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04 April 22, 2013 Budget & implementation• TIME: DATE: LOCATION: • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE MEETING AGENDA 9:30a.m. Monday,April22, 2013 BOARD ROOM County of Riverside Administrative Center 4080 lemon Street, First Floor, Riverside 'f>o COMMITTEE MEMBERS df?! 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 Natasha Johnson, 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 'f>o STAFF df?! Anne Mayer, Executive Director Theresia Trevino, Chief Financial Officer 'f>o AREAS OF RESPONSIBILITY df?! 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 RECORDS 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. COMM-BI-00012 Rivenide Coon*f Tro~portation Commission TO: Riverside County Transportation Commission FROM: Jennifer Harmon, Office and Board Services Manager DATE: April 17, 2013 SUBJECT: Possible Conflicts of Interest Issues -Budget and Implementation Committee Agenda of April 22, 2013 The April 22, 2013 agenda of the Budget and Implementation Committee includes items which may raise possible conflicts of interest. A RCTC member may not participate in any discussion or action concerning a contract or amendment if a campaign contribution of more than $250 is received in the past 12 months or 3 months following the conclusion from any entity or individual listed. Agenda Item No. 10 -Agreements for Investment Management Services Consultant(s): Logan Circle Partners L. P. 1717 Arch Street, Suite 1500 Philadelphia, PA 19103 Jude T. Driscoll, Chief Executive Officer Payden & Tygel 333 South Grand A venue Los Angeles, CA 90071 Edward S. Garlock, Managing Principal Agenda Item No. 13 -Agreement with CASE Systems, Inc. for Call Box System Maintenance Services Consultant(s): CASE Systems, Inc. 5 Goddard Irvine, CA 92618 Sebastian E. Gutierrez, President/CEO TaraS~ From: Sent: To: Cc: Tara Byerly Thursday, April18, 2013 7:14AM Tara Byerly Jennifer Harmon Subject: Attachments: URGENT: UPDATE TO THE BUDGET AND IMPLEMENTATION COMMITTEE AGENDA RCTC Budget and Implementation Page 2 of the Face Agenda. pdf Importance: Tracking: High Recipient Tara Byerly Jennifer Harmon 'rogernberg@msn.com' 'terry1 henderson@aol.com' 'shernandez@coachella.org' 'mec336@verizon. net' 'rgibbs@murrieta.org' 'sadams@riversideca.gov' 'jbrookshire@riversideca.gov' Good Morning Budget and Implementation Committee Members: Read Read: 4/18/2013 7:15AM I'm attaching the second page of the Budget and Implementation Committee ((face" agenda for the April 22, 2013 as I inadvertently used the wrong year for the March 25 minutes. For those that receive the agenda link for their iPad the agenda is correct. I was just not able to grab the UPS overnight packages before the driver processed them. Also, I will have a copy for you at the dais just in case. Please let me know if you have any questions or concerns. I appreciate your cooperation in this matter. Thank you. Respectfully, TaraS. Byerly Senior Adnrin.istrative Assistant 4080 Lemon Street, 3rd Floor Riverside, CA 92501 (951) 787-7141 1 TaraB~ From: Sent: To: Cc: Subject: Attachments: Importance: Tara Byerly Thursday, April 18, 2013 6:37AM Tara Byerly Jennifer Harmon RCTC Budget and Implementation Committee Agenda -04.22.2013 Conflict of Interest Memo. pdf; Conflict of Interest Form. pdf High Good Morning Budget and Implementation Committee Members: Attached below is the link to the Budget and Implementation Committee agenda for the meeting scheduled @ 9:30a.m. on Monday, April 22. http://www. rete. org/u pload s/media items/budget-and-implementation-eomm ittee-april-22-201 3. original. pdf Also attached for your review and information is the conflict of interest memo and form. Please let me know if you have any questions. Thank you. Respectfully, TaraS. Byerly Senior Administrative Assistant 4080 Lemon Street, 3rd Floor Riverside, CA 92501 (951) 787-7141 1 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE www. rete. org AGENDA* *Actions may be taken on any item listed on the agenda 9:30a.m. Monday, April 22, 2013 BOARDROOM County Administrative Center 4080 Lemon Street, First Floor Riverside, California In compliance with the Brown Act and Government Code Section 5495 7. 5, agenda materials distributed 72 hours prior to the meeting, which are public records relating to open session agenda items, will be available for inspection by members of the public prior to the meeting at the Commission office, 4080 Lemon Street, Third Floor, Riverside, CA, and on the Commission's website, www. rete. org. In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if you need special assistance to participate in a Committee meeting, please contact the Clerk of the Board at (951) 787-7141. Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be made to provide accessibility at the meeting. 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. PUBLIC COMMENTS -Each individual speaker is limited to speak three (3) continuous minutes or less. The Committee may, either at the direction of the Chair or by majority vote of the Committee, waive this three minute time limitation. Depending on the number of items on the Agenda and the number of speakers, the Chair may, at his/her discretion, reduce the time of each speaker to two (2) continuous minutes. Also, the Committee may terminate public comments if such comments become repetitious. In addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Committee shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Budget and Implementation Committee April 22, 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-MARCH 25, 2013 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. 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. 7 A. SINGLE SIGNATURE AUTHORITY REPORT Page 1 Overview This item is for the Committee to: 1) Receive and file the Single Signature Authority report for the third quarter ended March 31, 2013; and 2) Forward to the Commission for final action. 8. PROPOSED BUDGET FOR FISCAL YEAR 2013/14 Page 3 Overview This item is for the Committee to: 1) Discuss, review, and provide guidance on the proposed FY 2013/14 Budget; 2) Open the public hearing in order to receive input and comments on the proposed FY 2013/14 Budget on May 8 and on June 12, 2013, and thereafter close the public hearing; and 3) Forward to the Commission for final action. Budget and Implementation Committee April 22, 2013 Page 3 9. STATE ROUTE 91 CORRIDOR IMPROVEMENT PROJECT TOLL-SUPPORTED DEBT FINANCINGS Page 21 Overview This item is for the Committee to: 1) Adopt Resolution No. 13-004, "Resolution Authorizing Agreements Relating to the Sale of Not to Exceed $400,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Toll Revenue Bonds in One or More Series, Including the Execution and Delivery of a Master Indenture, a First Supplemental Indenture, a Second Supplemental Indenture, a Purchase Contract, an Official Statement, and a Continuing Disclosure Agreement, 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"; 2) Approve the draft Official Statement for the issuance for a not to exceed amount of $400 million in 2013 Toll Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; 3) 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; 4) 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; 5) 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; 6) 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 April 22, 2013 Page 4 7) 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 201 3 Toll Bonds and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; 8) Approve the draft TIFIA Loan Agreement between the Riverside County Transportation Commission and the USDOT for an amount not to exceed · $451 million and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; and 9) Forward to the Commission for final action. 1 0. AGREEMENTS FOR INVESTMENT MANAGEMENT SERVICES Page 341 Overview This item is for the Committee to: 1) Award Agreement No. 13-19-077-00, to Logan Circle Partners, L.P. and Agreement No. 13-19-135-00, to Payden & Rygel Investment Management for investment management services for a five-year term, and two additional one-year options to extend the agreement, for a total period of performance of up to seven years, in an aggregate amount of $2.3 million, plus a contingency amount of $200,000, for a total amount not to exceed in an aggregate value of $2.5 million; 2) Authorize the Chair or Executive Director, pursuant to legal counsel review, to execute the agreements, including option years, on behalf of the Commission; 3) Authorize the Executive Director or designee to approve contingency work up to the total authorized amount as may be required during the period of services; and 4) Forward to the Commission for final action. 11. FEDERAL SURFACE TRANSPORTATION PROGRAM 2013 CALL FOR REHABILITATION PROJECTS Page 376 Overview This item is for the Committee to: 1) Approve programming federal Surface Transportation Program (STP) funds for rehabilitation projects in the amount of $12.142 million as submitted; and 2) Forward to the Commission for final action. Budget and Implementation Committee April 22, 2013 Page 5 12. SUNLINE TRANSIT AGENCY'S FISCAL YEAR 2012/13 SHORT RANGE TRANSIT PLAN AMENDMENT Page 380 Overview This item is for the Committee to: 1) Approve modification to Sun line Transit Agency's (Sunline) FY 2012/13 capital improvement program to reflect an additional $1 ,456,000 in Federal Transit Administration (FTA) Section 5309 State of Good Repair (SGR) program funds and $314,584 in South Coast Air Quality Management District (SCAOMD) funds for the solar panel replacement and new installation project; 2) Allocate $49,416 in State Transit Assistance (STA) funds to cover needed capital matching funds for the above Section 5309 program solar panel project; 3) Approve an amendment to Sun line's Short Range Transit Plan (SRTP) to reflect the changes above; and 4) Forward to the Commission for final action. 13. AGREEMENT WITH CASE SYSTEMS, INC. FOR CALL BOX SYSTEM MAINTENANCE SERVICES Page 383 Overview This item is for the Committee to: 1) Award Agreement No. 13-45-102-00 with CASE Systems, Inc. for call box system maintenance services throughout Riverside County for a three-year term, and two one-year options to extend the agreement, in an amount not to exceed $1,250,000; 2) Authorize the Chair or Executive Director, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; and 3) Forward to the Commission for final action. Budget and Implementation Committee April 22, 2013 Page 6 14. MEMORANDUM OF UNDERSTANDING WITH SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS FOR THE RISING STARS IN TRANSIT INTERNSHIP PROGRAM Page 414 Overview This item is for the Committee to: 1) Approve Memorandum of Understanding (MOU) No. 13-25-106-00 between the Commission and the Southern California Association of Governments (SCAG) for the Rising Stars in Transit -Internships for University Students program; 2) Authorize the Executive Director, pursuant to legal counsel review, to execute the MOU on behalf of the Commission; and 3) Forward to the Commission for final action. 15. STATE AND FEDERAL LEGISLATIVE UPDATE Page 436 Overview This item is for the Committee to: 1) Receive and file an update on state and federal legislation; 2) Adopt a Support position on AB 1 081 (Medina); and 3) Forward to the Commission for final action. 16. COMMISSIONERS I STAFF REPORT Overview This item provides the opportunity for the Commissioners and staff to report on attended and upcoming meeting/conferences and issues related to Commission activities. 17. ADJOURNMENT AND NEXT MEETING ·The next Budget and Implementation Committee meeting is scheduled to be held at 9:30 a.m., Monday, June 24, 2013, Board Chambers, First Floor, County Administrative Center, 4080 Lemon Street, Riverside. RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE ROLL CALL APRIL 22, 2013 Present Absent 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 if' D %_ D D ~-D I D : ~ %' ~ D jK' D D D D D D D D RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE SIGN-IN SHEET APRIL 22, 2013 E MAIL ADDRESS 4 S3.lnNIII\I 9 11\13.11 VON3E>V RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE Monday, March 25, 2013 MINUTES 1. CALL TO ORDER The meeting of the Budget and Implementation Committee was called to order by Chair Ella Zanowic at 9:30 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside, California, 92501. 2. PLEDGE OF ALLEGIANCE At this time, Commissioner Douglas Hanson led the Budget and Implementation Committee in a flag salute. 3. ROLL CALL Members/ Alternates Present Steve Adams Roger Berg Mary Craton Rick Gibbs Douglas Hanson Steven Hernandez Bob Magee Scott Matas Greg Pettis Ron Roberts Larry Smith Jeff Stone* John Tavaglione* Ella Zanowic Members Absent *Arrived after the meeting was called to order RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 2 4. PUBLIC COMMENTS There were no requests to speak from the public. 5. APPROVAL OF MINUTES-FEBRUARY 25, 2013 M/S/C (Craton/Adams) to approve the minutes of February 25, 2013 meeting as submitted. At this time, Commissioners Jeff Stone and John Tavaglione arrived at the meeting. 6. ADDITIONS I REVISIONS There were no additions or revisions to the agenda. 7. STATE ROUTE 91 CORRIDOR IMPROVEMENT PROJECT PLAN FINANCING Theresia Trevino, Chief Financial Officer, updated the Commission on the State Route 91 Corridor Improvement Project (SR-91 CIP) plan of finance, highlighting the following areas: • 2009 Measure A financing history; • SR-91 CIP team; • Creditworthiness summary; • SR-91 CIP financial and plan of finance overviews; • Preliminary SR-91 CIP sources and uses; • Measure A pay go contribution; • 2013 sales tax and toll revenue bonds; • Transportation Infrastructure Finance and Innovation Act (TIFIA) loan; • SR-91 CIP flow of funds; • Toil-supported debt events of default; • SR-91 CIP financing documents; and • Next steps. In response to Commissioner Mary Craton's question for debt service coverage, Theresia Trevino replied there is a minimum requirement of 1 .3x for all senior and subordinated toll revenue-supported debt. RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 3 At Commissioner Craton's request, Dan Wiles, Fieldman Rolapp and Associates, explained the section of the resolution regarding the toll revenue bonds, where there is an indenture under which the Commission pledges all of its interest in net toll revenues for the bond holders. Commissioner Rick Gibbs expressed appreciation for the presentation and requested clarification on the total cost of the project in the plan of finance. Theresia Trevino replied it is anticipated the total cost will be $1 .3 billion. In response to Commissioner Gibbs' request about staff's comfort level with this complex plan of finance, Theresia Trevino replied these bonds are fixed rate bonds and expressed being very comfortable with the plan of finance. In response to Commissioner Gibbs' clarification about interest rate swaps, Theresia Trevino stated the master indenture for the toll bonds provides the ability to enter into swaps. However, the Commission does not contemplate entering into interest rate swaps. The current plan has sufficient cushion in the sales tax bonds to ensure the Commission is able to service the debt. At Commissioner Gibbs' request, Dan Wiles explained Section 39.01 of the Redemption and Purchase of 2013 Series A Bonds related to optional redemption and mandatory sinking account payments. Commissioner Gibbs then asked about 1) the boiler plate indemnification statement, 2) negative impacts of not having a reserve fund requirement for 2013 Bonds, and 3) letters of credit. Theresia Trevino replied 1) it is payable solely from the sales tax revenues, 2) the only negative impact would be for the bond holders of the sales tax bonds, and 3) there are two letters of credit for the Commercial Paper program and there is two liquidity facilities supporting $60 million series of commercial paper and it includes a component for accrued interest. In response to Commissioner Gibbs' question regarding the U.S Secretary of Transportation's signing of the TIFIA Loan Agreement, Anne Mayer stated the Department of Transportation Credit Council approved the Commission's loan and expressed appreciation if Secretary LaHood signed the loan agreement as he was an integral part of this approval process. At Commissioner Gibbs' request, Theresia Trevino then explained the TIFIA loan disbursement conditions and project oversight and monitoring. RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 4 Commissioner Gibbs commended staff for an incredible job on the plan of finance. M/S/C (Stone/Adams) 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 T o/1 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; 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 2 013 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; RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 5 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) 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; 8) Approve the revised Debt Management Policy; 9) Approve the estimated costs of issuance to be paid from the bond proceeds and execution of related agreements, as required; and · 1 0) Forward to the Commission for final action. At this time, Commissioners Steven Hernandez and Bob Magee left the meeting. 8. 2013 SPECIALIZED TRANSIT CALL FOR PROJECTS -JOBS ACCESS REVERSE COMMUTE, NEW FREEDOM, AND MEASURE A SPECIALIZED TRANSIT GRANT AWARDS Robert Yates, Multimodal Services Director, provided an overview for the 2013 Specialized Transit Call for Projects (2013 Call for Projects) for the Jobs Access Reverse Commute (JARC), New Freedom, and Measure A Specialized Transit grant awards. At Commissioner Greg Pettis' request for a status of SunLine Transit Agency's (SunLine) JARC funding and its audits, Robert Yates replied there is existing JARC funding from the 2011 Call for Projects going to SunLine to fund the Taxi Voucher program and the Route 220 Commuter Link service. He explained for the 2013 Call for Projects, SunLine has two projects being funded, which is the new service to North Shore and the extension to continue the Route 220 Commuter Link service. SunLine is audited through the Triennial Performance Audit as well as the Measure A Transit Development Act (TDA), which includes the federal awards. RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 6 Anne Mayer explained staff believes the issues raised by Sunline with respect to this funding are resolved. Staff does not anticipate this situation to occur with these awards from the 2013 Call for Projects. Commissioner Pettis requested any future issues be brought to the Budget and Implementation Committee for discussion. M/S/C (Hanson/Matas) 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 (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; 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; 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; RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 7 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; 10) 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; 15) 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 $544,170 in Measure A Specialized Transit grant funds; RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 8 16) 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; 17) Approve Agreement No. 13-26-131-00 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; 18) 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; 19) 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; 20) 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; 21) 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; 22) Approve Agreement No. 13-26-114-00 with the Desert Samaritans for Seniors for the provision of directly operated transportation (Senior Transportation Program) in an amount not to exceed $57,488 in New Freedom grant funds; 23) Authorize the Chair, pursuant to legal counsel review, to execute the agreements on behalf the Commission; and 24) Forward to the Commission for final action. 9. STATE LEGISLATIVE UPDATE Aaron Hake, Government Relations Manager, presented the proposed bill positions and an overview of state legislative activities. At this time, Commissioner John Tavaglione left the meeting. RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 9 In response to Commissioner Larry Smith's request for clarification on AB 574 (Lowenthal), Aaron Hake replied it is no longer a spot bill and the language is complete. Also, the initiation process remains the same. At Anne Mayer's request, Aaron Hake provided the details of the initiation process for relinquishment. Anne Mayer added if there is an issue with the technical aspects of the relinquishment such as being relinquished without any upgrades or funding, then the local jurisdiction can raise objections. Commissioner Smith referred to SB 337 (Emmerson) and stated if it becomes law what the time frame is when it is implemented. Aaron Hake replied it is not specified in the bill and referred to AB 574. Anne Mayer stated it will depend on what the city is looking for in the relinquishment. Commissioner Smith explained the city of Hemet's (Hemet) position is an evaluation process and Hemet would be anxious to go through that entire process. He stated Hemet prefers to have a time frame to do the evaluation and encouraged all Commissioners to support SB 337. M/S/C (Adams/Smith) to: 1) Receive and file an update on state legislation; and 2) Adopt the following bill positions: a) AB 14 (Lowenthal) -Support; b) AB 179 (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. Abstain: Stone on AB 266 (Biumenfield) 10. COMMISSIONERS I EXECUTIVE DIRECTOR REPORT 1 OA. Commissioner Gibbs announced the city of Murrieta is a member of the CEQA Working Group. RCTC Budget and Implementation Committee Minutes March 25, 2013 Page 10 11. ADJOURNMENT AND NEXT MEETING There being no further business for consideration by the Budget and Implementation Committee, the meeting was adjourned at 10:41 a.m. The next meeting of the Budget and Implementation Committee is scheduled for April 22, 2013 at 9:30 a.m. Respectfully submitted, o~ Jennifer Harmon Clerk of the Board \\~ VL LN311 1N31 RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: April 22, 201 3 TO: Budget and Implementation Committee FROM: Marla Dye, Procurement Administrator Matt Wallace, Procurement Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Single Signature Authority Report STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the Single Signature Authority report for the third quarter ended March 31 , 201 3; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: Certain contracts are executed under single signature authority as permitted in the Commission's Procurement Policy Manual adopted in December 2012. The Executive Director is authorized to sign services contracts that are less than $100,000 individually and in an aggregate amount not to exceed $1 million in any given fiscal year. Additionally, in accordance with Public Utilities Code Section 130323(c), the Executive Director is authorized to sign contracts for supplies, equipment, materials, and construction of all facilities and works under $50,000 individually. The attached report details all contracts that have been executed for the third quarter ended March 31, 2013, under the single signature authority granted to the Executive Director. The unused capacity of single signature authority for services at March 31, 2013 is $445,528. Attachment: Single Signature Authority Report as of March 31, 2013 Agenda item 7 A 1 CONSULTANT AMOUNT AVAILABLE July 1, 2012 Southstar Engineering & Consulting. California Highway Patrol (CHP) Temecula Alvarado Smith Arellano Associates, LLC Cambria Solutions, Inc Koff & Associates The Skancke Company AECOM Atkins North America Warner Water Works Info Tech Services Groups, Inc AMOUNT USED AMOUNT REMAINING through March 31,2013 SINGLE SIGNATURE AUTHORITY AS OF March 31, 2013 DESCRIPTION OF SERVICES ROW Management Support Services COZEEP for 1-215 (Part 2) Legal Representation DBE/SBE Outreach Services Toll Program Implementation Services Classification, Compensation & Benefit Study Amendment No. 3 for Federal Advocacy Services Construction Design & Enviromental Services for 1-215 E. Junction HOV Connectors. Right of Way Audit Services for the SR-91 CIP Station Street Sweeping Services Station Security Database Maintenance and Development Serivces Agreements that fall under Public Utilities Code 130323 (C) Marla Modell Theresia Trevino Prepared by Re;,;;,;;.,,;(! by Note: Shaded area represents new contracts listed in the third quarter. 2 ORIGINAL CONTRACT AMOUNT $1,000,000.00 33,000.00 32,000.00 100,000.00 55,000.00 100,000.00 50,000.00 4,471.79 100,000.00 10,000.00 60,000.00 10,000.00 554,471.79 $445,528.21 PAID AMOUNT 27,060.00 0.00 86,335.47 27,544.95 67,160.00 21,482.83 4,471.79 0.00 0.00 11,726.00 0.00 REMAINING CONTRACT AMOUNT 5,940.00 32,000.00 13,664.53 27,455.05 32,840.00 28,517.17 0.00 100,000.00 10,000.00 48,274.00 10,000.00 8 11\13.11 'VON39'V ~~--RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: April 22, 2013 TO: Budget and Implementation Committee FROM: Michele Cisneros, Accounting and Human Resources Manager THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Proposed Budget for Fiscal Year 2013/14 STAFF RECOMMENDATION: This item is for the Committee to: 1) Discuss, review, and provide guidance on the proposed FY 2013/14 Budget; 2) Open the public hearing in order to receive input and comments on the proposed FY 2013/14 Budget on May 8 and on June 12, 2013, and thereafter close the public hearing; and 3) Forward to the Commission for final action. BACKGROUND INFORMATION: Staff completed the initial budget preparation process, and attached is an executive summary for the proposed FY 2013/14 Budget. The policy goals and objectives approved by the Commission on March 13 were the basis of this budget. The policy goals and objectives considered during the preparation of the budget relate to mobility initiatives, goods movement, improved system efficiencies, environmental stewardship, economic development, intermodalism and accessibility, and public and agency communications as well as financial and administration policies. Staff will present highlights of significant items included in the budget and is seeking review of and input on the proposed FY 2013/14 Budget. Based on input received from Commissioners, staff will update the document, as necessary, and present the proposed budget for the opening of the public hearing and for the Commission's review on May 8. As a result of input received from the public and the Commission, staff will make any necessary changes to the budget document for final review, close of the public hearing, and adoption at the June 12 Commission meeting. The executive summary document contains a summary of all departmental budgets and summarizes the information for the entire Commission. The department budgets present the goals and objectives, the resources needed to accomplish the Agenda Item 8 3 goals, and the appropriations required to accomplish the tasks. Staff also included the budgets by governmental fund type, as this table provides a summary of the budgeted revenues and expenditures from a fund perspective. Preliminary funding estimates for transit operating and capital expenditures have been included in the budget, although the draft Short Range Transit Plans are still under review. An adjustment for a revised estimate of these transit expenditures may be included in the final budget document presented in June 2013. At the June 12 Commission meeting, staff will present the entire budget with detailed narratives. A summary of the proposed FY 2013/14 Budget is as follows: FY 2013/14 Budget Revenues and other financing sources: Sales taxes-Measure A and Local Transportation Funds Reimbursements (federal, state, and other) Transportation Uniform Mitigation Funds, including reimbursements State Transit Assistance Other revenues Interest on investments Debt proceeds Transfers in Total revenues and other financing sources Expenditures and other financing uses: Personnel salary and fringe benefits Professional services Support services Projects and operations Capital outlay Debt service (principal, interest and costs of issuance) Transfers out Total expenditures and other financing uses Excess (deficiency} of revenues and other financing sources over (under} expenditures and other financing uses Beginning fund balance (projected} Ending fund balance (projected} $ Attachment: FY 2013/14 Proposed Budget Executive Summary Agenda Item 8 4 219,500,000 223,155,700 6,723,400 13,298,000 500,000 3,963,500 94,000,000 354,083,900 915,224,500 6,998,000 25,291,700 5,183,500 787,214,000 796,200 33,177,200 354,083,900 1 ,212, 744,500 (297,520,000) 11167,030,800 869,510,800 Executive Summary Introduction The budget for Fiscal Year {FY) 2013/14 is presented to the Board of Commissioners {Board) and the citizens of Riverside County. The budget outlines the projects the Commission plans to undertake during the year and appropriates expenditures to accomplish these tasks. The budget also shows the funding sources and fund balances that will be used for these projects. This document will serve as the Commission's monetary guideline. To provide the reader a better understanding of the projects, staff has included descriptive information regarding each department and major projects. The discussion in each department includes a review of accomplishments, major initiatives, and key assumptions. Staff used the goals and objectives approved at the Commission meeting on March 13, 2013, to prepare this budget. In addition to the Commission's long-term goals and strategic plan, the short-term factors listed below were used to guide the development of the budget: Operational • Aggressively pursue completion of the environmental, design, and construction processes on the State Route (SR) 91, Interstate {I) 15, and 1-215 projects included in the Western Riverside County Delivery Plan. • Enhance corridor mobility and traveler choice by continuing property acquisition and commencing construction on the SR-91 corridor improvement project and continuing to develop tolled express lanes on 1-15. • Work closely with local jurisdictions to administer the Transportation Uniform Mitigation Fee {TUMF) Regional Arterial Program and facilitate the delivery of eligible arterial improvements in western Riverside County {Western County). • Work closely with partners in the Coachella Valley to ensure the implementation of Measure A funding priorities. • Complete projects and programs included in the 1989 Measure A. • Continue the preliminary engineering and environmental clearance for the Mid County Parkway and SR-79 realignment projects. • Work with local and regional agencies in developing resources for preservation and maintenance of the highways and regional arterials. • Continue cooperation with the Federal Transit Administration {FTA) regarding the Small Starts process to support activities for the Perris Valley Line Metrolink extension (Perris Valley Line) project. • Improve utilization and increase efficiency of commuter rail lines serving the County. • Support innovative programs that provide transit assistance in hard to serve rural areas or for riders with special transit needs. • Support cost controls and promote operating efficiency for transit operators. • Maintain effective partnerships among commuters, employers, and government to increase the efficiency of our transportation system by encouraging and promoting motorized and non-motorized transportation alternatives.· • Continue to provide a motorist aid system that ensures safety and convenience to freeway motorists. • Maintain an active involvement in state and federal legislative matters to ensure that the Commission receives proper consideration for transportation projects and funding. • Explore local options for sustainable funding in addressing long-term transportation and quality-of-life needs for Riverside County. • Maintain close communication with Commissioners and educate policy makers on all issues of importance to the Commission. Financial • Fund administrative costs with allocations from Measure A, L TF, FSP, SAFE, and TUMF funds. • Maintain administrative program delivery costs below the policy threshold of 4% of Measure A revenues; the FY 2013/14 Management Services budget is 2.32% of Measure A revenues. 5 • Maintain administrative salaries and benefits at less than 1% of Measure A revenues; the FY 2013/14 administrative salaries and benefits is .82% of Measure A revenues. • Continue to maintain prudent cas)1 reserves to provide some level of insulation for unplanned expenditures. • Maintain current positive bond ratings with rating agencies. • Move forward on Measure A projects for highways and regional arterials using sales tax revenues, TUMF revenues, and state and federal funding as well as financing alternatives such as commercial paper, sales tax revenue bonds, toll revenue bonds, and federal loans. • Establish and maintain reserves for toll operations, capital improvements, and debt service in accordance with toll supported debt agreements. • Adopt toll revenue policies to establish congestion pricing in order to maximize throughput on toll facilities. • Leverage and protect past Measure A investments in rail with state and federal funding for additional rail improvements, including the Perris Valley Line. • Maintain the financial software system to integrate project accounting needs and improve accounting efficiency. Budget Overview Total sources (Table 1) are budgeted at $915,224,500, which is a decrease of 33% over FY 2012/13 projected sources and a 51% decrease over the FY 2012/13 revised budget. Total sources are comprised of revenues of $467,140,600, transfers in of $354,083,900, and TIFIA loan proceeds of $94,000,000. The projected fund balance at June 30, 2013 available for expenditures (excluding reserves for debt service of $164,559,900 and advances receivable of $32,818,200) is $969,652,700. Accordingly, total funding available for the FY 2013/14 budget totals $1,884,877,200. Table 1-Sources FY 2012-2014 FY 11/11 FY 11/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget change Change Measure A Sales Tax $ 134,984,300 $ 141,000,000 $ 141,000,000 $ 147,000,000 $ 6,000,000 4% LTF Sales Tax 66,556,700 69,500,000 69,500,000 72,500,000 3,000,000 4% STA Sales Tax 13,487,500 14,212,500 14,212,500 13,298,000 (914,500) -6% Intergovernmental 51,516,900 93,758,400 64,845,100 223,155,700 129,397,300 138% TUMF Revenue 8,116,400 7,557,300 7,268,200 6,723,400 (833,900) -11% Other Revenue 1,430,100 882,800 493,500 500,000 (382,800) -43% Investment Income 4,308,300 7,265,900 4,640,300 3,963,500 (3,302,400) -45% Operating Transfers In 123,977,200 328,118,600 318,684,000 354,083,900 25,965,300 8% Debt Proceeds 40,000,000 1,220,172,000 745,000,000 94,000,000 (1,126,172,000) -92% TOTAL Sources $ 444,377,400 $ 1,882,467,500 $ 1,365,643,600 $ 915,224,500 $ (967,243,000) -51% Through FY 2005/06, the County had experienced significant growth corresponding to the national economic expansion and amplified locally by competitive advantages of Riverside County over nearby coastal counties (Los Angeles, Orange and San Diego): (i) housing that was (and remains) more available and affordable; and (ii) plentiful commercial real estate and available development land at lower rates. Moreover, both transportation and communication access to employment centers in Los Angeles and Orange counties improved. Riverside County's economy thrived, reflecting the area's competitive advantages over its neighboring counties, largely as a result of the County's continuing ability to draw jobs, residents, and affordable housing away from the Los Angeles, Orange, and San Diego county areas. As a result, the County enjoyed a more diversified employment and commercial base and an increasing share of the regional economy. The economy in Riverside County reflects the previous nationwide recession, as was evidenced by high unemployment; lower total personal income and taxable sales, residential building permits, and the rate of home 6 sales and the median price of single-family residences; and high rates of distressed properties. The impact of the recession was amplified in the Inland Empire (i.e., Riverside and San Bernardino counties} due to its relatively greater growth through 2006 and the relatively lower average income levels when compared to coastal areas. These factors have resulted in fluctuating Measure A and L TF safes tax revenues and flat TUMF fees; however, as noted on Chart 1 the sales tax revenues appear to have stabilized since FY 2009/10. Chart 1 -Commission Sources Trend $800,000,000 $400,000,000 :::.:.: +---··· .............. -----··-----....... -: ----~---~~ !}--_____ _ -·t---------------------·--·---... -;----· ·----\ -----·------··· --···--j-·· \ $500,000,000 !·-------l $300,000,000 ----··········· ---I $200,000,000 +·····--·--~------------· -~ ....... -..--I. . . ~ > S:::::. wef_ •z.:: --'~ $100,000,000 r··-----·-;_: • ~= .»------\, .so J. 'ti "" ~ • ., ~~;.: .t!i!!j··rrm ee m .$1_. I fY 09/10 fY 10/11 FY 11/12 FY 12/13 fY 13/14 -+-Measure A Sales Tax -11-L TF Sales Tax -.&-STA Sales Tax .._TUMF ....,..._Federal, State, Local Revenues -4-0peratingTransfers In _...._Debt Proceeds While economic reports indicate that the national recession ended in 2009 and economic growth has resumed, recovery in the local Inland Empire economy continues to be sluggish in the housing market. The economic outlook for the Commission in FY 2013/14 continues to be encouraging with the stabilization of sales tax revenues; however, the state and federal budget issues continue to affect funding of the Commission's capital projects and programs. Should Measure A and LTF sales tax revenues decline again and the availability of federal and state revenues continues to be uncertain, the timing and scope of the Commission's projects and programs may be impacted. While the Commission's primary revenues are the Measure A and LTF sales taxes, other revenues and financing sources are required to fund the Commission's programs and projects as illustrated in Chart 2. Chart 2-Sources: Major Categories Debt Proceeds\ 10% \ Measure A Sales Tax 16% Operating oran.sters----0% Other Revenue 0% 7 lntPntnvernmenbll The State Board of Equalization (SBOE) recently provided to cities and other agencies its projections that statewide taxable sales over the next fiscal year will increase 5.45%. However, given the tenuous local economy, the Commission is not basing its estimate of revenues on the SBOE's projection and will continue its conservative projection practices. After taking the state of the local economy and recent optimistic revenue trends into consideration, staff projects that Measure A sales tax revenues of $147,000,000 for FY 2013/14. This is a 4% increase from the FY 2012/13 revised projection of $141,000,000. At midyear the Commission will reassess sales tax revenue projections based on the economy and revenue trends. On behalf of the County, the Commission administers the LTF for public transportation needs, local streets and roads, and bicycle and pedestrian facilities. The majority of l TF funding received by the County and available for allocation is distributed to all public transit operators in the County, and the Commission receives allocations for administration, planning, and programming in addition to funding for rail operations included in the commuter rail Short Range Transit Plan (SRTP). The l TF sales tax revenue received from the State is budgeted at $72,500,000, an increase of 4% from the FY 2012/13 revised projection of $69,500,000. STA funds generated from the statewide sales tax on motor vehicle fuel are allocated by formula by the State Controller to the Commission for allocations to the County's public transit operators; however, these funds have been subject to suspension in past years due to the State's budget issues. The STA transit allocation, which is based on recent State estimates, for FY 2013/14 is $13,298,000. Intergovernmental revenues include reimbursement revenues from federal sources of $97,660,000, state sources of $122,391,300, and local agencies of $3,109,400 for highway and rail capital, rail operations and station maintenance, commuter assistance, and motorist assistance programs as well as planning and programming activities. Reimbursement revenues vary from year to year depending on project activities and funding levels. As a result of an amended Memorandum of Understanding (MOU) with the Western Riverside Council of Governments (WRCOG), the Commission will receive 48.7% of TUMF revenues (as updated by the most recent Nexus study). TUMF represents fees assessed on new residential and commercial development in Western County. FY 2013/14 TUMF fees are expected to remain flat at $6,300,000 to reflect the slow but encouraging signs in the housing market in the Inland Empire, and additional TUMF zone reimbursements of $423,400 are expected for the 74/215 interchange project. Other revenue of $500,000 is projected to decrease 43% from the prior year's budget of $882,800 primarily because of the decline in property management revenues from properties acquired in connection with the SR-91 corridor improvements project. Investment income is anticipated to decrease in FY 2013/14 as a result of lower cash balances primarily due to the increased activity with Perris Valley Line and the 5R-91 corridor improvement projects. Staff continues to actively manage its resources and make appropriate investments to maximize the return to the Commission without sacrificing security and affecting short-term cash requirements. Transfers in of $354,083,900 relate primarily to the transfer of available debt proceeds for highway and regional arterial projects; LTF funding for general administration, planning and programming, rail operations and station maintenance, and grade separation project allocations; approved interfund allocations for specific projects; and debt service requirements from highway, regional arterial, and local streets and roads projects. Debt proceeds consist of the issuance of $94,000,000 in TIFIA loan proceeds related to the SR-91 corridor improvement project. Total uses (Table 2), including transfers out of $354,083,900, are budgeted at $1,212,744,500, an increase of 25% from the prior year budget amount of $970,284,000. Program expenditures and transfers out totaling $1,166,180,400 represent 96% of total budgeted uses in FY 2013/14. Program costs have increased by 43% from $813,841,800 in FY 2012/13. 8 Table 2-Uses FY 2012·2014 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change Capital Highway, Rail, and Regional Arterials $ 238,856,700 $ 637,362,200 $ 506,342,800 $ 962,980,100 $ 325,617,900 51% Capital local Streets and Roads 40,127,900 42,129,000 42,129,000 43,825,900 1,696,900 4% Commuter Assistance 3,317,600 4,190,100 4,348,700 4,300,700 110,600 3% Debt Service 61,532,600 143,413,000 110,557,200 33,ln,200 (110,235,800) -77% Management Services 17,714,600 13,029,200 11,934,000 13,386,900 357,700 3% Motorist Assistance 4,942,900 6,169,300 6,048,900 6,740,600 571,300 9% Planning and Programming 3,399,900 4,994,100 3,538,600 5,595,500 601,400 12% Public and Specialized Transit 68,068,600 104,443,800 77,742,900 127,663,200 23,219,400 22% Rail Maintenance and Operations 20,202,600 14,553,300 11,549,300 15,074,400 521,100 4% TOTAL Uses $ 458,163,400 $ 970,284,000 $ 774,191,400 $ 1,212,744,500 $ 242,460,500 25% Note: Management Services includes Executive Management, Administration, Legislative Affairs and Communications, and Finance. Capital highway, rail, and regional arterials budgeted uses of $962,980,100 are 51% higher compared to FY 2012/13 due to construction of the Perris Valley line and significant right of way activities and commencement of construction of SR-91 corridor improvement project in addition to transfers out of debt proceeds from capital projects funds to finance 2009 Measure A Western County highway project costs. Debt Service of $33,177,200 has decreased 77% as a result of the retirement of $80 million of outstanding commercial paper notes from sales tax revenue bond proceeds issued in connection with the SR-91 corridor improvement project financing. Commuter Assistance budgeted expenditures of $4,300,700 are 3% higher than FY 2012/13 due to increased expenditures related to projects and operations activities. Management Services expenditures have increased 3% from the FY 2012/13 budget due to information technology equipment upgrades. Motorist Assistance expenditures have increased 9% or $571,300 from the FY 2012/13 budget as a result of increased demand for freeway service patrol services supporting construction projects. Planning and Programming budgeted expenditures of $5,595,500 reflect a 12% increase from the FY 2012/13 budget due to increased projects and operations activities in connection with L TF disbursements for planning and programming and grade separations projects. Public and Specialized Transit budgeted expenditures of $127,663,200 are 22% higher than FY 2012/13 due to increased transit capital expenditures for public transit. The 4% increase in Rail Maintenance and Operation's budgeted expenditures of $15,079,400 is primarily due to additional consultant work needed to perform planning and modeling for rail projects including the SR-91/PVL expansion and Coachella Valley Service. Total uses included in the FY 2013/14 budget by major categories are illustrated in Chart 3. Chart 3-Uses: Major Categories Public and Specialized Planning and Rail Maintenance and Motorist Assistance l'Yo Management;)4!Mces_ 1% Commuter Assistance 0% Capitall..o<:al Streets and Roads 4% 9 Commission Personnel Final salary information has not been included in the budget. Action was taken by the Commission's Executive Committee to approve a revised salary structure for Commission employees; however, a full review of the issue has been requested by a member of the Executive Committee. The new structure would have included actions to require employees to begin paying their full share of pension costs over a three-year period with a corresponding salary increase. Per the Commission's Administrative Code, a Commissioner may request a review of any action by the Executive Committee at its next regular meeting. Currently, the personnel information in the draft budget Executive Summary assumes no salary increases. With that assumption, the Commission's salary and benefits total $6,998,000 for FY 2013/14. This represents an increase of $26,900 over the FY 2012/13 budget of $6,971,100 (Chart 4). The slight increase is a result of mandated increases from PERS and higher costs for insurance premiums. Chart 4 -Salary and Benefits Costs: Five Year Comparison $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $-FY09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14. Management continues to be firmly committed to the intent of the Commission's enabling legislation that called for a small staff. Staff will continue to be provided the tools needed to ensure an efficient and productive work environment. However, it must be recognized that small is not viewed in an absolute context; it is relative to the required tasks to be performed and the demands to be met. Table 3-Staff Summary by Department FY 2012-2014 FY 11/12 FY 12/13 FY 13/14 Executive Management 0.3 0.4 0.3 Administration 5.3 4.6 4.5 Legislative Affairs and Communications 1.9 2.0 2.4 Finance 7.0 6.6 6.9 Planning and Programming 4.8 4.8 4.3 Rail Maintenance and Operations 3.2 3.3 3.4 Public and Specialized Transit 2.5 2.4 2.4 Commuter Assistance 1.6 1.6 1.8 Motorist Assistance 1.2 1.2 1.2 Capital Project Development and Delivery 12.2 15.1 14.8 TOTAL 40.0 42.0 42.0 10 The Commission provides a comprehensive package of benefits to all permanent, salaried employees. The package includes: health, dental, vision, and life insurance, short and long-term disability, workers' compensation, tuition assistance, sick and vacation leave, retirement benefits in the form of participation in California Public Employees Retirement System (CaiPERS), postretirement health care, deferred compensation, and employee assistance program. The compensation components are shown in Chart 5. Chart 5-Personnel Salary and Benefits Other Fringes Department Initiatives The preparation of each department's budget was based on key assumptions, accomplishments in FY 2012/13, major initiatives for FY 2013/14, and department goals and related objectives. Following are the key initiatives and summary of expenditures for each department (Tables 4 through 13). Executive Management • Continue project development and delivery as the key Measure A priority. • Initiate construction on Riverside County's largest transportation projects, the SR-91 corridor improvement project. • Advance public transit with the construction of the Perris Valley line making this Riverside County's first major rail expansion in more than 14 years. • Advocate for state investments in transportation and approval of a federal transportation bill to fund needed transportation priorities in Riverside County and stimulate the local economy. • Maintain regional cooperation and collaboration as a significant effort consistent with the philosophy and mission of the Commission. • Enhance external communications with media, business and civic groups, and the community. • Maintain an effective mid-sized transportation agency with a small and dedicated staff. Table 4 -Executive Management FY 11/12 FY12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Olange Personnel $ 105,200 $ 120,600 $ 83,000 $ 95,600 $ (25,000) ·21% Professional 69,900 105,000 101,100 105,000 0% Support 39,600 57,600 53.700 57,200 (400) -1% TOTAL $ 214,700 $ 283,200 $ 237,800 $ 257,800 $ (25,400) -9% 11 Administration • Provide high quality support services to the Commission and to internal and external customers. • Continue to strengthen the electronic records management system. • Continue to provide timely communications to Commissioners with continued emphasis on the utilization of electronic mail. • Continue to update technology to streamline processes and provide easier access to Commission records. • Support and develop a motivated workforce with a framework of activities and practices that comply with employment laws and regulations. Table 5-Administration FY 11/12 FY 12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change·. Personnel $ 434,000 $ 460,300 $ 398,200 $ 474,600 $ 14,300 3% Professional 239,000 260,700 141,000 207,600 {53,100) -20% Support 547,700 641,200 601,800 641,200 0% Capital Outlay 17,400 140,000 55,000 385,000 245,000 175% Debt Sel\'ice 25,200 N/A TOTAL $ 1,263,300 $ 1,502,200 $ 1,196,000 $ 1,708,400 $ 206,200 14% Legislative Affairs and Communications • Continue efforts to protect and seek greater state and federal investment in transportation infrastructure and goods movement. • Develop effective partnerships with transportation providers to communicate a unified message to Congress regarding mobility needs. • Advocate positions in the State Legislature and in Congress that advance the County's transportation interests, especially those related to the implementation of the SR-91 corridor improvement project. • Continue a leadership role in formulating a countywide direction on federal transportation policies. • Take a leadership role on the modernization of CEQA. • Continue to develop a broad public information program regarding the Commission's responsibilities and accomplishments through a variety of media formats and presentation opportunities. • Continue to place an emphasis on providing proactive public communications support related to major project development efforts. • Conduct a concerted outreach effort to new federal and state representatives on local transportation issues. • Provide new Commissioner orientation meetings and other continuing education opportunities for Commissioners. Table 6-Legislative Affairs and Communications FY 11/12 rf12/13 rf 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change Personnel $ 347,100 $ 395,000 s 351,200 $ 484,900 $ 89,900 23% Professional 425,400 661,300 456,200 552,500 (108,800) -16% Support 155,400 188,000 145,800 187,700 (300) 0% TOTAL $ 927,900 $ 1,244,300 $ 953,200 $ 1,225,100 $ (19,200) -2% Finance • Continue appropriate uses of long-and short-term financing to advance 2009 Measure A projects of the Commission and the Coachella Valley Association of Governments (CVAG). • Apply the sales tax revenue forecast update to develop a financing plan to support the Western Riverside County Delivery Plan and CVAG highway and regional arterial projects. 12 • Continue to keep abreast of Governmental Accounting Standards Board (GASB) technical activities affecting the Commission's accounting and financial reporting activities and consider early implementation of new pronouncements. • Continue to strengthen the enterprise resource planning (ERP) system to benefit all staff in the management of accounting and project information and automation of a paperless workflow system. • Continue to implement a centralized procurements process in order to strengthen controls and ensure consistency in the application of procurement policies and procedures and adherence to applicable laws and regulations. • Conduct outreach activities to encourage DBE and SBE participation in various contracts . Table 7 -Finance FY 11/12 FY12/13 FY 12/13 ' FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change Personnel $ 832,600 $ 828,600 $ 774,000 $ 823,200 $ (5,400) -1% Professional 3,977,800 3,514,100 3,119,900 3,701,700 187,600 5% Support 516,500 656,800 647,600 664,700 7,900 1% Capital Outlay 7,000 5,500 6,000 6,000 N/A Transfers Out 10,000,000 5,000,000 5,000,000 5,000,000 0% TOTAL $ 15,333,900 $ 9,999,500 $ 9,547,000 $ 10,195,600 $ 196,100 2% Planning and Programming • Monitor funding authority and responsibility related to the State Transportation Improvement Program (STIP) and impacts on the STIP caused by the state budget issues. • Ensure STIP and Proposition 18 funded projects are administered and implemented consistent with California Transportation Commission (CTC) and California Department of Transportation (Caltrans) policies. • Continue to strategically program projects and obligate funds in an expeditious manner for the maximum use of all available funding, including monitoring the use of such funding to prevent funds from lapsing. • Focus on interregional concerns and maintain effective working relationships involving various multi-county transportation issues, including goods movement. • Coordinate planning efforts with regional and local agencies relating to the development of regional transportation plans (RTP) and green house gas reduction implementation guidelines. • Secure funding through the federal transportation bill for goods movement-related needs. • Monitor and track the TUMF regional arterial projects. • Work cooperatively with member agencies to continue the work efforts on the new Community Environmental Transportation Acceptability Process (CETAP) corridors. • Continue the Congestion Management Program (CMP) update and traffic monitoring along urban and rural highway systems. • Administer the SB 821 Bicycle and Pedestrian Facilities Program. • Monitor the Port of Los Angeles and Port of Long Beach's (Ports) projects for impacts on Riverside County. Table 8-Planning and Programming Personnel Professional Support Projects and Operations Capital Outlay TOTAl $ $ FY 11/12 Actual 904,800 $ 132,900 17,400 2,323,600 21,200 3,399,900 $ FY 12/13 Revised Budget 835,800 $ 362,800 24,300 3,771,200 4,994,100 $ 13 FY 12/13 FY 13/14 Dollar Percent Projected Budget Change Change 959,200 $ 783,200 $ (52,600) -6% 198,000 487,500 124,700 34% 16,400 23,300 (1,000) -4% 2,365,000 4,301,500 530,300 14% N/A 3,538,600 $ 5,595,500 $ 601,400 12% Rail Maintenance and Operations • • • • • Continue active participation in governance and operations of the Metrolink commuter rail system . Continue the planning and implementation of capital improvements at the commuter rail stations in Riverside County, including the Perris Valley line, security and rehabilitation projects, and parking requirements. Continue to support activities related to the Perris Valley line project and evaluate its operational impact . Establish best approach to build, maintain, and operate cost effective and environmentally sustainable facilities that meet the public's transportation needs. Continue coordination with CVAG, Amtrak and the State to focus attention on the creation of intercity passenger rail service between Coachella Valley, the Pass Area, Riverside, and the Los Angeles basin. Table 9 -Rail Maintenance and Operations FY11/12 FY12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change Personnel $ 488,700 $ 496,700 $ 613,200 $ 530,300 $ 33,600 7% Professional 206,000 421,000 256,900 488,000 67,000 16% Support 1,260,100 1,735,600 1,440,900 1,668,700 (66,900) -4% Projects and Operations 18,225,900 11,834,300 9,181,900 12,339,200 504,900 4% Capital Outlay 21,900 65,700 56,400 48,200 (17,500) ·27% TOTAl $ 20,202,600 $ 14,553,300 $ 11,549,300 $ 15,074,400 $ 521,100 4% Public and Specialized Transit • • • • • • Support innovative programs that provide transit assistance in hard to serve rural areas or for riders having very special transit needs and monitor funding of these programs. Complete the second year of specialized transit funding allocations related to the 2011 universal call for projects and continue to monitor performance. Continue long-range planning activities to ensure that anticipated revenues are in line with projected levels of service by transit operators. Monitor public and specialized transit operators' performance through the TransTrack program . Provide availability for local matching funds to Western County applicants seeking FTA Section 5310 federal capital grants. Coordinate with operators on major capital purchases and investments into new rolling stock and other system improvements in order to maintain a viable on-hand reserve. Table 10-Public and Specialized Transit FY 11/12 FY 12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change Personnel $ 326,600 $ 326,200 $ 296,100 $ 339,300 $ 13,100 4% Professional 146,100 291,500 274,600 188,500 (103,000) -35% Support 8,400 18,900 13,500 24,500 5,600 30% Projects and Operations 52,677,000 84,174,600 58,822,300 113,144,800 28,970,200 34% Transfers Out 14,910,500 19,632,600 18,336,400 13,966,100 (5,666,500) ·29% TOTAl $ 68,068,600 $ 104,443,800 $ 77,742,900 s 127,663,200 $ 23,219.400 22% Commuter Assistance • Improve the suite of services and outreach to rideshare participants and employer partners, including personalized information and electronic access and distribution. • • • • Maintain and grow employer partnerships through value-added services and tools for ridesharing programs . Maintain and operate a four-county ridematching database system with partner agencies . Maintain long-term partnership with San Bernardino Associated Governments (SANBAG) to manage and implement a "sister" Commuter Assistance program for residents and employers in San Bernardino County. Optimize park and ride facilities to support car/vanpool/buspool arrangements and facilitate transit connections. 14 Table 11-Commuter Assistance FYll/12 FY12/13 FY1l/13 fY 13/14 Dollar Percent Actual Revised Budget Projected Bu"et Olange Change Personnel $ 216,000 $ 218,900 $ 375.200 $ 277,fiXJ $ 58,700 27% Professional 588,000 650,300 754,800 617,800 (32,500) -5% Support 366,900 529,200 469,100 483,300 (45,900) -9% Projects and Operations 1,986,700 2,623,400 2,588,300 2,802,800 179,400 7% Capital Outlay 17,000 10,000 7,000 (10,000) -59% Transfers Out 160,000 151,300 151,300 112,200 (39,100) -26% TOTAL $ 3,317,600 $ 4,190,100 $ 4,348,700 $ 4,300,700 $ 110,600 3% Motorist Assistance • Assess opportunities for efficiency related to the call box program operations. • Maintain a high benefit-to-cost ratio related to the performance of the FSP program. • Operate and maintain the IE511 system in accordance with national 511 implementation standards in partnership with SANBAG. • Enhance the IE511 with more personalized traffic information services. • Utilize the opportunity to enhance coordination between CHP and Caltrans on traveler information. Table 12-Motorist Assistance fY 11/12 fY 12/13 FY 12/13 fY 13/14 Dollar Percent Actual Revised Budget Projected Budget Olange Change Personnel $ 149,200 s 175,900 $ 175,900 $ 172,100 $ (3,800) -2% Professional 789,600 717,500 736,500 766,500 49,000 7% Support 515,400 884,600 880,200 875,900 (8,700) -1% Projects and Operations 2,392,100 3,070,000 2,935,000 3,635,000 565,000 18% Transfers Out 1,096,600 1,321,300 1,321,300 1,291,100 (30,200) -2% TOTAL $ 4,942,900 $ 6,169,300 $ .6,048,900 $ 6,740,600 $ 571,300 9% Capital Project Development and Delivery • Continue project development, right of way, and construction activities on remaining 1989 Measure A projects including SR-74 curve widening, SR-91 high occupancy vehicle (HOV) lanes/Adams Street to 60/91/215 interchange, and 60/215 East Junction HOV lane connectors. • Continue project activities on the 1-215 bi-county highway and Perris Valley Line rail projects, which were included in both the 1989 Measure A and 2009 Measure A programs. • Continue project work on the Western Riverside County Delivery Plan projects, including the 91/71 connectors; the SR-91, 1-15, and 1-215 corridor mobility improvement projects; SR-79 realignment; and Mid County Parkway. • Provide Western County TUMF funding and support to local jurisdictions for regional arterial project engineering, right of way acquisition, and construction. • Provide 2009 Measure A funding to the incorporated cities and the County for local streets and roads maintenance, repair, and construction. • Provide advance funding and support of 2009 Measure A highway and regional arterial projects. • Develop strategies to implement alternative financing structures including public toll roads. • Maintain a right of way acquisition and management program in support of capital projects. • Manage right of way acquisition in the most cost effective manner and within project schedules, while adhering to federal and state regulations. • Maintain and manage the access, use, safety, and security of Commission-owned properties including commuter rail stations, properties in acquisition process, and income-generating properties. 15 Table 13-Capital Project Development and Delivery FY 11/12 FY 12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Budget Change Change Personnel $ 2,268,400 $ 3,113.100 $ 2,934.200 $ 3,017,200 $ (95,900) -3% Professional 5,057,500 7,692,500 7,316,700 18,176,600 10,484,100 136% Support 300,700 597,100 302,900 557,000 (40,100) -7% Projects and Operations 173,405,700 365,850,100 243,964,700 650,990,700 285,140,600 78% Capital Outlay 142,200 225,000 78,300 350,000 125,000 56% Debt Service 61,507,400 143,413,000 110,557,200 33,177,200 (110,235(800) -77% Transfers Out 97,810.100 302,013,400 293,875,000 333,714,500 31,701,100 10% TOTAL $ 340,492,000 $ 822,904,200 $ 659,029,000 $ 1,039,983,200 $ 217,079,000 26% Fund Balances The total fund balance as of June 30, 2013 is projected at $1,167,030,800. The Commission's budgeted activities for FY 2013/14 are expected to result in a $297,520,000 decrease of total fund balance at June 30, 2014 to $869,510,800. The primary cause of the decrease is related to the completion of financing activities in FY 2012/13 and the commencement of construction in FY 2013/14 for the SR-91 corridor improvement project. Table 14 presents the components of fund balance by governmental fund type and program at June 30, 2014. Table 14-Projected Fund Balances by Governmental Fund Type and Program at June 30, 2014 Genenlfund $8,686,1m Management Services Planning and Programming Rail Maintenance and Operations Budget Summary ai"Verside County-TranspoilatiOn Commission $86?.510,800 Special R~Que Funds $406.91J;7oo $4,515,700 Measure A Western County: 1,745,100 Bond Financing 1,415,200 Commuter Assistance Economic Development Highways local Streets and Roads New Corridors Public and Specialized Transit Rail Regional Arterials Measure A Coachella Valley: Highways and Regional Arterial local Streets and Roads Specialized Transit Measure A Palo Verde Valley local Streets and Roads Motorist Assistance State Transit Assistance local Transportation Fund TUMF: CETAP Regional Arterials $4,673,200 13,700,400 3,737,800 101,185,000 1,100 S4,310,400 7,832,000 37,903,200 26,143,000 4,287,100 1,600 . 1,361,200 600 5,236,000 37,094,600 84,773,000 17,042,400 7,629,100 ca~1 Projecis Funds ·"' . $313,529,700 Highways $ 313,519,700 li~j~,F.~ $1~;383.~~ The overall budget for FY 2013/14 is presented in Table 15 by summarized line items, Table 16 by operating and capital classifications, and Table 17 by governmental fund type. Highway, rail, and regional arterial program expenditures by project are summarized in Table 18. 16 Table 15-Budget Comparative by Summarized line Item FY 2012-2014 FY 11/12 FY 12/13 FY 12/13 FY 13/14 Dollar Percent Actual Revised Budget Projected Revenues Budil!t Change Change Measure A Sales Tax $ 134,984,300 $ 141,000,000 s 141,000,000 s 147,000,000 s 6,000,000 4% l TF Sales Tax 66,556,700 69,500,000 69,500,000 72,500,000 3,000,000 4% STA Sales Tax 13,487,500 14,212,500 14,212,500 13,298,000 (914,500) -6% Federal Reimbursements 28,097,000 73,151,900 40,949,200 97,655,000 24,503,100 33% State Reimbursements 21,411,300 17,917,800 21,306,500 122,391,300 104,473,500 583% Local Reimbursements 2,008,600 2,688,700 2,589,400 3,109,400 420,700 16% TUMF Revenue 8,116,400 7,557,300 7,268,200 6,723,400 (833,900) -11% Other Revenue 1,430,100 882,800 493,500 500,000 (382,800) -43% Investment Income 4,308,300 7,265,900 4,640,300 3,%3,500 (3,302,400) -45% TOTAL Revenues 280,400,200 334,176,900 301,959,600 467,140,600 132,963,700 40% Expenditures Personnel Salary and Benefits 6,072,600 6,971,100 6,960,200 6,998,000 26,900 0% Professional and Support Professional Services 11,632,200 14,676,700 13,355,700 25,291,700 10,61S,OOO 72% Support Costs 3,728.100 5,333.300 4,571.900 5.183,500 {149,800) -3% TOTAL Professional and Support Costs 15,360,300 20,010,000 17,927,600 30,475,200 10,465,200 52% Projects and Operations Program Operations -General 11,194,200 18,880,500 14,255,600 20,107,100 1,226,600 6% Engineering 21,366,500 27,932,000 16,580,400 20,299,000 {7,633,000) -27% Construction 27,451,200 125,994,100 61,617,400 238,509,400 112,515,300 89% Design Build 16,285,700 29,050,000 29,050,000 192,700,000 163,650,000 563% Right of Way/Land 53,728,100 112,246,800 66,725,200 116,438,800 4,192,000 4% Operating and Capital Disbursements 71,658,200 97,835,800 68,779,200 129,544,800 31,709,000 32% Special Studies 236,500 800,000 320,000 789,000 {11,000) -1% local Streets and Roads 40,127,900 42,129,000 42,129,000 43,825,900 1,696,900 4% Regional Arterials 8,962,700 16,455,400 20,400,400 25,000,000 8,544,600 52% TOTAL Projects and Operations 251,011,000 471,323,600 319,857,200 787,214,000 315,890,400 67% Debt Service Principal Payments 46,523,900 126,800,000 86,800,000 7,100,000 (119,700,000) -94% Interest Payments 15,008,700 16,613,000 16,457,200 26,077,200 9,464,200 57% Cost of Issuance 7,300,000 N/A TOTAL Debt Service 61,532,600 143,413,000 110,557,200 33,177,200 (110,235,800) -77% Capital Outlay 209 .. 700 447.700 205,200 796,200 348,500 78% TOTAL Expenditures 334,186.200 642,165,400 455,507,400 858,660,600 216,495.200 34% Excess {deficiency) of Revenues over (under) Expenditures (53,786,000) (307,988,500) (153,547,800) (391,520,000) (83,531,500) 27% Other Financing Sources (Uses) Transfers In 123,977,200 328,118,600 318,684,000 354,083,900 25,965,300 8% Transfers Out (123,977,200) (328,118,600) (318,684,000) (354,083,900) (25,965,300) 8% Debt Proceeds 40,000,000 1,220,172,000 745,000,000 (1,220,172,000) -100% TIFIA Loan Proceeds 94.000.000 94,000,000 N/A Net Financing Sources (Uses) 40,000,000 1,220,172,000 745,000,000 94,000,000 (1,126,172,000) ·92% Excess (deficiency) of Revenues over (under) Expenditures and Other Financing Sources (Uses) (13,786,000) 912,183,500 591,452,200 (297,520,000) (1,209, 703,500) -133% Beginning Fund Balance 589,364,600 575,578,600 575,578,600 1,167,030,800 591,452,200 103% ENDING FUND BALANCE s 575,578,600 $ 1,487,762,100 $ 1,167,030,800 $ 869,510,800 $ (618,251,300) -42% 17 Table 16 -Operating and Capital Budget FY 2013/14 FY 13/14 FY 13/14 FY 13/14 Operating Budget Capital Budget TOTAL Budget Revenues Measure A Sales Tax $ 14,018,000 $ 132,982,000 $ 147,000,000 LTFSalesTax 72,500,000 72,500,000 STA Sales Tax 13,298,000 13,298,000 Federal Reimbursements 751,400 96,903,600 97,655,000 State Reimbursements 4,844,000 117,547,300 122,391,300 Local Reimbursements 2,653,400 456,000 3,109,400 TUMF Revenue 6,723,400 6,723,400 Other Revenue 500,000 500,000 Investment Income 395,700 3,567,800 3,963,500 TOTAL Revenues 108,460,500 358,680,100 467,140,600 Expenditures Personnel Salary and Benefits 3,973,200 3,024,800 6,998,000 Professional and Support Professional Services 4,416,900 20,874,800 25,291,700 Support Costs 4,604,500 579,000 5,183,500 TOTAL Professional and Support Costs 9,021,400 21,453,800 30,475,200 Projects and Operations Program Operations -General 7,909,500 12,197,600 20,107,100 Engineering 5,000 20,294,000 20,299,000 Construction 238,509,400 238,509,400 Design Build 192,700,000 192,700,000 Right of Way and Land 116,438,800 116,438,800 Operating and Capital Disbursements 127,544,800 2,000,000 129,544;800 Special Studies 764,000 25,000 789,000 Local Streets and Roads 43,825,900 43,825,900 Regional Arterials 25,000,000 25,000,000 TOTAL Projects and Operations 136,223,300 650,990,700 787,214,000 Debt Service Principal Payments 7,100,000 7,100,000 Interest Payments 26,077,200 26,077,200 TOTAL Debt Service 33,177,200 33,177,200 Capital Outlay 446,200 350,000 796,200 TOTAL Expenditures 149,664,100 708,996,500 858,660,600 Excess (defiCiency) of Revenues over (under) Expenditures (41,203,600) (350,316,400) (391,520,000) Other Financing Sources (Uses) Transfers In 16,837,500 337,246,400 354,083,900 Transfers Out (15,369,400) {338, 714,500) (354,083,900) TIFIA loan Proceeds 94,000,000 94,000,000 Net Financing Sources (Uses) 1,468,100 92,531,900 94,000,000 Excess (deficiency) of Revenues over (under} Expenditures and Other Financing Sources (Uses} (39,735,500) (25 7, 784,500) (297,520,000) Beginning Fund Balance 198,418,700 968,612,100 1,167,030,800 ENDING FUND BALANCE $ 158,683,200 $ 710,827,600 $ 869,510,800 18 Table 17 -Budget by Governmental Fund Type FY 2013/14 FY 13/14 General Fund Special Revenue Capital Projects Debt Service TOTAL Budget Revenues Measure A Sales Tax $ 2,800,000 $ 144,200,000 $ $ $ 14 7 ,000, 000 LTF Sales Tax 72,500,000 72,500,000 STA Sales Tax 13,298,000 13,298,000 Federal Reimbursements 25,000 94,886,000 2,744,000 97,655,000 State Reimbursements 664,000 121,727,300 122,391,300 Local Reimbursements 379,800 2,729,600 3,109,400 TUMF Revenue 6,723,400 6,723,400 Other Revenue 500,000 500,000 Investment Income 21,700 1,014,600 1,882,200 1,045,000 3,963,500 TOTAL Revenues 3,890,500 457,578,900 1,882,200 3,789,000 467,140,600 Expenditures Personnel Salary and Benefits 3,413,800 3,584,200 6,998,000 Professional and Support Professional Services 2,924,100 20,331,200 1,248,100 788,300 25,291,700 Support Costs 3,233,200 1,950,300 5,183,500 TOTAL Professional and Support Costs 6,157,300 22,281,500 1,248,100 788,300 30,475,200 Projects and Operations Program Operations-General 1,471,700 18,635,400 20,107,100 Engineering 5,000 20,294,000 20,299,000 Construction 238,509,400 -238,509,400 Design Build 192,700,000 192)00,000 Right of Way/Land 116,438,800 116.~38,800 Operating and Capital Disbursements 14,400,000 115,144,800 -129,544,800 Special Studies 764,000 25,000 --789,000 Local Streets and Roads 43,825,900 43,825,900 Regional Arterials 25,000,000 25,000,000 TOTAL Projects and Operations 16,640,700 770,573,300 787,214,000 Debt Service Principal Payments 7,100,000 7,100,000 Interest Payments 26,077,200 26,077,200 TOTAL Debt Service 33,177,200 33,177,200 Capital Outlay 439,200 357,000 796,200 TOTAL Expenditures 26,651,000 796,796,000 1,248,100 33,965,500 858,660,600 Excess (deficiency) of Revenues over (under) Expenditures (22,760,500) (339,217,100} 634,100 (30,176,500} (391,520,000) Other Financing Sources (Uses) Transfers In 14,887,500 323,196,400 16,000,000 354,083,900 Transfers Out (66,066,100} (278,017,800} (10,000,000} (354,083,9oo} TIFIA Loan Proceeds 94,000,000 94,000.000 Net Financing Sources (Uses} 14,887,500 257,130,300 ( 184,017,800} 6,000,000 94,000,000 Excess (deficiency} of Revenues over (under) Expenditures and Other Financing Sources (Uses) (7 ,873,000) (82,086,800) (183,383, 70D} (24,176,500} (297,520,000} Beginning Fund Balance 16,559,000 488,998,500 496,913,400 164,559,900 1.167,030,800 ENDING FUND BALANCE s 8,686,000 s 406,911,700 s 313,529,700 $ 140,383,400 s 869,510,800 19 Table 18-Highway, Regional Arterial, and Rail Programs FY 2013/14 Descrlpt,on Proj~cts and Operations Bechtel Program Management SCRRA Program Management TOTAL PROJECTS-GENERAL Highway Engineering 60/215 East Junction HOV Lanes Connector 91/71 Connectors 1-l.S Corridor Improvements 1-215 Corridor Improvement Southbound Connector Mid County Parkway SR-91 Corridor Improvements SR-91 HOV Lanes/Adams Street to 60/91/215 Interchange General SUBTOTAL HIGHWAY ENGINEERING Regional Arterial Engineering Various Western County TUMF Regional Arterial Projects, Including SR-79 realignment Rail Engineedng CCTV Operations Center Station Downtown Station SUBTOTAL RAIL ENGINEERING TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL ENGINEERING Highway Construction SR-60/Valley Way Interchange 60/215 East Junction HOV lane Connect:ors 74/215 Interchange 1-215 Corridor Improvements (Central Segments)/1-15 to Nuevo Road 1-215/Bialne Street to Martin Luther King Boulevard Widening 1-15/Los Alamos Road Bridge Replacement SR-74 Curve Widening SR-91 Corridor Improvements SR-91/La Sierra Interchange SR-91/HOV Mary Street to 7th Street SUBTOTAL HIGHWAY CONSTRUCTION Reglonal Arterial Construction Various Western County TUMF Regional Arterial Projects Rail Construction Riverside Downtown Pedestrian ~mprovements CCTV Operations Center Station Rehabilitation Perris Valley Line and Other Rail Projects North Main Corona Station Parking Structure Perris Multlmodal Facility SUBTOTAL RAIL CONSTRUCTION TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL CONSTRUCTION Highway Design Build SR-91 Corridor Improvements TOTAL HIGHWAY DESIGN BUILD Highway Right of Way and Land 74/215 Interchange 60/215 East Junction HOV Lane Connectors 1-215 Corridor Improvement (Central Segment)/Scott Road to Nuevo Road Mid County Parkway SR-74 Curve Widening SR-74/I-1S to 7th Street 91/71 Connectors SR-91 Corridor Improvements SR-91 HOV Lanes/Adams Street to 60/91/215 Interchange General SUBTOTAL HIGHWAY RIGHT OF WAY AND LAND Regional Arterial Right of Way and Land Various West~rn County TUMF Regional Arterial Projects Rail Right of Way and land Perris Multlmodal Facility Perris Valley Line and Other Rail Projects General. SUBTOTAL RAIL RIGHT OF WAY AND LAND TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL RIGHT OF WAY AND LAND GRAND TOTAL HIGHWAY, REGIONAL ARTERIAL, AND RAIL PROGRAMS 20 $ 9,200,000 1,200,000 $ 10,400,000 $ 150,000 4,600,000 7,000,000 950,000 2,550,000 100,000 32,000 100,000 15,482,000 4,612,000 200,000 5,000 205,000 $ 20,299"000 $ 905,000 750,000 47,200,000 2,057,300 900,000 3,401,000 3,800,000 33,000 150,000 59,196,300 41,484,100 1,152,000 1,150,000 2,260,000 133,197,000 20,000 50,000 137,829,000 $ 238,509,400 $ 192.700,000 $ -1.92;700.000 $ 30,000 5,000 730,000 6,182,000 310,000 30,000 3,335,000 87,310,000 11,4-.000 3,020,000 112,396,000 3,545,800 10,000 427;000 60,000 497,000 $ 116,438,800 $ 578,347 .. 200 -1-1 CIJ tlD -c ::s t:C -c CIJ V) 0 c.. 0 '-c.. ~ ~ m ~ 0 N '-ta ~ ta u V) ·-L&. . ~ ' 0 811 I~ Resource Estimation Commission Policy Goals Department Goals and Objectives Department Budget Development Budget Compilation Budget Review and Adoption r VT/£TOZ Ad ui spaapoad ueoi VidI1 J0 apuenssi • saanmpuadxa pa[oad sanaasal jWnl Jo asn • 1 A-leA009.1 D uaouopa Jo su6is 6u!beanopua Inq Imols • spaau pa[oad lewleo pue suoneaado msueai uo peduai • paimbaa 1ADHod 6uimonoq punpalui • siueiinsuop Jo asn A/teaq 41w lieis Hews • spa[oad Jo 6uiu g pue adoos a6uetia of Amciixald • suaea6oad pue spa[oad aoj saMeSaa paleinunme Jo ash • suogeiado 31,3110 amleu u pp- avoid -..MEMMI suopRiapsuoD lhapnE1 WEIN AJ -mar 4.s. FY 2013/14 Beginning Fund Balance $ 1,167,030,800 Revenues 467,140,600 Debt Proceeds 94,000,000 Transfers In 354,083,900 Total Estimated Sources 915,224,500 Expenditures ( 825,483,400) Debt Service ( 33,177,200) Transfers Out ( 354,083,900) Total Estimated Uses {1,212,744,500) Uses Over Sources {297,520,000} (offset by beginning fund balance) -Ending Fund Balance $ 869,510,800 FY 12/13 FY 12/13 FY 13/14 Revised Budget Projected Budget Measure A Sales Tax $ 141,000,000 $ 141,000,000 $ 147,000,000 LTF Sales Tax 69,500,000 69,500,000 72,500,000 STA Sales Tax 14,212,500 14,212,500 13,298,000 I nte rgove rn mental 93,758,400 64,845,100 223, 155, 700 TUMF Revenue 7,557,300 7,268,200 6,723,400 Other Revenue 882,800 493,500 500,000 Investment Income 7,265,900 4,640,300 3,963,500 Operating Transfers In 328,118,600 318,684,000 354,083,900 Debt Proceeds 1,220,172, 000 745,000,000 94,000,000 TOTAL Sources $ 1,882,467,500 $ 1,365,643,600 $ 915,224,500 VI $1,400 s::::: .9 $1,200 ~ $1,000 $800 $600 $400 $200 $-"''?>+ ':::-.. ((;" c.,'C "''?>+ ':::-.. ((;" "'«.c., 'C "''?>+ ':::-.e.-" c.,'C ---·--···----~ :<::-'<J ~((; ---v-e-e-<::-((;..::;. ~~ -----~-----v-e-e-<::-((;..::;. ---~((; 0 ,:c::-<J :<::-"" ,<::-\e.-'" ~" o" ((;((; <J ~,o e.,"?-v.' " ~((;'?> 'v 4--"?-,:c::-~((; e.-'~ ,:c::-~ "'-0~ ,~ ((; 0~ ((; c}-~ ~((; ,:c::-"'''C .~¢o ~ :;<;>"" <::)((; e.-' o'< II FY 13/14 Budget II FY 12/13 Projected II FY 12/13 Revised Budget • Debt Service 4% Management Services 1% Rail Maintenance & Operation 2% Capital Highways, Rail& Arterials Capital Local Streets & Roads 5% ~ Program Uses Public & Specialized Transit 13% Planning & Programming 1% 95% Assistance .5% Commuter Assistance .5% FY 12/13 FY 12/13 FY 13/14 Revised Budget Projected Budget Capital Highway, Rail, and Regional Arterials $ 335,348,800 $ 212,467,800 $ 629,265,600 Capital Local Streets and Roads 42,129,000 42,129,000 43,825,900 Commuter Assistance 4,038,800 4,197,400 4,188,500 Debt Service 143,413,000 110,557,200 33,177,200 Management Services 8,029,200 6,934,000 8,386,900 Motorist Assistance 4,848,000 4, 727,600 5,449,500 Planning and Programming 4,994,100 3,538,600 5,595,500 Public and Specialized Transit 84,811,200 59,406,500 113,697, 100 Rail Maintenance and Operations 14,553,300 11,549,300 15,074,400 TOTAL Expenditures $ 642,165,400 $ 455,507,400 $ 858,660,600 --·~------~ ------... ____ ... ------_,, ~-----------·-···-·•· ----$650 ...-····::·:: . ..--:-:.=.~=: .. :=-:-~-~-=-~------. ·------···--0~ $600 l---:.:-n· ... . ----=---·_-·------__ --. -~ . __ --~-:.:::..=------___ _ __ :: $$550 -t::./ -------=-~-~--=-~--_------:_------·--·-·--·-----~ 500 -1 / .. ----------·-·-· --· -----' ---$450 -·-· / . ---. -----·-------------$400 -\··> ---.. .., -----..... -· ------· -----.... ------· ---- -\ $350 -V/ $300 t~/ $250 -(/ s2oo -r// $1so -r~/ $100 -t/ ' sso -r / $-¥-----.. ., .. .. - ---\ \ '1>-"' ,, o"' 0~ (.,e f;:-.<}~ , ...... e '::-.."?' ~ -0~ 0~ ~~ e"'"' e c.,'?' ,"?-~e~ -r;:-0 ~ '?><S 1;-0(., ~ ...... e ~ e,_;O(:' ·(.,e ~' '?e' --,--c., .(_,e ~' '?e' -.-(.,e ...... '?>~ <..,'"' -,-· --r-· -· 'A. ¢a c.,~ f;:-"-'~ 0 \ 'T ·-'1 c., -0~ ~~ e' ~"' ~e ~"' ~e f;:-~~ "?-'? .<} ~' ~0 ~' ~ ~~ ((,o -r;:-0 -~e .;;;-(.,' e o« -r;:-0 ~~ ~0 ~ '-r;:.¢o e~ f;:-(; ~' <(.! '::-..v -~~ <.?<:<' ~ ~~~ (( 0 '?« ~~ ~(., ~~ ~e ~~' ~ ~~ -~1>-<.?<:<' '1i FY 13/14 Budget • FY 12/13 Projected • FY 12/13 Revised Budget ((~ ~~ -~~ ~~ +fit r � rw., ' gni . auluamm aturotr1 a uetpJawi T 6 o4 lawn suuepy sauel AOH Personnel Salary and Benefits Professional Services Support Costs Projects and Operations Debt Service Capital Outlay TOTAL Expenditures ..... Professional Services 72% Projects & Operations 67% Capital Outlay 78% Support Costs 3% Debt Service 77% FY 12/13 Revised Budget $ 6,971,100 14,676,700 5,333,300 471,323,600 143,413,000 447,700 $ 642,165,400 FY 12/13 FY 13/14 Projected Budget $ 6,960,200 $ 6,998,000 13,355,700 25,291,700 4,571,900 5,183,500 319,857,200 787,214,000 110,557,200 33,177,200 205,200 796,200 $ 455,507,400 $ 858,660,600 /'/ ,.-"'" •' ,./ ,.,.~/--.,~"' ,.-.' ... .,/'"/ ,..,."" .,,' $350 / /,/ // // VI 1 / ~/ ,' / ~ $325 -f' _/ _// // ~ $300 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 $25 $-Personnel Salary and Benefits Professional Support Costs Projects and Services Operations DebtService Capital Outlay 1111 FY 13/14 Budget Ill FY 12/13 Projected ~ FY 12/13 Revised Budget Measure A administrative salaries and benefits Funding needs for projects and transit operators Sales tax and TUM F revenue trends Timeliness of federal and state reimbursements Receive input for the proposed budget and open the public hearing Review the final budget draft, close the public hearing, and adopt the final budget AGENDA ITEM 9 RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: April 22, 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 Toil-Supported Debt Financings STAFF RECOMMENDATION: At its April meeting, the Commission approved the Plan of Finance and the sales tax portion of the State Route 91 Corridor Improvement Project (SR-91 CIP) financing. The following staff recommendations are related to the issuance of toll revenue bonds and receipt of a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan from the U.S. Department of Transportation (USDOT) related to the SR-91 Cl P financing. This item is for the Committee to: 1) Adopt Resolution No. 13-004, "Resolution Authorizing Agreements Relating to the Sale of Not to Exceed $400,000,000 Aggregate Principal Amount of Riverside County Transportation Commission Toll Revenue Bonds in One or More Series, Including the Execution and Delivery of a Master Indenture, a First Supplemental Indenture, a Second Supplemental Indenture, a Purchase Contract, an Official Statement, and a Continuing Disclosure Agreement, 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"; 2) Approve the draft Official Statement for the issuance for a not to exceed amount of $400 million in 201 3 Toil Bonds and authorize the Executive Director to approve and execute the printing and distribution of the Official Statement; 3) 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; Agenda Item 9 21 4} 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 201 3 Toil Bonds and authorize the Executive Director to approve and execute the final Indenture; 5} 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; 6} 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; 7} Approve the draft Bond Purchase Agreement between the Riverside County Transportation Commission and Bank of America Merrill Lynch and Goldman, Sac~s & 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; 8} Approve the draft TIFIA Loan Agreement between the Riverside County Transportation Commission and the USDOT for an amount not to exceed $451 million and authorize the Executive Director to approve and execute the final Bond Purchase Agreement; and 9} Forward to the Commission for final action. BACKGROUND INFORMA T/ON: At its April meeting, the Commission approved the plan of finance for the SR-91 CIP. 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}, 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 2013 Toll Bonds represent 17 percent of total SR-91 CIP costs, the 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. The following is a summary of the most current estimate of sources and uses for the SR-91 CIP financing, and these amounts are subject to change through final pricing of the bonds: Agenda Item 9 22 Proposed Authorized or Approved Amount 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) Predevelopment costs Total debt uses Toil Revenue Bonds Bonds Sales Tax Toll Revenue $ 550 $ 400 $ 445 $ 220 $ 296 $ 153 49 45 22 100 $ 445 $ 220 $ $ $ TIFIA loan 451 Pay Go N/A 435 $ 106 435 $ 106 $ 435 $ 106 (in millions $) Pre-development Costs N/A $ 110 110 $ 110 Total $ 1,401 $ 1,316 $ 990 94 22 100 110 $ 1,316 The 2013 Toll 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. Actual interest rates for the bonds will be determined in June upon the pricing of the bonds. Since the SR-91 Cl P' s substantial completion date and commencement of toll operations are currently assumed in the financial model to occur in November 201 7, a portion of the toll revenue 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 as well as to pay costs of issuance, which are limited to 2 percent per the Commission's debt management policy. Agenda Item 9 23 Projected debt service coverage in the financial model based on projected toll revenues is expected to exce~d the toll bonds indenture (draft) requirement of 1 .5x coverage for senior level toll 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, which would set the toll revenue-supported financing for the SR-91 CIP on a course of ultimate 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 2052, which is about 15 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 1 .5x coverage requirement is met and the TIFIA lender approves; • Completion bonds may be issued should that prove necessary due to unexpected cost increases or delays; • After payment of current debt service on the toll revenue bonds and the TIFIA loan, revenues can be applied to the 71/91 interchange project and the 91115 north connector (Deferred SR-91 CIP); and • Revenues remaining after payment on bonds, the TIFIA loan, and the Deferred SR-91 CIP will be applied on a 50-50 ratio to prepayment of the TIFIA loan and to other Commission projects. Agenda Item 9 24 Flow of Funds for Toll Operations Toll 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); • Repair and rehabilitation reserve; • TIFIA loan scheduled debt service; • Planned improvements reserve to fund deferred SR-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 a default. Agenda Item 9 25 Transaction Documents The following is a summary of toll-supported debt documents related to the SR-91 CIP Plan of Finance approved by the Commission: 2 0 13 Toil Revenue Bonds Resolution 1 3-004 Official Statement Continuing Disclosure Agreement Master, First, and Second Supplemental Indentures Bond Purchase Agreement TIFIA Loan ! Loan Agreement Drafts of the following documents related to the toll supported debt of the SR-91 CIP financing are included as attachments to this staff report for approval and consist of the following: • Resolution No. 13-004 (draft) authorizing agreements related to the sale of a not to exceed amount of toll revenue bonds including the execution and delivery of a master indenture, first supplemental . indenture, second 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 Statement (draft) for the 2013 Toll Revenue 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 3 and 4); • Second Supplemental Indenture between the Commission and the trustee (draft) regarding the terms and conditions of the TIFIA loan (Attachment 5); • Continuing Disclosure Agreement (draft) between the Commission and the dissemination agent for the 2013 Toll Revenue Bonds (Attachment 6); and • TIFIA Loan Agreement between the Commission and USDOT (draft) regarding the terms and conditions of the TIFIA loan (Attachment 7). The purchase contract (draft) between the Commission and the underwriters regarding the purchase of the 2013 Toll Revenue Bonds will be provided at the Commission meeting. As part of the action to authorize the issuance of the 2 013 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 Toll Revenue Bonds, unless all Agenda Item 9 26 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 2013 Toll 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 such questions. The following is a schedule of subsequent activities related to the SR-91 CIP financing: Posting of preliminary official statements Pricing activities TIFIA Loan agreement execution Bond closing activities May 20 June 10-12 June 25-26 June 26-27 Changes to these documents may be necessary as a result of continuing development by the financing team and continuing negotiations with TIFIA. Since general legal counsel is a key member of the financing team, staff recommends the executive director be authorized to approve and execute the final documents. Financial Impact Proceeds from 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. Agenda Item 9 27 I Financial Information Yes FY 2012/13 $220 million toll bond In Fiscal Year Budget: Year: Amount: proceeds N/A FY 2013/14 + $435 million TIFIA loan Source of Funds: I Toll revenue bonds, TIFIA loan Budget Adjustment: I No N/A GL!Project Accounting No.: 3063159102 $220,000,000 Bond Proceeds 306 31 59104 $435,000,000 TIFIA Loan Proceeds Fiscal Procedures Approved: ~~ _ _j Dat:J 04/15/13 ---------·-·---Attachments: 1) Resolution No. 13-004 (Draft) for Toll Financing 2) Toll Bonds Preliminary Official Statement (Draft) 3) Toll Bonds Master Indenture (Draft) 4) Toll Bonds First Supplemental Indenture (Draft) 5) Toll Bonds Second Supplemental Indenture (Draft) 6) Toll Bonds Continuing Disclosure Agreement (Draft) 7) TIFIA Loan Agreement (Draft) Agenda Item 9 28 NO.B-004 ATTACHMENT 1 OH&S Draft 03/26/2013 RESOLUTION AUTHORIZING AGREEMENTS RELATING TO THE SALE OF NOT TO EXCEED $400,000,000 AGGREGATE PRINCIPAL AMOUNT OF RIVERSIDE COUNTY TRANSPORTATION COMMISSION TOLL REVENUE BONDS IN ONE OR MORE SERIES, INCLUDING THE EXECUTION AND DELIVERY OF A MASTER INDENTURE, A FIRST SUPPLEMENTAL INDENTURE, A SECOND SUPPLEMENTAL INDENTURE, A PURCHASE CONTRACT, AN OFFICIAL STATEMENT, A CONTINUING DISCLOSURE AGREEMENT, 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 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 (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 (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 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 County Transportation Improvement Plan, adopted as part of the Ordinance, including any future amendments thereto (the "Expenditure Plan"); OHSUSA753400213.1 29 WHEREAS, on July 14, 2010, the Commission adopted Ordinance No. 10-002 (the "20 10 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 2010 Ordinance became effective at the close ofthe 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 Assignn1ent 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 ("Cal trans"), 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 "OCT A 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, OHSUSA:753400213_1 -2-30 pertaining to the construction and operation of tolled transportation facilities on the SR -91 within both Orange and Riverside Counties; WHEREAS, OCT A imposes tolls on certain SR -91 lanes in Orange County pursuant to the OCT A Franchise Agreement; WHEREAS, the Commission's authorization to levy tolls and issue Toll Revenue Bonds pursuant to the Act was conditioned upon OCT A amending or partially assigning the OCTA Franchise Agreement to exclude that portion of SR-91 between the Orange and Riverside County line and State Highway Route 15 from such OCT A 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 OCTA and Caltrans; WHEREAS, in its Resolution I 0-026 (the "20 1 0 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 of the 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 "EIS/EIR") and submitted the EIS/EIR to Caltrans in October 2011 and, on November 5, 2012, the Record of Decision was released and a Notice of Final Federal Agency Actions on Proposed Highway in California was published in Federal Register Volume 77, Number 214 in satisfaction of the requirements of CEQA, the National Environmental Policy Act (codified at 42 U.S.C. Section 4321 et seq.), and Section 6002 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (codified at 23 U.S.C. Section 139) 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; OHSUSA:753400213.1 -3-31 WHEREAS, in its 201 0 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 "Caltrans DB Cooperative 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 OCTA (the "OCT A Cooperative Agreement"), providing guidelines for cooperation between the Commission and OCTA 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 of the 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 OCTA Cooperative Agreement by and between the Commission and OCT A; WHEREAS, on July 25, 2012, the Commission executed and delivered the Caltrans DB Cooperative 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 project 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 anticipates full approval for project credit assistance in an original amount (excluding compounded interest) of not to exceed 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"); OHSUSA 753400213.1 -4-32 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 first supplement to issuing and paying agent agreement, dated as of Apri I 1, 2012, each by and between the Commission and U.S. Bank Trust National Association, as issuing and paying agent; WHEREAS, the Commission has heretofore authorized the issuance of one or more new series or subseries of bonds in an aggregate principal amount not to exceed five hundred fifty million dollars ($550,000,000) 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 one or more 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 2010 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 "Toll Financing Documents"): OHSUSA:753400213.1 -5-33 (1) a proposed form of Toll Revenue Bond Indenture, by and between the Commission and the Toll Trustee, including a master indenture (the "Master Toll Revenue Bond Indenture"), a first supplemental indenture (the "First Supplemental Toll Revenue Bond Indenture") and a second supplemental indenture (the "Second 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 obtaining the TIFIA Loan and with the issuance of one or more series of Toll Revenue Bonds (the "Series 2013 Toll Bonds") to be secured primarily by a first lien on Toll Revenues as authorized in the 2010 Resolution; (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; (3) a proposed form of bond purchase agreement setting forth the terms of sale of the Series 2013 Toll Bonds (the "Toll Purchase Contract"), in an aggregate principal amount not to exceed four hundred million dollars ($400,000,000), 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"); (4) a proposed form of official statement in preliminary form to be distributed in connection with the offering and sale of the Series 2013 Toll Bonds (the "Official Statement"); and (5) a proposed form of Continuing Disclosure Agreement to be executed and delivered by the Commission to assist 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 Toll Financing Documents relating to the financing described herein (the "Toll 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 Toll Financing and to authorize and direct the consummation of the Toll Financing, and desires to confirm the Commission's authorization in the 2010 Resolution ofthe 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, First Supplemental Toll Revenue Bond Indenture and the Second Supplemental Toll Revenue Bond Indenture, and to ratify the changes expected to be incorporated therein by the Executive Director pursuant to such authorization; NOW THEREFORE, THE RIVERSIDE COUNTY TRANSPORTATION COMMISSION RESOLVES: OHSUSA:753400213.1 -6-34 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 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 projected 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. The Executive Director is hereby further authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver any additional documents, including the Second Supplemental Toll Revenue Bond Indenture, which the Executive Director may deem necessary or desirable, following consultation with the Department of Transportation and bond counsel to the Commission, to establish the TIFIA Loan Agreement as a Toll Revenue Bond, secured and payable upon the tem1s set forth in the TIFIA Loan Agreement and the Toll Revenue Bond Indenture. Section 3. 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 Master Toll Revenue Bond Indenture, the First Supplemental Toll Revenue Bond Indenture and the Second Supplemental Toll Revenue Bond Indenture, all as set forth in the 2010 Resolution, is hereby confirmed and approved. Section 4. The Toll Revenue Bond Indenture authorized and approved in the 2010 Resolution, including the Master Toll Revenue Bond Indenture, the First Supplemental Toll Revenue Bond Indenture and the Second 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 of the 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, OHSUSA:753400213.1 -7-35 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 Jaw, 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 5. The proposed form of Purchase Contract presented to this meeting and the terms and conditions thereof are hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to sell the Series 2013 Toll Bonds to the Toll Bond Underwriters pursuant to the Purchase Contract, with the Toll Bond Underwriters' compensation not to exceed LJ% of the principal amount of the Series 2013 Toll Bonds, and to execute and deliver the Purchase Contract, in substantially said form, with such changes therein as the officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 6. The proposed fom1 of Official Statement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Official Statement 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 cet1ificate confirming that the Official Statement in preliminary form is "deemed final" by the Commission for purposes of Securities and Exchange Commission Rule 15c2-12. The distribution by the Toll Bond Underwriters of copies of the Official Statement in final fom1 to all actual purchasers of the Series 2013 Toll Bonds, and the distribution by the Toll Bond Underwriters of the Official Statement in preliminary fonn to potential purchasers of the Series 2013 Toll Bonds, is hereby authorized and approved. Section 7. The proposed form of Continuing Disclosure Agreement presented to this meeting is hereby approved. The Executive Director is hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Continuing Disclosure Agreement in substantially said form, with such changes therein as such officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 8. The Executive Director is hereby authorized 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 OHSUSA:753400213.1 -8-36 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 Toll Bonds or to fund any bond reserve fund established pursuant to the Toll Revenue Bond Indenture, including the Master Toll Revenue Bond Indenture, the First Supplemental Toll Revenue Bond Indenture and the Second Supplemental Toll Revenue Bond Indenture. Section 9. Each of the Executive Director, the Deputy Executive Director of the Commission or the Chief Financial Officer of the Commission, acting singly (each an "Authorized Officer") is hereby authorized to enter into or to instruct the Toll Trustee 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 Toll Revenue Bond Indenture, including the Master Toll Revenue Bond Indenture, the First Supplemental Toll Revenue Bond Indenture and the Second Supplemental Toll Revenue Bond Indenture, on such terms as the Authorized Officer executing the same 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 Toll Bonds, or enhance the relationship between risk and return with respect to investments. Section 10. 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 or other state or local revenues in order to fund a portion of the costs of the Riverside SR-91 Corridor Improvement Project authorized in the Expenditure Plan. Section 11. All approvals, consents, directions, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, whether before or after the issuance of the 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 or other agreements related thereto, and any of the foregoing that may be necessary or desirable in connection with any investment of proceeds of 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 Toll Trustee or any similar action may be given or taken by an Authorized Officer without further authorization or direction by the Commission, and each Authorized Officer, acting singly, 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 Officer may deem necessary or desirable to further the purposes of this Resolution. Section 12. All actions heretofore taken by the officers and agents of the Commission with respect to the Toll Financing and the issuance and sale of 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 OHSUSA:753400213.1 -9-37 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 Toll Bonds. The Chief Financial Officer of the Commission shall act as the Auditor-Controller of the Commission for execution of the Series 2013 Toll Bonds and is hereby authorized to execute and attest to the execution of 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 Statement and the representations and warranties in the Purchase Contract, 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 Toll Financing and the issuance and sale of the Series 2013 Toll Bonds and otherwise to carry out, give effect to and comply with the terms and intent ofthe Ordinance, this Resolution, the 2012 Resolution, the Act, 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 May_, 2013. ATTEST: By: __________________________ _ Clerk of the Board of the Commission OHSUSA:753400213.1 By: -10-38 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 May_, 2013, of which meeting all ofthe 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:7534002 I 3. I By---1 1-39 Clerk ATTACHMENT 2 DRAFT OF 04/15/13 PRELIMINARY OFFICIAL STATEMENT DATED , 2013 EW ISSUE-BOOK-ENTRY ONLY RATINGS: Fitch: " " IDAC Logo! S&P:" " See "RATINGS" herein. In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel 10 the Commission, based upon an analysis of exisling laws, regula/ions, rulings and court decisions, and assuming, among other mailers, compliance wilh cerlain covenanls, interesl on !he Series 2013 Bonds is excluded from gross income for federal income tax purposes under Section I 03 of the Internal Revenue Code of 1986 and exempl from State of California personal income taxes. In the fur/her opinion of Bond Counsel, interest on !he Series 2013 Bonds is no! a specific preference if em for purposes of the federal individual or corporale alternative minimum faxes, 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 lax consequences related lo the ownership or disposition of, or the accrual or receipl of interest on, the Series 2013 Bonds. See "TAX MATTERS" RIVERSIDE COUNTY TRANSPORTATION COMMISSION $ . $ Toll Revenue Senior Lien Bonds, 2013 Series A (Current Interest Obligations) Dated: Date of Delivery ---:-=-:----,=----=-Toll Revenue Senior Lien Bonds, 2013 Series B (Capital Appreciation Obligations) Due: as shown on inside cover The Toll Revenue Senior Lien Bonds described above (individually, the "Series 2013A Bonds" and the "Series 20138 Bonds," and collectively, the "Series 2013 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 1, 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 Trust Estate, which consists primarily of Toll Revenues of the Toll oad, subject to the provisions of the Indenture permitting the prior application thereof for the purposes described therein. Capitalized ;:!rms used on the cover page hereof and not otherwise defined shall have the meaning assigned thereto in "APPENDIX D -SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE-Definitions." The Series 2013A Bonds are being issued as Current Interest Obligations and the Series 2013B Bonds are being issued as Capital Appreciation Obligations. 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. The Series 2013B Bonds will not bear current interest; each Series 20 I 3B Bonds will increase in value by the accumulation of earned interest from its initial principal amount 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 20 13B Bonds will be compounded commencing on December I, 2013, and thereafter on June I and December I in each year to maturity [or the date of redemption prior thereto]. The Series 2013 Bonds initially are 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 20 13A Bonds and in Maturity Values of $5,000, or any integral multiple thereof, with respect to the Series 20 13B 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 G-BOOK-ENTRY SYSTEM" herein. The Series 2013 Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as described herein. See "THE SERIES 20 I 3 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-91 Corridor Improvement Project, as more particularly described herein. The remaining proceeds of the Series 2013 Bonds will be used to (i) pay capitalized interest on the Series 20 13A Bonds, (ii) make deposit to the Senior Lien Bond Reserve Fund, and (iii) pay certain Costs of Issuance of the Series 2013 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 ·nvestors must read the entire Official Statement to obtain information essential to making an informed investment decision. Investment \the Series 2013 Bonds is subject to certain risks. See "RISK FACTORS" herein. NEITHER THE FULL 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 57023390.6 40 THE COMMISSION TO THE EXTENT OF THE PLEDGE OF THE REVENUE, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR INTEREST OF 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 Under ·s by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California. lt is anticipated that the Series """v 13 Bonds will be available for delivery through the book-entry facilities of DTC on or about June_, 2013. Bank of America Merrill Lynch Goldman, Sachs & Co. J.P. Morgan Dated: , 2013 ' Preliminary; subject to change. 57023390.6 41 Maturity Date (June 1) $ __ $ __ Maturity (June 1) MATURITY SCHEDULE* SERIES 2013A BONDS CUSJP(IJ Principal Amount Interest Rate Yield Price (Base ) _ __ %Term Bond due June 1, 20_-Yield-%-CUSlP _ __ %Term Bond due June 1, 20_-Yield- %-CUSJP Initial Principal Amount SERIES 2013B BONDS Yield to Maturity Maturity Value Initial Offering Price per $5,000 in Maturity Amount • CUSIP(IJ *Preliminary, subject to change. (I) 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 2013 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 issuance 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 ofthe Series 2013 Bonds. 57023390.6 42 57023390.6 Riverside SR-91 Corridor Improvement Project lt:r:A;;thtf !¢Jt~r "-<)'\ :./ ,.,.. r"") \,!., ! td·J(~l:f";' ''(J ' ~rm V..:.w " -Art~fti'L)ti!Jf;ff'';l/ Hft) t }'ti 1J.h··~ ~ ~t~ • , •.• ..,,. c,. ~ ,·· a~~ ... \_ ~ r) ~~tl-~-., ,....,._..,. ---' .' f $.;.-::;; ~~ ~ o».r ...... 'flr7ior0f • ~.,, ,):"/A , ' • ;~~ 0 43 RIVERSIDE COUNTY TRANSPORTATION COMMISSION BOARD MEMBERS Karen Spiegel (City of Corona), Chair Marion Ashley (County of Riverside), 1st Vice Chair Daryl R. Busch (City ofPerris), 2nd Vice Chair John J. Benoit (City of Riverside) Kevin Jeffries (County of Riverside) Jeff Stone (County of Riverside) John F. Tavaglione (County of Riverside) Bob Botts (City of Banning) Roger Berg (City of Beaumont) Joseph DeConinck (City ofBlyth) Ella Zanowic (City of Calimesa) Mary Craton (City of Canyon Lake) Greg Pettis (City of Cathedral City) Steven Hernandez (City of Coachella) Scott Matas (City of Desert Hot Springs) Adam Rush (City ofEastvale) Lany Smith (City of Hemet) Douglas Hanson (City oflndian Wells) Glenn Miller (City oflndio) Frank Johnston (City of Jurupa Valley) Teny Henderson (City of La Quinta) Bob Magee ((City ofLake Elsinore) Scott Mann (City ofMenifee) Tom Owings (City ofMoreno Valley) Rick Gibbs (City ofMurrieta) Berwin Hanna (City ofNorco) Jan Harnik (City ofPalm Desert) Ginny Foat (City ofPalm Springs) Ted Weill (City of Rancho Mirage) Steve Adams (City of Riverside) Andrew Kotyuk (City of San Jacinto) Ron Roberts (City of Temecula) Ben Benoit (City of Wildomar) Basem Muallem (Caltrans) 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, Henington & Sutcliffe LLP San Francisco, California 57023390.6 Disclosure Counsel Fulbright & Jaworski L.L.P. Los Angeles, California 44 Trustee The Bank ofNew York Mellon Trust Company, N.A. Los Angeles, California No dealer, salesman or any other person has been authorized by the Riverside County Transportation Commissi (the "Commission") or the Underwriters of the Series 2013 Bonds (the "Underwriters") to give any infonnation ol 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 of this 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, but the Underwriters do not guarantee the accuracy or completeness of such infonnation. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFEL. TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2013 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL ON THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TJME. 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 INSJDE COYER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. 57023390.6 45 FORWARD-LOOKING STATEMENTS Cet1ain statements included or incorporated by reference in this Official Statement constitute forward-looking .,tatements. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget," "forecast," "assume" and other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties, assumptions 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 do or do not 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 DESCRlBED 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 EXPECT A TlONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED DO OR DO NOT OCCUR. 57023390.6 46 TABLE OF CONTENTS Page INTRODUCTION ....................................................................................................................................... I General ............................................................................................................................................ ! Sources of Payment and Security ................................................................................................... I The Project ...................................................................................................................................... 2 Traffic and Revenue Study ............................................................................................................. 4 Report of the General Engineering Consultant ............................................................................... 4 Additional Senior Lien Bonds and Parity Obligations .................................................................... 5 The Comtn iss ion ............................................................................................................................. 5 Investn1ent Risks ............................................................................................................................. 5 THE SERIES 2013 BONDS ........................................................................................................................ 5 General ............................................................................................................................................ 5 Book-Entry System ......................................................................................................................... 6 Reden1ption ..................................................................................................................................... 6 SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS .................................... 9 Sources of Payn1ent. .............................................................................................................. · .......... 9 Funds and Accounts; Flow of Funds ............................................................................................. 10 2013 Bonds Reserve Account ....................................................................................................... 19 Rate Covenant and Annual Budget.. ............................................................................................. 19 Additional Senior Lien Bonds and Parity Obligations .................................................................. 21 Subordinated Obligations; TIFIA Loan ........................................................................................ 22 RIVERSIDE COUNTY TRANSPORTATION COMMISSION .............................................................. 22 General .................................................................................................................... .-..................... 22 The Transportation Expenditure Plan ........................................................................................... 23 Comn1issioners .............................................................................................................................. 24 Executive Staff. ............................................................................................................................. 24 THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT ..................................................... 25 CONSTRUCTION OF THE PROJECT .................................................................................................... 26 Components of the Project. ........................................................................................................... 26 Construction Contract ................................................................................................................... 26 Design-Builder .............................................................................................................................. 28 Right-of-Way Acquisition ............................................................................................................ 28 Environmental Studies .................................................................................................................. 28 Project Costs and Cost Contingencies .......................................................................................... 29 OPERATION AND MAINTENANCE OF THE PROJECT .................................................................... 29 Electronic Tolling ......................................................................................................................... 30 Toll Rates ...................................................................................................................................... 31 Toll Violations Enforcement ......................................................................................................... 31 Independent Operation and Maintenance Study ........................................................................... 31 PROJECTED FLOW OF FUNDS ............................................................................................................. 31 TRAFFIC AND REVENUE EST1MATES ............................................................................................... 32 57023390.6 47 TABLE OF CONTENTS (continued) Page PLAN OF FINANCE ................................................................................................................................. 32 Estimated Sources and Uses of Bond Proceeds ............................................................................ 33 Project Sources and Uses of Funds ............................................................................................... 34 Commission Funding .................................................................................................................... 34 TIFIA Loan ................................................................................................................................... 35 Series 2013 Bonds Delivery Contingency .................................................................................... 39 DEBT SERVICE REQUIREMENTS ........................................................................................................ 40 ESTIMATED CASH FLOW AND DEBT SERVICE COVERAGE ........................................................ 40 RISK FACTORS ....................................................................................................................................... 42 General .......................................................................................................................................... 42 Construction Risks ........................................................................................................................ 44 Operating Risks ............................................................................................................................. 45 FINANCIAL STATEMENTS ................................................................................................................... 46 LITIGATION ............................................................................................................................................. 47 LEGAL MATTERS ................................................................................................................................... 47 TAX MATTERS ........................................................................................................................................ 47 CONTINUING DISCLOSUR£ ................................................................................................................. 49 RATINGS .................................................................................................................................................. 49 FINANCIAL ADVISOR ........................................................................................................................... 50 UNDER WRITING .................................................................................................................................... 50 OTHER MATTERS ................................................................................................................................... 50 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-REPORT OF THE GENERAL ENGINEERING CONSULT ANT ........................... C-1 APPENDIX D-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ........................ D-1 APPENDIX E-SUMMARY OF CERTAIN PROVISIONS OF THE TIFIA LOAN AGREEMENT ........................................................................................................... E-1 APPENDIX F-FORM OF CONTINUING DISCLOSURE AGREEMENT ...................................... F-1 APPENDIX G-BOOK-ENTRY SYSTEM ......................................................................................... G-1 APPENDIX H-FORM OF BOND COUNSEL OPINION .................................................................. H-1 II 57023390.6 48 OFFICIAL STATEMENT relating to RIVERSIDE COUNTY TRANSPORTATION COMMISSION $-=-:---=-Toll Revenue Senior Lien Bonds, 2013 Series A $----,-----,,-Toll Revenue Senior Lien Bonds, 2013 Series B (Current Interest Obligations) (Capital Appreciation Obligations) 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 Senior Lien Bonds, Series 2013A (the "Series 2013A Bonds") and its Toll Revenue Senior Lien Bonds, 2013 Series B (the "Series 2013B Bonds" and, together with the Series 20 13A Bonds, the "Series 2013 Bonds"). References to "Senior Lien Bonds" herein shall mean all bonds or other obligations identified as the Riverside County Transportation Commission Toll Revenue Bonds authorized by, issued in accordance with, 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 I, 2013 (the "Master Indenture"), by and between the Commission and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated as of June l, 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 D-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." This Official Statement contains, in par1, 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 Trust Estate on an equal and ratable basis with any Parity Obligations issued in the future in accordance with the provisions of the Indenture, subject to the provisions of the Indenture permitting prior application thereof. The Trust Estate is comprised of (i) Toll Revenues, (ii) 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), (iii) all Swap Revenues, and (iv) all amounts (including the proceeds of Obligations) held by the Trustee in each Fund and Account established under the 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 'Preliminary; subject to change. 57023390.6 49 drawing on any Credit Support Instrument). See "SOURCES OF PAYMENT AND SECURlTY FOR THE SERIES 2013 BONDS." The Series 2013 Bonds are also secured by amounts held in the 2013 Bonds Reserve Account within the Senior Line Bond Reserve Fund. On the date of delivery of the Series 2013 Bonds, proceeds of the Series 2013 Bonds in the amount of$ , representing the initial 2013 Bonds Reserve Requirement, will be deposited in the 2013 Bonds Reserve Account, and shall be applied pursuant to the Indenture to make up any shortfall in the payment of interest and/or principal and/or redemption price (excluding any redemption premium) due on the Series 2013 Bonds. Also, proceeds of the Series 20 13A Bonds in the amount of$ will be deposited in the 2013 Series A Capitalized Interest Account, which amount will be sufficient to pay interest on the Series 20 13A Bonds through and including _____ _ NEITHER THE FULL 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 OR INTEREST OF THE SERIES 2013 BONDS. The Project General. 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 I-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 widthfrom 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 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. Two major freeway facilities intersect the Project: the 1-15 and SR-71. The Riverside SR-91 Corridor Improvement Project (the "Project") will extend the OCTA SR-91 Express Lanes from the Orange County/Riverside County Line approximately eight miles to the 1-15/SR-91 Interchange in Riverside, California by constructing one general purpose lane in each direction from the SR-91 /SR-71 interchange to 1-15, and converting the existing HOY lanes into two tolled express lanes, ultimately providing five general purpose lanes and two tolled express lanes in each direction. The Project also includes a two-lane direct tolled connector approximately 2.8 miles in distance providing SR-91 tolled express lanes access/egress with 1-15 South. This direct tolled connector commences near Grand Avenue on SR-91, and ends on 1-15 South near Ontario Avenue in the City of Corona. All ofthe Commission sponsored tolled express lanes are referred to herein as the "RCTC SR-91 Express Lanes." The Commission will use the services of the existing OCTA SR-91 Express Lanes operator, Cofiroute USA, LLC ("Cofiroute" or the "Toll Operator"), to serve as operator of the RCTC SR-91 Express Lanes. Cofiroute currently is responsible for managing the OCT A SR-91 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 RCTC SR-91 Express Lanes. 57023390.6 2 50 For additional information regarding the Project, see "THE RIVERSIDE SR-91 CORRIDOR IMPROVEMENT PROJECT," "CONSTRUCTION OF THE PROJECT" and "OPERATION AND MAINTENANCE OF THE PROJECT" Plan of Finance. The total cost of the Project is estimated at $[1.35] billion. The Project will be financed with (i) direct cash contributions from revenues generate by the Measure A Sales Tax along with State Transportation Improvement Program funds of the Commission, (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 TlFlA Loan, all as more fully described herein. The delivery and sale of Series 2013 Bonds will be conditioned upon and contemporaneous with the delivery and sale of the 2013 Sales Tax Revenue Bonds in the approximate principal amount of $ and the closing of the TIFIA Loan Agreement providing for the TlFlA Loan. TIFIA Loan. The Commission will enter into the TIFlA Loan Agreement with the United States Department of Transportation acting by and through the Federal Highway Administrator (the "TJFJA Lender") in order to obtain a loan in the approximate amount of [$451.0] million (the "TIF!A Loan") under the Transportation Infrastructure Finance and Innovation Act. Proceeds of the TIFIA Loan, when drawn upon, are expected to be used to finance a portion of the costs ofthe Project. The TlFlA Loan will be evidenced by a toll revenue bond of the Commission issued pursuant to the Indenture and a Second Supplemental Indenture, dated as of June 1, 2013, by and between the Commission and the Trustee (the "TIFIA Bond"). Certain conditions must be met for the Commission to draw funds under the TIFIA Loan Agreement and the obligations of the TIFIA Lender to advance funds under the TIFIA Loan Agreement may be suspended or terminated. See "RISK FACTORS-Construction Risks-Conditions to Drawing on the TIFIA Loan Agreement." Under the Indenture, the TlFIA Bond will be secured by the Trust Estate on a basis subordinate to the Series 2013 Bonds, except as provided below. Upon the occurrence and during the continuance of any Bankruptcy Related Event of the Commission (as defined in the Indenture), the TlFIA Bond will, if the Owner of the TIFIA Bond is the TIFlA Lender or another federal governmental lender at such time, automatically and without action on the part of the TIFIA Lender or any other person immediately become and be of equal rank and in parity with the Senior Lien Bonds or Parity Obligations and will be entitled to all rights of an Owner of Senior Lien Bonds or Parity Obligations (including, without limitation, the right of payment pro rata with other Senior Lien Bonds or Parity Obligations pursuant to the Indenture). Upon such event, the money and investments held in the TJFIA Payment Fund allocable to the payment of the TIFIA Bond are required to be transferred by the Trustee to the Senior Lien Bond Fund. See "SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS-Subordinated Obligations; TJFIA Loan." Key Project Agreements The Commission is working in partnership with California Department of Transportation (Caltrans), Federal Highway Administration (FHWA) and OCTA to obtain required environmental permits for the Project, procure a design-builder, secure project financing, design and construction, and operate and maintain the tolled express lane facility. Summaries of the key Project agreements are provided below. FHW A/Caltrans/RCTC High Profile Project Agreement (HPPA). The Project has been designated a Major Project and a High Profile Project by the FHWA due to the Project cost exceeding $500 million, innovative financing through use of toll revenues, and the use of a federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan. This agreement outlines the roles, 57023390.6 3 51 responsibilities, and requirements of FHWA, Caltrans, and the Commission as it relates to oversight and risk management of the Project. RCTC/Corona Cooperative Agreement. The Project lies almost entirely within the City of Corona. This agreement outlines the roles, responsibilities, and obligations of the Commission and the City of Corona relative to Project implementation, including design, right-of-way (ROW), construction, and funding. One of the unique approaches outlined in the agreement is the delegation of in-process design reviews and construction independent quality assurance (JQA) from the City of Corona to the Commission. This approach is intended to mitigate the risk of third-party delay. The City of Corona will maintain final design and construction approval for improvements under its jurisdiction. RCTC/OCTA Cooperative Agreement (ORCA). The tolled express lanes will be interoperable with OCTA's existing SR-91 Express Lanes and share a common operator, Cofiroute. Under this cooperative agreement, the Commission and OCTA will use a common toll operator and agree-on cost and revenue sharing, toll policies, business rules, interoperability of technology, OCTA review of design plans and construction activities, and shared marketing activities. RCTC/Caltrans Toll Facility Agreement (TFA). This agreement, an amendment to the existing franchise agreement between Caltrans and OCTA, eliminated OCTA's tolling rights along the SR-91 Corridor in the Riverside County. This agreement is a follow-up to AB 1316, providing state franchise rights to the Commission and authorization to toll the SR-91 from the Orange County Line to 1-15. The agreement outlines the Commission's leasehold rights to Caltrans' right-of-way (ROW) and Caltrans' oversight role in the operations and maintenance of the SR-91 express lanes. RCTC/Caltrans Design-Build Cooperative Agreement. This agreement outlines the roles and responsibilities of the Commission and Caltrans relative to Project implementation, including design, ROW, construction, and funding. The agreement also outlines the respective agency roles in providing design reviews, construction oversight, and Project IQA and approvals. RCTC/Riverside County Agreement. This agreement outlines the roles, responsibilities, and obligations of the Commission and Riverside County relative to Project implementation, including design, right-of-way (ROW), construction, and funding. One of the unique approaches outlined in the agreement is the delegation of in-process design reviews and construction independent quality assurance (JQA) from the County to the Commission. This approach is intended to mitigate the risk of third-party delay. Riverside County will maintain final design and construction approval for improvements under its jurisdiction. Traffic and Revenue Study The Commission has engaged Stantec Consulting Services Inc. ("Stantec") to be the traffic consultant for the Project. Stantec has prepared the "Riverside County 91 Express Lanes Extension Investment Grade Study" dated May 9, 2012, as supplemented by Stantec's Supplemental Letter dated May _, 2013 (the "Study"), which is attached hereto as APPENDIX B. The traffic and revenue projections reached in the Study are based on various assumptions and the Study should be read in its entirety. See "TRAFFIC AND REVENUE ESTIMATES." Report of the General Engineering Consultant The Commission has engaged Parsons Transportation Group ("Parsons") to prepare a Report of the General Engineering Consultant (the "Engineering Report") to document and describe the location, preliminary engineering design features, total project cost estimates, projected operation and 57023390.6 4 52 maintenances expenses, renewal and replacement expenses and the procurement schedule of the Project. The Engineering Rep01t is included as APPENDIX C to this Official Statement. Matters addressed in the Engineering Report are based on various assumptions and the Engineering Report should be read in its entirety. Additional Senior Lien Bonds and Parity Obligations The Indenture permits the Commission, subject to certain conditions, to issue from time to time additional Senior Lien Bonds or Parity Obligations secured on a parity with the Series 2013 Bonds. Furthennore, upon the occurrence of a Bankruptcy Related Event while the TIFIA Lender or another federal governmental lender owns the TIFIA Bond, the TIFIA Bond will be deemed to be a Parity Obligation. In such event, the TIFIA Bond would be secured by and payable from the Trust Estate on a parity with the Series 2013 Bonds and any other Outstanding Bonds. The Commission Riverside County Transportation 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 I30000 et seq.) (as amended, the "Act"). The Commission was established in 1977 to oversee the funding and coordination of all public transp01tation 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 infonnation regarding the Commission, see "THE COMMISSION." 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 statements included in this Official Statement are based on infonnation 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. 57023390.6 5 53 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 I in the years shown on the inside cover of this Official Statement. Each Series 20 13A 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 2013A 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 2013B Bonds will not bear current interest; each Series 2013B 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 thereofto 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 I and December 1 in each year to maturity [or the date of redemption prior thereto]. The principal of, premium, if any, and interest on the Series 2013A Bonds and the Accreted Value of the Series 2013B Bonds will be payable in lawful currency of the United States of America. While the Series 20 I 3 Bonds are Book-Entry Obligations, payment of debt service (including the Accreted Value of the Series 2013B Bonds) 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 Obligations, the principal of and premium, if any, or the Accreted Value on all such 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 the Series 20 13A 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 20 I 3A 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 2013 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 G-BOOK-ENTRY SYSTEM." 57023390.6 6 54 Redemption Optional Redemption of Series 2013A Bonds. The Series 20 13A Bonds maturing on or before June I, 20 _ shall not be subject to redemption prior to their respective stated maturities. The Series 20 13A Bonds maturing on or after June I, 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 I, 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 20 13A Bonds maturing on June I, 20 _ and June I, 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 I 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. Series 20 13A Bonds Maturing June 1, __ _ Sinking Fund Installment Dates (June 1) (I) (I) Final Maturity. Sinking Fund 1 nstallments Series 2013A Bonds Maturing June I, __ Sinking Fund Installment Dates (June I) (I) (I) Final Maturity. Sinking Fund Installments [Series 2013B Bonds Not Subject to Redemption. The Series 20 13B 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 20 13A 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 20 13A 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 13A 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 57023390.6 7 55 event Series 20 13A 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 20 13A Bonds are registered in the name of Cede & Co., as nominee of DTC, and less than all of such Series 20 13A Bonds within a maturity are being redeemed, the Series 20 13A 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 Obligations, 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 Obligations 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 Obligations to be redeemed in part only, the identity of the Obligations to be redeemed. Except in the case of conditional optional redemption, each such notice will also state that on said date there will become due and payable on each of said Obligations 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 Obligations 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 for any defect in the CUSIP number that appears on any Obligation or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Commission nor the Trustee 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 Obligations 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 Obligations thereby called for redemption, such Obligations shall not become due and payable, 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 of the Obligations, rescind and cancel such notice of redemption by Written Request of the Commission to the Trustee, and any optional redemption of Obligations 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 Obligations 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 Obligations called for optional redemption and such failure to optionally redeem the Obligations called for redemption will not be a default under the Indenture. 57023390.6 8 56 Purchase In Lieu of Redemption. In lieu of mandatory redemption from Sinking Fund Installments, the Commission may surrender to the Trustee for cancellation Series 20 13A Term Bonds purchased on the open market and such Series 2013A Term Bonds will be cancelled by the Trustee. If any Series 20 l3A 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. SOURCES OF PAYMENT AND 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 the Trust Estate, subject only to the provisions of the Indenture permitting the prior application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Series 20 13 Bonds are not secured by a mortgage or deed of trust on, or other security interest in, the Project. 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. Trust Estate. The "Trust Estate," as described in the Indenture, is comprised of (i) the Toll Revenues, (ii) 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), (iii) all Swap Revenues, and (iv) all amounts (including the proceeds of Obligations) held by the Trustee in each Fund and Account established under the 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). The Trust Estate does not include Measure A Sales Tax Revenues, state or federal grant funds or any other revenues of the Commission beyond Toll Revenues and the other components of the Trust Estate described above. Toll Revenues. "Toll Revenues," as defined in the Indenture, means (i) toll revenues, user fees, fines, rents or other similar charges payable for use of the Toll Road, (ii) 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 that are actually applied or reserved for application to the repair, restoration or replacement of the Toll Road, (iii) proceeds of any condemnation awards with respect to the Toll Road, except to the extent actually applied or reserved for application to the replacement of the Toll Rod, (iv) liquidated damages for delayed completion payable to the Commission under a construction contract relating to the Toll Road or a portion thereof, except for the portion of such liquidated damages that is deposited to the Project Fund or an Account therein and applied or reserved for payment of Project Costs relating to the Toll Road or such portion during such period of delayed completion, (v) proceeds of credit support provided by the Toll Operator pursuant to the Operating Agreement, and (vi) any other incidental or related fees or charges; but excluding therefrom ROW Revenues (revenues from sale of excess right-of-way property) and cash advances representing deposits against future toll payments from users or potential users of the Toll Road. 57023390.6 9 57 Toll Road. "Toll Road," as defined in the Indenture, 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 tolling 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 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" under the Indenture. "Toll Road" shall not include any Special Project. Initially, "Toll Road" initially means any such toll lanes and facilities (including structures, on-ramps, connector roads, bridges, and roadways that are on, necessary for, or related to the construction or operation ofthe Toll Road) on the portion ofSR-91 between the Orange and Riverside County line and Interstate 15 that constitute a part of the Riverside SR-91 Corridor Improvement Project. Revenue. "Revenue," as defined in the Indenture, means (i) Toll Revenues; (ii) 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 (iii) all Swap Revenues. Net Revenue. "Net Revenue," as defined in the Indenture, means for any Fiscal Year, Revenue less Operation and Maintenance Expenses for that Fiscal Year (excluding, in such calculations, any extraordinary or one-time revenues from Revenue and any extraordinary or one-time expenses from Operation and Maintenance Expenses when determining Net Revenue for such Fiscal Year), 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 Commission 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, projections of the Commission. 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 Commission's obligation to repay the TIFIA Bond is secured by a lien on, pledge of and security interest in the Trust Estate that is subordinate and junior to the lien on, pledge of and security interest in the Trust Estate securing the Series 2013 Bonds; provided, however, that upon the occurrence of a Bankruptcy Related Event under the Indenture, the TlFIA Bond will become a Parity Obligation payable from and secured by the Trust Estate 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 Funds and Accounts, which are established and created and maintained in trust by the Trustee: • Toll Revenue Fund • Project Fund, and within the Project Fund, the Senior Lien Bonds Account, the Permitted Second Lien Obligations Account, the Subordinate Obligations Account, the Sales Tax Revenue Bonds Account and the Commission Equity Account • Rebate Fund 10 57023390.6 58 • 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 • Permitted Second Lien Obligations Reserve Fund • Subordinate Obligations Payment Fund and the Subordinate Obligations Repayment Account therein • Subordinate Obligations Reserve Fund • Repair and Rehabilitation Fund • Capital Expenditures Fund • Residual Fund • Surplus Fund The Indenture also establishes the Operation and Maintenance Fund, which is created and maintained by the Commission. The funds in the Operation and Maintenance Fund shall be applied by the Commission to pay Operation and Maintenance Expenses in accordance with the terms of the Indenture. Deposit of Toll Revenues. As long as any Senior Lien Bonds, Parity Obligations, Reserve Facility Costs, Permitted Second Lien Obligations, or Subordinate Obligations remain unpaid, the Commission assigns and will cause Toll Revenues to be transmitted by the Toll Operator on at least a weekly basis directly to the Trustee for deposit in the Toll Revenue Fund. Toll Revenue Fund. From and 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. On each Monthly Funding Date from and 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) and the absence of any Event of Default, the Trustee shall make the following 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 transferred on any date pursuant to any clause below until amounts sufficient as of that Monthly Funding 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 57023390.6 II 59 Operation and Maintenance Expenses then due and payable, plus [one-sixth][NOT ONE-TWELFTH?] of the Operations and Maintenance Expenses projected in accordance with the most recently-adopted 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, (x) on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Senior Lien Bond Interest Payment Account the sum of (A)( I) in the case of outstanding Senior Lien Bonds or Parity Obligations with semiannual interest payment dates, one-sixth (I /6) of the amount of the interest payable on such Senior Lien Bonds and Parity Obligations on the next interest payment date; (2) in the case of outstanding Senior Lien Bonds or Parity Obligations with quarterly interest payment dates, one-fourth (1/4) of the amount of the interest payable on such Senior Lien Bonds and Parity Obligations on the next interest payment date; and (3) in the case of outstanding Senior Lien Bonds or Parity Obligations with monthly interest payment dates, the amount of interest payable on such Senior Lien Bonds and Parity Obligations 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 on such Senior Lien Bonds or Parity Obligations, 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 and Parity Obligations on such interest payment date; and (y) on each Monthly Funding Date, to the applicable Swap Parties, scheduled Hedging Obligations due under any Qualified Swap Agreements, if any, net of any scheduled amounts payable to the Commission with respect to such scheduled Hedging Obligations; Fourth, on each Monthly Funding Date and 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) or six months before the first semi-annual principal payment date (including any mandatory sinking fund redemption date), to the Senior Lien Bond Principal Payment Account, the sum of (A)( I) in the case of outstanding Senior Lien Bonds or Parity Obligations with annual principal or mandatory sinking fund payment dates, one-twelfth (1 112) of the principal and mandatory sinking fund redemptions due on the Senior Lien Bonds and Parity Obligations; and (2) in the case of outstanding Senior Lien Bonds or Parity Obligations with semi-annual principal or mandatory sinking fund payment dates, one-sixth (I /6) of the principal and mandatory sinking fund redemptions due on the Senior Lien Bonds and Parity 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 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 Senior Lien Bond Principal Payment Account equal to the amount of principal due on such principal payment date or mandatory sinking fund redemption date; Fifth, on each Monthly Funding Date, to the Senior Lien Bond Reserve Fund (or the applicable Account therein) the amount necessary so that the balance therein equals the applicable Senior Lien Bond Reserve Requirement calculated as of the most recent Calculation Date; provided, however, that in the event that the Trustee shall have withdrawn moneys in the Senior Lien Bond Reserve Fund or any Account therein for the purpose of paying principal of or interest on the applicable Senior Lien Bonds or Parity Obligations when due as provided in the Indenture, the Trustee shall also deposit to the Senior Lien 57023390.6 12 60 Bond Reserve Fund or the applicable Account therein, on each of the next twelve Monthly Funding Dates after such withdrawal, an amount equal to one-twelfth (I I 12'11) of the aggregate amount of each such unreplenished withdrawal until the amount on deposit in the Senior Lien Bond Reserve Fund (or the applicable Account therein) is equal to the applicable Senior Lien Bond Reserve Requirement; provided further however, that in the event such requirements cannot be fully funded, the funds available shall be transferred to each Account in the Senior Lien Bond Reserve Fund ratably in accordance with its respective shortfall; Sixth, (x) on each Monthly Funding Date and 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)( I) 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; (2) in the case of outstanding Permitted Second Lien Obligations with quarterly interest payment dates, one-fourth (1 /4) of the amount of the interest payable on such Permitted Second Lien Obligations on the next interest payment date; and (3) in the case of outstanding Permitted Second Lien Obligations with monthly interest payment dates, the amount of interest payable on such Permitted Second Lien Obligations 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 Jnterest 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 on such Permitted Second Lien Obligations, any other amount required to make the amount credited to the Permitted Second Lien Obligation Interest Payment Account equal to the amount payable on the Permitted Second Lien Obligations on such interest payment date, and (y) on each Monthly Funding 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, on each Monthly Funding Date and 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) or six months before the first semi-annual principal payment date (including any mandatory sinking fund redemption date), to the Permitted Second Lien Obligations Principal Payment Account, the sum of (A)(1) in the case of outstanding Permitted Second Lien Obligations with annual principal or mandatory sinking fund payment dates, one-twelfth ( 1112) of the principal and mandatory sinking fund redemptions due on the Permitted Second Lien Obligations; and (2) in the case of outstanding Permitted Second Lien Obligations with semi-annual principal or mandatory sinking fund payment dates, one-sixth ( 1 /6) 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 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; Eighth, on each Monthly Funding Date, to the Permitted Second Lien Obligations Reserve Fund, the amount necessary so that the balance therein equals the applicable Permitted Second Lien Obligations Reserve Requirement calculated as of the most recent Calculation Date; provided, however, that in the event that the Trustee shall have withdrawn moneys in the Permitted Second Lien Obligations Reserve Fund therein for the purpose of paying principal of or interest on the applicable Permitted Second Lien 57023390.6 13 61 Obligations when due as provided in the Indenture, the Trustee shall also deposit to the Permitted Second Lien Obligations Reserve Fund, on each of the next twelve Monthly Funding Dates after such withdrawal, an amount equal to one-twelfth ( 1/12'") of the aggregate amount of each such unreplenished withdrawal until the amount on deposit in the Pennitted Second Lien Obligations Reserve Fund is equal to the applicable Permitted Second Lien Obligations Reserve Requirement; Ninth, (x) on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Subordinate Obligations Payment Fund the sum of (A)( I) in the case of outstanding Subordinate Obligations with semiannual payment dates, one-sixth (I /6) of the amount payable on such Subordinate Obligations on the next payment date (such transfers to commence, with respect to Subordinate Obligations in the form of or securing payment of a TIFIA Loan, on the Monthly Funding Date that is six months prior to the date on which TIFIA Mandatory Debt Service is first due and payable, and to equal one-sixth (I /6) of the TIFIA Mandatory Debt Service due on the immediately succeeding TIFIA Payment Date); and (2) in the case of outstanding Subordinate Obligations with monthly payment dates, the amount payable on the next 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 Subordinate Obligations Payment Fund and not repaid; plus (C) if such Monthly Funding Date is also a payment date or the last Monthly Funding Date before a payment date, any other amount required to make the amount credited to the Subordinate Obligations Payment Fund equal to the amount payable on the Subordinate Obligations on such payment date; Tenth, on each Monthly Funding Date, to the Subordinate Obligations Reserve Fund, the amount, if any, necessary to increase the balance therein (taking into account amounts then on deposit therein) to the Subordinate Obligations Reserve Fund Required Balance; Eleventh, on each Monthly Funding Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior clauses First through Tenth, to the Repair and Rehabilitation Fund, an amount equal to one-twelfth (1/12) of the Repair and Rehabilitation Fund Required Deposit for such Fiscal Year until such deposit is made in full; Twelfth, in the event the Commission has Subordinate Obligations outstanding in the form of or securing payment of a TIFIA Loan, on each Monthly Funding Date commencing on the Monthly Funding Date that is six months prior to the date on which TIFlA Scheduled Debt Service is first due and payable, to the Subordinate Obligations Payment Fund, an amount which equals one-sixth (1/6) of the TlFIA 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 payment date for such TIFIA Loan; Thirteenth, on each Monthly Funding Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Twelfth clauses, to the Capital Expenditures Fund to the extent necessary to fund such Fund so that the balance therein (taking into account amounts then on deposit therein) equals the Capital Expenditures Fund Required Balance; Fourteenth, on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, 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 counterparties to Qualified Swap Agreements or Swaps, an amount equal to any Hedging Termination Obligations payable upon a termination of any such Qualified Swap Agreements or Swaps; and 57023390.6 14 62 Fifteenth, on each Monthly Funding Date, and only to the extent funds are then available after application of funds for the purposes specified in the prior First through Fourteenth clauses, on such Monthly Funding Date, to the Residual Fund, all remaining amounts, if any. 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 in the Permitted Second Lien Obligations Reserve Fund are in excess of the applicable Permitted Second Lien Obligations Reserve Requirement, or amounts in the Subordinate Obligations Reserve Fund are in excess of the applicable Subordinate Obligations 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. [INSERT DIAGRAM OF THE FLOW OF FUNDS] Project Fund. The following separate Accounts are established and created within the Project Fund: • Senior Lien Bonds Account • Permitted Second Lien Obligations Account • Subordinate Obligations 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 Accounts, including the Senior Lien Bonds Account, the Permitted Second Lien Obligations Account, the Subordinate Obligations 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 Obligations 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. Subordinate Obligations Account. The net proceeds of each draw under the TIFJA Loan shall be deposited on the respective funding date of such draw in the Subordinate Obligations Account in accordance with, and used for the purposes set forth in, the TlFIA Loan Agreement. Notwithstanding anything to the contrary set forth in the Indenture, the lien on the Subordinate Obligations Account (and 57023390.6 15 63 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. 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 in 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. Except as otherwise required by any applicable Law, to the extent that on the date of final completion of the construction of the Project, as evidenced by the delivery to the Trustee of a Certificate of the Commission, there shall be any funds remaining on deposit in the Project Fund (or any Account thereof), such funds will be deposited into the Toll Revenue Fund. Operation ami Maintenance Fund. Upon receipt of amounts transferred to the Operation and Maintenance Fund under the Indenture, the Commission shall thereafter apply the funds in the Operation and Maintenance Fund for the payment of Operation and Maintenance Expenses 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 or Parity Obligations that has a Senior Lien Bond Reserve Requirement, the Senior Lien Bond Reserve Requirement for those Senior Lien Bonds or Parity Obligations shall be deposited in the Senior Lien Bond Reserve Fund in an Account solely for the benefit of those Senior Lien Bonds or Parity Obligations. 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 or Parity Obligations and any one or more subsequently issued Series of Senior Lien Bonds or Parity Obligations 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 or Parity Obligations shall be deposited in the Senior Lien Bond Reserve Fund in an Account solely for the benefit of those Senior Lien Bonds or Parity Obligations and any additional Senior Lien Bonds or Parity Obligations with the same pooled Senior Lien Bond Reserve Requirement, and on the date of issuance of any such additional Senior Lien Bonds or Parity Obligations, there shall be deposited in the Account the amount necessary to increase the 57023390.6 16 64 balance in the Account to an amount equal to the Senior Lien Bond Reserve Requirement for all Senior Lien Bonds or Parity Obligations secured by that Account. Monies on deposit in each Account within the Senior Lien Bond Reserve Fund shall be applied by the Trustee as follows: ( 1) If on any interest payment date for Senior Lien Bonds or Parity Obligations secured by an Account within the Senior Lien Bond Reserve Fund, principal payment date for such Senior Lien Bonds or Parity Obligations or redemption date on which such Senior Lien Bonds or Parity Obligations 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 such Account of the Senior Lien Bond Fund in accordance with 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 such Senior Lien Bonds or Parity Obligations, 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 applicable Account of 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 such Senior Lien Bonds or Parity Obligations 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 with respect to such Senior Lien Bonds or Parity Obligations 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 with respect to such Senior Lien Bonds or Parity Obligations. (2) At maturity of the Senior Lien Bonds or Parity Obligations upon earlier redemption of all or any portion of the Outstanding Senior Lien Bonds or Parity Obligations secured by funds on deposit in an Account of the Senior Lien Bond Fund, the Commission may direct the Trustee to transfer such funds on deposit in such Account of 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 or Parity Obligations secured by such funds or to an escrow account established for defeasance of such Senior Lien Bonds or Parity Obligations pursuant to the Indenture, provided that, if less than all of the Senior Lien Bonds or Parity Obligations mature or are redeemed, the amount on deposit in such Account of the Senior Lien Bond Reserve Fund following such transfer shall not be less than the Senior Lien Bond Reserve Requirement applicable to the applicable Senior Lien Bonds or Parity Obligations to remain Outstanding following such maturity or redemption of Senior Lien Bonds or Parity Obligations. (3) Except as provided in paragraph (2) above, any amounts on deposit in an Account of the Senior Lien Bond Reserve Fund in excess of the applicable Senior Lien Bond Reserve Requirement shall be applied in accordance with the Indenture. The Reserve Requirement for any Series of Senior Lien Bonds or Parity Obligations 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 or in part by the Reserve Facility, provided that those terms and conditions shall conform to 57023390.6 17 65 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 or Parity Obligations 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. Subordinate Obligations Reserve Fund. If, on any. Monthly Payment Date immediately preceding a date when debt service on Subordinate Obligations (including, in the case of a TIFIA Loan, only TIFIA Mandatory Debt Service) shall be due and payable, the amounts available in the Subordinate Obligations Payment Fund for the payment of such debt service, after taking into account any transfers made into such Fund in accordance with clause Ninth of the clauses describing the Indenture flow of funds on such Monthly Payment Date, are not sufficient to pay such debt service payable on such payment date, then moneys shall be transferred to the Subordinate Obligations Payment Fund from the Subordinate Obligations Reserve Fund to pay such insufficient amounts. The lien on the Subordinate Obligations Reserve Fund (and all earnings thereon) shall secure the payment only of the Subordinate Obligations and the related interest of the registered Owner of such Subordinate Obligations with respect to amounts on deposit in such Fund from time to time, and such amounts shall be solely for the benefit of such holder of Subordinate Obligations until such funds have been disbursed in accordance with the Indenture. If necessary, the Commission shall instruct the Trustee to create Accounts within the Subordinate Obligations Reserve Fund to facilitate compliance with the provisions of this paragraph and the applicable provisions of any Supplemental Indenture. On the date that the Subordinate Obligations are paid in full, the amounts remaining on deposit in the Subordinate Obligations Reserve Fund on such date will be transferred to the Surplus Fund. Repair and Rehabilitation Fund. The Trustee shall, in accordance with the Indenture, cause amounts in the Toll Revenue Fund, to the extent available, to be deposited into the Repair and Rehabilitation Fund from time to time [in accordance with a schedule with budgeted variance][NTD: Nossman to provide specific language]. 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 Repair and Rehabilitation Fund Permitted Expenditures. Residual Fund; Surplus Fund. On June I [and December I] each year, after the payment of all amounts due on the Commission's Obligations on such date, the amounts remaining on deposit in the Residual Fund shall be transferred on each such date as follows: (I) while Subordinate Obligations in the form of or securing payment of a TIFIA Loan remain Outstanding: (A) one-half to the Subordinate Obligations Prepayment Account, and (B) one-half to the Surplus Fund; or (2) if no Subordinate Obligations in the form of or securing payment of a TIFIA Loan remain Outstanding, to the Surplus Fund. Funds on deposit in the Surplus Fund and funds credited to such Fund will not be subject to the lien and pledge of the Indenture, 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 Monthly Funding Date; provided that no Event of Default has occurred and is continuing hereunder and that there is no shortfall in funding 57023390.6 18 66 the amounts required by clauses First through Fourteenth of the flow of funds on such Monthly Funding Date. Insufficient Funds. Notwithstanding any other provision to the contrary in the Indenture or in any Financing Document, should the amount on deposit in any of the Funds or Accounts listed in the First through Thirteenth clauses in the Indenture flow of funds be insufficient to pay when due obligations payable from such Fund or Account pursuant to the terms of the Indenture, the Trustee shall transfer to such Fund or Account moneys held in other Funds and Accounts listed in the First through Fourteenth clauses in the Indenture flow of funds; provided that: (i) such transfers will be made from Funds and Accounts in inverse order of the deposits, (ii) no such transfers will be made from a Fund or Account earlier in the order of deposits 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 Subordinate Obligations Reserve Fund, or the Permitted Second Lien Obligations Reserve Fund (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 Fund), or any Redemption Fund or other Fund or Account not referenced in the deposits set forth in the Indenture flow of funds. Amounts in the Senior Lien Bond Reserve Fund shall only be used to make payments on the Senior Lien Bonds, and are not available for other purposes. Amounts in the Permitted Second Lien Obligations Reserve Fund shall only be used to make payments on the applicable Permitted Second Lien Obligations, and are not available for other purposes. Amounts in the Subordinate Obligations Reserve Fund shall only be used to make payments on the applicable Subordinate Obligations, and are not available for other purposes 2013 Bonds Reserve Account On the date of delivery of the Series 2013 Bonds, proceeds of the Series 2013 Bonds in the amount of$ , representing the initial 2013 Bonds Reserve Requirement, will be deposited in the 2013 Bonds Reserve Account within the Senior Lien Bond Reserve Fund, and shall be applied pursuant to the Indenture to make up any shortfall in the payment of interest and/or principal and/or redemption price (excluding any redemption premium) due on the Series 2013 Bonds. "2013 Bonds Reserve Requirement" means, as of any particular date of calculation, with respect to the Series 2013 Bonds, an amount equal to the least of (i) Maximum Annual Debt Service on the Series 2013 Bonds, (ii) one hundred twenty-five percent (125%) of average annual Debt Service on the Series 2013 Bonds, or (iii) ten percent ( 1 0%) of the original principal amount of the Series 2013 Bonds. Rate Covenant and Annual Budget The Commission covenants that it shall at all times, beginning in the second Fiscal Year following the Substantial Completion Date, establish, levy, maintain and collect tolls in connection with the Toll Road and establish such charges for use of the property constituting part of the Toll Road, including, without limitation and as permitted by law, leasehold payments, concession payments, rents and other charges, as shall be sufficient, collectively, to produce Net Revenue in each Fiscal Year, in an amount at least equal to the greater of (I), (2), or (3) below: (I) one hundred __ percent (I_%) of the Annual Debt Service in such Fiscal Year on all Outstanding Senior Lien Bonds and Parity Obligations; or (2) one hundred __ percent (1_%) of the Annual Debt Service in such Fiscal Year on all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and Subordinate Obligations; or 57023390.6 19 67 (3) one hundred percent (I 00%) of the Annual Debt Service in such Fiscal Year on all Outstanding Obligations, plus the amounts required to be deposited into the Senior Lien Bond Reserve Fund, the Permitted Second Lien Obligations Reserve Fund, the Subordinate Obligations Reserve Fund and the Repair and Rehabilitation Fund and any other Fund established by a Supplemental Indenture to be funded by Revenue. In making the calculations in (I), (2), and (3) above, the Commission may take into consideration as a credit against Annual Debt Service any amounts received, or reasonably expected to be received, in the Fiscal Year from or as a result of any additional security granted or pledged to the Bondholders by the Commission with respect to the Obligations; provided, that if the pledge is not for the benefit of all Obligations, the amounts expected to be received may only be taken into account when making the calculation for the affected Obligations. 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: (i) to compute projected Net Revenue for each Fiscal Year and the projected ratios described in (1), (2) and (3) above (the "Coverage Ratios") 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 furnish promptly to the Trustee a Certificate of the Commission setting forth the results of such computations; and (iii) if any Coverage Ratio is less than the applicable rate requirement, 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 Ratios for that Fiscal Year to equal or exceed the rate requirement. 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 tile with the Trustee a report setting fm1h the Net Revenue for such Fiscal Year. The failure of toll rates to yield an amount sufficient to achieve the Coverage Ratio shall not be deemed to constitute an Event of Default so long as the Commission complies with the requirements set forth below. If any such report indicates that the Net Revenue for such Fiscal Year were Jess than the amount required, 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 Jess, the maximum amount deemed feasible by the Traffic Consultant and that the Traffic Consultant estimates will not adversely affect the amount of Net Revenue). 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 Revenue 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 under the Indenture. 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, tire, 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; 57023390.6 20 68 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 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 Revenue. See "APPENDIX D -SUMMARY OF CERTAIN PROVISIONS OF THE TIFIA LOAN AGREEMENT" for a summary of rate covenants under the TIFIA Loan Agreement. Additional Senior Lien Bonds and Parity Obligations Subsequent to the issuance of the Series 2013 Bonds, additional Senior Lien Bonds or Parity Obligations may be issued if the requirements described in clauses (a), (b) or (c) below are met. (a) the Senior Lien Bonds or Parity Obligations are issued for purposes of refunding Outstanding Senior Lien Bonds or Parity Obligations by providing funds for the payment of any or all of the following: (I) The Bond Obligation, redemption or purchase price (including premium, if any) 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 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 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 projects that the Average Annual Debt Service on all Outstanding Bonds and Parity Obligations, Permitted Second Lien Obligations and TlFIA Mandatory Debt Service after the issuance of the proposed additional Bonds or Parity Obligations will be less than the Average Annual Debt Service on all Outstanding Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFJA Mandatory Debt Service prior to the issuance of such proposed Bonds or Parity Obligations; and provided further, that, if the maturity date of such additional Bonds or Parity Obligations to be issued extends to a date later than the final maturity date of the Obligations being refunded, then Net Revenue in each Fiscal Year from and after the final maturity date of such refunded Obligations is projected to be not less one hundred thirty percent (130%) of the Annual Debt Service payable in each such Fiscal Year with respect to all 57023390.6 21 69 Outstanding Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service, including the proposed additional Bonds or Parity Obligations; (b) the Commission delivers a report of the Traffic Consultant to the effect that, as of the date of issuance of the additional Senior Lien Bonds or Parity Obligations, either: (I) Net Revenue during the preceding Calculation Period ending not more than ninety (90) days prior to the date of delivery of the proposed additional Senior Lien Bonds or Parity Obligations, was sufficient to satisfY the Toll Road rate covenant of the Indenture (which report may assume that a revision of the tolls that was approved and implemented by the Commission subsequent to the beginning of such Calculation Period had been in effect for the entire Calculation Period), or (2) projected Net Revenue for each Fiscal Year over the term of the proposed additional Bond or Parity Obligations is expected be sufficient to satisfy the Toll Road rate covenant of the Indenture in each Fiscal Year. 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, while the Commission has outstanding Subordinate Obligations in the form of or securing payment of a TIFIA Loan held by the TIFIA Lender, the Commission has received the written consent of the TIFIA Lender to such issuance; or (c) the Senior Lien Bonds or Parity Obligations constitute Completion Obligations; provided, however, that prior to the incurrence of such Completion Obligations, the Commission shall furnish to the Trustee: (i) a certificate of a licensed architect or engineer estimating the costs of completing the facilities for which such Completion Obligations are to be incurred, (ii) a Certificate of the Commission certifYing that the amount of such Completion Obligations to be incurred will be sufficient, together with other funds, if applicable, to complete construction of the facilities as estimated by the architect or engineer in respect of which such Completion Obligation is to be incurred and pay capitalized interest, if any, on Commission Obligations Outstanding during the completion period, and (iii) evidence that such Senior Lien Bonds and Parity Obligations will be rated at an investment grade rating by such credit rating agency. See "APPENDIX E -SUMMARY OF CERTAIN PROVISIONS OF THE TIFIA LOAN AGREEMENT" for a summary of additional conditions to or restrictions on the Commission's ability to issue additional Senior Lien Bonds or Parity Obligations. Subordinated Obligations; TIFIA Loan Except to the extent restricted by a Supplemental Indenture, the Commission may issue or incur Pennitted Second Lien Obligations and other subordinate obligations, such as the TIFIA Loan, payable out of the Trust Estate 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 T/FIA Loan Agreement contains provisions providing for a lien on the Trust Estate on a parity with the Senior Lien Bonds and Parity Obligations in the event of Bankruptcy Related Event, as defined in the Indenture. 57023390.6 22 70 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 transpm1ation 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-597 call boxes along the County roadways and 21 FSP tow trucks providing assistance to more than 43, I 00 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, 2010 and 2011 with the addition of four members in total 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. The Transportation Expenditure Plan On November 5, 2002, 69.2% of the voters of the County approved Measure "A"-The Riverside County Transportation Commission Transportation Expenditure Plan (the "Plan") and Retail Transaction and Use Tax Ordinance which expressed the following 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." 57023390.6 23 71 The goals of the Plan are as follows: (1) Maintain and improve the quality of life in Riverside County by supplementing existing funds for transportation; (2) provide for accountability in the expenditure of taxpayer funds; (3) provide for equity in the distribution of Measure "A" Revenues; and (4) provide for local control 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 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 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 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 57023390.6 24 72 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. Michael Blomquist, Toll Program Director. Michael Blomquist has served as the Toll Program Director since 2008 after joining the Commission in 2007. · He is responsible for managing the toll program which includes the planning, design, construction, and operation of the Commission's two tolled express lane facilities. He previously worked in the consulting engineering arena in various project and program management roles on large design-build freeway projects in California, Oregon, and Utah. He has 22 years of experience in transportation infrastructure and is a professional engineer in the State of California. He holds a bachelors of science degree in civil engineering from the California Polytechnic State University at San Luis Obispo and a masters degree in business from the California State University at Fullerton. 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 of I-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 11 feet to 12 feet, as well as auxiliary lanes in each direction. In Orange County, two tolled express lanes ("OCTA SR-9 1 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'') Jane in each direction in Riverside County. Two major freeway facilities intersect the Project, including 1-15 and SR-71. The Project will extend the OCTA SR-91 Express Lanes from the Orange County/Riverside County Line approximately eight (8) miles to the 1-15/SR-91 Interchange in Riverside, California by constructing one general purpose lane in each direction from SR-91 /SR-71 interchange to 1-15, and converting the existing HOY into a tolled express lane providing two tolled express lanes and five (5) general purpose Janes in each direction. The Project also includes a two (2) lane direct tolled connector approximately 2.8 miles in distance providing SR-91 tolled express lanes access/egress with I-15 South. This direct tolled connector comme?1ces near Grand Avenue on SR-91, and ends on 1-15 South near Ontario Avenue in the City of Corona. All of the Commission sponsored tolled express lanes are referred to herein as the "RCTC SR-91 Express Lanes." Other Project improvements include reconstruction with geometric improvements of five local interchanges, addition of auxiliary Janes 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 ofthe SR-91/1-15 interchange. 57023390.6 25 73 The 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 in Riverside County. CONSTRUCTION OF THE PROJECT Components 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 to the design-builder. These activities generally include performing preliminary engineering, conducting traffic and revenue studies, obtaining the required environmental approvals, beginning of early right-of-way ("ROW') acquisitions, negotiating various agency agreements for environmental, design, construction, and operations, negotiating utility relocation agreements, obtaining state and federal tolling authority, securing state design-build authority, developing and adopting a toll policy, development of the design-build procurement documents, selection of the design-build contractor, award of the contract and issuance of a limited notice to proceed, and securing of Project funding. The Design-Build phase includes the activities that begin with financial close and issuance of the full notice to proceed 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 estimated costs for the Project derived from detailed design work and analysis of current costs for comparable components. The Federal Highway Administration and 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. [DELETE SINCE WE WILL HAVE A FIRM CONTRACT? MIGHT BE RELEVANT TO GIVE SOME ASSURANCE THAT CONTRACT PRICE IS FEASABLE?] Construction Contract The Commission and Atkinson/Walsh, a Joint Venture (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 for which it is responsible to obtain completion ofthe Project by the deadlines specified in the DB Contract. The DB Contract incorporates the following terms and provisions: Scope. [DESCRJBE DESCRIPTION OF SCOPE OF WORK. ALSO INCLUDE DESCRIPTION OF JNTERF ACE BETWEEN DESIGN-BUILDER AND COFIROUTE] Contract Price. 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. 57023390.6 26 74 Retainage. The Commission will withhold funds (the "Retainage") from each payment to be made to the Design-Builder until such time as substantial completion is achieved, and thereafter will cease withholding Retainage from future payments. The Retainage will be an amount equal to 5% of the payment amount, after subtracting any amounts owing for design services and construction management services. Completion Deadline. Authorization allowing Design-Builder to proceed with work under the DB Contract will be provided by the Commission's issuance of a notice to proceed. Notice to proceed will be issued in two phases. The first notice to proceed (NTPI) was issued following the execution of the DB Contract on May 8, 2013. Issuance ofNTP1 authorized the Design-Builder to begin the planning and designing related work. The second notice to proceed (NTP2) is required to be issued no earlier than 120 days after issuance ofNTPl. The issuance ofNTP2 authorizes the Design-Builder to perfonn all other work and activities for the Project. The Design-Builder is required to achieve substantial completion within I ,218 days after the effective date ofNTP2, which is expected to be issued no earlier than September 2013. If the issuance of NTP2 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 1,218 days after close of the financing for the Project (including the Series 2013 Bonds). The Design-Builder is required to achieve final completion within 120 days after substantial completion and achieve final acceptance within 120 days after final completion. Force Majeure Event. The Contract Price is subject to increase for additional costs, and the completion deadline is subject to extension, due to a "Force Majeure Event," [as defined in the DB Contract. Force Majeure Events include events that could not have been avoided by the exercise of caution, due diligence or reasonable efforts by the Design-Builder or its related entity and include events such as natural disasters, epidemics, civil unrest, war, major legislation or regulation inability to obtain required approvals.] [IN THE ALTERNATIVE, PROVIDE COMPLETE DEFINITION FROM DB CONTRACT?] 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 applicable deadlines, subject to any Force Majeure Event relief provided in the CB Contract. The amount of such liquidated damages are as follows: • $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. Any portion of liquidated damages that is deposited to the Project Fund or an Account therein and applied or reserved for payment of Project Costs relating to the Toll Road during a period of delayed completion are not included in Toll Revenues. Accordingly, such portion of liquidated damages would not be available to pay debt service on the Series 2013 Bonds. 57023390.6 27 75 Performance and Payment Bond. On or before the issuance by the Commission of the initial notice to proceed, the Design-Builder is required 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. [DESCRIBE REQUIREMENTS FOR DRAW AND POTENTIAL DEFENSES] See "RISK FACTORS -Construction Risks-Payment and Performance Bonds." Guarantees. Each of The Walsh Group, Ltd. and Clark Construction Group, LLC (each, a "DB Guarantor") has executed a guaranty (each, a "DB Guaranty") in favor of the Commission that guarantees on an unconditional basis the full and prompt payment and performance when due of all of the obligations of the Design-Builder arising out of, in connection with, under or related to the DB Contract (including, without limitation, the Design-Builder's obligation to make payment to the Commission for liquidated damages, stipulated damages, and indemnity). Under each DB Guaranty, the DB Guuarantor is entitled to the benefit of all defenses available to the Design-Builder under the DB Contract. 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. Furthermore, the Design-Builder is required to obtain delay coverage for loss of revenue due to accidental physical damage to the Project. Valuation will be based on estimated toll revenues with a period of indemnity limited to a period of no less than one year. The minimum loss valuation is $95,000 per day on an agreed basis. See "RISK FACTORS-Construction Risks-Limited Insurance Coverage." Design-Builder [IN FORMA TJON REGARDING DESlGN-BUILDER TO COME] Right-of-Way Acquisition The Project will require the acquisition of 74.27 acres of right-of-way, consisting of 248 parcels at an estimated cost of $144,100,000. As of the date of this Official Statement, the Commission has acquired 44 parcels at a cost of $36,668,000. [UPDATE PRIOR TO PRINTING] To address the specific risks associated with right-of-way acquisition that could hinder the ability of the Commission to meet the Project-specific goals and objectives, the Commission has implemented the following: • Development of a Project-specific ROW acquisition management plan (RAMP); • Implementation of a parcel mitigation planning program to minimize parcel impacts and reduce damages; • Implementation of an advanced and early acquisition program; and • Greater involvement of public outreach personnel in the acquisition process. 28 5 7023390.6 7 6 In addition, the Commission has entered into cooperative agreements with each of City of Corona and the County of Riverside outlining the roles and responsibilities of the Commission and the City of Corona or the County of Riverside, as applicable, relative to ROW acquisition, among other things. To the extent necessary, the Commission will use its power of eminent domain to acquire the necessary parcels. [DESCRIBE PLAN OF DISPOSITION OF SURPLUS AND FUNDING OF TJFIA RESERVE, FROM WHERE ROW ACQUISITION COSTS WJLL BE FUNDED AND SOURCE OF ESTIMATE OF TOTAL ROW COSTS] Environmental Studies Construction of the Project requires a variety of federal and state environmental perm its and other approvals. While the Commission expects to obtain any such approvals and permits that have not yet been obtained, there can be no assurances that construction of the Project will not be delayed as a result of delays in obtaining perm its and approvals. The major environmental permits with respect to the construction of the Project have been obtained. Preliminary engineering and environmental studies were initiated on the Project in September 2007. The studies determined that a full Environmental Impact Statement ("EJS") and Environmental Impact Report ("EIR") were required. Those documents were prepared by Parsons Brinckerhoff ("PB"). Caltrans 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 EJS/EIR to Caltrans in October 2011. The Project is included in the 20 I 2 Regional Transportation Plan (RTP) update that was adopted by the regional metropolitan planning organization, the Southern California Association of Governments ("SCAG"), on April 4, 2012. Completion of the environmental review through a Record of Decision ("ROD") occurred in November 2012. Project Costs and Cost Contingencies The following table provides the total costs of the Project including contingency funds: [INSERT TABLE SHOWING BREAK OUT OF THE CONSTRUCTION BUDGET] OPERATION AND MAINTENANCE OF THE PROJECT The Commission will use the services of the existing OCTA SR-91 Express Lanes operator, Cofiroute USA, LLC ("Cofiroute" or the "Toll Operator"), to serve as operator of the RCTC SR-91 Express Lanes. Cofiroute currently is responsible for managing the OCT A SR-9 I 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 RCTC SR-91 Express Lanes. Cofiroute will provide its services pursuant to the SR-91 Express Lanes Operating Agreement, dated ____ , 2013 (the "ORCOA"), by and among the Commission, OCTA and Cofiroute. The ORCOA will result in a single operator providing all operation and [first level] maintenance services for a single SR-91 tolled express lane system in Orange and Riverside Counties with such services payable by each of OCT A and the Commission from the revenues generated by its respective segment. 57023390.6 29 77 The Commission is responsible for roadway maintenance of the RCTC SR-91 Express Lanes infrastructure (e.g. pavement, barriers, channelizers, sign structures, etc.) pursuant to terms of the Toll Facilities Agreement between the Commission and Caltrans. The Commission will contract with Caltrans to perform this maintenance. Caltrans is responsible for the operations and maintenance for all SR-91 roadway elements outside the RCTC SR-91 Express Lanes. 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. Pursuant to the OR CO A, approximately six months prior to operational date of the RCTC SR-91 Express Lanes, Cofiroute is required to deliver cash, one or more letters of credit, United States Teasury securities and/or any combination thereof in the combined face amount of $10 million ($5 million of such security to be provided to the Commission and $5 million of such security to be provided to OCTA), as security for the performance of Cofiroute's obligations under the ORCOA. [DESCRIBE EXPERIENCE OF COFJROUTE AND ADDITIONAL TERMS OF ORCOA] Electronic Tolling As with the current OCTA SR-91 Express Lanes, the RCTC SR-91 Express Lanes will include an all-electronic toll collection system that will not accept cash on the road. All users will be required to have an account with a tolling agency that will issue a California standard (Title 21-compliant) FasTrak transponder to the customer. FasTrak transponders are fully interoperable with all toll roads and express lands in California, which will allow these customers to begin using the RCTC SR-91 Express Lanes as soon as it opens with no further administrative action on their part. The RCTC SR-91 Express Lanes will allow toll-free or discounted access to carpool vehicles with three or more occupants, depending on the time of day, and tolled access by single-occupant vehicles and carpools with few than three occupants. The goal of the Project is to make the transition from using the OCT A SR-91 Express Lanes to using the RCTC SR-91 Express Lanes as seam less as possible. 57023390.6 30 78 Tolls will be collected along the route at specific points of entry and departure, termed toll portals, as is currently done on the existing OCTA SR-91 Express Lanes. At the toll portal, an overhead antenna reads the transponder ID, encrypting the number for security causing a charge to be levied to the customer's account for the toll amount. The toll portal is also the point at which cameras record images of the vehicle's license plate for violation enforcement purposes. Cofiroute will be responsible for the proper collection, counting, handling, storage, transferring to the Commission's and OCT A's armored car service, and verification of the disposition of all collected funds. This includes cash payments, payments by credit card, check, or other sources associated with both SR-91 Express Lanes accounts and collections from violations and/or fines. Cofiroute will ensure that all funds are properly handled and stored in a vault prior to transfer to the Commission and OCTA armored car service. Cofiroute willl prepare the daily deposits for armored pickup and shall ensure that all cash and check remittances are kept intact with the deposit slip. Daily deposit records for bank deposit shall be distinguished by: • Type (Cash/Credit Card/Check) • Location • Payment Type (Tolls, Violations, Fees, Deposits, etc.,) Funds shall be transferred by armored car service to the bank designated by the Commission and OCTA and deposited into the custodial account established by the Commission and OCTA. Controls should be established over all cash and checks received at all times. Toll Rates In June 2012, the Commission adopted 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. See "APPENDIX B -RIVERSIDE COUNTY 91 EXPRESS LANES EXTENSION INVESTMENT GRADE STUDY." Toll Violations Enforcement According to California statutes, where video imaging or a photo is used for enforcement, the toll agency can pursue the vehicle's owner for collection of the toll plus administrative fees. Such enforcement measures are to be taken when a vehicle owner is not a registered program customer, has insufficient funds in his or her account, or his or her account has been closed. [DESCRJBE ENFORCEMENT PROCESS AND PARTIES INVOLVED] Cofiroute's back-office system has the is designed to generate warning letters and toll violation notices automatically or to take other actions, as determined by legislation and Commission and OCTA policies. Back-office violation processing functionality includes: • Manual review of the license plate data • Account verification • Retrieval of name and address 31 57023390.6 7 9 • Noticing • Payments • Collections • Court or administrative processing, as applicable Independent Operation and Maintenance Study At the Commission's request, Parsons Transportation Group prepared a Report of the General Engineering Consultant, attached hereto as APPENDIX C, to provide the Commission with an independent engineering opinion with respect to the probable annual operating, maintenance and administrative costs of the new SR-91 Tolled Express Lanes. The Commission has relied on such study in part in projecting Operation and Maintenance Expenses as set forth in the table below entitled "Estimated Cash Flow and Debt Service Coverage Table." [SUMMARY OF KEY FINDINGS TO BE ADDED] PROJECTED FLOW OF FUNDS The projected flow of funds under the Indenture is shown in the table below. See "SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2013 BONDS-Funds and Accounts; Flow of Funds." Also see "RISK FACTORS-General-Forward-Looking Statements." [INSERT PROJECTED ANNUAL FLOW OF FUNDS TABLE] 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 May 9, 2012, as supplemented by Stantec 's Supplemental Letter dated May _, 2013 (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 12,000 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 intemationally. Stantec's investment grade traffic and revenue reports have been the basis for the sale of over $31 billion in revenue bonds. The Study includes discussions of existing travel patterns; the study methodology, including the development, validation and application of the 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. 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 57023390.6 32 80 based on the OCT A policy, but allows for the increase of off-peak toll rates once certain volume thresholds are exceeded. The enhanced policy, which was adopted by the Commission in June 2012, 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. [DELETE?] PLAN OF FINANCE The total cost ofthe Project is estimated at $[1.35] billion. The Project will be financed with (i) the Commission's direct contribution of Measure A Sales Tax Revenues in the approximate amount of $ annually for a period of [three] years and State Transportation Improvement Program funds of the Commission in the approximate amount of$ , (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 "201 3 Sales Tax Revenue Bonds"), and (iv) pro.ceeds of the TlFlA Loan, all as more fully described below. The closing with respect to the Series 2013 Bonds, the 2013 Sales Tax Revenue Bonds and the TlFIA Loan are contingent on the successful concurrent closing with respect to all of them on the date of delivery of the Series 2013 Bonds. Information regarding the historical receipts of Measure A Sales Tax Revenues can be found in the Commission's Preliminary Official Statement dated __ , 2013, relating to the 2013 Sales Tax Revenue Bonds, which is hereby incorporated into this Official Statement by specific reference. Estimated Sources and Uses of Bond Proceeds The proceeds from the sale of the Series 2013 Bonds are estimated to be applied as set forth in the following table: Sources of Funds: Principal Amount of Series 2013A Bonds Principal Amount of Series 2013 B Bonds Premium/Original Issue Discount on Series 20 13A Bonds Premium/Original Issue Discount on Series 2013B Bonds Total Sources of Funds Uses of Funds: Senior Lien Obligations Account of Project Fund 2013 Series A Capitalized Interest Account(') 20 13 Bonds Reserve Account 2013 Bonds Costs of Issuance Account(2l (including Total Uses of funds (I) Amount deposited is expected to be sufficient to pay interest on the Series 2013 Bonds through and including m Costs of Issuance 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. 57023390.6 33 81 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 nom ina I 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. (I) Riverside SR-91 Corridor Improvement Project Sources (Nominal -$000's) Toll Revenue Bonds $ TIFIA Loan 2013 Sales Tax Revenue Bonds RCTC Annual Contributions of Sales Tax RCTC Pre-Development Contribution(Jl Investment Earnings STJP Funds Total Sources $ Uses (Nominal-$000's) Construction Fund Deposit(2l $ Capitalized Interest Fund Toll Revenue Bonds Deposit Sales Tax Bonds Deposit Debt Service Reserve Fund (Toll Revenue Bonds) Total Pre-Development Costs(J) Total Uses $ 168,908 445,835 449,132 132,366 95,143 12,582 2,000 1,355,966 1,011,806 31,077 81,197 16,891 214,995 1,355,966 Consists of amounts previously spent by the Commission on the Project from [DESCRIBE FUNDING SOURCES.] (2) Includes costs of issuance. (3) Includes retirement of$ of outstanding commercial paper notes. Commission Funding 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 lf2-cent sales tax that became effective on July I, 2009, less certain administrative fees paid to the California State Board of Equalization. The 20 J 3 Sales Tax Revenue Bonds are not payable from or secured by any Revenue securing the Series 2013 Bonds. 57023390.6 34 82 Commission Equity Account. The Commission has covenanted in the Indenture to deposit the following amounts into the Commission Equity Account, or otherwise provide for the payment of Project Costs from sources other than the funds on deposit in the Senior Lien Bonds Account, the Pennitted Second Lien Obligations Account, the Subordinate Obligations Account and the Sales Tax Revenue Bonds Account, as follows: Fiscal Year (ending June 30) Contribution Amount $ Such deposits or expenditures are expected to be made by the Commission from Sales Tax Revenues or other revenues of the Commission avai !able for such purpose. TIFIA Loan TIFIA Loan and TIFIA Bond. Pursuant to the Transportation Infrastructure Finance and Innovation Act of 1998, codified as 23 United States Code, Section 181, et seq. ("TIFIA"), 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 (the "TJFIA Loan Agreement") with the United States Department of Transportation acting by and through the Federal Highway Administrator (the "TJFIA Lender"), 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 TIFIA loan will be evidenced by a toll revenue bond of the Commission (the "TIFIA Bond"). Debt service on the TIFIA Bond is payable semiannually on each 1 and I, commencing 1, 20_. The final maturity date ofthe TIFIA Bond is 1, 20 __ See "ESTIMATED CASH FLOW AND DEBT SERVICE COVERAGE." TIFIA Loan Disbursement Conditions. Any disbursement by the TIFIA Lender of the TIFrA Loan to pay or reimburse the Commission for Eligible Project Costs incurred in connection with the Project, may be made no later than one year after the date on which the Project is open in its entirety to vehicular traffic (the "Substantial Completion Date"). The Commission must satisfY certain requirements and conditions to draw funds under the TIFIA Loan Agreement. Specifically, (a) the proceeds of all disbursements of the Tl FIA Loan may be used only to pay or to reimburse the Commission for Eligible Project Costs incurred by the Commission in connection with the Project, and (b) such disbursements will be made pursuant to a requisition made by the Commission in the form set forth in the TIFIA Loan Agreement and approved by the TIFIA Lender, which form must includes statements to the effect that the Commission (i) is in compliance with all of the terms and conditions ofthe 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 and as of the date of the draw; (ii) all documentation evidencing the Eligible Project Costs to be paid for or reimbursed by the disbursement has been delivered by the Commission as set forth in the TIFIA Loan Agreement; and (iii) the amount of the Requisition, together with all prior Requisitions, does not exceed the amount of the TIFIA Loan, and the amount of the Requisition together with the sum of all disbursements ofTIFIA Loan proceeds made and to be made for 57023390.6 35 83 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 set forth in the TIFIA Loan Agreement. In addition to the foregoing, each of the following conditions precedent must be satisfied or waived in writing by the TIFIA Lender in its sole discretion: (a) the Commission has certified as to the absence of debarment or suspension or voluntary exclusion from participation in Government contracts, procurement and other matters and has provided to the TIFIA Lender a certificate to that effect in the form attached to the TIFIA Loan Agreement, (b) the Commission has delivered to the TIFJA Lender satisfactory evidence of compliance with the requirements of the National Environmental Policy Act of 1969 (42 U.S.C. § 4321 et seq.), (c) the Commission has provided to the TJFJA Lender satisfactory evidence that the Project has satisfied the applicable planning and programmatic requirements of 23 U.S.C. §§134 and 135, (d) the Commission has demonstrated to the TIFJA Lender's satisfaction that the funds forecasted to be available under the Base Case Projections will be sufficient to complete the Project, (e) the Commission has 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, (e) the Commission has demonstrated to the TIFIA Lender's satisfaction that it has all necessary, permits and governmental approvals necessary to commence construction, except those required in the TIFIA Loan Agreement to be obtained by the Design-Build Contractor pursuant to the Design-Build Contract and delivered to the TIFIA Lender, and (f) the Commission has delivered to the to the TIFIA Lender a certified schedule acceptable to the TlFlA Lender demonstrating that the projected Revenues shall be sufficient to meet the Loan Amortization Schedule and meet the requirements of the Rate Covenant. The Tl FIA Lender is entitled to withhold approval of any pending or subsequent requests for the disbursement ofTIFJA Loan proceeds ifthe Commission (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 under the TIFlA Loan Agreement; or (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 by the TJFIA Loan Agreement; or (iv) an Event of Default under the TIFIA Loan Agreement has occurred and is continuing; or (v) 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 Commission with applicable federal or local law pertaining to the Project, or with the terms and conditions of the TIFIA Loan Agreement; or (vi) fails to observe or comply with any applicable federal or local law, or any term or condition of the TJFIA Loan Agreement; or (vii) 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 Commission, 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 Commission commences cure or correction within such thirty (30) day period and thereafter diligently completes such cure or correction within a further reasonable time period. 57023390.6 36 84 Default under TIFIA Loan Agreement. As described above, the TIFIA Lender is not required to fund the TIFIA Loan if a default under the TIFIA Loan Agreement has occurred and is continuing. An event of default exists under the TIFlA Loan Agreement if: (a) The Commission fails 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 TIFIA Loan Agreement, and any mandatory prepayment required pursuant to the TIFIA Loan Agreement) (each a "Payment Default"); or (b) The Commission fails to observe or perform any covenant, agreement or obligation of the Commission under the TIFIA Loan Agreement, the TIFJA 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 Commission 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 Commission 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; or (c) The Commission fails to complete the Project by , 2017, unless the Commission 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 TlFIA Lender (a "Development Default"). In such a case, the TIFIA Lender may: (A) suspend the disbursement of the TIFIA Loan proceeds under the TIFIA Loan Agreement; and (B) pursue such other remedies as provided in the TIFIA Loan Agreement, including declaring the TIFIA Default Rate in effect. The Commission shall immediately repay any unexpended TIFJA Loan proceeds previously disbursed to the Commission. The Commission has 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 Commission 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), or (d) Any of the representations, warranties or certifications of the Commission made in or delivered pursuant to the TlFlA Loan Documents shall prove to have been false or misleading in any material respect when made; or (e) (A) Any of the representations, warranties or certifications of the Commission 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 Commission 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 Commission shall have failed to cure such Misrepresentation Cross Default or 57023390.6 37 85 Covenant Cross Default or to obtain an effective written waiver thereof within 30 days after receipt of written notice thereof from the Tl Fl A Lender; or (B) The Commission defaults 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 Commission 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; or (f) 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 Commission 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; (g) [Failure to Maintain Existence]; or (h) A Bankruptcy Related Event shall occur; or (i) Operation of the Project shall cease for a continuous period of not less than 180 days unless' such cessation of operations shall occur by reason of an Uncontrollable Force and the Commission shall have in force an insurance policy or policies under which the Commission is entitled to recover substantially all Indenture Debt Service on Other Indenture Obligations, Debt Service on the TIFJA Bond and costs and expenses ofthe Commission during such cessation of operations. Whenever any Event of Default under the TIFIA Loan Agreement 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 under the TIFIA Loan Agreement or under the TIFIA Bond or the other TIFIA Loan Documents, and may prosecute any such judgment or final decree against the Commission including confession of judgment by the Commission against the Commission 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 Commission under the TJFIA Loan 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 Commission under the TIFIA Loan Agreement, the TJFlA Bond or the other TIFlA Loan Documents. Whenever any Event of Default under the TIFIA Loan Agreement involving fraud, misrepresentation, false claims, or similar criminal acts or acts of malfeasance or wrongdoing, shall have occurred and be continuing, the TJFJA Lender may suspend or debar the Commission from further participation in any Government program administered by the TIFJA Lender and to notify other departments and agencies of such default. See "RISK FACTORS -Construction Risks -Conditions to Disbursement under the TIFIA Loan Agreement." The TIFIA Bond will be issued and secured as a subordinate and junior obligation under the Indenture to the Series 2013 Bonds, except as provided below. 57023390.6 38 86 Upon the occurrence and during the continuance of any Bankruptcy Related Event of the Commission, the TIFIA Obligations will, if the owner of such TIFIA Obligations is the TIFIA Lender or another governmental lender at such time, automatically and without action on the part of the TIFJA 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 will become and be entitled to all rights of an owner of Senior Lien Bonds under the Indenture (including, without limitation, the right of payment pro rata with other Senior Lien Bonds and Parity Obligations under the Indenture). Upon such event, the money and investments held in the TIFIA Fund will be transferred by the Trustee to the Senior Lien Bond Debt Service Fund, and the money and investments held in the TJFIA Reserve Fund will be transferred by the Trustee to the Senior Lien Bond Debt Service Reserve Fund. As used in the TJFIA Loan Agreement and the Indenture, the term 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) 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. See "APPENDIX D -SUMMARY OF CERTAIN PROVISIONS OF THE TlFIA LOAN AGREEMENT" for additional information regarding the TIFIA Loan. Series 2013 Bonds Delivery Contingency The delivery and sale of Series 2013 Bonds will be conditioned upon and contemporaneous with the delivery and sale of the 2013 Sales Tax Revenue Bonds and the closing ofthe TIFIA Loan Agreement providing for the TIFIA Loan. 57023390.6 39 87 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 ESTIMATED CASH FLOW AND DEBT SERVICE COVERAGE Total Debt Service The table on the following page shows the estimated Toll Revenues of the Toll Road for the years ending December 3 I, 20_ through December 31, 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 TJFIA Loan) after deducting estimated Operation and Maintenance Expenses for the Toll Road. Actual operating results achieved during the projection period may vary from those presented below and such variations may be material. See "RISK FACTORS-General-Forward-Looking Statements." 57023390.6 40 88 Year En~ing December 31 Toll Revenues<'l Estimated Cash Flow and Debt-Service Coverage Table Operation and Maintenance Expensest~l Net Revenues Available for Debt Service Series 2013 Bonds Debt Service Senior Bond Debt Service Coverage <Il The Commission's authority to levy tolls continues for __ years after the final maturity of the Series 2013 Bonds. <2> Estimates were prepared by Stantec in their Riverside County 91 Express Lanes Extension Investment Grade Study attached hereto as APPENDIX B. Source: The Commission. 57023390.6 41 89 Mandatory TIFIA Bond Debt Service Total Debt Service Cover·age 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 fo11h 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 and 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, future economic, competitive and market conditions and future business decisions, all of which are 57023390.6 42 90 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. Limited Obligalions. The Series 2013 Bonds are special, limited obligations of the Commission payable solely from, and secured solely by a first lien on and pledge of the Trust Estate, which consists primarily of Toll Revenues. Toll Revenues will be generated only after the substantial completion of the Project. Other than the pledge of the Trust Estate, 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." Dilution of Senior Lien Security Upon Bankruptcy Related Event. Upon the occurrence of a Bankruptcy Related Event while the TIFIA Lender or another governmental lender owns the TlFIA Bond, the TIFIA Bond will be deemed to be a Parity Obligation. In such event, the TIFIA Bond would be secured by and payable from the Revenue on a parity with other Outstanding Bonds. Furthermore, in such event, the TIFIA Lender, as holder of greater than a majority of the Senior Obligations then Outstanding, would be entitled to exercise remedies under the Indenture without the consent of the owners of the Series 20 13 Bonds. Limitation of Remedies Under the Indenture. The remedies available to Owners of the Series 2013 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 of the 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 prope1ty 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 depend in many respects 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 ofthe United States Bankruptcy Code 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. 57023390.6 43 91 Constmction Risks 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. [DESCRIBE IN DETAIL MAJOR APPROVALS THAT NEED TO BE OBTAINED INCLUDING BNSF CONSTRUCTION & MAINTENANCE AGREEMENTS] 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 of the Project is significantly delayed. Conditions to Drawing on the TIFIA Loan Agreement. The Commission expects to draw funds under the TIFJA 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 TIFT A 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 DB Contract is$ , and the DB Contract requires payment and perfonnance 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 perfonnance 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 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. 57023390.6 44 92 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 m~eure, 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 (including delay coverage for loss of revenue due to accidental physical damage to the Project with valuation based on estimated toll revenues with a period of indemnity limited to a period of no less than one year and minimum loss valuation of $95,000 per day on an agreed basis), 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, unforeseeable environmental or geological conditions, discovery of archaeological artifacts, changes in law, 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 RIVERS I DE 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 D-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE-Covenants of the Commission-Insurance." Operating Risks The ability for 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 57023390.6 45 93 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. No Non-Compete Provisions. Neither the Indenture nor the TIFIA Loan Agreement contains restrictions on the ability of the Commission or Caltrans to construct new or improved roadways or other transit facilities that may compete with the Toll Road. 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 Toll 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 of the 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 offunds available to pay debt service on the Series 2013 Bonds. Seismic or Other Casualty to the Toll Road. ln the event of an earthquake, or other similar significant damage to the Toll Road, complete closure of the Toll Road might be required during the time needed for repair. In the event the Toll Road is destroyed or damaged by earthquake or some cause other than ordinary and usual usage thereof, amounts, if any, received from the proceeds of insurance may be used to pay all or any part ofthe cost of reconstructing, restoring, repairing or rehabilitating the Toll Road (including the toll collection systems). There can be no assurance that such amounts will be received, or if received will be sufficient to fully restore, repair or rehabilitate the Toll Road. 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 McGiadrey LLP, certified public accountants, as stated in their report therein. McGiadrey 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 infonnation concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by McGiadrey LLP with respect to any event subsequent to the date of its report. The Commission represents that, except as described herein, there has been no material adverse change in its financial position since June 30, 2012. 57023390.6 46 94 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 H 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 Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California. 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 20 J3 Bonds is excluded from gross income for federal income tax purposes under Section I 03 of the Internal Revenue Code of I 986 (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 H. 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 57023390.6 47 95 original offering to the public at the first price at which a substantial amount of such Series 2013 Bonds is sold to the pub! ic. Series 20 I 3 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 Series 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 20 I 3 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 20 I 3 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 Jaw, 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 op1111on 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. 1t 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, 57023390.6 48 96 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 Series 2013 Bonds ends with the issuance of the 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 I im ited 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 o~ the Series 2013 Bonds to provide certain financial information 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 F -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 20 J 3 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 marketabi I ity of the Series 20 13 Bonds. 57023390.6 49 97 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 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 and Goldman, Sachs & Co., as co-representatives of themselves, and J.P. Morgan Securities LLC (collectively, the "Underwriters"), as the Underwriters of the Series 2013 Bonds, have agreed to purchase the Series 20 13A 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. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the Underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the Commission and to persons and entities with relationships with the Commission, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the Commission (directly, as collateral securing other obi igations or otherwise) and/or persons and entities with relationships with the Commission. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. 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 57023390.6 50 98 documents for further information. Reference is made to original documents in all respects. Copies may be obtained from the Commission. 57023390.6 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: 51 99 Executive Director 57023390.6 APPENDIX A COMMISSION AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30,2012 A-1 100 57023390.6 APPENDIXB RIVERSIDE COUNTY 91 EXPRESS LANES EXTENSION INVESTMENT GRADE STUDY B-1 101 57023390.6 APPENDIX C REPORT OF THE GENERAL ENGINEERING CONSULTANT C-1 102 57023390.6 APPENDIXD SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE D-1 103 57023390 6 APPENDIXE SUMMARY OF CERTAIN PROVISIONS OF THE 2013 TIFIA LOAN AGREEMENT E-1 104 57023390.6 APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 105 APPENDIX G 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 Par1icipants 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 I 00 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 Par1icipants 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 57023390.6 G-1 106 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 Par1icipants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates 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 of DTC's par1nership 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 of principal 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 w_ill 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 ofDTC) is the responsibility of the Commission or the Trustee, disbursement of 57023390.6 G-2 107 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). ln 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 151h 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 I 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 tenns 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. 57023390.6 G-3 108 60L I-H NOINidO '13:SNflO::> UNOH .'10 Wl!O.'I HXIUN3ddV MASTER INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and ATTACHMENT 3 OH&S Draft 3/31/2013 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee OHS USA:260935709 .9 Dated as of June I, 2013 Riverside County Transportation Commission Toll Revenue Bonds 110 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 2.10 Section 2.11 TABLE OF CONTENTS ARTICLE I DEFINITIONS Page Definitions ........................................................................................................ 6 ARTICLE II THE OBLIGATIONS Authorization and Purposes ........................................................................... 30 General Terms of Obligations ........................................................................ 30 Execution ....................................................................................................... 31 Certificate of Authentication .......................................................................... 31 F onns of Obligations ..................................................................................... 31 Issuance, Sale and Delivery of Obligations; Application of Proceeds .......... 31 Mutilated, Lost, Stolen or Destroyed Obligations ......................................... 32 Exchangeability and Transfer of Obligations; Persons Treated as Holders ........................................................................................................... 32 Cancellation ................................................................................................... 33 Obligations Ratably Secured .......................................................................... 33 Book-Entry Only System ............................................................................... 33 ARTICLE III ADDITIONAL BONDS, PARITY OBLIGATIONS, AND SUBORDINATED OBLIGATIONS Section 3.01 Section 3.02 Section 3.03 Section 3.04 Section 3.05 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 5.01 Section 5.02 OI-ISUSA:260935709.9 Restrictions on Issuance of Additional Senior Lien Bonds and Parity Obligations .............................. 0 ...................................................................... 35 Proceedings for Issuance of Additional Senior Lien Bonds and Parity Obligations ..................... 00 •••••••••••• 0 ••• 0 ............................................................. 36 Restrictions on Issuance ofPermitted Second Lien Obligations or Additional Subordinate Obligations .............................................................. 37 Proceedings for Issuance of Permitted Second Lien Obligations or Additional Subordinate Obligations .............................................................. 39 Subordinate Obligations; TIFIA Loans ......................................................... 39 ARTICLE IV REDEMPTION Redemption and Purchase of Obligations ...................................................... 39 Notice of Redemption ... 0 ................................................................................ 39 Conditional Notice of Redemption; Rescission ............................................. 40 Effect of Redemption ..................................................................................... 40 Partial Redemption of Obligations ................................................................. 41 ARTICLE V PLEDGE; FUNDS AND ACCOUNTS Deposit ofRevenue by Trustee; Toll Revenue Fund ..................................... 41 Establishment of Funds and Accounts ........................................................... 41 -I-1 1 1 Section 5.03 Section 5.04 Section 5.05 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 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 6.10 Section 6.11 Section 6.12 Section 6.13 Section 6.14 Section 6.15 Section 6.16 OHSUSA:260935709.9 TABLE OF CONTENTS (continued) Page Toll Revenue Fund; Priority of Deposits and Transfers ................................ 42 Project Fund ................................................................................................... 4 7 Commission Equity Contribution to Project.. ................................................ 49 Operation and Maintenance Fund .................................................................. 49 Capital Expenditures Fund ............................................................................. 49 Senior Lien Bond Reserve Fund .................................................................... 49 Subordinate Obligations Reserve Fund ......................................................... 51 Repair and Rehabilitation Fund ..................................................................... 52 Residual Fund; Surplus Fund ......................................................................... 52 Rebate Fund ................................................................................................... 52 Senior LienBond Interest Payment Account.. ............................................... 52 Senior Lien Bond Principal Payment Account .............................................. 53 Permitted Second Lien Obligations Interest Payment Account.. ................... 53 Permitted Second Lien Obligations Principal Payment Account .................. 53 Subordinate Obligations Payment Fund ........................................................ 53 Establishment and Application of the Redemption Fund .............................. 53 Permitted Second Lien Obligations Reserve Fund ........................................ 54 Records .......................................................................................................... 54 Investment by Trustee .................................................................................... 54 Subsidy Payments .................................................................................... : ..... 55 Withdrawal and Application of Funds; Priority of Transfers from Funds and Accounts ....................................................................................... 56 Insufficient Funds; Application of Funds; Priority ........................................ 56 ARTICLE VI COVENANTS OF THE COMMISSION Punctual Payment and Performance .............................................................. 57 Against Encumbrances ................................................................................... 57 Toll and Revenue Covenants ......................................................................... 57 Annual Budget ............................................................................................... 59 Operation and Maintenance ofthe Toll Road ................................................ 59 Retention of Assets ........................................................................................ 60 Insurance ........................................................................................................ 60 Payment of Claims ......................................................................................... 60 Receipt and Deposit of Cash Advances ......................................................... 60 Toll Agreements ............................................................................................. 61 Construction and Maintenance From Other Sources Permitted .................... 61 Tax Covenants ............................................................................................... 61 Accounting Records; Financial Statements and Other Reports ..................... 62 Protection ofT rust Estate and Rights of Holders .......................................... 62 Payment of Governmental Charges and Compliance with Governmental Regulations ............................................................................. 63 Maintenance of Powers .................................................................................. 63 -II-112 Section 6.17 Section 6.18 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 10.0 I Section 10.02 Section 1 0.03 Section 11.01 Section 11.02 Section 11.03 Section 11.04 Section 11.05 Section 11.06 OHSUSA:260935709.9 TABLE OF CONTENTS (continued) Page Covenants Binding on Commission and Successors ..................................... 63 Continuing Disclosure ................................................................................... 63 Further Assurances ......................................................................................... 64 ARTICLE VII DEFAULT PROVISIONS AND REMEDIES Events of Default ........................................................................................... 64 Application of Revenue and Other Funds After Default ............................... 65 No Acceleration ............................................................................................. 66 Suits at Law or in Equity and Mandamus ...................................................... 66 Waivers .......................................................................................................... 67 Rights of Subordinate Lenders ....................................................................... 67 ARTICLE VIII THE TRUSTEE Trustee ............................................................................................................ 67 Compensation and Indemnification ofTrustee .............................................. 69 Qualifications ofTrustee; Resignation; Removal. ......................................... 70 Instrument of Bondholders ............................................................................ 72 Issuing and Paying Agents ............................................................................. 72 ARTICLE IX AMENDMENTS Amendments to Indenture Not Requiring Consent of Bondholders .............. 73 Amendments to Indenture Requiring Consent of Bondholders and TIFIA Lender ................................................................................................. 74 Notice to and Consent of Bondholders .......................................................... 75 Execution and Effect of Supplemental Indentures ......................................... 75 Obligations Owned by Commission .............................................................. 76 ARTICLE X DISCHARGE OF LIEN Discharge of Lien and Security Interest.. ....................................................... 76 Provision for Payment of Obligations ............................................................ 77 Unclaimed Moneys ........................................................................................ 77 ARTICLE XI MISCELLANEOUS Liability of Commission Limited to Trust Estate .......................................... 78 Limitation of Rights; Third Party Beneficiary ............................................... 78 Rights of Credit Providers ............................................................................. 78 Severability .................................................................................................... 79 Notices ........................................................................................................... 80 Payments Due on Non-Business Days ........................................................... 80 -Ill-113 Section 11.07 Section 11.08 Section 11.09 Section 11.10 OHSUSA:260935709.9 TABLE OF CONTENTS (continued) Page Captions ......................................................................................................... 80 California Law ............................................................................................... 80 Effective Date ................................................................................................ 80 Execution in Several Counterparts ................................................................. 80 -IV-114 • • • This MASTER INDENTURE, dated as of June I, 2013 (this "Indenture"), between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly existing under the laws of the State of California (as further defined herein, 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 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), and as it may be amended from time to time hereafter, 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 of Part 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 County and Riverside County line to the west and Interstate 15 (also known as State Highway Route 15) to the east (as further defined herein, the "Toll Road"), and to issue one or more series of bonds or other obligations (as further defined herein, the "Obligations") pursuant to the terms and conditions of a resolution adopted by a two-thirds vote of the Commission, which Obligations may be payable OHSUSA:260935709.9 115 from (i) the proceeds of such tolls (as further defined herein, 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 Obligations 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 Interstate 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 ("OCTA"), 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 "OCTA 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 to11ed transportation facilities within the SR-91 • corridor in both Orange County and Riverside County; WHEREAS, OCTA imposes tolls on certain SR-91 lanes in Orange County pursuant to the OCTA 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 Caltrans, OCT A has amended the OCT A Franchise Agreement to exclude that portion ofSR-91 between the Orange and Riverside County line and Interstate 15 from such OCT A 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, 201 0, 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:260935709.9 2 116 • • • 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 "Caltrans DB Cooperative Agreement"); WHEREAS, Riverside County Transportation Commission and Orange County Transportation Authority have on December I6, 20 II executed the Cooperative Agreement for State Route 9I Express Lanes and Corridor Improvements, by and between the Commission and OCT A (the "OCT A 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-9I 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 OCT A 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 apply the Toll Revenues to the financing or payment of the Riverside SR-9I 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 Obligations, including Senior Lien Bonds (as defined herein), to (i) pay or reimburse the Commission for the payment of a portion of the Project Costs (as hereinafter defined), (ii) finance the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, and maintenance of the Riverside SR-9I Corridor Improvement Project, (iii) apply for or otherwise obtain available federal, state and local matching funds, loans and grants to make additional funds available for the Riverside SR-9I Corridor Improvement Project; and (iv) finance the costs of issuance incurred in connection with the issuance of such bonds; WHEREAS, the Commission has determined to enter into this Master Indenture and one or more Supplemental Indentures 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 I.O I, the "'Parity Obligations"); OHSUSA:260935709.9 3 117 WHEREAS, the execution and delivery of this Master Indenture has in all respects been duly and validly authorized by resolution duly passed and approved by the • Commission; and WHEREAS, the Commission certifies that all acts that are necessary to make the Obligations, 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 Master Indenture have been duly authorized; NOW, THEREFORE, THIS MASTER INDENTURE WITNESSETH: The Commission, to secure the payment of the Obligations as the same become due and payable, whether at maturity or by prior redemption, and the performance and observance of all of the covenants and conditions herein contained, and in consideration of the premises and the acceptance by the Trustee of the trusts hereby created and of the purchase and acceptance of the Obligations by the Holders thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Commission does hereby grant, mortgage, grant a security interest in, assign, transfer in trust, and pledge to the Trustee, and to its successors in trust hereunder, and to them and their assigns forever, all rights, title, interest and privileges of the Commission in, to and under (i) the Toll Revenues, (ii) 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), (iii) all Swap Revenues, and (iv) all amounts (including the proceeds of Obligations) 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); TO HAVE AND TO HOLD all the same (herein called the "Trust Estate") with all privileges and appurtenances hereby granted and assigned, or agreed or intended so to be, to the Trustee and its successors in trust and to them and their assigns forever; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth, • FIRST: for the equal and proportionate benefit and security of all Senior Lien Bonds and Parity Obligations, all of which, regardless of the time or times of their delivery, maturity or other due date, shall be of equal rank without preference, priority or distinction as to lien or otherwise of any Senior Lien Obligation over any other Senior Lien Obligation, except as otherwise permitted by or provided for in this Indenture or in a Supplemental Indenture; provided, that any funds held by the Trustee for the payment of specific Senior Lien Bonds and Parity Obligations which are deemed to have been paid pursuant to the provisions of Article XI and any funds deposited with the Trustee hereunder specifically to be held in escrow or otherwise to provide additional security or an additional source of payment for specified Senior Lien Bonds and Parity Obligations shall be held and used only to pay or provide security for the Senior Lien Bonds and Parity Obligations for which such deposit was made and shall not be held • OHSUSA:260935709.9 4 118 • • • as security on a parity for any other Senior Lien Bonds and Parity Obligations; and provided further, that the Trustee shall apply the Trust Estate hereunder to the payment of the principal of, and interest on, or Maturity Value of, and other payments with respect to the Senior Lien Bonds and Parity Obligations and for the purposes and uses and in the order of priority set forth herein prior to the payment of the principal of, and interest on, or Maturity Value of, and other payments with respect to Permitted Second Lien Obligations, Subordinate Obligations or other Obligations; and SECOND: subject to the security interest in the Trust Estate pledged for the security and payment of the Senior Lien Bonds and Parity Obligations, for the equal and proportionate benefit and security of all Permitted Second Lien Obligations, all of which, regardless of the time or times of their delivery, maturity or other due date, shall be of equal rank without preference, priority or distinction as to lien or otherwise of any Junior Lien Obligation over any other Junior Lien Obligation, except as otherwise permitted by or provided for in this Indenture or in a Supplemental Indenture; provided, that any funds held by the Trustee for the payment of specific Permitted Second Lien Obligations that are deemed to have been paid pursuant hereto and any funds deposited with the Trustee hereunder specifically to be held in escrow or otherwise to provide additional security or an additional source of payment for specified Permitted Second Lien Obligations shall be held and used only to pay or provide security for the Permitted Second Lien Obligations for which such deposit was made and shall not be held as security on a parity for any other Permitted Second Lien Obligations; and provided further, that the Trustee shall apply the Trust Estate hereunder to the payment of the principal of, and interest on, or Maturity Value of, and other payments with respect to the Permitted Second Lien Obligations and for the purposes and uses and in the order of priority set forth herein subordinate to the payment of the Senior Lien Bonds and Parity Obligations but prior to the payment of the principal of, and interest on, or Maturity Value of, and other payments with respect to Subordinate Obligations and other Obligations; and THIRD: subject to the security interest in the Trust Estate pledged for the security and payment of the Senior Lien Bonds and Parity Obligations and the Permitted Second Lien Obligations, for the equal and proportionate benefit and security of all Subordinate Obligations, all of which, regardless of the time or times of their delivery, maturity or other due date, shall be of equal rank without preference, priority or distinction as to lien or otherwise of any Subordinate Lien Obligation over any other Subordinate Lien Obligation, except as otherwise permitted by or provided for in this Indenture or in a Supplemental Indenture; provided, that any funds held by the Trustee for the payment of specific Subordinate Obligations which are deemed to have been paid pursuant to the provisions hereof and any funds deposited with the Trustee hereunder specifically to be held in escrow or otherwise to provide additional security or an additional source of payment for specified Subordinate Obligations shall be held and used only to pay or provide security for the Subordinate Obligations for which such deposit was made and shall not be held as security on a parity for any other Subordinate Obligations; and provided further, that the Trustee shall apply the Trust Estate hereunder to the payment of the principal of, and interest on, or Maturity Value of, and other payments with respect to the Subordinate Obligations and for the purposes and uses and in the order of priority set forth herein subordinate to the payment of the Senior Lien Bonds and Parity Obligations and the Permitted Second Lien Obligations but prior to the payment of the principal of and interest on, or Maturity Value of, and other payments with respect to other Obligations; OHSUSA:260935709.9 5 119 PROVIDED, HOWEVER, that if the Commission, its successors or assigns, shall well and truly pay, or cause to be paid, or provide fully for payment as herein provided of • the principal of the Obligations and the interest due or to become due thereon (together with premium, if any), at the time and in the manner set forth in the Obligations according to the true intent and meaning thereof, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee sums sufficient for payment of the entire amount due or to become due thereon as herein provided, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof (as hereinafter defined), then this Indenture and the rights hereby granted shall cease, terminate and be void except as otherwise provided herein. THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Obligations issued and secured hereunder are to be issued, authenticated and delivered and all payments, revenues, income and funds hereby pledged and assigned, and are subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the Commission has agreed and covenanted, and does hereby covenant and agree with the Trustee, for the benefit of the owners from time to time of the Obligations issued hereunder 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. "Accreted Value" means, with respect to any Capital Appreciation Obligations or Convertible Capital Appreciation Obligations, the principal amount thereof plus the interest accrued thereon, compounded at the approximate interest rate thereon on each date specified therein. The Accreted Value at any date shall be the amounts set forth in the Accreted Value Table as of such date, if such date is a compounding date, and if not, as of the immediately preceding compounding date. "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. "Annual Debt Service" means the amount of payments due on the applicable Outstanding Obligations for any Calculation Period, as calculated by the Commission, utilizing . the following assumptions about payments on such Obligations (and if more than one such • assumption may apply, using the relevant assumptions selected by the Commission): • OHSUSA:260935709.9 6 120 • • • (i) in determining the principal amount of an 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 Obligations is not due until the final stated maturity of that Series of Obligations, the principal of and interest on such Obligations 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 Obligations; (iii) if the 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 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 during such shorter period that the Obligation has been Outstanding, or (b) the rate of interest on that Obligation on the date of calculation; (v) if 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 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 Obligations proposed to be issued are part of a Commercial Paper Program, 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 shall be calculated as if such Obligations were variable interest rate Obligations; (viii) if the variable interest on any 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 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 Obligation plus the fixed payments due to the Commission and variable payments due from the Commission under a Qualified Swap OHSUSA:260935709.9 7 121 Agreement or a Swap designated by the Commission are treated by the Commission as synthetic variable rate debt, the fixed interest rate 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 Obligations are Short-Term Put Obligations, 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 Obligations; (xi) principal and interest payments on 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 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 Obligations; (xii) if any of the 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 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 an 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; (xiv) if any of the 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; and (xv) if any of the Obligations are Subordinate Obligations in the form of or securing payment of a TIFIA Loan, Annual Debt Service on such TIFIA Loan shall include only annual TIFIA Mandatory Debt Service; provided that, for purposes of such calculation 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, and such TIFIA Loan shall be treated for purposes of all calculations of Annual Debt Service as Subordinate Obligations unless and until the occurrence of a Bankruptcy-Related Event, after which occurrence such TIFIA Loan shall be treated as Parity Obligations for such purposes. OHSUSA:260935709.9 8 122 • • • • "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. "Average Annual Debt Service" means, at any time of determination, the average amount of Annual Debt Service paid or payable in each Calculation Period on the applicable Outstanding Obligations to the stated maturity thereof. "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 Commission or any of its debts, or of a substantial part of the assets of the Commission, under any Insolvency Law, or (ii) the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official for the Commission for a substantial part of the assets of the Commission, and, in any case referred to in the foregoing subclauses (i) and (ii), such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (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 for a substantial part of the assets of the Commission, 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 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; or (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 lien 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. "Beneficial Owner" means, with respect to any Book-Entry Obligation, the beneficial owner of such Senior Lien Bond as determined in accordance with the applicable rules of the Securities Depository for such Book-Entry Obligations. "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 . OHSUSA:260935709.9 9 123 "Bond Obligation" means, as of any given date of calculation, ( 1) with respect to • any Outstanding Current Interest Obligation, the principal amount of such Obligation, and (2) with respect to any Outstanding Capital Appreciation Obligation or Convertible Capital Appreciation Obligation, the Accreted Value thereof. "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 Obligation shown on the books of registration kept by the Trustee, which, during any period when such Obligation is a Book-Entry Obligation, shall be the Securities Depository or its Nominee. "Book-Entry Obligations" means Obligations 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 the Government (as defined in the TIFIA Loan Agreement) or 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. "Caltrans DB Cooperative Agreement" means that certain Design-Build Construction Cooperative Agreement, dated as of December _, 2012, 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. "Capital Expenditures Fund" means the Fund by that name created pursuant to Section 5.02. "Capital Appreciation Obligations" means the Obligations designated as Capital Appreciation Obligations in the Supplemental Indenture providing for the issuance of such Obligations and on which interest is compounded and paid at maturity or on prior redemption. "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:260935709.9 10 124 • • • • • "Capital Expenditures Fund Required Balance" means the amount, as of the most recent Coverage Calculation Date, as reasonably determined by the Commission based on projections prepared by a Consulting Engineer, required to pay the Capital Expenditures Fund Permitted Expenditures that remain to be funded, which, initially, is equal to [$ m 2013 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 Obligations having the characteristics of commercial paper in that (i) such Obligations have a stated maturity not later than 270 days from their date of issue and (ii) maturing Obligations of such program may be paid with the proceeds of renewal Obligations . "Commission" means the Riverside County Transportation Commission, a public entity duly established and existing under the laws of the State of California, and any successor thereto. "Completion Obligations" means any Obligations incurred for the purpose of financing the completion of the Riverside SR-91 Corridor Improvement Project (or any additional or expanded facility constituting a portion of the Toll Road for which Obligations theretofore been incurred in accordance with the provisions hereof), to the extent necessary to complete the Riverside SR-91 Corridor Improvement Project (or such additional or expanded facility constituting a portion of the Toll Road), in the manner and scope contemplated at the time that such Obligations theretofore incurred were originally incurred, and, to the extent the same shall be applicable, in accordance with the general plans and specifications for the Riverside SR-91 Corridor Improvement Project (or such additional or expanded facility constituting a portion of the Toll Road), as originally prepared with only such changes as have been made in conformance with the documents pursuant to which such Obligations theretofore incurred were originally incurred. "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 Riverside SR-9 Corridor Improvement Project . OHSUSA:260935709.9 11 125 "Continuing Disclosure Agreement" means, with respect to each Series of Obligations requiring an undertaking regarding disclosure under Rule 15c2-12, the continuing • disclosure undertaking entered into by the Commission and, if applicable, the Trustee or a Dissemination Agent or both, as the same may be supplemented, modified or amended in accordance with its terms. "Convertible Capital Appreciation Obligations" means Obligations that initially are issued as Capital Appreciation Obligations, but later convert to Obligations on which interest is paid periodically. Convertible Capital Appreciation Obligations shall be Capital Appreciation Obligations until the conversion date and from and after such conversion date shall no longer be Capital Appreciation Obligations, but shall be treated as having a principal amount equal to their Accreted Value on the conversion date. "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 Obligations, 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 such Obligations, surety, insurance, liquidity and credit enhancements costs, and any other cost, charge or fee incurred in connection with the issuance of Obligations. "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 Obligations. "Credit Support Instrument" means a policy ofinsurance, 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 Obligations, as the same may be amended from time to time pursuant to its terms, and any replacement therefor. "CTC" means the California Transportation Commission. "Current Interest Obligations" means the Obligations designated as Current Interest Obligations in the Supplemental Indenture providing for the issuance of such Obligations and that pay interest to the Holders thereof on a periodic basis prior to maturity. Current Interest Obligations also includes Convertible Capital Appreciation Obligations after their conversion date. "Defeasance Securities" means noncallable: (i) U.S. Treasury certificates, notes, bills 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 OHSUSA:260935709.9 12 126 • • • • • 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. 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 Contract" means [to come] . "Design-Build Contractor" means [to come]. "Dissemination Agent" means, with respect to each Series of Obligations requiring an undertaking regarding disclosure under Rule 15c2-12, the party (which may be the Commission) acting as dissemination agent under the applicable Continuing Disclosure Agreement, 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 of the eventsspecified in Section 7.01. "Financing Documents" means this Indenture, any Swaps or Qualified Swap Agreements, and any documents and/or instruments evidencing, documenting, securing or otherwise relating to any or all of the obligations relating to the Parity Obligations, Permitted Second Lien Obligations, or Subordinate 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 . OHSUSA:260935709.9 13 127 "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 Ratings, 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 tem1 "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. "Funds Transfer Certificate" means a certificate prepared by the Commission in accordance with the terms of this Indenture substantially in the form of Exhibit LJ attached hereto containing the certifications by the Commission required by this Indenture with respect to a requested transfer of funds from a Fund or 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 bankruptcy, insolvency or similar proceeding with respect to the Commission), net of all scheduled amounts payable to the Commission by such Swap Parties, and (b) all other indebtedness, 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 upori 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 whoin, is independent with respect to the Commission, pursuant to the Statement on Auditing Standards No. 1 ofthe American Institute of Certified Public Accountants. OHSUSA:260935709.9 14 128 • • • • "Insolvency Law" means the United States Bankruptcy Code, including 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. "Maturity Value," with respect to any Capital Appreciation Obligation, shall mean the principal amount of such Obligation plus accrued interest at the maturity thereof and, with respect to a Convertible Capital Appreciation Obligation, shall mean the Accreted Value of such Obligation on the conversion date. "Maximum Annual Debt Service" means the highest amount of Annual Debt Service due on the applicable Obligations of the Commission for any Calculation Period during the period from the date of such determination through the final maturity date of the applicable Obligations then Outstanding and proposed to be issued. "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 (excluding, in such calculations, any extraordinary or one-time revenues from Revenue and any extraordinary or one-time expenses from Operation and Maintenance Expenses when determining Net Revenue for such Fiscal Year), 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 Commission 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, projections of the Commission. "Nominee" means the nominee of the Securities Depository for the Book-Entry Obligations, in whose name such Senior Lien Bonds are to be registered. The initial Nominee shall be Cede & Co., the partnership nominee of DTC. "Obligations" means all indebtedness of the Commission payable from Revenue incurred or -assumed by the Commission for borrowed money (including indebtedness arising under Credit Support Instruments) and all other financing obligations of the Commission relating to the Toll Road that, in accordance with generally accepted accounting principles, are included as a liability on a balance sheet for the Toll Road books and records, including any bonds, notes, certificates or other obligations, as the case may be, authenticated and delivered under and pursuant to this Indenture as Senior Lien Obligations, Permitted Second Lien Obligations or OHSUSA:260935709.9 15 129 Subordinate Obligations. For the purpose of determining the "Obligations" payable from • Revenue, Obligations that are no longer Outstanding shall be excluded. "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 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 Section 6802 of the California Public Contract Code. "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. "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 the Operating Agreement, or any other operating agreement entered into by the Commission and one or more entities in accordance with the terms hereof. "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 or payable 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 paid or 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, each trustee for or holder of Permitted Second Lien Obligations or Subordinate Obligations, 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 • OHSUSA:260935709.9 16 130 • • • do not include any commitment fees, termination fees, fines or other penalties or any payments to be made to Swap Parties including Hedging Obligations and Hedging Termination Obligations), any insurance consultant, legal and accounting expenses, and any other reasonable and necessary expense paid or payable for the operations and maintenance of the Toll Road, but excluding expenses paid or payable from proceeds of Senior Lien Bonds or Parity Obligations, capital expenditures, expenditures for rehabilitation and operational improvement projects on the Toil Road, depreciation or obsolescence charges or reserves therefore, debt service for Senior Lien Bonds, Parity Obligations, Permitted Second Lien Obligations or Subordinate Obligations, and any non-cash charges, such as depreciation, amortization of intangibles and 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 Obligations hereunder means all Obligations that have been issued by the Commission hereunder or pursuant hereto, except such Obligations: (i) canceled or delivered for 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 such Obligations; (iii) in lieu of which other 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 of such Obligations; and (iv) to the extent described in Section 9.05, Obligations held by or for the account of the Commission. "Parity Obligations" means obligations of the Commission that are secured by the Trust Estate on a parity with 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 Obligations 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 OHSUSA:260935709.9 17 131 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 ofcash or bonds or other obligations of the character described above in clause (i) or (ii) which fund may be applied only to the payment • of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the interest payment dates and the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, (c) as to which the principal of and interest on the bonds and obligations of the character described above in clause (i) or (ii) which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay the principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (vi) on the interest payment dates and the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (a) of this clause (vi), as appropriate, and (d) which 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 • OHSUSA:260935709.9 18 132 • 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; • (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 ($100,000,000) or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities and obligations described in clauses (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% ofthe 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 OHSUSA:260935709.9 19 133 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; (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 e,stablished pursuant to this Indenture; (xix) obligations ofthe 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. OHSUSA:260935709.9 20 134 • • • • • "Permitted Second Lien Obligations" means (i) any Obligations that are 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 Subordinate Obligations, and (ii) 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. "Permitted Second Lien Obligations Reserve Fund" means the Account by that name created pursuant to Section 5.02. "Permitted Second Lien Obligations Reserve Fund Required Balance" shall have the meaning assigned to that term in a Supplemental Indenture pursuant to which Permitted Second Lien Obligations are incurred . 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. "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" means the Riverside SR-91 Corridor Improvement Project and additional capital projects related thereto that the Commission determines to finance hereunder. "Project Costs" means all or any part of the following with respect to the Project: (a) the cost of study, design, acquisition, construction, expansion, enlargement, extension, reconstruction, restoration, repair and rehabilitation of the Project or portion thereof (including, but not limited to, indemnity and surety bonds, permits, taxes, OHSUSA:260935709.9 21 135 licenses, insurance premiums, or other municipal or governmental charges lawfully levied or • assessed during construction); (b) the cost of acquisition of all real or personal property, rights, rights-of- way, franchises, easements and interests acquired or used for the Project or portion thereof, (c) the cost of site preparation, including demolishing or removing any structures on land so acquired and the cost of acquiring any land to which the structures may be removed; (d) any cost of borings and other preliminary investigations necessary or incident to determining the feasibility or practicability of constructing the Project or portion thereof and any cost necessary or desirable to satisfy conditions associated with the issuance of any permit for the construction thereof (including the costs of environmental related mitigation required in connection therewith); stock; (e) the cost of all machinery and equipment, vehicles, materials and rolling (f) Costs oflssuance; (g) interest on Obligations for the period prior to and during acquisition or completion of construction (or such longer period as may be allowed by applicable law), as determined by the Commission; (h) the cost of architectural, engineering, environmental.feasibility, traffic and revenue, economic and demographic, appraisal, financial, and legal services; (i) planning, investigations, studies, evaluations, plans, specifications, estimates, and administrative and other expenses that are necessary or incidental to the determination of the feasibility of constructing the Project or portion thereof or incidental to the obtaining of construction contracts or to the construction (including construction administration and inspection), acquisition or financing thereof and that constitute capital costs; (j) Operation and Maintenance Expenses occurring during and for a period of up to one year after acquisition or completion of construction, as determined by the Commission, provided that, if applicable, the Trustee has received an Opinion of Bond Counsel (which opinion may address either specific Operation and Maintenance Expenses or categories of Operation and Maintenance Expenses) to the effect that the treatment of such Operation and Maintenance Expenses as a Project Cost will not adversely affect the exclusion of interest on any Outstanding Obligations from gross income for federal income tax purposes; (k) the repayment or reimbursement of any Obligation, loan or advance for any of the foregoing; and (I) such other costs and expenses as are permitted by the Act or other applicable law at the time such Obligations are issued. OHSUSA:260935709.9 22 136 • • • • • "Project Fund" means the Fund by that name established pursuant to Section 5.02. "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 un 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 Obligations, each of Fitch, Moody's and Standard & Poor's then maintaining a rating on such Series of Obligations at the request ofthe 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 Obligations 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 Obligations 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. "Repair and Rehabilitation Fund" means the Fund by that name created pursuant to Section 5.02. "Repair and Rehabilitation Fund Permitted Expenditures" means capital expenditures reasonably necessary to repair or rehabilitate the Riverside SR-91 Corridor Improvement Project so that it remains in a condition that meets the performance and OHSUSA:260935709.9 23 137 maintenance standards established by Caltrans for existing State-operated transportation facilities • of substantially equivalent size, location and character. "Repair and Rehabilitation Fund Required Deposit" means the amounts determined by the Commission on the date of issuance of the Bonds that are scheduled to be deposited in each Fiscal Year into the Repair and Rehabilitation Fund pursuant to the Scheduled Repair and Rehabilitation Fund Required Deposit set forth as Exhibit[_] [hereto] [to the TIFIA Loan Agreement] to adequately provide 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 Obligations, in which the Commission, among other things, makes certain representations to the Securities Depository with respect to the Book-Entry Obligations, the payment thereof and delivery of notices with respect thereto. "Reserve Facility" means a letter of credit, surety bond or insurance policy issued to the Trustee by a bank or company licensed to issue a surety bond or insurance policy guaranteeing the timely payment of the principal of and interest on the Obligations 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. "Residual Fund" means the Fund by that name created pursuant to Section 5.02. "Revenue" means: (i) Toll Revenues; (ii) 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 (iii) 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 non- tolled facilities, structures, on-ramps, connector roads, bridges, and roadways that are on, 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 Interstate 15 to the east. "ROW Revenues" means revenues generated by the Commission from the sale of excess right-of-way property. OHSUSA:260935709.9 24 138 • • • • • "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) any Swap Party, (iii) any trustee, holder or creditor of any Parity Obligations, (iv) any trustee, holder or creditor of any Permitted Second Lien Obligations, and (v) any trustee, holder or creditor of any Subordinate 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 Obligations. "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. "Senior Lien Bond Principal Payment Account" means the Account by that name created within the Senior Lien Bond Fund pursuant to Section 5.02 . OHSUSA:260935709.9 25 139 "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, issued in accordance with, and at any time Outstanding pursuant to, this Indenture. "Senior Lien Bonds Account" means the Account by that name created within the Project Fund pursuant to Section 5.02. "Series" means all Obligations identified in the Indenture or any Supplemental Indenture as a separate Series. "Short-Term Put Obligation" means an Obligation with a stated maturity often 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 Obligations, each amount so designated for the Term Bonds of such Series in the Supplemental Indenture providing for the issuance of such Series of Obligations requiring payments by the Commission to be applied to the retirement of such Series of Obligations 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. "State" means the State of California. "Subordinate Obligations" means any Obligations that are subordinated in right of payment and lien priority to the Senior Lien Bonds and Parity Obligations and the Permitted • Second Lien Obligations. OHSUSA:260935709.9 26 140 • • • "Subordinate Obligations Account" means the Account by that name created within the Project Fund pursuant to Section 5.02. "Subordinate Obligations Payment Fund" means the Fund by that name created pursuant to Section 5.02. "Subordinate Obligations Repayment Account" means the Account by that name created pursuant to Section 5.02. "Subordinate Obligations Reserve Fund" means the Fund by that name created pursuant to Section 5.02. "Subordinate Obligations Reserve Fund Required Balance" shall have the meaning assigned to that term in a Supplemental Indenture pursuant to which Subordinate Obligations are incurred. "Subsidy Payments" means, (a) with respect to a Series of Obligations issued under Section 54AA of the Code, the amounts relating to such Series of 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 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 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 ofthe 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 in accordance with this Indenture 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 OHSUSA:260935709.9 27 141 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 Obligations, as the same may be amended and supplemented in accordance with its terms. "Term Bonds" means Obligations 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 Obligations, which Sinking Fund Installments are calculated to retire such Obligations on or before their specified maturity dates. "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 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, or another . "TIFIA Loan" means each loan made to the Commission by TIFIA Lender pursuant to a TIFIA Loan Agreement. "TIFIA Loan Agreement" means a loan agreement by and between the • Commission and the TIFIA Lender and any amendments or supplements thereto permitted hereby and thereby. "TIFIA Mandatory Debt Service" means the portion of the TIFIA Loan 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 Payment Date" has the meaning specified for the term "Payment Date" (or any similar term) in the TIFIA Loan Agreement. "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 applicable TIFIA Loan Agreement), the total debt service to be made on such TIFIA Payment Date with respect to the applicable TIFIA Loan. "Toll Agreements" means the OCTA Cooperative Agreement, the Operating Agreement, the Design-Build Contract, the Caltrans DB Cooperative Agreement and the Toll Facility Agreement, and any amendments or supplements thereto permitted thereby and hereby. "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 OHSUSA:260935709.9 28 142 • • • oversight of the Project, and any amendments or supplements thereto permitted thereby and hereby. "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) 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 that are actually applied or reserved for application to the repair, restoration or replacement of the Toll Road, (iii) proceeds of any condemnation awards with respect to the Toll Road, except to the extent actually applied or reserved for application to the replacement of the Toll Road, (iv) liquidated damages for delayed completion payable to the Commission under a construction contract relating to the Toll Road or a portion thereof, except for the portion of such liquidated damages that is deposited to the Project Fund or an Account therein and applied or reserved for payment of Project Costs relating to the Toll Road or such portion during such period of delayed completion, (v) proceeds of credit support provided by the Toll Operator pursuant to the Operating Agreement, and (vi) any other incidental or related fees or charges; but excluding therefrom ROW Revenues and cash advances representing deposits against future toll payments from users or potential users ofthe 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 of the vehicle, (c) facilities using any combination of (a) and (b), and (d) facilities using any other. tolling 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" initially means any such toll lanes and facilities (including structures, on- ramps, connector roads, bridges, and roadways that are on, necessary for, or related to the construction or operation of the Toll Road) on the portion of SR-91 between the Orange and Riverside County line and Interstate 15 that constitute a part of the Riverside SR-91 Corridor Improvement Project. "Traffic Consultant" means any traffic and revenue consultant or firm of nationally-recognized traffic and revenue consultants experienced in performing the duties for OHSUSA:260935709.9 29 143 which a Traffic Consultant is required to be employed pursuant to the provisiOns of this • Indenture selected by the Commission. "Trust Estate" has the meaning specified in the Granting Clauses herein. "2013 Sales Tax Revenue Bonds" means the Riverside County Transportation Commission Sales Tax Revenue Bonds (Limited Tax Bonds), 2013 Series A. "Written Engineer's Certificate" means an instrument in writing signed by a Consulting Engineer stating that an Alternate Repair and Rehabilitation Fund Required Deposit (as defined in clause Tenth of Section 5.03) is necessary to pay for Repair and Rehabilitation Fund Permitted Expenditures for a Fiscal Year due to at least one of the following: (i) reasonably unforeseen expenditures incurred to the extent necessary to respond to emergency conditions; or (ii) reasonably unforeseen expenditures to the extent necessary to be made to maintain the Riverside SR-91 Corridor Improvement Project in a state of good repair and in a condition that meets the performance and maintenance standards established by Caltrans for existing State-operated transportation facilities of substantially equivalent size, location and character. "Written Request of the Commission" means an instrument in writing signed by an Authorized Representative. ARTICLE II THE OBLIGATIONS Section 2.01 Authorization and Purposes. Obligations in the form of Senior Lien Bonds, Parity Obligations, Permitted Second Lien Obligations or Subordinate Obligations 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 Bond Obligation of Obligations 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 initial Bond Obligation of Obligations 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 Permitted Second Lien Obligations are designated generally as "Riverside County Transportation Commission Second Lien 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 Permitted Second Lien Obligations. The Subordinate Obligations are designated generally as "Riverside County Transportation Commission Subordinate 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 Subordinate Obligations. The Obligations 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 Obligations shall be authorized by the Commission in a Supplemental Indenture. No Obligations may be issued under the provisions of this Indenture except in accordance with this Article and Article III. OHSUSA:260935709.9 30 144 • • • • • Obligations may be issued for the purpose of financing the Riverside SR-91 Corridor Improvement Project using a design-build procurement process, or for any other purpose authorized by the Act and this Indenture. Section 2.02 General Terms of Obligations. Each Obligation shall be secured hereby and shall bear interest and shall be payable and be additionally 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 Obligations 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 Obligations are Book-Entry Obligations, payment of debt service on such Book-Entry Obligations shall 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 any Obligations are not Book-Entry Obligations, unless otherwise specified in a Supplemental Indenture, the principal and Purchase Price of and premium, if any, on all such Obligations shall be payable by wire or check at the Principal Office of the Trustee upon the presentation and surrender of such Obligations as the same become due and payable, and the interest on such Obligations 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 Obligations 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 Obligations 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 Obligations 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 Obligations shall cease to be such officer or officers of the Commission before the Obligations so signed or attested shall have been authenticated or delivered by the Trustee or issued by the Commission, such Obligations 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 Obligation may be signed and attested on behalf of the Commission by such persons as at the actual date of execution of such Obligation shall be the proper officers of the Commission although at the nominal date of such Obligation any such person shall not have been such officer of the Commission. Section 2.04 Certificate of Authentication. No Obligations 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 Obligation referred to in Section 2.05 hereof, executed by the Trustee; and such certificate on any Obligation issued by the Commission shall be conclusive evidence that such Obligation has been duly authenticated and delivered hereunder. OHSUSA:260935709.9 31 145 Section 2.05 Forms of Obligations. The Obligations, 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 Obligations 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 Co111mission. Section 2.06 Issuance, Sale and Delivery of Obligations; Application of Proceeds. The Obligations 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 Obligations then being issued to the extent such terms are not set forth in the Supplemental Indenture creating such Series of Obligations and are applicable to such Obligations: whether such Obligation is a Senior Lien Bond, Parity Obligation, Permitted Second Lien Obligation or Subordinate Obligation hereunder; Series designation; Authorized Denominations; form of such Obligation; book-entry provisions, if any; maturity date or dates or maturity determination method, which may vary for Obligations within such Series; principal amount; issue date; interest rate or interest rate determination method, which may vary for Obligations within such Series; record date for interest payments; sinking fund provisions, if any; required reserves, 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 Obligations, the proceeds shall immediately be applied and deposited as set forth in the applicable Supplemental Indenture. . Section 2.07 Mutilated, Lost, Stolen or Destroyed Obligations. If any Obligation is mutilated, lost, stolen or destroyed, the Commission shall execute and the Trustee shall authenticate and deliver a new Obligation of the same Series, maturity date, principal amount and tenor in lieu of and in substitution for the Obligation 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 Obligation and of such loss, theft or destruction (or, in the case of a mutilated Obligation, such mutilated Obligation 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 Obligation shall have matured or a redemption date pertaining thereto shall have passed, instead of issuing a new Obligation, the Commission may pay the same without surrender thereof. The Commission and the Trustee may charge the Holder of such Obligation with their reasonable ' in this connection. Section 2.08 Exchangeability and Transfer of Obligations; Persons Treated as Holders. The Commission hereby directs the Trustee, which is hereby constituted and appointed the bond registrar for the Obligations, to keep books for the registration of the Obligations and for the registration of transfer of the Obligations as provided herein. OHS USA:260935 709.9 32 146 • • • • Any registered owner of a Obligation, in person or by its duly authorized attorney, may transfer title to its Obligation 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 Obligation 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 Obligation, the Commission shall execute, and the Trustee shall authenticate and deliver in the name of the transferee or transferees, a new Obligation or Obligations of the same Series, maturity date, Bond Obligation and tenor as the Obligation surrendered. Obligations may be exchanged upon surrender thereof at the Principal Office of the Trustee for Obligations of the same Series, maturity date, Bond Obligation and tenor as the Obligations being exchanged. The Commission shall execute and the Trustee shall authenticate and deliver Obligations that the registered owner making the exchange is entitled to receive, bearing numbers not contemporaneously then outstanding. Such registrations of transfers or exchanges of Obligations shall be without charge to the registered owner of such Obligations, 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 Obligation 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 Obligation after notice calling such Obligation (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 Obligation to be redeemed in part, the portion thereof not to be redeemed. The person in whose name any Obligation 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 Obligation to the extent of the sum or sums so paid. All Obligations issued upon any transfer or exchange of Obligations shall be legal, valid and binding obligations ofthe Commission, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Obligations surrendered upon such transfer or exchange. Section 2.09 Cancellation. All Obligations that have been surrendered to the Trustee pursuant to Section 2.07 or 2.08 of this Indenture and all Obligations 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 . OHSUSA:260935709.9 33 147 Section 2.10 Obligations Ratably Secured. All Obligations 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 Obligations shall be so equally and ratably secured so that, subject to any differences specified in this Indenture, all such Obligations 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 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 Obligations issued hereunder shall be issued as Book-Entry Obligations in fully registered form. Book-Entry Obligations 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 Obligations 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 Obligations 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 Obligations is to receive, hold or deliver any Obligation certificate. With respect to Obligations 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 Obligations. 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 Obligations, (ii) the delivery to any DTC Participant or any other person, other than a registered owner of the Obligations, as shown on the registration books, of any notice with respect to the Obligations, 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 Obligations, 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 Obligations. Replacement Obligations may be issued directly to Beneficial Owners of Obligations 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 Obligations (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 Obligations) that DTC is incapable of discharging its duties as Securities Depository for the Obligations; or (iii) the Commission has determined (which determination is conclusive as to DTC and the Beneficial Owners of the Obligations) that the interests of the Beneficial Owners of the Obligations 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 OHSUSA:260935709.9 34 148 • • • 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 Obligations, in certificate form, to the Beneficial Owners of the Obligations. 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 provisions to notify the Beneficial Owners of Obligations of such determination by mailing an appropriate notice to DTC and its Nominee, the Commission shall cause to be issued replacement Obligations in certificate form to Beneficial Owners of the Obligations as shown on the records of DTC provided to the Commission. Whenever, during the term of the Obligations, the Beneficial Ownership thereof is determined by book-entry at DTC, (i) the requirements in this Indenture of holding, delivering or transferring Obligations 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 Obligations 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 Obligation 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 Obligations m 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), (b) or (c) below are met. (a) the Senior Lien Bonds or Parity Obligations are issued for purposes of refunding Outstanding Senior Lien Bonds or Parity Obligations by providing funds for the payment of any or all of the following: (1) The Bond Obligation, redemption or purchase price (including premium, if any) 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 OHSUSA:260935709.9 35 149 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; (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 projects that the Average Annual Debt Service on all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service after the issuance of the proposed additional Senior Lien Bonds or Parity Obligations will be less than the Average Annual Debt Service on all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service prior to the issuance of such proposed Senior Lien Bonds or Parity Obligations; and provided further, that, if the maturity date of such additional Senior Lien Bonds or Parity Obligations to be issued extends to a date later than the final maturity date of the Obligations being refunded, then Net Revenue in each Fiscal Year from and after the final maturity date of such refunded Obligations is projected to be not less one hundred thirty percent (130%) ofthe Annual Debt Service payable in each such Fiscal Year with respect to all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service, including the proposed additional Senior Lien Bonds or Parity Obligations. (b) the Commission delivers a report of the Traffic Consultant to the effect that, as of the date of issuance of the additional Senior Lien Bonds or Parity Obligations, either: (1) Net Revenue during the preceding Calculation Period ending not more than ninety (90) days prior to the date of delivery of the proposed additional Senior Lien Bonds or Parity Obligations, was sufficient to satisfy the requirements of Section 6.03(a) of this Indenture (which report may assume that a revision of the tolls that was approved and implemented by the Commission subsequent to the beginning of such Calculation Period had been in effect for the entire Calculation Period), and (2) projected Net Revenue for each Fiscal Year over the term of the proposed additional Senior Lien Bond or Parity Obligations is expected be sufficient to satisfy the requirements of Section 6.03(a) of this Indenture in each Fiscal Year. 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; OHSUSA:260935709.9 36 150 • • • • and, while the Commission has outstanding Subordinate Obligations in the form of or securing payment of a TIFIA Loan held by the TIFIA Lender, the Commission has received the written consent of the TIFIA Lender to such issuance; or (c) the Senior Lien Bonds or Parity Obligations constitute Completion Obligations; provided, however, that prior to the incurrence of such Completion Obligations, the Commission shall furnish to the Trustee: (i) a certificate of a licensed architect or Consulting Engineer estimating the costs of completing the facilities for which such Completion Obligations are to be incurred, (ii) a Certificate of the Commission certifying that the amount of such Completion Obligations to be incurred will be sufficient, together with other funds, if applicable, to complete construction of the facilities as estimated by the architect or Consulting Engineer in respect of which such Completion Obligation is to be incurred and pay capitalized interest, if any, on Commission Obligations Outstanding during the completion period, and (iii) evidence that such Senior Lien Bonds and Parity Obligations will be rated at an investment grade rating by such credit rating agency. 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; (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 ofthe Commission. Section 3.03 Restrictions on Issuance of Permitted Second Lien Obligations or Additional Subordinate Obligations. Subsequent to the initial issuance of Subordinate Obligations in the form of or securing payment of a TIFIA Loan pursuant to this Indenture, Second Lien Obligations or additional Subordinate Obligations (including one or more TIFIA Loans) may be issued ifthe requirements of(a), (b) or (c) below are met. (a) the Permitted Second Lien Obligations or Subordinate Obligations, as applicable, are issued for purposes of refunding Outstanding Permitted Second Lien Obligations • or Subordinate Obligations by providing funds for the payment of any or all of the following: OHSUSA:260935709.9 37 151 (1) The Bond Obligation, redemption or purchase price (including premium, if any) of the Outstanding Permitted Second Lien Obligations or Subordinate • Obligations to be refunded; (2) All expenses incident to the calling, retiring or paying of such Outstanding Permitted Second Lien Obligations or Subordinate Obligations, the Costs of Issuance of such refunding Permitted Second Lien Obligations or Subordinate 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 Permitted Second Lien Obligations or Subordinate Obligations; (3) Interest on all Outstanding Permitted Second Lien Obligations or Subordinate Obligations to be refunded to the date such Permitted Second Lien Obligations or Subordinate Obligations will be called for redemption or paid at maturity; (4) Interest on the refunding Permitted Second Lien Obligations or Subordinate Obligations from the date thereof to the date of payment or redemption of the Permitted Second Lien Obligations or Subordinate Obligations to be refunded; provided that the Commission delivers a Certificate of the Commission to the effect that the Commission projects that the Average Annual Debt Service on all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service after the issuance of the proposed additional Permitted Second Lien Obligations or • Subordinate Obligations will be less than the Average Annual Debt Service on all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service prior to the issuance of such proposed Permitted Second Lien Obligations or Subordinate Obligations; and provided further, that, if the maturity date of such additional Permitted Second Lien Obligations or Subordinate Obligations to be issued extends to a date later than the final maturity date of the Obligations being refunded, then Net Revenue in each Fiscal Year from and after the final maturity date of such refunded Obligations is projected to be not less one hundred thirty percent ( 130%) of the Annual Debt Service payable in each such Fiscal Year with respect to all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and TIFIA Mandatory Debt Service, including the proposed additional Permitted Second Lien Obligations or Subordinate Obligations. (b) the Commission delivers a report of the Traffic Consultant to the effect that, as of the date of issuance of the additional Permitted Second Lien Obligations, either: (1) Net Revenue during the preceding Calculation Period ending not more than ninety (90) days prior to the date of delivery of the proposed additional Permitted Second Lien Obligations or Subordinate Obligations, was sufficient to satisfy the. requirements of Section 6.03(a)(2) and (3) of this Indenture (which report may assume that a revision of the tolls that was approved and implemented by the Commission subsequent to the beginning of such Calculation Period had been in effect for the entire Calculation Period), and OHSUSA:260935709.9 38 152 • • • • (2) projected Net Revenue for each Fiscal Year over the term of the proposed additional Permitted Second Lien Obligations or Subordinate Obligations is expected be sufficient to satisfy the requirements of Section 6.03(a)(2) and (3) of this Indenture in each Fiscal Year. 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 ofToll Road; and, while the Commission has outstanding Subordinate Obligations in the form of or securing payment of a TIFIA Loan held by the TIFIA Lender, the Commission has received the written consent of the TIFIA Lender to such issuance; or (c) such Permitted Second Lien Obligations or Subordinate Obligations constitute Completion Obligations; provided, however, that prior to the incurrence of such Completion Obligations, the Commission shall furnish to the Trustee: (i) a certificate of a licensed architect or Consulting Engineer estimating the costs of completing the facilities for which such Completion Obligations are to be incurred and pay capitalized interest, if any, on Commission Obligations Outstanding during the completion period, and (ii) a Certificate of the Commission certifying that the amount of such Completion Obligations to be incurred will be sufficient, together with other funds, if applicable, to complete construction of the facilities as estimated by the architect or a Consulting Engineer in respect of which such Completion Obligations is to be incurred . Section 3.04 Proceedings for Issuance of Permitted Second Lien Obligations or Additional Subordinate Obligations. Whenever the Commission determines to issue Permitted Second Lien Obligations or Subordinate Obligations subsequent to the initial issuance of Subordinate Obligations pursuant to this Indenture, the Commission shall 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 3.03 have been satisfied; (c) such amount, in cash or in the form of a Reserve Facility, as shall equal the Permitted Second Lien Obligations Reserve Requirement or Subordinate Obligations Reserve Requirement, if any, as of the date of issuance of such Series of Permitted Second Lien Obligations or Subordinate Obligations, for deposit in the Permitted Second Lien Obligations Reserve Fund or Subordinate Obligations Reserve Fund as applicable; and (d) an Opinion of Bond Counsel to the effect that the Supplemental Indenture creating such Series of Permitted Second Lien Obligations or Subordinate Obligations has been executed and delivered by the Commission in accordance with this Indenture and that such Series of Permitted Second Lien Obligations or Subordinate Obligations, when duly executed by the Commission and authenticated and delivered by the Trustee, will be valid and binding obligations of the Commission. OHSUSA:260935709.9 39 153 Section 3.05 Subordinate Obligations; TIFIA Loans. 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 while such TIFIA Loan Agreement is held by the TIFIA Lender. ARTICLE IV REDEMPTION Section 4.01 Redemption and Purchase of Obligations. Each Series of Obligations 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 Obligations. Section 4.02 Notice of Redemption. Unless otherwise specified in a Supplemental Indenture creating a Series of Obligations, 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 Obligations 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 ofthe Trustee), the CUSIP number (if any) ofthe maturity or maturities, and, inthe case of a Series of Obligations to be redeemed in part only, the identity of the Obligations to be redeemed. Except as provided in Section 4.03 in the case of conditional optional redemption, each such notice shall also state that on said date there will become due and payable on each of said Obligations 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 Obligations 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 Obligation or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Commission nor the Trustee shall be liable for any inaccuracy in such 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 Obligations 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 Obligations thereby called for redemption, such Obligations shall not become due and payable, 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 OHSUSA:260935709.9 40 154 • • • • • • fixed for optional redemption in any notice of redemption ofthe Obligations, rescind and cancel such notice of redemption by Written Request of the Commission to the Trustee, and any optional redemption of Obligations 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 Obligations 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 Obligations called for optional redemption and such failure to optionally redeem the Obligations 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 Obligations (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Obligations (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 Obligations so called for redemption shall cease to accrue, said Obligations (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said Obligations 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 Obligations. Upon surrender of any Obligation to be redeemed in part only, the Commission shall execute, and the Trustee shall authenticate and deliver to the Owner of such Obligation, at the expense of the Commission, a new Obligation or Obligations of Authorized Denominations equal in Bond Obligation to the unredeemed portion of the Obligation surrendered, of the same Series, maturity and terms as the surrendered Obligation. ARTICLE V PLEDGE; FUNDS AND ACCOUNTS Section 5.01 Deposit of Revenue by Trustee; Toll Revenue Fund. (a) All Toll Revenues received and receivable by the Commission and pledged and assigned by this Indenture to the Trustee, together with the balance of the Trust Estate, are to be paid directly to the Trustee and deposited by it in the Funds and Accounts described in this Article V and held in trust for the purposes set forth herein, and, except as otherwise provided herein, shall not be subject to any lien, levy, garnishment or attachment by any creditor of the Commission nor shall they be subject to any assignment or hypothecation by the Commission. Moneys on deposit in the Funds and Accounts described in this Article V (excluding the Rebate Fund and any Fund or Account established to hold the proceeds of a drawing on any Credit Support Instrument) shall be held by the Trustee in trust, and pending application in accordance with the provisions of this Article V shall be subject to a lien and charge in favor of the Holders until applied as hereinafter provided. The Trustee shall at all OHSUSA:260935709.9 41 155 times maintain accurate records of deposits into such Funds and Accounts and the sources and • timing of such deposits. (b) As long as any Senior Lien Bonds, Parity Obligations, Reserve Facility Costs, Permitted Second Lien Obligations, or Subordinate 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 Obligations, and Subordinate 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 established pursuant to Section 5.01, 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 Subordinate Obligations Account, the Sales Tax Revenue Bonds Account and the Commission Equity Account; (2) the Rebate Fund; (3) 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; (4) the Senior Lien Bond Reserve Fund; (5) 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; (6) the Permitted Second Lien Obligations Reserve Fund; (7) the Subordinate Obligations Payment Fund and the Subordinate Obligations Repayment Account therein; OHSUSA:260935709.9 (8) the Subordinate Obligations Reserve Fund; (9) the Repair and Rehabilitation Fund; (10) the Capital Expenditures Fund; 42 156 • • • • • ( 11) the Residual Fund; 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 and the Operation and Maintenance Fund) shall be held by 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 Fund or Account in accordance with the terms of this Indenture. Section 5.03 Toll Revenue Fund; Priority of Deposits and Transfers. (a) From and 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) On each Monthly Funding Date from and 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 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 transferred on any date pursuant to any clause below until amounts sufficient as of that Monthly Funding Date (to the extent applicable) for all the purposes specified under the prior clauses shall have been transferred 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 most recently-adopted 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; OHSUSA:260935709.9 43 157 Third, (x) on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Senior Lien Bond Interest Payment Account the sum of (A)(l) in the case of outstanding Senior Lien Bonds or Parity Obligations with semiannual interest payment dates, one-sixth (1 /6) of the amount of the interest payable on such Senior Lien Bonds and Parity Obligations on the next interest payment date; (2) in the case of outstanding Senior Lien Bonds or Parity Obligations with quarterly interest payment dates, one- fourth (1/4) of the amount of the interest payable on such Senior Lien Bonds and Parity Obligations on the next interest payment date; and (3) in the case of outstanding Senior Lien Bonds or Parity Obligations with monthly interest payment dates, the amount of interest payable on such Senior Lien Bonds and Parity Obligations 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 on such Senior Lien Bonds or Parity Obligations, 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 and Parity Obligations on such interest ·payment date; and (y) on each Monthly Funding Date, to the applicable Swap Parties, scheduled Hedging Obligations due under any Qualified Swap Agreements, if any, net of any scheduled amounts payable to the Commission with respect to such scheduled Hedging Obligations; Fourth, on each Monthly Funding Date and 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) or six months before the first semi-annual principal payment date (including any mandatory sinking fund redemption date), to the Senior Lien Bond Principal Payment Account, the sum of (A)(l) in the case of outstanding Senior Lien Bonds or Parity Obligations with annual principal or mandatory sinking fund payment dates, one-twelfth (1112) of the principal and mandatory sinking fund redemptions due on the Senior Lien Bonds and Parity Obligations; and (2) in the case of outstanding Senior Lien Bonds or Parity Obligations with semi-annual principal or mandatory sinking fund payment dates, one-sixth (1/6) of the principal and mandatory sinking fund redemptions due on the Senior Lien Bonds and Parity 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 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; Fifth, on each Monthly Funding Date, to the Senior Lien Bond Reserve Fund (or the applicable Account therein) the amount necessary so that the balance therein equals the applicable Senior Lien Bond Reserve Requirement calculated as of the most recent Calculation Date; provided, however, that in the event that the Trustee shall have withdrawn moneys in the Senior Lien Bond Reserve Fund or any Account therein for the purpose of paying principal of or interest on the applicable Senior Lien Bonds or Parity Obligations when due as provided in this OHSUSA:260935709.9 44 158 • • • • • • Indenture, the Trustee shall also deposit to the Senior Lien Bond Reserve Fund or the applicable Account therein, on each of the next twelve Monthly Funding Dates after such withdrawal, an amount equal to one-twelfth (1/12 1h) of the aggregate amount of each such umeplenished withdrawal until the amount on deposit in the Senior Lien Bond Reserve Fund (or the applicable Account therein) is equal to the applicable Senior Lien Bond Reserve Requirement; provided further however, that in the event such requirements cannot be fully funded, the funds available shall be transferred to each Account in the Senior Lien Bond Reserve Fund ratably in accordance with its respective shortfall; Sixth, (x) on each Monthly Funding Date and 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; (2) in the case of outstanding Permitted Second Lien Obligations with quarterly interest payment dates, one-fourth (1/4) of the amount of the interest payable on such Permitted Second Lien Obligations on the next interest payment date; and (3) in the case of outstanding Permitted Second Lien Obligations with monthly interest payment dates, the amount of interest payable on such Permitted Second Lien Obligations 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 on such Permitted Second Lien Obligations, any other amount required to make the amount credited to the Permitted Second Lien Obligation Interest Payment Account equal to the amount payable on the Permitted Second Lien Obligations on such interest payment date, and (y) on each Monthly Funding 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, on each Monthly Funding Date and 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) or six months before the first semi-annual principal payment date (including any mandatory sinking fund redemption date), to the Permitted Second Lien Obligations Principal Payment Account, the sum of (A)(l) in the case of outstanding Permitted Second Lien Obligations with annual principal or mandatory sinking fund payment dates, one-twelfth (1112) of the principal and mandatory sinking fund redemptions due on the Permitted Second Lien Obligations; and (2) in the case of outstanding Permitted Second Lien Obligations with semi-annual principal or mandatory sinking fund payment dates, one-sixth (1/6) 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 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 OHSUSA:260935709.9 45 159 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; Eighth, on each Monthly Funding Date, to the Permitted Second Lien Obligations Reserve Fund, the amount necessary so that the balance therein equals the applicable Permitted Second Lien Obligations Reserve Requirement calculated as of the most recent Calculation Date; provided, however, that in the event that the Trustee shall have withdrawn moneys in the Permitted Second Lien Obligations Reserve Fund therein for the purpose of paying principal of or interest on the applicable Permitted Second Lien Obligations when due as provided in this Indenture, the Trustee shall also deposit to the Permitted Second Lien Obligations Reserve Fund, on each of the next twelve Monthly Funding Dates after such withdrawal, an amount equal to one-twelfth (lllih) of the aggregate amount of each such unreplenished withdrawal until the amount on deposit in the Permitted Second Lien Obligations Reserve Fund is equal to the applicable Permitted Second Lien Obligations Reserve Requirement; Ninth, (x) on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Subordinate Obligations Payment Fund the sum of (A)(l) in the case of outstanding Subordinate Obligations with semiannual payment dates, one-sixth (1/6) of the amount payable on such Subordinate Obligations on the next payment date (such transfers to commence, with respect to Subordinate Obligations in the form of or securing payment of a TIFIA Loan, on the Monthly Funding Date that is six months prior to the date on which TIFIA Mandatory Debt Service is first due and payable, and to equal one- sixth (1/6) of the TIFIA Mandatory Debt Service due on the immediately succeeding TIFIA • Payment Date); and (2) in the case of outstanding Subordinate Obligations with monthly payment dates, the amount payable on the next 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 Subordinate Obligations Payment Fund pursuant to Section [5.24] and not repaid; plus (C) if such Monthly Funding Date is also a payment date or the last Monthly Funding Date before a payment date, any other amount required to make the amount credited to the Subordinate Obligations Payment Fund equal to the amount payable on the Subordinate Obligations on such payment date; Tenth, on each Monthly Funding Date, to the Subordinate Obligations Reserve Fund, the amount, if any, necessary to increase the balance therein (taking into account amounts then on deposit therein) to the Subordinate Obligations Reserve Fund Required Balance; Eleventh, on [each Monthly Funding Date] [July 1 of each Fiscal Year (commencing July 1, 20[14])], to the extent sufficient funds are then available after application of funds for the purposes specified in the prior clauses First through Ninth, to the Repair and Rehabilitation Fund, an amount equal to [one-twelfth (1112)] of the Repair and Rehabilitation Fund Required Deposit set forth on Exhibit LJ [hereto] [to the TIFIA Loan Agreement] for such Fiscal Year; provided, however, the Commission may provide a Written Request of the Commission to the Trustee at least [five (5)] Business Days prior to such [Monthly Funding Date] [July 1] to deposit an amount that is greater than or less than the Repair and Rehabilitation Fund Required Deposit (an "Alternate Repair and Rehabilitation Fund Required Deposit") for • such [Monthly Funding Date] [Fiscal Year]. The Commission shall not increase in any Fiscal OHSUSA:260935709.9 46 160 • • • Year the amount of the Repair and Rehabilitation Fund Required Deposit for such Fiscal Year by more than [ 1 0%] over the amount shown for such deposit [in the prior Fiscal Year] in Exhibit [_] [hereto] [to the TIFIA Loan Agreement], without the TIFIA Lender's prior written consent. No such consent shall be required provided that the Commission submits a Written Engineer's Certificate to the Trustee and TIFIA Lender at least [five (5)] Business Days prior to [Monthly Funding Date] [July 1]. [If the delivery of a Written Engineer's Certificate is required for an Alternate Repair and Rehabilitation Fund Required Deposit, the Trustee shall not make such deposit without the prior written consent of the TIFIA Lender in accordance with the provisions of the TIFIA Loan Agreement and hereof.] If sufficient funds are not then available for a particular Fiscal Year, after application of funds for the purposes specified in the prior clauses First through Ninth, to fund the Repair and Rehabilitation Fund Required Deposit or Alternate Repair and Rehabilitation Fund Required Deposit, as applicable, the Commission may use funds [each Monthly Funding Date] [July 1 of each Fiscal Year] from subsequent Fiscal Years to satisfy the Repair and Rehabilitation Fund Required Deposit or Alternate Repair and Rehabilitation Fund Required Deposit, as applicable; Twelfth, in the event the Commission has Subordinate Obligations outstanding in the form of or securing payment of a TIFIA Loan, on each Monthly Funding Date commencing on the Monthly Funding Date that is six months prior to the date on which TIFIA Scheduled Debt Service is first due and payable, to the Subordinate Obligations Payment Fund, an amount which equals one-sixth (1/6) of 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 payment date for such TIFIA Loan; Thirteenth, on each Monthly Funding Date, to the extent sufficient funds are then available after application of funds for the purposes specified in the prior First through Twelfth clauses, to the Capital Expenditures Fund to the extent necessary to fund such Fund so that the balance therein (taking into account amounts then on deposit therein) equals the Capital Expenditures Fund Required Balance; Fourteenth, on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, 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 counterparties to Qualified Swap Agreements or Swaps, an amount equal to any Hedging Termination Obligations payable upon a termination of any such Qualified Swap Agreements or Swaps; and Fifteenth, on each Monthly Funding Date, and only to the extent funds are then available after application of funds for the purposes specified in the prior First through Fourteenth clauses, on such Monthly Funding Date, to the Residual Fund, all remaining amounts, if any. (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 in the Permitted Second Lien Obligations Reserve Fund are in excess of the applicable Permitted Second Lien Obligations Reserve Requirement, or amounts in the Subordinate Obligations OHSUSA:260935709.9 47 161 Reserve Fund are in excess of the applicable Subordinate Obligations 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) Accounts. Pursuant to Section 5.02(a) hereof, the Trustee is to establish and create and maintain in trust the following separate Accounts within the Project Fund: (1) the Senior Lien Bonds Account; (2) the Permitted Second Lien Obligations Account; (3) the Subordinate Obligations 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 Accounts, including the Senior Lien Bonds Account, the Permitted Second Lien Obligations Account, the Subordinate Obligations Account, the Sales Tax Revenue Bonds Account and the Commission Equity Account as described below. The Commission shall be • entitled to open new Accounts of the Project Fund for such purposes as may be set forth in a Supplemental Indenture. (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 compli?nce 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 Obligations 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) Subordinate Obligations Account. The net proceeds of each draw under • the TIFIA Loan shall be deposited on the respective funding date of such draw in the OHSUSA:260935709.9 48 162 • • • Subordinate Obligations 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 Subordinate Obligations Account from time to time. Notwithstanding anything to the contrary set forth herein, the lien on the Subordinate Obligations 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 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. (g) Except as otherwise required by any applicable Law, to the extent that on the date of final completion of the construction of the Riverside SR-91 Corridor Improvement Project, as evidenced by the delivery to the Trustee of a Certificate of the Commission, there shall be any funds remaining on deposit in the Project Fund (or any Account thereof), such funds will be deposited into the Toll Revenue Fund. Section 5.05 Commission Equity Contribution to Project. The Commission hereby covenants to deposit the following amounts into the Commission Equity Account, or otherwise provide for the payment of Project Costs from sources other than the funds on deposit in the Senior Lien Bonds Account, the Permitted Second Lien Obligations Account, the Subordinate Obligations Account and the Sales Tax Revenue Bonds Account, as follows: OHSUSA:260935709.9 Fiscal Year (ending June 30) 49 163 Contribution Amount $ Such deposits or expenditures are expected to be made by the Commission from Sales Tax • Revenues or other revenues of the Commission available for such purpose. Section 5.06 Operation and Maintenance Fund. (a) The Commission shall establish and maintain the Operation and Maintenance Fund in accordance herewith. (b) Upon receipt of amounts transferred to the Operation and Maintenance Fund under Article V of this Indenture, the Commission shall thereafter apply the 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 Sections 5.03(c) and 5.24 of this 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 or Parity Obligations that has a Senior Lien Bond Reserve Requirement, the Senior Lien Bond Reserve Requirement for those Senior Lien Bonds or Parity Obligations shall be deposited in the Senior Lien Bond Reserve Fund in an Account solely for the benefit of those Senior Lien Bonds or Parity Obligations. 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 or Parity Obligations and any one or more subsequently issued Series of Senior Lien Bonds or Parity Obligations 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 or Parity Obligations shall be deposited in the Senior Lien Bond Reserve Fund in an Account solely for the benefit of those Senior Lien Bonds or Parity Obligations and any additional Senior Lien Bonds or Parity Obligations with the same pooled Senior Lien Bond Reserve Requirement, and on the date of issuance of any such additional Senior Lien Bonds or Parity Obligations, 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 or Parity Obligations secured by that Account. (b) Monies on deposit in each Account within the Senior Lien Bond Reserve Fund shall be applied by the Trustee as follows: OHSUSA:260935709.9 50 164 • • • • ( 1) If on any interest payment date for Senior Lien Bonds or Parity Obligations secured by an Account within the Senior Lien Bond Reserve Fund, principal payment date for such Senior Lien Bonds or Parity Obligations or redemption date on which such Senior Lien Bonds or Parity Obligations 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 such Account of the Senior Lien Bond Fund in accordance with 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 such Senior Lien Bonds or Parity Obligations, 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 applicable Account of 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 such Senior Lien Bonds or Parity Obligations 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 with respect to such Senior Lien Bonds or Parity Obligations 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 with respect to such Senior Lien Bonds or Parity Obligations . (2) At maturity of the Senior Lien Bonds or Parity Obligations upon earlier redemption of all or any portion of the Outstanding Senior Lien Bonds or Parity Obligations secured by funds on deposit in an Account of the Senior Lien Bond Fund, the Commission may direct the Trustee to transfer such funds on deposit in such Account of 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 or Parity Obligations secured by such funds or to an escrow account established for defeasance of such Senior Lien Bonds or Parity Obligations pursuant to Article X hereof, provided that, if less than all of the Senior Lien Bonds or Parity Obligations mature or are redeemed, the amount on deposit in such Account of the Senior Lien Bond Reserve Fund following such transfer shall not be less than the Senior Lien Bond Reserve Requirement applicable to the applicable Senior Lien Bonds or Parity Obligations to remain Outstanding following such maturity or redemption of Senior Lien Bonds or Parity Obligations. (3) Except as provided in paragraph (2) above, any amounts on deposit in an Account of the Senior Lien Bond Reserve Fund in excess of the applicable Senior Lien Bond Reserve Requirement shall be applied in accordance with Sections 5.03(c) and 5.24 ofthis Indenture. (c) The Senior Lien Bond Reserve Requirement for any Series of Senior Lien Bonds or Parity Obligations 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 OHSUSA:260935709.9 51 165 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 or Parity Obligations 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 Subordinate Obligations Reserve Fund. (a) If, on any Monthly Payment Date immediately preceding a date when debt service on Subordinate Obligations (including, in the case of a TIFIA Loan, only TIFIA Mandatory Debt Service) shall be due and payable, the amounts available in the Subordinate Obligations Payment Fund for the payment of such debt service, after taking into account any transfers made into such Fund in accordance with clause Ninth of Section 5.03(b) on such Monthly Payment Date, are not sufficient to pay such debt service payable on such payment date, then moneys shall be transferred to the Subordinate Obligations Payment Fund from the Subordinate Obligations Reserve Fund to pay such insufficient amounts. (b) The lien on the Subordinate Obligations Reserve Fund (and all earnings thereon) shall secure the payment only of the Subordinate Obligations and the related interest of the registered Owner of such Subordinate Obligations with respect to amounts on deposit in such • Fund from time to time, and such amounts shall be solely for the benefit of such holder of Subordinate Obligations until such funds have been disbursed in accordance with this Section. If necessary, the Commission shall instruct the Trustee to create Accounts within the Subordinate Obligations Reserve Fund to facilitate compliance with the provisions of this paragraph and the applicable provisions of any Supplemental Indenture. (c) On the date that the Subordinate Obligations are paid in full, the amounts remammg on deposit in the Subordinate Obligations Reserve Fund on such date will be transferred to the Surplus Fund. 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 Deposit. Any amounts on deposit in the Repair and Rehabilitation Fund in excess of the Repair and Rehabilitation Fund Required Deposit shall be applied in accordance with the requirements of Sections 5.03(c) and 5.24 hereof. (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 OHSUSA:260935709.9 52 166 • • • • Written Request of Commission to pay such Repair and Rehabilitation Fund Permitted Expenditures. Section 5.11 Residual Fund; Surplus Fund. (a) On June I [and December I] each year, after the payment of all amounts due on the Commission's Obligations on such date, the amounts remaining on deposit in the Residual Fund shall be transferred on each such date as follows: (I) while Subordinate Obligations in the form of or securing payment of a TIFIA Loan remain Outstanding: (A) one- half to the Subordinate Obligations Prepayment Account, and (B) one-half to the Surplus Fund; or (2) if no Subordinate Obligations in the form of or securing payment of a TIFIA Loan remain Outstanding, to the Surplus Fund. (b) Funds on deposit in the Surplus Fund and funds credited to such Fund will not be subject to the lien and pledge of this Indenture, 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 Monthly Funding Date; provided that no Event of Default has occurred and is continuing hereunder and that there is no shortfall in funding the amounts required by clauses First through Fourteenth of Section 5.03(c) on such Monthly Funding 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 'Yith this Indenture. 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 OHSUSA:260935709.9 53 167 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 Subordinate Obligations Payment Fund. (a) Funds will be deposited in the Subordinate Obligations Payment Fund in accordance with clauses Ninth and Twelfth of Section 5.03(b) and in the Subordinate Obligations Prepayment Account therein in accordance with clause Fifteenth of Section 5.03(b), and additional funds may be deposited therein pursuant to a Supplemental Indenture. (b) On each date when amounts shall be due and payable with respect to Subordinate Obligations, monies on deposit in the Subordinate Obligations Payment Fund shall be transferred to the trustee for or holder of such Subordinate Obligations in accordance with the applicable Supplemental Indenture or 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 (other than pursuant to a mandatory sinking fund redemption) 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 Permitted Second Lien Obligations Reserve Fund. (a) If, on any Monthly Payment Date immediately preceding a date when debt service on Permitted Second Lien Obligations shall be due and payable, the amounts available in the Permitted Second Lien Obligations Payment Fund for the payment of such debt service, after taking into account any transfers made into such Fund in accordance with clauses Sixth and Seventh of Section 5.03(b) on such Monthly Payment Date, are not sufficient to pay such debt service payable on such payment date, then moneys shall be transferred to the Permitted Second Lien Obligations Payment Fund from the Permitted Second Lien Obligations Reserve Fund to pay such insufficient amounts. (b) The lien on the Permitted Second Lien Obligations Reserve Fund (and all earnings thereon) shall apply only to the Permitted Second Lien Obligations and the related interest of the holder of such Permitted Second Lien Obligations with respect to amounts on • OHSUSA:260935709.9 54 168 • • • deposit in such Fund from time to time, and such amounts shall be solely for the benefit of such holder of Permitted Second Lien Obligations until·such funds have been disbursed in accordance with this Section. If necessary, the Commission shall instruct the Trustee to create Accounts within the Permitted Second Lien Obligations Reserve Fund to facilitate compliance with the provisions of this paragraph. (c) On the date that the Permitted Second Lien Obligations are paid in full, the amounts remaining on deposit in the Permitted Second Lien Obligations Reserve Fund on such date will be transferred to the Residual Fund. 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. Section 5.21 Investment by Trustee. Unless otherwise provided in a Supplemental Indenture, 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 with respect to a Fund or Account created pursuant to such Supplemental Indenture, 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 with respect to a Fund or Account created pursuant thereto, 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 an Account within the Project Fund, all interest, profits and other income received from the investment of moneys in an Account within the Project Fund shall be deposited in such Account. 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 and directed 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 . OHSUSA:260935709.9 55 169 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 dosing 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. Tothe 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 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. The Commission irrevocably directs that all Subsidy Payments with respect to Permitted Second Lien Obligations be made directly to the Trustee for deposit in the Permitted Second Lien . Obligations Interest Payment Account pursuant to this Indenture. The Commission irrevocably directs that all Subsidy Payments with respect to Subordinate Obligations be made directly to the Trustee for deposit in the Subordinate Obligations Payment Fund 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 applicable 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 • OHSUSA:260935709.9 56 170 • • • 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 Fund or Account shall be delivered to the Trustee (with a copy to the trustee for or holder of any Permitted Second Lien Obligations or Subordinate Obligations) no later than two (2) Business Days prior to each date on which funds are proposed to be withdrawn from the applicable Fund or Account or transferred from a Fund or Account to another Fund or Account in accordance with this Indenture. The Trustee shall comply with any such Funds Transfer Certificate; provided, that if the trustee for or holder of Permitted Second Lien Obligations or Subordinate Obligations 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 . Section 5.24 Insufficient Funds; Auulication 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 Thirteenth clauses in Section 5.03(b) of this 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 Fourteenth clauses in Section 5.03(b ); pmJided that: (i) such transfers will be made from Funds and Accounts in inverse order ofthe 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 Subordinate Obligations Reserve Fund, or the Permitted Second Lien Obligations Reserve Fund (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 Fund), 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 shall only be used to make payments on the Senior Lien Bonds, and are not available for other purposes. Amounts in the Permitted Second Lien Obligations Reserve Fund shall only be used to make payments on the applicable Permitted Second Lien Obligations, and are not available for other purposes. Amounts in the Subordinate Obligations Reserve Fund shall only be used to make payments on the applicable Subordinate Obligations, and are not available for other purposes . OHSUSA:260935709.9 57 171 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) its Obligations hereunder in strict conformity with the terms of the Act, the Indenture and such Obligations, and will faithfully observe and perform all of the agreements and covenants contained in the Indenture and such Obligations. 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 part of the Trust Estate, except for Operation and Maintenance Expenses payable from Revenue. The Commission will not create or cause or permit to be created any pledge, lien, charge or encumbrance having parity with the lien of the Senior Lien Bonds and Parity Obligations upon any part of the Trust Estate except the lien of Senior Lien Bonds and Parity Obligations, and, following a Bankruptcy-Related Event, Subordinate Obligations in the form of or securing payment of a TIFIA Loan. 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 Permitted Second Lien Obligations upon any part of the Trust Estate except Senior Lien Bonds and Parity Obligations and, following a Bankruptcy-Related Event, Subordinate Obligations in the form of or securing payment of a TIFIA Loan. 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 Subordinate Obligations upon any part of the Trust Estate, except • Senior Lien Bonds and Parity Obligations and, following a Bankruptcy-Related Event, Subordinate Obligations in the form of or securing payment of a TIFIA Loan, and Permitted Second Lien Obligations. The Commission will not create or permit to be created or issue any Obligations secured by the Trust Estate except as provided in Section 3.03. Section 6.03 Toll and Revenue Covenants. (a) The Commission covenants that it shall at all times, beginning in the second Fiscal Year following the Substantial Completion Date, establish, levy, maintain and collect tolls in connection with the Toll Road and establish such charges for use of the property constituting part of the Toll Road, including, without limitation and as permitted by law, leasehold payments, concession payments, rents and other charges, as shall be sufficient, collectively, to produce Net Revenue in each Fiscal Year, in an amount at least equal to the greater of (1 ), (2), or (3) below: ( 1) one hundred fifty percent (150%) of the Annual Debt Service in such Fiscal Year on all Outstanding Senior Lien Bonds and Parity Obligations; or (2) one hundred thirty percent (130%) of the Annual Debt Service in such Fiscal Year on all Outstanding Senior Lien Bonds and Parity Obligations, Permitted Second Lien Obligations and Subordinate Obligations; or OHSUSA:260935709.9 58 172 • • • • (3) one hundred percent (100%) of the Annual Debt Service in such Fiscal Year on all Outstanding Obligations, plus the amounts required to be deposited into the Senior Lien Bond Reserve Fund, the Permitted Second Lien Obligations Reserve Fund, the Subordinate Obligations Reserve Fund and the Repair and Rehabilitation Fund and any other Fund established by a Supplemental Indenture to be funded by Revenue. In making the calculations in (1), (2), and (3) above, the Commission may take into consideration as a credit against Annual Debt Service any amounts received, or reasonably expected to be received, in the Fiscal Year from or as a result of any additional security granted or pledged to the Bondholders by the Commission with respect to the Obligations; provided, that if the pledge is not for the benefit of all Obligations, the amounts expected to be received may only be taken into account when making the calculation for the affected Obligations. (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: (i) to compute projected Net Revenue for each Fiscal Year and the projected ratios described in Section 6.03(a)(l), (2) and (3) (the "Coverage Ratios") 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 furnish promptly to the Trustee a Certificate of the Commission setting forth the results of such computations; and (iii) if any Coverage Ratio is less than the applicable requirement of Section 6.03(a), 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 Ratios for that Fiscal Year to equal or exceed the requirement of Section 6.03(a). (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 Revenue for such Fiscal Year. The failure of toll rates to yield an amount sufficient to achieve the Coverage Ratio defined 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(b ). If any such report indicates that the Net Revenue 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 Traffic Consultant and that the Traffic Consultant estimates will not adversely affect the amount of Net Revenue). 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 OHSUSA:260935709.9 59 173 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 Revenue 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 Revenue. 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 will 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 [within_ days after] 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 Obligations 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 and that to impose and collect tolls on the Toll Road 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 and keep the Toll Road in good repair in accordance with customary business practices and the Maintenance Standards (as defined in the Toll Facility Agreement). The Commission further covenants that, should any Obligations remain Outstanding following the expiration of the Commission's authorization to impose tolls on the Toll Road, and should the Commission project that, within five calendar years such authorization will expire with Obligations remaining Outstanding, the Commission will petition the Legislature of the State to extend its authorization to impose such tolls. OHSUSA:260935709.9 60 174 • • • • Section 6.06 Retention of Assets. [Subject to the provisions of the Act and the Toll 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, however, that the Commission may pledge ROW Revenues as security for a Subordinate Obligation Subordinate Obligation in the form of or securing payment of a TIFIA Loan and transfer ROW Revenues to the Trustee for deposit in a reserve fund for or to pay debt service on a Subordinate Obligation in the form of or securing payment of 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 (including by the Design-Build Contractor, its subcontractors and/or the Toll Operator) 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 respectto 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 Trust Estate or any part thereof, prior to or on a parity with the charge and lien upon the Revenue securing the Obligations Outstanding hereunder. 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 ofthe 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 Toll Agreements. The Commission hereby covenants and agrees that it has all lawful right and power to enter into the Toll Agreements and that it shall perform all of its material obligations and exercise all of the powers granted to it thereunder (including OHSUSA:260935709.9 61 175 but not limited to the Commission's powers to enforce performance by the counterparty to each such Toll Agreement of such counterparty's obligations thereunder) as the Commission may, in • its reasonable judgment, determine are necessary to complete or cause the final 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 and continue collection of tolls established pursuant to Section 6.03 of this Indenture. The Commission hereby covenants and agrees to employ the design-build method of procurement in connection with the construction of the initial phase of the Riverside SR-91 Corridor Improvement Project, in accordance with the CIP Plan. 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 Obligations or any funds of the Commission, directly or indirectly, to acquire any securities or obligations that would cause the interest on Obligations 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 Obligations 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 Obligations. 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 Obligations or any funds of the Commission (so long as • OHSUSA:260935709.9 62 176 • • • such proceeds or other funds are under its control), directly or indirectly, in any manner, and shall not take or omit to take any action that would cause any of the Obligations to be treated as an obligation not described in Section 103(a) of the Code if such Obligations were, when originally issued, intended by the Commission to be obligations described in Section 1 03(a) of the Code. (d) Notwithstanding any provisiOns 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 Obligations, 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 shall 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 shall prepare and file with the Trustee annually within 210 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 Trust Estate and Rights of Holders. The Commission shall preserve and protect the Trust Estate and the security of the Obligations issued hereunder and the rights of the holders of such 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 Senior Lien Bonds, Permitted Second Lien Obligations or Subordinate Obligations by the Commission, such Obligations shall be incontestable by the Commission. Section 6.15 Payment of Governmental Charges and Compliance with Governmental Regulations. The Commission shall 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, rights, functions, duties and obligations OHSUSA:260935709.9 63 177 now reposed on it pursuant to the Act and all other laws and the Toll Facility Agreement and will • not at any time voluntarily do, suffer 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 Obligations hereunder 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 Obligations, or upon conversion of any Series of Obligations to an interest rate period, requiring an undertaking regarding continuing disclosure under Rule 15c2-12, the Commission hereby covenants and agrees that it will execute and deliver a Continuing Disclosure Agreement with respect to such Series of Obligations and comply with and carry out all of the provisions of such Continuing Disclosure Agreement applicable to it. Notwithstanding any other provision of this Indenture, failure of the Commission 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 Owner of an Outstanding Obligation, 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 an Obligation may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order to cause the Commission to comply with its obligations under this Section. 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:260935709.9 64 178 • • • • • 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) default by the Commission 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 thereofto the Commission given by the Trustee; (d) if the Commission files a petition in voluntary bankruptcy for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself; (e) if a court of competent jurisdiction shall enter an order, judgment or decree declaring the Commission insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the Commission, or approving a petition filed against the Commission seeking reorganization of the Commission under any applicable law or statute of the United States of America or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of the entry thereof; or (f) if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Commission or of the Revenue, and such custody or control shall not be terminated within sixty ( 60) days from the date of assumption of such custody or control. 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 Bond Obligation of all Senior Lien Bonds then Outstanding (or, if no Senior Lien Bonds are then Outstanding, then the Holders of not less than a majority of the Bond Obligation of the Permitted Second Lien Obligations and Subordinate Obligations then Outstanding), or, (ii) following a Bankruptcy-Related Event and prior to repayment of a Subordinate Obligation in the form of or securing payment of a TIFIA Loan in full pursuant to its terms, a combination of the TIFIA Lender together with Owners representing at least 25% in Bond Obligation of (X) such TIFIA Loan, calculated as if fully OHSUSA:260935709.9 65 179 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, the Trust Estate 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 trustee or holder of any Subordinate Obligations, 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 then Outstanding, in each case in the order of maturity ofthe 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); (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 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 Qualified Swap Agreements; (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; (g) seventh, 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; (h) eighth, to the pro rata payment of all accrued and unpaid interest (but not default interest, if any) on all Permitted Second Lien Obligations; (i) ninth, 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; (j) tenth, to the pro rata payment of all accrued and unpaid default interest then due, if any, with respect to any 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; OHSUSA:260935709.9 66 180 • • • (k) eleventh, 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) twelfth, 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) thirteenth, if a Subordinate Obligation in the form of or securing payment of a TIFIA Loan is then outstanding, to the pro rata payment of (except from and after the occurrence of a Bankruptcy Related Event) all amounts due under the related TIFIA Loan Agreement to the TIFIA Lender (to the extent not previously paid); (n) fourteenth, to the payment of any Hedging Termination Obligations with respect to Qualified Swap Agreements or Swaps; and ( o) fifteenth, upon the payment in full of all Secured Obligations in accordance with clauses first through fourteenth 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 or other funds then remaining in the Trust Estate. Section 7.03 No Acceleration. There shall be no right of acceleration with respect to the Obligations. 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 Bond Obligation 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, or, if no Senior Lien Bonds are then Outstanding, then the Holders of not less than a majority of the Bond Obligation of the Permitted Second Lien Obligations and Subordinate Obligations then Outstanding) 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 holders of Obligations by this Indenture or such Obligations 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 Obligations or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding without the approval of the Holders 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 OHSUSA:260935709.9 67 181 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 trustee for or holder of any Subordinate Obligations; (b) From and after the occurrence of a Bankruptcy Related Event, if the TIFIA Loan is then outstanding the TIFIA Lender may request, and the Trustee shall, upon receiving adequate indemnity, potentially including indemnity provided by such TIFIA 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 Obligations in trust for the benefit of the Holders of the Obligations as provided herein until such sums shall be paid to such Holders of such Obligations 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. OHSUSA:260935709.9 68 182 • • • 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 Obligations; (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 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 Bond Obligation 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 Obligations to the Trustee or purchase of Obligations by the Trustee shall constitute a redemption of Obligations or any extinguishment of the debt represented thereby, unless such Obligations are surrendered by the Commission to the Trustee for cancellation pursuant to this Indenture (including, with respect to Senior Lien Bonds, Section IO.Ol(b)) . OHSUSA:260935709.9 69 183 (e) The Trustee shall not be accountable for the use or application by the Commission of the proceeds of the Obligations 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 Obligations other than information provided by theTrustee 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 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 OHSUSA:260935709.9 70 184 • • • 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 of Trustee; 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 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 OHSUSA:260935709.9 71 185 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 Bond Obligation of the Senior Lien Bonds at the time Outstanding (or, if no Senior Lien Bonds are then Outstanding, then the Holders of not less than a majority of the Bond Obligation of the Permitted Second Lien Obligations and Subordinate Obligations then 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 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 R,equest 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 Obligations and its related hooks 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 OHSUSA:260935709.9 72 186 • • • 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 Obligations 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. 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 Obligations. 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 Obligations 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: OHSUSA:260935709.9 73 187 (a) to grant to or confer upon the Trustee for the benefit of the Holders of any Series of Obligations or of all Obligations any additional rights, remedies, powers or authority • that may lawfully be granted to or conferred upon the Trustee; (b) to grant or pledge to the Trustee for the benefit of the Holders of any Series of Obligations or of all Obligations 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 Obligations; (d) to cure any ambiguity, supply any omission, 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 insert such provisions clarifying matters or questions arising under the Indenture as are necessary or desirable and are not contrary to or inconsistent with the Indenture as theretofore in effect; (f) 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 Obligations intended by the Commission to bear federally tax-exempt interest; (g) to modify, amend or supplement this Indenture or any Supplemental Indenture in such manner as to permit, if presented, the qualification hereof and thereof under the • Trust Indenture Act of 1939 or any similar federal statute hereafter in effect or under any state blue sky law; (h) to make modifications or adjustments necessary in order to accommodate a Credit Support Instrument or a Reserve Facility; (i) to modify, alter, amend or supplement this Indenture if (1) all of the Obligations to be affected thereby are variable interest rate obligations, (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; G) to make any change therein that does not materially and adversely affect the rights of the Holders of the Obligations (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 (k) to issue additional Obligations hereunder in accordance with the terms hereof, including to specify and determine the lien status of a Series of Obligations or, if applicable, the springing lien status of a Series of Obligations and also any other matters and things relative to such Obligations which are not contrary to or inconsistent with this Indenture OHSUSA:260935709.9 74 188 • • • • as theretofore in effect, or to amend, modify or rescind any such authorization, specification or determination at any time prior to the original issuance of such Obligations; 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 Obligation, or (ii) a reduction in the principal amount of, or the redemption premium or the rate of interest on, any Obligation, or (iii) a preference or priority of any Senior Lien Bond or Senior Lien Bonds or Parity Obligations over any other Senior Lien Bond or Senior Lien Bonds or Parity Obligations, or (iv) a preference or priority of any Permitted Second Lien Obligation or Permitted Second Lien Obligations over any other Permitted Second Lien Obligation or Permitted Second Lien Obligations or Senior Lien Bond or Parity Obligation, or (v) a preference or priority of any Subordinate Obligation or Subordinate Obligations over any other Subordinate Obligation or Subordinate Obligation, Permitted Second Lien Obligation or Senior Lien Bond or Parity Obligation (except as otherwise provided herein with respect to Subordinate Obligations in the form of or securing payment of a TIFIA Loan held by the TIFIA Lender) or (vi) a reduction in the Bond Obligation 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 Lender. 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 each Subordinate Obligation in the form of or securing payment of a TIFIA Loan in full pursuant to its terms to receipt of written consent from the TIFIA Lender, the Holders of at least a majority in aggregate Bond Obligation of the Obligations Outstanding at the time such consent is given, and in case less than all of the several Series of Obligations then Outstanding are affected by the modification or amendment, of the Holders of at least a majority in aggregate Bond Obligation of the Obligations of each Series so affected and Outstanding at the time such consent is given (provided, however, that if such modification or amendment will, by its terms, not take effect so long as any Obligations of any particular Series and maturity remain Outstanding, the consent of the Holders of such Obligations shall not be required and such Obligations shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Obligations under this Section 9 .02) 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 Obligation, or (ii) a reduction in the principal amount of, or the redemption premium or the rate of interest on, any Obligation, 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 preference or priority of any Permitted Second Lien Obligation or Permitted Second Lien Obligations over any other Permitted Second Lien Obligation or Permitted Second Lien Obligations or Senior Lien Bond, or (v) a preference or priority of any Subordinate Obligation or Subordinate Obligations over any other Subordinate Obligation or Subordinate Obligation, Permitted Second Lien Obligation or Senior Lien Bond (except as otherwise provided herein with respect to Subordinate Obligations in the form of or securing payment of a TIFIA Loan held OHSUSA:260935709.9 75 189 by the TIFIA Lender) or (vi) a reduction in the Bond Obligation of the Obligations 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 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 Obligations then shown on the registration books for the Obligations. 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 Obligations 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 Obligations have consented to an amendment by purchasing such Obligations if the official statement or other disclosure document related to such purchase disclosed that the purchase of the Obligations 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 any Permitted Second Lien Obligation or the rights and obligations of the holders of any Permitted Second Lien Obligation without the prior written consent of the trustee for or required holders of such Permitted Second Lien Obligation. The Trustee shall not execute any Supplemental Indenture materially affecting the priority of payment of any Subordinate Obligation or the rights or obligations of the holder of any Subordinate Obligation without the prior written consent of the trustee for or required holders of such Subordinate Obligation. 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 Obligations Owned by Commission. (a) For purposes of this Article IX, Obligations 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 Obligations provided for in this Article IX, and the Commission shall not be entitled with respect to such Obligations 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 OHSUSA:260935709.9 76 190 • • • approval or consent of a Holder, only Obligations which the Trustee actually knows to be owned by the Commission shall be disregarded unless all Obligations are owned or held by or for the account of the Commission, in which case such Obligations shall be considered Outstanding for the purpose of such determination. Upon 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 Obligations so to be excluded. (b) The purchase or other acquisition of Obligations by or on behalf of the Commission shall not cancel, extinguish, or otherwise affect the Obligations unless such Obligations 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 Obligations and of all other amounts payable under this Indenture, the pledge and lien on the Trust Estate 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 Obligations, and Section 8.02 shall survive hereunder. (b) The Commission may at any time surrender to the Trustee for cancellation any Obligations previously authenticated and delivered hereunder that the Commission at its option may have acquired in any manner whatsoever and such Obligations 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 Obligations shall be paid by a Credit Provider, those Obligations 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 Trust Estate 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 Obligations. Obligations (or any portion of the Obligations) shall be deemed to have been paid within the meaning of Section 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 OHSUSA:260935709.9 77 191 principal amount of, redemption premium (if any) and all unpaid interest on such Obligations (or any portion thereof) to the maturity or the redemption date thereof, as the case may be; and • (b) if any such Obligations 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 redemption date) in form satisfactory to it irrevocable written instructions from· an Authorized Representative to redeem such Obligations 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 10.02(a)(ii) for the purpose of defeasing the lien of this Indenture as to Obligations 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 of the Trustee pursuant to this Section 1 0.02, that is not required for the payment of the principal of the Obligations 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 Obligations Outstanding under this Indenture, such income shall be automatically paid over to the Commission. Notwithstanding any other provision of this Indenture, no Obligation that is subject to optional or mandatory tender in accordance with the provisions of the Supplemental Indenture pursuant to which such Obligation was issued, shall be deemed to be paid within the meaning of this Indenture, unless arrangements shall have been made to assure that such Obligation, 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 1 0.02. 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 Obligations that remain unclaimed for two (2) years after the date when such Obligations 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 Obligations 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 bereleased 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 Obligations. OHSUSA:260935709.9 78 192 • • • • • ARTICLE XI MISCELLANEOUS Section 11.01 Liability of Commission Limited to Trust Estate. Notwithstanding anything contained herein, the Commission shall not be required to advance any money derived from any source of income other than from the Trust Estate as provided herein for the payment of the principal of or redemption premium, if any, or interest on the Obligations 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 Obligations 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 the Trust Estate as provided herein and the Commission is not obligated to pay them except from the Trust Estate. The Obligations 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 Obligations 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 covenants, 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 Obligations may provide that any Credit Provider providing a Credit Support Instrument with respect to Obligations of such Series may exercise any right under this Indenture given to the Owners of the Obligations 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:260935709.9 79 193 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 Obligations 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 Obligations 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 ptovided 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 or 4080 Lemon Street, 3rd Floor Riverside, CA 92501 Attention: Chief Financial 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. OHSUSA:260935709.9 80 194 • • • • • 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. 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:260935709.9 81 195 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:260935709.9 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By ------------------------------ Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By ------------------------------ 82 196 Authorized Officer • • • SCHEDULE I CAPITAL EXPENDITURES FUND [TO COME] • • OHSUSA:260935709.9 197 • • • FIRST SUPPLEMENTAL INDENTURE between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and ATIACHMENT4 OH&SDraft 3/26/2013 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee OHSUSA:260941335.5 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 198 • • • 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 ...................................................... 3 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 ........................................................... 5 ARTICLE XV REDEMPTION OF 2013 BONDS Optional Redemption of2013 Series A Bonds ................................................ 6 Mandatory Redemption of2013 Series A Bonds From Sinking Fund Installments ...................................................................................................... 6 Selection of 2013 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 16.01. Section 16.02. Section 16.03. Section 16.04. OHSUSA:260941335.5 Funds·and Accounts ......................................................................................... 8 2013 Bonds Project Fund ................................................................................. 9 2013 Bonds Costs oflssuance Account.. ......................................................... 9 2013 Bonds Reserve Account.. ...................................................................... 1 0 -1- 199 TABLE OF CONTENTS (continued) ARTICLE XVII MISCELLANEOUS Page Section 17.0 1. Severability .................................................................................................... 10 Section 17 .02. Parties Interested Herein ................................................................................ 11 Section 17.03. Headings Not Binding .................................................................................... 11 Section 17.04. Notice Addresses ...................................................•....................................... 11 Section 17.05. Notices to Rating Agencies ............................................................................ 11 Section 17.06. Indenture to Remain in Effect.. ...................................................................... 11 Section 17.07. Effective Date ofFirst Supplemental Indenture ............................................ 11 Section 17.08. Execution in Counterparts .............................................................................. 11 Exhibit A Form of2013 Series A Bond A-1 Exhibit B Notice Addresses ......................................................................................... B-1 OHSUSA:260941335.5 -ll- 200 • • • • • • 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 Senior Lien Bonds from time to time as authorized by a Supplemental Indenture, which Senior Lien Bonds are to be secured by the Trust Estate in accordance with the Indenture; and WHEREAS, the Commission desires to provide at this time for the issuance of Senior Lien Bonds secured by the Trust Estate, such Bonds to be designated "Riverside County Transportation Commission Toll Revenue Senior Lien Bonds, 2013 Series A," and "Riverside County Transportation Commission Toll Revenue Senior Lien 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 principal amount and any integral multiple thereof and, with respect to 2013 Series B Bonds, $5,000 Maturity Value and any integral multiple thereof. "First Supplemental Indenture" means this First Supplemental Indenture, dated as of June 1, 2013 . OHSUSA:260941335.5 201 "Interest Payment Date" means, with respect to the 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, and, for purposes of compounding interest on the 2013 Series B Bonds, June 1 and December 1 of each year until the maturity of such 2013 Series B Bonds, commencing with December 1, 2013. "Issue Date" means, with respect to the 2013 Bonds, the date on which the 2013 Bonds are first delivered to the purchasers 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. ["2Q13 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 ofthe Code.] "2013 Bonds Costs of Issuance Account" means the 2013 Bonds Costs of Issuance Account established within the Senior Lien Obligations Account within the Project Fund pursuant to Section 16.01. "2013 Bonds Reserve Account" means the 2013 Bonds Reserve Account established within the Senior Lien Bond 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. "2013 Series A Capitalized Interest Account" means the 2013 Series A Capitalized Interest Account established within the Senior Lien Obligations Account within the Project Fund pursuant to Section 16.0 1. "2013 Series A Bonds" means the Riverside County Transportation Commission Toll Revenue Senior Lien Bonds, 2013 Series A, authorized by Article XIV ofthis Indenture. "2013 Series B Bonds" means the Riverside County Transportation Commission Toll Revenue Senior Lien Bonds, 2013 Series B, authorized by Article XIV of this Indenture . OHSUSA:260941335.5 -2- 202 • • • • • • 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 2013 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 secured by the Trust Estate, 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 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 Senior Lien Bonds entitled to the benefit, protection and security of such provisions, including without limitation the grant OHSUSA:260941335.5 -3- 203 of the Trust Estate in the Indenture, is hereby authorized in the aggregate principal amount of $ . Such Senior Lien Bonds shall be issued as Current Interest Obligations and shall • be designated as, and shall be distinguished from the Senior Lien Bonds of all other Series by the title, "Riverside County Transportation Commission Toll Revenue Senior Lien Bonds, 2013 Series A." Pursuant to the provisions of this Indenture and the provisions of the Act, a Series of Senior Lien Bonds entitled to the benefit, protection and security of such provisions, including without limitation the grant of the Trust Estate in the Indenture, is hereby authorized in the initial Accreted Value of$ . Such Bonds shall be issued as Capital Appreciation Obligations 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 Senior Lien 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 Obligations 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 t Priced to first call date of June 1, 20_ at par. OHSUSA:26094 I 335.5 -4- 204 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 $1,000,000 or more in Accreted Value of 2013 Series A Bonds may, at any time prior to a Record Date, give the Trustee written instructions for payment of such interest on each succeeding interest payment date by wire transfer. (e) The 2013 Series B Bonds shall be issued as Capital Appreciation Obligations in the initial principal amounts and mature on June 1 in each of the years and Maturity Values shown below: [TO COME] The 2013 Series B Bonds shall not bear current interest; each 2013 Series B Bond shall increase in value by the accumulation of earned interest from its initial principal amount shown in the table above on the date of issuance thereof to the Maturity Value thereof at maturity, assuming in any period that the value increases in equal daily amounts on the basis of a 360-day year of twelve 30-day months. The interest on the 2013 Series B Bonds shall be compounded commencing on December 1, 2013, and thereafter on June 1 and December 1 in each year to maturity or the date of redemption prior thereto. Section 14.05. Conditions To Delivery of 2013 Bonds. Each of the 2013 Bonds shall be executed and delivered as authorized by this First Supplemental Indenture and the Indenture, including Articles II and III thereof, upon the receipt of payment therefor from the purchaser thereof. Section 14.06. Disposition of Proceeds of 2013 Bonds. The net proceeds from the sale of the 2013 Bonds shall be received by the Trustee and transferred and deposited by the Trustee as follows: (i) Deposit$ into the 2013 Bonds Costs of Issuance Account; ----- (ii) Deposit$ , representing the 2013 Bonds Reserve Requirement at the time of issuance of the 2013 Bonds, into the 2013 Bonds Reserve Account; (iii) Deposit $ _____ into the 2013 Series A Capitalized Interest Account; and OHSUSA:260941335.5 -5- 205 (iv) Deposit the remaining amount of$ into the Senior Lien Obligations ----- Account of the 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 June 1, 20_ shall not be subject to redemption prior to their respective stated maturities. The 2013 Series A 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 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 June 1, 20_, June 1, 20_, 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 in Section 15.02(b), in the principal amount equal to the Sinking Fund Installment 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 premmm. (b) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: OHSUSA:260941335.5 -6- 206 • • • • *Final Maturity Sinking Fund Installment Dates (June 1) Sinking Fund Installments (c) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: *Final Maturity Sinking Fund Installment Dates (June 1) Sinking Fund Installments (d) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: *Final Maturity Sinking Fund Installment Dates (June 1) Sinking Fund Installments (e) The Sinking Fund Installments for the 2013 Series A Term Bond maturing on June 1, 20_ shall be due in the amounts and on the dates as follows: OHSUSA:260941335.5 -7- 207 *Final Maturity Sinking Fund Installment Dates (June I) 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 of the 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 suchredemption. 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:260941335.5 -8- 208 • • • Costs of Issuance Account and 20 I 3 Series A Capitalized Interest Account in the Senior Lien Obligations Account of the Project Fund, which shall be held by the Trustee. To ensure the proper application of such proceeds from the sale of the 20 I 3 Bonds to be applied to satisfy the 2013 Bonds Reserve Requirement, there is hereby established the 2013 Bonds Reserve Account within the Senior Lien Bond 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 moneys 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 20 I 3 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 of Issuance 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 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 OHSUSA:260941335.5 -9- 209 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 _], any amounts remaining in the 2013 Bonds Costs oflssuance 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 L...-___ ., 20 _] 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:260941335.5 -10- 210 • • • • 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:260941335.5 -11- 211 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:260941335.5 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: -------------------------------- Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: -------------------------------- Authorized Officer 212 • • • • • 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 June 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 the Trust Estate 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 December 1, 2013 and semiannually thereafter on June 1 and December 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 ofNew 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 Accreted Value 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:260941335.5 213 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"), of the 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 initial Accreted Value 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 SECURED SOLELY BY THE TRUST ESTATE AS DEFINED AND PROVIDED IN THE INDENTURE AND THE COMMISSION IS NOT OBLIGATED TO PAY THIS BOND EXCEPT FROM SUCH TRUST ESTATE. 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 Trust Estate 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 secured by and payable both as to principal and interest, and as to any premium upon the redemption hereof, solely from the Trust Estate 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 said Trust Estate. • The Bonds of the Series of Bonds of which this Bond is a part maturing on or before June 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 June 1, 20_ shall be subject to redemption prior to their respective stated maturities, at the option of the Commission, from any • A-2 OHSUSA:260941335.5 214 • • • 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 June 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 June 1, 20LJ 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 June 1, 20_ and on each June 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 ofthis 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 ofthe same series, maturity, interest rate and in the same Accreted Value, 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 secured by the Trust Estate, 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:260941335.5 215 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:260941335.5 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: __________ _:__ __ _ Chair of the Board of Commissioners A-4 216 • • • • • [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 ofThe 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:260941335.5 217 [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:260941335.5 218 • • • • • • 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 June 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 the Trust Estate 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 June 1 and December 1 of each year commencing on December 1, 2013, 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. Ifthe 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:260941335.5 219 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, 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 initial Accreted Value 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 SECURED SOLELY BY THE TRUST ESTATE AS DEFINED AND PROVIDED IN THE INDENTURE AND THE COMMISSION IS NOT OBLIGATED TO PAY THIS BOND EXCEPT FROM SAID TRUST ESTATE. 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 Trust Estate 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 secured by and payable both as to principal and interest, and as to any premium upon the redemption hereof, solely from the Trust Estate 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 such Trust Estate. The Bonds of the Series of Bonds of which this Bond is a part are not subject to redemption prior to maturity. A-8 OHS USA:260941335 .5 220 • • • • • The rights and obligations of the Commission and ofthe 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 Accreted Value, 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 ofthe State of California and the Act, and that this Bond, together with all other indebtedness of the Commission secured by the Trust Estate, 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:260941335.5 221 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:260941335.5 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: _____________ -,---_ Chair of the Board of Commissioners A-10 222 • • • • • (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 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:260941335.5 223 [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:260941335.5 224 • • • • • • EXHIBITB 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 pub fin_ structured@standardandpoors.com Moody's Investors Service MSPG Surveillance 99 Church Street, 9th Floor New York, New York 10007 Fitch Ratings One State Street Plaza New York, New York 10004 OHSUSA:260941335.5 B-1 225 • • • SECOND SUPPLEMENTAL INDENTURE between ATTACHMENT 5 OH&SDraft 03/26/2013 RIVERSIDE COUNTY TRANSPORTATION COMMISSION and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee OHSUSA:753387945.2 Dated as of June 1, 2013 Relating to the Riverside County Transportation Commission Subordinate Toll Revenue Bonds, 2013 TIFIA Series (Supplementing the Master Indenture Dated as of June 1, 2013) 226 • • • Section 18.01. Section 18.02. Section 19.01. Section 19 .02. Section 19.03. Section 20.01. Section 20.02. Section 20.03 . Section 20.04. Section 20.05. Section 20.06. Section 20.07. TABLE OF CONTENTS ARTICLE XVIII DEFINITIONS Page Definitions ........................................................................................................ 1 Rules of Construction ..................................................................................... 2 ARTICLE XIX FINDINGS, DETERMINATIONS AND DIRECTIONS Findings and Determinations ........................................................................... 3 Recital in Bonds ............................................................................................... 3 Effect of Findings and Recital ......................................................................... 3 ARTICLE XX AUTHORIZATION OF THE 2013 TIFIA BOND Authorization; Principal Amount, Designation and Series .............................. 3 Priority and Lien; Effect of Bankruptcy Related Event on 2013 TIFIA Bond ................................................................................................................. 4 Purpose ............................................................................................................. 4 Form, Denomination, Numbers and Letters .................................................... 4 Date, Maturities and Interest Rates .................................................................. 4 Conditions To Delivery of 2013 Bonds ........................................................... 5 Disposition of Proceeds of2013 Bonds ........................................................... 5 ARTICLE XXI TRANSFERS; SUBORDINATE OBLIGATIONS RESERVE FUND Section 21.01. Section 21.02. Section 22.01. Section 23.05. Section 23.06 . OHSUSA:753387945.2 Transfers to the Debt Service Fund ................................................................. 6 Subordinate Obligations Reserve Fund ........................................................... 6 ARTICLE XXII OTHER PROVISIONS Tax Status ......................................................................................................... 6 ARTICLE XXIII MISCELLANEOUS Effective Date of Second Supplemental Indenture .......................................... 7 Execution in Counterparts ................................................................................ 7 -I- 227 • • • THIS SECOND SUPPLEMENTAL INDENTURE, dated as of June 1, 2013 (this "Second Supplemental Indenture"), between the RIVERS~DE 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 Second 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 Subordinate Obligations from time to time as authorized by a Supplemental Indenture, which Subordinate Obligations are to be secured by the Trust Estate in accordance with the Indenture; WHEREAS, the Commission and the Trustee desire to enter into this Second Supplemental Indenture to set forth the terms of the Commission's obligations to the TIFIA Lender, relating to the execution and delivery of a Secured Loan Agreement dated as of June 1, 2013 (the "2013 TIFIA Loan Agreement") authorizing and setting forth the terms and conditions of a TIFIA Loan (the "2013 TIFIA Loan") from the TIFIA Lender to the Commission, which TIFIA Loan is to be evidenced by a bond entitled "Riverside County Transportation Commission Toll Revenue Bonds, 2013 TIFIA Series" (the "2013 TIFIA Bond"), to be issued in an aggregate principal amount not to exceed $ ; and WHEREAS, the 2013 TIFIA Loan Agreement is being entered into as indebtedness under, pursuant to and in accordance with the Act, and the proceeds of the 2013 TIFIA Loan may be disbursed by the TIFIA Lender to be used to finance the Riverside SR-91 Corridor Improvement Project; and WHEREAS, the Commission desires to provide at this time for the issuance of the 2013 TIFIA Bond, as further provided in this Second Supplemental Indenture; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE XVIII DEFINITIONS Section 18.01. 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 Second Supplemental Indenture . OHSUSA:753387945.2 228 (b) Additional Definitions. Unless the context otherwise requires, the following terms shall, for all purposes of this Second Supplemental Indenture, have the • following meanings: "Interest Payment Date" means, with respect to the 2013 TIFIA Bond, each scheduled interest payment date as set forth in the Loan Amortization Schedule (as defined in the TIFIA Loan Agreement), which shall occur on June 1 and December I of each applicable year, or if such day is not a Business Day, then the Business Day succeeding such date. "ISsue Date" _means the date of delivery of the 2013 TIFIA Bond to the TIFIA Lender. "Principal Payment Date" means, with respect to the 2013 TIFIA Bond, each scheduled principal payment date as set forth in the Loan Amortization Schedule (as defined in the TIFIA Loan Agreement), which shall occur on June 1 and December 1 of each applicable year, or if such day is not a Business Day, then the Business Day succeeding such date. "Record Date" means, with respect to the 2013 TIFIA Bonds, the fifteenth (15th) day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs. "Registration Books" has the meaning specified in Section 20.04(a). "Second Supplemental Indenture" means this Second Supplemental Indenture, dated as of June 1, 2013. · • "Subordinate Obligations Reserve Required Balance" means (a) pnor to [FUNDING DATE], $0, and (b) on and after [FUNDING DATE], [$20,000,000]. Section 18.02. 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 ofthe terms set forth in this Article XVIII. The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar terms, as used in this Second Supplemental Indenture, refer to the Indenture. OHSUSA:753387945.2 -2- 229 • • • • ARTICLE XIX FINDINGS, DETERMINATIONS AND DIRECTIONS Section 19.01. Findings and Determinations. The Commission hereby finds and determines that the 2013 TIFIA Bonds shall be issued pursuant to Article XX hereof and upon the issuance of the 2013 TIFIA 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 19.02. Recital in Bonds. There shall be included in each of the definitive 2013 TIFIA Bonds, and also in each of the temporary 2013 TIFIA 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 TIFIA Bond, and in the issuing of that 2013 TIFIA 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 TIFIA 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 neither the full faith and credit nor the taxing power of the State is pledged to the payment of principal or interest of the 2013 TIFIA Bond, and that such certification and recital shall be in such form as is set forth in the forms of the 2013 TIFIA Bond attached hereto as Exhibit A. Section 19.03. Effect of Findings and Recital. From and after the issuance of the 2013 TIFIA 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 TIFIA Bonds is at issue, and no bona fide purchaser of any such 2013 TIFIA Bond 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 TIFIA Bonds. ARTICLE XX AUTHORIZATION OF THE 2013 TIFIA BOND Section 20.01. Authorization; Principal Amount, Designation and Series. The Commission hereby approves the terms and provisions of the 2013 TIFIA Loan Agreement substantially in the form and substance contained in Exhibit A to this Second Supplemental Indenture. Pursuant to the provisions of this Indenture and the provisions of the Act, and to evidence the payment obligations of the Commission under the 2013 TIFIA Loan, a Subordinate Obligation entitled to the benefit, protection and security of such provisions, including without limitation the grant of the Trust Estate in the Indenture subject to the provisions of the Indenture, is hereby authorized in the aggregate principal amount of $ Such Subordinate Obligation shall be issued as a Current Interest Obligation and shall be designated as, and shall be distinguished from the Subordinate Obligations of all other Series by the title, "Riverside County Transportation Commission Subordinate Toll Revenue Bonds, 2013 TIFIA Series." OHSUSA:753387945.2 -3- 230 Section 20.02. 2013 TIFIA Bond. Priority and Lien; Effect of Bankruptcy Related Event on (a) The principal and interest payment obligations pursuant to the TIFIA Loan Agreement and evidenced by the 2013 TIFIA Bond shall, subject to the provisions of Section 20.07(b) of this Second Supplemental Indenture, constitute Subordinate Obligations under the Indenture. All payment obligations under the TIFIA Loan Agreement, other than the obligations to pay principal and interest thereunder and under the 2013 TIFIA Bond, shall constitute Subordinate Obligations under the Indenture. (b) Upon the occurrence and during the continuance of any Bankruptcy- Related Event of the Commission, the 2013 TIFIA Bond shall, if the Owner of the 2013 TIFIA Bond is the TIFIA Lender at such time, automatically and without action on the part of the Owner of the 2013 TIFIA Bond or any other Person immediately become, and be of equal rank and in parity with the, Senior Lien Bonds and the Owner of the 2013 TIFIA Bond shall be entitled to all rights of an Owner of Senior Lien Bonds (including, without limitation, the right of payment pro rata with other Senior Lien Bonds pursuant to the Indenture). Upon such event, the money and investments held in the Subordinate Obligations Payment Fund allocable to the payment of the 2013 TIFIA Bond shall be transferred by the Trustee to the applicable account within the Senior Lien Bond Fund. Section 20.03. Purpose. The 2013 TIFIA Bond is issued for the purpose of financing the Riverside SR -91 Corridor Improvement Project [and paying costs of issuance]. Section 20.04. Form, Denomination, Numbers and. Letters. The 2013 TIFIA Bond shall not be issued as a book-entry-only Obligation. Initially there shall be delivered hereunder one fully registered 2013 TIFIA Bond numbered R-1, without interest coupons, with 2013 TIFIA Bonds issued in replacement thereof numbered consecutively from R- 2 upward, payable to the Owner thereof. The 2013 TIFIA Bond and the certificate of authentication shall be substantially in the form attached hereto as Exhibit C, which form is hereby approved and adopted as the form of the 2013 TIFIA Bond and as the form of the certificate of authentication. Section 20.05. Date, Maturities and Interest Rates. (a) The 2013 TIFIA Bond (i) may and shall be prepaid prior to the respective payment dates, in whole or in part, and at such time, in such amounts and with such notice as may be provided in the 2013 TIFIA Loan Agreement and the form of2013 TIFIA Bond set forth herein, and (ii) the principal of and interest on the 2013 TIFIA Bond shall be payable, all as provided, and in the manner required or indicated, herein and in the form of 2013 TIFIA Bond set forth herein and in the 2013 TIFIA Loan Agreement. (b) The TIFIA Loan as evidenced by the 2013 TIFIA Bond shall mature on the earlier of (i) June 1, 20_ and (ii) the date that is 35 years after the date of Substantial Completion (as defined in the TIFIA Loan Agreement), and shall bear interest at the rate of _% per annum (or the TIFIA Default Rate (as defined in the TIFIA Loan Agreement), if OHSUSA:753387945.2 -4- 231 • • • • • • applicable), payable on the dates and in accordance with the form of 2013 TIFIA Bond set forth herein. (c) The 2013 TIFIA Bond will be assumed to amortize in accordance with its stated terms for purposes of calculating Debt Service. Annual Debt Service on the 2013 TIFIA Bond shall include only annual TIFIA Mandatory Debt Service; provided that, for purposes of such calculation 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, and such TIFIA Loan shall be treated for purposes of all calculations of Annual Debt Service or Maximum Annual Debt Service as Subordinate Obligations unless and until the occurrence of a Bankruptcy-Related Event, after which occurrence such TIFIA Loan shall be treated as Parity Obligations for such purposes. (d) The entity in whose name the 2013 TIFIA Bond shall be registered in the registration books of the Trustee at any time shall be deemed and treated as the absolute Owner thereof for all purposes of the Indenture, whether or not the 2013 TIFIA Bond shall be overdue, and the Commission and the Trustee shall not be affected by any notice to the contrary, but such registration may be changed as herein provided. Payment of, or on account of, the principal of, premium, if any, and interest on the 2013 TIFIA Bond shall be made only to such Owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon the 2013 TIFIA Bond to the extent of the sum or sums so paid. Pursuant to Section [ 17] of the TIFIA Loan Agreement, the Owner of the 2013 TIFIA Bond shall at all times be the party to the TIFIA Loan Agreement having all rights and obligations of the "TIFIA Lender" thereunder. Accordingly, the 2013 TIFIA Bond may be transferred by an Owner only to a transferee that is a party to the TIFIA Loan Agreement having all rights and obligations of the "TIFIA Lender" thereunder. The Trustee shall not register any transfer or exchange of the 2013 TIFIA Bond unless the Owner and the Owner's prospective transferee deliver to the Trustee a letter substantially in the form as set forth in Exhibit B attached hereto. The Trustee may rely on the letter in making a transfer or exchange of the 2013 TIFIA Bond without any investigation. (e) The Commission appoints the Trustee to act as the paying agent for paying the principal of and interest on the 2013 TIFIA Bond and any other amounts under the 2013 TIFIA Loan Agreement, and hereby instructs the Trustee to make the payments when due to the TIFIA Lender in accordance with this Section 20.05. The Trustee shall keep proper records of all payments made by the Commission and the Trustee with respect to the 2013 TIFIA Bond, and of all exchanges and replacements of 2013 TIFIA Bond, as provided in the Indenture. Section 20.06. Conditions To Delivery of 2013 Bonds. The 2013 TIFIA Bond shall be executed and delivered as authorized by this Second Supplemental Indenture and the Indenture, including Articles II and III thereof, upon execution and delivery of the 2013 TIFIA Loan Agreement. Section 20.07. Disposition of Proceeds of 2013 Bonds. The proceeds from the sale of the 2013 TIFIA Bond shall be received by the Trustee and transferred and deposited by the Trustee as follows: (i) [Deposit $ _____ into the 2013 Bonds Costs of Issuance Account; and] OHSUSA:753387945.2 -5- 232 (ii) Deposit all remaining proceeds from the sale of the 2013 TIFIA Bond from time • to time into the Subordinate Obligations Account of the Project Fund. ARTICLE XXI TRANSFERS; SUBORDINATE OBLIGATIONS RESERVE FUND Section 21.01. Transfers to the Debt Service Fund. Transfers to the Subordinate Obligations Payment Fund with respect to the 2013 TIFIA Bond shall commence on the sixth Monthly Funding Date prior to the first Interest Payment Date after the Issue Date. On each Interest Payment Date and each Principal Payment Date, the Trustee shall transfer to the Owner of the 2013 TIFIA Bond money on deposit in the Subordinate Obligations Payment Fund to pay principal of and interest on the 2013 TIFIA Bond due and payable on such Interest Payment Date or Principal Payment Date. No later than the Business Day following each Principal Payment Date, if there is at least $1,000,000 on deposit in the TIFIA Prepayment Account, the Trustee shall transfer to the Owner of the 2013 TIFIA Bond the highest integral multiple of $1,000,000 then on deposit in the TIFIA Prepayment Account to prepay principal of the 2013 TIFIA Bond. Section 21.02. Subordinate Obligations Reserve Fund. On or before [FUNDING DATE], the Commission shall transfer to the Trustee from time to time for deposit to the Subordinate Obligations Reserve Fund funds in the aggregate amount of $20,000,000. The Commission covenants that it will use ROW Revenues or Sales Tax Revenues to make such transfer or transfers on or before [FUNDING DATE]. ARTICLE XXII OTHER PROVISIONS Section 22.01. Tax Status. It is the intention of the Commission that the 2013 TIFIA Bond not be an obligation described in section 1 03 of the Code interest on which is excludable from the gross income of the holders and in that regard the Commission agrees not to file a form 8038-G, or any comparable information return relating to tax-exempt obligations, with the Internal Revenue Service. Section 22.02. No Amendment without Consent of the TIFIA Lender. So long as the TIFIA Lender is the Owner of the 2013 TIFIA Bond, the Commission shall not enter into any Supplemental Indenture (other than the First Supplemental Indenture and this Second Supplemental Indenture) pursuant to the Indenture without the prior written consent of the TIFIA Lender as set forth in the Indenture. ARTICLE XXIII MISCELLANEOUS Section 23.01. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Second Supplemental Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the OHSUSA:753387945.2 -6- 233 • • • remainder of this Second Supplemental Indenture, and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Second Supplemental Indenture shall remain valid. Section 23.02. Parties Interested Herein. Nothing in this Second Supplemental Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Commission, the Trustee, and the Owners of the 2013 TIFIA Bonds, any right, remedy or claim under or by reason of this Second Supplemental Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this Second Supplemental Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the Commission, the Trustee and the Owners. Section 23.03. Headings Not Binding. The headings in this Second Supplemental Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Second Supplemental Indenture. Section 23.04. Indenture to Remain in Effect. Save and except as amended and supplemented by this Second Supplemental Indenture, the Master Indenture shall remain in full force and effect. Section 23.05. Effective Date of Second Supplemental Indenture. This • Second Supplemental Indenture shall take effect upon its execution and delivery. • Section 23.06. Execution in Counterparts. This Second Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHSUSA:753387945.2 -7- 234 • • • IN WITNESS WHEREOF, the parties hereto have executed this Second Supplemental Indenture by their officers thereunto duly authorized as of the day and year first written above. Countersigned: Clerk of the Board OHSUSA:753387945.2 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: -------------------------------- Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: ~----------------------------- Authorized Officer 235 OHSUSA:753387945.2 EXHIBIT A TIFA LOAN AGREEMENT A-I 236 • • • • • • EXHIBITB FORM OF TRANSFEREE'S LETTER The Bank of New York Mellon Trust Company, N .A. Re: Riverside County Transportation Commission Toll Bridge Revenue Bonds, 2013 TIFIA Ladies and Gentlemen: The undersigned representatives of (the "Seller") and (the "Purchaser"), do hereby certify, represent and warrant for the benefit of The Bank ofNew York Mellon Trust Company, N.A. as trustee (the "Trustee"), that the Purchaser is a party to the 2013 TIFIA Loan Agreement having all rights and obligations of the "Lender" thereunder. The Purchaser understands that in connection with any future transfer or exchange of the 2013 TIFIA Bond by the Purchaser, there must be delivered to the Trustee a letter of the transferee in substantially the form of Exhibit B to the Second Supplemental Indenture . Terms not defined herein shall have the meanings given to them under the Second Supplemental Indenture ("Second Supplemental Indenture"), dated as of June 1, 2013, by and between Riverside County Transportation Commission and The Bank of New York Mellon Trust Company, N.A., as Trustee. IN WITNESS WHEREOF, the undersigned representatives have hereunto executed this letter as of the day of , 2013. OHSUSA:753387945.2 [SELLER] By: _____________ _ Name:. _____________ _ Title: _____________ _ [PURCHASER] By: _____________ _ Name: ---------------Title: _____________ _ [MUST BE SIGNED BY ACTUAL PURCHASER MAY NOT BE SIGNED BY NOMINEE OR AGENT] B-1 237 No. R- EXHIBIT C FORM OF 2013 TIFIA BOND UNITED STATES OF AMERICA STATE OF CALIFORNIA RIVERSIDE COUNTY TRANSPORTATION COMMISSION, TOLL REVENUE BOND, 2013 TIFIA SERIES (TIFIA-No. __ __, MAXIMUM PRINCIPAL AMOUNT EFFECTIVE DATE DUE Issuance Date: , 2013 Registered Owner: UNITED STATES DEPARTMENT OF TRANSPORTATION [BOND FORM TO COME] • 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:753387945.2 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: _____________ _ Chair of the Board of Commissioners B-1 238 • • • • [FORM OF CERTIFICATE OF AUTHENTICATION] It is hereby certified that this Bond has been issued under the provisions of the Indenture described in this Bond. Dated of Authentication: OHSUSA:753387945.2 ------- B-2 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: ________________________ __ Authorized Officer 239 [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. B-3 OHSUSA:753387945.2 240 • • • • • • APPENDIX ONE Maturity Date: The earlier of 1, 20_ or 35 years after Substantial Completion of the Riverside SR-91 Corridor Improvement Project Maximum Principal Sum: $ ----- Borrower: Riverside County Transportation Commission Project: Riverside SR-91 Corridor Improvement Project Lender: The United States Department ofTransportation, acting by and through the Federal Highway Administrator Loan Number: ---- DISBURSEMENTS, CAPITALIZED INTEREST AND PAYMENTS OF PRINCIPAL 1 Amount of Date Amount of Disbursement Interest Capitalized Amount of Unpaid Principal Paid Principal Sum Notation Made By 1 This Grid may be extended if the number of Disbursements, payment and extensions so requires. B-4 OHSUSA:753387945.2 241 APPENDIX TWO LOAN AMORTIZATION SCHEDULE Initial Principal Amount: Closing Date Date Beginning Balance Loan Disbursements Repayment Semiannual P&l Semiannual Compounding Interest calculated based upon actual days over actual days OHSUSA:753387945.2 B-5 Interest Paid 242 Interest Accrued • Interest Rate Repayment of Accrued Interest Principal Ending Repayment Balance • • • • • AITACHMENT6 DRAFT OF CONTINUING DISCLOSURE AGREEMENT by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION and DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent Dated as of June 1, 2013 Relating to $ ____ _ 03/26/13 RIVERSIDE COUNTY TRANSPORTATION COMMISSION Toll Revenue Bonds, 2013 Series A $ ____ _ RIVERSIDE COUNTY TRANSPORTATION COMMISSION Toll Revenue Bonds, 2013 Series B 78902882.1 243 • CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), dated as of June 1, 2013, is by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a public entity duly established and existing under the laws of the State of California (the "Commission"), and DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent (the "Dissemination Agent"). WITNESSETH: WHEREAS, the Commission has issued $ Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series A and 2013 Series B (the "Series 2013 Bonds") pursuant to a Master Indenture, dated as of June I, 2013, between the Commission and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), as supplemented by a First Supplemental Indenture, dated as of June 1, 2013, between the Commission and the Trustee (collectively, the "Indenture"); and WHEREAS, this Disclosure Agreement is being executed and delivered by the Commission and the Dissemination Agent for the benefit of the owners and beneficial owners of the Series 2013 Bonds and in order to assist the underwriters of the Series 2013 Bonds in complying with the Rule (as defined herein); NOW, THEREFORE, for and in consideration of the mutual promises and covenants • herein contained, the parties hereto agree as follows: • Section 1. Purpose of the Disclosure· Agreement. This Disclosure Agreement is being executed and delivered by the Commission and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Series 2013 Bonds and in order to assist the Participating Underwriters in complying with SEC Rule 15c2-12. Section 2. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Commission pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Disclosure Representative" means the Chief Financial Officer of the Commission, or such other officer or employee of the Commission as the Executive Director of the Commission or the Chief Financial Officer of the Commission shall designate in writing to the Dissemination Agent and the Trustee from time to time .. "Dissemination Agent" means an entity selected and retained by the Commission, or any successor thereto selected by the Commission. The initial Dissemination Agent shall be Digital Assurance Certification, L.L.C . 78902882.1 1 244 "EMMA" shall mean the Municipal Securities Rulemaking Board's Electronic Municipal Market Access System for Municipal Securities disclosures, maintained on the • internet at http://emma.msrb.org. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30, or any twelve-month or fifty-two week period hereafter selected by the Commission, with notice of such selection or change in fiscal year to be provided as set forth herein. "Listed Events" means any of the events listed in Section 5 hereof. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b )( 1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. "Official Statement" means the Official Statement, dated June_, 2013, relating to the Series 2013 Bonds. "Participating Underwriters" means the underwriters of the Series 2013 Bonds required to comply with the Rule in connec_tion with the offering of the Series 2013 Bonds. "Repository" means, until otherwise designated by the SEC, EMMA. "Rule" means Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. "SEC" means the Securities and Exchange Commission. Section 3. Provision of Annual Reports. (a) So long as any Series 2013 Bonds remain outstanding pursuant to the Indenture, the Commission shall, or shall cause the Dissemination Agent to, not later than nine (9) months after the end of each Fiscal Year, commencing with the report for the 2012-13 Fiscal Year, provide to the MSRB, through EMMA, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report must be submitted in electronic format, accompanied by such identifying information as provided by the MSRB. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Commission may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Fiscal Year changes for the Commission, the Commission shall give notice of such change in the manner provided under Section 5( e) hereof. 78902882.1 2 245 • • • • (b) Not later than two (2) Business Days prior to the date specified in subsection (a) for providing the Annual Report to each Repository, the Commission shall provide the Annual Report to the Dissemination Agent. If by such date, the Dissemination Agent has not received a copy of the Annual Report from the Commission, the Dissemination Agent shall contact the Commission to determine if the Commission is in compliance with the first sentence of subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report of the Commission has been provided to each Repository by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached hereto as Exhibit A. (d) The Dissemination Agent shall: (i) determine the electronic filing address of, and then-current procedures for submitting Annual Reports to, the MSRB each year prior to the date for providing the Annual Report; and (ii) to the extent known to the Dissemination Agent file a report with the Commission and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, and stating the date it was provided . Section 4. Content of Annual Reports. The Commission's Annual Report shall contain or include by reference the following: (a) The audited financial statements of the Commission for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Commission's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The debt service schedule for the Series 2013 Bonds, if there have been any unscheduled redemptions, retirements or defeasances, and the debt service on any additional parity bonds issued, in each case during the prior Fiscal Year. (c) [TO COME]. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Commission or public entities related thereto, which have been submitted to each Repository or the Securities and Exchange • Commission. If the document included by reference is a final official statement, it must be 78902882.1 3 246 available from the MSRB. The Commission shall clearly identify each such other document so included by reference. The contents, presentation and format of the Annual Reports may be modified from time to time as determined in the judgment of the Commission to conform to changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the Commission or to reflect changes in the business, structure, operations, legal form of the Commission or any mergers, consolidations, acquisitions or dispositions made by or affecting the Commission; provided that any such modifications shall comply with the requirements of the Rule. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2013 Bonds, in a timely manner not more than ten ( 1 0) Business Days after the event: ( 1) principal and interest payment delinquencies; (2) defeasances; (3) tender offers; ( 4) rating changes; (5) adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices ofProposed Issue (IRS Form 5701-TEB); ( 6) unscheduled draws on the debt service reserves reflecting financial difficulties; (7) unscheduled draws on credit enhancements reflecting financial difficulties; (8) substitution of credit or liquidity providers or their failure to perform; or (9) bankruptcy, insolvency, receivership or similar proceedings. For these purposes, any event described in the immediately preceding paragraph (9) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Commission in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Commission, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or 78902882.1 4 247 • • • • • • liquidation by a court or governmental authority having superviSion or jurisdiction over substantially all of the assets or business of the Commission. (b) Pursuant to the provisions of this Section 5, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2013 Bonds, if material: (1) the consummation of a merger, consolidation or acqms1t10n involving the Commission or the sale of all or substantially all of the assets of the Commission, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions; (2) appointment of a successor or additional Trustee or the change of the name of a Trustee; (3) non-payment related defaults; (4) modifications to the rights ofHolders; (5) bond calls; (6) release, substitution or sale of property securing repayment of the Series 2013 Bonds; or (7) in addition to the adverse tax opmwns or determinations of taxability described in Section 5(a)(5) above, any other notices or determinations with respect to the tax status of the Series 2013 Bonds. (c) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, described in subsection (b) ofthis Section 5, the Commission shall as soon as possible determine if such event would be material under applicable federal securities law. (d) If the Commission determines that knowledge of the occurrence of a Listed Event described in subsection (b) of this Section 5 would be material under applicable federal securities law, the Commission shall promptly notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence to the MSRB in a timely manner not more than ten ( 1 0) Business Days after the event. (e) If the Dissemination Agent has been instructed by the Commission to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB . 78902882.1 5 248 Section 6. Filings with the MSRB. All information, operating data, financial statements, notices and other documents provided to the MSRB in accordance with this • Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The Commission's obligations under this Disclosure Agreement shall terminate upon the legal defeasance or payment in full of all of the Series 2013 Bonds. If such termination occurs prior to the final maturity of the Series 2013 Bonds, the Commission shall give notice of such termination in the same mam1er as for a Listed Event under Section 5. Section 8. Dissemination Agent. The Commission may, from time to time, appoint or engage another Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent; provided, it shall receive written notice of such designation at the time of such designation. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Commission may amend this Disclosure Agreement, provided no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of such party, and any provision of this Disclosure Agreement may be waived if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to the Commission to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. Section 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Commission from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. • Section lL Default. In the event of a failure of the Commission or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee shall, at the written request of any Participating Underwriter or of the Holders of at least twenty-five percent (25%) of the aggregate principal amount of the Series 2013 Bonds then Outstanding (but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, reasonable fees and expenses of its attorneys), or any Holder or beneficial owner of the Series 2013 Bonds 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 Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Commission . or the • 78902882.1 6 249 • • • Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not be responsible for the form or content of any notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Commission agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Commission under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series 2013 Bonds. Section 13. Notices. Any notices or communications to or among any of the parties to the Disclosure Agreement or the Trustee may be given as follows: To the Commission: To the Dissemination Agent: To the Trustee: Riverside County Transportation Mail: Commission 4080Lemon Street, 3rd Floor P.O. Box 12008 Riverside, California 92501 Riverside, California 92502 Tel: (951) 787-7926 Fax: (951) 787-7920 Digital Assurance Certification, L.L.C. 390 North Orange Avenue, Suite 1750 Orlando, Florida 32801 Tel: (407) 515-1100 Fax: (407) 515-6513 The Bank ofNew York Mellon Trust Company, N.A. 400 South Hope Street, Suite 400 Los Angeles, California 90071 Attention: Corporate Trust Division Tel: (213) 630-6240 Fax: (213) 630-6215 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. Any notice or communication may also be sent by electronic mail, receipt of which shall be confirmed. Section 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Commission, the Dissemination Agent, the Participating Underwriters and holders and 78902882.1 7 250 beneficial owners from time to time of the Series 2013 Bonds, and shall create no rights in any • other person or entity. Section 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written. 78902882.1 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By: ______________________________ __ Theresia Trevino Chief Financial Officer DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent By: ______________________________ __ 8 251 Authorized Representative • • • • • EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name oflssuer: Riverside County Transportation Commission (the "Commission") Name of Issue: $ Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series A; and $ Riverside County Transportation Commission Toll Revenue Bonds, 2013 Series B Date of Issuance: June_, 2013 NOTICE IS HEREBY GIVEN that the Commission has not provided an Annual Report with respect to the above-named Bonds as required by this Continuing Disclosure Agreement dated as of June 1, 2013, between the Cmhmission and the Dissemination Agent. The Commission anticipates that the Annual Report will be filed by _____ _ Dated: ------- DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Dissemination Agent, on behalf of the Commission cc: Riverside County Transportation Commission 78902882.1 9 252 • • • ATIACHMENT7 Nixon Peabody Draft-4/10/13 UNITED STATES DEPARTMENT OF TRANSPORTATION TIFIA LOAN AGREEMENT For Up to [$451,000,000] With RIVERSIDE COUNTY TRANSPORTATION COMMISSION 14352874.7 For the SR-91 CORRIDOR IMPROVEMENT PROJECT (TIFIA-2012-1006A) Dated as of June_, 2013 253 Table of Contents Page Definitions ............................................................................................................... 1. Interpretation ......................................................................................................... 25 • SECTION I. SECTION 2. SECTION 3. TIFIA Loan Amount. ............................................................................................ 25 SECTION 4. Disbursement Conditions ...................................................................................... 26 SECTION 5. Term ...................................................................................................................... 27 SECTION 6. Interest Rate .......................................................................................................... 27 SECTION 7. Outstanding TIFIA Loan Balance ......................................................................... 27 SECTION 8. Security and Priority; Flow of Funds .................................................................... 28 SECTION 9. Payment of Principal and Interest ......................................................................... 32 SECTION 10. Prepayment. .......................................................................................................... 35 SECTION 11. Compliance with Laws ........................................................................................ 36 SECTION 12. Conditions Precedent: ........................................................................................... 36 SECTION 13. Representations and Warranties of Borrower ..................................................... 38 SECTION 14. Representations, Warranties, and Covenants ofTIFIA Lender .......................... 40 SECTION 15. Borrower Covenants ........................................................................................... 41 SECTION 16. Indemnification ..................................................................................................... 50 • SECTION 17 Sale ofTIFIA Loan ............................................................................................... 50 • SECTION 18. Events ofDefault and Remedies ........................................................................... 5.1 SECTION 19. Accounting and Audit Procedures; Inspections; Reports and Records ................ 54 SECTION 20. Financial Plan, Statements, and Reports ............................................................... 55 SECTION 21. Project Oversight and Monitoring ........................................................................ 58 SECTION 22. No Personal Recourse ........................................................................................... 60 SECTION 23. No Third Party Rights ........................................................................................... 60 SECTION 24. Borrower's Authorized Representative ................................................................. 60 SECTION 25. TIFIA Lender's Authorized Representative ......................................................... 60 SECTION 26. Servicer. ................................................................................................................ 61 SECTION 27. Fees and Expenses ................................................................................................ 61 SECTION 28. Amendments and Waivers .................................................................................... 62 SECTION 29. Governing Law ..................................................................................................... 62 SECTION 30. Severability·······························-··········································································· 62 SECTION 31. Successors and Assigns ......................................................................................... 62 SECTION 32. Remedies Not Exclusive ....................................................................................... 62 SECTION 33. Delay or Omission Not Waive .............................................................................. 62 14352874.7 I 254 Table of Contents (continued) Page SECTION 34. Counterparts .......................................................................................................... 63 • SECTION 35. Notices; Payment Instructions .............................................................................. 63 SECTION 36. Effectiveness ......................................................................................................... 64 SECTION 37. Termination ........................................................................................................... 64 Schedules 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-Debannent Certification EXHIBIT D -Requisition Procedures EXHIBIT E -Compliance with Laws EXHIBIT F -High Profile Project Oversight 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 14352874.7 11 255 • • • • TIFIA LOAN AGREEMENT THIS TIFIA LOAN AGREEMENT (this "Agreement"), dated as of June_, 2013, by and between RIVERSIDE COUNTY TRANSPORTATION COMMISSION, a county transportation commission duly existing under the laws of the State of California, with an address of 4080 Lemon Street, 3rd Floor, Riverside, CA 92501 (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, 2012 (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 14352874.7 1 256 defined in this Agreement or in the Master Indenture. Any term used in this Agreement which is defined by reference to 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. 44 Accreted Value" means, with respect to any Capital Appreciation Obligations or Convertible Capital Appreciation Obligations, the principal amount thereof plus the interest accrued thereon, compounded at the approximate interest rate thereon on each date specified therein. The Accreted Value at any date shall be the amounts set forth in the Accreted Value Table as of such date, if such date is a compounding date, and if not, as of the immediately preceding compounding date. ' 4Act" means the Transportation Infrastructure Finance and Innovation Act of 1998, § 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), as codified as 23 U.S.C. § 601, et seq. 44 Additional Financing Documents" means any documents and/or instruments evidencing, documenting, securing or otherwise relating to any or all of the obligations relating to the applicable Obligation, all as the same may from time to time be amended, modified, extended, renewed and/or restated. "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. 4'Administrator" means the Administrator of the FHW A. ''Agreement" has the meaning provided in the preamble hereto. • ' 4Alternate Repair and Rehabilitation Fund Required Deposit" means for any Monthly Funding Date, an amount that is greater than or less than the Scheduled Repair and Rehabilitation Fund Required Deposit; provided, however, that (i) in any Fiscal Year prior to the Substantial Completion Date, the Alternative Repair and Rehabilitation Fund Required Deposit shall not exceed the Scheduled Repair and Rehabilitation Fund Required Deposit for such Fiscal Year as shown in Exhibit_ [hereto] to the Master Indenture, without the TIFIA Lender's prior written consent and (ii) in any Fiscal Year commencing after the Substantial Completion Date, the Alternative Repair and Rehabilitation Fund Required Deposit shall not exceed 1 0% of the Scheduled Repair and Rehabilitation Fund Required Deposit for such Fiscal Year as shown in Exhibit Ll [hereto] [to the Master Indenture], without the TIFIA Lender's prior written consent. No such consent shall be required provided that the Borrower submits a Written Engineer's Certificate to the Trustee and the TIFIA Lender at least five (5) Business Days prior • 14352874.7 2 257 • • • to the applicable Monthly Funding Date. [If the delivery of a Written Engineer's Certificate is required for an Alternate Repair and Rehabilitation Fund Required Deposit, the Trustee shall not make such deposit without the prior written consent of the TIFIA Lender in accordance with the provisions of the TIFIA Loan Agreement and hereof.] "Annual Debt Service" means the amount of payments due on the applicable Outstanding Obligations for any Calculation Period, as calculated by the Borrower, utilizing the following assumptions about payments on such Obligations (and if more than one such assumption may apply, using the relevant assumptions selected by the Borrower): (a) in determining the principal amount of an 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) if [20] percent or more of the principal of a Series of Obligations is not due until the final stated maturity of that Series of Obligations, the principal of and interest on such Obligations 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 Obligations; (c) if the 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; (d) if an Outstanding 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 during such shorter period that the Obligation has been Outstanding, or (b) the rate of interest on that Obligation on the date of calculation; (e) if 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 LIB OR Rate is not available for such period, another similar rate or index selected by the Borrower and, for so long as the TIFIA Loan remains Outstanding, acceptable to the TIFIA Lender; (f) if 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 and, for so long as the TIFIA Loan remains Outstanding, acceptable to the TIFIA Lender; (g) if Obligations proposed to be issued are part of a Commercial Paper Program, the principal of such Obligations may be treated as if such principal were due based 14352874.7 3 258 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 Obligations were Variable Interest Rate Obligations; (h) if the variable interest on any Obligation plus the variable payments due to the Borrower and Fixed Amortization Payments due from the Borrower under a Qualified Swap Agreement or a Swap designated by the Borrower are treated by the Borrower as synthetic fixed rate debt, the Variable Interest Rate Obligation may be treated as bearing such synthetic fixed rate for the duration of the synthetic fixed rate; (i) if the fixed interest on any Obligation plus the fixed payments due to the Borrower and variable payments due from the Borrower under a Qualified Swap Agreement or a Swap designated by the Borrower are treated by the Borrower as synthetic variablerate debt, the fixed interest rate 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; (j) if any of the Obligations are Short-Term Put Obligations, 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 Obligations; (k) principal and interest payments on 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 and irrevocably therefor and interest payments on any 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 Obligations; (1) if any of the Obligations are, or upon issuance will be, obligations for which the Borrower is entitled to receive Subsidy Payments, as evidenced by an Opinion of Bond Counsel delivered with respect to such 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; (m) any payment obligation under an 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; (n) if any of the 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 14352874.7 4 259 • • • • 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; and ( o) if any of the Obligations are Subordinate Obligations in the form of or securing payment of a TIFIA Loan, Annual Debt Service on such TIFIA Loan shall include only annual TIFIA Mandatory Debt Service; provided that, for purposes of such calculation during the period prior to the Debt Service Payment Commencement Date, the TIFIA Mandatory Debt Service shall be deemed to be zero, and such TIFIA Loan shall be treated for purposes of all calculations of Annual Debt Service as Subordinate Obligations unless and until the occurrence of a Bankruptcy-Related Event, upon which occurrence such TIFIA Loan shall be treated as Holder of a Senior Obligation for such purposes. "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, in respect of any Variable Interest Rate Obligations, the "Applicable _Margin" as defined in the applicable Additional Financing Documents. "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 any Insolvency 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 shall 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 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 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 . 14352874.7 5 260 "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 forecast for the Project prepared as of the Effective Date using the Base Case Financial Model. "Board" means the Board of Commissioners of the Borrower. "Borrower" means the Riverside County Transportation Commission, a county transportation commission duly existing under the laws of the State of California, or its respective governmental successor or assignee under .State law. "Borrower Fiscal Year" means, (a) the period of twelve 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, with respect to any Obligations insured, guaranteed by or payable from a Credit Facility (as such term is defined in the Master Indenture) the office where draws are to be made on a Credit Provider (as such terffi is defined in the Master Indenture) is located. "Calculation Date" means each Semi-Annual Payment Date occurrmg after the Effective Date. "Calculation Period" means the twelve month period ending on the day prior to a Calculation Date. "Caltrans" means the California Department of Transportation. "Caltrans DB Cooperative Agreement" means that certain Cooperative Agreement for Design-Build of the State Route 91 Toll Facilities and Corridor Improvement Project, dated as of July 25, 2012, by and between the Borrower 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. 14352874.7 6 261 • "Capital Appreciation Obligations" means the Obligations designated as Capital Appreciation Obligations in the Supplemental Indenture providing for the issuance of such Obligations and on which interest is compounded and paid at maturity or on prior redemption. "Capital Expenditures Fund" means the Fund by that name created pursuant to Section 5.02 of the Master Indenture. "Capital Expenditures Fund Permitted Expenditures" means the expenditures necessary to complete the projects specified m Schedule I to the Master Indenture which aggregate expenditures shall not exceed $ ____ _ "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 Riverside SR-91 Corridor Improvement Project. "Convertible Capital Appreciation Obligations" means Obligations that initially are issued as Capital Appreciation Obligations, but later convert to Obligations on which interest is paid periodically. Convertible Capital Appreciation Obligations shall be Capital Appreciation Obligations until the conversion date and from and after such conversion date shall no longer be Capital Appreciation Obligations, but shall be treated as Current Interest Bonds having a principal amount equal to their Accreted Value on the conversion date. "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) . 14352874.7 7 262 "CPI" means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. • City Average for All Items, 1982-84=100 (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 (5th) anniversary of the date of Substantial Completion or, if such date does 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 (5th) anniversary of the Substantial Completion Date. "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.] "Design-Build Contractor" means and any successorthereto. ---------------- "Development Default" has the meaning set forth in Section 18(a)(iii). "Disbursements and Contributions Certificate" means a certificate (a) 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 on an aggregate basis, (b) indicating the amount of Senior Obligation proceeds which as of the date of the Disbursements and Contributions Certificate have been utilized by the Borrower for purposes of funding Project Costs, (c) executed by the Borrower's Authorized Representative, and (d) 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 -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; 14352874.7 8 263 • • • • • (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. "FHWA" means the Federal Highway Administration, an agency ofUSDOT. "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. "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. "Fixed Amortization Payment Commencement Date" means the Payment Date following the end of the [ ] consecutive Payment Period after the Debt Service Payment Commencement Date. "Fixed Amortization Payment Period" means the period commencing on the Fixed Amortization Payment Commencement Date and ending on the Final Maturity Date (or on such earlier date as the TIFIA Loan and all other amounts payable hereunder shall be paid in full). "GAAP" means generally accepted accounting principles for state and local governments, which are the minimum standards of and guidelines for financial accounting and reporting. "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, 14352874.7 9 264 Federal Intermediate Credit Ba,nks, 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, 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. 14352874.7 10 265 • • • "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 entered into by, or at the direction of, the Borrower and secured by or payable from Revenues. "Indenture Event of Default" means an event of default set forth in Section 7.01 of the Master Indenture. "Initial Senior Obligations" means the Riverside County Transportation Commission Toll Revenue Senior Lien Bonds, 2013 Series A and Riverside County Transportation Commission Toll Revenue Senior Lien 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. "Interim Payment Date" means any day occurring during the Payment Period that (a) is a date on which interest on or principal of any 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". "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 Obligations, the initial rate equal to the sum of the long-term fixed swap rate, plus the swap margin, plus any applicable Bank Lending Margin, contemplated in an updated Base Case Financial Model prepared by the Borrower in respect of such Variable Interest Rate Obligations, and to be set forth in each certificate delivered pursuant to Section 15(s) of this Agreement. 14352874.7 11 266 "Long-Dated Qualified Hedge" has the meaning set forth in Section 18(s)(vii)(A) . "Master Custodial Depository Agreement" means any agreement entered into by the Borrower relating to the collection and distribution of tolls relating to the Toll Road. "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 Annual Debt Service due on the applicable Obligations of the Borrower for any Calculation Period during the period from the date of such determination through the final maturity date of the applicable Obligations then Outstanding and proposed to be issued. "Misrepresentation Cross Default" has the meaning set forth in Section 18(a)(v). • "Monthly Funding Date" means the last day of each calendar month or, if such day is • not a Business Day, the preceding Business Day. "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 Borrower Fiscal Year, Revenue less Operating and Maintenance Expenses for that Borrower Fiscal Year (excluding in such calculation, any extraordinary or one-time revenues from Revenue for such Borrower Fiscal Year), as set forth in (a) the audited financial statement of the Borrower for Borrower 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 Borrower 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 Senior Lien Bond Reserve Fund, the Permitted Second Lien Obligation Reserve Fund, the Subordinate Obligation Reserve Fund, or any Subsidy Payments; provided however, that in no event shall "Toll Revenue" include Subsidy Payments and (y) for purposes of Sections 3.01, 3.03 and 6.03 of the Master Indenture and Section 18(o) hereof, Toll Revenue shall not include amounts received under clauses (c), (d) and (e) above. "Obligations" means all indebtedness of the Borrower payable from Revenue incurred or • assumed by the Borrower for borrowed money (including indebtedness arising under Credit 14352874.7 12 267 • • • Support Instruments) and all other financing obligations of the Borrower relating to the Toll Road that, in accordance with GAAP, are included as a liability on a balance sheet for the Toll Road books and records, including any bonds, notes, certificates or other obligations, as the case may be, authenticated and delivered under and pursuant to the Master Indenture as Senior Obligations, Permitted Second Lien Obligations or Subordinate Obligations. For the purpose of determining the "Obligations" payable from Revenue, Obligations that are no longer Outstanding shall be excluded. "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. "OCTA 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 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 Section 6802 of the California Public Contract Code. "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, OCT A, and Caltrans. "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 L_ ___ , 20_], by and among the Borrower, OCTA and the Toll Operator, as amended, modified, supplemented in accordance with the terms of the Master Indenture and the Operating Agreement, 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 the Master Indenture. "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 payable from Revenue, determined in accordance with GAAP, including, without limitation, payments with respect to financing leases and installment purchase agreements, all amounts paid or payable 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 paid or payable on any insurance, payments for oversight services, all administrative, engineering and policing costs, 14352874.7 13 268 costs for any security, toll collection and enforcement expenses, fees and expenses of the Traffic • Consultant, the Trustee, each trustee for or holder of Permitted Second Lien Obligations or Subordinate Obligations, any rating agency, credit, liquidity or remarketing fees relating to Senior 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 to Swap Parties including Hedging Obligations and Hedging Termination Obligations), any insurance consultant, legal and accounting expenses, and any other reasonable and necessary expense paid or payable for the operation and maintenance of the Toll Road, but excluding, expenses paid or payable from proceeds of Obligations, capital expenditures, expenditures for rehabilitation and operational improvement projects on the Toll Road, expenditures for obsolescence charges or reserves therefore, debt service for Obligations and any non-cash charges, such as depreciation, amortization of intangibles and 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 and held by the Authority. "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 Loan Documents" has the meaning set forth in Section 18(a)(v). "Other Material Indebtedness" means the Senior Obligations and any Permitted Second Lien Obligations. "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. "Parity Obligations" means obligation of the Borrower that are secured by the Trust Estate on a parity with the Senior Lien 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. "Payment Date" means each Semi-Annual Payment Date or Interim Payment Date. "Payment Default" has the meaning set forth in Section 18(a)(i). "Payment Period" means any period of six months that ends on a Payment Date, commencing with the six month period ending on the Debt Service Payment Commencement Date. "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: 14352874.7 14 269 • • • • • (a) Senior Obligations, including the Initial Senior Obligations and any other Senior Obligations that meet the requirements of Sections 3.01(b) and (c) and 3.02 ofthe Master Indenture and consented to by the TIFIA Lender in accordance with such provisions; (b) Permitted Second Lien Obligations or Subordinate Obligations that meet the requirements of Sections 3.03(b) and (c) and 3.04 of the Master Indenture and consented to by the TIFIA Lender in accordance with such provisions; (c) the TIFIA Loan and the TIFIA Bond (which bond shall be a Subordinate Obligation under the Master Indenture until the occurrence of Bankruptcy Related Event upon which it will become a Senior Obligation); and (d) indebtedness incurred in respect of any Hedge Agreement. ["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 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 Subordinate Obligations Account within the Project Fund and the Subordinate Obligations Reserve Fund (to be discussed) Subordinate Obligations: (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 secunttes 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 that the senior long-term debt of such corporations, institutions or associations is rated "AA" or its equivalent by a Nationally Recognized Rating Agency . 14352874.7 15 270 "Permitted Liens" on the Trust Estate and the Toll Road means: (a) the Liens imposed pursuant to the Master Indenture; (b) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 15(u); (c) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance, and other social security laws or regulations; (d) 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; (e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 18(a)(vi); (f) 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; • (g) any Lien on any property or asset of the Borrower ex1stmg 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; (h) 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· (i) 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. "Permitted Second Lien Obligations" means (i) any Obligations that are subordinated in right of payment and lien priority to the Senior Obligations and, senior in right of payment and lien priority to the Subordinate Obligations (except for the Subordinate Obligation securing the 14352874.7 16 271 • • • • TIFIA Loan, which upon the occurrence of a Bankruptcy Related Event shall be a Senior Obligation), and (ii) 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 of the Master Indenture. "Permitted Second Lien Obligations Fund" means the Fund by that name created pursuant to Section 5.02 of the Master Indenture. "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 of the Master Indenture. "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 ofthe Master Indenture. "Permitted Second Lien Obligations Reserve Fund" means the Account by that name created pursuant to Section 5.02 ofthe Master Indenture. "Permitted Second Lien Obligations Reserve Fund Required Balance" shall have the meaning assigned to that term in a Supplemental Indenture pursuant to which Permitted Second Lien Obligations are incurred . "Person" means any natural person, firm, partnership, association, corporation, or public body. "Police Services Agreement" means the Police Services Agreement, to be executed by the State, acting by and through the California Highway Patrol, and the Borrower, as the same may be amended, modified and supplemented in accordance with its terms. "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 OCT A Cooperative Agreement, (c) the Operating Agreement, (d) the Project Oversight Agreement (e) [the Assignment Agreement], (f) the System Integration Contract, (g) the Master Custodial Depository Agreement, (h) the Police Services Agreement, (i) the Toll Facility Agreement, G) the OCTA Franchise Agreement, (k) the Caltrans DB Cooperative Agreement, (I) 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 (m) any document that replaces or supplements any of the foregoing agreements. "Project" means the extension of the OCTA SR-91 Express Lanes from the Orange County/Riverside County Line approximately eight (8) miles to the I-15/SR-91 Interchange in Riverside, California by constructing one general purpose lane in each direction from SR- 91/SR-71 interchange to 1-15, and converting the existing High Occupancy Vehicle (HOV) into a tolled express lane providing two tolled express lanes and five (5) general purpose lanes in each direction. The Project also includes the restriping of lanes in the eastbound direction for 14352874.7 17 272 approximately 3 miles to the east of the I-15/SR-91 interchange, a two (2) lane direct tolled • connector approximately 2.8 miles in distance providing SR-91 tolled express lanes access/egress with I-15 South. This direct tolled connector commences near Grand Avenue on SR-91, and ends on I-15 South near Ontario Avenue in the City of Corona. "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 of the 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 of the Master Indenture. "Project Oversight Agreement" means the High Profile Project Oversight Agreement for the SR-91 Corridor Improvement Project, dated June 28, 2012, by and among the Borrower, Caltrans and the FHW A California Division Office. "Qualified Hedge Provider" means 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 ofthe 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. • 14352874.7 18 273 • • • ''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 ofthe California Statutes of2008 (Senate Bill No. 1316), and as such may be amended from time to time hereunder. "Related Documents" means the TIFIA Loan Documents, Hedging Agreements and the Principal Project Contracts. "Remedial Plan" has the meaning set forth in Section 18(a)(iii). "Repair and Rehabilitation Fund" means the Fund by that name created pursuant to Section 5.02 ofthe Master Indenture. "Repair and Rehabilitation Fund Permitted Expenditures" means capital expenditures reasonably necessary to repair or rehabilitate the Riverside SR-91 Corridor Improvement Project so that it remains in a condition that meets the performance and maintenance standards established by Caltrans for existing State-operated transportation facilities of substantially equivalent size, location and character. "Residual Fund" means the fund by that name 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 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 (c) all Swap Revenues; provided that in no event shall "Revenue" include Subsidiary Payments. "ROW Revenues" means revenues generated by the Borrower from the sale of excess right-of-way property. "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 RevenueBond 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 . 14352874.7 19 274 "Scheduled Repair and Rehabilitation Fund Required Deposit" means for each Borrower Fiscal Year, the amount of Repair and Rehabilitation Permitted Expenditures set forth • for such Borrower Fiscal Year in Exhibit_ [hereto][to the Master Indenture]. "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 Subordinate Toll Revenue Bonds, 2013 TIFIA Series. "Secretary" means the United States Secretary ofTransportation. "Semi-Annual Payment Date" means each June 1 and December 1 or if such day is not a Business Day, then the Business Day immediately following such June 1 or December 1. "Senior Lien Bonds" means Bonds issued pursuant to Section 3.01 and 3.02 of the Master Indenture. "Senior Lien Bond Fund" means the fund by that name created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Senior Lien Bond Reserve Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "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 Senior Lien Bond Reserve Fund for the payment of principal of and • interest on those Senior Lien Bonds. "Senior Lien Bond Fund" means the fund by that name created pursuant to and designated as such in Section 5.02 of the Master Indenture. "Senior Lien Bond Reserve Fund" means the fund created pursuant to and designated as such in Section 5.02 of the Master Indenture. "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 Senior Lien Bond Reserve Fund for the payment of principal of and interest on those Senior Lien Bonds.] "Senior Obligations" means collectively, Senior Lien Bonds and Parity Obligations issued under the Master Indenture and, upon the occurrence of a Bankruptcy Related Event, Subordinate Obligations in the form of or securing payment of a TIFIA Loan. "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. 14352874.7 20 275 • • • • "Subordinate Obligations" means any Obligations that are subordinated in right of payment and lien priority to the Senior Obligations and the Permitted Second Lien Obligations, including any Subordinate Obligations in the form of or securing payment of a TIFIA Loan prior to the occurrence of a Bankruptcy Related Event. "Subordinate Obligations Account" means the Account by that name created within the Project Fund pursuant to Section 5.02 of the Master Indenture. "Subordinate Obligations Payment Fund" means the Fund by that name created pursuant to Section 5.02 of the Master Indenture. "Subordinate Obligations Prepayment Account" means the Account by that name created pursuant to Section 5.02 of the Master Indenture. "Subordinate Obligations Reserve Fund" means the Fund by that name created pursuant to Section 5.02 of the Master Indenture. "Subordinate Obligations Reserve Fund Required Balance" means twenty million dollars ($20,000,000). ["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.] "Subsequent Qualified Hedge" has the meaning set for the in Section 15(5)(iii). "Subsidy Payments" means, (a) with respect to a Series of Obligations issued under Section 54AA of the Code, the amounts relating to such Series of Obligations which are payable by the Federal government under Section 6431 of the Code, which the Borrower has elected to receive under Section 54AA(g)(l) of the Code, and (b) with respect to a Series of 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 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. 14352874.7 21 276 "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. "System Integration Contract" means any agreement entered into by the Borrower relating to the electronic toll collection system operations on the Toll Road. "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 Debt Service" means collectively, TIFIA Mandatory Debt Service and TIFIA Scheduled Debt Service. "TIFIA Default Rate" means an interest rate of 200 basis points above the TIFIA Interest Rate. "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. • "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, the Master Indenture and the Second Supplemental Indenture. "TIFIA Loan Prepayment Amount" has the meaning assigned to such term in Section 18( q) of this Agreement. "TIFIA Loan Prepayment Commencement Date" means the first' Monthly Funding Date occurring after the Debt Service Payment Commencement Date on which a TIFIA Loan Prepayment Amount is require to be paid to the TIFIA Lender pursuant to Section 15 ( q) of this Agreement. "TIFIA Mandatory Debt Service" means with respect to any Payment Date occurring (a) after the Debt Service Payment Commencement Date and prior to the Fixed Amortization 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 )(i) and (b) on and after the Fixed Amortization Payment Commencement Date, the Fixed Amortization Payments 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)(ii). 14352874.7 22 277 • • • "TIFIA Pro Rata Share" means on a relevant date of disbursement, [ ] % of the aggregate amount from the Project Fund to pay Eligible Project Costs under the Master Indenture. [of disbursements] "TIFIA Scheduled Debt Service" means with respect to any Payment Date occurring after the Debt Service Payment Commencement Date and prior to the Fixed Amortization 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(d). "Toll Facility Agreement" means that Toll Facility Agreement, dated as of May 14, 2012, by and between the Borrower and Caltrans, as the same may be amended and supplemented. "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) 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 that are actually applied or reserved for application to the repair, restoration or replacement of the Toll Road, (c) proceeds of any condemnation awards with respect to the Toll Road, except to the extent actually applied or reserved for application to the replacement of the Toll Road, (d) liquidated damages for delayed completion payable to the Borrower under a construction contract relating to the Toll Road or a portion thereof, except for the portion of such liquidated damages that is deposited to the Project Fund or an Account therein and applied or reserved for payment of Project Costs relating to the Toll Road or such portion during such period of delayed completion, (e) proceeds of credit support provided by the Toll Operator pursuant to the Operating Agreement, and (f) any other incidental or related fees or charges; but excluding therefrom ROW Revenues and cash advances representing deposits against future toll payments from users or potential users of the 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 of the vehicle, (c) facilities using any combination of (a) and (b), and (d) facilities using any other tolling strategy the Borrower may determine appropriate on a facility-by-facility basis, upon which the Borrower 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 (i) the Borrower irrevocably designates in writing ·that such toll lanes and facilities, and any 14352874.7 23 278 expansion, improvement, upgrade, enlargement or enhancement constitutes a "Toll Road" generating Toll Revenues hereunder and (ii) that (x) the additional Operation and Maintenance • Costs associated with any such expansion, improvement, upgrade, enlargement or enhancement and (y) any additional Obligations issued to finance the. costs of any such expansion, improvement, upgrade, enlargement or enhancement shall not result in debt service coverage ratios of the Subordinate Obligations lower than those stated in the Base Case Model delivered on the Effective Date. "Toll Road" shall not include any Special Project (as such term is defined in the Master Indenture). Initially, "Toll Road" initially means any such toll lanes and facilities (including structures, on-ramps, connector roads, bridges, and roadways that are on, necessary for, or related to the construction or operation of the Toll Road) on the portion ofSR-91 between the Orange and Riverside County line and Interstate 15 that constitute a part of the Riverside SR- 91 Corridor Improvement Project. "Traffic Consultant" means initially, Stantec Consulting Services, and any replacement or successor traffic and revenue consultant or firm of traffic and revenue consultants of national recognition with expertise and experience regarding the operation, management and financing of, and the collection of revenues from toll roads, selected and employed by the Borrower from time to time and reasonably acceptable to the TIFIA Lender. "Traffic and Revenue Study" means the Final Traffic and Revenue Study for the Project, dated [July, 20 _], prepared for the Borrower by Stantec Consulting Services, and any amendments, supplements or updates thereto. "Trust Estate" means all rights, title, interest and privileges of the Borrower in, to and under (i) the Toll Revenues, (ii) all interest or other income from investment of money in the Funds and Accounts established under the Master Indenture (excluding the Rebate Fund, the Surplus Fund and any Fund or Account established to hold the proceeds of a drawing on any Credit Support Instrument), (iii) all Swap Revenues, and (iv) all amounts (including the proceeds of Obligations) held by the Trustee in each Fund and Account established under the Master Indenture (except for amounts on deposit in the Rebate Fund, the Surplus Fund and amounts on deposit in any Fund or Account established to hold the proceeds of a drawing on any Credit Support Instrument). "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 14352874.7 24 279 • • • • • such order or judgment shall not constitute or be construed as a willful or negligent action or a lack of reasonable diligence of the Borrower. "USDOT" means the United States Department of Transportation. "Variable Interest Rate Obligations" means any Obligations that accrue interest at a variable interest rate. "Written Engineer's Certificate" means an instrument in writing signed by a Consulting Engineer stating that the Alternate Repair and Rehabilitation Fund Required Deposit is necessary to pay for Repair and Rehabilitation Permitted Expenditures for a Fiscal Year due to at least one of the following: (i) reasonably unforeseen expenditures to the extent necessary to pay for compliance with emergency expenses; or (ii) reasonably unforeseen expenditures to the extent necessary to be made 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 for existing State-operated transportation facilities of substantially equivalent size, location and character. 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. SECTION 4. The principal amount of the TIFIA Loan shall not exceed [$451,000,000] (excluding any interest that is capitalized in accordance with the terms hereof); provided, however, in no event shall the maximum principal amount of the TIFIA Loan disbursed by the TIFIA Lender, together with the amount ofany 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 14352874.7 25 280 Rating, the amount of the Initial Senior Obligations. TIFIA Loan proceeds shall be disbursed from time-to-time in accordance with Section 4. • SECTION 5. 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. (b) Copies of each Requisition, each of which shall be accompanied by a Disbursement and Contributions 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 were issued by the Borrower no later than June_, 2013, and (ii) the State's approved transportation improvement program and approved statewide transportation improvement program pursuant to 23 U.S.C.§§134 and 135 have been amended to reflect all funding sources for the Project, including the TIFIA Loan. · 14352874.7 26 281 • • • • SECTION 6. Term. The term of the TIFIA Loan shall extend 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 7. 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 Sections 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 8. 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 Fixed Amortization Payment 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 14352874.7 27 282 Schedule, as of the Effective Date, has been determined based on the Anticipated TIFIA Loan • Disbursement Schedule in effect on the Effective Date. SECTION 9. Security and Priority; Flow of Funds. (a) As security for the TIFIA Loan, the Borrower shall pledge, assign and grant a lien on the Trust Estate in accordance with the provisions of the Master Indenture. The TIFIA Loan shall be secured by the 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, Permitted Second Lien Obligations, Hedging Obligations and related Hedge Facilities. Upon 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 respectto the Trust Estate on a parity with any Senior Obligations. (b) Except to the extent otherwiseprovided in paragraph (a) of this Section, or as may be entitled to priority as a matter of law, the Trust Estate is 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 Trust Estate in contravention of this Agreement or the Master Indenture. (d) Amounts on deposit in the Subordinate Obligations Account ofthe Project Fund during the period on and prior to one year after the Substantial Completion Date and amounts on deposit in Senior Lien Bond Reserve Fund, the Subordinate Obligations Payment Fund and the Subordinate Obligation 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 and in the amounts set forth below commencing after the Substantial Completion Date to the extent that Revenue is available to make such deposits. For purposes of this Flow of Funds, Accreted Value shall be treated as "principal." • 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 most recently-adopted Annual Operating Budget of the Borrower to be due and payable during the next succeeding calendar year; • 14352874.7 28 283 • • • Second, 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; Third, (x) on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Senior Lien Bond Interest Payment Account the sum of (A)( 1) in the case of outstanding Senior Obligations with semiannual interest payment dates, one-sixth (1/6) of the amount of the interest payable on such Senior Obligations on the next interest payment date; (2) in the case of outstanding Senior Obligations with quarterly interest payment dates, one-third (1/3) of the amount of the interest payable on such Senior Obligations on the next interest payment date; and (3) in the case of outstanding Senior Obligations with monthly interest payment dates, the amount of interest payable on such Senior Obligations on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made to the Senior Lien Bond Interest Payment Account on any preceding Monthly Funding Date and any amounts transferred from the Senior Lien 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 on any Senior Obligations, any other amount required to make the amount credited to the Senior Lien Bond Interest Payment Account equal to the amount payable on such Senior Obligations on such interest payment date; and (y) on each Monthly Funding Date, to the applicable Swap Parties, scheduled Hedging Obligations due under any Qualified Swap Agreements, if any, net of any scheduled amounts payable to the Borrower with respect to such scheduled Hedging Obligations; Fourth, on each Monthly Funding Date and 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) or six months before the first semi-annual principal payment date (including any mandatory sinking fund redemption date), to the Senior Lien Bond Principal Payment Account, the sum of (A)(l) in the case of outstanding Senior Obligations with annual principal or mandatory sinking fund payment dates, one-twelfth (1112) of the principal and mandatory sinking fund redemptions due on such Senior Obligations; and (2) in the case of outstanding Senior Obligations with semi-annual principal or mandatory sinking fund payment dates, one-sixth (1/6) of the principal and mandatory sinking fund redemptions due on the such Senior Obligations; and (B) the sum of any shortfall in transfers required to have been made to the Senior Lien Bond Principal Payment Account 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) on any Senior Obligations, 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 Senior Obligations on such principal payment date or mandatory sinking fund redemption date; Fifth, on each Monthly Funding Date, to the Senior Lien Bond Reserve Fund (or the applicable Account therein) the amount necessary so that the balance therein equals the applicable Senior Lien Bond Reserve Requirement calculated as of the most recent Calculation 14352874.7 29 284 Date; [provided, however, that in the event that the Trustee shall have withdrawn moneys in the Senior Lien Bond Reserve Fund or any Account therein for the purpose of paying principal of or interest on the applicable Senior Obligations secured thereby when due as provided in the Master Indenture, the Trustee shall also deposit to the Senior Lien Bond Reserve Fund or the applicable Account therein, on each of the next twelve Monthly Funding Dates after such withdrawal, an amount equal to one-twelfth (1/lih) of the aggregate amount of each such unreplenished withdrawal until the amount on deposit in the Senior Lien Bond Reserve Fund (or the applicable Account therein) is equal to the applicable Senior Lien Bond Reserve Requirement; provided further however, that in the event such requirements cannot be fully funded, the funds available shall be transferred to each Account in the Senior Lien Bond Reserve Fund ratably in accordance with its respective shortfall]; Sixth, (x) on each Monthly Funding Date and 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; (2) in the case of outstanding Permitted Second Lien Obligations with quarterly interest payment dates, one-third (1/3) of the amount of the interest payable on such Permitted Second Lien Obligations on the next interest payment date; and (3) in the case of outstanding Permitted Second Lien Obligations with monthly interest payment dates, the amount of interest payable on such Permitted Second Lien Obligations on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made to the Permitted Second Lien Obligations Interest Payment Account 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 on any Permitted Second Lien Obligations, any other amount required to make the amount credited to the Permitted Second Lien Obligation;;_ Interest Payment Account equal to the amount payable on such Permitted Second Lien Obligations on such interest payment date, and (y) on each Monthly Funding Date, to the applicable Swap Parties, 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; Seventh, on each Monthly Funding Date and 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) or six months before the first semi-amiual principal payment date (including any mandatory sinking fund redemption date), to the Permitted Second Lien Obligations Principal Payment Account, the sum of (A)(l) in the case of outstanding Permitted Second Lien Obligations with annual principal or mandatory sinking fund payment dates, one-twelfth (1/12) of the principal and mandatory sinking fund redemptions due on -such Permitted Second Lien Obligations; and (2) in the case of outstanding Permitted Second Lien Obligations with semi-annual principal or mandatory sinking fund payment dates, one-sixth (1/6) of the principal and mandatory sinking fund redemptions due on such Permitted Second Lien Obligations; and (B) the sum of any shortfall in transfers required to have been made to the Permitted Second Lien Obligations Principal Payment 14352874.7 30 285 • • • • • • Account on any previous Monthly Funding Date, plus any amounts transferred from the Permitted Second Lien Obligations 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) on any Permitted Second Lien Obligations, 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 Permitted Second Lien Obligations on such principal payment date or mandatory sinking fund redemption date; Eighth, on each Monthly Funding Date, to the Permitted Second Lien Obligations Reserve Fund (or the applicable Account therein), the amount necessary so that the balance therein equals the applicable Permitted Second Lien Obligations Reserve Requirement calculated as of the most recent Calculation Date; [provided, however, that in the event that the Trustee shall have withdrawn moneys in the Permitted Second Lien Obligations Reserve Fund therein for the purpose of paying principal of or interest on the applicable Permitted Second Lien Obligations secured thereby when due as provided in the Master Indenture, the Trustee shall also deposit to the Permitted Second Lien Obligations Reserve Fund, on each of the next twelve Monthly Funding Dates after such withdrawal, an amount equal to one-twelfth (Ill th) of the aggregate amount of each such unreplenished withdrawal until the amount on deposit in the Permitted Second Lien Obligations Reserve Fund is equal to the applicable Permitted Second Lien Obligations Reserve Requirement; provided, further however, that in the event such requirements cannot be fully funded, the funds available shall be transferred to each Account in the Permitted Second Lien Bond Reserve Fund ratably in accordance with its respective shortfall]; Ninth, (x) on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Subordinate Obligations Interest Payment Account the sum of (A)(1) in the case of outstanding Subordinate Obligations with semiannual payment dates, one-sixth ( 1 /6) of the interest payable on such Subordinate Obligations on the next interest payment date; and (2) in the case of outstanding Subordinate Obligations with monthly payment dates, the interest payable on such Subordinate Obligations on the next interest payment date; plus (B) the sum of any continuing shortfall in transfers required to have been made to the Subordinate Obligations Interest Payment Fund on any preceding Monthly Funding Date; plus (C) if such Monthly Funding Date is also an interest payment date or the last Monthly Funding Date before an interest payment date on any Subordinate Obligations, any other amount required to make the amount credited to the Subordinate Obligations Interest Payment Account equal to the interest payable on such Subordinate Obligations on such interest payment date; Tenth, on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the Subordinate Obligations Principal Payment Account the sum of (A)(1) in the case of outstanding Subordinate Obligations with annual principal payment dates, one-twelfth (1/12) of the principal due on such Subordinate Obligations on the next principal payment date; and (2) in the case of outstanding Subordinate Obligations with semi-annual principal payment dates, one-sixth (1/6) of the principal redemptions due on such Subordinate Obligations on the next principal payment date; plus (B) the sum of any shortfall in transfers required to have been made to the Subordinate Obligations Principal 14352874.7 31 286 Payment Account on any previous Monthly Funding Date; plus (C) if the Monthly Funding Date ·is also a principal payment date or the last Monthly Funding Date before a principal payment • date (or mandatory sinking fund redemption date) on any Subordinate Obligations, any other amount required to make the amount credited to the Subordinate Obligations Principal Payment Account equal to the amount of principal due on such Subordinate Obligations on such principal payment date or mandatory sinking fund redemption date; [Eleventh; on each Monthly Funding Date, to the Subordinate Obligations Reserve Fund (or the applicable Account therein), the amount, if any, necessary to increase the balance therein (taking into account amounts then on deposit therein) to the Subordinate Obligations Reserve Fund Required Balance]; [Twelfth, on each Monthly Funding Date, to the Repair and Rehabilitation Fund, an amount equal to the Alternate Repair and Rehabilitation Fund Required Deposit or, if no such deposit it is then required to be made, an amount equal to one-twelfth (1/12) of the Scheduled Repair and Rehabilitation Fund Required Deposit for such Borrower Fiscal Year until such deposit is made in full]; Thirteenth, in the event the Borrower has Subordinate Obligations outstanding in the form of or securing payment of a TIFIA Loan, on each Monthly Funding Date commencing on the Monthly Funding Date that is six months prior to the date on which TIFIA Scheduled Debt Service is first due and payable, to the Subordinate Obligations Payment Fund, an amount which equals [one-sixth (1/6) of] 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 payment date for such TIFIA Loan; Fourteenth, on each Monthly Funding Date, to the Capital Expenditures Fund to the extent necessary to fund such Fund so that the balance therein (taking into account amounts then on deposit therein) equals the Capital Expenditures Fund Required Balance, provided, however, that in no event shall the total amount transferred into this account exceed $ ---- in the aggregate; Fifteenth, on each Monthly Funding Date and on each other date on which the following amounts shall be due and payable, to the counterparties to Qualified Swap Agreements or Swaps, an amount equal to any Hedging Termination Obligations payable upon a termination of any such Qualified Swap Agreements or Swaps; and Sixteenth, on each Monthly Funding Date, and only to the extent funds are then available after application of funds for the purposes specified in the prior First through Fourteenth clauses, on such Monthly Funding Date, to the Residual Fund, all remaining amounts, if any. • SECTION 10. 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. • 14352874.7 32 287 • • • (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 June 1 and December 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. (i) On each Payment Date occurring, on or after the Debt Service Payment Commencement Date and on or prior to the Fixed Amortization Payment Commencement Date, the Borrower shall pay TIFIA Mandatory Debt Service 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). (ii) On each Payment Date commencing on the Fixed Amortization 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). The amount of the Fixed Amortization Payment shall be calculated as of the first day of the Fixed Amortization 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 Fixed Amortization 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 (A) the amount payable on the first Payment Date occurring during a Fixed Amortization Payment Period shall be adjusted on a pro rata basis to reflect the duration of the period from the commencement of the Fixed Amortization Payment Period to such first Payment Date shall be less than six months, and (B) 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 Fixed Amortization Payment Period for the TIFIA Loan, the TIFIA Lender shall give written notice to the Borr<;>wer of the amount of the Fixed Amortization Payments for each Semi-Annual Payment Date occurring during the Fixed Amortization 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 Fixed Amortization Payment Period in addition to the Fixed Amortization Payments, such prepayments shall be applied to the remaining 14352874.7 33 288 principal portion of the Fixed Amortization Payments in the inverse order of the maturity thereof. (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 Fixed Amortization 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 Fixed Amortization 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 Fixed Amortization 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 Scheduled Debt Service, provided that TIFIA Mandatory Debt Service prior to the Fixed Amortization 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: (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 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 or Permitted Second Lien Obligations shall be outstanding, or when no Senior Obligations or Permitted Second Lien Obligations shall be outstanding other than • 14352874.7 34 289 • • • Senior Obligations or Permitted Second Lien 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) 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. (g) 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 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 11. 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( q). 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 of $15,000 in excess 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 amount 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 delive~ed to the TlFIA 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. 14352874.7 35 290 (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 ofthe unpaid balance ofprincipal 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 Fixed Amortization 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 Fixed Amortization 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 Fixed Amortization 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 12. 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 Project Oversight Agreement, the Borrower and Caltrans pursuant to the Project Oversight Agreement will be responsible for certain Project oversight activities. The Borrower agrees to cooperate with the FHW A California Division Office and Caltrans in carrying out its duties under this Agreement and the Project Oversight Agreement. The Borrower agrees that there will be no irreversible or irretrievable commitment ofresources, 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 13. 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: 14352874.7 36 291 • • • • (a) The Borrower shall (i) 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) 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 I. (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 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 or certified copies of fully executed counterparts of each Principal Project Contract entered into as of the Effective Date. (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. 14352874.7 37 292 (I) The Borrower shall have delivered to the TIFIA Lender a certified schedule acceptable to the TIFIA Lender demonstrating that the projected Revenue 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, or will be, 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). ( 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 Project Oversight Agreement. (r) 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 14. 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 (m) of this Section, as of each date on which any disbursement of the TIFIA Loan is made: (a) The Borrower is a county transportation commission 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 14352874.7 38 293 • • • 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 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 ofthe 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, the TIFIA Lender shall be entitled to the rights of a Bondholder of a Senior Obligation for all purposes under the Master Indenture all as set forth in the Master Indenture, and such rights are valid security rights of the TIFIA Lender enforceable under State law without any further action by the Borrower or any other party . 14352874.7 39 294 (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. G) The representations, warranties and certifications of the Borrower set forth in this Agreement, the Project 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 (i) [regional transportation plan for the Southern California Association of Governments], and (ii) the approved State transportation improvement program to the extent required by 23 U.S.C. §602(a)(3). (m) The TIFIA Loan has received an Investment Grade Rating from at least one Nationally Recognized Rating Agency, and written evidence of such rating h~s been 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 15. Representations, Warranties, and Covenants ofTIFIA Lender. The TIFIA Lender represents and warrants that: 14352874.7 40 295 • • • • (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 16. 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 Obligations under the Master Indenture or incur any 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 first satisfying the requirements for the issuance of such Obligations established by Sections 3.01, 3.02, 3.03 and/or 3.04, as applicable, of the Master Indenture, including obtaining the written consent of the TIFIA Lender as required thereby . (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 lien on the Trust Estate 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 is 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 lien on the Trust Estate 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 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 Obligations, 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 . 14352874.7 41 296 (e) Use of Proceeds. The Borrower shall use the proceeds of the TIFIA Loan • only to pay, or to reimburse the Borrower for, Eligible Project Costs. (f) Prosecution of Work. The Borrower shall diligently prosecute, or cause to be prosecuted, the work relating to the Project and complete the Project in accordance with the Construction Schedule, as the same may be revised, including, without limitation, the provisions of Section 18(a)(iii) hereof, and in accordance with the standards required by the Toll Facility Agreement and the Design-Build Contract, 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 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 or certificates 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: 14352874.7 (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 42 297 • • • • (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 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 (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) Senior Lien Bond Reserve Fund, Permitted Second Lien Obligations Reserve Fund and Subordinate Obligations Reserve Fund. The Borrower shall maintain the Senior Lien Bond Reserve Fund in an amount equal to the Senior Lien Bond Reserve Fund Requirement in accordance with the provisions of the Master Indenture and the applicable Supplemental Indenture. Amounts in the Senior Lien Bond Debt Service Reserve Account shall be made available to ensure the timely payment of any Annual Debt Service on Senior Obligations in accordance with the Master Indenture. 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 Permitted Second Lien Obligations Bond Reserve Fund in an amount equal to the Permitted Second Lien Obligations Reserve Fund Required Balance in accordance with the provisions of the Master Indenture and the applicable Supplemental Indenture. Amounts in the Permitted Second Lien Obligations Reserve Account shall be made available to ensure the timely payment of any Annual Debt Service on any Permitted Second 14352874.7 43 298 Lien 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 agrees that the Subordinate Obligations Reserve Fund shall be funded at the Subordinate Obligations Reserve Fund Required Balance no later than July I, 2019 from ROW Revenues, and if such ROW Revenues are insufficient therefor, from Sales Tax Revenues. The Borrower shall maintain the Subordinate Obligations Reserve Fund in an amount equal to the Subordinate Obligations Reserve Fund Required Balance in accordance with the provisions of the Master Indenture, the Second Supplemental Indenture and this Agreement. ( o) Rate Covenant. The Borrower covenants that it shall at all times, commencing in the first full Borrower Fiscal Year following the Substantial Completion Date, establish, levy, maintain and collect tolls in connection with the Toll Road and establish such charges for use of the property constituting part of the Toll Road, including, without limitation and as permitted by law,· leasehold payments, concession payments, rents and other charges, as shall be sufficient, collectively, to produce Net Revenue in each Borrower Fiscal Year, in an amount at least equal to the greatest of(l), (2), or (3) below: (1) one hundred fifty percent (150%) of the Annual Debt Service in such Borrower Fiscal Year on all Outstanding Senior Obligations; or (2) one hundred thirty percent (130%) of the Annual Debt Service in such Borrower Fiscal Year on all Outstanding Senior Obligations and Permitted Second Lien Obligations; or (3) one hundred percent (100%) of the Annual Debt Service in such Borrower Fiscal Year on all Outstanding Obligations, plus the amounts required to be deposited into the Senior Lien Bond Reserve Fund, the Permitted Second Lien Obligations Reserve Fund, the Subordinate Obligations Reserve Fund, the Capital Expenditures Fund and the Repair and Rehabilitation Fund and any other Fund established by a Supplemental Indenture to be funded by Revenue. In making the calculations in (1), (2), and (3) above, the Borrower may take into consideration as a credit against Annual Debt Service any amounts received, or reasonably expected to be received, in the Borrower Fiscal Year from or as a result of any additional security irrevocably granted or pledged to the Bondholders by the Borrower with respect to the Obligations; [provided, that if the pledge is not for the benefit of all Obligations, the amounts expected to be received may only be taken into account when making the calculation for the affected Obligations.] • Beginning in the first full Borrower Fiscal Year following the commencement of toll collections by the Borrower for use of the Toll Road pursuant to the OCTA Cooperative Agreement, the Borrower covenants: (i) to compute projected Net Revenue for each Borrower Fiscal Year and the projected ratios described in clauses (1), (2) and (3) above (the greatest of • 44 14352874.7 299 • • • clause (1), (2) and (3) in any Borrower Fiscal Year shall be the "Coverage Ratio" for such Borrower Fiscal Year) within ten Business Days after the beginning of that Borrower Fiscal Year (such date of computation being hereinafter referred to as a "Coverage Calculation Date"); (ii) to furnish promptly to the Trustee a Certificate of the Borrower setting forth the results of such computations; and (iii) if any Coverage Ratio is less than the required Coverage Ratio 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 Ratios for each Borrower Fiscal Year to equal or exceed the applicable Coverage Ratio for each such Borrower Fiscal Year. Within 60 days after the end of each Borrower Fiscal Year (beginning with the second Borrower Fiscal Year following the commencement oftoll 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 Revenue for such Borrower Fiscal Year. The failure of toll rates to yield an amount sufficient to achieve the Coverage Ratio for such Borrower Fiscal Year shall not be deemed to constitute an Event of Default so long as the Borrower complies with the requirements set forth in this Section 15( o ). If any such report indicates that the Net Revenue for such Borrower Fiscal Year were less than the amount required to satisfy the applicable Coverage Ratio, 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, 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 Borrower 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 Revenue). Promptly upon its receipt of such written report (and, in any case, within 180 days after the end of the Borrower 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 Revenue 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 multiple passengers or which allow for a limited numbers of passengers, including motorcycles, according to policies determined by the State or the Borrower; electric, hybrid-electric and other vehicles that meet emission-reduction policies determined by the State or the Borrower; 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 . 14352874_7 45 300 Notwithstanding any provision to the contrary, nothing in this Section 15( 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 nothing contained in this Section 15( 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 Revenue. (p) No Prohibited Liens. The Borrower will not create, incur, assume or permit to exist any Lien on the Toll Road or on any property or asset now owned or hereafter acquired by the Borrower, except Permitted Liens or assign or sell any income or revenue including accounts receivable or rights in respect of any thereof. ( q) TIFIA Loan Prepayment. Pursuant to Section [ ] of the Master Indenture and Section 8( e) of this Agreement, beginning on the first Semi-Annual Payment Date following the TIFIA Loan Prepayment Commencement Date, 50% of amount in the Residual Fund after giving effect to the payments in clauses (i) through (xv) of Section 8(e) of this Agreement (the "TIFIA Loan Prepayment Amount") shall be transferred to the Subordinate Obligations Prepayment Account. On the last Business Day of each January (or on the next Business Day of such date is not Business Day) on and after the TIFIA Loan Prepayment Commencement Date, the Borrower shall cause the Trustee to transfer amounts on deposit in the Subordinate Obligations Prepayment Account to the TIFIA Lender to prepay the TIFIA Loan. (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. (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 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 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 Amortization 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 • 14352874.7 46 301 • • • 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 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 date of the Variable Interest Rate 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 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. 14352874.7 (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 47 302 14352874.7 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 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 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 • deposited fm: 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 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 48 303 • • • remammg 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 GAAP on a consistent basis, set aside on its books adequate reserves with respect thereto . (v) Borrower Fiscal Year. The Borrower will not at any time adopt any fiscal year other than the Borrower 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 1 0% 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 10% 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 14352874.7 49 304 not executed as of the Effective Date to be executed, in form and substance acceptable to the TIFIA Lender as evidenced by the TIFIA Lender's written approval thereof, and shall deliver • certified copies thereof to the TIFIA Lender. (aa) Repair and Replacement Reserve Fund 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 the Repair and Replacement Reserve Fund. SECTION 17. 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 · 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 of liability, 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 18. 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 14352874.7 50 305 • • • • • 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. SECTION 19. Events ofDefault and Remedies. 14352874.7 (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 Mandatory 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 lO(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 51 306 14352874.7 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 ofup 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; (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 su~h 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 52 307 • • • 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. The Borrower shall fail to maintain its existence as a county transportation commission duly existing under the laws of the State; (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 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 Annual Debt Service on Obligations 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 14352874.7 53 308 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 20. 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 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 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 its • independent public accountants (and by this provision the Borrower irrevocably authorizes 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 ofDefault 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 Toll Road 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 Toll Road, (ii) all material notices and other written communications relating to the Master Indenture, the TIFIA Loan Documents, the Project or the financing thereof (including, until the Substantial Completion Date, relating to the • 14352874.7 54 309 • • • Sales Tax Indenture), 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 21. 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 through Substantial Completion, the Financial Plan shall be approved by the FHW A California Division with the concurrence of the TIFIA Lender and FHWA's Office of Innovative Program Delivery. The FHWA 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. 14352874.7 (i) The Financial Plan shall include: (A) 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 ofthe Borrower's knowledge and belief'; (B) 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 (C) 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: (A) provide the current estimate of the total cost of the Project and the 55 310 14352874.7 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; (B) 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; (C) 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; (D) 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; (E) based on the updated cash flow schedule, provide projected debt service coverage ratios for any Obligations through the Final Maturity Date; (F) provide cost containment strategies and risk mitigation plans that have been or may be implemented to address factors that are affecting or could affect the scheduled completion or financial viability of the Project; (G) 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; (H) 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 (I) 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: (A) provide an updated cash flow schedule showing annual cash inflows (Revenue, interest and other income) and outflows (Operating and Maintenance Expenses, capital costs, Annual Debt Service on the Obligations , 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; (B) 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; (C) provide an updated schedule of actual and projected Revenue, showing actual and projected coverage ratios for the TIFIA Loan; (D) provide a schedule of then current toll rates and planned increases; and (E) provide a written narrative report explaining any variances in costs or 56 311 • • • • • 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 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 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 Borrower Fiscal Year, the Borrower's quarterly cash flow 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 Borrower Fiscal Year, the audited financial statements of the Borrower for such Borrower Fiscal Year. All such financial statements of the Toll Road shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except for changes approved or required by 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 14352874.7 57 312 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 22. 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 Project 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. 14352874.7 (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 expected 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. 58 313 • • • • • (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 Borrower 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 GAAP for the next Borrower 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 (A) the operating data for the Project for the previous financial quarter, including total Revenue received and total Operating and Maintenance Expenses and Capital Expenditures Fund Permitted Expenditures incurred, (B) 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 (C) 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 14352874.7 59 314 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 as an Operation and Maintenance Expense. 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 23. 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 24. 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, 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 Borrower 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 25. 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 26. 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) necessary to 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 14352874.7 60 315 • • 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 27. 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 28. 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 annual loan servicing fee on or before 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=100, 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 ofthe 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 14352874.7 61 316 TIFIA Loan Documents and the transactions hereby and thereby contemplated, including without limitation, reasonable attorneys', engineers', and planning fees and professional costs, including • a11 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 fu11 or transfer of the TIFIA Bond, the enforcement of any provision 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 29. 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 30. 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 31. Severability. In case any provision in or obligation under this Agreement shall be invalid, i11egal 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 32. 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 33. 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 34. 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 14352874.7 62 317 • • • (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 35. 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 36. 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 If to the Borrower: TIFIA Joint Program Office (HITJ) Federal Highway Administration 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 14352874.7 63 318 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. SECTION 37. Effectiveness. This Agreement shall be effective on the Effective Date. SECTION 38. 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. 14352874.7 64 319 • • • • • -------------------------------------------------- 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. 14352874.7 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] 320 14352874.7 Schedule I I-1 321 • • • Schedule II TIFIA Eligible Project Costs • • II-I 14352874.7 322 Schedule III SR 91 Corridor Improvement Project • Construction Schedules Project Schedule Date • III-I • 14352874.7 323 • • • 14352874.7 Exhibit A FORM OF TIFIA BOND [TO COME) A-1 324 14352874.7 Appendix Two TIFIA Loan Amortization Schedule SR-91 Corridor Improvement Project A-2 325 • • • • Exhibit B SR 91 Corridor Improvement Project Anticipated TIFIA Loan Disbursement Schedule • • B-1 14352874.7 326 • • • • • • • • 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: -------- 14352874.7 RIVERSIDE COUNTY TRANSPORTATION COMMISSION By _______________________ __ Name: Title: C-1 327 • • • • • • 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 5:00 P.M. (EST) on the fifteenth Business Day of a calendar month in order to obtain disbursement by the first day of the next succeeding 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 14352874.7 328 (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 ofTIFIA 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 14352874.7 (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-2 329 • • • • (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 14352874.7 330 • • • • • • 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 4-100 Sacramento, CA 95814 Attention: Division Administrator Re: SR 91 CORRIDOR IMPROVEMENT PROJECT (TIFIA-2012-1006A) 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 [ -----1, __j, which 1s the first Business Day following 1, __ ]. 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 14352874.7 331 5. The amount of this 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. 10. 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. A copy of the construction progress report pursuant to Section 21(b)(i) of the 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 of this 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 14352874.7 332 • • • • • • 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 14352874.7 333 14352874.7 Exhibit E UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL HIGHWAY ADMINISTRATION E-1 334 • • • • • • 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: 14352874.7 (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 of the 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-2 335 14352874.7 (xii) The health and safety requirements set forth in 23 C.F.R. § 635.1 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 of highway improvements; (xiv) The Buy America requirements set forth in Section 165 of the Surface Transportation Assistance Act of 1982 and implementing regulations (23 C.F.R. § 635.410); (xv) The requirements of23 U.S.C. §§ 101et 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-3 336 • • • • • • 14352874.7 Exhibit F High Profile Project Oversight Agreement For SR-91 Corridor Improvement Project F-1 337 14352874.7 Exhibit G SR 91 Corridor Improvement Project TIFIA Debt Service Schedule G-1 338 • • • • • • 14352874.7 Exhibit H SR 91 Corridor Improvement Project TIFIA Debt Service Structure H-1 339 14352874.7 Exhibit I Forms of Opinions of Counsel to the Borrower [Forms to be Attached] H-1 340 • • • • AGENDA ITEM 1 0 • . \ • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: April 22, 2013 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: Anne Mayer, Executive Director SUBJECT: Agreements for Investment Management Services STAFF RECOMMENDATION: This item is for the Committee to: 1 ) 2) 3) Award Agreement No. 13-19-077-00, to Logan Circle Partners, L.P. and Agreement No. 13-19-135-00, to Payden & Rygel Investment Management for investment management services for a five-year term, and two additional one-year options to extend the agreement, for a total period of performance of up to seven years, in an aggregate amount of $2.3 million, plus a contingency amount of $200,000, for a total amount not to exceed in an aggregate value of $2.5 million; Authorize the Chair or Executive Director, pursuant to legal counsel review, to execute the agreements, including option years, on behalf of the Commission; Authorize the Executive Director or designee to approve contingency work up to the total authorized amount as may be required during the period of services; and 4) Forward to the Commission for final action. BACKGROUND INFORMA T/ON: In connection with the issuance of sales tax revenue bonds and toll revenue bonds for the receipt of Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for the State Route 91 Corridor Improvement Project (SR-91 CIP), the Commission anticipates the need to engage an investment manager. With the Commission's debt proceeds from the sales tax and toll revenue supported portion of the SR-91 CIP, the indenture(s) for the bonds and TIFIA loan agreement will include multiple accounts containing investments that must comply with the permitted investment language of the specific indenture, as well as the Commission's investment policy. The estimated proceeds of the sales tax bonds and toll revenues bonds are $445 million and $220 million, respectively, and will be maintained in investment accounts for construction, capitalized interest, and debt service reserve. Other operating, capital, and debt service reserve accounts will be Agenda Item 1 0 341 required under the TIFIA loan agreement and toll bonds indenture. In addition, the Commission anticipates its annual contributions to construction cost, in the • aggregate amount of approximately $1 06 million, will be deposited in the construction fund. Additionally, the Commission desires to engage an investment manager to initially provide investment advisory services related to the Commission's operating funds with the potential to provide investment management services of a portion of the operating funds. The investment managers will review the Commission's investment policy and provide recommendations for changes as part of the annual investment policy development process. The investment manager for the SR-91 CIP will also review the draft indenture documents for the bonds and TIFIA loan and provide recommendations for permitted investments and other matters. To the extent the investment manager provides investment management services, they must adhere to the Commission's investment policy objectives, in order of priority, of safety, liquidity, and then yield. Procurement Process A request for proposals (RFP) for investment management services was released by staff and advertised on February 14, 2013. Staff responded to all questions • submitted by potential proposers prior to the February 21 deadline. Fifteen organizations -Chandler Asset Management; Cutwater Asset Management; Davidson Fixed Income Management; Garcia Hamilton & Associates; J.P. Morgan Asset Management; LM Capital Group, LLC; Logan Circle Partners; Payden & Rygel Investment Management; RBC Global Asset Management (U.S.) Inc.; REAMS Asset Management; Riverside County Treasurer-Tax Collector; Sterling Capital Management LLC; The PFM Group; US Bancorp Asset Management; and Wells Capital Management -submitted proposals prior to the March 1 9 submittal deadline. All 15 firms submitted responsive and responsible proposals. Utilizing the evaluation criteria set forth in the RFP, the 15 firms were evaluated and scored by an evaluation committee comprised of two Commission staff and a representative from the Orange County Transportation Authority (OCTA). Based on the evaluation committee's assessment of the written proposals and pursuant to the terms of the RFP, the evaluation committee short listed and invited five firms to the interview phase of the evaluation and selection process. Interviews of the short listed firms -Chandler Asset Management, Logan Circle Partners, Payden & Rygel Investment Management, RBC Global Asset Management (U.S.) Inc., and The PFM Group -were conducted on April 11. Agenda Item 1 0 342 • • • • Pursuant to the terms of the RFP, the evaluation committee recommends agreements be awarded to Logan Circle Partners and Payden & Rygel Investment Management, as these firms earned the highest total evaluation scores under the evaluation criteria terms of the RFP. Logan Circle Partners was deemed most responsive and was selected for its overall plan to serve the Commission. Therefore, it will be assigned investment management services for the SR-91 CIP funds. Payden & Rygel Investment Management was selected because of its policy recommendations on the Commission's investment policy and experience managing other government operating funds. It will be assigned to provide investment advisory services with the potential for investment management services of the Commission's operating funds. The recommended firms' fees were competitively established and considered fair and reasonable based upon adequate price competition under the above referenced procurement process. Both Logan Circle Partners and Payden & Rygel Investment Management offered the most advantageous combination of experience, relevant qualifications, and pricing. Staff is confident that the recommended firms will provide the Commission with quality service at the best possible price. Financial Information In Fiscal Year Budget: Yes Year: FY 2013/14 Amount: $ 600,000 N/A FY 2014/15+ 1,900,000 Investment income; Measure A, No Source of Funds: Motorist Assistance, and TUMF Budget Adjustment: N/A revenues GL!Project Accounting No.: XXX XX 65302 Various Commission Funds Fiscal Procedures Approved: ~~ I Date: I 04/15/13 Attachments: 1) Logan Circle Partners, L.P. Agreement No. 13-19-077-00 2) Payden & Rygel Investment management Agreement No. 13-19-135-00 Agenda Item 1 0 343 • • • ATTACHMENT 1 Agreement No. 13-19-077-00 RIVERSIDE COUNTY TRANSPORTATION COMMISSION AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES WITH LOGAN CIRCLE PARTNERS, L.P. 1. PARTIES AND DATE. This Agreement is made and entered into this_ day of , 2013, by and between the RIVERSIDE COUNTY TRANSPORTATION COMMISSION ("the Commission") and LOGAN CIRCLE PARTNERS, L.P. ("Consultant"). 2. RECITALS. 2.1 Consultant desires to perform and assume responsibility for the provision of certain professional consulting services required by Commission on the terms and conditions set forth in this Agreement. Consultant represents that it is a professional consultant, experienced in providing investment management services, and is familiar with the plans of Commission . 2.2 Commission desires to engage Consultant to render certain investment management services related to the sales tax and toll revenue bonds (Bonds) and U.S. Department of Transportation's Transportation Infrastructure Finance and Innovation Act loan (Loan) financings in connection with the SR-91 Corridor Improvement Project ("Project") as set forth herein. Additionally, the Commission may desire to engage Consultant to render certain investment management services related to other Commission cash and investments ("Optional Project") as set forth herein, collectively the "Projects". 3. TERMS. 3.1 General Scope of Services. Consultant promises and agrees to furnish to Commission all labor materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately provide professional consulting services and advice on various issues affecting the decisions of Commission regarding the Projects and on other programs and matters affecting Commission, hereinafter referred to as "Services". The Services are more particularly described in Exhibit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state, and federal laws, rules and regulations . 1 344 3.2 Term. The term of this Agreement shall commence upon the issuance of the Bonds and closing of the Loan for an initial five year period, unless • earlier terminated as provided herein. The Commission shall have the option, in its sole discretion, to extend the term of the Agreement for two additional one-year periods. Consultant shall complete the Services within the term of this Agreement and shall meet any other established schedules and deadlines. 3.3 Schedule of Services. Consultant sha11 perform the Services expeditiously, within the term of this Agreement, and in accordance with the Scope of Services set forth in Exhibit "A" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Schedule, the, Commission shall respond to Consultant's submittals in a timely manner. Upon r~c:Juest of the Commission, Consultant shall provide a more detailed schedule of antidp8:ted performance to meet the Schedule of Services. ·~i:;,:.i 3.4 Independent Contractor;·:.Control and Payment:,·:of Subordinates. The Services shall be performed .. by ConsultanMt:trgerdfs supervisioli't&;}'Consultant will determine the means, method '~md ;details of p~:rf~rming the Services subject to the requirements of this Agreement. Commission retains Consultant on an independent contractor basis and Consultant is not an employee of Gpmmission. Consultant retains the right to perform similar or different servioes for others during the term of this Agreement. Any adgiti¢nal personnel performing the Servi~s under this Agreement on • behalf of Consultantt~~hall not be employees of Comrmis~ion and shall at all times be under Consultant's' ~«elusive di.rection and control. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services uru:ter;.this Agreement and as required by law. Consultant shall be responsible for all reports and·:obligations respecting such additional personnel, including, but not limited to: social security taxes, income taxwithholding, unemployment insurance, and workers• compensation insurance. 3.5 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of Commission. 3.6 Substitution of Key Personnel. Consultant has represented to Commission that certain key' personnel will perform and coordinate the Services under this Agreement. ShoUld one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence and experience upon written approval of Commission. In the event that Commission and Consultant cannot agree as to the substitution of key personnel, Commission shall be entitled to terminate this Agreement for cause, pursuant to provisions of Section 3.16 of this Agreement. The key personnel for performance of this Agreement are as follows: 2 345 • • • • 3.7 Commission's Representative. Commission hereby designates L_INSERT NAME OR TITLE__], or his or her designee, to act as its representative for the performance of this Agreement ("Commission's Representative"). Commission's representative shall have the power to act on behalf of Commission for all purposes under this Agreement. Consultant shall not accept direction from any person other than Commission's Representative or his or her designee. 3.8 Consultant's Representative. Consultant hereby designates L_INSERT NAME OR TITLE__], or his or her designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and <:~Cf on behalf of the Consultant for all purposes under this Agreement. The ConsultanrsRepresentative shall supervise and direct the Services, using his or her best sKill and attention, and shall be responsible for all means, methods, techniques, sequences and procedures and for the satisfactory coordination of all portions of the Services underthts Agreement. 3.9 Coordination of ServiQe's: Consultant agrees te work closely with Commission staff in the performance of SerVices and s!1?~.11 be availableHo Commission's staff, consultants and other staff ~:!<all reasonabl.~tim~.~1 ;~~· ·~" .,, ;' .··• 3.10 Standard of Clafe1£:Ticenses. Con~ultant shall perform the Services under this Agreement in a skillful ~. coil1petent manner, consistent with the standard generally recognized as. peing employ~d by professionals in the same discipline in the State of California.. G(mstdtant represents and maintains that it is skilled in the professional calling ryecessaf1·\to perform the Servi6e~. .··Consultant warrants that all employees and subcbntractors,~hall have'~uffrcient skill and experience to perform the Services assigned to 'them. R!~ally, Consultant represents that it, its employees and subcontractor~ have all J~~nsg$, ',~ermits, qualifications and approvals of whatever nature that are l~gaUy reqbir~;d to perform the Services and that such licenses and approvals shall be maintainedthroughout the term of this Agreement. Consultant shall perform~ at its own cost and expense and without reimbursement from Commission, any Servicesne?essary to correct errors or omissions which are caused by the Consultant's failure to c6mply with the standard of care provided for herein, and shall be fully responsible to the Commissi~li'l for all damages and other liabilities provided for in the indemnification provisions ofAthis Agreement arising from the Consultant's errors and omissions. 3.11 Laws' and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Gal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If the Consultant performs any work knowing it to be contrary to such laws, rules and regulations and without giving written notice to Commission, Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify and hold Commission, its officials, directors, officers, employees and agents free and harmless, pursuant to the 3 346 indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations. • 3.12 Insurance. 3.12.1 Time for Compliance. Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the Commission that it has secured all insurance required under this section. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured all insurance required under this section. 3.12.2 Minimum Requirements.: Consultant shall, at its expense, procure and maintain for the duration of the Agreemeiltinsurance against claims for injuries to persons or damages to property which may ad$~ from or in connection with the performance of the Agreement by the;J3onsultant, lts~'lagents, representatives, employees or subcontractors. Consultantsryatl also require alt:-~f its subcontractors to procure and maintain the same insuran~~>for the duration of the Agreement. Such insurance shall meet at least the following m~~imum le\{e:ts of coverage: (A) \~~i'nimum Scope cifl~·~urance. Coverage shall be at least as broad as the latest versjon· of tl;l.e following: .(1) General Liability: Insurance Services Office Commercial General LiabiliiY:-:'Coverage{occurrence form CG 0001); (2) Automobile Liability: Insurance Servi~es Office Business,~)\uto Coverage form number CA 0001, code 1 (any auto); and (3) ·workers' Compt:Jnsafion and Employer's Liability: • Workers' Compensation insuraf'lce as required by the State of California and Employer's Liability Insurance: Aqditionany; Consultant .shall have errors and omissions insurance [or investment advisor0;pr:~fessionalliability lb~ll,lrance and additional coverage through a fidelity bonq;and umbrell'aiinsuraHGe, ',;·;, · '.,y, ;.'·'" .•..... .. (B) ... MinimuM::;U:imits of Insurance. Consultant shall maintain limits no less than: (1) General Liability: $2,000,000 per occurrence for bodily injury, persor)al injury and property•·d~mage. If Commercial General Liability Insurance or other form with general aggregat~; limit is used, either the general aggregate limit shall apply separately to this Agreement/location or the general aggregate limit shall be twice the required occurrence limit; (2) Automobile Liability: $1,000,000 per accident for: bodily injury and pr()perty damage; (3) if Consultant has an employees, Workers' Compensation and Employer's Liability: Workers' Compensation limits as required by the Labor Code of the State of California; Employer's Practices Liability limits of $1,000,000 per accident; (4) Errors and Omissions [or Investment Advisor Professional Liability]: $10 million; and (5) Fidelity Bond and Umbrella: $1 million. 3.12.3 {Reserved} 3.12.4 Insurance Endorsements. The insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms approved by the Commission to add the following provisions to the insurance policies: 4 347 • • • • (A) General Liability. The general liability policy shall be endorsed to state that: (1) the Commission, its directors, officials, officers, employees and agents shall be covered as additional insureds with respect to the Services or operations performed by or on behalf of the Consultant, including materials, parts or equipment furnished in connection with such work; and (2) the insurance coverage shall be primary insurance as respects the Commission, its directors, officials, officers, employees and agents, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant's scheduled underlying coverage. Any insurance or self- insurance maintained by the Commission, its directors, officials, officers, employees and agents shall be excess of the Consultant's insurance;':Ethclt shall not be called upon to contribute with it in any way. " · (B) Automobile Uabifity. The. automobile liability policy shall be endorsed to state that: (1) the Commission, its directors, officials, officers, employees and agents shall be covere.p;,:as additional insJ'r~~s with respect to the ownership, operation, maintenance, use'Fqoading or unloading ol any auto owned, leased, hired or borrowed by the Consultanfor:·Jor which. the Consdlla~t is responsible; and (2) the insurance coverage shall be primar)t;insuJlance as respects'tl~ Commission, its directors, officials, officers, emjlqyees and ag~~ts, or if excess, sli:all stand in an unbroken chain of coverage exces§.:of the Consultafifs scheduled underlying coverage. Any insurance or self-insurance maintained by the Co~tr~ission, its directors, officials, officers, employees and agents shall be excessr~f the Gd'nsyltant's insurance and shall not be called upon to contriB:ute with it in any way!?7\0 ,>;;;, (C) : , Workers'"'•>Obmpensation and Employers Liability Coverage. The insurer shall a'gree to vJafve all rights of subrogation against the Commission,. its directors, offic1als,>1officers,.:.~mployees and agents for losses paid under the terms of the insurance poli~y, whi~h arise from work performed by the Consultant. · · · {D) All Coverages. Each insurance policy required by this Agreement shall be endorsed to state that: (A) coverage shall not be suspended, voided or canceled except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the Commission; and, (B) any failure to comply with reportin·g or other provisions of the policies, including breaches of warranties, shall not affect coverage provided to the Commission, its directors, officials, officers, employees and agents. 3.12.5 Deductibles and Self-Insurance Retentions. Any deductibles or self-insured retentions must be declared to and approved by the Commission. If the Commission does not approve the deductibles or self-insured retentions as presented, Consultant shall guarantee that, at the option of the Commission, either: (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the Commission, its directors, officials, officers, employees and agents; or, (2) the 5 348 Consultant shall procure a bond guaranteeing payment of losses and related investigation costs, claims and administrative and defense expenses. • 3.12.6 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating no less than A:VIII, licensed to do business in California, and satisfactory to the Commission. 3.12. 7 Verification of Coverage. Consultant shall furnish Commission with original certificates of insurance and endorsements effecting coverage required by this Agreement on forms satisfactory to th~t1:Gommission. The certificates and endorsements for each insurance policy shall be ,~igned by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements must be received and approved by the Commission before work commences. The Commission reserves the right to require complete, certified copies of all ,required insurance policies, at any time. <;~~~;•;: 3.13 Safety. Consultant shaH execute and mai avoid injury or damage to any person or'pr~perty. l(t carrying a "ts Services, the Consultant shall at all times be in ompliance \.vith auq,a~plicable local;' .• :ite and federal laws, rules and regulations, andvi , !:.exercise allr;jil~cessary precaution~· for the safety of employees appropriate to the ·•.· ure o{the work·a;,dthe conditions under which the ' '"· ··> "1'-0~ .. •y, work is to be performed. Safety prec~uti6ns as applicao1e:,,shall include, but shall not be limited to: (A) adequate.Jife protecti0n,and life/~aving e6f~ipment and procedures; (S) instructions in accid~!jl.t:,pr~vention for~~~ employee$\):61J1d subcontractors, such as safe • walkways, scaffold'~·~;i';fall protection lad(jers, bridges~~~~ang planks, confined space procedures, trenchintr<lnd shot:jvg, equiprn,e~t and other•safety devices, equipment and wearing apparel as are· neces ·c ··· or lawfl.Jl'lY required to prevent accidents or injuries; and (C) aoeq~.:t~!~, facilities , e .Proper inspection and maintenance of all safety measur~.9~ ,• ... AiV\.;. 3.14 Fe~§.and Payment. . 3.14.1 Cbmpensation. Consultant shall receive compensation, including authoriz~d reimbur~~1)1ents, for all Services rendered under this Agreement at the rates set forth in Exhib,itc"B" attached hereto. The total compensation shall not exceed L_INSERi WRITtE;N DOLLAR AMOUNT __j ($[__INSERT NUMERICAL DOLLAR AMOUNT __j) without written approval of Commission's Executive Director ('Total Compensation"). Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement. · 3.14.2 Payment of Compensation. Consultant shall submit to Commission a monthly statement which indicates work completed and hours of Services rendered by Consultant. The statement shall describe the amount of Services and supplies provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the statement. 6 349 • • • • Commission shall, within 45 days of receiving such statement, review the statement and pay all approved charges thereon. · 3.14.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by Commission. 3.14.4 Extra Work. At any time during the term of this Agreement, Commission may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by Commission to be necessary for the proper completion of the Project, but which the parties ,did not reasonably anticipate would be necessary at the execution of this Agreement. Consultant shall not perform, nor be compensated for, Extra Work without written authorization from Commission's Executive Director. 3.15 Accounting . Records. ·wonsultant shaH maintain complete and accurate records with respect to all costs and expenses incurred and fees charged under this Agreement. All such records shall be clearly identifiable, Consultant shall allow a representative of Commission during n(i)rmal business hoursto examine, audit, and make transcripts or copies .of such reco'rds a.f\l~ any other documents created pursuant to this Agreement. Co.~sultant shall ~~~$~ inspection of all work, data, documents, proceedings, and actf!i/ities-related to the Agreement for a period of three (3) years from the date of final mattirities ofthe toll revenue-supported debt issued and related to this Agreement. · · '"-"" 3.16 .::;rermi~~llegof Agre~ment. ';\· ' ' ' 3:16.1 Grounds for Termination. Commission may, by written notice to Cons;l\IJtant, terminatE!:~the Whole or any part of this Agreement at any time and without cause by giving writt'E!tli noticeto Consultant of such termination, and specifying the effective date thereof. Upon termination; Consultant shall be compensated only for those services which have been fully and adequately rendered to Commission through the effective date of the termination, and Consultant shall be entitled to no further compensation, Consultant ·may not te'rminate this Agreement except for cause. '3.16.2 Effect of Termination. If this Agreement is terminated as provided herein, Commission may require Consultant to provide all finished or unfinished Documents and Data, as defined below, and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request. 3.16.3Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, Commission may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated . 7 350 3.17 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such • other address as the respective parties mc;~y provide in writing for this purpose: CONSULT ANT: Attn: ------- COMMISSION: Riverside County Transportation Commission 4080 Lemon Street, 3rd Floor Riv,erside, CA 92501 Attn!Executive Director Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail;: first class postage prepaid and addressed to the party at its applicable,address. Actu~.J notice shall be deemed adequate notice on the date actual notice. oe(li:.trred, regardless··of•the method of service. 3.18 Ownership of Materials/Confidentiality . .. 3.18.1 Docum~nts & Data. Thi~.lAgreement creat~~ an exclusive and perpetual license for Commis,s,ion::'to .Gopy, use, modify, reuse, or sub-license any and all copyrights and designs embodied;.in plans, specifications, studies, drawings, estimates, materials, data and other documents or works .. of authorship fixed in any tangible medium of expr®sion, including but nc>t' limited tO:;.· physical drawings or data • magnetically or otherwise recorded on ,computer di$kettes, which are prepared or caused to be prepared by Consfilltant under-this Agreement ("Documents & Data"). , / • .. Con~itlt.~ot s~all require at,J subcontractors to agree in writing that Oommi~~iq:~ is gre~oted an it#xclusive and:;perpetual license for any Documents & Data the su~rontractor prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to grant the exclusive.;. and perpetual license for all such Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or proyided to Consultant by the Comr,:nission. Commission shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at Commission's sole risk. 3.18.2 Intellectual Property. In addition, Commission shall have and retain all right, title and interest (including copyright, patent, trade secret and other proprietary rights) in all plans, specifications, studies, drawings, estimates, materials, data, computer programs or software and source code, enhancements, documents, and any and all works of authorship fixed in any tangible medium or expression, including 8 351 • • • • but not limited to, physical drawings or other data magnetically or otherwise recorded on computer media ("Intellectual Property") prepared or developed by or on behalf of Consultant under this Agreement as well as any other such Intellectual Property prepared or developed by or on behalf of Consultant under this Agreement. The Commission shall have and retain all right, title and interest in Intellectual Property developed or modified under this Agreement whether or not paid for wholly or in part by Commission, whether or not developed in conjunction with Consultant, and whether or not developed by Consultant. Consultant will execute separate written assignments of any and all rights to thet,above referenced Intellectual Property upon request of Commission. Consultant shall also be respoQsi6re to obtain in writing separate written assignments from any subcontractors or agehts of'~~sultant of any and all right to the above referenced Intellectual Property~": Should O~tlSI.Jitant, either during or following termination of this Agreement, d~sire to use any b:f,~the above-referenced Intellectual Property, it shall first obtain the!Jritten approval of the'G(;)mmission. '~ /·· '., All materials apd documentSl;YifhiQtl',Were developed ,,or prepared by the Consultant for general use pf,i,~r,to the execati~~1!8t this Agreement'and which are not the copyright of any other ):)arty'Or publicly a~ailable and any other computer applications, shall continue to be the ptott>erty of the Consultant. However, unless otherwise identified and stated prior-to execution ol' this Agreement, Consultant represents and warrant$'thatit has the"right to gran1;~1\}e exclusive and perpetual license for all such Intellectual Property as provided herein. ''~0~t ' >;::~',c Commission further is gF~nted by Consultant a non-exclusive and perpetual li~ense to copy. use, mpdity,or stJ~..,Iicense any and all Intellectual Property otherwise ownetfby Consultant whi'cfr is the basis or foundation for any derivative, collective, insurrecti&hal; or supplemental work created under this Agreement. 3.18.3 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and,other Documents and Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materiai;S shall not, without the prior written consent of Commission, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use Commission's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of Commission . 9 352 Should Consultant receive a subpoena or court order related to this Agreement, the Services or the Project, Consultant shall immediately provide written • notice of the subpoena or court order to the Commission in order to allow the Commission to pursue legal remedies designed to limit any confidential information required to be disclosed or to assure the confidential treatment of the information following disclosure. Consultant shall not respond to any such subpoena or court order until notice to the Commission is provided as required herein, and shall cooperate with the Commission in responding to the subpoena or court order. 3.19 Cooperation; Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or ~igm:,any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement. 3.20 Attorney's Fees. If either party comm~nces an action against the other party, either legal, administrative or ot~er'wise, arising q~tof or in connection with this Agreement, the prevailing party in ,sti~h litigation shalr'~$ entitled to have and recover from the losing party reasonable attQ~Qey's fees and costs,ofsuch actions. i,., .;y;~:_(>::· 3.21 Indemnification. Consultant sh~~ indemnity<::and hold the Commission, its directors, offici~Js; officers, agents, consultants, employees and volunteers free and harmless tr&~ a~~;~:c:md all clafrm,~· demands, causes of action, costs, expenses, liabilities, losses, damages or injuries; im law or in equity, to property or persons, including wrongf!JI death, in, any mahner arising qut of or incident to alleged negligent acts, omission~ or:willful misconduct of the Consultant, its officials, officers, • employees, agent~;, consultan~$,,, and cdritractors arising eut of or in connection with the performance of the S~rvices, the Project orthis Agreement, including without limitation, the payment of all conS'~quent~~·Jdamages, attorneys fees and other related costs and expenses,,t:pqn~:~ltant ShaJI,<;Jetend,<'at Consultant's own cost, expense and risk, any and all ~odh,,:afor~~aid suits.:'gdions or other legal proceedings of every kind that may be brought or institutect:;agairisttbe Commission, its directors, officials, officers, agents, consultants, employees:~~nd voiUrlteers. Consultant shall pay and satisfy any judgment, award or de~ree that may be renderecl,, against the Commission or its directors, officials, officers, agents, consultants, employees and volunteers, in any such suit, action or other legal proce~(:Jing. Con~l;Jitant shall reimburse the Commission and its directors, officials, officers, ~gents, consultants, employees and volunteers, for any and all legal expenses and costs?Jfhclud:jng reasonable attorney's fees, incurred by each of them in connection therewith or ill) enforcing the indemnity herein provided. Consultant's obligation to indemnity sha'll not be restricted to insurance proceeds, if any, received by the Commission or its directors, officials, officers, agents, consultants, employees and volunteers. Notwithstanding the foregoing, to the extent Consultant's Services are subject to Civil Code Section 2782.8, the above indemnity shall be limited, to the extent required by Civil Code Section 2782.8, to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant. This Section 3.21 shall survive any expiration or termination of this Agreement. 10 353 • • • • 3.22 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties. 3.23 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County. 3.24 Time of Essence. Time is of the essence for each and every provision of this Agreement. 3.25 Commission's Right to Empt0y ·· Other Consultants. The Commission reserves the right to employ other:,~corfsultants in connection with this Project. ,~:,. 3.2