Outstanding TIFIA Loan Balance and Revisions to Exhibit G and the Loan Amortization Schedule. (a) The Outstanding TIFIA Loan Balance will be (i) increased on each occasion on which the TIFIA Lender shall disburse loan proceeds hereunder, by the amount of such disbursement of loan proceeds, (ii) increased on each occasion on which interest on the TIFIA Loan is capitalized pursuant to the provisions of Section 9 hereof, by the amount of interest so capitalized and (iii) decreased upon each payment or prepayment of the principal amount of the TIFIA Loan, by the amount of principal so paid. The TIFIA Lender may in its discretion at any time and from time-to-time, or when so requested by the Borrower, advise the Borrower by written notice of the amount of the Outstanding TIFIA Loan Balance as of the date of such notice, and its determination of such amount in any such notice shall be deemed conclusive absent manifest error. Upon any determination of the Outstanding TIFIA Loan Balance, the TIFIA Lender may, but shall not be obligated to, make applicable revisions to Exhibit G and the Loan Amortization Schedule pursuant to Section 9 and in such event shall provide the Borrower with a copy of such Exhibit G and Loan Amortization Schedule as revised, but no failure to provide or delay in providing the Borrower with such copy shall affect any of the obligations of the Borrower under this Agreement or the other TIFIA Loan Documents. The Loan Amortization Schedule, as of the date hereof, has been determined based on the Loan Disbursement Schedule in effect on the Effective Date. (b) The TIFIA Lender shall make applicable revisions to Exhibit G and the Loan Amortization Schedule pursuant to Section 9 (i) as of the Debt Service Payment Commencement Date, (ii) on each Payment Date commencing on the Debt Service Payment Commencement Date to and including the last Payment Date prior to the Sculpted Payment 24 14352874.4 289 • • • • • • Commencement Period and (iii) upon any prepayment of the TIFIA Loan. Upon any such revisions the TIFIA Lender shall provide the Borrower with copies of such Exhibit G and Loan Amortization Schedule as revised, but no failure to provide or delay in providing the Borrower with such copies shall affect any of the obligations of the Borrower under this Agreement or the other TIFIA Loan Documents. Each of Exhibit G and the Loan Amortization Schedule, as of the Effective Date, has been determined based on the Anticipated TIFIA Loan Disbursement Schedule in effect on the Effective Date. SECTION 8. Security and Priority; Flow of Funds. (a) As security for the TIFIA Loan, the Borrower shall pledge, assign and grant the TIFIA Lien in accordance with the provisions of the Master Indenture. The TIFIA Loan shall be secured by the TIFIA Lien with respect to Trust Estate subordinate, during any period when an Event of Default described in Section 18(a)(viii) has not occurred, only (except as otherwise required by law) to the Lien on the Trust Estate of any Senior Obligations, Hedging Obligations and Hedging Termination Obligations and related Hedge Facilities. From and after the occurrence of an Event of Default described in Section 18(a)(viii), the TIFIA Loan shall be secured by a first priority right, pledge, charge, preference and priority with respect to the Trust Estate on a parity with any Senior Obligations. (b) Except to the extent otherwise provided in paragraph (a) of this Section, or as may be entitled to priority as a matter of law, the Revenue are and will be free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge created hereby, and all governmental action on the part of the Borrower to that end has been duly and validly taken. (c) The Borrower shall not use Revenue to make any payments or satisfy any obligations other than in accordance with the provisions of this Section 8 and the Master Indenture and shall not apply any portion of the Revenue in contravention of this Agreement or the Master Indenture. (d) Amounts on deposit in the Project Fund during the period on and prior to one year after the Substantial Completion Date and amounts on deposit in any Reserve Fund, the TIFIA Fund and the TIFIA Reserve Fund established under the Master Indenture shall be invested in Permitted Investments. (e) [TO BE DISCUSSED] All terms used in this Section 8(e), which are not otherwise defined in this Agreement, shall have the meaning assigned to such terms as provided for in the Master Indenture. The Master Indenture provides that all Revenue in the Toll Revenue Fund shall, be applied substantially in the following order of priority, as more fully described, and in accordance with the requirements specified, in Article V of the Master Indenture at the times ans in the amounts set forth below commencing after the Substantial Completion Date: [For purposes of this Flow of Funds, Accreted Value shall be treated as "principal."] (i) 14352874.4 on each Monthly Funding Date, to the Operation and Maintenance Fund, the amount necessary to increase the balance of the Operation and Maintenance Fund to an amount equal to the Operation and Maintenance Expenses then due and 25 290 14352874.4 payable, plus one-sixth of the Operation and Maintenance Expenses projected in • accordance with the Annual Operating Budget of the Borrower to be due and payable during the next succeeding calendar year; (ii) on each Monthly Funding Date (or any other date when so due and payable), to the Fees and Expenses Fund the amount necessary to increase the balance of the Fees and Expenses Fund to an amount equal to the Fees and Expenses then due and payable, plus one-twelfth of the Fees and Expenses projected in accordance with the Annual Operating Budget of the Borrower to be due and payable during the next succeeding calendar year; (iii) on each Monthly Funding Date, any payments then due and payable by the Borrower to the Rebate Fund or any similar rebate fund established with respect to any future tax-exempt borrowing transaction under the Master Indenture; (iv) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, (x) to the Bond Interest Payment Account the sum of(A)(l) in the case of outstanding Bonds with semiannual interest payment dates, one-sixth (1/6) of the amount of the interest payable on such Bonds on the next interest payment date; and (2) in the case of outstanding Bonds with monthly interest payment dates, the amount of interest payable on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made on any preceding Monthly Funding Date and any amounts transferred from the Bond Interest Payment Account pursuant to the Master Indenture and not repaid; plus (C) if such Monthly Funding Date is also an interest payment date or the last Monthly Funding Date before an interest payment date, any other amount required to make the amount credited to the Bond Interest Payment Account equal to the amount payable on the Bonds on such interest payment date, and (y) to holders of any Parity Obligations, an amount equal to the interest portion due on such Parity Obligations and Hedging Obligations due and payable under any related Hedging Agreements, as the case may be; (v) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, (x) commencing twelve months before the first annual principal payment date (including any mandatory sinking fund redemption date), to the Bond Principal Payment Account, the sum of (A) one-twelfth (1/12) of the principal and mandatory sinking fund redemptions due on the Bonds; and (B) the sum of any shortfall in transfers required to have been made on any previous Monthly Funding Date, plus any amounts transferred from the Bond Principal Payment Account pursuant to the Master Indenture and not repaid; and (C) if the Monthly Funding Date is also a principal payment date (or mandatory sinking fund redemption date) or the last Monthly Funding Date before a principal payment date (or mandatory sinking fund redemption date); any other amount required to make the amount credited to the Bond Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date, and (y) to holders of any Parity Obligations, an 26 291 • • • • • 14352874.4 (vi) amount equal to the principal portion due on any such Parity Obligations (including any mandatory redemption payments thereon); on each Monthly Funding Date, to the Bond Reserve Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the Bond Reserve Requirement calculated as of the most recent Calculation Date; (vii) (x) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, to the Permitted Second Lien Obligations Interest Payment Account the sum of {A)(l) in the case of outstanding Permitted Second Lien Obligations with semiannual interest payment dates, one-sixth (1/6) of the amount of the interest payable on such Permitted Second Lien Obligations on the next interest payment date; and (2) in the case of outstanding Permitted Second Lien Obligations with monthly interest payment dates, the amount of interest payable on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made on any preceding Monthly Funding Date and any amounts transferred from the Permitted Second Lien Obligations Interest Payment Account pursuant to the Master Indenture and not repaid; plus (C) if such Monthly Funding Date is also an interest payment date or the last Monthly Funding Date before an interest payment date, any other amount required to make the amount credited to the Permitted Second Lien Obligations Interest Payment Account equal to the amount payable on the Permitted Second Lien Obligations on such interest payment date, and (y) on each Calculation Date, to the applicable Hedging Banks, scheduled payments due under any Hedging Obligations, if any, net of any scheduled amounts payable to the Borrower with respect to such scheduled Hedging Obligations, under any Hedging Agreements entered into in connection with such Permitted Second Lien Obligations; (viii) (x) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, commencing twelve months before the first annual principal payment date (including any mandatory sinking fund redemption date), to the Permitted Second Lien Obligations Principal Payment Account, the sum of {A) one-twelfth (1112) of the principal and mandatory sinking fund redemptions due on the Permitted Second Lien Obligations; and (B) the sum of any shortfall in transfers required to have been made on any previous Monthly Funding Date, plus any amounts transferred from the Permitted Second Lien Obligations Principal Payment Account pursuant to Master Indenture and not repaid; and (C) if the Monthly Funding Date is also a principal payment date (or mandatory sinking fund redemption date) or the last Monthly Funding Date before a principal payment date (or mandatory.sinking fund redemption date), any other amount required to make the amount credited to the Permitted Second Lien Obligations Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date, and (y) on each Calculation Date, to the applicable Hedging Banks, any Hedging Termination Obligations related to mandatory prepayments or mandatory 27 292 14352874.4 redemptions of any Permitted Second Lien Obligations, if any; (ix) on each Calculation Date, to the trustee of any Permitted Second Lien Obligations, the amount, if any, necessary to fund any reserve fund established in connection with such Permitted Second Lien Obligation so that the balance therein (taking into account amounts then on deposit therein) equals the applicable reserve requirement; (x) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, to the counterparties to Hedging Agreements, an amount equal to any Hedging Termination Obligations payable upon a Permitted Hedging Termination; (xi) on each Calculation Date, to the TIFIA Payment Account, an amount which equals the TIFIA Mandatory Debt Service due on the immediately succeeding TIFIA Payment Date; (xii) on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior clauses (i) through (xi), to the TIFIA Reserve Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the TIFIA Reserve Fund Required Balance; (xiii) on each Calculation Date, to the TIFIA Payment Account, an amount which equals the TIFIA Scheduled Debt Service (excluding any amounts to be applied to TIFIA Mandatory Debt Service in accordance with clause (xi)) due on the immediately succeeding TIFIA Payment Date; (xiv) on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior clauses (i) through (xiii), to the Repair and Rehabilitation Fund, the amount identified in the Financial Model as being deposited into the Repair and Rehabilitation Fund as of such Calculation Date, plus the cumulative amount of any such amounts not fully funded on each previous Calculation Date; provided, however, that the amount of such deposit shall not cause the balance of the Repair and Rehabilitation Fund to exceed the Repair and Rehabilitation Fund Required Balance as of such Calculation Date; (xv) on each Monthly Funding Date or on each other date on which the following amounts shall be due and payable, to the counterparties to Hedging Agreements, an amount equal to any Subordinate Hedging Termination; • • (xvi) on each Calculation Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior clauses (i) through (xv), to the Discretionary Capital Expenditures Fund to the extent necessary to fund such account so that the balance therein (taking into account amounts then on deposit therein) equals the Discretionary Capital Expenditures Fund Required • Balance;] 28 293 • • • (xvii) on each date on which the following amount shall be then due and payable, to the Bond Principal Payment Account, any voluntary prepayments and/or optional redemptions of Bonds, so long as the Restricted Payment Conditions are satisfied as of the Calculation Date occurring on or immediately prior to such date; (xviii) on any Calculation Date, if the Restricted Payments Conditions have not been satisfied, to the Lock-up Account all funds then available after application of funds for the purposes specified in the prior clauses (i) through (xvi); (xix) on any Calculation Date, or such other date prior to the next succeeding Calculation Date as permitted under this Agreement, to the TIFIA Sinking Fund Account from funds that are then on deposit in the Lock-Up Account (taking into account amounts deposited therein on such Calculation Date) in the amounts specified in Section 15(q); (xx) on each date on which the following amounts shall be then due and payable, but only to the extent required under Section 15( q), to the TIFIA Payment Account, other prepayments of the TIFIA Credit Assistance required under this Agreement; and (xxi) on each Calculation Date on which all of the Restricted Payment Conditions are satisfied on such Calculation Date, to the Surplus Fund, all remaining amounts, if any . For the avoidance of doubt, for the purposes of this Section 8, if a Calculation Date is not a Business Day, then such. transfers and withdrawals to and from such Funds or Accounts pursuant to this Section 8 shall occur on the immediately following Business Day. SECTION 9. Payment of Principal and Interest. (a) The Borrower agrees to pay the principal of and interest on the TIFIA Loan by making payments in accordance with the provisions of this Agreement and the Master Indenture on each Payment Date and on each other date (including, without limitation, the Final Maturity Date) on which payment thereof is required to be made hereunder. (b) Capitalized Interest Period. No payment of the principal of or interest on the TIFIA Loan is required to be made during the Capitalized Interest Period. On each January 1 and July 1 occurring during the Capitalized Interest Period, interest accrued in the six month period ending immediately prior to such date on the TIFIA Loan shall be capitalized and added to the Outstanding TIFIA Loan Balance. Within 30 days after the end of the Capitalized Interest Period, the TIFIA Lender shall give written notice to the Borrower [and the Trustee] stating the Outstanding TIFIA Loan Balance as of the close of business on the last day of the Capitalized Interest Period, which statement thereof shall be deemed conclusive absent manifest error; provided, however, that no failure to give or delay in giving such notice shall affect any of the obligations of the Borrower hereunder or under any of the other TIFIA Loan Documents. (c) Payment of TIFIA Mandatory Debt Service. On each Payment Date occurring on or after the Debt Service Payment Commencement Date and on or prior to the Sculpted Payment Commencement Date, the Borrower shall pay TIFIA Mandatory Debt Service 14352874.4 29 294 in the amount of principal of and interest on the TIFIA Loan due and payable as of such date as • set forth on Exhibit G, which payments shall be made in accordance with Section 9( e); provided that if such Payment Date is an Interim Payment Date, the amount payable shall be as calculated in Section 9( e )(ii). On each Payment Date commencing on the Sculpted Payment Commencement Date, the Borrower shall pay TIFIA Mandatory Debt Service in the amount of 1 00% of the amount of principal of and interest on the TIFIA Loan due and payable as of such date as set forth on Exhibits G and H, which payments shall be made in accordance with Section 9( e); provided that if such Payment Date is an Interim Payment Date, the amount payable shall be as calculated in accordance with Section ( e )(ii). (d) Payment of TIFIA Scheduled Debt Service. On each Payment Date occurring on or after the Debt Service Payment Commencement Date and prior to the Sculpted Payment Commencement Date, the Borrower shall pay TIFIA Scheduled Debt Service on the TIFIA Loan for each Payment Period in the amount set forth on Exhibits G and H hereto, which payments shall be made in accordance with Section 9( e); provided that is such Payment Date is an Interim Payment Date, the amount payable shall be calculated in accordance with Section 9(e)(iii); and provided further, however, that the Borrower's obligation to pay the non-mandatory portion of the TIFIA Scheduled Debt Service on any Payment Date shall be applicable only if and solely to the extent that funds shall be available thereof on such date in accordance with the provisions of Section 8(f). To the extent that the aggregate amount of TIFIA Scheduled Debt Service actually paid during any Payment Period for the TIFIA Loan in accordance with the provisions hereof shall be less than the aggregate amount of TIFIA Scheduled Debt Service for such period determined as provided above, then the unpaid portion of such TIFIA Scheduled • Debt Service shall be deferred until the period commencing on the Sculpted Payment Commencement Date and shall be part of the Outstanding TIFIA Loan Balance that is due and payable over the remaining life of the TIFIA Loan from the Sculpted Payment Commencement Date to the Final Maturity Date. Following any such deferral, Exhibit G shall be revised on each such Payment Date to take into account such deferral and any adjustment for TIFIA Schedul~d Debt Service, provided that TIFIA Mandatory Debt Service prior to the Sculpted Payment Commencement Date shall not be revised or altered as a result thereof. (e) Dates and Amounts of Payment. The Borrower shall make payments of TIFIA Debt Service on each Payment Date commencing with the Debt Service Payment Commencement Date, as follows: 14352874.4 (i) If Senior Obligations have any payment of principal or interest due on any Interim Payment Date after the Debt Service Payment Commencement Date, the Borrower shall promptly notify the TIFIA Lender thereof in writing, identifying the period covered by such Interest Period and the interest payment date on which interest on or principal of the Senior Obligations for such Interest Period is due and payable. (ii) The amount of TIFIA Debt Service due and payable on any Payment Date occurring during any Payment Period shall be equal to the amount of TIFIA Debt Service for such Payment Period as shown on Exhibit G, as the same may be revised as provided in Section 7(b), multiplied by a fraction, the 30 295 • • • • numerator of which is equal to the number of months contained in the Interest Period ending on such Payment Date and the denominator of which is equal to 6. (iii) Notwithstanding the foregoing provisions of this Section 9(e) or any other provision of this Agreement, at any time when no Senior Obligations shall be outstanding, or when no Senior Obligations shall be outstanding other than Senior Obligations with respect to which principal and interest are payable on Semi-Annual Payment Dates, then TIFIA Debt Service hereunder shall be payable only on each Semi-Annual Payment Date occurring during the Payment Period. In the event that an Interim Payment Date is other than a monthly date, the method for determining the method for calculating interim payments shall be determined at such time by the parties hereto. (f) Sculpted Payments. On each Semi-Annual Payment Date occurring during the Sculpted Payment Period, the Borrower shall make a payment of principal and interest (each a "Sculpted Payment") in the amount set forth in Exhibits G and H. The amount of the Sculpted Payment shall be calculated as of the first day of the Sculpted Payment Commencement Date in such manner that the Outstanding TIFIA Loan Balance of the TIFIA Loan as of such date shall be reduced to $0 on the Final Maturity Date (assuming that interest accrues during such period on the principal balance of such TIFIA Loan at the rate per annum set forth in Section 6 in the absence of an Event of Default, that all Sculpted Payments are made in a timely manner during such period, and that no additional payments of principal of or interest on the TIFIA Loan are made during such period); provided that (i) the amount payable on the first Payment Date occurring during a Sculpted Payment Period shall be appropriately adjusted in the event that the duration of the period from the commencement of the Sculpted Payment Period to such first Payment Date shall be less than six months, and (ii) there shall be due and payable on the Final Maturity Date of the TIFIA Loan, all amounts of principal and interest not otherwise paid pursuant to the provisions of this Agreement. Within 30 days prior to the beginning of the Sculpted Payment Period for the TIFIA Loan, the TIFIA Lender shall give written notice to the Borrower of the amount of the Sculpted Payments for each Semi-Annual Payment Date occurring during the Sculpted Payment Period (including any adjustment in respect of the first such payment), which amount shall be deemed conclusive absent manifest error. To the extent that any prepayments of the TIFIA Loan shall be made during the Sculpted Payment Period in addition to the Sculpted Payments, such prepayments shall be applied to the remaining Sculpted Payments in the inverse order of the maturity thereof. (g) Manner of Payment. Payments under this Agreement and the TIFIA Bond shall be made by wire transfer on or before each Payment Date in immediately available funds in accordance with payment instructions provided by a TIFIA Lender's Authorized Representative pursuant to Section 35, as modified in writing from time-to-time by the TIFIA Lender's Authorized Representative. (h) TIFIA Bond; Adjustments to Loan Amortization Schedule. As evidence of the Borrower's obligation to repay the TIFIA Loan, the Borrower shall issue and deliver to the TIFIA Lender, on or prior to the Effective Date, the TIFIA Bond substantially in the form of Exhibit A, attached hereto and incorporated herein by reference, having a maximum principal amount of [$451,000,000] (subject to increase or decrease as herein provided) and bearing 14352874.4 31 296 interest at the rate set forth in Section 6. The TIFIA Lender is hereby authorized to enter on the • grid attached to such TIFIA Bond as Appendix One, attached hereto and incorporated herein by reference, the amount of each disbursement made under this Agreement and to amend the Loan Amortization Schedule from time-to-time in accordance with Section 7 hereof. Absent manifest error, the TIFIA Lender's determination of such matters as set forth on Appendix One to the TIFIA Bond and the Loan Amortization Schedule shall be conclusive evidence thereof. SECTION 10. Prepayment. (a) Mandatory. The Borrower shall prepay the TIFIA Loan in whole or in part, without penalty or premium, in the amounts and at the times required pursuant to the provisions of Section 15(p ). Such prepayments shall be used first to pay interest on TIFIA Loan to the extent that interest has accrued and has not been paid on a current basis under the Loan Amortization Schedule and then to prepay principal as provided in Section 7. Each such prepayment shall be accompanied by a certificate signed by the Borrower's Authorized Representative identifying the provision of this Agreement pursuant to which such prepayment is being made and containing a calculation in reasonable detail of the amount of such prepayment. (b) Optional. The Borrower may prepay the TIFIA Loan in whole or in part (and, if in part, the amounts thereof to be prepaid shall be determined by the Borrower; provided, however, that such prepayments shall be in principal amounts of $1,000,000 or any integral multiple thereof), at any time or from time-to-time, without penalty or premium, by paying to the TIFIA Lender such principal amount of the TIFIA Loan to be prepaid, together with the unpaid interest accrued on the ainount of principal so prepaid to the date of such prepayment. Each prepayment of the TIFIA Loan shall be made on such date and in such principal amount as shall be specified by the Borrower in a written notice delivered to the TIFIA Lender. In the case of any partial prepayment, such written notice shall be delivered to the TIFIA Lender not less than 10 days or more than 30 days prior to the date set for prepayment. (c) General. Notice having been given as provided in Section 1 O(b ), the principal amount of the TIFIA Loan stated in such notice or the whole thereof, as the case may be, shall become due and payable on the prepayment date stated in such notice, together with interest accrued and unpaid to the prepayment date on the principal amount then being prepaid. The amount of principal and interest due and payable as a result of a mandatory or optional prepayment shall be paid (i) in case the entire unpaid balance of the principal of the TIFIA Bond is to be prepaid, upon presentation and surrender of such TIFIA Bond evidencing the obligation to repay such TIFIA Loan to the Borrower or its representative at the principal office of the TIFIA Lender, and (ii) in case only part of the unpaid balance of principal of such TIFIA Bond is to be prepaid, the TIFIA Lender may make a notation on the TIFIA Bond indicating the amount of principal of and interest on such TIFIA Bond then being prepaid. All such partial prepayments of principal shall be applied to the remaining Outstanding TIFIA Loan Balance in the inverse order of the maturity thereof and the remaining Sculpted Payments will be recalculated to be an amount sufficient to amortize the remaining Outstanding TIFIA Loan Balance at the TIFIA Interest Rate over the period ending on the Final Maturity Date and the resulting Sculpted Payments will be reflected in revised Exhibits G and H. The TIFIA Lender shall, and is hereby authorized by the Borrower, to make the appropriate notations thereof on Appendix One to such TIFIA Bond and to revise the Loan Amortization Schedule for each 14352874.4 32 297 • • • • • Sculpted Payment Period and Exhibits G and H in accordance herewith. Absent manifest error such TIFIA Lender notations and revisions shall be conclusive. If said moneys shall not have been so paid on the prepayment date, such principal amount of such TIFIA Bond shall continue to bear interest until payment thereof at the rate provided for in Section 6. SECTION 11. Compliance with Laws. The Borrower covenants to require its contractors and subcontractors to abide by all applicable federal and State laws. The list of federal laws attached as Exhibit E is illustrative of the type of requirements generally applicable to transportation projects and is not intended to be exhaustive. The FHW A California Division Office has oversight responsibility for ensuring compliance with all applicable provisions of federal law. Pursuant to 23 U.S.C. § 106(c) and the Oversight Agreement, the Borrower [and Cal trans] will be responsible for certain Project oversight activities. The Borrower [and Cal trans] each agree to cooperate with the FHW A California Division Office in carrying out their respective duties under this Agreement and the Oversight Agreement. The Borrower agrees that there will be no irreversible or irretrievable commitment of resources, including but not limited to physical construction, before all State and/or federal environmental permits required for commencement of construction of the relevant portion of the Project are finalized and approved by the appropriate resource agencies. In the event that an environmental permit that has not been obtained is required after construction on any applicable portion of the Project has begun, the Borrower shall take immediate steps to acquire that permit. If the Borrower begins construction before all required permits have been obtained, the Borrower shall assume the risk of any loss associated therewith . SECTION 12. Conditions Precedent. Notwithstanding anything in this Agreement to the contrary, this Agreement shall not become effective and the TIFIA Lender shall have no obligation to disburse any loan proceeds to the Borrower until each of the following conditions precedent shall have been satisfied: (a) The Borrower shall (i) shall have duly executed and delivered to the Trustee each of the Master Indenture, the Second Supplemental Indenture and this Agreement, each in form and substance satisfactory to the TIFIA Lender and the Trustee and (ii) shall have duly executed and delivered the TIFIA Bond to the TIFIA Lender, in form and substance satisfactory to the TIFIA Lender and the Trustee. (b) Counsel to the Borrower shall have rendered to the TIFIA Lender legal opinions in substantially the forms attached hereto as Exhibit H. (c) The Borrower shall have provided a certificate as to the absence of debarment, suspension or voluntary exclusion from participation in Government contracts, procurement and non-procurement matters substantially in the form attached hereto as Exhibit C. (d) The Borrower shall have provided to the TIFIA Lender's satisfactory evidence that the Project has satisfied the applicable planning and programmatic requirements of 23 U.S.C. §§134 and 135. (e) The Borrower shall have provided evidence to the TIFIA Lender's satisfaction, not later than 14 days prior to the Effective Date or such other date as deemed 14352874.4 33 298 acceptable by the TIFIA Lender, of the assignment by a Nationally Recognized Rating Agency • of an Investment Grade Rating on the Initial Senior Obligations and the TIFIA Loan. (f) The Borrower shall have delivered to the TIFIA Lender a certificate designating the Borrower's Authorized Representative and such person's position and incumbency and a certificate of the Borrower to the effect that the insurance requirements of Section 15(h) have been satisfied as of the Effective Date. The foregoing condition is waived pursuant to the Borrower's satisfaction of the covenants in Section 15(h). (g) The Borrower shall have demonstrated to the TIFIA Lender's satisfaction that the funds forecasted to be available under the Base Case Projections will be sufficient to complete the Project. (h) The Borrower shall have delivered an original fully executed counterpart of the Traffic and Revenue Study in form and substance acceptable to the TIFIA Lender. (i) The Borrower shall have delivered original fully executed counterparts of each Principal Project Contract. (j) The Borrower shall have provided certified copies of all available agreements and any plans of acquisition related to the acquisition or control of any Project right- of-way to be acquired with the proceeds of the TIFIA Loan. (k) The Borrower shall have demonstrated to the TIFIA Lender's satisfaction that it has all necessary, permits and governmental approvals necessary to commence construction, except those hereinafter required to be obtained by the Design-Build Contractor pursuant to the Design-Build Contract and delivered to the TIFIA Lender. (1) The Borrower shall have delivered to the TIFIA Lender a certified schedule acceptable to the TIFIA Lender demonstrating that the projected Revenues shall be sufficient to meet the Loan Amortization Schedule and meet the requirements of the Rate Covenant contained in Section 15( o) hereof. (m) The Borrower shall have provided evidence of compliance with the National Environmental Policy Act of 1969 (42 U.S.C. §4321 et seq.). (n) The TIFIA Lender shall have delivered its initial TIFIA Lender's Authorized Representative certificate. ( o) The Borrower shall also have delivered such other agreements, documents, instruments, opinions and other items required by the TIFIA Lender, all in form and substance satisfactory to the TIFIA Lender, including, but not limited to, evidence that all other Project funding requirements have been met (including evidence of other funding sources or funding commitments). (p) The Borrower shall have obtained a Data Universal Number System • number with the Federal System for Awards Management (formerly the Central Contractor • Registry). 14352874.4 34 299 • • • ( q) The Borrower shall have delivered, in form and substance, satisfactory to the TIFIA Lender, a letter addressed to Caltrans, acknowledging the Borrower's obligation to comply with the Oversight Agreement. (t) The Borrower shall have caused counsel to the Trustee to have rendered to the TIFIA Lender a legal opinion as to the due execution and validity of the documents to be executed by the Trustee, namely, the Master Indenture, the First Supplemental Indenture and the Second Supplemental Indenture. SECTION 13. Representations and Warranties of Borrower. The Borrower hereby represents and warrants that as of the Effective Date and, as to each of the representations and warranties below other than those contained in clauses (b) and (1) of this Section, as of each date on which any disbursement of the TIFIA Loan is made: (a) The Borrower is a public entity duly existing under the laws of the State of California, duly organized, validly existing and in good standing under the laws of the State, has full legal right, power and authority to enter into the Related Documents then in existence, to execute the TIFIA Bond, and to carry out and consummate all transactions contemplated by hereby and thereby and has duly authorized the execution, delivery and performance of the Related Documents. (b) As of the Effective Date, the officers of the Borrower executing the Related Documents to which the Borrower is a party, are duly and properly in office and fully authorized to execute the same. (c) Each of the TIFIA Loan Documents has been duly authorized, executed and delivered by the Borrower and constitutes the legal, valid and binding agreement of the Borrower enforceable in accordance with its terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (B) is subject to general principles of equity (regardless of whether enforceability is considered in equity or at law). (d) The execution and delivery of the Related Documents to which the Borrower is a party, the consummation of the transactions contemplated in the Related Documents and the fulfillment of or compliance with the terms and conditions of the Related Documents will not, in any material respect, conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) by the Borrower of any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Borrower is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited Lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower. (e) No consent or approval of any trustee, holder of any indebtedness of the Borrower or any other Person, and no consent, permission, authorization, order or license of, or filing or registration with, any Governmental Authority required as of the date hereof is necessary in connection with the execution and delivery by the Borrower of the Related 14352874.4 35 300 Documents, the consummation of any transaction contemplated by the Related Documents, or • the fulfillment of or compliance with the Borrower of the terms and conditions of the Related Documents, except as have been obtained or made and as are in full force and effect. (f) There is no action, suit, proceeding, inquiry or investigation before or by any court or other Governmental Authority, pending, or to the knowledge of the Borrower after reasonable inquiry and investigation, threatened against or affecting the Borrower or the assets, properties or operations of the Borrower which are likely to have a Material Adverse Effect. The Borrower is not in default (and no event has occurred and is continuing which with the giving of notice or the passage of time or both could constitute a default) with respect to any order or decree of any court or any order, regulation or demand of any other Governmental Authority, which default would be reasonably likely to have a Material Adverse Effect. (g) The Master Indenture establishes, in favor of the Trustee, for the benefit of the TIFIA Lender, the TIFIA Lien which it purports to create; such TIFIA Lien is in full force and effect and is not subordinate or junior to any other Liens in respect of the Trust Estate except as to the extent explicitly set forth in the Master Indenture and the Borrower is not in breach of any covenants set forth in Section 15( c) of this Agreement and the Master Indenture with respect thereto. (h) Upon the occurrence of a Bankruptcy Related Event under this Agreement, or an Indenture Event of Default described in Section 7.01(c) of the Master Indenture, the rights of the TIFIA Lender to be entitled to the rights of a Bondholder of a Senior Obligation for all purposes under the Master Indenture all as set forth in Section 7.02 of the • Master Indenture, are valid security rights of the TIFIA Lender enforceable under State law without any further action by the Borrower or any other party. (i) Neither the Borrower nor its principals (as defined in 2 C.F.R. Part 180.995) is debarred, suspended or voluntarily excluded from participation in Government contracts, procurement or non-procurement matters or delinquent on a Government debt as more fully set forth in the certificate delivered in substantially the form of Exhibit C. (j) The representations, warranties and certifications of the Borrower set forth in this Agreement, the Oversight Agreement, the Master Indenture and the Second Supplemental Indenture and all information provided by the Borrower to the TIFIA Lender when taken as a whole and after giving effect to any updates, remain true and accurate. (k) The Borrower has complied, with respect to the Project, with all applicable requirements of the National Environmental Policy Act of 1969 (42 U.S.C. §4321 et seq.). (1) The Project has been included in the metropolitan transportation improvement program for the Southern California Association of Governments, in the State transportation plan and the approved State transportation improvement program to the extent required by 23 U.S.C. §602(a)(l). (m) The TIFIA Loan has received an Investment Grade Rating from at least • one Nationally Recognized Rating Agency, and written evidence of such rating has been 14352874.4 36 301 • • • provided to the TIFIA Lender prior to the Effective Date, and to the knowledge of the Borrower, no such rating has been reduced, withdrawn or suspended as of the Effective Date. (n) Upon execution and delivery of this Agreement and the TIFIA Bond, the Borrower is not in default in any material respect under the terms hereof or thereof and no event has occurred or condition exists which, with due notice or lapse of time or both, would constitute an Event of Default. ( o) All authorizations, consents, approvals, licenses, permits and reviews required as of the Effective Date for the undertaking and completion by the Borrower of the Project have been obtained or effected and are in full force and effect and there is no basis for the revocation of any such authorization, consent, commitments or approval. (p) To its knowledge, the Borrower is not in violation of (i) any applicable anti-money laundering laws, including those contained in the Bank Secrecy Act, (ii) any applicable economic sanction laws administered by OF AC or by the United States Department of State or (iii) any applicable anti-drug trafficking, anti-terrorism, or anti-corruption laws, civil or criminal. (q) The Principal Project Contracts, which have been executed and delivered as of the Effective Date, are all in full force and effect, the Borrower is not in default under any of such agreements or contracts, and, to the knowledge of the Borrower, no party to any of such agreements or contracts is in default thereunder. SECTION 14. Representations, Warranties, and Covenants ofTIFIA Lender. The TIFIA Lender represents and warrants that: (a) The TIFIA Lender has all requisite power and authority to make the TIFIA Loan and to perform all transactions contemplated by the Related Documents to which it is a party. (b) The Related Documents to which it is a party have been duly authorized, executed and delivered by TIFIA Lender, and are legally valid and binding agreements of the TIFIA Lender, enforceable in accordance with their terms. (c) The officers of the TIFIA Lender executing each of the Related Documents to which the TIFIA Lender is a party is duly and properly in office and fully authorized to execute the same on behalf of the TIFIA Lender. SECTION 15. Borrower Covenants. The Borrower hereby covenants and agrees that: (a) Permitted Indebtedness. Except for Permitted Debt, the Borrower shall not issue or incur indebtedness of any kind payable from the Trust Estate. (b) Additional Obligations. The Borrower shall not issue additional Other Indenture Obligations or incur other indebtedness secured by all or any portion of the Trust Estate that is on a parity with or prior to the TIFIA Lien without (i) first meeting the 14352874.4 37 302 requirements for the issuance of Bonds established by Sections 3.01 or 3.02 of the Master Indenture and (ii) obtaining the prior written consent of the TIFIA Lender. • (c) Securing the TIFIA Lien. The Borrower shall at any and all times, so far as it may be authorized by law, adopt, make, do, execute, acknowledge and deliver, all and every such further resolutions, acts, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning, securing and confirming the TIFIA Lien granted for the benefit of the TIFIA Lender, pursuant to the Master Indenture, or intended so to be granted pursuant to the Master Indenture and the RCTC Act, or which the Borrower may become bound to grant and the Trust Estate are and will be free and clear of any pledge, Lien, charge or encumbrance thereon or with respect thereto prior to, or of equal rank with the TIFIA Lien created by the Master Indenture, other than as permitted by the Master Indenture or by this Agreement, and all governmental action on the part of the Borrower to that end shall be duly and validly taken at such times. The Borrower shall at all times, to the extent permitted by law, defend, preserve and protect the TIFIA Lien granted pursuant to the Master Indenture and the RCTC Act and all the rights for the benefit of the TIFIA Lender under the Master Indenture against all claims and demands of all Persons whomsoever, subject to Permitted Liens. (d) Copies of Documents. The Borrower shall furnish to the TIFIA Lender a copy of any offering document and cash flow projections prepared in connection with the incurrence of any Permitted Debt, prior to the incurrence of any such Permitted Debt, as well as copies of any continuing disclosure documents [pertaining to Pledged Revenues], in each case prepared or filed in connection with the applicable rules of the Securities and Exchange • Commission, in each case promptly following the preparation or filing thereof. (e) Use of Proceeds. The Borrower shall use the proceeds ofthe TIFIA Loan only to pay, or to reimburse the Borrower for, Eligible Project Costs. . (f) Prosecution of Work. The Borrower shall diligently prosecute the work relating to the Project and complete the Project in accordance with the Construction Schedule, including, without limitation, the provisions of Section 18( a)(iii) hereof, and in accordance with the highest standards of Borrower's industry, using its best efforts at all times. (g) Operations and Maintenance. Borrower shall operate and maintain the Toll Road in a reasonable and prudent manner and shall maintain the Toll Road in good repair, working order and condition and shall from time-to-time make or cause to be made all necessary and proper replacements, repairs, renewals and improvements so that the Toll Road shall not be materially impaired. The Borrower shall at all times do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises and authorizations material to the conduct of its business, and comply in all material respects with all applicable laws, rules, regulations, orders, decrees, judgments or administrative decisions, whether now in effect or hereafter enacted, of any Governmental Authority having jurisdiction over the Borrower or its assets or operations (including, without limitation, the National Environmental Policy Act of 1969 ( 42 U .S.C. §4321 et seq.) and all other federal, state and local laws, rules, regulations, orders, decrees, judgments and administrative decisions relating to the environment, the preservation or reclamation of natural resources, the • 14352874.4 38 303 • • • management, release or threatened release of any hazardous material or to health and safety matters). (h) Insurance. The Borrower shall at all times maintain or cause to be maintained insurance on the Toll Road, with responsible insurers, as is customarily maintained in the United States with respect to works and properties of like character, against accident to, loss of or damage to such works or properties, and to the extent any requirements for such insurance are set forth in the Master Indenture, such insurance shall comply with the Master Indenture. The Borrower shall review with the TIFIA Lender and the FHW A California Division each policy of insurance currently provided, or to be secured, under the Design-Build Contract and where requested by the TIFIA Lender, cause the TIFIA Lender to be included as an "additional insured" party for each such and endorsed thereon. (i) Notice. The Borrower shall, within five (5) Business Days after the Borrower learns of the occurrence, give the TIFIA Lender notice of any of the following events, setting forth details of such event: (i) Events of Default: any Event of Default or any event which, given notice or the passage of time or both, would constitute an Event of Default; (ii) Litigation: the filing of any actual litigation, suit or action, or the delivery to the Borrower of any written claim, which could reasonably be expected to have a Material Adverse Effect; and (iii) Other Adverse Events: the occurrence of any other event or condition, which could reasonably be expected to result in a Material Adverse Effect. (j) Remedied Action. Within 30 calendar days after the Borrower learns of the occurrence of an event specified in Section 15(i), the Borrower's Authorized Representative shall provide a statement setting forth the actions the Borrower proposes to take with respect thereto. (k) No Lien Extinguishment or Adverse Amendments. Borrower shall not, without the prior written consent of the TIFIA Lender, either (i) extinguish the TIFIA Lien on the Trust Estate, except as provided under the Master Indenture, (ii) amend, modify, supplement or grant or receive any waiver with respect to any Related Document in a manner that could adversely affect the TIFIA Lender in connection with the TIFIA Loan or (iii) terminate, assign, amend or modify, or waive timely performance by the Borrower or any other party of material covenants under, the Design-Build Contract or any other Principal Project Contract except for termination, assignment, amendment, modification or waiver that could not reasonably be expected to have a Material Adverse Effect. Except as otherwise agreed by the TIFIA Lender in writing, the Borrower will provide to the TIFIA Lender copies of any proposed amendments to any Related Document at least 30 days prior to the effective date thereof. (1) Maintain Legal Structure. To the fullest extent permitted by law, the Borrower shall maintain its legal existence 14352874.4 39 304 (m) Annual Rating. The Borrower shall, commencing in 2014, no later than the last Business Day of December of each year over the term of the TIFIA Loan, at no cost to • the TIFIA Lender, provide to the TIFIA Lender a rating by a Nationally Recognized Rating Agency on the. TIFIA Loan and the existing ratings on any Senior Obligations. (n) Bond Reserve Fund and TIFIA Reserve Fund. The Borrower shall maintain the Bond Reserve Fund in an amount equal to the Bond Reserve Fund Requirement with the provisions of the Master Indenture and the applicable Supplemental Indenture. Amounts in the Bond Debt Service Reserve Account shall be made available to ensure the timely payment of any Indenture Debt Service on any Senior Obligation. The Borrower may replace all or a portion of the required balance thereof, in accordance with the terms of the Master Indenture, with an irrevocable letter of credit, insurance policy or similar instrument provided by a financial institution with a long-term credit rating at the time of initial delivery of any such instrument in one of the top two Rating Categories. The Borrower shall maintain the TIFIA Reserve Fund in an amount equal to the TIFIA Reserve Fund Requirement in accordance with the provisions of the Master Indenture, the Second Supplemental Indenture and this Agreement. The Borrower further agrees that the TIFIA Reserve Fund shall be funded at the TIFIA Reserve Fund Requirement no later than the end of the sixth month following Substantial Completion from ROW Revenues, and if such ROW Revenues are insufficient therefor, from Sales Tax Revenues. ( o) [Rate Covenant. [TO BE DISCUSSED] The Borrower covenants that it will at all times establish and maintain tolls on the Toll Road at rates projected by it to generate • sufficient Revenue to pay, as and when due, amounts due on all Outstanding Senior Obligations, Operation and Maintenance Expenses, and other obligations of the Borrower, and to otherwise comply with the RCTC Act. Beginning in the second Fiscal Year following the commencement of toll collections by the Borrower for use of the Toll Road pursuant to the Cooperative Agreement, the Borrower covenants to: (i) compute projected Net Revenue for each Fiscal Year and the ratio produced by dividing projected Net Revenue by projected Indenture Debt Service for that Fiscal Year (such ratio being hereinafter referred to as the "Coverage Ratio") within ten Business Days after the beginning of that Fiscal Year (such date of computation being hereinafter referred to as a "Coverage Calculation Date"); (ii) to promptly furnish to the Trustee a Certificate of the Borrower setting forth the results of such computations; and (iii) if the Coverage Ratio is less than 1.50:1, to take such action as promptly as practicable after the Coverage Calculation Date (including, without limitation, increasing Toll Revenues through toll increases) as the Borrower projects is necessary to cause the projected Coverage Ratio for that Fiscal Year to equal or exceed 1.5: 1. Within 60 days after the end of each Fiscal Year (beginning with the second Fiscal Year following the commencement of toll collections by the Borrower for use of the Toll Road pursuant to the Cooperative Agreement), the Borrower will file with the Trustee a report setting forth the Net Revenues for such Fiscal Year. The failure of toll rates to yield an amount sufficient to achieve the Coverage Ratio described in the preceding paragraph shall not be deemed to constitute an Event of Default under the Indenture or under this Agreement so long as • 14352874.4 40 305 • • • the Borrower complies with the requirements set forth in the following paragraph. If any such report indicates that the Net Revenues for such Fiscal Year were less than the amount required pursuant to the preceding paragraph, then as soon as practicable after delivering such report to the Trustee and the TIFIA Lender, the Borrower shall employ a Traffic Consultant to review and analyze the operations of the Toll Road and to submit to the board of the Borrower, as soon as practicable (but not later than such date as will enable the Board to act upon it within 180 days after the end of the Fiscal Year in question), a written report which shall include the actions that the Traffic Consultant recommends should be taken by the Borrower with respect to (i) revising the toll rates, (ii) altering its methods of operation, or (iii) taking other action projected to produce the amount so required in the following twelve month period (or, if less, the maximum amount deemed feasible by the Traffic Consultant and that the Traffic Consultant estimates will not adversely affect the amount of Net Revenues). Promptly upon its receipt of such written report (and, in any case, within 180 days after the end of the Fiscal Year in question), after giving due consideration thereto, the Borrower will revise the toll rates, as permitted by law, alter its methods of operation, or take such other action as it deems appropriate. Such revisions, alterations, or actions need not comply with the recommendations of the Traffic Consultant so long as Net Revenues projected by the Traffic Consultant to be produced by the revisions, alterations or actions then taken by the Borrower are at least equal to the amount required hereinabove. The Borrower further covenants that such toll rates for traffic using the Toll Road will be established and maintained in a reasonable way to cover all traffic (other than vehicles used for maintaining the Toll Road; police, fire, and other public emergency vehicles; buses owned and operated by any public agency; vehicles with two or more passengers; vehicles which are otherwise exempt from payment of tolls under State or federal law; and any vehicles during a public emergency declared by the Borrower) consistent with the requirements hereof, but with such classifications as the Borrower may deem appropriate. Notwithstanding any provision to the contrary, nothing in this clause ( o) shall be deemed to require the Borrower to collect tolls and other fees with respect to which the Borrower has determined, based upon a report from a Traffic Consultant, that the costs of collection would exceed the amount of tolls and other fees expected to be collected; and provided further that I nothing contained in this clause ( o) shall prevent the Borrower from temporarily reducing or eliminating tolls and other fees in connection with programs which it intends to use to increase Net Revenues.] (p) No Prohibited Liens. The Borrower will not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, except Permitted Liens or assign or sell any income or revenue including accounts receivable or rights in respect of any thereof. (q) TIFIA Revenue Share Amount and Loan Prepayment. [TO COME]. (r) Copies of Additional Project Contracts. The Borrower shall provide a copy of each Additional Project Contract to the TIFIA Lender promptly after execution thereof. 14352874.4 41 306 (s) Hedging. (i) To protect against fluctuations in interest rates, the Borrower • shall make arrangements for a Qualified Hedge to be in place and maintained at all times with respect to the Senior Obligations during any period in which the Senior Obligations bear interest at a Variable Interest Rate. The initial Qualified Hedge must have an aggregate stated notional amount of not less than 98% of the aggregate principal amount of the Variable Interest Rate Senior Obligations projected to be outstanding during the term of the Qualified Hedges and have a stated maturity or termination date not earlier than the final maturity date of the Initial Senior Obligations. The Borrower, at all times when the TIFIA Loan is outstanding, shall have in full force and effect Qualified Hedges with an aggregate notional amount of not less than 98% of the aggregate principal amount of the Variable Interest Rate Senior Obligations projected by the Borrower from time-to-time to be outstanding during the term of the TIFIA Loan and (x) at least 98% of the notional amount of such Qualified Hedges shall be subject to a Qualified Hedge with a stated maturity or termination date not earlier than the final maturity date of the TIFIA Loan and (y) the notional amount of the balance of such Qualified Hedges shall be subject to a Qualified Hedge with a stated maturity or termination date of at least one year. (ii) Each Qualified Hedge shall provide for a fixed interest rate or interest rate cap resulting in fixed payment amounts payable by the Borrower which, when taken together with the Bank Lending Margin, shall be a rate which is less than or equal to the Loan Underwriting Rate. The Borrower's obligations to pay (a) any payments required in connection with the acquisition of a Qualified Hedge to assure that the fixed interest rate to be paid by the Borrower or interest rate cap provided to the Borrower under the Qualified Hedge, together with the Bank Lending Margin, shall be at or below the Loan Underwriting Rate, (b) Hedging Obligations and (c) Hedging Termination Obligations shall be from the sources and in the • priority specified in the Master Indenture. Each Qualified Hedge shall be secured and documented on terms and conditions substantially similar to the terms and conditions of the Initial Qualified Hedge unless otherwise approved by the TIFIA Lender (the "Hedge Documents"). The Borrower shall ensure that, as of the day following the termination date of any Qualified Hedge, either (a) a Subsequent Qualified Hedge (as defined below) is in full force and effect to the extent the Senior Obligations bear interest at a Variable Interest Rate or (b) the Variable Interest Rate Senior Obligations have been converted to a fixed rate, in each case in accordance with this Agreement and the Senior Loan Agreement. (iii) Any Qualified Hedge entered into subsequent to the Initial Qualified Hedge (a "Subsequent Qualified Hedge") shall (1) commence no later than the termination date of the Qualified Hedge which is terminating and terminate no earlier than the date which is the first (1 51 ) anniversary of the effective date of such Subsequent Qualified Hedge or (2) commence no later than the termination date of the existing Qualified Hedge and terminate no earlier than the final maturity ~ate of the Variable Interest Rate Senior Obligations. (iv) No later than thirty days prior to the Borrower seeking any bids from any Qualified Hedge Provider for a Subsequent Qualified Hedge, the Borrower shall obtain the written consent of the TIFIA Lender to the effect that the process for selecting a Subsequent Qualified Hedge is a competitive process designed to obtain a fair market price and to avoid conflicts of interest. At the time the Subsequent Qualified Hedge is priced, the Borrower shall provide to the TIFIA Lender a certificate from a qualified third party acceptable to the TIFIA Lender to the effect that either the underlying LIBOR based fixed rate or the price of acquiring a 14352874.4 42 307 • • • • ------------. Subsequent Qualified Hedge is a fair price based on the interest rate market at the time such Qualified Hedge is priced. (v) The Trustee shall be granted a security interest in each Qualified Hedge and payments due under each Qualified Hedge in order to secure the Borrower's obligations to the TIFIA Lender under this Agreement. The Hedge Documents shall provide that all payments due thereunder to the Borrower shall be made directly to the Trustee for deposit and disbursement in accordance with the Master Indenture. (vi) The Borrower shall neither terminate (other than Permitted Hedging Terminations), transfer nor consent to any transfer (other than to a Qualified Hedge Provider) of any existing Qualified Hedge without the TIFIA Lender's prior written consent as long as the Borrower is required to maintain a Qualified Hedge pursuant to this Agreement. 14352874.4 (vii) Hedge Deposits. (A) The Borrower shall be required to establish an account under the Master Indenture (the "Hedging Acquisition Account") and make payments to the Trustee· (each a "Hedge Deposit") for deposit into the Hedging Acquisition Account (1) on the Calculation Date occurring twelve months prior to entering into each Subsequent Qualified Hedge with a remaining term of one year or less (a "Short Term Qualified Hedge") and (2) on each of the Calculation Dates occurring twelve and six months prior to entering into Subsequent Qualified Hedge with a remaining term of greater than one year (a "Long Dated Qualified Hedge"). (B) The Hedge Deposit for a Short Term Qualified Hedge shall be the mid-market amount estimated by the Borrower at that time to be necessary to purchase, at the scheduled termination of the then existing Qualified Hedge, a Subsequent Qualified Hedge obligating the Borrower to make payments based on a fixed rate of interest or interest rate cap equal to or less than the Loan Underwriting Rate minus the Bank Lending Margin for a period of one year or less having a notional amount equal to the principal amount of the Variable Interest Rate Senior Obligations projected to be outstanding during the term of such Qualified Hedge. (C) The first Hedge Deposit for a Long Dated Qualified Hedge shall be the mid-market amount estimated by the Borrower at that time to be necessary to provide one-half of the funds needed to purchase, at the scheduled termination of the then existing Qualified Hedge, a Subsequent Qualified Hedge obligating the Borrower to make payments based on a fixed rate of interest or interest rate cap equal to or less than the Loan Underwriting Rate minus the Bank Lending Margin for a period of greater than one ( 1) year having a notional amount equal to the principal amount of the Variable Interest Rate Senior Obligations projected to be outstanding during the term of such Qualified Hedge. The second Hedge Deposit for a Long Dated Qualified Hedge shall be the mid-market amount, if any, estimated by the Borrower at that time to be necessary, when added to the amount 43 308 deposited for the first Hedge Deposit for a Long Dated Qualified Hedge, to purchase, at the scheduled termination date of the then existing Qualified Hedge, • a Subsequent Qualified Hedge obligating the Borrower to make payments based on a fixed rate of interest or interest rate cap equal to or less than the Loan Underwriting Rate minus the Bank Lending Margin for a period of greater than one (1) year, having a notional amount equal to the principal amount of the Variable Interest Rate Senior Obligations projected to be outstanding during the term of such Qualified Hedge. (D) For the purpose of determining the required Hedge Deposits, the Borrower shall provide the anticipated notional amounts of the Subsequent Qualified Hedge to a qualified third party who shall in tum calculate the amount of the Hedge Deposit in accordance with (vii) (B) and (C) above. The Borrower shall select, subject to the TIFIA Lender's approval, the qualified third party at least 15 days prior to the applicable Calculation Date. 1. The Borrower's obligation to make any Hedge Deposit payments shall be from the sources and in the priority specified in Article V of the Master Indenture. 2. Provided that no Event of Default has occurred and is continuing, funds on deposit in the Hedging Acquisition Account shall be applied towards the purchase of a Subsequent Qualified Hedges. Any remaining balance in the Hedging Acquisition Account after such • purchase which exceeds the amount required to satisfy the Hedge Deposit requirements in this clause (vii) shall be transferred to the Pledged Revenues Account, as provided in the Master Indenture. (t) No Prohibited Sale or Assignment. Except to the extent permitted by Section 6.06 of the Master Indenture, the Borrower shall not sell or assign all or substantially all of its rights in and to the Toll Road without the written consent of the TIFIA Lender and shall not sell or assign its rights and obligations under this Agreement unless such sale or assignment is not expected to result in a Material Adverse Effect and is upon terms and conditions approved in writing by the TIFIA Lender in its sole discretion. (u) Material Obligations. The Borrower will pay its material obligations promptly and in accordance with their terms and pay and discharge promptly all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful and material claims for labor, materials and supplies or other claims which, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested by the Borrower in good faith by appropriate proceedings and so long as the Borrower shall, to the extent required by [GASB/GAAP] on a consistent basis, set aside on its books adequate reserves with respect thereto. 14352874.4 44 309 • • • (v) Fiscal Year. The Borrower will not at any time adopt any fiscal year other than the Fiscal Year, except upon written notice to the TIFIA Lender. (w) No Prohibited Business. The Borrower will not at any time engage in any business or activity other than as authorized the laws of the State. (x) Principal Project Contracts. The Borrower (i) will comply with each of the Principal Project Contracts in all material respects and (ii) shall not terminate a Principal Project Contract without the TIFIA Lender's consent. (y) Operations and Maintenance Costs. The Borrower shall not increase in any year the amount of Project Operating and Maintenance Expenses by more than 10% over the amount shown for such expenditures in the prior year as shown in the Base Case Financial Model, without the TIFIA Lender's prior written consent. No consent shall be required for the following purposes, provided that the Borrower submits a written explanation for the increase over 1 0% together with a certification from a Consulting Engineer stating that such expenditures were necessary and permitted hereunder: (i) reasonably unforeseen expenditures to the extent necessary to pay for compliance with emergency expenses; (ii) reasonably unforeseen expenditures to the extent necessary to be made to cause the Project to be in compliance with any applicable mandatory requirement imposed by a Governmental Authority; or (iii) expenditures necessary to be in compliance with Section 6.05 of the Master Indenture. (z) [Execution and Delivery of Agreements after the Effective Date. The Borrower shall, as soon as reasonably practicable, cause any of the Principal Project Contracts not executed as of the Effective Date to be executed, in form and substance satisfactory to the TIFIA Lender, and shall deliver certified copies thereof to the TIFIA Lender.] (aa) Reserve Funding Requirements. The Borrower covenants to comply with applicable requirements of the Master Indenture relating to the funding of, and application of amounts on deposit in, in each of the Operating and Maintenance Reserve Fund and the Repair and Replacement Reserve Fund. SECTION 16. Indemnification. To the extent authorized by law, the Borrower shall indemnify the TIFIA Lender and any official, employee, agent or representative of the TIFIA Lender (each such Person being herein referred to as an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, fines, penalties, costs and expenses (including, without limitation, the fees, charges and disbursements of any counsel for any Indemnitee and the costs of environmental remediation), whether known, unknown, contingent or otherwise, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution, delivery and performance of this Agreement or any of the Related Documents, (ii) the TIFIA Loan or the use of the proceeds thereof, or (iii) the violation of any law, rule, regulation, order, decree, judgment or administrative decision relating to the environment, the preservation or reclamation of natural resources, the management, release or threatened release of any hazardous material or to health and safety matters; in each case arising out of or in direct relation to the Project; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, • damages, liabilities or related expenses are determined by a court of competent jurisdiction by 14352874.4 45 310 final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. In case any action or proceeding is brought against an • Indemnitee by reason of any claim with respect to which such Indemnitee is entitled to indemnification hereunder, the Borrower upon notice from such Indemnitee shall defend the same and such Indemnitee shall cooperate with the Borrower at the expense of the Borrower in connection therewith. Nothing herein shall be construed as a waiver of any legal immunity that may be available to any Indemnitee. To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory ofliability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the Related Documents, the TIFIA Loan and the other transactions contemplated hereby and thereby, or the use of the proceeds thereof. All amounts due to any Indemnitee under this Section shall be payable promptly upon demand therefor. The obligations of the Borrower under this Section shall survive the payment or prepayment in full or transfer of the TIFIA Bond, the enforcement of any provision of this Agreement or the Related Documents, any amendments, waivers (other than amendments or waivers in writing with respect to this Section) or consents in respect hereof or thereof, any Event of Default, and any workout, restructuring or similar arrangement of the obligations of the Borrower hereunder or thereunder. SECTION 17. Sale of TIFIA Loan. The TIFIA Lender shall not sell the TIFIA Loan at any time prior to the date of Substantial Completion. After such date, the TIFIA Lender may sell the TIFIA Loan to another entity or reoffer the TIFIA Loan into the capital markets only in accordance with the provisions of this Section. Such sale or reoffering shall be on such terms as the TIFIA Lender shall deem advisable. However, in making such sale or reoffering the TIFIA • Lender shall not change the terms and conditions of the TIFIA Loan without the prior written consent of the Borrower, which consent shall not be unreasonably withheld. The TIFIA Lender shall provide (i) at least 60 days prior to any sale or reoffering of the TIFIA Loan, written notice to the Borrower to the effect that the TIFIA Lender is considering the sale or reoffering of the TIFIA Loan and (ii) at least 30 days prior to any sale or reoffering of the TIFIA Loan, written notice to the Borrower confirming TIFIA Lender's intention to consummate such a sale or reoffering; provided, however, that no such notice shall be required during the continuation of any Event of Default. The provision of any notice pursuant to this Section shall not (i) obligate the TIFIA Lender to sell nor (ii) provide the Borrower with any rights or remedies in the event the TIFIA Lender, for any reason, does not sell the TIFIA Loan. The TIFIA Lender and the Borrower agree that, for so long as any Senior Obligations or Hedging Agreements remain outstanding, the provisions contained in Section 8(a) hereof and in the Master Indenture with respect to the TIFIA Lender's right to have the TIFIA Bond become and be secured as a Senior Obligation under the Master Indenture from and after the occurrence of a Bankruptcy Related Event shall be of no force or effect following the complete sale of the TIFIA Loan to a non- governmental commercial entity. However, should an assignment or sale be made to a federal government agency or instrumentality, the federal government shall retain the right to have the TIFIA Bond become and be secured as a Senior Obligation under the Master Indenture from and after the occurrence of any Bankruptcy Related Event. 14352874.4 46 311 • • • • 14352874.4 SECTION 18. Events ofDefault and Remedies . (a) An Event of Default shall exist under this Agreement if: (i) Payment Default. The Borrower shall fail to pay any of the principal amount of or interest on the TIFIA Loan (including, without limitation, TIFIA Debt Service required to have been paid pursuant to the provisions of Section 9, and any mandatory prepayment required pursuant to the provisions of Section 1 0( a)) (each a "Payment Default"); (ii) Covenant Default. The Borrower shall fail to observe or perform any covenant, agreement or obligation of the Borrower under this Agreement, the TIFIA Bond or any other TIFIA Loan Document (other than in the case of any Payment Default any Development Default, and such failure shall not be cured within 30 days after receipt by the Borrower from the TIFIA Lender of written notice thereof; provided, however, that if such failure is capable of cure but cannot reasonably be cured within such 30-day period, then no Event of Default shall be deemed to have occurred or be continuing under this clause (ii) if and so long as within such 30-day period the Borrower shall commence actions reasonably designed to cure such failure and shall diligently pursue such actions until such failure is cured, provided such failure is cured within 180 days; (iii) Development Default. The Borrower fails to complete the Project by , 2017, unless the Borrower demonstrates to the TIFIA Lender's satisfaction that it is proceeding with the construction of the Project with due diligence toward a date acceptable to the TIFIA Lender (a "Development Default"). In such a case, the TIFIA Lender may: (A) suspend the disbursement of the TIFIA Loan proceeds under this Agreement; and (B) pursue such other remedies as provided in Section 18 of this Agreement, including declaring the TIFIA Default Rate in effect. The Borrower shall immediately repay any unexpended TIFIA Loan proceeds previously disbursed to the Borrower. For the purposes of this Section 18(a)(iii), the Borrower shall have the right to amend the construction schedule to extend the date for Substantial Completion for a period of up to 60 days (unless a longer extension is required due to the occurrence of an Uncontrollable Force) within thirty (30) days of receipt of notice of an alleged Development Default; provided that the Borrower shall provide the TIFIA Lender with (x) a remedial plan with respect to the construction of the Project (a "Remedial Plan") reviewed by a general engineering consultant satisfactory to the TIFIA Lender and (y) a certificate from such general engineering consultant concluding that Substantial Completion is likely to occur by the date specified in the Remedial Plan, and the TIFIA Lender approves the Remedial Plan (such approval not to be unreasonably withheld); (iv) Misrepresentation Default. Any of the representations, warranties or certifications of the Borrower made in or·delivered pursuant to the TIFIA Loan Documents shall prove to have been false or misleading in any material respect when made; 47 312 14352874.4 (v) Cross Default. (A) Any of the representations, warranties or • certifications of the Borrower made in or delivered pursuant to the Master Indenture, or made in or delivered pursuant to the documents (the "Other Loan Documents") under which any Other Material Indebtedness shall be created or incurred, shall prove to be false or misleading in any material respect (each a "Misrepresentation Cross Default"), or any default shall occur in respect of the performance of any covenant, agreement or obligation of the Borrower under the Master Indenture or the Other Loan Documents, and such default shall be continuing after the giving of any applicable notice and the expiration of any applicable grace period specified in the Master Indenture or the Other Loan Documents (as the case may be) with respect to such default (each a "Covenant Cross Default"), if the effect of such Misrepresentation Cross Default or Covenant Cross Default shall be to permit the immediate acceleration of the maturity of any or all of the Other Material Indebtedness, and, in the case of any such Misrepresentation Cross Default or Covenant Cross Default, the Borrower shall have failed to cure such Misrepresentation Cross Default or Covenant Cross Default or to obtain an effective written waiver thereof within 30 days after receipt of written notice thereof from the TIFIA Lender; or (B) The Borrower shall default in the timely performance of any covenant, agreement or obligation under any Related Document or any Related Document shall be terminated prior to its scheduled expiration (unless in any case such default or termination could not reasonably be expected to have a Material Adverse Effect), and such default shall be continuing after the giving of • any applicable notice and the expiration of any applicable grace period specified in the Master Indenture or the Other Loan Documents (as the case may be) with respect to such default and the Borrower shall have failed to cure such default or to obtain an effective written waiver thereof, or to obtain an effective revocation of such termination (as the case may be), within 30 days after receipt of written notice thereof from the TIFIA Lender; (vi) Judgments. One or more judgments for the payment of money in an aggregate amount in-excess of [$2,000,000] (inflated annually by CPI) and not otherwise covered by insurance or other reserves shall be rendered against the Borrower relating to the Toll Road and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed; (vii) [Failure to Maintain Existence] (viii) Occurrence of A Bankruptcy Related Event. A Bankruptcy Related Event shall occur; (ix) Project Abandonment. The Borrower shall abandon the Project; or (x) Cessation of Operations. Operation of the Project shall cease for a • continuous period of not less than 180 days unless such cessation of operations 48 313 • • shall occur by reason of an Uncontrollable Force and the Borrower shall have in force an insurance policy or policies under which the Borrower is entitled to recover substantially all Indenture Debt Service on Other Indenture Obligations, Debt Service on the TIFIA Bond and costs and expenses of the Borrower during such cessation of operations. (b) Upon the occurrence of any Event of Default, the TIFIA Lender, by written notice to the Borrower, may in its sole discretion suspend or terminate all of its obligations hereunder with respect to the disbursement of any undisbursed amounts of the TIFIA Loan. (c) Whenever any Event of Default hereunder shall have occurred and be continuing, the TIFIA Lender shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of any sums due and unpaid hereunder or under the TIFIA Bond or the other TIFIA Loan Documents, and may prosecute any such judgment or final decree against the Borrower including confession of judgment by the Borrower against the Borrower and collect in the manner provided by law the moneys adjudged or decreed to be payable from the Trust Estate, and the TIFIA Lender may take such other actions at law or in equity as may appear necessary or desirable to collect all amounts payable by Borrower under this Agreement, the TIFIA Bond or the other TIFIA Loan Documents then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Agreement, the TIFIA Bond or the other TIFIA Loan Documents. (d) Whenever any Event of Default hereunder involving fraud, misrepresentation, false claims, or similar criminal acts or acts of malfeasance or wrongdoing, shall have occurred and be continuing, the TIFIA Lender may suspend or debar the Borrower from further participation in any Government program administered by the TIFIA Lender and to notify other departments and agencies of such default. (e) No action taken pursuant to this Section shall relieve Borrower from its obligations pursuant to this Agreement, the TIFIA Bond or the other TIFIA Loan Documents, all of which shall survive any such action. SECTION 19. Accounting and Audit Procedures; Inspections; Reports and Records. (a) The Borrower shall establish fiscal controls and accounting procedures sufficient to assure proper accounting for all Project-related transactions (including collection of Revenue, and any other revenues attributable to the Project, and TIFIA Loan requisitions received and disbursements made with regard to the Project), so that audits may be performed to ensure compliance with and enforcement of this Agreement. The Borrower shall use accounting, audit and fiscal procedures conforming to [GASB/GAAP], including, with respect to the TIFIA Loan, accounting of principal and interest payments, disbursements, prepayments and calculation of interest and principal amounts outstanding. (b) So long as the TIFIA Loan or any portion thereof shall remain outstanding and until five years after the TIFIA Loan shall have been paid in full, the TIFIA Lender shall • have the right, upon reasonable prior notice, to visit and inspect any of the locations or properties 14352874.4 49 314 of the Borrower, to examine its books of account and records, to make copies and extracts therefrom at the Borrower's expense, and to discuss the Borrower's affairs, finances and • accounts with, and to be advised as to the same by, its officers and employees and the State Auditor or its independent public accountants (and by this provision the Borrower irrevocably authorizes the State Auditor or its independent public accountants to discuss with the TIFIA Lender the affairs, finances and accounts of the Borrower, whether or not any representative of the Borrower is present, it being understood that nothing contained in this Section 19(b) is intended to confer any right to exclude any such representative from such discussions), all at such reasonable times and intervals as the TIFIA Lender may desire. The Borrower agrees to pay all out-of-pocket expenses incurred by the TIFIA Lender in connection with the TIFIA Lender's exercise of its rights under this Section 19(b) at any time when an Event of Default shall have occurred and be continuing. (c) The Borrower shall maintain and retain all files relating to the Project and the TIFIA Loan until five years after the later of the date on which (1) all rights and duties hereunder and under the TIFIA Bond (including payments) have been fulfilled and necessary audits have been performed and (2) any litigation relating to the Project, the TIFIA Loan or this Agreement is finally resolved. The Borrower shall provide the TIFIA Lender in a timely manner all records and documentation relating to the Project that the TIFIA Lender may reasonably request from time-to-time. (d) The Borrower shall provide to the TIFIA Lender, promptly after the sending or receipt thereof, copies of (i) all reports or other written materials relating to the System sent to any Nationally Recognized Rating Agency that has provided, or is being • requested to provide, a rating on any indebtedness in respect of the System, (ii) all material notices and other written communications relating to the Master Indenture, the TIFIA Loan Documents, the Project or the financing thereof, and (iii) all reports, notices and other written materials required to be sent to the Bondholders under the Master Indenture, including, without limitation, all such notices relating to any of the Principal Project Contracts. (e) The TIFIA Lender shall have the right to conduct from time-to-time independent financial and compliance audits of the Borrower in accordance with the Single Audit Act of 1984, as amended, and Office of Management and Budget Circular A 133, "Audits of State and Local Governments," or as otherwise requested by the TIFIA Lender. Upon reasonable notice, the Borrower shall cooperate fully in conducting audits and shall provide full access to any books, documents, papers or other records which are pertinent to the Project or the TIFIA Loan, to the Secretary, or the designee thereof, for necessary project or programmatic audits pursuant to 23 U.S.C. § 607,49 CFR 80.19, 31 U.S.C. § 6503(h) and 31 U.S.C. § 7503(b). SECTION 20. Financial Plan, Statements, and Reports. (a) The Borrower shall provide a Financial Plan to the TIFIA Lender and the FHW A California Division Office, within 60 days after the Effective Date and annually thereafter not later than 90 days after the beginning of each Borrower Fiscal Year until the repayment in full of the TIFIA Loan. The Base Case Financial Plan submitted within 60 days after the Effective Date should be consistent in all respects with the projections, assumptions and • other information contained or reflected in the Base Case Financial Model. For the period 14352874.4 50 315 • • • --------------, through Substantial Completion, the Financial Plan shall be approved by the FHW A California Division with the concurrence of the TIFIA Lender and FHW A's Office of Innovative Program Delivery. The FHW A California Division Office's approval of the Base Case Financial Plan is required prior to the physical commencement of construction of the Project. The Financial Plan shall be prepared in accordance with recognized financial reporting standards, such as those in the "Guide for Prospective Financial Information" of the American Institute of Certified Public Accountants, shall meet FHWA's Major Project Financial Plan Guidance, as amended from time-to-time, and shall be in form and substance satisfactory to the TIFIA Lender. 14352874.4 (i) The Financial Plan shall include: (1) a certificate signed by the Borrower's Authorized Representative to the effect that the Financial Plan, including the assumptions and supporting documentation, is accurate and reasonable to the "best of the Borrower's knowledge and belief'; (2) a certificate signed by the Borrower's Authorized Representative demonstrating that annual projected Revenue shall be sufficient to meet the Loan Amortization Schedule and to meet the Rate Covenant established pursuant to Section 15(o); and (3) an electronic copy of the updated Base Case Financial Model of the operation of the Project for the period from inception thereof through the Final Maturity Date, in substantially the form heretofore provided to the TIFIA Lender, based upon assumptions and projections with respect to the revenues, expenses and other financial aspects of the Project which shall reflect the prior experience and current status of the Project, and the expectations of management with respect to the Project, as of the most recent practicable date prior to the delivery of such model. (ii) For the period through Substantial Completion, the Financial Plan shall: (1) provide the current estimate of the total cost of the Project and the remaining cost to complete the Project, identify any significant cost changes since the previous Financial Plan, discuss reasons for and implications of the cost changes, and include a summary table showing the history of Project Costs by major activity or category since the Base Case Financial Plan and the preceding Financial Plan; (2) provide the current schedule and implementation plan for completing the Project, including the Substantial Completion Date, identify major milestones for each component of the Project and compare current milestone dates with milestone dates in the Base Case Financial Plan and the preceding Financial Plan, and discuss reasons for changes in Project milestones; (3) provide current estimates of sources and uses of funds for the Project, identify any significant funding changes since the preceding Financial Plan, discuss reasons for and implications of the funding changes, and include a summary table showing the history of Project funding since the Base Case Financial Plan and the preceding Financial Plan; ( 4) provide an updated cash flow schedule showing annual cash needs versus available revenue and funding to meet those needs and identifY any potential revenue and funding shortfalls and addressing contingency measures that will or may be taken to address any shortfalls; ( 5) based on the updated cash flow schedule, provide projected debt service coverage ratios for any Other Indenture Obligations and the TIFIA Loan through the Final Maturity Date; ( 6) provide cost containment strategies and risk mitigation plans that have been or may be implemented to address factors that are affecting or could affect 51 316 the scheduled completion or financial viability of the Project; (7) provide the total value of approved changes in project design or scope, and provide a listing of • each individual change valued at $2,500,000 or more, setting forth the rationale or need for the proposed change and describing the impact of such change on the Project; (8) contain, in form and substance satisfactory to the TIFIA Lender, a written narrative report on the progress of design, permitting, acquisition and construction of the Project since the Base Case Financial Plan and the preceding Financial Plan, describing in reasonable detail all significant activities concerning Project status including any material matters that may affect the future performance of the Borrower's obligations under this Agreement and the causes thereof; and (9) comply in all respects with FHWA's Major Project Financial Plan requirements. (iii) For the period following Substantial Completion until repayment of the TIFIA Loan in full, the Financial Plan shall: (I) provide an updated cash flow schedule showing annual cash inflows (Revenue, interest and other income) and outflows (Operating and Maintenance Expenses, capital costs, Indenture Debt Service on the Other Indenture Obligations and the TIFIA Bond, replenishment of reserves and other uses) with a narrative identifying any potential revenue or funding shortfall and discussing contingency measures that will or may be taken to address any shortfalls; (2) provide current and estimated amounts of revenues received and the amounts deposited into each of the accounts and subaccounts established under the Master Indenture and the amount disbursed from such funds and accounts and the balance in each of the funds and accounts; (3) provide an updated schedule of actual and projected Pledged Revenues, showing actual and projected coverage ratios for the TIFIA Loan; (4) provide a schedule of then current toll rates and planned increases; and (5) provide a written narrative report explaining any variances in costs or revenues since the Base Case Financial Plan and the preceding Financial Plan and describing in reasonable detail any material matters that may affect the. future performance of the Borrower's obligations under this Agreement and the causes thereof to include, but not limited, traffic and revenue reports, operational contracts, and third-party transactions. (b) Not later than ninety (90) days following the Substantial Completion Date, the Borrower shall provide the TIFIA Lender with a final written narrative report, summarizing all significant activities and events, since the Base Case Financial Plan, affecting the operation, maintenance, financing, or management of the project in a form reasonably satisfactory to the TIFIA Lender. Such report shall include an updated cash flow schedule and currently projected Total Debt Service Coverage Ratios for all Borrower Fiscal Years during the term of the TIFIA Loan. For the avoidance of doubt, the Borrower must comply with the continued reporting requirements of FHW A Major Projects Financial Plan Guidance, as amended from time-to-time. (c) For the period through Substantial Completion, the Borrower shall provide the TIFIA Lender with written notification, before instituting any increase or decrease of the overall Project Costs in an amount equal to or greater than $2,500,000, setting forth the nature of • the proposed increase or decrease and estimating the impact of such increase or decrease on the • capital costs, operating costs, and the Financial Plan. The Borrower's notice shall demonstrate 14352874.4 52 317 • • • that the proposed increase or decrease is consistent with the provisions of this Agreement, is necessary or beneficial to the Project and does not materially impair the TIFIA Lender's security. (d) The Borrower shall furnish to the TIFIA Lender: (i) As soon as available, but no later than sixty (60) days after the end of each quarterly period of each fiscal year, the Borrower's quarterly financial statement. These statements are to be complete and correct in all material respects and to be certified by the chief executive officer or chief financial officer of the Borrower as fairly stating in all material respects the financial condition of the Borrower as at the end of such period and the results of its operations for such period (subject to normal year-end audit adjustments); and (ii) Within one hundred eighty ( 180) days after the last day of each Fiscal Year, the audited financial statements ofthe Borrower for such Fiscal Year. All such financial statements of the System shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with [GASB/GAAP] applied consistently throughout the periods reflected therein (except for changes approved or required by the State Auditor or any independent public accountants certifying such statements and disclosed therein). (e) The Borrower shall furnish to the TIFIA Lender, together with each delivery of annual audited or interim unaudited financial statements of the Borrower pursuant to Section 20( d), a certificate signed by the Borrower's Authorized Representative stating whether or not, during the annual or semi-annual period (as the case may be) covered by such financial statements, there occurred any Event of Default or event which, with notice or lapse of time or both, would become an Event of Default, and, if any such Event of Default or other event shall have occurred during such period, the nature of such Event of Default or other event and the actions that the Borrower has taken or intends to take in respect thereof. SECTION 21. Project Oversight and Monitoring. (a) Project Development, Design and Construction. The TIFIA Lender shall have the right in its sole discretion to monitor (or direct its agents to monitor) development, including but not limited to environmental compliance, design, right-of-way acquisition, and construction of the Project. The Borrower shall be responsible for administering construction oversight of the Project in accordance with the Design-Build Contract. The Borrower's oversight of Project development, environmental compliance, design, right-of-way acquisition, and construction monitoring shall be conducted pursuant to the Oversight Agreement, which may be amended from time-to-time upon mutual agreement of Caltrans and FHW A, or when so required by federal statute or otherwise required by the United States Congress. The Borrower agrees to cooperate in good faith with the TIFIA Lender in the conduct of such monitoring by promptly providing the TIFIA Lender with such reports, documentation or other information as shall be requested by the TIFIA Lender, or its agents, including any independent engineer reports, documentation or information . 14352874.4 53 318 14352874.4 (b) Reporting. The Borrower shall furnish to the TIFIA Lender the following: (i) Construction Progress Reports. On or before the last Business Day of any calendar month during the Construction Period, a report executed by a Borrower's Authorized Representative (A) of the amount of Project Costs expended since the Effective Date as well as during the preceding calendar month and the amount of Project Costs estimated to be required to complete the Project, (B) providing an assessment of the overall construction progress of the Project since the date of the last report and since the Effective Date, together with an assessment of how such progress compares to the Construction Schedule, (C) specifying the Substantial Completion Date, (D) providing a detailed description of all material problems (including but not limited to actual and anticipated cost and/or schedule overruns, if any) encountered or anticipated in connection with the construction of the Project since the date of the last report, together with an assessment of how such problems may impact the Construction Schedule and the meeting of critical dates thereunder and a detailed description of the proposed solutions to any such problems, (E) specifying the delivery status of major equipment and the effect, if any, that the anticipated delivery dates of such equipment has on the overall Construction Schedule, (F) specifying any proposed or pending change orders, (G) specifying any material changes or deviations from the Borrower's land procurement plans or schedule, and (H) a discussion or analysis of such other matters related to the Project as the TIFIA Lender may • reasonably request. The Borrower shall respond, and use commercially • reasonable efforts to cause the applicable Design-Build Contractor to respond, to the TIFIA Lender's inquiries regarding such report, the construction of the Project and the Design-Build Contractor's performance of its obligations under the Design-Build Contract. (ii) Design-Build Contractor Reports. During the Construction Period, promptly after receipt thereof, a copy of each report delivered by the Design- Build Contractor to the Borrower pursuant to the Design-Build Contract. (iii) Annual Operating Budget. No later than 30 days prior to the commencement of each Fiscal Year, the Borrower shall submit an operating plan and a budget, on a cash flow basis of projected traffic, Revenues, Operating and Maintenance Expenses, Repair and Rehabilitation Fund Permitted Expenditures, interest, and other costs and a pro forma balance sheet prepared in accordance with GASB for the next Fiscal Year (collectively, an "Annual Operating Budget"), each prepared by the Borrower in good faith and accompanied by a certificate of an Authorized Representative of the Borrower to the effect that such officer has no reason to believe that it is incorrect or misleading in any material respect, based upon information then known by such Authorized Representative. (iv) Traffic and Operating Report. For the period commencing after Substantial Completion, deliver to the TIFIA Lender, not later than ninety (90) days after the end of each financial quarter, a traffic and operating report showing (1) the operating data for the Project for the previous financial quarter, including 54 319 • • • • total Pledged Revenues received and total Operating and Maintenance Expenses and Discretionary Capital Expenditures incurred, (2) the variances for such period between the Revenues actually received and the budgeted Revenues as shown in the Annual Operating Budget, together with a brief narrative explanation of the reasons for any such variance of 20% or more, and (3) the variances for such period between the actual Operation and Maintenance Expenses incurred and the budgeted Operating and Maintenance Expenses as shown in the Annual Operating Budget, together with a brief narrative explanation of the reasons for any such variance of 20% or more. (v) Permits. Promptly after the receipt or filing thereof, as the case may be (but in no event later than thirty (30) days after such receipt or filing), a copy of (A) each Governmental Approval or other consent or approval obtained by the Borrower, or obtained by any Design-Build Contractor and delivered to the Borrower pursuant to any Design-Build Contract after the Effective Date, and (B) each filing made by the Borrower or the Design-Build Contractor with any Governmental Authority with respect to a Governmental Approval, except such as are routine or ministerial in nature. (vi) [Annual Engineer's Report. During the Construction Period, promptly after the receipt or filing thereof (but in no event later than thirty (30) days after such receipt or filing), a copy of each annual engineers' certificates or reports required pursuant to Sections [6.05] of the Master Indenture.] (c) Project Operations. For the period following Substantial Completion, the TIFIA Lender shall have the right, in its sole discretion, to monitor (or direct its agents to monitor) the Project's operations and to require reporting on the operation and management of the Project and to provide copies of any contracts relating to the operation, maintenance and safety services for the Project as may be required from time-to-time. The Borrower agrees to cooperate in good faith with the TIFIA Lender in the conduct of such monitoring by promptly providing the TIFIA Lender with such reports, documentation, or other information as shall be requested by the TIFIA Lender. In the event that the TIFIA Lender retains a financial oversight advisor under contract with the TIFIA Lender, which decision shall be within the sole discretion of the TIFIA Lender, to carry out the provisions of this Section, the full cost of such monitoring shall be borne by the Borrower. Any costs incurred by the TIFIA Lender for such monitoring shall be promptly reimbursed by the Borrower upon demand therefor in the form of an invoice reasonably acceptable to the Borrower. SECTION 22. No Personal Recourse. No official, employee or agent of the TIFIA Lender or the Borrower or any Person executing this Agreement or any of the other TIFIA Loan Documents shall be personally liable on this Agreement or such other TIFIA Loan Documents by reason of the issuance, delivery or execution hereof or thereof, provided that nothing in this Section shall be construed to relieve the Borrower from any liability it may incur under this Agreement or any of the other TIFIA Loan Document. SECTION 23. No Third Party Rights. The parties hereby agree that this Agreement and the Master Indenture create no third party rights against the United States or the TIFIA Lender, 14352874.4 55 320 solely by virtue of the TIFIA Loan, and the Borrower agrees to hold the above Federal parties • harmless, to the extent permitted by laws, from any lawsuit or claim arising in law or equity solely by reason of the TIFIA Loan, and that no third party creditor or creditors of the Borrpwer shall have any right against the TIFIA Lender with respect to the TIFIA Loan made pursuant to this Agreement or otherwise under the Master Indenture. No payment obligations arising under the Master Indenture or any other document shall be payable by the TIFIA Lender, except to the extent of funds appropriated and legally available therefor. SECTION 24. Borrower's Authorized Representative. The Borrower shall at all times have appointed a Borrower's Authorized Representative by designating such Person or Persons from time-to-time to act on the Borrower's behalf pursuant to a written certificate furnished to the TIFIA Lender, the Trustee and the Servicer, if any, containing the specimen signature or signatures of such Person or Persons and signed by the Borrower. SECTION 25. TIFIA Lender's Authorized Representative. (a) The TIFIA Lender shall at all times have appointed a TIFIA Lender's Authorized Representative by designating such Person or Persons from time-to-time to act on the TIFIA Lender's behalf pursuant to a written certificate furnished to the Borrower, the Trustee and the Servicer, if any, containing the specimen signature or signatures of such Person or Persons and signed by the TIFIA Lender. (b) Pursuant to a Delegation of Authority dated July 24, 2003, the Administrator delegated the authority to enter into contracts and sign all contractual and funding documents (with the exception of the term sheets and credit agreements) necessaryto implement the Act, including entering into technical amendments to, and restatements of, term sheets and credit agreements that do not materially impair the credit quality of the revenues pledged to repay the USDOT. This authority was delegated to the Associate Administrator for Administration who in turn delegated such authority to the Director of the Office of Innovative Program Delivery on June 15, 2009. Pursuant to these delegations the above named officers, any of whom alone may act, serve as the Lender's Authorized Representative under this Agreement, in addition to the Administrator for the purposes set forth herein. SECTION 26. Servicer. The TIFIA Lender may from time-to-time designate an entity or entities to perform, or assist the TIFIA Lender in performing, the duties of the Servicer or specified duties of the TIFIA Lender under this Agreement and the TIFIA Bond. The TIFIA Lender shall give the Borrower written notice of the appointment of any Servicer and shall enumerate the duties or any change in duties to be performed by any Servicer. Any references in this Agreement to the TIFIA Lender shall be deemed to be a reference to the Servicer with respect to any duties which the TIFIA Lender shall have delegated to such Servicer. The TIFIA Lender may at any time assume the duties of any Servicer under this Agreement and the TIFIA Bond. SECTION 27. Fees and Expenses. • (a) Commencing in Federal Fiscal Year (FFY) 2014 and continuing thereafter each year throughout the term of this Agreement, the Borrower shall pay to the TIFIA Lender an • 14352874.4 56 321 • • • annual loan servicing fee on or about the 15 1h of November of each such year. The TIFIA Lender shall establish the amount of this annual fee, and the TIFIA Lender shall notify the Borrower of the amount, at least 30 days before payment is due. (b) In establishing the amount of the fee, the TIFIA Lender will adjust the previous year's base amount utilizing the Consumer Price Index for All Urban Consumers (CPI- U) for the U.S. City Average for All Items, 1982-84=1 00, or its successor(s), published by the Bureau of Labor Statistics, or its successor(s). For the FFY 2014 calculation, the TIFIA Lender will use the FFY 2013 base amount of $12,303 which applies to other TIFIA borrowers, as the previous year's base amount. The TIFIA Lender will calculate the percentage change in the CPI- U, before seasonal adjustment, from August of the previous year to August of the current year and will then adjust the previous year's base amount in proportion to the CPI percentage change. To calculate the amount of the fee, the TIFIA Lender shall round the current year's base amount using increments of $500. Results with the ending integers between 250-499 or between 750- 999 shall be rounded upward, and results with the ending integers between 001-249 or between 501-749 shall be rounded downward. The CPI adjustments in the following years shall begin with the base amount, not the rounded fee. (c) The Borrower shall cooperate and respond to any reasonable request of the Servicer for information, documentation or other items reasonably necessary for the performance by the Servicer of its duties hereunder. (d) The Borrower agrees, whether or not the transactions hereby contemplated shall be consummated, to reimburse the TIFIA Lender on demand from time-to-time on and after the date hereof for any and all fees, costs, charges and expenses incurred by it (including the reasonable fees, costs and expenses of counsel and other advisors) in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other TIFIA Loan Documents and the transactions hereby and thereby contemplated, including without limitation, reasonable attorneys', engineers', and planning fees and professional costs, including all such fees, costs and expenses incurred as a result of or in connection with: (i) the enforcement of or attempt to enforce any provision of this Agreement or any of the other TIFIA Loan Documents; (ii) any amendment or requested amendment of, or waiver or consent or requested waiver or consent under or with respect to, this Agreement or any of the other TIFIA Loan Documents, or advice in connection with the administration of this Agreement or any of the other TIFIA Loan Documents or the rights of the TIFIALenderthereunder;and (iii) any work-out, restructuring or similar arrangement of the obligations of the Borrower under this Agreement or the other TIFIA Loan Documents during the pendency of one or more Events of Default. (e) The obligations of the Borrower under this Section shall survive the payment or prepayment in full or transfer of the TIFIA Bond, the enforcement of any provision 14352874.4 57 322 of this Agreement or the other TIFIA Loan Documents, any such amendments, waivers or • consents, any Event of Default, and any such workout, restructuring or similar arrangement. SECTION 28. Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Agreement shall in any event be effective without the written consent of each of the parties hereto. SECTION 29. Governing Law. This Agreement shall be governed by the federal laws of the United States if and to the extent such federal laws are applicable and the internal laws of the State, if and to the extent such federal laws are not applicable. SECTION 30. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 31. Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective permitted successors and assigns and shall inure to the benefit of the parties hereto and their permitted successors and assigns. Neither the Borrower's rights or obligations hereunder nor any interest therein may be assigned or delegated by the Borrower without the prior written consent of the TIFIA Lender. SECTION 32. Remedies Not Exclusive. No remedy conferred herein or reserved to the TIFIA Lender is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. SECTION 33. Delay or Omission Not Waiver. No delay or omission of the TIFIA Lender to exercise any right or remedy provided hereunder upon a default of the Borrower (except a delay or omission pursuant to a written waiver) shall impair any such right or remedy or constitute a waiver of any such default or acquiescence therein. Every right and remedy given by this Agreement or by law to the TIFIA Lender may be exercised from time-to-time, and as often as may be deemed expedient by the TIFIA Lender. SECTION 34. Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. SECTION 35. Notices; Payment Instructions. Notices hereunder shall be effective upon receipt and shall be given by certified mail, return receipt requested, or by other delivery service providing evidence of receipt to: If to the TIFIA Lender 14352874.4 TIFIA Joint Program Office (HITJ) Federal Highway Administration 58 323 • • • • • If to the Borrower: 1200 New Jersey Avenue, SE Washington, DC 20590 Attention: Director Telephone: 202-366-9644 Facsimile: 202-366-2908 E-mail: TIFIACredit@dot.gov with copies to: Federal Highway Administration California Division 650 Capitol Mass, Suite 4-1 00 Sacramento, CA 95814 Attention: Division Administrator Telephone: 916-498-5001 Facsimile: 916-498-5008 E-mail: Riverside County Transportation Commission P.O. Box 12008 Riverside, California 92502 Attention: Chief Financial Officer Telephone: 951-787-7141 Facsimile: 951-787-7920 E-mail: Notices required to be provided herein shall be provided to such different addresses or to such further parties as may be designated from time-to-time by a Borrower's Authorized Representative with respect to notices to the Borrower or by a TIFIA Lender's Authorized Representative with respect to notices to the TIFIA Lender or the Servicer. The Borrower shall make any payments hereunder or under the TIFIA Bond in accordance with the payment instructions hereafter provided by a TIFIA Lender's Authorized Representative, as modified from time-to-time by a TIFIA Lender's Authorized Representative . 14352874.4 59 324 SECTION 36. Effectiveness. This Agreement shall be effective on the Effective Date. SECTION 37. Termination. This Agreement shall terminate upon payment in full by the Borrower of the TIFIA Loan, provided, however, that the indemnification requirements of Section 16, the reporting and record keeping requirements of Section 19(b) and (c) and the payment requirements of Section 27 shall survive the termination of this Agreement. 14352874.4 60 325 • • • • • • 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 date first written above. 14352874.4 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: ________________________ _ Name: Title: UNITED STATES DEPARTMENT OF TRANSPORTATION, acting by and through the Federal Highway Administrator By: ________________________ _ Name: Victor M. Mendez Title: Administrator [Signature Page to TIFIA Loan Agreement] 326 Schedule II TIFIA Eligible Project Costs • • II-1 14352874.4 328 Schedule III • SR 91 Corridor Improvement Project Construction Schedules Project Schedule Date • • 111-1 14352874.4 329 • • • 14352874.4 Exhibit B SR 91 Corridor Improvement Project Anticipated TIFIA Loan Disbursement Schedule B-1 332 • • • Exhibit C CERTIFICATION REGARDING DEBARMENT, SUSPENSION, AND OTHER RESPONSIBILITY MATTERS- PRIMARY COVERED TRANSACTIONS The Borrower certifies, to the best of its knowledge, that it and its principals (as defined in 2 C.F.R. Part 180.995): (a) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency; (b) Have not within a three-year period preceding the Effective Date been convicted of or had a civil judgment rendered against them for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State or local) transaction or contract under a public transaction; violation of Federal or State antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property; (c) Are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (Federal, State or local) with commission of any of the offenses enumerated in paragraph (b) of this certification; and (d) Have not within a three-year period preceding the Effective Date had one or more public transactions (Federal, State or local) terminated for cause or default. Capitalized terms used in the certificate and not defined shall have the respective meanings ascribed to such terms in the TIFIA Loan Agreement, dated as of 2013, between the TIFIA Lender and the Borrower, as the same may be amended from time-to-time. Dated: -------- 14352874.4 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By ________________________ _ Name: Title: C-1 333 • • • Exhibit D REQUISITION PROCEDURES This Exhibit D sets out the procedures which the Borrower agrees to follow in submitting Requisitions for the disbursement of TIFIA Loan proceeds to pay directly for, or reimburse the Borrower for, Eligible Project Costs incurred in connection with the Project. Section 1 sets out the manner in which Requisitions are to be submitted and reviewed. Sections 2 through 4 set out the circumstances in which the TIFIA Lender may reject or correct Requisitions submitted by the Borrower or withhold a disbursement. The Borrower expressly agrees to the terms hereof, and further agrees that (i) the rights of the TIFIA Lender contained herein are in addition to (and not in lieu of) any other rights or remedies available to the TIFIA Lender under the TIFIA Loan Agreement, and (ii) nothing contained herein shall be construed to limit the rights of the TIFIA Lender to take actions including, but not limited to, administrative enforcement action and actions for breach of contract against the Borrower if it fails to carry out its obligations under the TIFIA Loan Agreement during the term thereof. Section 1. General Requirements. All requests by the Borrower for the disbursement of TIFIA Loan proceeds shall be made by electronic mail or overnight delivery service by submission to the TIFIA Lender, in accordance with Section 35 of the Agreement, of a Requisition, in form and substance satisfactory to the TIFIA Lender and completed and executed by a duly authorized representative of the Borrower. The form of Requisition is attached as Appendix One to this Exhibit D. Supporting documentation should be submitted with the requisition. The TIFIA Lender agrees to promptly send to the Borrower in accordance with Section 35 of the Agreement, an acknowledgement of receipt of each Requisition in the form attached as Appendix Two to this Exhibit D setting forth the date of receipt by the TIFIA Lender of such Requisition and setting forth the Business Day on which disbursement will be made absent denial by the TIFIA Lender. All disbursement requests must be received by the TIFIA Lender at or before 5:00P.M. (EST) on the first Business Day of a calendar month in order to obtain disbursement by the fifteenth day of such calendar month or, if either such day is not a Business Day, the next succeeding Business Day. If a Requisition is approved by the TIFIA Lender, the TIFIA Lender will notify the Borrower of such approval and of the amount so approved. Section 2. (a) (b) Representative; Rejection. A Requisition may be rejected by the TIFIA Lender if it is: submitted without signature; submitted under signature of a Person other than a Borrower's Authorized (c) submitted after prior disbursement of all proceeds of the TIFIA Loan; or D-1 14352874.4 334 (d) submitted without adequate documentation of Eligible Project Costs incurred or paid. Such documentation shall include detailed invoices for costs incurred or paid. • The TIFIA Lender will notify the Borrower of any Requisition so rejected, and the reasons therefor. Any Requisition rejected for the reasons specified in (a) or (b) above must be resubmitted in proper form in order to be considered for approval. If a Requisition exceeds the balance of the TIFIA Loan proceeds remaining to be disbursed, the request will be treated as if submitted in the amount of the balance so remaining, and the TIFIA Lender will so notify the Borrower. Section 3. Correction. A Requisition containing an apparent mathematical error will be corrected by the TIFIA Lender, after telephonic notification to the Borrower, and will thereafter be treated as if submitted in the corrected amount. The TIFIA Lender will confirm correction of the error, to the Borrower, in writing. Section 4. Withholding. The TIFIA Lender shall be entitled to withhold approval of any pending or subsequent requests for the disbursement of TIFIA Loan proceeds if: (a) the Borrower (i) fails to pay any principal or interest on the TIFIA Loan when the same is due and payable; or (ii) applies TIFIA Loan proceeds for purposes other than payment of, or reimbursement for, Eligible Project Costs which have been the subject of an • approved disbursement request hereunder; or 14352874.4 (iii) knowingly takes any action, or omits to take any action, amounting to fraud or violation of any applicable federal or local criminal law, in connection with the transactions contemplated hereby; or (iv) An Event of Default under the TIFIA Loan Agreement shall have occurred and be continuing; (b) the Borrower (i) fails to construct the Project in a manner consistent with plans, specifications, engineering reports or facilities plans previously submitted to and approved by the TIFIA Lender, or with good engineering practices, where such failure prevents or materially impairs the Project from fulfilling its intended purpose, or prevents or materially impairs the ability of the TIFIA Lender to monitor compliance by the Borrower with applicable federal or local law pertaining to the Project, or with the terms and conditions of the TIFIA Loan Agreement; or (ii) fails to observe or comply with any applicable federal or local law, or any term or condition of the TIFIA Loan Agreement; or D-2 335 • • • • (iii) fails to deliver documentation evidencing Eligible Project Costs claimed for disbursement at the times and in the manner specified by the TIFIA Loan Agreement; and such failure continues for a period of more than thirty (30) days following written notice from the TIFIA Lender to the Borrower, the TIFIA Lender shall be entitled to withhold, from any Requisition received after such thirty (30) day period has expired, and until such failure is cured or corrected, an amount determined by the TIFIA Lender (in its sole discretion) to be adequate for the cure or correction of such failure, which amount shall be stated in such notice; provided, that if the nature of the failure is such that it cannot reasonably be cured or corrected within such thirty (30) day period, the TIFIA Lender shall not withhold any disbursement by reason of such failure if the Borrower commences cure or correction within such thirty (30) day period and thereafter diligently completes such cure or correction within a further reasonable time period. The foregoing notwithstanding, if, as of the date of such notice from the TIFIA Lender, the balance of the TIFIA Loan proceeds remaining to be disbursed is less than the amount determined by the TIFIA Lender to be adequate for the cure or correction of such failure, the TIFIA Lender may immediately withhold all further disbursement of TIFIA Loan proceeds until such failure is cured or corrected within the time period specified by the preceding paragraph . D-3 14352874.4 336 • • • Appendix One to Exhibit D FORM OF REQUISITION United States Department of Transportation c/o Director, TIFIA Joint Program Office (HITJ) Federal Highway Administration 1200 New Jersey Avenue, SE, Washington, DC 20590 Federal Highway Administration California Division 650 Capitol Mass, Suite 4-1 00 Sacramento, CA 95814 Attention: Division Administrator Re: SR 91 CORRIDOR IMPROVEMENT PROJECT (TIFIA-2013-___ __. Ladies and Gentlemen: Pursuant to Section 4 of the TIFIA Loan Agreement, dated as of June_, 2013 (the "TIFIA Loan Agreement"), by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION (the "Borrower") and the UNITED STATES DEPARTMENT OF TRANSPORTATION, acting by and through the Federal Highway Administrator (the "TIFIA Lender"), we hereby request disbursement in the amount of$ for Eligible Project Costs. Capitalized terms used but not defined herein have the meaning set forth in the TIFIA Loan Agreement. In connection with this Requisition the undersigned does hereby represent and certify the following: 1. This Requisition is Requisition number --- 2. The requested date of disbursement is [ -----Business Day following 1, _]. 1, -~], which IS the first 3. The amounts previously disbursed under the TIFIA Loan Agreement aggregate $ and the amounts previously disbursed under the Master Indenture aggregate $ _____ _ 4. The amounts hereby requisitioned have been incurred by or on behalf of the Borrower for Eligible Project Costs, and such amounts, together with the amounts set forth in paragraph 3 above, will not exceed as of the requested disbursement date 33% of reasonably anticipated Eligible Project Costs . D-4 14352874.4 337 5. The amount ofthis Requisition, together with all prior Requisitions, does not exceed the amount of the TIFIA Loan, and the amount of this Requisition together with the sum of all disbursements of TIFIA Loan proceeds made and to be made for the current year will not exceed the cumulative disbursements through the end of the current year as set forth in the Anticipated TIFIA Loan Disbursement Schedule, as such may be amended from time-to-time. 6. All amounts requisitioned hereunder are for Eligible Project Costs which have not been paid for or reimbursed by any previous disbursement from TIFIA Loan proceeds. 7. All documentation evidencing the Eligible Project Costs to be paid for or reimbursed by the disbursement has been delivered by the Borrower at the times and in the manner specified by the TIFIA Loan Agreement. 8. The Project has been, and is being, constructed in a manner consistent with all plans, specifications, engineering reports and facilities plans previously submitted to and approved by the TIFIA Lender and the FHW A California Division and with good engineering practices. 9. The Borrower is in compliance with all of the terms and conditions of the TIFIA Loan Agreement and the Master Indenture and there does not currently exist an Event of Default under the TIFIA Loan Agreement or an event of default under the Master Indenture or any event which with the giving of notice or the passage of time or both would constitute such an Event of Default or event of default. 10. A copy of the construction progress report pursuant to Section 21(b)(i) ofthe TIFIA Loan Agreement for the month preceding the date of the applicable Requisition has been delivered to each of the above named addresses. 11. The undersigned acknowledges that if the Borrower makes a false, fictitious, or fraudulent claim, statement, submission, or certification to the Government in connection with the Project, the Government reserves the right to impose on the Borrower the penalties of 18 U.S.C. §1001 and 49 U.S.C. §5307(n)(l), to the extent the Government deems appropriate. 12. A copy ofthis requisition has been delivered to each ofthe above named addressees. 13. The undersigned is duly authorized to execute and deliver this requisition on behalf of the Borrower. 14. [Add wire instructions.] Date: ---------------------- Borrower's Authorized Representative Name: ------------------------Title: ------------------------- D-5 14352874.4 338 • • • • • • Appendix Two to Exhibit D [APPROVAL/DISAPPROVAL] OF THE TIFIA LENDER (To be delivered to the Borrower) Requisition Number is [approved] [approved in part] 1 [not approved]2 by the TIFIA Lender (as defined herein) pursuant to Section 4 of the TIFIA Loan Agreement, dated as of June_, 2013, by and between the Riverside County Transportation Commission (the "Borrower") and the United States Department of Transportation, acting by and through the Federal Highway Administrator (the "TIFIA Lender"). Any determination, action or failure to act by the TIFIA Lender with respect to the Requisition set forth above, including but not limited to the withholding of a disbursement, shall be at the TIFIA Lender's sole discretion, and in no event shall the TIFIA Lender be responsible for or liable to the Borrower for any and/or all consequence(s) which are the result thereof. UNITED STATES DEPARTMENT OF TRANSPORTATION, acting by and through the Federal Highway Administrator By: ---------------------------- TIFIA Lender's Authorized Representative Name: -----------------------Title: ------------------------Dated: -------------------- Those portions of the requisitions that are approved and those portions that are not approved are described in Schedule A attached hereto, with explanations for items not approved. Attached hereto as Exhibit A are reasons for denial of approval. D-6 14352874.4 339 • • • 14352874.4 Exhibit E UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL HIGHWAY ADMINISTRATION E-1 340 • • • COMPLIANCE WITH LAWS The Borrower agrees to abide by any and all applicable Federal and state laws. The following list of Federal laws is illustrative of the type of requirements generally applicable to transportation projects. It is not intended to be exhaustive. The Borrower shall require that its contractors and subcontractors comply with applicable laws as they may be amended from time to time: 14352874.4 (i) The Americans With Disabilities Act of 1990 and implementing regulations (42 U.S.C. §§ 12101 et seq.; 28 C.F.R. § 35; 29 C.F.R. § 1630); (ii) Title VI ofthe Civil Rights Act of 1964, as amended (42 U.S.C. §§ 2000d et seq.) and United States Department of Transportation regulation, 49 C.F.R. Part 21; (iii) The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. §§ 4601 et seq.), with the understanding that the requirements of said Act are not applicable with respect to utility relocations except with respect to acquisitions by the Borrower of easements or other real property rights for the relocated facilities; (iv) Equal employment opportunity requirements under Executive Order 11246 dated September 24, 1965 (30 F.R. 12319), any Executive Order amending such order, and implementing regulations (29 C.F.R. §§ 1625- 27, 1630; 28 C.F.R. § 35; 41 C.F.R. § 60; and 49 C.F.R. § 27); (v) Restrictions governing the use of Federal appropriated funds for lobbying (31 U.S.C. § 1352; 49 C.F.R. § 20); (vi) The Clean Air Act, as amended (42 U.S.C. §§ 1857 et seq., as amended by Pub. L. 91-604); (vii) The National Environmental Policy Act of 1969 (42 U.S.C. §§ 4321 et seq.); (viii) The Federal Water Pollution Control Act, as amended (33 U.S.C. §§ 1251 et seq., as amended by Pub. L. 92-500); (ix) The environmental mitigation requirements and commitments made by the Borrower that result in TIFIA Lender's approval of the Final Environmental Impact Statement (issued pursuant to 42 U.S.C. § 4332(2)(C)) and issuance of the Record of Decision for the Project; (x) The Endangered Species Act, 16 U.S.C. § 1531, et seq.; (xi) 23 U.S.C. §138 [49 U.S.C. §303]; E-2 341 14352874.4 (xii) The health and safety requirements set forth in 23 C.F.R. § 635. I 08; (xiii) The prevailing wage requirements set forth in 42 U.S.C. § 276a, 23 U.S.C. § 113, as supplemented by 29 C.F.R. Part 5, 23 C.F.R. §§ 635.117(f), 635.118 and FHWA Form 1273 §§ IV and V for those contracts that involve construction ofhighway improvements; (xiv) The Buy America requirements set forth in Section 165 of the Surface Transportation Assistance Act of I 982 and implementing regulations (23 C.F.R. § 635.41 0); (xv) The requirements of23 U.S.C. §§ I 01 et seq. and 23 C.F.R.; and (xvi) The applicable requirements of 49 C.F.R. Part 26 relating to the Disadvantaged Business Enterprise program. E-3 342 • • • • • • 14352874.4 Exhibit F High Profile Project Operating Agreement For SR-91 Corridor Improvement Project F-1 343 14352874.4 Exhibit G SR 91 Corridor Improvement Project TIFIA Debt Service Schedule G-1 344 • • • • • • 14352874.4 Exhibit H SR 91 Corridor Improvement Project TIFIA Debt Service Structure H-1 345 14352874.4 Exhibit I Forms of Opinions of Counsel to the Borrower [Forms to be Attached] H-1 346 • • • • • • ~~-~ --------------------------------------. ATTACHMENT 8 Riverside County Transportation Commission DEBT MANAGEMENT POLICY The Riverside County Transportation Commission (RCTC) is responsible for providing leadership and creating transportation choices that enhance the quality of life in Riverside Cpunty. RCTC' s mission is to create, coordinate, finance, and deliver an easy to use transportation network that keeps Riverside County moving and meets the public's needs. In an effort to fulfill this vision, RCTC issues short and long-term debt on an as-needed basis. RCTC's Chief Financial Officer (CFO) is responsible for the sale of debt for the specific projects. RCTC's main objectives in the sale of debt are to: _•_Issue sales tax revenue bonds subject to a bond debt limitation of $975,000,000 under the 2009 Measure A program, as amended by Measure K in November 201 0;_, • Issue toll revenue bonds, as authorized by Chapter 714 of the California Statutes of 2008 (Senate Bill No. 1316), subject to a debt limitation of $900,000,000, as authorized by the RCTC Board of Commissioners (Board) at its July 2010 meeting; • Maintain a ~debt service coverage of 2x for sales tax revenue bonds, 1.5x for toll revenue bonds, and 1.3x for federal loan assistance,_;_ • Obtain the lowest possible cost of funds for each of RCTC's borrowing programs;_, • Obtain the highest possible credit ratings that allow sufficient flexibility_;_, • Minimize risk exposure to variable rate debt and/or derivatives_;_, and • Maintain the required secondary market disclosure with the rating agencies, institutional and retail investors. This Comprehensive Debt Management Policy contains the policies and the procedures that govern all debt sales. All participants performing services on RCTC's debt sales: • Must comply with the policies and procedures set forth herein, and • Will be expected to consistently perform at a level that provides maximum benefit to RCTC. The CFO, after consultation with and approval by RCTC's Board of Commissioners (Board), reserves the right to remove any participant from an RCTC transaction or underwriting pool at any time for substandard performance or failure to abide by RCTC's Comprehensive Debt Management Policy. The CFO actively manages all phases of each financing. All decisions related to each transaction are subject to the CFO's approval. Questions regarding the policies and procedures outlined in this Comprehensive Debt Management Policy should be directed to: F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC-Revised 03/14/12 347 Theresia Trevino, CFO Riverside County Transportation Commission 4080 Lemon Street, 3'd Floor Riverside, California 92501 Mailing Address: PO Box 12008, Riverside, CA 92502-2208 (951) 787-7141-E-mail address: ttrevino@rctc.org A. GOALS AND CREDIT OBJECTIVES RCTC's goals and credit objectives are to: • Serve the people of Riverside County in the fulfillment of RCTC's policy and transportation objectives;_, • Comply with all State and Federal laws and regulations governing the issuance of debtj_, • Promptly repay when due the principal and interest on all debt issued and outstandingj_, • Implement debt programs with the highest possible credit ratings which provide the necessary flexibility in order to achieve the lowest possible borrowing costs on RCTC's debt obligationsj_, • Ensure that RCTC's debt proceeds are invested in safe, liquid and secure investments that earn competitive market rates of return in accordance with RCTC's Annual Investment Policy and indenturej_, • Ensure that RCTC does not take any action regarding the use of the debt proceeds that would cause the interest on any tax-exempt debt to be included in gross income for purposes of federal income taxationj_, • Establish policies and procedures for participation in RCTC's debt financing_;_, • Hold debt financing participants accountable to such policies and proceduresj_7 • Reward adherence to RCTC's policies and procedures and good performance by the debt financing participants with continued participation in RCTC's debt financing programj_, • Explore and implement innovative structuring ideas when they are prudent and consistent with the statements listed above_;_, and thus • Protect the funds that Riverside County taxpayers have entrusted to RCTC. B. CREDIT RATING OBJECTIVES RCTC seeks to obtain and maintain the highest possible debt ratings while at same time providing the appropriate and necessary flexibility in its bond financing documents. Sales Tax Revenue Be-AGsSupported Debt For the sales tax revenue supported debt, RCTC currently maintains an "Aal+" rating from Moody's Investors Service (Moody's), an "AA+" rating from Standard and Poor's Ratings Group (S&P). and a "AA" from Fitch Ratings (Fitch). RCTC will support the Measure A program, in part, by the issuance of debt backed by revenues derived from the Measure A sales tax. Any debt related to the 1989 Measure A was retired as of June 30, 2009. As of March 31June 30, 201~2-. RCTC will have the following sales tax revenue debt issues or commercial paper programssupported debt outstanding under the 2009 Measure A: 1 . 2. $185,000,000 Sales Tax Revenue Bonds, Series 2009 A, B and C, with a total outstanding balance of $1 74,700161 .400 ,OOO,j_ $120,000,000 Commercial Paper Notes Program, 2005 Series A and Series B, with a total outstanding balance of $40,000,000Q,j_ aB6 F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 348 • • • • • • ..:o3_:_. __ $150,000,000 Sales Tax Revenue Bonds, Series 2010 A (tax-exempt) and B (taxable), with a total outstanding balance of $150,000,000; and $ Sales Tax Revenue Bonds, Series 2013 A .. Toil Revenue Supported Debt For the toll revenue supported debt, RCTC intends to maintain investment grade ratings from Fitch and/or S&P. RCTC will support the toll program, in part, by the issuance of debt backed by toll revenues derived from specific transportation corridor projects. Such debt may be in the form of toll revenue bonds or federal credit assistance. As of June 30, 2013, RCTC will have the following toll revenue debt outstanding under the toll program: 1. $ Toll Revenue Bonds, 2013 Series A (Current Interest Bonds) and Series B (Capital Appreciation Bonds) related to the 91 Corridor Improvement Project; and 2. $ Transportation Infrastructure Finance and Innovation Act (TIFIA) Loan from the U.S. Department of Transportation. Additionally, in July 2010, ~CTC authorized the issuance of up to $900,000,000 in toll revenue bonds related to the £R 91 Corridor Improvement Project; ho,wever, no suoh bonds have been issued to date. C. SELECTING THE APPROPRIATE METHOD OF DEBT SALE It is in the interest of RCTC to sell its public debt using the method of sale that is expected to achieve the best sale results, taking into account both short-range and long-range implications for Riverside County taxpayers. The CFO will advise the Board of the most appropriate method of sale in light of the prevailing financial, market and transaction-specific conditions. D. APPOINTMENT OF A FINANCIAL ADVISOR The CFO, with the approval of the Board, may select a financial advisor to assist in the issuance and administration of RCTC's debt. The services of the financial advisor may include, but are not limited to: • • • • • • • • Monitoring all fixed income markets, Evaluating proposals submitted to the CFO, Analyzing the costs and risks of debt issues, Reviewing the structuring and pricing of debt issues, Developing and maintaining the time and responsibility schedule, Advising on terms and conditions of credit facilities dealing with the issuance of variable rate debt, Assisting in the preparation of official statements, and Preparing and reviewing presentation materials for rating agencies, investors and insurers . The services of a financial advisor will be obtained through a competitive evaluation of proposals. The criteria to be used in evaluating and selecting a financial advisor include: • Experience in providing formal financial advisory services, • Experience with diverse and complex financial structuring requirements, • Experience and reputation of assigned personnel, and • Fees and expenses. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 349 RCTC's financial advisor will provide RCTC with objective advice and analysis, maintain the confidentiality of RCTC's financial plans and be free from any conflict of interest as defined by the: • CFO and all California statutes and regulations governing financial advisors. RCTC's financial advisor may not participate in any of RCTC's syndicates in the sale of debt. E. APPOINTMENT OF LEGAL COUNSEL The CFO, with the approval of the Board, must select legal counsel, including bond counsel and disclosure counsel, and engage RCTC's general counsel, to assist in the issuance of RCTC's debt. All debt issued by RCTC must include a written opinion of bond counsel affirming that RCTC is authorized to issue the proposed debt, that RCTC has met all the constitutional and statutory requirements necessary for the issuance of the proposed debt and a determination of the proposed debt's income tax status. This approving legal opinion and other documents relating to the issuance of the proposed debt must be prepared by a nationally recognized private legal counsel with extensive experience in municipal finance and tax matters. The services of the bond counsel may include, but are not limited to: • Rendering a legal opinion with respect to the authorization and valid issuance of debt obligations of RCTC including whether the interest paid on the debt is tax exempt under federal and State of California laws; • Preparing all necessary legal documents in connection with the authorization, sale, issuance and delivery of bonds and other obligations; • Assisting in the preparation of the preliminary and final official statements and commercial paper memoranda; • Participating in discussions with potential investors, insurers and credit rating agencies, if requested, and • Providing continuing advice, as requested, on the proper use and administration of bond proceeds under applicable laws and the indenture, particularly arbitrage tracking and rebate requirements, and post-issuance requirements, particularly future contracts with respect to the use of bond-financed assets. The services of the disclosure counsel may include, but are not limited to: • Preparing the preliminary and final official statements and commercial paper memoranda. RCTC will engage its outside general counsel in the review of all documentation, including the preliminary and final official statements and commercial paper memoranda. Outside general counsel will provide an opinion that RCTC has duly authorized the documents for the issuance of the proposed debt. F. APPOINTMENT OF UNDERWRITERS The CFO, with the approval of the Board, may select a pool of qualified underwriters. The appointment will be based upon a competitive evaluation of objective criteria. The best-qualified firm will be appointed as the book-running senior manager for long-term debt. The best-qualified firm will be appointed as the dealer for commercial paper. Criteria to be used in the appointment of qualified underwriters will include: F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 350 • • • • • • • Demonstrated ability to manage complex financial transactions, • Demonstrated ability to structure debt issues efficiently and effectively, • Demonstrated ability to sell debt to institutional and retail investors, • Demonstrated willingness to put capital at risk, • Quality and applicability of financing ideas, • Experience and reputation of assigned personnel, and • Fees and expenses. The CFO will monitor the performance of the members of the underwriting pool and recommend changes as appropriate. The underwriters selected to participate in RCTC's underwriting pool must follow certain rules for participation: Minimum Underwriter Qualifications 1. The firm must maintain minimum net capital of at least $500,000. 2. The firm must hold and maintain all licenses and registrations required by applicable federal and state laws for businesses offering underwriting or investment banking services. All licenses and registrations must be current and in good standing with each of the following: • the U.S. Securities and Exchange Commission (SEC), • the National Association of Securities Dealers (NASD), and • the California Department of Corporations (CDC) . G. PROFESSIONAL CONDUCT All of RCTC' s debt financing participants shall maintain the highest standards of professional conduct at all times: 1. Municipal Securities Rulemaking Board (MSRB) Rules, including Rule G-37, shall be followed at all times. 2. RCTC expects debt financing participants to assist RCTC's staff in achieving its goals and objectives as defined in this Comprehensive Debt Management Policy. 3. All debt financing participants shall make cooperation with RCTC's staff their highest priority. H. NEW ISSUANCE AND BOND PROCEEDS MINIMUM BALANCE RCTC has developed a Strategic Plan (Plan) which sets forth the transportation programs and services to be provided to the residents of the County. The Plan also contains cash flow analysis for the capital program with corresponding analysis projecting the available sources and uses of funds verifying RCTC's financial ability and commitment to deliver current and planned programs and services. The RCTC Plan is based on a set of assumptions developed through detailed data collection and analysis of historical data concerning revenues, economic forecasts and trend projections. The main sources of revenues include sales tax revenues, toll revenues, contributions from other agencies and federal capital assistance grants. The largest sales tax revenue source is the Measure A }2 cent transactions and use tax. The revenue generated from Measure A is expended on the projects contained in the Measure A Ordinance. RCTC also intendswill---te-alsoearn revenues through the F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 351 imposition of tolls for the use of selected transportation corridors. Tolls will be imposed and toll revenues expended as allowed under the governing statutes and ordinances. RCTC's Measure A and toll programs are capital intensive. RCTC will issue its debt as needed in order to fund the Measure A and toll programs. RCTC must be able at all times to pay contractors and vendors for work in progress. Therefore, the CFO will work with the applicable RCTC directors to forecast the program construction draw down requirements. Based upon program construction draw down requirements and the conclusions resulting from the Plan, the CFO shall attempt to keep a reasonable amount of bond proceeds (approximately 4 months of program construction draw down requirements) available for construction draw down purposes. The CFO with the approval of the Board may increase or decrease the size of the Measure A tax- exempt commercial paper program to maintain liquidity in the program construction draw down account. I. MANAGING THE COMPETITIVE SALES PROCESS The CFO is responsible for implementing and managing RCTC's competitive bid debt sale process. If the CFO selects a competitive bid process for a sale of debt, the CFO will instruct RCTC's financial advisor to deliver a preliminary official statement and notice of sale to prospective underwriters and buyers that clearly states the location, time and requirements of the bid. After a successful competitive bid, the CFO will instruct RCTC's financial advisor to work closely with the winning underwriter(s) in order to prepare and deliver the final official statement at closing. J. MANAGING THE NEGOTIATED SALES PROCESS The CFO is responsible for implementing and managing RCTC's negotiated debt sale process. Introduction A. RCTC expects its underwriters to participate in a valuable and significant way with respect to the structuring and pricing of each debt issue, sales performance and various other aspects of the financing. B. Underwriters are expected to make themselves available to participate, when requested, in information and other meetings prior to the issuance of debt. C. Underwriters are expected to cooperate fully with the book-running senior manager in a way that provides the maximum benefit to RCTC. D. The book-running senior manager is responsible for communicating RCTC's finance plan and timing to the other managing underwriters in the syndicate. Syndicate Management Process A. Liability 1. Prior to the day of pricing, the book-running senior manager must provide to the CFO a recommended liability assignment for each underwriter in the underwriting syndicate. The CFO will review the recommended assignments and make any necessary adjustments. Upon approval by the CFO, the liability assignments of each underwriter must be incorporated into the Agreement Among Underwriters (AAU) by the book- running senior manager. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 352 • • • • • • 2 . B. AAU As a general rule, the liability assignments must not exceed the underwriting ability of the underwriters in the syndicate to whom they are assigned. The AAU must include the liability assignments of each managing underwriter, the priority of orders for the purpose of allocation and the takedown designation policy. The book-running senior manager must provide a copy of the AAU to each managing underwriter in the syndicate. Each underwriter in the syndicate must review the terms and conditions set forth in the AAU and return a signed copy of the AAU to the book-running senior manager the day of the pricing. C. Underwriting Gross Spread Components; Fees and Expenses • The management fee, if any, will be distributed to the managing underwriters based upon their relative contribution to the development and implementation of the financing plan. • Proposed takedowns (i.e. sales commissions) for all maturities must be included as part of the proposed pricing terms delivered by the book-running senior manager to RCTC prior to the final pre-pricing discussions. All takedowns are subject to review and approval by the CFO. • The expense component of the underwriting gross spread must be submitted by the book- running senior manager to RCTC's CFO for approval prior to the day of pricing. The CFO reserves the right to review and approve all fees and expenses and to request their substantiation. An estimate of the expense component of the underwriting gross spread must be submitted by the book-running senior manager to the CFO no later than one week prior to the pricing. RCTC expects the book-running senior manager to keep expense items and costs of issuance to an absolute minimum . • In general, RCTC will not reimburse the book-running senior manager for clearance fees except for the Depository Trust Company ("DTC") charge on issues that are registered in book-entry form only. RCTC will not reimburse the book-running senior manager for MSRB, Securities Industry and Financial Markets Association and California Public Securities Association expenses. • There will be no consideration of an underwriting risk component of the gross underwriting spread until after the order period closes. At that time, the CFO and the book-running senior manager will review the book of orders and discuss the need, if any, for including an underwriting risk component in the gross underwriter's spread for unsold bonds. There will be no negotiation of the underwriting risk component of the gross underwriter's spread after the CFO has given the verbal award to the book-running senior manager. D. Marketing Plan Once the issue of debt has received its ratings and the credit enhancement, if any, has been determined, the book-running senior manager will provide to the CFO and the financial advisor its plan for marketing the issue. The plan will specify the sectors and specific customer types to which each maturity, group of maturities or type of bonds will be directed. In addition, the marketing plan will specify the efforts of the syndicate in advertising the issue and distributing notice of the issue to the market as a whole and the expected customers. E. Selling Groups The book-running senior manager will discuss with the CFO the advantages and/or disadvantages of using a selling group for the financing. If the CFO decides to use a selling group, the book-running senior manager will provide a list of recommended firms for RCTC's approval at least one week prior to the day of pricing. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC-Revised 03/14/12 353 F. Retention and Takedown Designation Policies • The book-running senior manager will discuss the use of retention with the CFO at least one week prior to the day of pricing. During this discussion, the book-running senior manager will provide to the CFO the proposed retention amounts by maturity for each underwriter in the syndicate. • If the use of retention is advised by the book-running senior manager and agreed upon by the CFO, the book-running senior manager will make retention amounts and maturities available to the underwriters as soon as possible prior to the day of pricing. • Any change in the retention to the managing underwriters must be approved by the CFO prior to its release. • At least one week prior to the day of pricing, the book-running senior manager must provide the CFO a proposed priority of orders for the purpose of allocation and a proposed policy for the designation of takedown on net designated orders. The policy must include a maximum percentage of takedown to be designated to any one firm, as well as a minimum number of firms to be designated on any one net designated order. It is anticipated that each underwriter in the syndicate will be allowed to place net designated orders on all RCTC debt sales. Upon approval by the CFO, the priority of orders and the designation policy must be communicated to the underwriters and included in the preliminary pricing wire. Any changes to the designation policy must be approved by the CFO ·and communicated to all underwriters in the syndicate and selling group members, if any, RCTC and the financial advisor. G. Pricing Procedures • At least one hour prior to the pre-pricing meeting or conference call (one business day prior to the day of the pricing) the book-running senior manager must deliver to the CFO and the financial advisor the proposed pricing terms. This is to allow for the thorough evaluation of the proposed pricing terms by the CFO. The list of the proposed pricing terms must include principal amounts, coupons, yields, optional redemption prices, and takedowns per maturity. • One day prior to the day of the pricing, the book-running senior manager must initiate a pre- pricing meeting or conference call with the CFO and the financial advisor to discuss the proposed pricing terms, order period, underwriting gross spread components, market conditions and other necessary pricing information. • A draft copy of the preliminary pricing wire must be provided to the CFO upon the completion of the pre-pricing meeting or conference call. Prior to its release, the preliminary pricing wire is subject to the approval of the CFO. The preliminary pricing wire must include, among other things, all pricing terms agreed upon by the CFO and the book-running senior manager during the pre-pricing meeting or conference call. • On the morning of the day of the pricing (and prior to the start of the order period), if the book-running senior manager believes that a change in any of the pricing terms approved at the pre-pricing meeting or on the pre-pricing conference call is required, the book-running senior manager must contact the CFO and the financial advisor to review proposed changes and any suggested changes in light of the current market conditions. Any change in the initial pricing terms must be approved by the CFO and promptly communicated to the underwriters and syndicate and selling group members, if any. • The book-running senior manager must track the receipts of orders broken down by maturity, amount, type and firm. Status reports of the pricing, including total orders received for each maturity, amount, type and firm, may be requested by the CFO and the financial advisor at any time during the order period. The Dalnet "Orders and Allotments by Maturity" report is an acceptable report for these purposes. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 354 • • • • • • • The book-running senior manager must receive approval from the CFO before terminating any order period on any maturity before the previously determined close of the order period. • At the close of the order period, the book-running senior manager must provide in writing and in a format acceptable to the CFO and the financial advisor, a listing of the total orders received for each maturity, amount, type and firm, through the end of the order period. At this time the book-running senior manager must also make a concerted effort to provide the CFO and the financial advisor with the true interest cost of the issue. The book-running senior manager must initiate a meeting or conference call with the CFO and the financial advisor to review the book of orders and negotiate any change in pricing terms, prior to the verbal award of the issue to the book-running senior manager as the representative of the underwriters in the syndicate and selling group members, if any. • The CFO may agree to a verbal award of the bonds and sign a bond purchase contract with the book-running senior manager as representative for the underwriters in the syndicate after consultation with and approval from the Board. • A complete set of final quantitative analyses must be provided to the CFO before the CFO signs the bond purchase contract. The quantitative analyses must include, but not necessarily be limited to, a table of sources and uses of funds, a summary of assumptions and results (including significant dates, underwriting gross spread breakdown, ratings, true interest cost, etc.) and any additional tables that include coupons, yields, prices, takedowns, principal amounts and related debt service by maturity. • The book-running senior manager and underwriter's counsel is jointly responsible for coordinating the execution of the bond purchase contract. • The CFO reserves the right to postpone the pricing if the above pricing procedures are not strictly followed. H. Allocation of Bonds The book-running senior manager will be responsible for ensuring that the overall allocation of bonds meets RCTC goals of: (a) obtaining the best price for the issue and (b) providing each underwriting firm involved with bond allocations that are commensurate with the work performed (i.e., the type and amount of orders submitted). The CFO reserves the right to monitor the order taking process and to review and approve bond allocations prior to their release. I. Post-Sale Support • In accordance with MSRB rules, sales credits designated by an institutional investor must be distributed within 30 days after the delivery of the bonds. • In accordance with MSRB rules, final settlement of the underwriting account and the distribution of any profit to members must be made within 60 days of delivery of the bonds. • The underwriting syndicate agrees to comply with any syndicate rules prohibiting the selling of bonds below the public offering price (less the full takedown) prior to the release of syndicate restrictions. In addition, each managing underwriter in the syndicate agrees to inform the CFO of any non-compliance with such syndicate rules. • For seven business days following the release of syndicate restrictions, the managing underwriters in the syndicate agree to inform the CFO of any firm significantly lowering the price of the bonds in the secondary market below market levels. • The book-running senior manager must be prepared to provide the CFO on an ongoing basis for at least seven business days following the release of the syndicate restrictions secondary market price levels, unsold balances, and the level of trading activity of the bonds. • RCTC expects the managing underwriters in the syndicate to provide liquidity in the secondary market for its bonds on an ongoing basis . F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03114112 355 J. Post-Sale Evaluation RCTC has a policy of acknowledging good performance and building accountability into its relationships with its managing underwriters. RCTC will conduct post-sale evaluations of the underwriting account to ensure that its policies are adhered to and that sales performance is documented. • The book-running senior manager must provide the CFO and the financial advisor with a final pricing book. The final pricing book must include, but not necessarily be limited to, the following information: the time and responsibility schedule; the working group distribution list; a discussion of the market conditions leading up to and during the final pricing; the preliminary and final pricing wires; media coverage; rating agency credit reports; a full set of quantitative analyses; a table identifying takedown and designation dollars by firm; and a table identifying designations on net designated orders. The book-running senior manager's final pricing book must be provided to the CFO and the financial advisor within 60 days of the closing. • The financial advisor must also provide the CFO with its own final pricing report. The final pricing report must include, but not necessarily be limited to, the following information: a discussion of the market conditions leading up to and during the final pricing; a discussion on the sales process; a pricing comparison of similar credits in California and the national markets and the preliminary and final pricing wires. The financial advisor's final pricing report must be provided to the CFO within 30 days of the pricing. • In addition to the book-running senior manager, each underwriter is encouraged to provide the CFO and the financial advisor with a confidential written analysis of the sale of the bonds. K. MANAGING THE SALE OF COMMERCIAL PAPER The CFO is responsible for implementing and managing RCTC's sale of commercial paper. The CFO shall work closely with RCTC's commercial paper dealers to develop a marketing strategy for the initial sale and subsequent frequent rollover of commercial paper amounts and maturities. The marketing strategy for the initial sale and subsequent frequent roll-over of commercial paper amounts and maturities shall take into account the short-term yield curve as well as RCTC's philosophy to have a significant number of diverse commercial paper investors. The CFO may require RCTC's commercial paper dealers to provide quarterly and annual reports detailing the commercial paper average cost, average maturity and a list of commercial paper investors. Subject to the approval of its liquidity and/or letter-of-credit provider, RCTC reserves the right to change the number of commercial paper dealers for the commercial paper program. L. REFUNDING OPPORTUNITIES An advance refunding involves refunding bonds in advance of the bond's first optional redemption date. An advance refunding is an important debt management tool for RCTC. Advance refundings are commonly used to achieve interest cost savings, remove or change burdensome bond covenants or to restructure future debt service payments. Advance refundings are limited by federal tax law and must be used judiciously. RCTC generally will only pursue an advance refunding if the threshold present value savings level (net of all issuance costs and any cash contribution to the refunding) is at least three percent of the F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 356 • • • • • • par value of the refunded bonds. However, in certain circumstances, the CFO after consultation with and approval by the Board, may agree that lower savings levels may be justified. RCTC's debt management practices anticipate the potential for advance refundings. When RCTC issues debt careful attention is given to pricing considerations that will affect future advance refunding flexibility such as: • Optional redemption provisions and • Coupon characteristics. In addition, it is important to create a refunding defeasance escrow that will produce the greatest savings level. A defeasance escrow is efficient if the yield on the defeasance escrow is as close as possible (i.e., generally less than 1 ooth of a basis point) to the arbitrage yield on the refunding bonds. The CFO will select the appropriate defeasance securities. M. FEDERAL CREDIT ASSISTANCE OPPORTUNITIES RCTC may submit applications for federal credit assistance, including loans, to the USDOT for specific transportation corridor projects. The CFO and the Toll Program Director shall coordinate the financial and technical preparation and submittal of such applications with assistance from appropriate consultants. N. FIXED RATE VERSUS VARIABLE RATE DEBT The CFO and the Board recognize that variable rate secunttes are a useful debt management tool that traditionally have had lower interest rate costs than fixed rate debt. RCTC's current goal is to maintain a debt program which consists of approximately 20% to 25% of variable rate debt (which includes commercial paper but does not include variable rate debt subject to an interest rate swap to a fixed rate) with the remaining 75% to 80% kept as fixed rate debt. RCTC's book-running senior manager, commercial paper dealer and financial advisor shall advise the CFO if the rating agencies and/or institutional investors feel that 20% to 25% of RCTC's debt in the variable rate mode is too large a percentage. NO. DERIVATIVES RCTC will continue to explore the use of derivative products as appropriate and in accordance with the Investment Policy and the Swap Policy, provided that the derivative products: • Hedge variable rate debt exposure, • Lower interest rate costs, or • Minimize risks to RCTC. Although RCTC may enter into swap agreements, including fixed to variable rate swap agreements, derivative products for debt shall not be used for the purpose of interest rate speculation. The CFO has the sole responsibility for determining which prospective debt products for new issue debt are derivatives. Derivative products debt instruments may be incorporated into RCTC's debt program only after the CFO has informed the Executive Director and the Commissioners of the purpose and the risks associated with the derivative product debt instruments including but not limited to: • Interest rate risk, F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 357 • Counterparty credit risks, • Termination risks, and • Tax implications. If appropriate, the CFO, after consultation and approval by the Board, may determine a m1n1mum level of savings required before implementing a derivative product debt instrument. If the Commission authorizes the use of derivative products, the CFO will provide the Commissioners within twenty-four hours with a memo detailing any activity related to the use of derivative products. Q~. PRIMARY AND SECONDARY MARKET DISCLOSURE A-([rustee~ hasve been appointed for the benefit of the Measure A Sales Tax Revenue Bonds and the Toll Revenue Bonds and related TIFIA Loan. Each+-J::le trustee shall perform all functions and duties required under the terms and conditions set forth in the respective indentures and/or federal loan agreements. The CFO will recommend changes as appropriate. In addition to the responsibilities required by the respective indentures and federal loan agreements, RCTC has a commitment to continuing to disclose material information after the sale of its debt. The CFO is responsible for implementing and managing RCTC's legal and professional commitment to continuing to disclose material information after the sale of its debt. In adherence to Securities and Exchange Commission Rule 15c2-12(b)(5), the Commission's Continuing Disclosure Agreement with i-ts-each trustee or disclosure dissemination agent, as applicable, agrees to provide its Annual Report and notice of material listed events to the NRMSIR (until June 30, 2009) or the MSRB {effeotive July 1, 2009) and state repository, as applicable, for dissemination to interested parties. "Material Listed events" are defined as: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on the debt service reserve funds reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; and 6. Adverse tax opinions or events adversely affecting the tax-exempt status of aft¥ bonds or COPsthe security; 7. Modifications to rights of Bondholderssecurity holders; 8. Optional, o~ontingent or unscheduled bonds calls; 9. Defeasances; 10. Refease, substitution or sale of property securing the payment of any bond or GG-Pssecurity.,.; and 11 . Rating changes. Q. INVESTMENT AND USE OF BOND DEBT PROCEEDS Unless otherwise provided by RCTC resolutions, unexpended OOAtl-debt proceeds shall be held by RCTC and the investment of OORG-debt proceeds shall be managed by the CFO or its designee. The CFO or designee shall maintain records and prepare quarterly statements to the Board regarding the investments and transactions involving B&Ae-debt proceeds. In order to ensure compliance with debt covenants and restrictions set forth in applicable RCTC resolutions and tax certificates, the CFO and other appropriate Commission personnel shall perform the following responsibilities: F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03!14/12 358 • • • ., • • • Monitor the use of ~debt proceeds, the use of OOAtldebt-financed assets throughout the term of bonds debt (and in some cases beyond the term of the bGRGsdebt), • Maintain records identifying the assets or portion of assets that are financed or refinanced with proceeds of each issue of bGRGsdebt, • Consult with bond counsel and other professional expert advisors in the review of any contracts or arrangements involving use of OOAtldebt-financed facilities, including any sale of financed-assets or changes from a qualifying governmental use of such assets to non- qualifying uses, • Maintain records for any contracts or arrangements involving the use of OOAtldebt-financed facilities as might be necessary or appropriate, and • Meet at least annually with personnel responsible for OOAtldebt-financed assets to identify and discuss any existing or planned use of OOAtldebt-financed assets. The CFO will retain the above documents as described below in Paragraph -R_§_. R. COMPLIANCE WITH ARBITRAGE REBATE AND YIELD CALCULATIONS RCTC will engage the services of an expert advisor to assist in the calculation of arbitrage rebate from investment of bond proceeds. Trustee statements and other requested documents and information will be provided to the rebate service provider upon request on a prompt basis. The CFO will monitor the arbitrage rebate services to assure compliance with required rebate payments, if any, no later than each 5 year period over the term of the tax exempt bonds. In addition, during the construction period of the capital project, the CFO will monitor the investment and expenditure of bond proceeds and will consult the arbitrage rebate service provider to determine compliance with exceptions from the arbitrage rebate requirement upon the expenditure of proceeds during each 6 month spending period up to 6 months, 18 months or 24 months as applicable, following the issuance of the bonds. The CFO will retain copies of the arbitrage reportsand trustee statements as described below in Paragraph -R_§_. RS. RECORD KEEPING AND TAX RETURN FILING REQUIREMENTS The CFO, or its designee, will maintain the following documents for the term of the bonds debt (including refunding bonds, if any) plus three years: _•_Copy of the bond closing transcript and other relevant documentation in connection with the closing of the issuance of bonds~ • Copy of the federal credit assistance agreements and other relevant documentation in connection with the closing of federal credit assistance;, • Copy of all material documents related to capital expenditures financed or refinanced by ~debt proceeds, including construction contracts, purchase orders, invoices, trustee requisitions and payment records as well as other documents relating to costs reimbursed with ~debt proceeds and records identifying the assets or portion of assets that are financed with tax exempt bond proceeds,~ • Copy of all contracts and arrangements involving private or unrelated use of the OOR€!-debt financed assets,; and • Copies of all records of investments, investment agreements, arbitrage reports and underlying documents, including trustee statements. The CFO, or its designee, will also assure compliance with IRS tax return filing requirements . F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 359 ST. RATING AGENCIES The CFO is responsible for implementing and managing RCTC's rating agencies relations program. The CFO recognizes the importance of immediate and timely disclosure of relevant financial and program information concerning each of RCTC's debt programs to the rating agencies. The CFO shall promptly respond to any inquiry from any rating agency analyst. In addition, the CFO and/or the Executive Director and one or more representatives of RCTC's Commissioners shall periodically meet with the rating agencies in order discuss RCTC's proposed debt financings and/or recent financial results, financial projections, Board policy, specific RCTC programs such as Measure A as well as the general economy in Riverside County and Southern California and other matters. +!,!. INVESTOR RElATIONS The CFO is responsible for implementing and managing RCTC's investor relations program. The CFO shall make every attempt to promptly respond to any inquiry from an institutional or retail investor. In addition, the CFO shall periodically attempt to meet with key institutional investors in order to familiarize the institutional investors with RCTC's financial history and financial projections. The CFO shall periodically post investor disclosure information on the unique website established by the Digital Assurance Certification, LLC (DAC) for RCTC on its website, www.dacbond.com. Yy. BUILD AMERICA BOND AND RECOVERY ZONE ECONOMIC DEVELOPMENT BOND SUBSIDIES Introduction The Board recognizes its responsibility to ensure compliance with all Federal laws and regulations ("Federal Requirements") associated with the issuance of tax-exempt debt ("Tax-Exempt Obligations") and tax-advantaged direct pay notes, bonds or other form of repayment obligations issued under Section 54A or Section 1400U-2 of the Internal Revenue Code ("Tax Advantaged Obligations"). The purpose of this policy is to provide guidelines and establish procedu~es for compliance with Federal Requirements in connection with the issuance of Tax-Exempt Obligations and Tax Advantaged Obligations. Procedures Unless otherwise instructed by bond counsel, at least five business days before distributing a preliminary official statement in which RCTC contemplates offering Tax Advantaged Obligations for sale, RCTC will obtain the advice of bond counsel regarding applicable Internal Revenue Code compliance with respect to the Tax Advantaged Obligations and provide a written notice to financial advisor, underwriter, and its counsel, that none of the maturities which represent Tax Advantaged Obligations can have an issue price with more than a de minimis amount of premium as required by Section 54AA(d)(2)(c) of the Internal Revenue Code (or other applicable Section of the Internal Revenue Code or guidance provided thereunder as instructed by bond counsel) and that costs of issuance (including underwriter's discount) cannot exceed 2% of the proceeds of the sale of the Tax Advantaged Obligations. Unless otherwise instructed by bond counsel, prior to executing any purchase contract with respect to Tax Advantaged Obligations, RCTC will require written confirmation from the underwriter that at least the first ten percent of each maturity of Tax Advantaged Obligations has been sold to the public (and not to bond houses, brokers, or other intermediaries) at a price that does not have more than a de minimis amount of premium as required by Section 54AA(d)(2)(c) of the Internal Revenue Code (or other applicable section of the Internal Revenue Code or guidance provided thereunder as F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 360 • • • • • • instructed by bond counsel) and that costs of issuance do not exceed 2% of the proceeds of the sale of the Tax Advantaged Obligations. Unless otherwise instructed by bond counsel, on a quarterly basis the CFO will provide a written report to the Board of the expenditure of proceeds derived from Tax-Exempt Obligations and Tax Advantaged Obligations certifying the amount expended in the prior month, the total amount expended from the date of the closing of the transaction; that the expenditure was for capital projects (as defined by the applicable provisions of the Internal Revenue Code and guidance provided thereunder (or as otherwise permitted by bond counsel)); the amount remaining to be spent; [and the amount remaining invested in a reasonably required reserve fund, if any]. Unless otherwise instructed by bond counsel, at closing RCTC will execute documentation covenanting to comply with Federal rebate and arbitrage requirements as required under Paragraph 0 above as though the Tax Advantaged Obligations were tax exempt bonds. Unless otherwise instructed by bond counsel, at least -67 days before an interest payment date pertaining to fixed rate Tax Advantaged Obligations, RCTC will calculate, or cause to be calculated: the interest amount due on the next interest payment date; and the refundable credit to be reported on Form 8038-CP. Unless otherwise instructed by bond counsel, the CFO will file, or cause to be filed, the completed and executed Form 8038-CP with the Department of the Treasury not later than 45 days prior to the applicable interest payment date. The CFO is hereby designated as the staff person responsible for RCTC's compliance with this policy . lJW. GLOSSARY Additional Bonds Test: A calculation based upon total pledged revenues divided by total proposed debt service. This is a protection to investors so that the issuer cannot issue additional parity bonds without providing ample security to the investors in the previous financing(s). Advance Refunding: A defeasance of outstanding debt prior to the date the bonds can be called by depositing cash and/or securities in escrow sufficient to pay all principal and interest plus the call premium, if any, when due. Upon an advance refunding and defeasance, all covenants and restrictions of the refunded bond indenture are extinguished. Agreement among Underwriters or AAU: The contract establishing the underwriting syndicate formed to underwrite and purchase the bonds. The AAU will include provisions covering the liability of each syndicate member, a description of order types, pricing of the bonds and requirements respecting a public offering. The AAU may contain a variety of other matters relating to trade practice and applicable rules of the MSRB. Allocation: The post-sale distribution of bonds among the syndicate and selling group members, if any. Basis Point: Yields on bonds are usually quoted in increments of basis points. One basis point is equal to 1 1100 of one ( 1) percent. For example, the difference between 7.00% and 7. 50% is 50 basis points. Bond Purchase Agreement: The contract between the syndicate and the issuer setting forth the final terms, prices and conditions upon which the syndicate will purchase a new issue. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 361 Book-Running Senior Manager: The managing underwriter that controls the book of orders for the transaction and is primarily responsible for the successful execution of the transaction. Concession: In the new issue market, one of the two discounts members receives from the syndicate. In the secondary market, a discount one dealer offers to another. Group Net Order: An order for bonds submitted by a syndicate member in which the takedown is distributed to syndicate members according to their respective liability shares in the issue. Liability: The principal amount of bonds to be underwritten by each member of the syndicate. Member Order: An order for bonds placed by a member of the syndicate where the bonds would be confirmed to that member at syndicate terms. Municipal Securities Rulemaking Board (MSRB): An independent self-regulatory organization established by the Securities Acts Amendments of 1975, which is charged with primary rulemaking Commission over broker-dealers and brokers in municipal securities. National Association of Securities Dealers (NASD): A self-regulating and self-financed organization which acts as a buffer between the Securities and Exchange Commission (SEC) and broker-dealers. The NASD operates in municipal securities according to a special set of municipal bond rules written by the MSRB. Net Designated Order: An order for bonds submitted by a syndicate member in which all or a portion of the takedown is to be credited to firms designated by the purchaser of the bonds according to relative designated by the said purchaser. Priority Order: A retail or a net designated order. Retail Order: An order for bonds placed by an individual or, as determined by the CFO, a retail order may also include an order placed by a bank trust department or an investment advisor for an individual. Retention: An amount of bonds that will be guaranteed to be available for sale by each member of the syndicate. Rule 1 Ob-5: A regulation of the SEC adopted pursuant to the Securities and Exchange Act of 1934, which makes it unlawful for any person to employ any device, scheme, or artifice to defraud, to make any untrue statement of a material fact or to omit a material fact necessary to make statements made, in the light of the circumstances under which they were made, not misleading; or to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. Securities and Exchange Commission (SEC): The federal agency that oversees and regulates stock, bond and other financial market participants. Selling Group: A group of underwriters formed to aid in the distribution of the bonds in a bond financing. Selling group members do not assume any financial or legal liability in the financing. Syndicate: A group of underwriters formed to purchase and re-offer an issuer's bonds for sale to the public. Each syndicate member has a share in the liability of the issue. F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 362 • • • • • • Syndicate Participation Percentages: A sales partiCipation goal for each syndicate member determined by RCTC and its CFO for RCTC bond issues. Takedown: The total discount at which members of syndicates buy bonds from an account - composed of two parts: concession and takedown. True Interest Cost: The rate, compounded semi-annually, necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received on the closing date of the bond issue. Trust Indenture: A contract between an issuer and a trustee, for the benefit of investors. The trustee administers the funds specified in the indenture and implements the remedies provided in case of default. Underwriter's Gross Spread: In a negotiated sale, the difference between the price the underwriter pays the issuer and the original re-offering price to the public; includes the management fee, expenses, and sales commissions (takedown and concession) . F:/USERS/FINANCE/FISCAL PROCEDURES/DEBT POLICIES.DOC -Revised 03/14/12 363 State Route 91 Corridor Improvement Project Plan Plan of Finance l~taildlrriPIEm'len~ation .c;:ommittee · JVJc;~hl5, io1~ . ·· · Commercial Paper Program •$120 million •Retired with 2009 Bonds proceeds •$150 million •$185 million 75 million Measure A Debt Limit SR-91 CIP Team Nossaman da,|Legal Counsel) \#cegic \Partnership \ dAdvisors e e Krieger General : b Counsel) . reld$an » \Rolapp (Financial Advisor) Goldman/\} (Senior :Ma,n.a /Underwriters) . y.:: . .. . kec(Traffic /& Revenue \Consultant) • Strategic location • Demonstrated corridor success • Political support • Synergy of operations • Demand fueled by existing congestion • Toll policy flexibility • Length of toll authority • Conservative structure • Robust viability of financial structure • High credit quality • Commitment of local resources • Toll revenue for maximum leverage • RCTC Measure A sales tax contribution (cash and debt) • TIFIA loan secured by project tolls Tofli'tinaridng funds alloc~ted to expfess lane ..•. .. and general purpose lane}• improvements ' ;> ""'~financing and7c ,, .. cattitfto gener~l ,~fii~~:o~:~~~~$·"'. :, ',,"'''";1,~~:::~,:,·:::\"' ' , w~2:~:::,~~:~~~·' SR-91 CIP Project to be funded with various sources of capital Bonds Sales Tax Toll Revenue Debt sources: Par amount $ 445,000 $ 220,000 $ Debt uses: Construction Fund $ 296,000 $ 153,000 $ deposit Capitalized Interest Fund 49,000 45,000 deposit Debt Service Reserve -22,000 Fund deposit Retirement of commercial paper notes 100,000 -(development costs) Predevelopment costs --Total debt uses $ 445,000 $ 220,000 $ (in thousands $) TIFIA Loan 435,000 435,000 ----435,000 $ $ $ Pay Go Contribution 106,000 106,000 ----106,000 Predevelopment Costs $ 110,000 ----110,000 $ 110,000 Total $ 1,316,000 $ 990,000 94,000 22,000 100,000 110,000 $ 1 ,316,000 * m CJl ..... 3 Q) ..... CD ..... 0 ""0 Q) ::J ::J s· co ""0 c ..., ""0 0 CJl CD CJl Q) ::J 0.. CJl c 0"" (ii" (") ..... ..... 0 (") :r Q) ::J co CD VlVl ,o -oC ,""0 h Vlro -lin ,""0 ....... ~ 00 ~ ~ (1) OJ In c ..... (1) }> N 0 0 ~ ~ (1) OJ In c ..... (1) )> • Par amount of $445 million* • Fund construction and capitalized interest deposits • Retire commercial paper notes • Pay costs of issuance • Fixed coupon rates 2.98 percent-S. 74 percent* • Maturities beginning July 2018-2039 • Debt service reserve not required • Secured by Measure A sales tax revenues • Debt service coverage > 2x • Measure A debt limit is not exceeded • Reduction or termination in commercial paper program *Estimate for planning purposes and subject to change • $161 million* current interest bonds • Fixed coupon rates 3.33 percent-6.50 percent* •Interest paid every six months • Maturities July 2029-2041 • $59 million* capital appreciation bonds (or zero coupon bonds) •Interest accrues at stated compounded rate until maturity • Maturities July 2032-2043 • Fund construction, capitalized interest, debt service reserve deposits • Pay costs of issuance • Debt service coverage > l.Sx • Represents senior lien secured by RCTC 91 Express Lanes net toll revenues *Estimate for planning purposes and subject to change . . .. · .. · Drawn pro rata Loan maturities July 2()27·2050 (maximum 35 year.term) ~ Secure~i~y net toll revenues • Additionaltoll bond~'cari be issued if> .1.3x coverage . Can apply surplus revenues to priority deferred capital projects Remaining surplus revenues to be applied 50/50 to TIFIA prepayment and other · deferred capital projects *Estimate for planning purposes and subject to change 3.50 percent* f~ierest rate Interest only paymeritsJuly 2022-2027 ' ,,':;{<.,<:~ ,,·. . ' 'c> $20 million reserve funded by excess ROW sale proceeds Total. toll debt service coverage > 1.3x Annual reporting and monitoring requirements Minor annual servicing fee of approximately $13,000 SRE-91 CIP Flow of Funds 91 11F' F{i, FI rn v i Tall Operations Start in 2017 for SD years 4 p�M 441 pow* NO oproM Nonpayment of interest or principal on any bonds when due Occurrence and continuation of bankruptcy-related event of Commission Default in observance or performance of any other covenant/agreement in Indenture for 60 days after notice SR-91 CIP Financing Documents • Resolution 13-003 Sales Tax Bonds * Official Statewent • Continuing Disclosure Agreement Indenture • Bond Pu n:b se Agreement Toll Bonds • o icial Statement • Continuing Disclosure Agreement • Master, 14. Yid Supplemental indentures • Bond Purchase Agreement TIM Loan R • loan Agreement t. Revised ed Debt M - ment Polic . . Costs of f um a Services elements C -iluid waited awbti Bios** litingi Pours of Pfelondutv E' k Spli~s imageroutPoach x* Bond pricing *maws TWA Loan trearmrew isoculkin Bond daunt - (tr+r • • AGENDA ITEM 8 • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: March 25, 2013 TO: Budget and Implementation Committee FROM: Robert Yates, Multimodal Services Director THROUGH: John Standiford, Deputy Executive Director 2013 Specialized Transit Call for Projects -Jobs Access Reverse SUBJECT: Commute, New Freedom, and Measure A Specialized Transit Grant Awards STAFF RECOMMENDATION: This item is for the Committee to: 1 ) 2) 3) 4) 5) 6) 7) Approve Agreement No. 13-26-115-00 with Care-A-Van Services, Inc. for the provision of directly operated transportation services (Care-A-Van Project) in an amount not to exceed $715,000 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-116-00 with Community Connect for the provision of transportation pass or voucher services (Transportation Access Program) in an amount not to exceed $368,632 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-117-00 with Riverside Transit Agency (RTA) for the provision of directly operated transportation services (Commuterlink Service, Routes 212 and 217) in an amount not to exceed $569,957 in Jobs Access Reverse Commute (JARC) grant funds and $182,386 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-118-00 with the Independent Living Partnership for the provision of mileage reimbursement to volunteer drivers (Transportation Reimbursement and Information Project -TRIP Western Riverside) in an amount not to exceed $1,173,759 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-119-00 with Care Connexxus, Inc. for the provision of directly operated transportation services (Specialized Transit Project) in an amount not to exceed $505,000 in Measure A Specialized Transit grant funds; Approve Agreement No. 13-26-120-00 with RTA for the provision of mobility management and travel training service (RTA Travel Training Project) in an amount not to exceed $475,536 in New Freedom grant funds; Approve Agreement No. 13-26-121-00 with RTA for the provision of directly operated transportation services (Extended Service Project) in an amount not to exceed $871,930 in JARC funds and $279,018 in Measure A Specialized Transit grant funds; Agenda Item 8 364 8) Approve Agreement No. 13-26-122-00 with the Riverside County Regional Medical Center for the provision of directly operated transportation services (Specialized Non-Emergency Medical Transportation program) in an amount not to exceed $182,071 in New Freedom grant funds and $487,971 in Measure A Specialized Transit grant funds; 9) Approve ·Agreement No. 13-26-123-00 with Community Connect for the provision of transportation information services (211 Riverside One Call/One Click Project) in an amount not to exceed $158,400 in Measure A Specialized Transit grant funds; 1 0) Approve Agreement No. 13-26-124-00 with Operation SafeHouse, Inc. for the provision of directly operated transportation services (Main Street Transitional Living Program) in an amount not to exceed $49,872 in Measure A Specialized Transit grant funds; 11) Approve Agreement No. 13-26-125-00 with Inland Aids Project for the provision of directly operated