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City of Santa Ana March 18, 2014 Paae 2 Role Disclosure The Issuer hereby confirms and acknowledges each of the following concerning the role that Stifel would have as an underwriter: (1) Municipal Securities Rulemaking Board Rule G -17 requires an underwriter to deal fairly at all times with both municipal issuers and investors; (2) the underwriter's primary role is to purchase securities with a view to distribution in an arm's - length commercial transaction with the issuer and it has financial and other interests that differ from those of the issuer; (3) unlike a municipal advisor, the underwriter does not have a fiduciary duty to the issuer under the federal securities laws and is, therefore, not required by federal law to act in the best interests of the issuer without regard to its own financial or other interests; (4) the underwriter has a duty to purchase securities from the issuer at a fair and reasonable price, but must balance that duty with its duty to sell municipal securities to investors at prices that are fair and reasonable; and (5) the underwriter will review the official statement for the issuer's securities, and complete requisite due diligence, in accordance with, and as part of, its responsibilities to investors under the federal securities laws, as applied to the facts and circumstances of the transaction. Disclosures Concerning the Underwriter Compensation The underwriter will be compensated by an underwriting discount will be set forth in the bond purchase agreement to be negotiated and entered into in connection with the issuance of the Bonds. As a placement agent, compensation would be derived in the form of a fee negotiated in connection with the issuance of the Bonds. Payment or receipt of the underwriting discount or placement agent fee will be contingent on the closing of the transaction and the amount of the fee or discount may be based, in whole or in part, on a percentage of the principal amount of the Bonds. While this form of compensation is customary in the municipal securities market, it presents a conflict of interest since the underwriter may have an incentive to recommend to the Issuer a transaction that is unnecessary or to recommend that the size of the transaction be larger than is necessary. Conflicts of Interest Disclosures Stifel has not identified any additional potential or actual material conflicts that require disclosure. 25B -10