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HomeMy WebLinkAbout24 - Bond Purchase Agreement - 2011A 2011B 2011CBOND PURCHASE CONTRACT CITY OF NEWPORT BEACH REVENUE BONDS (HOAG MEMORIAL HOSPITAL PRESBYTERIAN) SERIES 2011A, 2011B AND 2011C CHIC_5134515.1 F &L Draft Dated 12/15/10 (clean version) TABLE OF CONTENTS Section Page 1. Purchase, Sale and Delivery of the Bonds ............................................. ..............................1 Exhibit C 2. Representations, Warranties and Agreements of the City ..................... ..............................4 Form of Opinion of City Attorney 3. Conditions to Obligations of the Underwriters ...................................... ..............................6 Exhibit F 4. Conditions to the Obligations of the City ............................................. .............................12 Form of Opinion of Bank's Counsel 5. Expenses/ Fees ....................................................................................... .............................13 6. Notices .................................................................................................. .............................13 7. Governing Law ..................................................................................... .............................13 8. Miscellaneous ....................................................................................... .............................13 9. No Fiduciary or Advisory Role ............................................................. .............................13 10. Counterparts .......................................................................................... .............................14 Exhibit A Letter of Representation Exhibit B Schedule of Maturity Dates, Interest Rate Periods, Interest Payment Dates, Initial -i- CHIC_5134515.1 Interest Rates and Prices Exhibit C Form of Agreed -Upon Procedures Letter of Ernst & Young LLP Exhibit D Form of Opinion of City Attorney Exhibit E Form of Opinion of Counsel to the Borrower Exhibit F Form of Opinion of Underwriters' Counsel Exhibit G Form of Opinion of Bank's Counsel Exhibit H Officer's Certificate -i- CHIC_5134515.1 $ CITY OF NEWPORT BEACH REVENUE BONDS (HOAG MEMORIAL HOSPITAL PRESBYTERIAN) SERIES 2011A, 2011B AND 2011C BOND PURCHASE CONTRACT 12011 City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92658 Ladies and Gentlemen: Citigroup Global Markets Inc. (the "Representative "), acting on behalf of itself and J.P. Morgan Securities LLC (collectively, the "Underwriters "), offers to enter into this Bond Purchase Contract, including the Letter of Representation attached hereto as Exhibit A (the "Letter of Representation "), being herein called the "Bond Purchase Contract," with the City of Newport Beach (the "City ") with the approval of Hoag Memorial Hospital Presbyterian, as Borrower (the `Borrower "), which, upon acceptance, will be binding upon the City and the Underwriters. This offer is made subject to the City's acceptance on or before 11:59 p.m., Newport Beach, California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Representative upon written notice delivered to the City by the Representative at any time prior to acceptance. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Bond Indenture (defined below). 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein and in the Letter of Representation, dated the date hereof, executed and delivered contemporaneously herewith by the Borrower and attached hereto as Exhibit A, the Underwriters hereby agree to purchase from the City, and the City hereby agrees to sell to the Underwriters, all (but not less than all) of the (i) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A (the "Series 2011A Bonds "), (ii) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 201113 (the "Series 2011B Bonds ") and (iii) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011C (the "Series 2011C Bonds" and together with the Series 2011A Bonds and the Series 2011B Bonds, the "Bonds ") identified on Exhibit B hereto, such Bonds to be dated the date of delivery, to be issued in the aggregate principal amounts and CHIC_5134515.1 bearing interest at the rates and maturing on the dates set forth in Exhibit B hereto. The aggregate purchase price for the Bonds shall be $ , consisting of the par amount of the Bonds of $ less an underwriting discount of $ The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable as provided in, that certain Bond Indenture dated as of February 1, 2011 (the "Bond Indenture "), by and between the City and Wells Fargo Bank, National Association, as bond trustee (the "Trustee "). The Bonds shall be limited obligations of the City payable solely from Loan Repayments (as that term is defined in the Bond Indenture) made by the Borrower under that certain Loan Agreement dated as of February 1, 2011 (the "Loan Agreement ") by and between the City and the Borrower, from payments made on Obligation No. 10 (as hereinafter defined) by the Obligated Group (as hereinafter defined), from amounts held in certain funds established pursuant to the Bond Indenture (including certain proceeds of the sale of the Bonds), and from proceeds of draws on the Letter of Credit during its term. The Bonds will be further secured by an assignment of the right, title and interest of the City in the Loan Agreement and in Obligation No. 10, to the extent and as more particularly described in the Bond Indenture, and the Letter of Credit (defined below). The Bonds will initially bear interest at a Weekly Interest Rate. During each Weekly Interest Rate Period, the Bonds will bear interest at the Weekly Interest Rate, which will be determined by as remarketing agent (the "Remarketing Agent "), pursuant to a Remarketing Agreement dated as of February 1, 2011 (the "Remarketing Agreement ") by and between the Borrower and the Remarketing Agent. Subject to the terms of a Reimbursement Agreement, dated as of February 1, 2011 (the "Reimbursement Agreement "), between the Borrower and JPMorgan Chase Bank, National Association (the `Bank "), the Bank will issue its irrevocable transferable direct pay Letter of Credit (the "Letter of Credit ") in favor of the Trustee to provide for the payment of (i) principal of and interest on, the Bonds when due, whether upon maturity, redemption or acceleration and (ii) the purchase price of Bonds optionally or mandatorily tendered for purchase, to the extent such purchase price is not paid from proceeds of remarketing such tendered Bonds. The proceeds from the sale of the Bonds will be loaned to the Borrower pursuant to the Loan Agreement and will be used, together with other available funds to (1) refund the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2009B and 20090, (2) finance the acquisition and construction of certain additions and improvements to, and equipment for, the acute care hospital and other health facilities owned by the members of the Obligated Group and (3) pay certain costs of issuing the Bonds. The Borrower, as Credit Group Representative (as defined in the Master Indenture, defined below) will issue its Obligation No. 10 ( "Obligation No. 10 ") to evidence the obligation of the Obligated Group Members to make payments sufficient to pay the principal of, premium, if any, and interest on the Bonds pursuant to the Supplemental Master Indenture for Obligation No. 10, dated as of February 1, 2011 (the "Supplemental Master Indenture for Obligation No. 10 "), by and between the Borrower, as Credit Group Representative, and Wells Fargo Bank, National Association, as master trustee (the "Master Trustee "), supplementing the Master Indenture dated as of May 1, 2007 (the "Master Indenture ") between the Borrower, -2- CHIC_5134515.1 Newport Healthcare Center, LLC ( "NHC ") and such other Members as may join the obligated group as defined therein (the "Obligated Group ") and the Master Trustee. The Borrower, as Credit Group Representative, will issue its Obligation No. l l ( "Obligation No. 11" and together with Obligation No. 10, the "Obligations ") to evidence and secure the obligation of the Obligated Group Members to the Bank under the Reimbursement Agreement pursuant to the Supplemental Master Indenture for Obligation No. 11, dated as of February 1, 2011 (the "Supplemental Master Indenture for Obligation No. 1 I" and together with Supplemental Master Indenture for Obligation No. 10, the "Supplemental Master Indentures "), by and between the Borrower, as Credit Group Representative, and the Master Trustee, supplementing the Master Indenture. The Borrower will undertake, pursuant to a Continuing Disclosure Certificate, dated as of the date of issuance and delivery of the Bonds (the "Continuing Disclosure Certificate "), by and between the Borrower and the Trustee, to provide certain annual financial information and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement (as defined below) and will also be set forth in the Official Statement (as defined below). (b) The Borrower has delivered to the Representative copies of the Preliminary Official Statement dated January , 2012 (the "Preliminary Official Statement'). Until the Official Statement (as defined below) has been prepared and is available for distribution, the Borrower shall provide to the Representative, sufficient quantities of the Preliminary Official Statement as the Underwriters deem necessary in order to comply with Rule 15c2 -12 of the Securities and Exchange Commission ( "Rule 15c2 -12 ") with respect to distribution to each potential customer, upon request, of a copy of the Preliminary Official Statement. (c) The Borrower shall deliver to the Representative copies of the Official Statement dated February , 2011 (or such earlier or later date as shall be agreed to by the City, the Borrower and the Representative) (the "Official Statement'), signed on behalf of the City by the Mayor of the City and approved by the Borrower by its Senior Vice President and Chief Financial Officer (or such other officer as is acceptable to the Representative) in substantially the same form of the Preliminary Official Statement, with only such changes therein as shall have been approved by the City, the Borrower and the Representative (the delivery of the Official Statement by the Borrower and the acceptance thereof by the Representative to constitute in all events such approval). The Official Statement shall be delivered in sufficient quantity as may reasonably be requested by the Representative in order to comply with Rule 15c2 -12 and the rules of the Municipal Securities Rulemaking Board ( "MSRB ") within seven business days of the date hereof and, in the event the Closing Date is less than seven business days after the date hereof, upon request of the Representative, in sufficient time to accompany any confirmation requesting payment from any customers of the Underwriters. (d) The City has deemed the information contained in the Preliminary Official Statement, and will deem the information contained in the Official Statement, regarding the City under the captions "THE CITY" and "LITIGATION — The City ", to be final as of its date. The -3- CHIC_5134515.1 City hereby ratifies, confirms and approves the use and distribution by the Underwriters prior to the date hereof of the Preliminary Official Statement, and hereby authorizes the Underwriters to use and distribute the Master Indenture, the Preliminary Official Statement and the Official Statement (on or prior to the date hereof) and drafts of the Bond Indenture and the Loan Agreement in connection with the offer and sale of the Bonds. (e) No later than 1:00 p.m., New York time, on February , 2011, or at such earlier or later time or date as shall be agreed by the City and the Representative (such time and date being herein referred to as the "Closing Date "), the City will deliver to or upon the order of The Depository Trust Company ( "DTC ") in New York, New York, for the account of the Underwriters (or such other location as may be designated by the Representative and approved by the City), the Bonds in the form of a separate, single, fully registered Bond (which may be typewritten) for each series of Bonds (all of the Bonds bearing CUSIP numbers), duly executed by the City and authenticated by the Trustee, and will deliver to the Representative at the offices of Orrick, Herrington & Sutcliffe LLP in Sacramento, California, the other documents herein mentioned. The Underwriters will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (a) of this Section by certified or official bank check payable in, or wire transfer of, immediately available funds (such delivery and payment being herein referred to as the "Closing "). Notwithstanding the foregoing, neither the failure to print CUSIP numbers on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriters to accept delivery of and pay for the Bonds on the Closing Date in accordance with the terms of this Bond Purchase Contract. (f) The Underwriter shall have received from Ernst & Young LLP (i) on or prior to the date hereof, an executed copy of its letter, substantially in the form of Exhibit C hereto (the "Procedures Letter "), and (ii) on or prior to the date of printing thereof, its consent to the inclusion of its audit report on the financial statements of the Borrower that are included in the Official Statement and to the references to its name in the Official Statement. 2. Representations, Warranties and Agreements of the City. The City represents and warrants to and agrees with the Underwriters and the Borrower as follows: (a) The City is and will be at the Closing Date a municipal corporation and charter city duly organized and existing under a freeholder's charter under the Constitution and laws of the State of California (the "State ") and pursuant to the Charter of the City with the full power and authority to issue the Bonds and to execute this Bond Purchase Contract, the Bond Indenture and the Loan Agreement. (b) When delivered to and paid for by the Underwriters at the Closing in accordance with the provisions of this Bond Purchase Contract, the Bonds will have been duly authorized, executed, issued and delivered, and will constitute valid and binding limited obligations of the City in conformity with, and entitled to the benefit and security of, the Bond Indenture (subject as to enforcement to any applicable bankruptcy, reorganization, insolvency, moratorium or other law or laws affecting the enforcement of creditors' rights generally or -4- CHIC_5134515.1 against municipal corporations such as the City from time to time in effect and further subject to the availability of equitable remedies). (c) By official action of the City prior to or concurrently with the acceptance hereof, the City has consented to the distribution of the Preliminary Official Statement and the Official Statement and authorized and approved the execution and delivery of and the performance by the City of, the obligations on its part contained in the Bonds, the Loan Agreement, the Bond Indenture and this Bond Purchase Contract and the consummation by the City of all other transactions contemplated by the Preliminary Official Statement, the Official Statement and this Bond Purchase Contract, including approval of the issuance and delivery of the Letter of Credit. (d) Other than as described in the Preliminary Official Statement or the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, known to the City to be pending or threatened against the City seeking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting any proceedings of the City taken concerning the issuance or sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, in any way contesting the validity or enforceability of the Bonds, the Bond Indenture, the Loan Agreement or this Bond Purchase Contract or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, as amended or supplemented, or the existence or powers of the City relating to the issuance of the Bonds or any of the transactions contemplated by the Preliminary Official Statement, the Official Statement or this Bond Purchase Contract. (e) The statements and information contained in the Official Statement relating to the City and its functions, duties and responsibilities under the captions "THE CITY" and "LITIGATION — The City" as of its date and the date hereof did not and, as of the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) The City will furnish, at the expense of the Borrower, such information, execute such instruments and take such other action in cooperation with the Representative as the Representative may reasonably request in order for the Underwriters (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and to continue such qualification in effect so long as required for distribution of the Bonds; provided, however, that in no event shall the City be required to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not now so subject. (g) If, between the date of this Bond Purchase Contract and up to and including the 25th day following the end of the underwriting period (as such term is defined in Rule 15c2 -12), an event occurs, of which the City has knowledge, which might or would cause the information relating to the City and its functions, duties and responsibilities contained in the -5- CHIC_5134515.1 Official Statement under the captions "THE CITY" and "LITIGATION — The City," as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein not misleading in the light of the circumstances under which it was presented or if the City is notified by the Borrower pursuant to Section 20 of the Letter of Representation, or otherwise requested to amend, supplement or otherwise change the Official Statement, the City will notify the Representative and the Borrower. If, in the opinion of the Representative, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will amend or supplement the Official Statement in a form and in a manner approved by the Representative, provided all expenses thereby incurred will be paid by the Borrower or the Representative pursuant to Section 23 of the Letter of Representation. (h) The execution and delivery of the Bonds, the Loan Agreement, the Bond Indenture and this Bond Purchase Contract, and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a breach of or default under any existing law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Bond Indenture and the Loan Agreement. (i) The execution and delivery of this Bond Purchase Contract by the City shall constitute a representation by the City to the Representative that the representations and agreements contained in this Section 2 are true as of the date hereof; and as to all matters of law the City is relying on the advice of counsel to the City; and provided further that no member of the City shall be individually liable for the breach of any representation, warranty or agreement contained herein. 3. Conditions to Obligations of the Underwriters. The obligation of the Underwriters to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Representative, to the accuracy in all material respects of the representations, warranties and agreements on the part of the City contained herein or on the part of the Borrower contained in the Letter of Representation as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City or the Borrower made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City or the Borrower of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions. (a) At the Closing Date, the Master Indenture shall be in full force and effect, and the Supplemental Master Indentures, the Obligations, the Bond Indenture, the Official Statement, the Loan Agreement, the Remarketing Agreement, the Reimbursement Agreement, the Letter of Credit and the Continuing Disclosure Certificate shall have been duly authorized, executed and delivered by the respective parties thereto, in substantially the forms heretofore -6- CHIC_5134515.1 submitted to the Representative, with only such changes as shall have been agreed to in writing by the Representative and the City, and said agreements shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Representative, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated thereby and by this Bond Purchase Contract all such actions as, in the opinion of Orrick, Herrington & Sutcliffe LLP, bond counsel ( "Bond Counsel') and City of Newport Beach City Attorney ( "City Attorney "), shall be necessary and appropriate. (b) At the Closing Date, the Official Statement shall not have been amended, modified or supplemented, except as may have been agreed to by the Representative. (c) At the time of Closing, there shall not have occurred any change or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings or operations of the Borrower from that set forth in the Official Statement that in the judgment of the Representative, is material and adverse and that makes it, in the judgment of the Representative, impracticable or inadvisable to proceed with the offer, sale or delivery of the Bonds on the terms and in the manner contemplated in the Official Statement. (d) Between the date hereof and the Closing Date, the market price or marketability of the Bonds, at the initial offering prices set forth in the Official Statement, shall not have been materially adversely affected, in the judgment of the Representative (evidenced by a written notice to the City and the Borrower terminating the obligation of the Underwriters to accept delivery of and pay for the Bonds), by reason of any of the following: (1) an event shall occur which makes untrue or incorrect in any material respect, as of the time of such event, any statement or information contained in the Official Statement or which is not reflected in the Official Statement but should be reflected therein in order to make the statements contained therein not misleading in any material respect and requires an amendment of or supplement to the Official Statement and the effect of which, in the reasonable judgment of the Underwriters, would materially adversely affect the market for the Bonds or the sale, at the contemplated offering prices (or yields), by the Underwriters; or (2) legislation shall be introduced in, enacted by, reported out of committee, or recommended for passage by State of California, either House of the Congress, or recommended to the Congress or otherwise endorsed for passage (by press release, other form of notice or otherwise) by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or legislation is proposed for consideration by either such committee by any member thereof or presented as an option for consideration by either such committee by the staff or such committee or by the staff of the Joint Committee on Taxation of the Congress of the United States, or a bill to amend the Code (which, if enacted, would be effective as of a date prior to the Closing) shall be filed in either House, or a decision by a court of -7- CHIC_5134515.1 competent jurisdiction shall be rendered, or a regulation or filing shall be issued or proposed by or on behalf of the Department of the Treasury or the Internal Revenue Service of the United States, or other agency of the federal government, or a release or official statement shall be issued by the President, the Department of the Treasury or the Internal Revenue Service of the United States, in any such case with respect to or affecting (directly or indirectly) the taxation of interest received on obligations of the general character of the Bonds which, in the reasonable judgment of the Representative, materially adversely affects the market for the Bonds or the sale, at the contemplated offering prices (or yields), by the Underwriters; or (3) a stop order, ruling, regulation, proposed regulation or statement by or on behalf of the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering, sale or distribution of obligations of the general character of the Bonds is in violation or would be in violation of any provisions of the Securities Act of 1933, as amended (the "Securities Act'), the Securities Exchange Act of 1934, as amended (the "Exchange Act') or the Trust Indenture Act of 1939, as amended; or (4) legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of Securities Act, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering, or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect; (5) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national or international emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the reasonable judgment of the Representative, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or (6) there shall have occurred a general suspension of trading, minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges or prices for securities shall have been required on the New York Stock Exchange or other national stock exchange whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental agency having jurisdiction or any national -g- CHIC_5134515.1 securities exchange shall have: (i) imposed additional material restrictions not in force as of the date hereof with respect to trading in securities generally, or to the Bonds or similar obligations; or (ii) materially increased restrictions now in force with respect to the extension of credit by or the charge to the net capital requirements of underwriters or broker - dealers such as to make it, in the reasonable judgment of the Representative, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or (7) a general banking moratorium shall have been declared by federal or New York or Massachusetts state authorities or a major financial crisis or a material disruption in commercial banking or securities settlement or clearances services shall have occurred such as to make it, in the judgment of the Representative, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or (8) a downgrading or suspension of any rating (without regard to credit enhancement) by Moody's Investors Service, Inc. ( "Moody's "), Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P ") or Fitch Ratings ( "Fitch ") of any debt securities issued by or on behalf of the Borrower, or (ii) there shall have been any official statement as to a possible downgrading (such as being placed on "credit watch" or "negative outlook" or any similar qualification) of any rating by Moody's, S &P or Fitch of any debt securities issued by or on behalf of the Borrower, including the Bonds. (e) At or prior to the Closing Date, the Representative and the City shall have received executed or, as noted below, conformed copies of the following documents, in each case satisfactory in form and substance to the Representative and the City: (1) The Master Indenture (conformed copy), Obligation No. 10 (specimen copy), Obligation No. 11 (specimen copy), the Supplemental Master Indentures, the Bond Indenture, the Loan Agreement, the Remarketing Agreement, the Reimbursement Agreement and the Continuing Disclosure Certificate, duly executed and delivered by the respective parties thereto, with such amendments, modifications or supplements as may have been agreed to in writing by the Representative; (2) The unqualified approving opinion of Bond Counsel, dated the Closing Date and addressed to the City, in substantially the form attached as Appendix E to the Official Statement, together with a reliance letter addressed to the Underwriters and a supplemental opinion of Bond Counsel in a form acceptable to the Representative, dated the Closing Date and addressed to the Underwriters, to the effect that: (i) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; -9- CHIC_5134515.1 (ii) this Bond Purchase Contract has been duly executed and delivered by the City and, assuming due authorization, execution and delivery by the Representative and approval by the Borrower, is a valid and binding agreement of the City, subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles and to the exercise of judicial discretion in appropriate cases; and (iii) the statements contained in the Official Statement under the captions "THE BONDS," "SECURITY FOR THE BONDS," "TAX MATTERS," "APPENDIX C — Summary of Principal Documents," insofar as such statements expressly summarize certain provisions of the Bonds, the Master Indenture, the Obligations, the Bond Indenture, the Loan Agreement, the Supplemental Master Indentures or the opinion of Bond Counsel concerning certain tax matters, are accurate in all material respects; (3) The opinion of City Attorney, dated the Closing Date, in substantially the form attached hereto as Exhibit D; (4) The opinion, dated the Closing Date and addressed to the City, the Underwriters and the Bank, of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Borrower, in substantially the form attached hereto as Exhibit E; (5) The opinion of Foley & Lardner LLP, counsel to the Underwriters, dated the Closing Date and addressed to the Underwriters, in substantially the form attached hereto as Exhibit F; (6) The opinion of counsel to the Bank, dated the Closing Date and addressed to the City, the Trustee, the Borrower and the Underwriters, in a form satisfactory to Bond Counsel and Underwriters' Counsel; (7) A certificate, dated the Closing Date and signed by an authorized official of the City, to the effect that (a) to the best of such official's knowledge, no litigation is pending or threatened against the City (i) to restrain or enjoin the issuance or delivery of any of the Bonds or the collection of the Revenues (as defined in the Bond Indenture) pledged under the Bond Indenture; (ii) in any way contesting or affecting the authority for the issuance of the Bonds or the validity of the Bonds, the Bond Indenture, the Loan Agreement, the Letter of Credit or this Bond Purchase Contract; or (iii) in any way contesting the existence or powers of the City; and (b) no event affecting the City or its functions, duties and responsibilities has occurred since the date of the Official Statement that would cause as of the Closing Date any statement or information concerning the City or its functions, duties and responsibilities contained in the Official Statement under the captions "THE CITY" and "LITIGATION — The City" to contain any untrue -10- CHIC_5134515.1 statement of a material fact or omit to state a material fact necessary in order to make the statements made concerning the City or its functions, duties and responsibilities contained under such caption not misleading in the light of the circumstances under which they were made; (8) A certificate of the Senior Vice President and Chief Financial Officer of the Borrower, or such other officer as is acceptable to the Representative and the City, dated the Closing Date, substantially in the form attached hereto as Exhibit G; (9) A certificate of the Bank, dated the Closing Date, in a form satisfactory to Bond Counsel and Underwriters' Counsel; (10) Certified copies of the resolution of the City authorizing the execution and delivery of the Bond Indenture, the Loan Agreement, the Bonds, this Bond Purchase Contract, the Preliminary Official Statement and the Official Statement; (11) Copies of each of the Borrower's and NHC's articles of incorporation or certificate of formation, certified as of a date not earlier than fifteen (15) days prior to the Closing Date by the Secretary of State of the State of California or Delaware, as applicable; a good standing certificate of recent date certified by the Franchise Tax Board of the State of California; and certified copies of the Borrower's and NHC's bylaws or operating agreement; (12) Certified copies of the resolutions of the Board of Directors of the Borrower authorizing the execution and delivery of the Loan Agreement, the Supplemental Master Indentures, the Obligations, the Continuing Disclosure Certificate, the Remarketing Agreement, the Reimbursement Agreement and the Letter of Representation, and approving this Bond Purchase Contract, the Bond Indenture, the Preliminary Official Statement and the Official Statement (and distribution thereof); (13) Certificates of the Borrower and the City deeming the Preliminary Official Statement final for purposes of Rule 15c2 -12. (14) Evidence that the Borrower has been determined to be an organization described in Section 501(c)(3) of the Code; (15) A Tax Agreement in form satisfactory to Bond Counsel; (16) Satisfactory evidence that the Bonds have been assigned the long- term municipal bond ratings of " ' by S &P and " " by Moody's and the short -term municipal bond ratings of "" by S &P and " " by Moody's; (17) Two copies of the Official Statement executed as required by Section 1(b) hereof; -11- CHIC_5134515.1 (18) A specimen copy of the Letter of Credit; (19) A letter of Ernst & Young LLP dating down the Procedures Letter; (20) A properly completed and executed Form 8038 of the Internal Revenue Service relating to the Bonds; and (21) Such additional corporate resolutions, legal opinions, certificates, proceedings, instruments and other documents as the Representative, the City or Bond Counsel may reasonably request to evidence compliance by the City, the Borrower and NHC with legal requirements, the truth and accuracy, as of the Closing Date, of the representations of the City contained herein, of the Borrower contained in the Letter of Representation, and the due performance or satisfaction by the City, the Borrower and NHC at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the City, the Borrower and NHC. If the City shall be unable to satisfy the conditions to the Underwriters' obligations contained in this Bond Purchase Contract or if the Underwriters' obligations shall be terminated for any reason permitted herein, this Bond Purchase Contract shall terminate and neither the Underwriters nor the City shall have any further obligation hereunder. 4. Conditions to the Obligations of the City. The obligations of the City to issue and deliver the Bonds on the Closing Date shall be subject, at the option of the City, to the performance by the Underwriters of their obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions: (a) The Supplemental Master Indentures, the Obligations, the Bond Indenture, the Loan Agreement, the Continuing Disclosure Certificate and this Bond Purchase Contract shall have been executed by the parties thereto; (b) The Letter of Credit shall have been duly issued and delivered; (c) No order, decree, injunction, ruling or regulation of any court, regulatory agency, public board or body shall have been issued, nor shall any legislation have been enacted, with the purpose or effect, directly or indirectly, of prohibiting the offering, sale or issuance of the Bonds as contemplated hereby or by the Preliminary Official Statement or the Official Statement; and (d) The documents contemplated by Section 3(e) (other than those required to be delivered by or on behalf of the City) shall have been delivered in substantially the forms set forth herein or in form and substance satisfactory to Bond Counsel. -12- CHIC_5134515.1 5. Expenses/Fees. All reasonable expenses and costs of the City incident to the performance of its obligations in connection with the authorization, issuance and sale of the Bonds to the Underwriters, including printing costs, fees and expenses of consultants, fees and expenses of rating agencies, fees and expenses of Bond Counsel, City Attorney, Underwriters' Counsel (including fees in connection with qualification of the Bonds for sale under the Blue Sky or other securities laws and regulations of various jurisdictions and preparation and printing of a blue sky survey and legal investment memorandum) and counsel for the Borrower and NHC shall be paid by the Borrower. The Borrower shall pay for expenses incurred on behalf of the Borrower's employees which are incidental to implementing this Bond Purchase Contract, including but not limited to, meals, transportation, lodging and entertainment of those employees (some of which expenses may have been paid for by the Underwriters and included in the expense component of the underwriting discount). All fees and expenses to be paid by the Borrower pursuant to this Bond Purchase Contract may be paid from Bond proceeds to the extent permitted by the Bond Indenture and Tax Agreement. 6. Notices. Any notice or other communication to be given to the City under this Bond Purchase Contract may be given by delivering the same in writing at the City's address as set forth above, and any such notice or other communication to be given to the Underwriters may be given by delivering the same in writing to Citigroup Global Markets hic., 444 South Flower Street, 27th Floor, Los Angeles, California 90071 and J.P. Morgan Securities LLC, 560 Mission Street, 3`d Floor, San Francisco, California 94105. The approval of the Representative when required hereunder or the determination of its satisfaction as to any document referred to herein shall be in writing signed by the Representative and delivered to you. 7. Governing Law. This Bond Purchase Contract shall be construed in accordance with and governed by the Constitution and the laws of the State of California. 8. Miscellaneous. This Bond Purchase Contract is made solely for the benefit of the City, the Borrower and the Underwriters (including the successors or assigns of each), and not other person, partnership, association or corporation shall acquire or have any right hereunder or by virtue hereof. 9. No Fiduciary or Advisory Role. The City acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Bond Purchase Contract is an arm's- length commercial transaction between the City and the Underwriters, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriters are and have been acting solely as principals and are not acting as the agent, advisor or fiduciary of the City, (iii) the Underwriters have not assumed an advisory or fiduciary responsibility in favor of -13- CHIC_5134515.1 the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or are currently providing other services to the City on other matters) and the Underwriters have no obligation to the City with respect to the offering contemplated hereby except the obligations expressly set forth in this Bond Purchase Contract and (iv) the City has consulted its own legal, financial and other advisors to the extent it has deemed appropriate. 10. Counterparts. This Bond Purchase Contract may be executed in any number of counterparts and all such counterparts shall together constitute one and the same instrument. -14- CHIC_5134515.1 CITIGROUP GLOBAL MARKETS INC., as Representative of the Underwriters Director Signature Page to Bond Purchase Contract for the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 201 IA, 2011B and 2011C Accepted and Agreed to: CITY OF NEWPORT BEACH By: Mayor Attest: By: City Clerk Signature Page to Bond Purchase Contract for the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 201 IA, 2011B and 2011C Approve d: HOAG MEMORIAL HOSPITAL PRESBYTERIAN By: Authorized Representative Signature Page to Bond Purchase Contract for the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 201 IA, 2011B and 201 IC EXHIBIT A TO BOND PURCHASE CONTRACT LETTER OF REPRESENTATION 2011 City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92658 Citigroup Global Markets Inc., as Representative of the Underwriters 444 South Flower Street 27`h Floor Los Angeles, California 90071 Ladies and Gentlemen: The City of Newport Beach (the "City ") proposes to enter into a Loan Agreement with Hoag Memorial Hospital Presbyterian (the `Borrower ") dated as of February 1, 2011 (the "Loan Agreement "). Pursuant to a Bond Purchase Contract, dated the date hereof (the "Bond Purchase Contract"), between the City and Citigroup Global Markets Inc. (the `Representative "), acting on behalf of itself and on behalf of J.P. Morgan Securities LLC (collectively, the "Underwriters ") which the Borrower has approved, the City proposes to sell the (i) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A (the "Series 2011A Bonds "), (ii) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011B (the "Series 2011B Bonds ") and (iii) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011C (the "Series 2011C Bonds" and together with the Series 2011A Bonds and the Series 2011B Bonds, the "Bonds ") identified on Exhibit B hereto. The offering of the Bonds is described in a Preliminary Official Statement dated January , 2011 (the "Preliminary Official Statement ") and in an Official Statement dated , 2011 (the "Official Statement "). The Bonds shall be issued and secured under the provisions of that certain Bond Indenture dated as of February 1, 2011 (the `Bond Indenture "), by and between the City and Wells Fargo Bank, National Association, as bond trustee (the "Trustee "). The Bonds shall be payable from payments made by the Borrower under the Loan Agreement from payments made on Obligation No. 10 (as hereinafter defined) by the Obligated Group (as hereinafter defined) and from amounts held in certain funds established pursuant to the Bond Indenture (including certain proceeds of the sale of the Bonds). The Bonds will be further secured by (i) an assignment of the right, title and interest of the City in the Loan Agreement and in Obligation No. 10, to the extent and as more particularly described in the Bond Indenture and (ii) a letter of A -1 CHIC_5134515.1 credit (the "Letter of Credit "), issued and delivered by JPMorgan Chase Bank, National Association (the "Bank ") pursuant to the terms of a Reimbursement Agreement dated as of February 1, 2011, between the Borrower and the Bank. All terms not otherwise defined herein shall have the meanings ascribed thereto in the Bond Purchase Contract. The proceeds from the sale of the Bonds will be loaned to the Borrower pursuant to the Loan Agreement and will be used, together with other available funds to (1) refund the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2009B and 2009C, (2) finance the acquisition and construction of certain additions and improvements to, and equipment for, the acute care hospital and other health facilities owned by the members of the Obligated Group and (3) pay certain costs of issuing the Bonds. The Borrower, as Credit Group Representative (as defined in the Master Indenture, defined below) will issue its Obligation No. 10 ( "Obligation No. 10 ") to evidence the obligation of the Obligated Group Members to make payments sufficient to pay the principal of, premium, if any, and interest on the Bonds pursuant to the Supplemental Master Indenture for Obligation No. 10, dated as of February 1, 2011 (the "Supplemental Master Indenture for Obligation No. 10 "), by and between the Borrower, as Credit Group Representative, and Wells Fargo Bank, National Association, as master trustee (the "Master Trustee "), supplementing the Master Indenture dated as of May 1, 2007 (the "Master Indenture ") between the Borrower, Newport Healthcare Center, LLC ( "NHC'� and such other Members as may join the obligated group as defined therein (the "Obligated Group ") and the Master Trustee. The Borrower, as Credit Group Representative, will issue its Obligation No. 11 ( "Obligation No. 11" and together with Obligation No. 10, the "Obligations ") to evidence and secure the obligation of the Obligated Group Members to the Bank under the Reimbursement Agreement pursuant to the Supplemental Master Indenture for Obligation No. 11, dated as of February 1, 2011 (the "Supplemental Master Indenture for Obligation No. 11" and together with Supplemental Master Indenture for Obligation No. 10, the "Supplemental Master Indentures "), by and between the Borrower, as Credit Group Representative, and the Master Trustee, supplementing the Master Indenture. Pursuant to the terms of the Master Indenture and the Supplemental Master Indentures, the Borrower, NBC and any future Members of the Obligated Group will be jointly and severally obligated to make payments on the Obligations according to the terms thereof when due. The Borrower and NHC are presently the only Members of the Obligated Group. The Borrower will undertake, pursuant to a Continuing Disclosure Certificate, dated as of the date of issuance and delivery of the Bonds (the "Continuing Disclosure Certificate "), by and between the Borrower and the Trustee, to provide certain annual financial information and notices of the occurrence of certain events, if material. In order to induce the City and the Underwriters to enter into the Bond Purchase Contract and to make the sale and purchase and reoffering of the Bonds therein contemplated, the Borrower hereby represents, warrants and agrees with each of you as follows: A -2 CHIC_5134515.1 1. The Borrower is a nonprofit public benefit corporation duly organized and existing under the laws of the State of California. 2. NHC is a limited liability company duly organized and existing under the laws of the State of California. 3. The Borrower has, and at the Closing Date will have, full legal right, power and authority to enter into and perform its obligations under this Letter of Representation, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures, the Obligations, the Reimbursement Agreement, the Remarketing Agreement and the Continuing Disclosure Certificate, to approve the Bond Purchase Contract, the Bond Indenture and the Official Statement and to carry out and consummate all transactions contemplated by the Bond Purchase Contract, the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures, the Obligations, this Letter of Representation, the Continuing Disclosure Certificate, the Remarketing Agreement, the Reimbursement Agreement and the Official Statement, and by proper corporate action has duly authorized the execution and delivery of this Letter of Representation, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures, the Obligations, the Reimbursement Agreement, the Remarketing Agreement and the Continuing Disclosure Certificate, the approval of the Bond Purchase Contract, the Bond Indenture and the Official Statement (including the distribution thereof) and the obtaining of the Letter of Credit. 4. NHC has, and at the Closing Date will have, full legal right, power and authority to perform its obligations under the Master Indenture, the Supplemental Master Indentures and the Obligations. 5. The officers of the Borrower and NHC executing the Master Indenture and the officers of the Borrower executing this Letter of Representation, the Loan Agreement, the Supplemental Master Indentures, the Remarketing Agreement, the Obligations, the Reimbursement Agreement, the Remarketing Agreement and the Continuing Disclosure Certificate, approving the Bond Purchase Contract, the Bond Indenture and the Official Statement (including the distribution thereof) and obtaining the Letter of Credit are, or were at the time of execution of such document, fully authorized to execute and approve the same. 6. The Bond Purchase Contract, the Bond Indenture, the Preliminary Official Statement and the Official Statement have been duly approved by the Borrower; this Letter of Representation has been duly authorized, executed and delivered by the Borrower; the Letter of Credit has been duly obtained by the Borrower; the Loan Agreement, the Supplemental Master Indentures, the Obligations, the Reimbursement Agreement, the Remarketing Agreement and the Continuing Disclosure Certificate have been duly authorized and, at the Closing, will have been duly executed and delivered by the Borrower. 7. This Letter of Representation constitutes and the Loan Agreement, the Remarketing Agreement, the Reimbursement Agreement and the Continuing Disclosure Certificate will constitute the legal, valid and binding agreements of the Borrower, and the Master Indenture constitutes, and the Supplemental Master Indentures and the Obligations will constitute, the legal, valid and binding agreements of the Borrower and NHC, in each case A -3 CHIC_5134515.1 enforceable against the Borrower and NHC, as applicable, in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors' rights generally, including without limitation self -help remedies and applicable foreclosure procedures, and also limited by the application of equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law and except as enforcement may be held to be against public policy. 8. Neither the Borrower nor NHC is in any material way (i) in violation of any applicable law or administrative regulation of the state in which it is incorporated or the United States of America or any applicable judgment or decree, which violation would materially adversely affect the financial position or operations of the Borrower and the Obligated Group taken as a whole, or (ii) in default under any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Borrower or NHC is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute an event of default under any such instrument which default would materially adversely affect the financial position or operations of the Borrower taken as a whole. 9. The execution and delivery of this Letter of Representation, the approval of the Bond Purchase Contract, the Bond Indenture and the Official Statement; at the Closing, the execution and delivery of the Loan Agreement, the Supplemental Master Indentures, the Obligations, the Reimbursement Agreement, the Remarketing Agreement and the Continuing Disclosure Certificate; the consummation of the transactions contemplated herein and therein; 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 (with due notice or the passage of time or both) under the articles of incorporation of the Borrower, its bylaws or the articles of organization of NHC or its operating agreement 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 Borrower or NHC is a party or by which they or their 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 or NHC, 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 the Bond Purchase Contract, the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures, the Obligations, the Remarketing Agreement, the Reimbursement Agreement, the Remarketing Agreement, the Continuing Disclosure Certificate, this Letter of Representation or the Official Statement or the financial condition, assets, properties or operations of the Borrower or the Obligated Group taken as a whole. 10. No consent or approval of any trustee or holder of any indebtedness of the Borrower or NEC, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority (except in connection with Blue Sky proceedings) is necessary in connection with the execution and delivery of this Letter of Representation; at the Closing, the execution and delivery of the Loan Agreement, the Supplemental Master Indentures, the Obligations, the Reimbursement Agreement, the Remarketing Agreement or the Continuing A -4 CHIC_5134515.1 Disclosure Certificate; the approval of the Bond Purchase Contract, the Bond Indenture or the Official Statement; the obtaining of the Letter of Credit; or the consummation of any transaction therein or herein contemplated, except as have been obtained or made and as are in full force and effect (or, with respect to the consummation of any transaction therein or herein contemplated, except as are expected to be obtained in due course). 11. Except as described in the Preliminary Official Statement and Official Statement, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other government authority pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or NHC or the assets, properties or operations of the Borrower or NHC which, if determined adversely to the Borrower or NHC or their interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Bond Purchase Contract, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures, the Obligations, this Letter of Representation, the Official Statement, the Reimbursement Agreement, the Remarketing Agreement or the Continuing Disclosure Certificate or upon the financial condition, assets, properties or operations of the Borrower or the Obligated Group taken as a whole. Neither the Borrower nor NHC is in violation of any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which violation might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Bond Purchase Contract, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures, the Remarketing Agreement, the Reimbursement Agreement, the Obligations, the Continuing Disclosure Certificate, this Letter of Representation and the Official Statement or the financial conditions, assets, properties or operations of the Borrower or the Obligated Group taken as a whole. 12. The Borrower is a corporation organized and operated exclusively for charitable purposes, not for pecuniary profit, and no part of the net earnings of the Borrower inures to the benefit of any private shareholder or individual. The Borrower is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, which is exempt from federal income taxes under Sections 501(a) of the Internal Revenue Code of 1986, as amended, except for unrelated trade or business income subject to taxation under Section 511 of said Code. 13. The proceeds of the Bonds will not be used by an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, in an "unrelated trade or business" within the meaning of Section 513(a) of the Internal Revenue Code of 1986, as amended, or by any other person, in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest on any of the Bonds under Section 103 of said Code. 14. Each of the Borrower and NHC has all necessary power and authority to conduct the business now being conducted by it and the business contemplated by the Master Indenture, the Supplemental Master Indentures, the Obligations, the Loan Agreement, the Continuing Disclosure Certificate, the Remarketing Agreement and the Reimbursement Agreement and has all necessary power and authority to enter into the respective documents mentioned above and to approve the Bond Purchase Contract and the Official Statement. A -5 CHIC_5134515.1 15. Each of the Borrower and NHC has good and marketable title to its Property, free and clear from all encumbrances other than Permitted Liens (as such terms are defined in the Master Indenture). 16. Each of the Borrower and NHC has all permits, licenses, accreditations and certifications, including, without limitation, licensing and certification of the Property (as defined in the Master Indenture), necessary to conduct its business as it is presently being conducted. 17. The Borrower is eligible under applicable statutes, regulations and administrative practices for payment under Medicare and Medicaid. 18. The Borrower is currently participating in the programs of Medicare and Medicaid, and there are in full force and effect arrangements providing for payments to the Borrower with respect to patients enrolled in such programs. 19. The Borrower has not incurred any material liability, direct or contingent, and there has been no material adverse change in the financial position, results of operations or condition, financial or otherwise, of the Borrower since September 30, 2010, which is not described in the Official Statement, whether or not arising from transactions in the ordinary course of business. 20. Between the date hereof and the date of the Closing, the Borrower and NHC will not, without the prior written consent of the Representative, except as described in or contemplated by the Official Statement, incur any material liabilities, direct or contingent, other than in the ordinary course of business. 21. As of the date thereof, the Preliminary Official Statement did not contain any untrue statement of a material fact or omit 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; provided, however, that the Borrower makes no representation or warranty as to the information contained in or omitted from the Preliminary Official Statement in reliance upon and in conformity with information furnished in writing to the Borrower by or on behalf of the Representative, the City or the Bank specifically for inclusion therein. 22. As of the date thereof and at the Closing Date, the Official Statement, as amended or supplemented pursuant to the Bond Purchase Contract or this Letter of Representation, will not contain any untrue statement of a material fact or omit 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; provided, however, that the Borrower makes no representation or warranty as to the information contained in or omitted from the Official Statement in reliance upon and in conformity with information furnished in writing to the Borrower by or on behalf of the Representative, the City or the Bank specifically for inclusion therein. 23. The Borrower will deliver or cause to be delivered to the Representative copies of the Official Statement, signed on behalf of the City by the Mayor of the City and approved by the Borrower by its Senior Vice President and Chief Financial Officer (or such other officer as is acceptable to the Representative) in substantially the form of the Preliminary Official Statement, A -6 CHIC_5134515.1 with only such changes therein as shall have been approved by the City, the Borrower and the Representative (the delivery of the Official Statement by the Borrower and the acceptance thereof by the Representative to constitute in all events such approval). The Official Statement shall be delivered in sufficient quantity as may reasonably be requested by the Representative in order to comply with Rule 15c2 -12 of the Securities and Exchange Commission and the rules of the Municipal Securities Rulemaking Board ( "MSRB ") within seven business days of the date hereof and, in the event the Closing Date is less than seven business days after the date hereof, upon request of the Underwriters, in sufficient time to accompany any confirmation requesting payment from any customers of the Underwriters. Except for Permitted Omissions, the Borrower has deemed the Preliminary Official Statement final as of its date. As used herein "Permitted Omissions" means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per series, delivery dates, ratings, other terms of the Bonds depending on such matters and the identity of the Underwriters. The Borrower hereby ratifies, confirms and approves the use and distribution by the Underwriters prior to the date hereof of the Preliminary Official Statement, and hereby authorizes the Underwriters to use and distribute the Official Statement, the Master Indenture, the Bond Indenture and the Loan Agreement in connection with the offer and sale of the Bonds. If, between the date hereof and up to and including the 25th day following the end of the underwriting period (as defined in Rule 15c2 -12 of the Securities and Exchange Commission), any event relating to or affecting the Borrower, NHC or any future Members of the Obligated Group or their respective present or proposed facilities shall occur which might or would cause the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, the Borrower shall notify the City and the Representative and if, in the opinion of the Borrower, the City or the Representative such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Borrower will request the City to cause the Official Statement to be amended or supplemented in a form and in a manner approved by the Representative. 24. For twenty -five days from the date of the end of the underwriting period (as defined in Rule 150-12 of the Securities and Exchange Commission), the Borrower will (a) not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, any of you shall reasonably object in writing or which shall be disapproved by your respective counsel and (b) if any event relating to or affecting the City, the Borrower or NHC or any future Members of the Obligated Group or their respective present or proposed facilities shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriters or the City, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, forthwith prepare and furnish to the Representative and the City (at the expense of the Borrower for 90 days from the date of Closing, and thereafter at the expense of the Underwriters) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriters and counsel to the City) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading, in the light of the circumstances existing at the time the Official Statement is delivered to the purchaser. For the purposes of this section, the A -7 CHIC_5134515.1 Borrower will furnish such information with respect to itself, NHC, any future Members of the Obligated Group and their respective present and proposed facilities as any of you may from time to time reasonably request. 25. (a) The Borrower agrees to indemnify and hold harmless the Underwriters, the directors, officers, employees and agents of the Underwriters and each person who controls the Underwriters within the meaning of either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Official Statement (or in any supplement or amendment thereto), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Borrower will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Official Statement, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information furnished to the Borrower by or on behalf of the Underwriters specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Borrower may otherwise have. (b) The Borrower agrees to indemnify and hold harmless the City, the directors, officers, employees and agents of the City and each person who controls the City within the meaning of either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Official Statement (or in any supplement or amendment thereto), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Borrower will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Official Statement, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information furnished to the Borrower by or on behalf of the City specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Borrower may otherwise have. A -8 CHIC_5134515.1 (c) The Underwriters agree to indemnify and hold harmless the Borrower, each of its officials, directors, trustees, officers and employees, and each person who controls the Borrower within the meaning of either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, to the same extent as the foregoing indemnity from the Borrower to the Underwriters, but only with reference to written information relating to the Underwriters furnished to the Borrower by or on behalf of the Underwriters specifically for inclusion in the Official Statement (or in any amendment or supplement thereto). This indemnity agreement will be in addition to any liability which the Underwriters may otherwise have. The Borrower acknowledges that the statements set forth in the section entitled "UNDERWRITING," the statements relating to the Remarketing Agent in the first paragraph of the section entitled "THE BONDS — Certain Considerations Relating to the Remarketing of the Bonds" and the paragraph related to stabilization on the inside cover page of the Official Statement, constitute the only information furnished in writing by or on behalf of the Underwriters for inclusion in the Official Statement (or in any amendment or supplement thereto). (d) Promptly after receipt by an indemnified party under this Section 25 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 25 notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a), (b) or (c) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and /or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. A -9 CHIC_5134515.1 (e) In the event that the indemnity provided in paragraph (a) or (c) of this Section 25 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Borrower and the Underwriters agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses ") to which the Borrower and the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the Borrower on the one hand and by the Underwriters on the other from the offering of the Bonds. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Borrower and the Underwriters shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Borrower on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. In no case shall the Underwriters be responsible for any amount in excess of the purchase discount or commission applicable to the Bonds purchased by the Underwriters hereunder. Benefits received by the Borrower shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) received by it, and benefits received by the Underwriters shall be deemed to be equal to the total purchase discounts and commissions in each case set forth in the Official Statement under the section entitled "UNDERWRITING." Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Borrower on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, information and opportunity to correct or prevent such untrue statement or omission. The Borrower and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (e), no person guilty of fraudulent misrepresentation (within the meaning of Section I l(f) of the Securities Act of 1933, as amended) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 25, each person who controls the Underwriters within the meaning of either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and each director, officer, employee and agent of the Underwriters shall have the same rights to contribution as the Underwriters, and each person who controls the Borrower within the meaning of either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and each official, director, officer and employee of the Borrower shall have the same rights to contribution as the Borrower, subject in each case to the applicable terms and conditions of this paragraph (e). 26. The Borrower has filed all annual reports when and where they are required to be filed pursuant to any Continuing Disclosure Certificate executed and delivered by the Borrower pursuant to Rule 15c2 -12 of the Securities and Exchange Commission that has been binding upon the Borrower, and has filed all required notices of "listed events," as described in Rule 15c2 -12, when and where such notices are required to be filed pursuant to such Continuing Disclosure Certificates. 27. The representations, warranties, agreements and indemnities herein shall survive the Closing under the Bond Purchase Contract, and any investigation made by or on behalf of any of you or any person who controls any of you of any matters described in or related to the A -10 CHIC_5134515.1 transactions contemplated hereby and by the Bond Purchase Contract, the Official Statement, the Loan Agreement, the Bond Indenture, the Master Indenture, the Supplemental Master Indentures, the Remarketing Agreement, the Reimbursement Agreement, the Obligations and the Continuing Disclosure Certificate. 28. The Borrower hereby agrees to pay the expenses described in Section 5 of the Bond Purchase Contract (which are the responsibility of the Borrower), and to pay any expenses incurred in amending or supplementing the Official Statement pursuant to the Bond Purchase Contract or this Letter of Representation. 29. This Letter of Representation shall be binding upon the Borrower and inure solely to the benefit of each of you and, to the extent set forth herein, persons controlling any of you, and their respective members, officers, employees, agents, successors and assigns, and no other person or firm shall acquire or have any right under or by virtue of this Letter of Representation. No recourse under or upon any obligation, covenant or agreement contained in this Letter of Representation shall be had against any officer or director of the Borrower as individuals, except as caused by their bad faith. 30. The Borrower acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to the Bond Purchase Contract is an arm's- length commercial transaction between the City and the Underwriters, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriters are and have been acting solely as principals and are not acting as the agent, advisor or fiduciary of the Borrower, (iii) the Underwriters have not assumed an advisory or fiduciary responsibility in favor of the Borrower with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or are currently providing other services to the Borrower on other matters) and the Underwriters have no obligation to the Borrower with respect to the offering contemplated hereby except the obligations expressly set forth in the Bond Purchase Contract and (iv) the Borrower has consulted its own legal, financial and other advisors to the extent it has deemed appropriate. 31. This Letter of Representation may be executed in any number of counterparts and all such counterparts shall together constitute one and the same instrument. A -11 CHIC_5134515.1 Very truly yours, HOAG MEMORIAL HOSPITAL PRESBYTERIAN By: Authorized Representative Signature Page to Letter of Representation for the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C Accepted and Agreed to: CITIGROUP GLOBAL MARKETS INC., as Representative of the Underwriters IM Director Signature Page to Letter of Representation for the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 201 IA, 2011B and 2011C Accepted and Agreed to: CITY OF NEWPORT BEACH By: Mayor Signature Page to Letter of Representation for the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C EXHIBIT B TO BOND PURCHASE CONTRACT SCHEDULE OF MATURITY DATES, INTEREST RATE PERIODS, INTEREST PAYMENT DATES, INITIAL INTEREST RATES AND PRICES Series 2011A Bonds Principal Maturity Interest Initial Interest Interest Payment Initial Amount Date Rate Period Payment Date Date Generally Interest Rate Price Mandatory Sinking Fund Redemption: [To be provided] Optional /Extraordinary Optional Redemption The Bonds shall be subject to optional and extraordinary optional redemption under the circumstances as described in the Bond Indenture. B -1 CHIC_5134515.1 Series 2011B Bonds Principal Maturity Interest Initial Interest Interest Payment Initial Amount Date Rate Period Payment Date Date Generally Interest Rate Price Mandatory Sinking Fund Redemption: [To be provided] Optional /Extraordinary Optional Redemption The Bonds shall be subject to optional and extraordinary optional redemption under the circumstances as described in the Bond Indenture. B -1 CHIC_5134515.1 Series 2011C Bonds Principal Maturity Interest Initial Interest Interest Payment Initial Amount Date Rate Period Payment Date Date Generally Interest Rate Price Mandatory Sinking Fund Redemption: [To be provided] Optional /Extraordinary Optional Redemption The Bonds shall be subject to optional and extraordinary optional redemption under the circumstances as described in the Bond Indenture. B -1 CHIC_5134515.1 EXHIBIT C TO BOND PURCHASE CONTRACT FORM OF AGREED -UPON PROCEDURES LETTER OF ERNST & YOUNG LLP [See attached] C -1 CHIC_5134515.1 EXHIBIT D TO BOND PURCHASE CONTRACT FORM OF OPINION OF CITY ATTORNEY February , 2011 City of Newport Beach, California Newport Beach, California Citigroup Global Markets Inc., Los Angeles, California J.P. Morgan Securities LLC San Francisco, California Hoag Memorial Hospital Presbyterian Newport Beach, California Re: $ City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C (the "Bonds ") Ladies and Gentlemen: This opinion is delivered to you pursuant to the Bond Purchase Contract dated , 2011 (the "Purchase Contract', between the City of Newport Beach, California (the "City ") and Citigroup Global Markets Inc., acting on behalf of itself and on behalf of J.P. Morgan Securities LLC, which Hoag Memorial Hospital Presbyterian (the `Borrower ") has approved, in connection with the issuance by the City of (i) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A (the "Series 2011A Bonds "), (ii) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011B (the "Series 2011B Bonds ") and (iii) $ aggregate principal amount of the City's Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011C (the "Series 2011C Bonds" and together with the Series 2011A Bonds and the Series 2011B Bonds, the "Bonds ") pursuant to a Bond Indenture dated as of February 1, 2011 (the `Bond Indenture "), between the City and Wells Fargo Bank, National Association, as bond trustee (the "Bond Trustee "). The Bonds are being issued for the purpose of making a loan of the proceeds thereof to the Borrower pursuant to a Loan Agreement dated as of February 1, 2011 (the "Loan Agreement) between the City and the Borrower. The opinions or conclusions expressed herein are based on an analysis of existing laws, regulations, rulings ands court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. We have assumed the genuineness of all documents D -1 CHIC_5134515.1 and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the City. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such documents. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Bond Indenture, the Loan Agreement and the Purchase Contract may be subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws affecting creditors' rights, to the application of equitable principles and to the exercise of judicial discretion in appropriate cases. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents. As counsel for the City in connection with the issuance of the Bonds, I have examined certain documents, records and proceedings as I have deemed necessary and appropriate for the purpose of this opinion and, on the basis of the foregoing and upon consideration of applicable law, I am of the opinion that: 1. The City is a municipal corporation and charter city duly organized and validly existing under a freeholder's charter under the Constitution and laws of the State of California and has corporate power and authority to consummate and carry out all transactions contemplated by the Purchase Contract. 2. The Preliminary Official Statement dated January , 2011 (the "Preliminary Official Statement ") has been duly authorized and delivered and the Official Statement dated , 2011 (the "Official Statement ") has been duly authorized, executed and delivered, in each case by the City. 3. Without assuming any responsibility for the accuracy, completeness or fairness of the information or the statements contain in the Official Statement, to my knowledge, the information relating to the City in its limited role as the conduit issuer of the Bonds contained in the Official Statement under the headings "THE CITY" and "LITIGATION — The City" does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4. The Resolution of the City Council of the City approving and authorizing the execution and delivery of the Bond Indenture, the Purchase Contract, the Bonds, the Loan Agreement and the Official Statement was duly adopted at a meeting of the City Council which was called and held pursuant to law and all public notices required by law and the procedural rules of the City Council and at which a quorum was present and acting throughout. 5. There is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body known to be pending or threatened against or affecting the City to restrain or enjoin the issuance of delivery of the Bonds or the collection of revenues pledged under the Bond Indenture or the assignment of the Loan Agreement under the Bond Indenture, in any way contesting or affecting any authority for the issuance of the Bonds or the D -2 CHIC_5134515.1 validity of the Bonds, the Loan Agreement, the Bond Indenture or the Purchase Contract or in any way contesting the existence or powers of the City with respect to the issuance of the Bonds or the security therefore wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Preliminary Official Statement, the Official Statement, the Bond Indenture, the Loan Agreement or the Purchase Contract or the validity of the Bonds. 6. The execution and delivery of the Bonds, the Bond Indenture, the Loan Agreement and the Purchase Contract and compliance with the provisions thereof under the circumstances contemplated thereby do not and will not conflict with or constitute on the part of the City a breach or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject, the result of which breach or default would be to materially adversely affect the City's ability to perform its obligations under the Loan Agreement, the Bond Indenture, the Bonds or the Purchase Contract. 7. The Loan Agreement, the Bond Indenture, the Bonds and the Purchase Contract have been duly executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, are valid and binding obligations of the City enforceable in accordance with their terms subject to laws relating to bankruptcy, insolvency, reorganization or creditors' rights generally and to the application of equitable principles if equitable remedies are sought. 8. All right and title to the payments due under the Loan Agreement have been duly and legally assigned and pledged to the Bond Trustee for the payment of the principal of, premium, if any, and interest on the Bonds. Respectfully Submitted, CITY ATTORNEY D -3 CHIC_5134515.1 EXHIBIT E TO BOND PURCHASE CONTRACT FORM OF OPINION OF COUNSEL TO THE BORROWER February , 2011 City of Newport Beach Newport Beach, California Citigroup Global Markets Inc. Los Angeles, California J.P. Morgan Securities LLC San Francisco, California Wells Fargo Bank, National Association as bond trustee and as master trustee Los Angeles, California JPMorgan Chase Bank, National Association New York, New York Re: $ City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C Ladies and Gentlemen: We have acted as special counsel to Hoag Memorial Hospital Presbyterian, a California nonprofit public benefit corporation (the "Corporation ") and Newport Healthcare Center, LLC, a Delaware limited liability company ( "NHC "), in connection with the sale and delivery of $ City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C (collectively, the "Bonds "); however, we are not general counsel to the Corporation or NHC. Our opinion is based on the following general transaction structure: The Bonds are being executed and delivered pursuant to a Bond Indenture, dated as of February 1, 2011 (the "Indenture ") between the City of Newport Beach (the "City") and Wells Fargo Bank, National Association, as trustee (the "Bond Trustee "). The proceeds of the Bonds are being loaned to the Corporation under the terms of a Loan Agreement, dated as of February 1, 2011 (the "Loan Agreement') between the City and the Corporation. The Bonds will be supported by a letter of credit issued by JPMorgan Chase Bank, National Association (the `Bank "), pursuant to that certain Reimbursement Agreement dated as of February 1, 2011 (the E -1 CHIC_5134515.1 "Reimbursement Agreement'), between the Corporation and the Bank. Capitalized terms used but not defined in this opinion have the respective meanings ascribed thereto in the Indenture. The Corporation is issuing its (a) Obligation No. 10 ( "Obligation No. 10 ") to evidence its obligation to make payments sufficient to pay the principal of, premium, if any, interest on and purchase price of the Bonds and (b) Obligation No. 11 ( "Obligation No. 11 ") in connection with a letter of credit supporting the payment of the Bonds, in each case pursuant to a Master Trust Indenture dated as of May 1, 2007 (as amended, supplemented and otherwise modified, the "Master Indenture "), by and among the Corporation, NHC and Wells Fargo Bank, National Association, as master trustee (the "Master Trustee "). In connection with the Bonds, the Corporation and the Master Trustee are also entering into (i) Supplemental Master Indenture For Obligation No. 10, dated as of February 1, 2011 ( "Supplemental Master Indenture No. 10 ") and (ii) Supplemental Master Indenture For Obligation No. 11, dated as of February 1, 2011 ( "Supplemental Master Indenture No. 1 I "). The Bonds are being sold pursuant to a Bond Purchase Contract dated 2011 between the City and Citigroup Global Markets Inc., acting on behalf of itself and on behalf of J.P. Morgan Securities LLC, and approved by the Corporation (the "Purchase Contract'). A preliminary official statement dated January , 2011 (the "Preliminary Official Statement') and an official statement dated , 2011 (the "Official Statement') have been prepared to furnish information with respect to the sale and delivery of the Bonds. The Bonds will be remarketed from time to time pursuant to a Remarketing Agreement dated as of February 1, 2011 between the Corporation and (the "Remarketing Agreement'). This Opinion is provided pursuant to paragraph 3(e)(4) of the Purchase Contract. We have made such investigations of facts and law, examined such documents, obtained such certificates from public officials and officers of the Corporation, and done such other things as we have determined to be necessary or appropriate to render this opinion. We have assumed that there are no other documents or agreements between the Corporation or NHC and the Master Trustee which would expand or otherwise modify the respective rights and obligations of the Corporation or NBC and the Master Trustee as set forth in Supplemental Master Indenture No. 10, Supplemental Master Indenture No. 11, Obligation No. 10 and Obligation No. 11 and the documents required or contemplated thereby. As to questions of fact relevant to this opinion, we have been furnished with and relied solely upon certificates of public officials, certificates of and questionnaires completed by certain officers of the Corporation, and documents submitted to us in response to our information request to the Corporation and NHC and follow -up with officers of the Corporation where indicated based on the information received from such sources. We have assumed and have not verified the accuracy of the facts stated in any certificate, questionnaire or the documents provided to us in response to our requests as described above. Whenever a statement herein is qualified by "known to us," "to our current actual knowledge," or similar phrase, it is intended to indicate that, during the course of our representation of the Corporation and NHC, no information that would give us current actual E -2 CHIC_5134515.1 knowledge of the inaccuracy of such statement has come to the attention of those attorneys in this firm who have rendered legal services in connection with the transaction described in the introductory paragraph hereof. However, except as otherwise expressly indicated, we have not undertaken any independent investigation to determine the accuracy of such statement, and any limited inquiry undertaken by us during the preparation of this opinion letter should not be regarded as such an investigation; no inference as to our knowledge of any matters bearing on the accuracy of any such statement should be drawn from the fact of our representation of the Corporation or NHC. We have assumed the legal capacity of all natural persons and that, with respect to all parties to agreements or instruments relevant hereto (other than the Corporation and NHC), such parties had the requisite power and authority to execute, deliver and perform such agreement or instruments, that such agreements or instruments have been duly authorized by all requisite action, executed and delivered by such parties, and that such agreement or instruments are the valid binding and enforceable obligations of such parties. We have further assumed the authenticity of all items submitted to us as originals, the conformity to originals of all items submitted to us as certified or photostatic copies, and except for signatures on behalf of the Corporation and NEC, the genuineness of such signatures. We have further assumed that the City is a duly organized and validly existing local government entity and that the Bonds have been duly issued by the City. With respect to our opinions in paragraphs 18 and 19 below, we have made the following assumptions: (i) the description of the Gross Receivables contained in Supplemental Master Indenture For Obligation No. 1, dated as of May 1, 2008, between the Corporation and the Master Trustee ( "Supplemental Master Indenture No. 1 ") and the UCC -1 Financing Statements described in paragraphs 18 and 19 below `reasonably identifies" the Gross Receivables within the meaning of California Uniform Commercial Code Section 9108; (ii) the Corporation and NEC have sufficient `rights" or "power to transfer rights" in the Gross Receivables within the meaning of California Uniform Commercial Code Section 9203 and (iii) the Corporation and NHC have each received legally sufficient consideration and "value" (as such term is defined in California Uniform Commercial Code Section 1201) as required by California Uniform Commercial Code Section 9203 for its obligations under Supplemental Master Indenture No. 1, Supplemental Master Indenture No. 10, Supplemental Master Indenture No. 11, Obligation No. 1, Obligation No. 10 and Obligation No. 11 and for the granting of security interests in its property as security for such obligations. Based on the foregoing, and subject to the additional assumptions, exceptions, the qualifications and limitations set forth below, as of the date of this letter, it is our opinion that: 1. The Corporation is a nonprofit public benefit corporation duly organized and in good standing under the laws of the State of California. 2. NEC is a limited liability company duly organized and in good standing under the laws of the State of Delaware. 3. The Corporation has the power and authority to enter into the Loan Agreement, the Tax Certificate and Agreement, the Purchase Contract (including the Letter of Representation E -3 CHIC_5134515.1 appended thereto), the Remarketing Agreement, Supplemental Master Indenture No. 10, Supplemental Master Indenture No. 11, Obligation No. 10, Obligation No. 11 and the Continuing Disclosure Certificate (collectively, the "Borrower Documents "), to perform all of its duties contained therein, and to approve the Preliminary Official Statement and the Official Statement. 4. The execution of Supplemental Master Indenture No. 10 and Supplemental Master Indenture No. 11 is authorized or permitted by the Master Indenture. 5. All conditions precedent to the execution of Supplemental Master Indenture No. 10 and Supplemental Master Indenture No. 11 have been satisfied or waived. The Borrower Documents have been duly authorized by all necessary corporate action on the part of the Corporation and have been duly executed and delivered by the Corporation. 6. The obligations under the Loan Agreement, Obligation No. 10 and Obligation No. 11 constitute the legal, valid and binding agreements of the Corporation (and NBC with respect to Obligation No. 10 and Obligation No. 11) enforceable against the Corporation (and NHC with respect to Obligation No. 10 and Obligation No. 11) in accordance with their respective terms. 7. (i) The Borrower Documents constitute the legal, valid and binding obligations of the Corporation and NHC enforceable against the Corporation and NHC in accordance with their respective terms. 8. The Corporation has the corporate power to approve and has duly approved the Indentures, the Preliminary Official Statement and the Official Statement and duly authorized the distribution of the Official Statement. 9. The distribution of the Preliminary Official Statement and the Official Statement and the approval thereof by the Corporation, the approval by the Corporation of the Indentures, the execution and delivery by the Corporation of the Borrower Documents and the execution and delivery by the Corporation and NEC of the Master Indenture, the performance by the Corporation and NHC, as applicable, of the duties and covenants of the Corporation and NHC contained therein and the fulfillment of or compliance by the Corporation and NHC with the terms and conditions thereof (a) do not and will not constitute on the part of the Corporation or NHC a breach of or default (with due notice or the passage of time or both), and do not result in the creation or imposition of any prohibited lien, charge or encumbrance upon the property or assets of the Corporation or NHC, under the articles of incorporation or bylaws of the Corporation or the Limited Liability Company Agreement of NHC, or the resolution of the Board of Directors of the Corporation duly adopted on authorizing the transactions contemplated by the documents referred to in this paragraph, (b) do not and will not, to our knowledge, constitute a material breach of the terms, conditions or provisions of, or constitute a default under, any material contract, undertaking, indenture or other agreement or instrument; and (c) neither is prohibited by, nor subjects the Corporation or NHC to, a fine, penalty, or other similar sanction under, any statute or regulation of the State of California, or any federal statute or regulation, of a type which are typically applicable to transactions similar to those transactions contemplated by the documents referred to in this paragraph, and which breach, default, lien, charge or encumbrance would materially and adversely affect the consummation of the E -4 CHIC_5134515.1 transactions contemplated by the documents referred to in this paragraph, or the financial condition or operations of the Corporation or NHC. 10. With respect to requirements imposed on the Corporation or NHC, no consent, approval, authorization of or designation, declaration, or filing with any California or United States federal authority (except as may be required under any state or federal blue sky or securities laws) is required in connection with the execution and delivery by the Corporation and NEC of the Borrower Documents and the Official Statement or the distribution of the Preliminary Official Statement and the Official Statement, or, in the case of and the Borrower Documents, is required in connection with the performance of the obligations and duties of the Corporation and NHC contained therein, except as has been obtained or made on or before the date hereof and as is in full force and effect or which are not required to be made or obtained until after the date hereof. All requirements and conditions to be fulfilled by the Corporation and NEC prior to the issuance of Obligation No. 10 and Obligation No. 11 set forth in the Master Indenture, Supplemental Master Indenture No. 10 and Supplemental Master Indenture No. 11 have been complied with and satisfied. 11. (a) To our current actual knowledge, there is no action, suit or proceeding pending against the Corporation or NHC or their respective properties in any court or before any governmental authority or agency, or arbitration board or tribunal, which challenges the consummation of the financing transactions contemplated by or the validity of the Bonds or the Borrower Documents, which, if determined adversely to the Corporation or NEC, would have a material and adverse effect on such consummation or validity. (b) To our current actual knowledge, there is no action, suit or proceeding, pending against the Corporation or NHC or their respective assets, properties or operations in any court or before any governmental authority or agency, or arbitration board or tribunal, which, if determined adversely to the Corporation or NHC, would have a material and adverse effect on the Corporation or NHC or their financial condition, assets or operations (taken as a whole). (c) To our current actual knowledge, neither the Corporation nor NHC is in violation or breach with respect to any specific judicial or administrative adjudicative order or decree directed to or affecting the Corporation or NEC by any federal, state, or municipal court or other governmental authority which violation or breach might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the documents referred to in this paragraph 11 or the financial condition or operations of the Corporation or NHC (taken as a whole). 12. The Corporation is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code "), and is exempt from federal income taxation under Section 501(a) of the Code except for unrelated business income subject to taxation under Section 511 of the Code. 13. The Corporation is an organization described in Section 3(a)(4) of the Securities Act of 1933, as amended, and Section 12(g)(2)(D) of the Securities Exchange Act of 1934, as amended. E -5 CHIC_5134515.1 14. Each of the Corporation and NHC has the power and authority to own its properties and assets and to carry on its business as now being conducted by it. 15. The Corporation is duly licensed by the State of California Department of Health Services as a general acute care hospital and is qualified to participate in the federal Medicare and state Medi -Cal programs. 16. Each of Obligation No. 10 and Obligation No. 11 is exempt from registration under the Securities Act of 1933, as amended. 17. The provisions of Supplemental Master Indenture No. 1 are sufficient to create a security interest which has attached to the right, title and interest of the Corporation and NHC in those items and types of Gross Receivables in which a security interest may attach under Division 9 of the California Uniform Commercial Code. "Gross Receivables," as used in this opinion, has the same meaning ascribed thereto in Supplemental Master Indenture No. 1. 18. The UCC -1 Financing Statement filed with the California Secretary of State on as Filing No. (the "Corporation Financing Statement ") is in adequate and legally sufficient form to perfect a security interest in favor of the Master Trustee in the right, title and interest of the Corporation to the Gross Receivables which are described in the Corporation Financing Statement and Supplemental Master Indenture No. 1, and for which perfection may occur by the filing of a UCC -1 Financing Statement with the Secretary of State for the State of California (the "Corporation Gross Receivables "). Assuming that the Corporation Financing Statement was duly filed with the Secretary of State for the State of California in accordance with the provisions of Section 9516(a) of the California Uniform Commercial Code, the Master Trustee has a perfected security interest in the Corporation Gross Receivables. 19. The UCC -1 Financing Statement filed with the Delaware Secretary of State on as Filing No. (the "NHC Financing Statement ") is in adequate and legally sufficient form to perfect a security interest in favor of the Master Trustee in the right, title and interest of NHC to the Gross Receivables which are described in the NHC Financing Statement and Supplemental Master Indenture No. 1, and for which perfection may occur by the filing of a UCC -1 Financing Statement with the Secretary of State for the State of Delaware (the "NHC Gross Receivables "). Assuming that the NHC Financing Statement was duly filed with the Secretary of State for the State of Delaware in accordance with the provisions of Section 9516(a) of the California Uniform Commercial Code, the Master Trustee has a perfected security interest in the NHC Gross Receivables. 20. As holders of Master Indenture Obligations (as defined in the Master Indenture), the holders of Obligation No. 10 and Obligation No. 11 are entitled to the benefit of the security interest in favor of the Master Trustee in the Corporation Gross Receivables and the NHC Gross Receivables, on the terms and subject to the conditions set forth in Supplemental Master Indenture No. 1. In connection with our participation in the preparation of the Official Statements, we have not independently verified the accuracy, completeness or fairness of the statements E -6 CHIC_5134515.1 contained therein, and the limitations inherent in the examination made by us and the knowledge available to us are such that we are unable to assume, and we do not assume, any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statements. However, on the basis of our examination and our participation in conferences with certain officers of the Corporation and NHC, its independent auditors and representatives of the Underwriter, its counsel and Bond Counsel in connection with the preparation of the Official Statements, we can advise you supplementally as a matter of fact that we have no current actual knowledge that the Official Statements as of their date or the date hereof contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. However, we are not expressing any belief as to the financial statements and the notes thereto or any financial statistical or economic data or forecast, or the demographic and statistical data, or any information regarding the City, the Book -Entry Only System and The Depository Trust Company, all as contained in the Official Statements. Our opinion is subject to the following qualifications (a) We have not examined the question of what law would govern the interpretation or enforcement of the Master Indenture, the Indenture, Obligation No. 10, Obligation No. 11, the Loan Agreement or the Purchase Contract and, except as set forth in (b), (c) and (d) below, we express no opinion with respect to the laws of any state or jurisdiction other than California. (b) We express our opinion with respect to federal law only as set out in paragraphs 9, 10, 11, 12, 13, 14, 15 and 16 hereof and as it may apply to exception paragraphs (c), (d), (e) and (g). (c) Except as specifically provided in paragraphs 13 and 16 and in exception paragraph (d), we express no opinion with respect to the registration or qualification provisions of federal or state securities laws or their application to any of the documents referred to herein or any transaction contemplated thereunder. (d) The enforceability of the documents listed in paragraphs 7 and 8 may be limited: (i) by bankruptcy, insolvency, fraudulent conveyance, or other similar laws or proceedings affecting the enforcement of creditors' rights generally as such proceedings or laws affect the Corporation, including, without limitation, self -help remedies, applicable foreclosure procedures and by application of equitable principles regardless of whether such enforceability is considered in a proceeding in equity or at law, (ii) to the extent that enforcement may be held to be against public policy, (iii) to the extent that the indemnification provisions in such documents may be limited by applicable securities law or public policy, (iv) by the implied covenant of good faith and fair dealing, and E -7 CHIC_5134515.1 (v) to the extent that enforcement may be limited by donor restrictions on certain funds. (e) Our opinion as expressed in paragraph 12 is based solely upon an interview with the Senior Vice President and Chief Financial Officer of the Corporation, a review of the minutes of the Board of Directors of the Corporation, and a review of responses to inquiries by us of litigation counsel identified by the Corporation regarding litigation matters pertaining to the Corporation and a certificate regarding litigation matters dated the date hereof of the Senior Vice President and Chief Financial Officer of the Corporation. (f) We express no opinion as to: (i) The enforceability of provisions in any of the documents mentioned herein with respect to the payment of attorneys' fees. (ii) The enforceability under certain circumstances of provisions waiving stated rights or unknown future rights, or providing that rights or remedies are not exclusive, but every right or remedy is cumulative and may be exercised in addition or with any other right or remedy or that the election of some particular remedy or remedies does not preclude or waive recourse to one or more others. Provisions purporting to limit or restrict the right of the Corporation or NHC to sell, encumber or otherwise transfer or dispose of any of their respective property may be unenforceable to the extent that they impose restrictions upon the Corporation or NHC and it cannot be demonstrated that such restrictions are reasonably necessary for Master Trustee's protection. Limitations on strict enforcement of certain covenants in debt instruments absent a showing of damage to the lender, impairment of value of collateral or impairment of the debtor's ability to pay or otherwise under circumstances which would violate the lender's covenant of good faith and fair dealing. (iii) The enforceability under certain circumstances of provisions which waive statutory rights to receive notice or to be allowed to cure, or which waive statutes of limitations. (iv) The enforceability under certain circumstances of provisions to the effect that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of that right or remedy or that waivers must be in writing in order to be effective. Limitations on the exercise of certain contractual rights and remedies if the defaults are not material or the penalties bear no reasonable relation to the damages suffered by the aggrieved party as a result of the delinquencies or defaults. (v) The enforceability under certain circumstances of provisions to the effect that the invalidity or unenforceability of certain provisions shall not impair the validity or enforceability of remaining provisions. (vi) The enforceability of provisions in any of the documents relating to the disposition of insurance proceeds or condemnation proceeds. E -8 CHIC_5134515.1 (vii) The enforceability of provisions in any of the documents relating to the execution of claims by third parties to such documents. (viii) The enforceability of provisions increasing the interest rate payable after a default or imposing a prepayment premium (except upon voluntary prepayment) or late charges. (ix) The enforceability of provisions which waive rights of set -off. (x) The enforceability of provisions that time is of the essence. (xi) The enforceability of any provisions that indemnify any party against its own negligence or willful misconduct. The effect of provisions releasing or indemnifying a party against liability for its own wrongful or negligent acts, or where indemnification is contrary to public policy. (xii) The effect of California Civil Code Section 1670.5 which provides that a court may refuse to enforce, or may limit the application of a contract or any clause thereof which the court finds as a matter of law to have been unconscionable at the time it was made. The effect of California Civil Code Section 1671 which provides in part that a contractual provision liquidating the damages for breach of contract in a commercial transaction will be invalid if it is established that the provision was "unreasonable" under the circumstances existing at the time the contract was made. The effect of Sections 2787 through 2855 of the California Civil Code which provide protections for and limitations on the obligations of a guarantor such as, but not limited to, limitations that provide (i) in certain circumstances that a notice be given to the guarantor of any default by the debtor or obligor which may result in liability to the guarantor; (ii) that the obligations of a guarantor cannot be greater in amount or more burdensome than that of the obligor; (iii) that the guarantor will have the same defenses to liability as the obligor, other than defenses arising from the personal disability of the obligor; (iv) that a guarantor will be exonerated from liability, by any act of the creditor taken without the guarantor's consent, which alters the original obligations of the obligor or impairs or suspends any remedies or rights of the creditor against the obligor or security for the guaranteed obligation; (v) that the creditor's acceptance of anything in partial satisfaction of the guaranteed obligation also reduces the obligation of the guarantor to the same extent; and (vi) that a guarantor may require the creditor to proceed against the obligor or security held by the creditor or to pursue other remedies within the power of the creditor which cannot be pursued by the guarantor before proceeding against the guarantor. The effect of Sections 3439.01 through 3439.12 of the California Civil Code relative to fraudulent transfers or conveyances. (xiii) The effect of Section 1698 of the California Civil Code which provides in part that provisions of any instrument or agreement may only be waived in writing will not be enforced to the extent that an oral agreement has been executed modifying provisions of such instrument or agreement. (xiv) The enforceability of provisions governing choice of law, waiving the right to trial by jury, consenting to jurisdiction or venue, altering the statutory method E -9 CHIC_5134515.1 of service of process, or appointing any party as the attorney -in -fact for the other ply. (g) Certain provisions of the Borrower Documents may be unenforceable under applicable California laws governing such provisions, but neither such laws nor the possible unenforceability of the provisions referred to in section (f) above, subject to the other exceptions, qualifications and limitations in this Opinion, render the Borrower Documents invalid as a whole or substantially interfere with realization of the principal benefits provided by the Borrower Documents. In addition, we advise you that California court decisions invoking statutes or principles of equity have held that certain covenants and provisions of agreements are unenforceable where (i) the breach of such covenants or provisions imposes restrictions or burdens upon the debtor, including the acceleration of indebtedness due under debt instruments, and it cannot be demonstrated that the enforcement of such restrictions or burdens is reasonably necessary for the protection of the creditor, or (ii) the creditor's enforcement of such covenants or provisions under the circumstances would be unreasonable, violate the creditor's implied covenant of good faith and fair dealing or would be commercially unreasonable. (h) Our opinions as expressed in paragraphs 12 and 13 are based solely upon (i) The current articles of incorporation as certified by the Secretary of State of the State of California and bylaws of the Corporation as provided to us by the Corporation; (ii) A copy of a letter dated March 10, 1954 by the Internal Revenue Service addressed to the Corporation confirming that the Corporation is exempt from federal income taxes under Section 501(a) of the Code as an organization described in Section 501(c)(3) and that the Corporation is not a "private foundation" within the meaning of Section 509(a) of the Code; (iii) A certificate from the President and Senior Vice President and Chief Financial Officer of the Corporation stating that the Corporation has not been notified by the Internal Revenue Service of any investigation of, or proposed or actual revocation of its status as an organization described in section 501(c)(3) of the Code which is not a private foundation; and (iv) Factual information set forth in certificates from officers of the Corporation, the Corporation's responses to our questionnaire dated and the documents and other information submitted to us in response to our information request to the Corporation dated , and follow -up with officers of the Corporation where indicated based on the information received from such sources. (i) We understand that you will rely upon the opinion of Bond Counsel as to matters concerning the effect of the execution and delivery of the Indentures on the validity and tax- exempt status of the Bonds, and we express no opinion herein on such matters. 0) The opinions expressed herein are based on facts, laws, regulations and case law in effect as of the date hereof, and we assume no obligation to revise or supplement this E -10 CHIC_5134515.1 letter should such facts, laws, regulations and case law be changed in any respect, including any changes in organization or affairs of the Corporation and NHC. (k) We have not rendered insurance advice to the Corporation or NHC as to any types or classifications of coverage, including general and medical malpractice liability coverage, and we do not represent by this opinion or otherwise that we have reviewed or made any assessment about, nor do we express any opinion about the types or amounts of coverage, of the ability of any insurer or any self insurance program or organization to meet its obligations pursuant to any policy or agreement with the Corporation or NHC, or of the adequacy of the funding or reserves thereof. (1) As special counsel to the Corporation and NHC in this matter, we have not rendered financial advice to the Corporation or NHC and do not represent by this opinion, or otherwise, that we have reviewed or made any assessment about, nor do we offer any opinion about, the financial condition of the Corporation or NHC, past, present or future (except only as financial condition is related to a standard of materiality as used in paragraphs 9, 1 l(b) and II(c) hereof), and with respect to the latter we have relied entirely on the assessment of materiality made by the Senior Vice President and Chief Financial Officer of the Corporation. (m) We express no opinion with respect to any numerical or mathematical calculation or computation regarding the Bonds, any of the documents referred to herein or any certificate given or issued with respect to the matters referred to herein. Without limiting the generality of the above, we specifically express no opinion with respect to any such calculation or computation contained in or related to the subject matter of the Tax Certificate and Agreement or Internal Revenue Service Form 8038. (n) We express no opinion as to the ownership or the condition of title of any real or personal property of the Corporation or NEC. (o) Our opinion is limited to the matters expressly set forth herein, and no opinion or other statement may be inferred or implied beyond the matters expressly stated. (p) We expressly do not comment upon or render any opinion with respect to the Corporation's or NHC's rights in or title to any item of Gross Receivables, the priority of any security interest in any item of Gross Receivables over any other interest in Gross Receivables, and the ability of the Master Trustee to realize upon any item of Gross Receivables in which any other person has an interest. (q) Our opinions rendered above do not include any opinion as to the perfection of any security interest or lien which is not perfected by the filing of a financing statement with the Secretary of State for the State of California or the Secretary of State for the State of Delaware. We are members of the Bar of the State of California and, accordingly, do not purport to be experts on or to be qualified to express any opinion herein concerning, nor do we express any opinion herein concerning, any laws other than the laws of the State of California and federal law. E -11 CHIC_5134515.1 Our engagement by the Corporation and NHC with respect to the matters stated herein terminates as of the date hereof. No attorney - client relationship exists between us and you. This opinion is furnished by us as special counsel to the Corporation and it may be relied upon only by the addressees, their counsel and Orrick, Herrington & Sutcliffe LLP, as Bond Counsel. Provided with respect to the Bank, this opinion may not be disclosed to or relied upon by any person other than you, except that (i) this opinion may be disclosed to (A) bank regulatory and other governmental authorities having jurisdiction over you requesting (or requiring) such disclosure, (B) your independent auditors and attorneys, (C) pursuant to order or legal process of any court or governmental agency, or (D) in connection with any legal action to which you are party arising out of the transactions contemplated by the Reimbursement Agreement, and (ii) this opinion may be disclosed to and relied upon by an assignee of the Bank (pursuant to an assignment that is permitted under and made in accordance with the Reimbursement Agreement) and any participants in the interests of the Bank under the Reimbursement Agreement, in each case on the condition and with the understanding that (A) this opinion does not extend to any issue or matter related to any such assignment or participation or arising from or out of any such assignment or participation (as distinct from the subject transaction), (B) this opinion is limited and qualified with respect to such assignee or any such participant in the same manner that it is limited and qualified as set forth above with respect to you, and (C) any reliance by such assignee or any such participant must be actual and reasonable under the circumstances existing at the time of the related assignment or the grant of the related participation interest, as applicable, which circumstances may include any changes in law, facts or any other developments known to or reasonably knowable by such assignee or any such participant at such time. This letter shall not be used, quoted, disseminated, circulated or relied upon by any other person or entity, for any purpose, without our prior written consent, except as copies may be included in transcripts of the proceedings relating to the issuance of the Bonds. Respectfully submitted, /s/ STRADLING YOCCA CARLSON & RAUTH E -12 CHIC_5134515.1 EXHIBIT F TO BOND PURCHASE CONTRACT FORM OF OPINION OF UNDERWRITER'S COUNSEL February , 2011 Citigroup Global Markets Inc. Los Angeles, California J.P. Morgan Securities LLC San Francisco, California Re: $ City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C (the "Bonds ") Ladies and Gentlemen: We have acted as counsel to you as the Underwriters in connection with the purchase by you of the $ aggregate principal amount of the City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C (collectively, the `Bonds ") pursuant to a Bond Purchase Contract (the "Bond Purchase Contract "), by and between the City of Newport Beach (the "City ") and you, as the Underwriters, which Hoag Memorial Hospital Presbyterian (the "Borrower ") has approved. The Bonds are being issued pursuant to a Bond Indenture dated as of February 1, 2011 (the `Bond Indenture ") between the City and Wells Fargo Bank, National Association, as bond trustee (the "Trustee ") for the purpose of making a loan to the Borrower pursuant to the Loan Agreement dated as of February 1, 2011 (the "Loan Agreement ") between the City and the Borrower. In that connection, we have reviewed the Loan Agreement; the Bond Indenture; the Master Indenture dated as of May 1, 2007 between the Borrower, Newport Healthcare Center, LLC ( "NHC ") and Wells Fargo Bank, National Association, as master trustee (the "Master Trustee "), as supplemented by the Supplemental Master Indenture for Obligation No. 10 and by the Supplemental Master Indenture for Obligation No. 11 (as so supplemented, the "Master Indenture "), between the Borrower and the Master Trustee; Obligation No. 10; Obligation No. 11; the Preliminary Official Statement dated January , 2011 (the "Preliminary Official Statement"), the Official Statement dated , 2011 (the "Official Statement") relating to the Bonds; the Continuing Disclosure Certificate dated the date of issuance and delivery of the Bonds (the "Continuing Disclosure Certificate ") by and between the Borrower and Wells Fargo Bank, National Association, as dissemination agent; the Letter of Representation described in the Bond Purchase Contract; the Remarketing Agreement dated as of February 1, 2011 between the Borrower and ; the Reimbursement Agreement dated as of February 1, 2011 F -1 CHIC_5134515.1 between the Borrower and JPMorgan Chase Bank, National Association; the Letter of Credit issued by the Bank in favor of the Bond Trustee; the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Borrower, dated the date hereof; certifications of the City, the Borrower, NEC, the Master Trustee, the Bank, the Trustee and others as to certain matters; such opinions and such other records and documents; and we have made such investigations of law, as we have deemed appropriate as a basis for the opinions and statements hereinafter expressed. In rendering the opinions and making the statements hereinafter expressed, we are not expressing any opinion or view of the validity, accuracy or sufficiency of the documents, certificates or opinions referred to above or on the authorization, issuance, delivery or validity of the Bonds and we have assumed, but not independently verified, that the signatures on all documents, certificates and opinions that we have reviewed are genuine. Based on and subject to the foregoing, and in reliance thereon, we are of the opinion that: 1. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended; and the Bond Indenture and the Master Indenture are exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. 2. Because the primary purpose of our professional engagement was not to establish factual matters and because of the wholly or partially non -legal character of many determinations involved in the preparation of the Official Statement, we are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that we have independently certified the accuracy, completeness or fairness of any such statements. However, in our capacity as counsel for the Underwriter during the course of preparation of the Official Statement, we met in conferences or had discussions with your representatives, representatives of the Borrower and its counsel, bond counsel, and others, during which conferences the contents of the Official Statement and related matters were discussed. Based on our participation in the above mentioned conferences and in reliance thereon and on the certificates, opinions and other documents herein mentioned, we advise you that no information came to our attention which caused us to believe that the Official Statement as of its date and as of the date of this opinion (except for any financial or statistical data or forecasts and the information relating to DTC and the Bank contained therein as to which we express no opinion or view) contained any untrue statement of a material fact or omitted to state any 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. 3. The Continuing Disclosure Certificate satisfies the requirements of Section (b)(5)(i) of Rule 15c2 -12 of the Securities and Exchange Commission (17 C.F.R., Part 240, §420.15c2- 12)(the "Rule "), which provide for an undertaking for the benefit of the holders, including beneficial owners, of the Bonds to provide certain annual financial information and event notices to various information repositories at the times and in the manner required by the Rule. F -2 CHIC_5134515.1 4. With respect to the Bonds, other than the Borrower, there are no "obligated persons" within the meaning of the Rule which would be required to provide certain annual financial information and event notices to various information repositories as required by the Rule. In rendering the foregoing opinions in paragraphs 3 and 4 hereof, we have assumed the due authorization, execution and delivery of the Continuing Disclosure Certificate by the Borrower, and that such Continuing Disclosure Certificate is a valid and binding obligation of the Borrower enforceable in accordance with its terms. The opinions expressed herein are based upon existing law as of the date hereof and we express no opinion herein as of any subsequent date or with respect to any pending legislation. We assume no obligation to supplement this opinion if any applicable laws change after the date hereof or if we become aware of any facts that might change the opinions expressed herein after the date hereof. In rendering these opinions, we are expressing no opinion on the validity of the Bonds or on the exclusion of interest evidenced by the Bonds from the gross income of the holders thereof for federal income tax purposes or the exemption of interest on the Bonds from State of California personal income taxes. We understand that you are relying on the opinion of Bond Counsel in that regard. The opinions herein are limited to the laws of the United States. We are furnishing this letter to you pursuant to the Bond Purchase Contract solely for your benefit as Underwriter. This letter is not to be used, circulated, quoted or otherwise referred to for any other purpose except that reference to our opinion in the first numbered paragraph of this letter may be made in the Official Statement or other documents and except that reference may be made to this letter in any list of closing documents pertaining to the sale of the Bonds. Respectfully, Foley & Lardner LLP F -3 CHIC_5134515.1 EXHIBIT G TO BOND PURCHASE CONTRACT FORMS OF OPINION OF BANK'S COUNSEL [To be provided] G -1 CHIC_5134515.1 EXHIBIT H TO BOND PURCHASE CONTRACT FORM OF OFFICER'S CERTIFICATE Re: $ City of Newport Beach Revenue Bonds (Hoag Memorial Hospital Presbyterian) Series 2011A, 2011B and 2011C (the "Bonds ") I, Jennifer Mitzner, hereby certify that I am the Senior Vice President and Chief Financial Officer of Hoag Memorial Hospital Presbyterian (the "Corporation "), a nonprofit public benefit corporation duly organized and existing under the laws of the State of California and that, as such, I am authorized to execute this certificate on behalf of the Corporation under the Master Indenture dated as of May 1, 2007, as supplemented and amended, by and among the Corporation, Newport Healthcare Center, LLC and such other members as may join the obligated group as defined therein and Wells Fargo Bank, National Association, as master trustee. I hereby further state and certify, to the best of my knowledge, that: 1. Since September 30, 2010, no material and adverse change has occurred in the financial position or results of operation of the Corporation which is not described in the Official Statement prepared in connection with the issuance of the Bonds or which has not been described in writing delivered by the Corporation to the City and the Underwriters. 2. The Corporation has not, since September 30, 2010, incurred any material liabilities other than in the ordinary course of business which are not described in or contemplated by the Official Statement or in writing delivered by the Corporation to the City and the Underwriters. 3. No proceedings are pending or threatened in any way contesting or affecting the Corporation's status as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the "Code "), as amended, or which would subject any income of any Member of the Obligated Group to federal income taxation. 4. No event affecting the Corporation has occurred since the date of the Official Statement which (i) makes untrue or incorrect in any material respect as of the date hereof, or at such earlier or later time or date as shall be agreed by the City and the Underwriters, any statement or information contained in the Official Statement or (ii) is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect. 5. The representations and warranties made by the Corporation in the Letter of Representation delivered by the Corporation in connection with the execution of the Bond Purchase Contract related to the Bonds, are true and correct as of the date hereof as if made on the date hereof. H -1 CHIC_5134515.1 Capitalized terms used and not defined herein have the meanings assigned to them in the Bond Purchase Contract dated , 2011 between Citigroup Global Markets Inc., acting on behalf of itself and on behalf of J.P. Morgan Securities LLC and the City of Newport Beach and approved by the Corporation. Dated: February _,2011 HOAG MEMORIAL HOSPITAL PRESBYTERIAN IC Senior Vice President and Chief Financial Officer H -2 CHIC_5134515.1