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292 <br /> <br />City of Santa Ana <br />Page Two <br />July 9, 1999 <br /> <br />Opinion of Counsel: <br /> <br />At closing, the Lessee shall provide an opinion of counsel which will <br />address that the Lease is a valid and binding obligation of the City, <br />and that under present law interest on the Lease is not included in the <br />gross income of the owner therefore for federal income tax purposes <br />is not included as an item of tax preference in computing the federal <br />alternative minimum tax for certain corporations. In addition, the <br />opinion will state that interest under state law is exempt from income <br />taxation. <br /> <br />Fees: <br /> <br />Should PBCC approve the transaction, Lessee shall pay all costs and <br />disbursements incurred by PBCC in connection therewith, including, <br />without limitation, ail fees and disbursements of outside counsel to <br />PBCC, UCC filing and lien search fees, and the cost of obtaining a <br />tax opinion. <br /> <br />Escrow: <br /> <br />It is anticipated that the funds will be deposited into an escrow prior <br />to August 6, 1999. The Lessee will have the option to set up a <br />separate account within the City to avoid paying a third party to <br />escrow the funds. <br /> <br />THIS IS A NON-BINDING PROPOSAL AND IS NOT DESIGNED TO SET FORTH ALL <br />OF THE TERMS AND CONDITIONS OF A PROPOSED FINANCING. ACCORDINGLY, <br />THIS PROPOSAL IS CONDITIONED UPON AND SUBJECT TO: <br /> <br />(1) a. PBCC's transaction and credit approval; <br /> <br />b. PBCC's investment approval of the economics of the proposed transaction; and <br /> <br />Co <br /> <br />There being in PBCC's sole opinion no material change or prospect thereof in Lessee's <br />structure, ownership, financial condition or operating trends, between the date of the most <br />recent financial statement received by PBCC and the date of funding of the proposed <br />transaction. <br /> <br />(2) Negotiation of documentation in foma and substance satisfactory in all respects to all parties to <br /> the transaction and their respective counsel. <br /> <br />This letter is not a commitment to enter into this financing, nor should it be construed as an offer to <br />perform any undertaking. By your execution below you agree that PBCC shall not be held liable <br />for any action or inaction stemming from this letter. A commitment can be issued only alter full <br />credit, legal and investment review and subsequent approval by the appropriate officers of PBCC. <br /> <br />Upon receipt of this executed proposal letter, we will be in a position to begin the transaction <br />analysis process. This letter will remain in effect until the close of business on July 15, 1999. <br /> <br /> <br />