Agreements

Type of P3 agreement:

1. Design-Build-Operate-Maintain

2. Pre-Development Agreement

3. Concession - Investor Financed

4. Concession - Tax-exempt Financed

5. Other _______________________

Concession - Investor Financed.

What is the title and date of the primary P3 agreement? Who are the parties to that agreement?

What is the form of the private entity (e.g., corporation, LLP, LLC, partnership or joint venture)? If a joint venture, is there joint and several liability?

Are the obligations of the private entity guaranteed by one or more third parties (other than sureties)?

Development Franchise Agreement for a Privatized Transportation Project, made and entered into as of December 31, 1990, by and between San Diego Expressway Limited Partnership [Note: assigned from California Transportation Ventures, Inc. to San Diego Expressway Limited Partnership], and The State of California, Department of Transportation, Acting by and through the Director of Transportation.

San Diego Limited Partnership is a limited partnership.

No third party guarantees provided.

Describe conditions applicable to the financing plan (types, sources, and covenants of capital financing).

12.4. FINANCIAL OBLIGATIONS.

(a) Subject to the cooperation of Caltrans pursuant to Section 11.4, Developer shall be responsible for

(i) obtaining all financing required in connection with the development, construction and operation of the Project, and
(ii) arranging for servicing and retirement of all such debt incurred by Developer. Without limiting the means for fulfillment of the foregoing obligations, Developer may obtain financing through a local governmental entity.

What are the roles of the public and private entities for pre-financing tasks, such as project definition, preparation of environmental documents, permitting, traffic and revenue studies, surveys, geotechnical investigations, right-of-way acquisition and preliminary engineering, public involvement?

Developer has full responsibility for pre-financing tasks, without reimbursement by Caltrans.

Caltrans has responsibility for obtaining certain environmental approvals.

How is the private entity to be compensated for its equity and debt contributions with respect to design, acquisition, permitting, construction, and related services?

How is the private entity to be compensated for operation and maintenance services?

The Developer (the private entity) has the right to impose and collect tolls, subject to limitations on its overall rate of return.

Does the public entity establish the design, construction, operation and maintenance standards with which the private entity must comply?

Yes.

What is the mechanism by which user fees, if any, are established and adjusted? Describe any limitations or user fees and exempt vehicles.

Developer shall have the right, in its sole discretion, to establish, and thereafter to modify from time to time, the toll rates applicable to: (1) various classes of vehicles, (2) vehicle occupancy levels, (3) times of use and (4) portion of Project utilized. Caltrans shall have no right to regulate or participate in the setting of toll rates.

What is the duration of the agreement and what are the options to extend this timeframe (if applicable)?

Term of Lease (which commences after completion of construction) is 35 years, subject to the following in Section 9.1:

(b) If Developer has demonstrated to Caltrans satisfaction that it is or will be unable to achieve a Base Return Account of zero (0) or greater over the term of the Lease, Caltrans will use its best efforts (including formal participation, as appropriate, in any and all legislative, judicial and administrative proceedings) at Caltrans expense to obtain legislation permitting extension of the Lease for an additional term sufficient to permit the recovery of a reasonable return on investment in the manner contemplated by this Agreement.

Describe measures of compensation upon termination for convenience.

No direct right. However Developer has the right to seek compensation for "losses" in certain events and Caltrans agrees and understands that Developer is entitled to seek compensation for losses resulting from the occurrence of any of the following operative events:

(a) The State legislature, the California Transportation Commission, or any other administrative agency or authority of the State enacts, adopts, promulgates, modifies, repeals, or changes any State law, rule, initiative, referendum, constitutional provision, or regulation, all or any of which has the effect of

(i) directing Caltrans to acquire the Transportation Facility or portion thereof,
(ii) terminating, limiting, reducing, or abrogating the rights or benefits of Developer under this Agreement, or
(iii) regulating or interfering with Developer's right to establish and collect tolls;

(b) The voters of the State, by initiative, referendum, or other ballot measure, enact, adopt, promulgate, modify, repeal, or change any State law, rule, initiative, referendum, constitutional provision, or regulation, all or any of which has the effect of (i) directing Caltrans to acquire the Transportation Facility or portion thereof, (ii) terminating, limiting, reducing, or abrogating the rights or benefits of Developer under this Agreement, or (iii) regulating or interfering with Developer's right to establish and collect tolls; or

(c) Any court issues any order, decree, or judgment which has the effect of

(i) directing Caltrans to acquire the Transportation Facility or portion thereof,
(ii) terminating, limiting, reducing, or abrogating, the rights or benefits of Developer under this Agreement,
(iii) declaring illegal, void, or ultra vires any portion of this Agreement or voiding the rights of Developer under this Agreement, or
(iv) regulating or interfering with Developer's right to establish and collect tolls.

Caltrans shall, immediately upon determination of the award to which Developer is entitled, use its Best Efforts to obtain from the State Legislature an appropriation and/or other authorization to enable it to pay to Developer the amount of such award as expeditiously as possible, and payment shall be subject to the terms of such authorization.

If applicable, describe the private entity's rights and obligations to provide future project capacity improvements, extras, or expansions.

See 3.2 and Article VI.
In Section 6.2, Developer may develop and construct the Project as a sequence of Transportation Facilities or stages thereof, as contemplated by Exhibit A hereto. Subject to Section 3.7 hereof, the completion of any Transportation Facility or stage thereof shall not obligate Developer to complete any or all subsequent Transportation Facilities or stages.

Sec. 3.2 (e) Caltrans' obligations under Section 3.2(d) 2, 3, 5, and 6, above shall terminate as to a specific Transportation Facility upon one hundred twenty (120) days notice if both of the following events have occurred:

1. Either:
   (a) All Transportation Facilities for which the Transfer Date has occurred have operated at the level of traffic corresponding to Caltrans' "E" level of service designation for at least two consecutive hours per day on at least 150 days per year over a two-year period; or
   (b) All debt incurred in connection with the development, construction, financing or refinancing of the Project has been repaid from Project revenues or SANDAG reimbursements, and

2. Developer is not diligently pursuing the development and construction of additional capacity expansion of the Project. Evidence of such non-pursuit shall exist when more than two years have passed since the occurrence described in 1.(a) and the steps required by Article VI with respect to such capacity expansion have not been completed.

Describe any provisions relative to competitive transportation facilities (include a description of what constitute competitive facilities, exceptions, and measure of damages).

9. Franchise Zone

1. In relation to Transportation Facility I (and II, if undertaken):
   The Franchise Zone is a 6 mile wide south-north corridor having SR-125 as its center axis and bordered on the south by the Mexican border and on the north by SR-54.

If applicable, what is the reasonable/maximum return or rate of return on investment authorized for the developer/operator to earn, the formula by which such rate of return will be calculated and the distribution of project revenues?

10.1. DETERMINATION OF REASONABLE RETURN ON INVESTMENT.

In consideration of Developer's obligations and undertakings hereunder, Caltrans hereby agrees and stipulates that the Cash Flow to be retained by Developer pursuant to Section 10.3 of this Agreement will not be deemed to exceed a "reasonable return on investment" contemplated by the Act.

Rights of Developer to Cash Flow is determined by a highly complex. See Article X

What other rights does the public entity have to terminate the agreement (e.g., failure to meet milestones, termination for convenience)? If the agreement is terminated for convenience, what compensation is paid to the private entity?

See above.

What are the lender's rights and remedies with respect to private entity defaults? Does the agreement provide for lender's rights and remedies?

Extensive provisions for right to cure and exercise rights under any Financing Agreement.

What are the obligations of the developer/operator to maintain records, to allow inspection and audit and to provide regular reports to the public owner?

What obligation does the public entity have to maintain the confidentiality of specified information?

21.4. RECORDS.

Developer shall maintain all records, documents, and other data for a period not less than five years from the date that material was generated. Records, data, and documents will be kept in such a manner as to provide a clear distinction between direct and indirect costs related to either the Project and the costs of other projects and operations undertaken by Developer. Said records will be made available by Developer for Caltrans inspection, audit, or copying to substantiate Costs in the event of any question arising with regard to work or recovery from toll revenues.

12.9. REPORTING REQUIREMENTS.

(a) A final audit of the Capital Base and Capital Costs with respect to each Transportation Facility or stage thereof, performed at Developer's expense, by a recognized Certified Public Accountant approved by Caltrans, shall be delivered to Caltrans within six months after the corresponding Transfer Date. Audit examinations will be made in accordance with generally accepted auditing practices and standards adopted by the American Institute of Certified Public Accountants.
(b) One hundred twenty (120) days after the end of each fiscal year, beginning with the year in which the first Transfer Date occurs, Developer shall provide Caltrans with annual financial reports pursuant to 10.2 audited by a recognized independent accounting firm selected by Developer and approved by Caltrans. Annual reports shall include the independent auditor's report, a balance sheet, and a statement of income and expenses (including a traffic and toll revenues report, a report of Operating Costs, a list of transactions and contracts with Related Parties, and the reports required by Exhibit G).
(c) Caltrans reserves the right to conduct or have conducted, at its own expense, within three years after submission of each report required by this Section 12.9, an audit similar to the audits outlined in (a) or (b) above and to determine that the calculations prescribed by Article X have been made by Developer accurately and in accordance with the terms of this Agreement. Items determined by Caltrans as a result of such audit to be materially at variance with normal commercial practices (including contractual relationships between Developer and Related Parties) and not resolved by negotiation shall be resolved in accordance with Article XIX of this Agreement. The amounts of such variances, if any, which are agreed by the parties or determined pursuant to Article XIX shall be taken into account and appropriate adjustments (including, where applicable, exclusions of expenditures from Outflows) shall thereafter be made in the calculations required by Article X.

Describe lender protection provisions (if any).

20.2. RIGHTS AND OBLIGATIONS OF LENDERS.

So long as any Financing Assignment shall remain unsatisfied and Caltrans has received the notices specified in paragraph (c) of Section 20.1 above, and in addition to the cure rights of Developer and Lender set forth in Article XVII, the following provisions shall apply:

(a) Caltrans agrees that should any event or condition occur under any Franchise Document which would either immediately or with the passage of the applicable grace period or the giving of notice or both, enable Caltrans to terminate or suspend its obligations under any Franchise Document (a "Termination Event"), Caltrans shall not terminate such Franchise Document until it first gives written notice of such Termination Event to each Lender, and provides each Lender a reasonable opportunity to cure such Termination Event, as provided below:

Describe any provisions regarding high-occupancy toll lanes or variable pricing.

Developer shall have the right, in its sole discretion, to establish, and thereafter to modify from time to time, the toll rates applicable to: (1) various classes of vehicles, (2) vehicle occupancy levels, (3) times of use and (4) portion of Project utilized. Caltrans shall have no right to regulate or participate in the setting of toll rates.

Describe any provisions limiting liability or waiving consequential damages.

None.