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Mr. Francisco Gutierrez <br />City of Santa Ana <br />December 1, 2011 <br />Page 7 <br />imposition of substantial penalties. These transactions include: (1) certain "reportable <br />transactions" including those identified by the Internal Revenue Service as "Listed <br />Transactions" (or transactions considered to be substantially similar to a Listed <br />Transaction); (2) certain "uncertain tax positions," for which a corporate taxpayer or <br />related party has recorded a reserve in an audited financial statement; and (3) transactions <br />lacking economic substance. (A transaction is treated as having economic substance where <br />the transaction changes in a meaningful way [apart from federal income tax effects] the <br />taxpayer's economic position, and the taxpayer has a substantial purpose [apart from <br />federal income tax effects] for entering into such transaction.) Disclosure may also be <br />required of transactions entered into in the course of your business that may be considered <br />typical. In addition, certain state tax shelter rules require taxpayers to file reportable <br />transactions disclosure statements with the appropriate state income and franchise tax <br />returns, if applicable. In connection with the performance of tax services covered by this <br />Agreement, you agree to assume responsibility for adequate disclosure of all reportable <br />transactions, reportable uncertain tax positions, and/or transactions lacking economic <br />substance which the Company has entered into. At your request, we will provide you with <br />a Reportable Transaction Questionnaire to assist you in identifying reportable transactions <br />which the Company may have entered into. We will advise you if we identify any <br />reportable transactions based upon information that comes to our attention. We cannot, <br />however, take responsibility for the identification of reportable transactions, reportable <br />uncertain tax positions, or transactions lacking economic substance. Further, MGO will <br />not be liable for any penalties that may be incurred with respect to any failure to <br />adequately and timely disclose any reportable transactions or transactions lacking <br />economic substance. <br />10. Filing Tax Returns. You agree to file the tax returns as prepared by MGO without any <br />modifications. If modifications must be made to the tax returns prior to filing, you agree to <br />obtain our written approval in advance. <br />11. E-mail Communication. In connection with the performance of our services we may <br />communicate with you or others via email transmission. As emails can be intercepted and <br />read, disclosed or otherwise used or communicated by an unintended third party, or may <br />not be delivered to each of the parties to whom they are directed and only to such parties, <br />we cannot guarantee or warrant that emails from us will be properly delivered and read <br />only by the addressee. Therefore, we specifically disclaim and waive any liability or <br />responsibility whatsoever for interception or unintentional disclosure or communication of <br />email transmissions, or for the unauthorized use or failed delivery of emails transmitted by <br />us in connection with the performance of this engagement. In that regard, you agree that <br />we shall have no liability for any loss or damage to any person or entity resulting from the <br />use of email transmissions, including any consequential, incidental, direct, indirect or <br />special damages, such as loss of revenues or anticipated profits, or disclosure or <br />communication of confidential or proprietary information. <br />25E-12