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HomeMy WebLinkAbout16 - Loan Agreement Series B-ECITY OF NEWPORT BEACH and HOAG MEMORIAL HOSPITAL PRESBYTERIAN LOAN AGREEMENT Dated as of June 1, 2009 Relating to $[PRINCIPAL AMOUNT] CITY OF NEWPORT BEACH REVENUE BONDS (HOAG MEMORIAL HOSPITAL PRESBYTERIAN) SERIES 2009B, 2009C, 2009D AND 2009E OHS West:260644344.3 DRAFT OH &S 05/05/09 This LOAN AGREEMENT, dated as of June 1, 2009 (the "Loan Agreement "), between the CITY OF NEWPORT BEACH, a municipal corporation and charter city duly organized and existing under a freeholder's charter under the Constitution and the laws of the State of California (the "City "), and HOAG MEMORIAL HOSPITAL PRESBYTERIAN, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "Corporation "); WITNESSETH: WHEREAS, the City has the right and power to make and enforce all laws and regulations in respect to municipal affairs and certain other matters in accordance with and as more particularly provided in Sections 3, 5 and 7 of Article XI of the Constitution of the State of California and Section 200 of Article II of the charter of the City (the "Charter "); WHEREAS, the City Council of the City, acting under and pursuant to the powers reserved to the City under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California and Section 200 of Article II of the Charter, has duly enacted Ordinance No. 85 -23 and 84 -4 of the City (the "Law "), establishing a procedure for the authorization, sale and issuance of revenue bonds by the City for the purpose, inter alia, of making loans to participating health institutions to finance and refinance health facilities as provided in the Law; WHEREAS, the Corporation has requested the assistance of the City in the financing and refinancing of the acquisition, construction, and equipping of health facilities located within the City; WHEREAS, the City has previously provided such assistance through the issuance of its Insured Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2007D (the "2007 Prior Bonds "), and its Refunding Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2008A and Series 2008B (the "2008 Prior Bonds" and together with the 2007 Prior Bonds, the "Prior Bonds "); WHEREAS, the Corporation has requested the assistance of the City in the refunding of the outstanding Prior Bonds; WHEREAS, the Corporation has also requested the assistance of the City in the acquisition, construction, and equipping of health facilities located within the City; WHEREAS, after due investigation and deliberation, the City has approved said request and authorized the issuance of its Revenue Bonds (Hoag Memorial Hospital Presbyterian), Series 2009B, 2009C, 2009D and 2009E (collectively, the `Bonds ") in the aggregate principal amount of [principal amount in words] dollars ($[Principal Amount]), together with its Revenue Bonds (Hoag Memorial Hospital Presbyterian), Series 2009A, in the aggregate principal amount of dollars ($ ), to provide such assistance to the Corporation in accordance with the Law; WHEREAS, pursuant to a master trust indenture, dated as of May 1, 2007 (the "Master Indenture "), between the Corporation, Newport Healthcare Center LLC, a California limited liability company, the sole corporate member of which is the Corporation and such other OHS West260644344.3 Members as may join the obligated group as defined therein (the "Obligated Group ") and Wells Fargo Bank, National Association, as master trustee (the "Master Trustee "), and a Supplemental Master Indenture for Obligation No. [X], dated as of June 1, 2009, between the Corporation and the Master Trustee ( "Supplement No. [X] "), the Corporation has issued its Obligation No. [X] to evidence the joint and several obligation of the Members to make all payments required of the Corporation under this Loan Agreement, including amounts sufficient to pay the principal of and premium and interest on the Bonds; WHEREAS, the Corporation has requested the City to enter into this loan agreement specifying the terms and conditions of a loan by the City to the Corporation of the proceeds of the Bonds and of the payment by the Corporation to the City of the amounts required for the payment of the principal of, and interest and premium, if any, on the Bonds and certain related expenses; and WHEREAS, the City and the Corporation have each duly authorized the execution, delivery and performance of this Loan Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS; INTERPRETATION; CONTENTS OF CERTIFICATES AND OPINIONS Section 1.1. Definitions. Unless the context otherwise requires, all terms used herein shall have the meanings assigned to such terms in Section 1.01 of the Bond Indenture between the City and Wells Fargo Bank, National Association, as trustee (the "Bond Trustee "), dated as of June 1, 2009, as originally executed and as amended or supplemented from time to time. Section 1.2. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean and include the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. (c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or subdivision hereof. OHS West260644344.3 Section 1.3. Content of Certificates and Opinions. Every certificate or opinion provided for in this Loan Agreement with respect to compliance with any provision hereof shall include the requirements set forth in Section 1.02 of the Bond Indenture. ARTICLE II ISSUANCE OF BONDS AND OBLIGATION NO. [X] Section 2.1. The Bonds. Pursuant to the Bond Indenture, the City has authorized the issuance of the Bonds in the aggregate principal amount of [principal amount in words] dollars ($[Principal Amount]). The Corporation hereby approves the Bond Indenture, the assignment thereunder to the Bond Trustee of the right, title and interest of the City (with certain exceptions noted therein) in this Loan Agreement and Obligation No. [X] and the issuance thereunder by the City of the Bonds. All rights accruing to or vested in the City with respect to Obligation No. [X] may be exercised by the Bond Trustee. Section 2.2. Issuance of Obligation No. W. In consideration of the issuance of the Bonds by the City and the application of the proceeds thereof as provided in the Bond Indenture, the Corporation agrees to issue and to cause to be authenticated and delivered to the City or its designee, pursuant to the Master Indenture and Supplement No. [X], concurrently with the issuance and delivery of the Bonds, Obligation No. [X] in substantially the form set forth in Section 11 of Supplement No. [X]. The City agrees that Obligation No. [X] shall be registered in the name of the Bond Trustee. The Corporation agrees that the aggregate principal amount of Obligation No. [X] shall be limited to [principal amount in words] dollars ($[Principal Amount]), except for any Obligation No. [X] authenticated and delivered in lieu of another Obligation No. [X] as provided in Section 6 of Supplement No. [X] with respect to the mutilation, destruction, loss or theft of Obligation No. [X]. Issuance and delivery of the Bonds by the City shall be a condition of the issuance and delivery of Obligation No. [X]. Section 2.3. Restrictions on Number and Transfer of Obligation No. W. (a) The Corporation agrees that, except as provided in subsection (b) of this Section, so long as any Bond remains Outstanding, Obligation No. [X] shall be issuable only as a single obligation without coupons, registered as to principal and interest in the name of the Bond Trustee, and no transfer of Obligation No. [X] shall be registered under the Master Indenture or be recognized by the Corporation except for transfers to a successor Bond Trustee. (b) Upon the principal of all Obligations Outstanding (within the meaning of that term as used in the Master Indenture) being declared immediately due and payable, Obligation No. [X] may be transferred if and to the extent that the Bond Trustee requests that the transfer restrictions set out in subsection (a) of this Section be terminated. OHS West:260644344.3 ARTICLE III LOAN OF PROCEEDS; PAYMENTS Section 3.1. Loan of Proceeds; Payments of Principal, Premium and Interest. (a) The City hereby lends and advances to the Corporation, and the Corporation hereby borrows and accepts from the City a loan in a principal amount equal to the aggregate principal amount of the Bonds, the net proceeds of which loan shall be equal to the net proceeds received from the sale of the Bonds, such proceeds to be applied under the terms and conditions of this Loan Agreement and the Bond Indenture. In consideration of the loan of such proceeds to the Corporation, the Corporation agrees to pay, or cause to be paid, "Loan Repayments" in an amount sufficient to enable the Bond Trustee to make the transfers and deposits required at the times and in the amounts pursuant to Section 5.02 of the Bond Indenture. Each Loan Repayment shall be made in immediately available funds at least three days prior to the time the Bond Trustee must make each transfer and deposit pursuant to Section 5.02 of the Bond Indenture. Notwithstanding the foregoing, the Corporation agrees to make payments, or cause payments to be made, at the times and in the amounts required to be paid as principal or Redemption Price of and interest on the Bonds from time to time Outstanding under the Bond Indenture and other amounts required to be paid under the Bond Indenture (including Tender Price), as the same shall become due whether at maturity, upon redemption, by declaration of acceleration or otherwise. (b) Except as otherwise expressly provided herein, all amounts payable with respect to Obligation No. [X] or hereunder by the Corporation to the City shall be paid to the Bond Trustee or other parties entitled thereto as assignee of the City and this Loan Agreement and all right, title and interest of the City in any such payments are hereby assigned and pledged to the Bond Trustee so long as any Bonds remain Outstanding. Section 3.2. Additional Payments. In addition to Loan Repayments and payments on Obligation No. [X], the Corporation shall also pay to the City, the Bond Trustee, the Tender Agent, the Liquidity Facility Provider (if any), the Credit Facility Provider (if any), the Remarketing Agent, or the designated agent of any of them, as the case may be, "Additional Payments," as follows: (a) all taxes and assessments of any type or character charged to the City or to the Bond Trustee affecting the amount available to the City or the Bond Trustee from payments to be received hereunder or in any way arising due to the transactions contemplated hereby (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Bond Trustee and taxes based upon or measured by the net income of the Bond Trustee; provided, however, that the Corporation shall have the right to protest any such taxes or assessments and to require the City or the Bond Trustee, at the Corporation's expense, to protest and contest any such taxes or assessments levied upon them and that the Corporation shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the City or the Bond Trustee; OHS West260644344.3 4 (b) all reasonable fees, charges, expenses and indemnities of the Bond Trustee and the Tender Agent (if any) hereunder and under the Bond Indenture, the reasonable fees, charges, expenses and indemnities of the Credit Facility Provider (if any) under the related Credit Facility, the Liquidity Facility Provider (if any) under the related Liquidity Facility, and the Remarketing Agent, as and when the same become due and payable; (c) the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the City or the Bond Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under this Loan Agreement, Supplement No. [X], Obligation No. [X] or the Bond Indenture; (d) the reasonable fees and expenses of the City, or any agent or attorney selected by the City to act on its behalf, in connection with this Loan Agreement, Supplement No. [X], Obligation No. [X], the Bonds or the Bond Indenture, including any and all reasonable fees and expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or by the City's attorneys in connection with any litigation which may at any time be instituted involving this Loan Agreement, Supplement No. [X], Obligation No. [X], the Bonds or the Bond Indenture or any of the other documents contemplated thereby, or in connection with the supervision or inspection of the Corporation, any Members, their properties, assets or operations or otherwise in connection with the administration of this Loan Agreement; and (e) all other reasonable and necessary fees and expenses attributable to the Bonds, this Loan Agreement, Obligation No. [X] or related documents, including without limitation all payments required pursuant to the Tax Agreement. Such Additional Payments shall be billed to the Corporation by or upon direction of the City, the Bond Trustee, the Tender Agent, the Credit Facility Provider (if any), the Remarketing Agent or the Liquidity Facility Provider (if any) from time to time, together with a statement certifying that the amount billed has been incurred or paid for one or more of the above items. After such a demand, amounts so billed shall be paid by the Corporation within thirty (30) days after receipt of the bill by the Corporation. The obligations of the Corporation under this Section shall survive the resignation or removal of the Bond Trustee, the Tender Agent, the Credit Facility Provider (if any), the Liquidity Facility Provider (if any), or the Remarketing Agent under the Bond Indenture and payment of the Bonds and discharge of the Bond Indenture, and termination of this Loan Agreement. Section 3.3. Credits for Payments. The Corporation shall receive credit against its payments required to be made under Section 3.1, in addition to any credits resulting from payment or repayment from other sources, as follows: (a) on installments of interest in an amount equal to moneys deposited in the Interest Account, which amounts are available to pay interest on the Bonds, to the extent such amounts have not previously been credited against such payments; OHS West260644344.3 5 (b) on installments of principal in an amount equal to moneys deposited in the Principal Account, which amounts are available to pay principal of the Bonds, to the extent such amounts have not previously been credited against such payments; (c) on installments of principal and interest in an amount equal to the principal amount of Bonds for the payment at maturity or redemption of which sufficient amounts (as determined by Section 10.03 of the Bond Indenture) in cash or United States Government Obligations are on deposit as provided in Section 10.03 of the Bond Indenture to the extent such amounts have not previously been credited against such payments, and the interest on such Bonds from and after the date fixed for payment at maturity or redemption thereof Such credits shall be made against the installments of principal, premium if any, and interest which would have been used, but for such call for redemption, to pay principal of and interest on such Bonds when due; and (d) on installments of principal and interest in an amount equal to the principal amount of Bonds acquired by the Corporation and surrendered to the Bond Trustee for cancellation or purchased by the Bond Trustee on behalf of the Corporation and canceled, and the interest on such Bonds from and after the date interest thereon has been paid prior to cancellation. Such credits shall be made against the installments of principal and interest which would have been used, but for such cancellation, to pay principal of and interest on such Bonds when due. Section 3.4. Prepayment. The Corporation shall have the right, so long as all amounts which have become due hereunder have been paid, at any time or from time to time to prepay all or any part of the Loan Repayments and the City agrees that the Bond Trustee shall accept such prepayments when the same are tendered. Prepayments may be made by payments of cash, deposit of United States Government Obligations or surrender of Bonds, as contemplated by subsections 3.3(c) and (d). The interest component of all such prepayments shall be deposited in the Interest Account and the principal component of all such prepayments (and the additional payment of any amount necessary to pay the applicable premium, if any, payable upon the redemption of Bonds) shall be deposited upon receipt at the Corporation's direction in (i) the Principal Account if the Bonds are to be redeemed pursuant to Section 4.01(E) of the Bond Indenture, (ii) the Optional Redemption Account of the Redemption Fund if the Bonds are to be redeemed pursuant to Section 4.01(B), (C) or (D) of the Bond Indenture, or (iii) the Special Redemption Account of the Redemption Fund if the Bonds are to be redeemed pursuant to Section 4.01(A) or (F) of the Bond Indenture and, at the request of and as determined by the Corporation, credited against payments due hereunder or used for the redemption or purchase of Outstanding Bonds in the manner and subject to the terms and conditions set forth in the Master Indenture and the Bond Indenture. Notwithstanding any such prepayment or surrender of Bonds, as long as any Bonds remain Outstanding or any Additional Payments required to be made hereunder remain unpaid, the Corporation shall not be relieved of its obligations hereunder. Section 3.5. Payment of Tender Price of Purchased Bonds. (a) The Corporation agrees that, if a Liquidity Facility is not in effect with respect to a Series of Bonds or if the Liquidity Facility Provider for a Series of Bonds has not paid the full amount required by the Bond Indenture at the times required by the Bond Indenture, 01 {S WesC260644344.3 6 it shall pay to the Tender Agent all amounts necessary for the purchase of Bonds of such Series pursuant to Section 4.13 of the Bond Indenture and not deposited with the Tender Agent by the Remarketing Agent from the proceeds of the sale of such Bonds pursuant to Section 4.13 of the Bond Indenture. Each such payment by the Corporation to the Tender Agent pursuant to this Section shall be in immediately available funds and paid to the Tender Agent at its Principal Office by 2:45 p.m., New York City time, on each date upon which a payment is to be made pursuant to Section 4.13 of the Bond Indenture. (b) If the Fixed Rate Conversion Date for a Series of Bonds is established pursuant to the Bond Indenture, the obligations of the Corporation pursuant to this Section 3.5 with respect to such Bonds shall be terminated following the Fixed Rate Conversion Date. Section 3.6. Obligations Unconditional. The obligations of the Corporation hereunder and under Obligation No. [X] are absolute and unconditional, notwithstanding any other provision of this Loan Agreement, Supplement No. [X], Obligation No. [X], the Master Indenture or the Bond Indenture. Until this Loan Agreement is terminated and all payments hereunder are made, the Corporation: (a) will pay all amounts required hereunder without abatement, deduction or setoff except as otherwise expressly provided in this Loan Agreement; (b) will not suspend or discontinue any payments due hereunder or under Obligation No. [X] for any reason whatsoever, including, without limitation, any right of setoff or counterclaim; (c) will perform and observe all its other agreements contained in this Loan Agreement; and (d) except as provided herein, will not terminate this Loan Agreement for any cause, including, without limiting the generality of the foregoing, damage, destruction or condemnation of the facilities financed or refinanced with the proceeds of the Bonds or any part thereof, commercial frustration of purpose, any change in the tax or other laws of the United States of America, the State of California or any political subdivision of either, or any failure of the City to perform and observe any agreement, whether express or implied, duty, liability or obligation arising out of or connected with this Loan Agreement. Nothing contained in this Section 3.6 shall be construed to release the City from the performance of any of the agreements on its part contained herein, and in the event the City should fail to perform any such agreement on its part, the Corporation may institute such action against the City as the Corporation may deem necessary to compel performance. The rights of the Bond Trustee or any party or parties on behalf of whom the Bond Trustee is acting shall not be subject to any defense, setoff, counterclaim or recoupment whatsoever, whether arising out of any breach of any duty or obligation of the City, the Master Trustee or the Bond Trustee owing to the Corporation, or by reason of any other indebtedness or liability at any time owing by the City, the Master Trustee or the Bond Trustee to the Corporation. OHS West:260644344.3 7 Section 3.7. Condition Precedent. The obligation of the City to make the loan as herein provided shall be subject to the receipt by it of the proceeds of the issuance and sale of the Bonds. Section 3.8. Replacement of Remarketing Agent. The Corporation hereby covenants and agrees to exercise its best efforts to appoint a Remarketing Agent, when the Bond Indenture requires a Remarketing Agent for any Series of Bonds, upon resignation of the Remarketing Agent for such Series of Bonds pursuant to the terms of the Bond Indenture. MA0 1[47092►q FINDINGS BY THE CITY; REPRESENTATIONS AND WARRANTIES OF THE CORPORATION Section 4.1. Findings by the City. The City hereby finds and determines based upon the representations, warranties and agreements of the Corporation and such other information as the City deems necessary that (i) the Corporation is a "participating health institution" and the Project is a "health facility" as such terms are defined in the Law; (ii) the loan to be made hereunder with the proceeds of the Bonds will promote the purposes of the Law by providing funds to pay the cost of acquiring, constructing, rehabilitating or improving health facilities or to refinance indebtedness incurred for that purpose; (iii) said loan is in the public interest, serves a public purpose, promotes the health, welfare and safety of the citizens of the State of California, and meets the requirements of the Law; (iv) the portion of the proceeds of the Bonds allocable to the cost of financing of the Project does not exceed the total cost thereof as determined by the Corporation; and (v) no member of the City Council, department head or other officer of the City (except a member of any board or commission) is financially interested, directly or indirectly (as interpreted in accordance with Section 608 of the Charter of the City) in the transactions contemplated by this Loan Agreement. Section 4.2. Representations and Warranties of the Corporation. The Corporation represents and warrants to the City that, as of the date of execution of this Loan Agreement and as of the date of delivery of the Bonds to the initial purchasers thereof and of Obligation No. [X] to the Bond Trustee (such representations and warranties to remain operative and in full force and effect regardless of the issuance of the Bonds or any investigation by or on behalf of the City or the results thereof): (a) the Corporation is a nonprofit public benefit corporation duly incorporated and in good standing under the laws of the State of California; the Corporation has full legal right, power and authority to enter into this Loan Agreement, the Master Indenture, Supplement No. [X] and Obligation No. [X] and to carry out and consummate all transactions contemplated hereby and thereby and by proper corporate action has duly authorized the execution, delivery and performance of this Loan Agreement, the Master Indenture, Supplement No. [X] and Obligation No. [X]; (b) the officers of the Corporation executing this Loan Agreement, Supplement No. [X] and Obligation No. [X] are duly and properly in office and fully authorized to execute the same; OHS We t:2606443443 8 (c) this Loan Agreement, Supplement No. [X] and Obligation No. [X] have been duly authorized, executed and delivered by the Corporation; (d) the Master Indenture has been duly authorized, executed and delivered by the Members, and the Members have full legal right, power and authority to enter into the Master Indenture and to carry out and consummate all transactions contemplated thereby; (e) this Loan Agreement and Obligation No. [X], when assigned to the Bond Trustee pursuant to the Bond Indenture, will constitute the legal, valid and binding agreements of the Corporation, and, in addition, with respect to Obligation No. [X] the other Members, enforceable against the Corporation and, in addition, with respect to Obligation No. [X] the other Members, in accordance with their terms for the benefit of the Holders of the Bonds, and any rights of the City and obligations of the Corporation and the other Members not so assigned to the Bond Trustee constitute the legal, valid, and binding agreements of the Corporation and the other Members enforceable against the Corporation and the other Members, as applicable, in accordance with their terms; except as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought; (f) the execution and delivery of this Loan Agreement, Supplement No. [X], Obligation No. [X] and the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, will not conflict with or constitute a violation or breach of or default under the articles of incorporation of the Corporation, its bylaws or 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 Corporation 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 Corporation, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement, the Master Indenture, Obligation No. [X], Supplement No. [X] or the financial condition, assets, properties or operations of the Obligated Group taken as a whole; (g) no consent or approval of any trustee or holder of any indebtedness of the Corporation and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Loan Agreement, Supplement No. [X] or Obligation No. [X] or heretofore required for the consummation of any transaction herein or therein or in the Master Indenture contemplated, except as have been obtained or made and as are in full force and effect; (h) there is no action, suit, proceeding, inquiry or investigation, before or by any court or federal, state, municipal or other governmental authority, pending, or to the knowledge of the Corporation, after reasonable investigation, threatened; against or affecting the Corporation or the assets, properties or operations of the Corporation which, if determined adversely to the Corporation or its interests, would have a material adverse effect upon the consummation of the transactions contemplated by, or the validity of, this Loan Agreement, the Master Indenture, Obligation No. [X] or Supplement No. [X] or upon the financial condition, OHS West:260644344.3 9 assets, properties or operations of the Obligated Group taken as a whole, and the Corporation, is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement, the Master Indenture, Obligation No. [X] or Supplement No. [X] or the financial condition, assets, properties or operations of the Obligated Group taken as a whole. All tax returns (federal, state and local) required to be filed by or on behalf of the Corporation have been filed, and all taxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Corporation, in good faith, have been paid or adequate reserves have been made for the payment thereof; (i) the Corporation enjoys the peaceful and undisturbed possession of all of the premises upon which it is operating its facilities; 0) the consolidated audited financial statements of the Corporation and its affiliates (described in such financial statements) as of September 30, 2008, and the other financial information and consolidated related statements of operations and changes in net assets and cash flows for the 13 months ended on such date (copies of which, certified by Ernst & Young, LLP independent auditors, have been furnished to the City), fairly state the financial position of the Corporation and its affiliates at September 30, 2008, and the results of operations of the Corporation and its affiliates for the 13 months ended on such date, and since September 30, 2008, there has been no material adverse change in the condition (financial or otherwise) of the Corporation and its affiliates, except as is specifically disclosed in the Official Statement; (k) no written information, exhibit or report furnished to the City by the Corporation in connection with the negotiation of this Loan Agreement, Obligation No. [X] or Supplement No. [X] (including, without limitation, information in the Official Statement of the City for the Bonds) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (1) the Corporation is an organization described in Section 501(c)(3) of the Code, is exempt from federal income tax under Section 501(a) of the Code and is not a private foundation as described in Section 509(a) of the Code; (m) the Corporation is and has at all times been in compliance with all applicable Environmental Laws in all respects material to the ability of the Corporation to perform its obligations with respect to the transactions contemplated by this Loan Agreement, the Master Indenture, Obligation No. [X] or Supplement No. [X]; (n) there has been no spill, discharge, release, cleanup, contamination of any Hazardous Materials or toxic waste or substance used, generated, treated, stored, disposed of or handled by the Corporation which spill, discharge, release, cleanup, or contamination is material to the ability of the Obligated Group taken as a whole to perform its obligations with respect to the transactions contemplated by this Loan Agreement, the Master Indenture, Obligation No. [X] or Supplement No. [X]; OHS West:260644344.3 10 (o) except for such Hazardous Materials or toxic substances or wastes as occur, are handled, and are disposed of in the ordinary course of business of the Corporation and in all respects material to the ability of the Corporation to perform its obligations with respect to the transactions contemplated by this Loan Agreement, the Master Indenture, Obligation No. [X] or Supplement No. [X], no Hazardous Materials or toxic substances or wastes are located at, or have been removed from the Corporation's properties other than as is disclosed in the Official Statement with respect to the Bonds under the caption "BONDHOLDERS' RISKS" — Other Risk Factors — Natural Gas"; (p) the Corporation is a "participating health institution" and operates "health facilities," as those terms are defined in the "Law"; and (q) the Corporation has good title to the facilities it owns and operates free and clear from all encumbrances other than Permitted Liens. /R71i(QUILT/ COVENANTS Section 5.1. Incorporation by Reference. The covenants of the Obligated Group as set forth in the Master Indenture are hereby incorporated by reference and reaffirmed for the benefit of the City and the Holders of the Bonds. Section 5.2. Prohibited Uses. No portion of the proceeds of the Bonds will be used to finance or refinance any facility, place or building used or to be used (1) primarily for sectarian instruction or study or as a place for devotional activities or religious worship or (2) by a Person that is not an organization described in Section 501(c)(3) of the Code or a governmental unit as defined in Section 150 of the Code or by an organization described in Section 501(c)(3) of the Code (including the Corporation) in an "unrelated trade or business" (as set forth in Section 513(a) of the Code), in such a manner or to such extent as would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Code. Section 5.3. Nonliability of the City. (a) The City shall not be obligated to pay the principal of, premium, if any, and interest on the Bonds, except from payments received hereunder, under Obligation No. [X] and other Revenues. Neither the faith and credit nor the taxing power of the City or the State of California or any political subdivision thereof is pledged to the payment of the principal of, premium or interest on the Bonds. The City shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind or any conceivable theory, under or by reason of or in connection with this Loan Agreement, Obligation No. [X], the Bonds or the Bond Indenture, except only to the extent amounts are received for the payment thereof from the Corporation under this Loan Agreement or under Obligation No. [X]. (b) The Corporation hereby acknowledges that the City's sole source of moneys to repay the Bonds will be provided by the payments made by the Corporation hereunder and pursuant to Obligation No. [X] and other Revenues, together with amounts on deposit in, and investment income on, certain funds and accounts held by the Bond Trustee under the Bond Indenture, and hereby agrees that if the payments to be made hereunder and under Obligation OHS West260644344.3 11 No. [X] shall ever prove insufficient to pay all principal of, premium, if any, and interest on or Tender Price of the Bonds as the same shall become due (whether by maturity, redemption, acceleration, tender or otherwise), then upon notice from the Bond Trustee, the Corporation shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal, premium, interest or Tender Price, including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Bond Trustee, the Tender Agent, if any, the Remarketing Agent (if any), the Liquidity Facility Provider, if any, the Master Trustee, the Members, the City or any third party, as the case may be. Section 5.4. Expenses. The Corporation covenants and agrees to pay and to indemnify the City and the Bond Trustee against all reasonable fees, costs and charges, including reasonable fees and expenses of attorneys, accountants, consultants and other experts, incurred in good faith and arising out of or in connection with the transactions contemplated hereby and by the Bonds, the Bond Indenture, the Master Indenture, Supplement No. [X], Obligation No. [X], or the Tax Agreement. The obligations under this Section and Section 5.6 shall remain valid and in effect notwithstanding the repayment of the loan hereunder or termination of this Loan Agreement or the Bond Indenture. Section 5.5. Tax Covenant. The Corporation covenants and agrees that it will at all times do and perform all acts and things permitted by law, the Tax Agreement (which is incorporated herein by this reference) and this Loan Agreement which are necessary to assure that interest paid on the Bonds (or any of them) will be excluded from gross income for federal income tax purposes and will take no action that would result in such interest not being so excluded. Without limiting the generality of the foregoing, the Corporation agrees to comply with the provisions of the Tax Agreement. This covenant shall survive payment in full or defeasance of the Bonds. Section 5.6. Indemnification of the Bond Trustee and the City. (a) To the fullest extent permitted by law, the Corporation agrees to indemnify, hold harmless and defend the City, the Bond Trustee, and each of their respective officers, governing members, directors, officials, employees, attorneys and agents (collectively, the "Indemnified Parties "), against any and all losses, damages, claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under any statutory law (including federal or state securities laws) or at common law or otherwise, arising out of or based upon or in any way relating to: (i) the Bonds, the Bond Indenture, this Loan Agreement, the Master Indenture, Supplement No. [X], Obligation No. [X] or the Tax Agreement or the execution or amendment hereof or thereof or in connection with transactions contemplated hereby or thereby, including the issuance, sale or resale of the Bonds; (ii) any act or omission of the Corporation or any other Members or their agents, contractors, servants, employees or licensees in connection with the Project or any of their facilities, the operation of the Project or any of their facilities, or the condition, OHS West260644344.3 12 environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of the Project or any of their facilities or any part thereof, (iii) any lien or charge upon payments by the Corporation to the City and the Bond Trustee hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the City or the Bond Trustee in respect of any portion of the Project or any other facilities of the Corporation; (iv) any violation of any Environmental Laws with respect to, or the release of any Hazardous Materials from, the Project or any other facilities of the Corporation or any part thereof, (v) the defeasance and/or redemption, in whole or in part, of the Bonds; (vi) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in any offering statement or disclosure or continuing disclosure document for the Bonds or any of the documents relating to the Bonds, or any omission or alleged omission from any offering statement or disclosure or continuing disclosure document for the Bonds of any material fact necessary to be stated therein in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (vii) any declaration of taxability of interest on the Bonds, or allegations (or regulatory inquiry) that interest on the Bonds is taxable, for federal tax purposes; (viii) the Bond Trustee's acceptance or administration of the trust of the Bond Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party; except (A) in the case of the foregoing indemnification of the Bond Trustee or any of its respective officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the negligence or misconduct of such Indemnified Party; or (B) in the case of the foregoing indemnification of the City or any of its officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Corporation, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party and reasonably acceptable to the Corporation, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Corporation shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Corporation if in the reasonable judgment of such Indemnified Party a conflict of OHS West260644344.3 13 interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel. (b) The rights of any Persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses pursuant to Section 5.4 or this Section 5.6 and Section 6.6 shall survive the final payment or defeasance of the Bonds and in the case of the Bond Trustee any resignation or removal. The provisions of this Section shall survive the termination of this Loan Agreement. Section 5.7. Credit Facility, Alternate Credit Facility. (a) The Corporation may elect to maintain or furnish, as the case may be, a Credit Facility (or, if a Credit Facility is then in existence, an Alternate Credit Facility in substitution for the Credit Facility then in effect) or otherwise make funds available pursuant to a Credit Facility to the Bond Trustee to provide for the payment of principal of and interest on any Series of Bonds in accordance with the Bond Indenture. Any election by the Corporation to maintain or furnish, as the case may be, a Credit Facility as provided by this Section, does not obligate the Corporation to extend the terms thereof or furnish any subsequent Credit Facility for such Series of Bonds. Any Credit Facility (or Alternate Credit Facility) shall be a facility provided by a commercial bank or other financial institution in an amount equal to the Required Stated Amount with a term of at least 360 days from the effective date thereof, and shall be subject to the approval of the Liquidity Facility Provider (if any) for such Bonds if the Liquidity Facility Provider is a separate entity from the Credit Facility Provider. The Corporation shall give at least forty -five (45) days' advance written notice to the Bond Trustee (unless waived by the Bond Trustee) of (1) its intent to furnish a Credit Facility or Alternate Credit Facility to the Bond Trustee, which notice shall specify the nature of such Credit Facility, the identity of the Credit Facility Provider and the proposed effective date of the Credit Facility and (2) its intent to terminate a Credit Facility then in effect, which notice shall specify the proposed termination date for such Credit Facility. (b) If a Credit Facility has been delivered or otherwise made available to the Bond Trustee in accordance with subsection (a) of this Section, and subject to the Corporation's right to terminate any Credit Facility in accordance with the immediately preceding paragraph, the Corporation (1) shall maintain the Credit Facility or an Alternate Credit Facility, in an amount equal to the Required Stated Amount prior to its termination, and (2) shall not voluntarily terminate the Credit Facility or any Alternate Credit Facility without the written consent of the Liquidity Facility Provider (if any) for the Series of Bonds subject to such Credit Facility, if such Liquidity Facility Provider is a separate entity from the applicable Credit Facility Provider. (c) The Corporation may elect to have no Credit Facility or Liquidity Facility securing or supporting any Series of Bonds provided that notice of such election, if it is a change with respect to a Series, is provided in accordance with the terms hereof and of the Bond Indenture. As of the Date of Issuance of the Bonds, there is no Credit Facility or Liquidity Facility with respect to any Series. OHS West:2606443443 14 Section 5.8. Liquidity Facility; Alternate Liquidity Facility. (a) In the case of a Conversion of a Series of Bonds from any Interest Rate Period to any other Interest Rate Period (except a Long -Term Interest Rate Period effective to the Maturity Date for such Series), including Conversion from one Long -Tenn Interest Rate Period to another Long -Term Interest Rate Period, the Corporation may furnish a Liquidity Facility (or, if a Liquidity Facility is then in existence, an Alternate Liquidity Facility in substitution for the Liquidity Facility then in effect) to provide for the purchase of Bonds of any Series upon their optional or mandatory tender in accordance with the Bond Indenture. Any election by the Corporation to furnish a Liquidity Facility as provided by this Section, does not obligate the Corporation to extend the terms thereof or furnish any subsequent Liquidity Facility for such Series of Bonds or to any other Series of Bonds. Any Liquidity Facility (or Alternate Liquidity Facility) shall be approved in writing by the Credit Facility Provider (if any) securing such Series of Bonds, if such Liquidity Facility Provider is a separate entity from the applicable Credit Facility Provider, and shall be a facility provided by a commercial bank or other financial institution in an amount equal to the Required Stated Amount for such Series with a term of at least 364 days from the effective date thereof. The Liquidity Facility Provider shall be of sufficient financial strength to cause the short-term ratings for any Series of Bonds to be secured by such Liquidity Facility Provider's Liquidity Facility to be rated at least "A -1" by S &P and VMIG -1 by Moody's or a comparable Rating Category; the Corporation shall provide written evidence of such rating to the Bond Trustee and the applicable Credit Facility Provider (if any), if such Liquidity Facility Provider is a separate entity from such Credit Facility Provider, prior to delivery of a Liquidity Facility. (b) If a Liquidity Facility has been delivered in accordance with subsection (a) of this Section with respect to a Series of Bonds, prior to the Fixed Rate Conversion Date for such Series of Bonds, the Corporation (1) shall maintain the Liquidity Facility or an Alternate Liquidity Facility, in an amount equal to the Required Stated Amount for such Series, and (2) shall not voluntarily terminate the Liquidity Facility or any Alternate Liquidity Facility without at least thirty (30) days' written notice to the Bond Trustee, the Tender Agent, the Remarketing Agent and the Credit Facility Provider (if any) for such Series of Bonds. (c) The Credit Facility Provider (if any) for a Series of Bonds shall be provided by, or at the direction of, the Corporation with notice (and a copy) of all renewals, amendments and supplements to a Liquidity Facility for such Bonds, if such Credit Facility Provider is a separate entity from the applicable Liquidity Facility Provider. Section 5.9. Self - Liquidity Arrangements. The Corporation, at its sole option, may maintain a Self - Liquidity Arrangement in lieu of a Liquidity Facility for a Series of Bonds. As of the Date of Issuance of the Bonds, there is a Self- Liquidity Arrangement in effect with respect to each Series of the Bonds. Section 5.10. Continuing Disclosure. The Corporation hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Loan Agreement or the Master Indenture, failure of the Corporation to enter into and comply with the Continuing Disclosure Certificate shall not be considered a Loan Default Event or an Event of Default; however, the Bond Trustee may (and, at the request of any Participating Underwriter (as defined in the OHS West:260644344.3 15 Continuing Disclosure Certificate) or the Holders of at least 25% in aggregate principal amount of Outstanding Bonds, shall) or any Bondholder or Beneficial Owner may, take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Corporation to comply with its obligations under this Section 5.10. Section 5.11. Compliance with Bond Indenture. The Corporation hereby covenants and agrees that it will comply with and carry out all of the provisions of the Bond Indenture to be performed by the Corporation or the Obligated Group. Section 5.12. Waiver of Personal Liability. No official, officer, agent or employee of the City or any member, officer, director, agent or employee of the Corporation or any other Member shall be individually or personally liable for the payment of any principal of or interest or premium on any Bonds or any other sum hereunder or under the Bond Indenture or be subject to any personal liability or accountability by reason of the execution and delivery of this Loan Agreement; but nothing herein shall relieve any such member, director, officer, agent or employee from the performance of any official duty provided by law or by this Loan Agreement. Section 5.13. Appointment of Remarketing Agent. The Corporation hereby covenants and agrees that it will appoint one or more Remarketing Agents, on behalf of the City, at least 45 days prior to the last day of the initial Long -Term Interest Rate Period to perform the duties thereof set out in the Bond Indenture. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1. Events of Default. Each of the following events shall constitute and be referred to herein as a "Loan Default Event": (a) failure by the Corporation to pay in full any payment required hereunder or under Obligation No. [X] when due, whether on an interest payment date at maturity, upon a date fixed for prepayment, by declaration, upon tender of the Bonds for purchase pursuant to the Bond Indenture, or otherwise pursuant to the terms hereof or thereof; (b) if any material representation or warranty made by the Corporation herein or made by the Corporation or any other Member in any document, instrument or certificate famished to the Bond Trustee or the City in connection with the issuance of Obligation No. [X] or the Bonds shall at any time prove to have been incorrect in any respect as of the time made; (c) if the Corporation shall fail to observe or perform any other covenant, condition, agreement or provision in this Loan Agreement on its part to be observed or performed, other than as referred to in subsection (a) or (b) of this Section, or shall breach any warranty by the Corporation herein contained, for a period of sixty (60) days after written notice, specifying such failure or breach and requesting that it be remedied, has been given to the Corporation by the City, the Credit Facility Provider (if any) or the Bond Trustee; except that, if such failure or breach can be remedied but not within such sixty -day period and if the Corporation has taken all action reasonably possible to remedy such failure or breach within such sixty -day period, such failure or breach shall not become a Loan Default Event for so long as the OHS WesC260644344.3 16 Corporation shall diligently proceed to remedy such failure or breach in accordance with and subject to any directions or limitations of time established by the Bond Trustee with the written consent of the Credit Facility Provider (if any); (d) if the Corporation 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 or for the whole or any substantial part of the Corporation's facilities; (e) if a court of competent jurisdiction shall enter an order, judgment or decree declaring the Corporation an insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the Corporation or of the whole or any substantial part of the Corporation's facilities, or approving a petition filed against the Corporation seeking reorganization of the Corporation 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, (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 Corporation's facilities, and such custody or control shall not be terminated within sixty (60) days from the date of assumption of such custody or control; (g) if the Corporation shall abandon the Corporation's facilities or any substantial part thereof and such abandonment shall continue for a period of sixty (60) days after written notice thereof shall have been given to the Corporation by the City or the Bond Trustee; (h) any Event of Default as defined in and under the Bond Indenture; or (i) any Event of Default as defined in and under the Master Indenture. Section 6.2. Remedies on Default. If a Loan Default Event shall occur, then, and in each and every such case during the continuance of such Loan Default Event, the Bond Trustee on behalf of the City, but subject to the limitations in the Bond Indenture as to the enforcement of remedies, take such action as it deems necessary or appropriate to collect amounts due hereunder, to enforce performance and observance of any obligation or agreement of the Corporation hereunder or to protect the interests securing the same, and may, without limiting the generality of the foregoing: (a) Exercise any or all rights and remedies given hereby or available hereunder or given by or available under any other instrument of any kind securing the Corporation's performance hereunder (including, without limitation, Obligation No. [XI and the Master Indenture); (b) By written notice to the Corporation declare all Loan Repayments and Additional Payments to be immediately due and payable under this Loan Agreement, whereupon the same shall become immediately due and payable; and OHS West260644344.3 17 (c) Take any action at law or in equity to collect the payment required hereunder then due, whether on the stated due date or by declaration of acceleration or otherwise, for damages or for specific performance or otherwise to enforce performance and observance of any obligation, agreement or covenant of the Corporation hereunder. Section 6.3. Discontinuance or Abandonment of Default Proceedings. If any proceeding taken by the Bond Trustee on account of any Loan Default Event shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Bond Trustee, then and in every case the City, the Bond Trustee, the Credit Facility Provider (if any) and the Corporation shall be restored to their former position and rights hereunder, respectively, and all rights, remedies and powers of the City, the Credit Facility Provider (if any), the Bond Trustee and the Corporation shall continue as though no such proceeding had taken place. Section 6.4. Remedies Cumulative. No remedy conferred upon or reserved to the City or the Bond Trustee hereby or now or hereafter existing at law or in equity or by statute, shall be exclusive but shall be cumulative with all others. Such remedies are not mutually exclusive and no election need be made among them, but any such remedy or any combination of such remedies may be pursued at the same time or from time to time so long as all amounts realized are properly applied and credited as provided herein. No delay or omission to exercise any right or power accruing upon any Loan Default Event shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient by the City or the Bond Trustee. In the event of any waiver of a Loan Default Event hereunder, the parties shall be restored to their former positions and rights hereunder, but no such waiver shall extend to any other or subsequent Loan Default Event or impair any right arising as a result thereof To entitle the Bond Trustee to exercise any remedy reserved to it, it shall not be necessary to give notice other than as expressly required herein. Section 6.5. Application of Moneys Collected. Any amounts collected pursuant to action taken under this Article VI shall be applied in accordance with the provisions of Article VII of the Bond Indenture and to the extent applied to the payment of amounts due on the Bonds shall be credited against amounts due on Obligation No. [X]. Section 6.6. Attorney's Fees and Other Expenses. If, as a result of the occurrence of a Loan Default Event, the City, the Credit Facility Provider (if any), or the Bond Trustee employs attorneys or incurs other expenses for the collection of payments due hereunder or for the enforcement of performance or observance of any obligation or agreement on the part of the Corporation, the Corporation will, on demand, reimburse the City, the Credit Facility Provider (if any) or the Bond Trustee, as the case may be, for the reasonable fees of such attorneys and such other reasonable expenses so incurred. Section 6.7. Notice of Default. The Corporation agrees that, as soon as is practicable, and in any event within ten (10) days, the Corporation will furnish the Bond Trustee and the Credit Facility Provider (if any) notice of any event which is a Loan Default Event pursuant to Section 6.1 which has occurred and is continuing on the date of such notice, which notice shall set forth the nature of such event and the action which the Corporation proposes to take with respect thereto; provided, however, that with respect to a Loan Default Event pursuant OHS West:260644344.3 18 to Section 6.1(a), the Bond Trustee shall give the Corporation and the Credit Facility Provider (if any) immediate telephonic notice on the date such default occurs. ARTICLE VII MISCELLANEOUS Section 7.1. Amendments and Supplements. This Loan Agreement may be amended, changed or modified only as provided in Section 6.08 of the Bond Indenture. Section 7.2. Time of the Essence; Non - Business Days. Time shall be of the essence for purposes of this Loan Agreement. When any action is provided for herein to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day other than a Business Day, such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the specified period. Section 7.3. Binding Effect. This instrument shall inure to the benefit of and shall be binding upon the City and the Corporation and their respective successors and assigns, subject to the limitations contained herein; provided, however, that the Bond Trustee shall have only such duties and obligations as are expressly given to it hereunder. Section 7.4. Entire Agreement, Third -Party Beneficiaries. This Loan Agreement, together with all agreements and documents incorporated by reference herein, constitutes the entire agreement of the parties and is not subject to modification, amendment, qualification or limitation except as expressly provided herein. The City and the Corporation recognize and agree that the Credit Facility Provider (if any) is a third -party beneficiary to the provisions of this Loan Agreement. No other Person shall be deemed a third -party beneficiary hereof. Section 7.5. Severability. If any covenant, agreement or provision, or any portion thereof contained in this Loan Agreement, where the application thereof to any Person or circumstance is held to be unconstitutional, invalid or unenforceable, the remainder of this Loan Agreement and the application of 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 Loan Agreement shall remain valid, and the Bondholders shall retain all valid rights and benefits accorded to them under this Loan Agreement and the Constitution and laws of the State of California. Section 7.6. Notices. (a) Unless otherwise expressly specified or permitted by the terms hereof, all notices, consents or other communications required or permitted hereunder shall be deemed to have been sufficiently given or served for all purposes by being delivered or sent by Electronic Means receipt confirmed or by being mailed by first -class mail, postage prepaid, addressed as follows: OHS West:260644344.3 19 (1) to the City at: City of Newport Beach 3300 Newport Boulevard; P.O. Box 1768 Newport Beach, California 92658 -8915 Attention: Telephone: (949) 644 -3123 Facsimile: (949) 644 -3339 E -mail: (2) to the Corporation at: Hoag Memorial Hospital Presbyterian One Hoag Drive; P.O. Box 6100 Newport Beach, California 92658 -6100 Attention: Chief Financial Officer Telephone: (949) 764 -4411 Facsimile: (949) 764 -5746 E-mail: (3) to the Bond Trustee at: Wells Fargo Bank, National Association 707 Wilshire Boulevard, 17th Floor Los Angeles, CA 90017 Attention: Corporate Trust Services Telephone: (213) 614 -3350 Facsimile: (213) 614 -3355 E -mail: (b) The Corporation, the Authority or the Bond Trustee may at any time and from time to time by notice in writing to the other Persons listed in Section 7.6(a) designate a different address or addresses for notice under this Loan Agreement. Section 7.7. Term. Except as otherwise provided herein this Loan Agreement shall remain in full force and effect from the date of execution hereof until no Bonds remain Outstanding under the Bond Indenture and all payments required hereunder have been made. Section 7.8. Countemarts. This Loan Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Section 7.9. Governing Law; Venue. This Loan Agreement shall be governed by and construed according to the Constitution and laws of the State of California applicable to contracts made and performed within such State. OHS Wesk260644344.3 20 IN WITNESS WHEREOF, the City and the Corporation have caused this Loan Agreement to be executed in their respective names as of the date first written above. CITY OF NEWPORT BEACH By: Mayor [Seal] Attest: 0 City Clerk HOAG MEMORIAL HOSPITAL PRESBYTERIAN Authorized Representative OHS WesC260644344.3 21 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; INTERPRETATION; CONTENTS OF CERTIFICATES AND OPINIONS Section1.1. Definitions .......................................................................... ..............................2 Section 1.2. Interpretation ...................................................................... ..............................2 Section 1.3. Content of Certificates and Opinions ................................. ..............................3 ARTICLE II ISSUANCE OF BONDS AND OBLIGATION NO. [X] Section2.1. The Bonds .......................................................................... ..............................3 Section 2.2. Issuance of Obligation No. [X] ......................................... ............................... 3 Section 2.3. Restrictions on Number and Transfer of Obligation No. [X] .......................... 3 ARTICLE III LOAN OF PROCEEDS; PAYMENTS Section 3.1. Loan of Proceeds; Payments of Principal, Premium and Interest ....................4 Section 3.2. Additional Payments .......................................................... ..............................4 Section 3.3. Credits for Payments ......................................................... ............................... 5 Section3.4. Prepayment ......................................................................... ..............................6 Section 3.5. Payment of Tender Price of Purchased Bonds .................. ............................... 6 Section 3.6. Obligations Unconditional ................................................ ............................... 7 Section 3.7. Condition Precedent .......................................................... ............................... 8 Section 3.8. Replacement of Remarketing Agent ................................. ............................... 8 ARTICLE IV FINDINGS BY THE CITY; REPRESENTATIONS AND WARRANTIES OF THE CORPORATION Section 4.1. Findings by the City .......................................................... ............................... 8 Section 4.2. Representations and Warranties of the Corporation ......... ............................... 8 ARTICLE V COVENANTS Section 5.1. Incorporation by Reference ............................................. ............................... 11 Section 5.2. Prohibited Uses ................................................................. .............................11 Section 5.3. Nonliability of the City ..................................................... .............................11 Section5.4. Expenses ............................................................................ .............................12 Section 5.5. Tax Covenant .................................................................... .............................12 Section 5.6. Indemnification of the Bond Trustee and the City ............ .............................12 Section 5.7. Credit Facility; Alternate Credit Facility .......................... .............................14 Section 5.8. Liquidity Facility; Alternate Liquidity Facility ................. .............................15 Section 5.9. Self- Liquidity Arrangements ............................................ .............................15 Section 5.10. Continuing Disclosure ....................................................... .............................15 Section 5.11. Compliance with Bond Indenture ..................................... .............................16 OHS West260644344.3 _i_ TABLE OF CONTENTS (continued) Page Section 5.12. Waiver of Personal Liability ............................................. .............................16 Section 5.13. Appointment of Remarketing Agent ................................. .............................16 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.1. Events of Default ............................................................... .............................16 Section 6.2. Remedies on Default ......................................................... .............................17 Section 6.3. Discontinuance or Abandonment of Default Proceedings .............................18 Section 6.4. Remedies Cumulative ....................................................... .............................18 Section 6.5. Application of Moneys Collected ..................................... .............................18 Section 6.6. Attorney's Fees and Other Expenses ................................ .............................18 Section 6.7. Notice of Default ............................................................... .............................18 ARTICLE VII MISCELLANEOUS Section 7.1. Amendments and Supplements ......................................... .............................19 Section 7.2. Time of the Essence; Non - Business Days ........................ .............................19 Section 7.3. Binding Effect ................................................................... .............................19 Section 7.4. Entire Agreement; Third -Party Beneficiaries ................... .............................19 Section7.5. Severability ....................................................................... .............................19 Section7.6. Notices ............................................................................... .............................19 Section7.7. Term ................................................................................ ............................... 20 Section7.8. Counterparts .................................................................... ............................... 20 Section 7.9. Governing Law; Venue ..................................................... .............................20 OHS WesG260644344.3 _ii-