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Holman Capital Corporation April 6, 2018 Page 2 investment of lease proceeds into the Escrow Account and Permitted Investments, and certain other matters was adopted at a meeting that was held in compliance with all applicable laws relating to the holding of open and public meetings. 4. No litigation or proceeding is pending or, to the best of my knowledge, threatened to restrain or enjoin the execution, delivery, or performance by the Lessee of the Transaction Documents or in any way to contest the validity of the Transaction Documents, to contest or question the creation or existence of the Lessee or the Governing Body of the Lessee or the authority or ability of the Lessee to execute or deliver the Transaction Documents or to comply with or perform its obligations thereunder. There is no litigation pending or, to the best of my knowledge, threatened seeking to restrain or enjoin the Lessee from annually appropriating sufficient funds to pay the rental payments or other amounts contemplated by the Lease Agreement. The entering into and performance of the Transaction Documents do not and will not violate any judgment, order, law, or regulation applicable to the Lessee or result in any breach of, or constitute a default under, or result in the creation of any lien, charge, security interest, or other encumbrance upon any assets of the Lessee or on the Equipment (as such term is defined in the Lease Agreement) pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement, or other instrument to which the Lessee is a party or by which it or its assets may be bound. 5. The Lessee has covenanted to comply with any continuing requirements that may be necessary to preserve the exclusion from gross income for purposes of federal income taxation under the Internal Revenue Code of 1986, as amended ("Code"), of the portion of the Rental Payments designated as interest. In the event that the Lessee continuously complies with its covenants under the Transaction Documents and so long as the amounts payable to the Lessor are derived from the Rental Payments made by the Lessee, the portion of the Rental Payments designated as interest is not includible in gross income for federal income tax purposes under the current law. No opinion is expressed as to the tax treatment of payments made to the Lessor from sources other than from Rental Payments made by the Lessee. The Lease Agreement and the obligation to pay Rental Payments thereunder as represented by the Lease Agreement are not "specified private activity bonds" as such tern is defined in the Code and the portion of the Rental Payments designated as interest is not includible as an item of tax preference under Section 57 of the Code for purposes of computing the alternative minimum tax. However, the portion of Rental Payments designated as interest and received by the Lessor may be subject to an alternative minimum tax. The portions of the Rental Payments designated as interest represented by the Lease Agreement and any gain on the sale of the Lease Agreement are not includible as gross income under California Law. Except as set forth in paragraph 6 herein, we express no opinion regarding other federal tax consequences arising with respect to the Lease Agreement and Transaction Documents. This opinion may be relied upon by purchasers and assignees of Lessor's interests in the Lease Agreement. Respectfully submitted, .. hn M. Funk Assistant City Attorney SANTA ANA CITY COUNCIL Miguel A. Pulled Michele Martinez Vicente Sarmiento dose Solorio P. David Banavides Juan Villages Sal Tnajero Mayor Mayor Pro Tem, Ward 2 Ward Ward Ward Ward Ward mpulid000santa-ana.ora mi mart! nezrrsanta-ana.ora vsarmientoVaanta-anaorq solorioRsanla-ana.oro dbenavidesnasanta-ana.oroivilleoas�losanta-ana.orq stinaiero0sante-ana.ora