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Contract - Roto - 2003-08-14 LEASE WITH OPTION TO PURCHASE #03-059 This LEASE WITH OPTION TO PURCHASE dated August 14 2003 ( Lease ) is by and between MUNICIPAL FINANCE CORPORATION ( Corporation ) a corporation duly organized and operating under the laws of the State of California as lessor and COSTA MESA SANITARY DISTRICT a sanitary district duly organized and existing under the laws of the State of California ( Lessee ) as lessee RECITALS WHEREAS Lessee deems it essential for Lessee to refinance and retain the property described herein for its own public purposes and WHEREAS it is intended that this Lease be treated as a tax exempt obligation of Lessee for federal income tax purposes and WHEREAS Lessee and Corporation agree to mutually cooperate now and hereafter to the extent possible in order to sustain the intent of this Lease and the bargain of both parties hereto WITNESSETH NOW THEREFORE in consideration of the mutual covenants hereinafter set forth the parties hereto agree as follows SECTION 1 Lease Corporation hereby leases to Lessee and Lessee hereby leases and hires from Corporation all property (the Property' ) described in the schedule or schedules (collectively the Schedule ) executed by the parties concurrently herewith and hereafter and made a part hereof Hereinafter reference to Corporation means Corporation and Corporation s assigns for those rights interests and obligations that may be assigned by Corporation SECTION 2 Term The terms and conditions of this Lease shall become effective upon the authorized execution of this Lease by the parties hereto The rental term of the Property leased hereunder commences and terminates on the dates specified in the Schedule SECTION 3A Representations and Warranties of Lessee The Lessee represents and warrants to Corporation tha,_ (a) Lessee is a sanitary district and political subdivision duly organized and existing under the Constitution and laws of the State of California with authority to enter into this Lease and to perform all of its obligations hereunder (b) Lessee s governing body has duly authorized the execution and delivery of this Lease and further represents and warrants that all requirements have been met and procedures followed to ensure its enforceability (c) The execution delivery and performance of this Lease do not and will not result in any breach of or constitute a default under any indenture mortgage contract agreement or instrument to which Lessee is a party by which it or its property is bound tS• (d) There is no pending or to the knowledge of Lessee threatened action or proceeding before any court or administrative agency which will materially adversely affect the ability of Lessee to perform its obligations under this Lease (e) The Property being leased is essential to Lessee in the performance of its governmental functions and its estimated useful life to Lessee exceeds the term of this Lease SECTION 3B Budget and Appropriation Lessee shall take such action as may be necessary to include all rental payments in its annual budget and annually to appropriate an amount necessary to make such rental payments During the term of this Lease Lessee will furnish to Corporation if so requested copies of each proposed budget of Lessee within thirty (30) days after it is filed and of each final budget of the Lessee within thirty (30) days after it is printed The covenants on the part of Lessee shall be -deemed and construed to be duties imposed by law and it shall be the duty of each and every public official of Lessee to take such action and do such things as are required by law in the performance of the official duty of such officials to enable Lessee to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by Lessee SECTION 4 Representations and Warranties of Corporation Corporation represents and warrants to Lessee that (a) Corporation is duly organized validly existing and in good standing under the laws of the State of California with full corporate power and authority to lease and own real and personal property (b) Corporation has full power authority and legal right to enter into and perform its obligations under this Lease and the execution delivery and performance of this Lease have been duly authorized by all necessary corporate actions on the part of Corporation and do not require any further approvals or consents (c) The execution delivery and performance of this Lease do not and will not result in any breach of or constitute a default under any indenture mortgage contract agreement or Instrument to which Corporation is a party by which it or its property is bound (d) There is no pending or to the knowledge of Corporation, threatened action or proceeding before any court or administrative agency which will materially adversely affect the ability of Corporation to perform its obligations under this Lease SECTION 5 Property Acquisition. Lessee currently has possession of the Property pursuant to a Lease with Option to Purchase dated July 12 2001 between Municipal Finance Corporation as lessor ( Lessor ) and the Lessee (the Refunded Lease ) SECTION 6 Financing Amount The monies available to pay for the Property set forth on the Schedule are defined as the Financing Amount Disbursement of the Financing Amount will be made directly to 2 City National Bank as paying agent of Lessor under the Refunded Lease to pay the purchase option price of the Property SECTION 7 Rental Payments LESSEE SHALL PAY CORPORATION RENTAL PAYMENTS (the Rental Payments ) IN THE AMOUNTS AND AT THE TIMES SET FORTH IN THE SCHEDULE AT THE OFFICE OF CORPORATION OR TO SUCH OTHER PERSON OR AT SUCH OTHER PLACE AS CORPORATION MAY FROM TIME TO TIME DESIGNATE IN WRITING Should Lessee fail to pay any part of the Rental Payments herein reserved within fifteen (15) days from the due date thereof Lessee shall upon Corporation' s written request pay interest on such delinquent payment from the date said payment was due until paid at the rate of twelve percent (12%) per annum or the maximum legal rate whatever is less Lessee shall pay Rental Payments exclusively from legally available funds in lawful money of the United States of America to the Corporation The obligation to pay Rental Payments will be absolute and unconditional in all events and will not be subject to set-off defense abatement reduction counterclaim, or recoupment for any reason whatsoever SECTION 8 Reserved SECTION 9 Security Interest As additional security for the payment of all of Lessee s obligations hereunder Lessee hereby grants Corporation its successors or assigns a security interest in the Property its accessions and attachments thereto and replacements thereof and substitutions therefor and all proceeds of the Acquisition Account and all proceeds and products of any of the foregoing Lessee agrees to execute such additional documents including financing statements which Corporation deems necessary or appropriate to establish and maintain Corporation s security interest SECTION 10 Use Lessee shall cause the Property to be used in a careful and proper manner and shall comply with and conform to all national state municipal police and other laws ordinances and regulations in anyway relating to the possession use or maintenance of the Property SECTION 11 Acceptance Lessee has accepted the Property and acknowledges that the Property is in good working order normal wear and tear excepted SECTION 12 Reserved SECTION 13 Property Selection Lessee has negotiated and facilitated the acquisition of the Property to be leased hereunder Corporation shall have no duty to inspect the Property If the Property has not been properly installed does not operate as represented or warranted by any Contractor or is unsatisfactory for any reason, Lessee shall make any claim on account thereof solely against said Contractor SECTION 14 Disclaimer of Warranty CORPORATION NOT BEING THE MANUFACTURER OR SUPPLIER OF THE PROPERTY NOR A DEALER IN SIMILAR PROPERTY HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION WARRANTY OR COVENANT EXPRESS OR IMPLIED WITH RESPECT TO THE DESIGN DURABILITY FITNESS FOR USE SUITABILITY OR MERCHANTABILITY OF THE 3 PROPERTY IN ANY RESPECT AND AS BETWEEN CORPORATION AND LESSEE ALL PROPERTY SHALL BE ACCEPTED AND LEASED BY LESSEE WHERE IS " AS IS " AND 'WITH ALL FAULTS " AND CORPORATION SHALL NOT BE RESPONSIBLE FOR ANY PATENT OR LATENT DEFECTS THEREIN LESSEE AGREES TO SETTLE DIRECTLY SUCH CLAIMS WITH THE SUPPLIER AND WILL NOT ASSERT ANY SUCH CLAIMS AGAINST CORPORATION SECTION 15 Alterations and Attachments All additions and improvements that are made to the Property shall belong to and become the property of the Corporation except that separately identifiable attachments added to the Property by Lessee may remain the property of Lessee as long as (i) the attachment is paid for in full by Lessee and (ii) Lessee agrees to remove the attachment and restore the Property to substantially as good condition as when received, normal wear and tear excepted if and when the Property may be returned to Corporation SECTION 16 Reserved SECTION 17 Maintenance and Repairs Lessee at its own cost and expense shall furnish necessary labor and materials to maintain the Property in good repair condition and working order Lessee s obligations to maintain the Property does not relieve the Supplier of its responsibility to fully perform with respect to all applicable Property warranties and guarantees SECTION 18 Risk of Loss ; Damage; Destruction With the exception of acts resulting from intentional misconduct or gross negligence by Corporation its agents and representatives Lessee hereby assumes and shall bear the entire risk of loss and damage to the Property from any and every cause whatsoever No loss or damage to the Property or any part thereof shall impair any obligation of Lessee under this Lease which shall continue in full force and effect Lessee waives the benefit of Civil Code Sections 1932 (2) and 1933 (4) and any and all other rights to terminate this Lease by virtue of any damage or destruction to the Property SECTION 19 Physical Damage/Public Liability Insurance Lessee shall keep the Property insured against risk of loss or damage from any special form peril for not less than the applicable purchase option value in the Schedule and Lessee shall carry public liability and property damage insurance covering the Property All said insurance shall be in form and amount and with reputable companies and shall name Corporation as an additional insured and loss payee Lessee shall pay the premiums therefor and deliver certification of said policies to Corporation Each insurer shall agree by endorsement upon the policy or policies issued by it or by independent instrument furnished to Corporation that it will give Corporation thirty (30) days written notice before the policy or policies shall be altered or canceled The proceeds of such insurance at the option of Lessee shall be applied (a) toward the replacement restoration or repair of the Property or (b) toward payment of the total remaining obligations of Lessee hereunder provided however that Lessee shall be responsible for the amount by which such insurance proceeds are insufficient to satisfy the cost of option (a) or option (b) above as applicable Should Lessee replace restore or repair the Property as set out in option (a) above this Lease shall continue in full force and effect Lessee may 4 self-insure up to specified limits as evidenced by a certificate of self insurance to be attached hereto in form and amount acceptable to Corporation Any self insurance program in which Lessee is a participant shall comply with the provisions under this Lease respecting cancellation and modification and payment of losses to the Corporation as its respective interests may appear Such self insurance shall be maintained on a basis which is actuarially sound as established by Lessee s risk manager or an independent insurance consultant which determination shall be made annually Any deficiency shall be corrected within sixty (60) days of Lessee becoming aware of such deficiency SECTION 20 Reserved. SECTION 21 Liens and Taxes Lessee shall keep the Property free and clear of all levies liens and encumbrances and shall promptly pay all fees assessments charges and taxes (municipal state and federal) which may now- or hereafter be imposed upon the ownership leasing renting sale possession or use of the Property excluding however all taxes on or measured by Corporation s income SECTION 22 Indemnity Subject to California law concerning contribution and enforceability of indemnifications Lessee shall indemnify Corporation against and hold Corporation harmless from any and all claims actions suits proceedings costs expenses damages and liabilities including attorneys fees arising out of connected with or resulting from the selection possession use operation or return of the Property excepting that Lessee shall not be required to indemnify Corporation in the event that such liability or damages are caused by the gross negligence or intentional misconduct of Corporation its agents or representatives SECTION 23 Events of Default The term Event of Default as used in this Lease means the occurrence of any one or more of the following events (a) Lessee fails to make any Rental Payment (or any other payment) within fifteen (15) days after the due date thereof or Lessee fails to perform or observe any other covenant condition or agreement to be performed or observed by it hereunder and such failure to either make the payment or perform the covenant condition or agreement is not cured within ten (10) days after written notice thereof by Corporation (b) Corporation discovers that any statement representation or warranty made by Lessee in this Lease the Schedule or in any document ever delivered by Lessee pursuant hereto or in connection herewith is false misleading or erroneous in any material respect (c) Lessee becomes insolvent is unable to pay its debts as they become due makes an assignment for the benefit of creditors applies or consents to the appointment of a receiver trustee conservator or liquidator of Lessee or of all or a substantial part of its assets or a petition for relief is filed by or against Lessee under federal bankruptcy insolvency or similar laws SECTION 24 Remedies Upon the occurrence of an Event of Default Corporation may at its option exercise any one or more of the following remedies (a) by written notice to Lessee request Lessee to (and Lessee agrees that it shall ) at Lessee s expense promptly return the Property to Corporation freight prepaid and insured to any 5 location in the State of California as designated by Corporation or Corporation at its option may enter upon Lessee s premises where the Property is located and take immediate possession of and remove the same without liability to Corporation or its agents for such entry or for damage to property or otherwise (b) sell or lease the Property or sublease it for the account of the Lessee holding Lessee liable for all Rental Payments and other payments due to the effective date of such selling leasing or subleasing plus any accrued interest to the date of termination and (c) exercise any other right remedy or privilege which may be available to it under applicable law including the right to (i) proceed by appropriate court action to enforce the terms of this Lease (ii) recover damages for the breach of this Lease and (iii) rescind this Lease as to any portion of or all of the Property No right or remedy herein conferred upon or reserved to Corporation is exclusive of any other right or remedy herein but each shall be cumulative of every other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and -may be enforced concurrently therewith or from time to time SECTION 25 Non Waiver No covenant or condition to be performed by Lessee under this Lease can be waived except by the written consent of Corporation Forbearance or indulgence by Corporation in any regard whatsoever shall not constitute a waiver of the covenant or condition in question Until performance by Lessee of said covenant or condition is complete Corporation shall be entitled to invoke any remedy available to Corporation under this Lease or by law or in equity despite said forbearance or indulgence SECTION 26 Assignment Without the prior written consent of Corporation Lessee shall not (a) assign transfer pledge or hypothecate this Lease the Property or any part thereof or any interest therein or (b) sublet or lend the Property or any part thereof or permit the Property or any part thereof to be used in a material way by anyone other than Lessee or Lessee s employees Consent to any of the foregoing prohibited acts applies only in the given instance and is not a consent to any subsequent like act by Lessee or any other person Corporation shall not assign its obligations under this Lease with the exception of its obligation to issue default notices and its obligations pursuant to Section 30 Corporation may assign its right title and interest L.. this Lease the Rental Payments and other amounts due hereunder and the Property in whole or in part to one or more assignees or subassignees at any time without the consent of Lessee Any such assignment by Corporation or its assigns shall comply with the requirements of Sections 5950-5955 of the California Government Code No such assignment shall be effective as against Lessee unless and until Corporation shall have filed with Lessee written notice thereof Lessee shall pay all Rental Payments hereunder pursuant to the direction of Corporation or the assignee named in the most recent assignment or notice of assignment filed with Lessee During this Lease term Lessee shall keep a complete and accurate record of all such notices of assignment Subject always to the foregoing this Lease inures to the benefit of and is binding upon, the heirs legatees personal representatives successors and assigns of the parties hereto 6 SECTION 27 Ownership The Property is and shall at all times be and remain the sole and exclusive property of Corporation and Lessee shall have no right title or interest therein or thereto except as expressly set forth in Sections 29 and 30 Lessee shall take all actions necessary to insure that legal title to the Property being acquired by Lessee hereunder whether by Lessee or by a third party acting on behalf of Lessee is vested in Corporation SECTION 28 Personal Property The Property is and shall at all times be and remain personal property notwithstanding that the Property or any part thereof may now be or hereafter become in any manner affixed or attached to or imbedded in or permanently resting upon real property or any building thereon or attached in any manner to what is permanent by means of cement plaster nails bolts screws or otherwise SECTION 29 Purchase Option If Lessee is not in default of any term, condition or payment specified hereunder Lessee may exercise options to prepay this Lease and purchase not less than all of the Property in as is and where is condition on the specified dates and for the specified amounts set forth in the Schedule annexed hereto Each purchase option payment specified for a particular date is exclusive of the Rental Payment due on the same date SECTION 30 Release of Liens Upon Lessee either making all of the Rental Payments scheduled herein or making a purchase option payment Corporation its successors or assigns shall cause i) legal title to the Property to be transferred to Lessee and ii) the release of all liens encumbrances or security interests on the Property created pursuant to Corporation s rights under this Lease SECTION 31 Reports/Tax Covenants Lessee shall cooperate with Corporation to comply with any and all reporting requirements that may be mandated by agencies of the United States of America or the State of California including the timely filing of IRS Form #8038-G or #8038- GC Lessee covenants to Corporation that (a) Throughout the term of the Lease the Property will be used for performing one or more governmental functions consistent with the permissible scope of Lessee s authority and will not be used in a trade or business of any person or entity other than Lessee except for uses by community services organizations as prescribed in the California Government Code (b) Lessee will not take any action or omit to take any action which action or omission, if reasonably expected on the date of this Lease would have caused this Lease to be an arbitrage bond within the meaning of Section 148 of the Internal Revenue Code of 1986 (as amended) (the Code ) (c) The Rental Payments are not directly guaranteed or indirectly guaranteed in whole or in part by the United States or any agency or instrumentality of the United States so as to cause the Rental Payments to be federally guaranteed within the meaning of Section 149 (b) of the Code 7 (d) The Lease Proceeds used for reimbursement of prior expenditures will be made pursuant to and in compliance with Income Tax Regulations Section 1 150 2 (e) Lessee hereby designates this Lease for purposes of paragraph (3) of Section 265 (b) of the Code and represents that not more than $10 000 000 aggregate principal amount of obligations the interest on which is excludable (under Section 103 (a) of the Code) from gross income for federal income tax purposes (excluding (i) private activity bonds as defined in Section 141 of the Code except qualified 501 (c) (3) bonds as defined in Section 145 of the Code and (ii) current refunding obligations to the extent the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation) including this Lease has been or will be issued by Lessee including all subordinate entities of Lessee during calendar year 2003 SECTION 32 Extraordinary Costs In the case of li tigation the prevailing party shall be entitled to recover from the opposing party all costs and expenses including attorneys fees (which may be the allocable cost of in-house counsel) incurred by the prevailing party in exercising any of its rights or remedies hereunder or enforcing any of the terms conditions or provisions hereof SECTION 33 Severability If any provision of this Lease shall be held invalid or unenforceable by a court of competent jurisdiction, such holdings shall not invalidate or render unenforceable any other provision of this Lease unless elimination of such provision materially alters the rights and obligations embodied in this Lease SECTION 34 Entire Agreement This Lease the Schedule and any agreements that specifically refer to this Lease that are duly executed by authorized agents of the parties hereto constitute the entire agreement between Corporation and Lessee and it shall not be further amended altered or changed except by a written agreement that is properly authorized and executed by the parties hereto SECTION 35 Notices Service of all notices under this Lease shall be sufficient if given personally or mailed to the party involved at its respective address hereinafter set forth or at such address as such party may provide in writing from time to time Any such notice mailed to such address shall be effective when deposited in the United States mail duly addressed and with postage prepaid SECTION 36 Titles The titles to the Sections of this Lease are solely for the convenience of the parties and are not an aid in the interpretation thereof SECTION 37 Further Assurances and Corrective Instruments Corporation and Lessee agree that they will from time to time execute acknowledge and deliver or cause to be executed acknowledged and delivered, such supplements hereto and such further instruments as may be reasonably required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Lease 8 a •4 t "V SECTION 38 Execution in Counterparts This Lease may be executed in several counterparts each of which shall be original and all of which shall constitute but one and the same instrument SECTION 39 Time Time is of the essence in this Lease and each and all of its provisions SECTION 40 Lease Interpretation This Lease and the rights of the parties hereunder shall be determined in accordance with the laws of the State of California IN WITNESS WHEREOF the parties hereto have caused their authorized agents to execute this Lease on the dates specified below MUNICIPAL FINANCE CORPORATION COSTA MESA SANITARY DISTRICT 23945 Calabasas Road, Suite 103 77 Fair Drive 3rd Floor Calabasas CA 91302 Costa Mesa CA 9 626 (lessor) A (lessle) By BY _ . s LED -_ _L. .0 Arlene Sc afer Title Title Date Date August 14, 2003 By James Ferrym Title Secretary Date August 14, 2003 9 LEASE SCHEDULE #03-059 This Schedule is issued pursuant to the Lease with Option to Purchase dated as of August 14 2003 by and between the undersigned A Property Location City wide B Property Description Roll out carts (approximately 44 000) C Name and Address of Supplier(s) ROTO INDUSTRIES INC 1251 North Jefferson ST Anaheim, CA 92807 D Financing Amount Summary Original Property Cost (including related expenses) $2 200 000 00 Less Capital Contribution from Prior lease payments (312 829 16) Financing Amount $1 887 170 84 E Lease Term The term of this Schedule is for a period of ninety six (96) months commencing on and concluding ninety six (96) months thereafter F Rental Payments The Rental Payments for this Schedule are due in sixteen (16) consecutive semi-annual payments in accordance with the Payment Schedule herein Each payment includes interest at the rate of 3 65% per annum on the unpaid principal balance based upon an initial principal equal to the Financing Amount shown in Section D G Payment Schedule Payable semi annually in #03 059 arrears I PMT Due Date (1) Rental (2) Purchase To To # Payment Option Principal Interest 1 $137 070 99 1 829 154 24 $102 630 12 34 440 87 2 137 070 99 1 722 038 54 104 503 12 32 567 87 3 137 070 99 1 612 967 98 106 410 30 30 660 69 4 137 070 99 1 501 906 89 108 352 29 28 718 70 5 137 070 99 1 388 818 92 110 329 72 26 741 27 6 137 070 99 1 273 667 10 112 343 24 24 727 75 7 137 070 99 1 156 413 76 114 393 50 22 677 49 8 137 070 99 1 037 020 55 116 481 18 20 589 81 9 137 070 99 915 448 41 118 506 97 18 464 02 10 137 070 99 791 657 58 120 771 54 16 299 45 11 137 070 99 665 607 57 122 975 62 14 095 37 12 137 070 99 537 257 14 125 219 93 11 851 06 13 137 070 99 406 564 32 127 505 19 9 565 80 14 137 070 99 273 486 36 129 832 16 7 238 83 15 137 070 99 137 979 72 132 201 60 4 869 39 16 137, 070 . 99 0 00 134 , 614 36 2, 456 . 63 TOTALS $2, 193, 135 . 34 $1 887 170 84 t3_9_5_,_.9_6_5_10 (1) Refer to the paragraph in the Lease entitled Release of Liens (2) Refer to the paragraph in the Lease entitled Purchase Option and Release of Liens Purchase options are in addition to the rental payment due on the same day Approved and agreed co MUNICIPAL FINANCE CORPORATION COSTA MESA SANITARY DISTR_CT (lessor) s e) By B. JA l 6,2nyug. Arlene Schafer Title . Title President Date Date August 14 2003 By James F ym i U!1 e ryman Title Secretary Date August 14, 2003 ASSIGNMENT OF LEASE #03 059 FOR VALUE RECEIVED MUNICIPAL FINANCE CORPORATION ( Corporation ) as assignor without recourse does hereby sell assign and transfer to CITIZENS BUSINESS BANK ( Assignee ) as assignee and its successors and assigns (i) all of its right title and interest in and to the attached Lease with Option to Purchase #03 059 dated August 14 2003 between Corporation as lessor and COSTA MESA SANITARY DISTRICT ( 'Lessee ) as Lessee (hereinafter said lease and any supplements amendments additions thereof and any extension or renewals thereof is referred to as the Lease ) and the Property subject to the Lease and (ii) all moneys sums and amounts now due or hereinafter to become due under the Lease Corporation represents that the Lease and Lease Schedule (s) delivered to Assignee are one of two duly executed duplicate originals that the duplicate originals comprise the entire writing obligation and agreement between Corporation and Lessee and that the holder of the second duly executed original of the Lease and Lease Schedule (s) is Lessee Corporation further represents and warrants that it has made no prior sale or assignment of any interest covered hereby that the Lease is genuine and in all respects is what it purports to be that Assignee shall not be liable for and does not assume responsibility for the performance of any of the covenants agreements or obligations specified in the Lease to be kept paid or performed by Corporation with exception of Assignee s obligation to issue notices upon Lessee ' s default of the Lease and to convey title to the leased Property upon Lessee s exercise of its option to purchase said Property in conformance with the terms of the Lease Corporation further represents and warrants that as of the date this assignment is made the Lease is in full force and effect has not been amended except as set forth in instrument delivered to Assignee and Lessee is not in default of any terms thereunder Corporation hereby constitutes and irrevocably appoints Assignee the true and lawful attorney of Corporation to demand receive and endorse payments and to give receipts releases and satisfactions either in the name of Assignee or in the name of Corporation in the same manner and with the same effect as Corporation could do if this Assignment of Lease had not been made Within fifteen (15) days after receiving its full bargain with respect to each Schedule covered hereby Assignee shall cause to be released to Lessee its vested interest in the Property thereto This Assignment of Lease shall be construed and governed in accordance with the laws of the State of California Any provision of this Assignment of Lease found to be prohibited by law shall be ineffective only to the extent of such prohibition and shall not invalidate the remainder of this Assignment of Lease This Assignment shall be binding upon and inure to the benefit of the parties and their respective successors and assigns and is made in accordance with the Municipal Lease Placement Agreement dated as of January 1 1999 as amended entered into between Corporation and Assignee In the case of litigation the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including attorneys ' fees which may be the allocable cost of in house counsel incurred by the prevailing party in exercising any of its rights or remedies hereunder or enforcing any of the terms conditions or provisions hereof IN WITNESS WHEREOF Corporation has caused this Assignment of Lease to be executed by its duly authorized agent on the date specified below MUNICIPAL FINANCE CORPORATION (assignor) By Title Date ACKNOWLEDGEMENT OF ASSIGNMENT The undersigned hereby acknowledges the assignment by MUNICIPAL FINANCE CORPORATION over to CITIZENS BUSINESS BANK of that certain Lease with Option to Purchase #03 059 dated as of August 14 2003 (the Lease ) entered into between MUNICIPAL FINANCE CORPORATION as lessor and the undersigned as lessee With respect to the Lease the undersigned agrees to pay commencing with the first scheduled Rental Payment all rentals and moneys due or to become due under said Lease to CITIZENS BUSINESS BANK, 701 North Haven Avenue Suite 350 Ontario CA 91764 and further agrees it shall have no counterclaim or offset against rentals due thereunder as to said Assignee and expressly further agrees that said Assignee shall not (except for the obligations specifically set forth in the foregoing Assignment of Lease) be liable for any of the obligations or burdens of the lessor under said Lease IN WITNESS WHEREOF the lessee has caused this Acknowledgment of Assignment to be executed by its authorized agent on the date specified below COSTA MESA SANITARY DISTRICT (le -e) i By By I/ A _Lei, . James err an Ar ene cha er Title Secretary Title President Date August 14 2003 Date August 14, 2003 2 ARBITRAGE CERTIFICATE #03-059 I certify that I am a duly authorized officer of the Costa Mesa Sanitary District (the Lessee ) and that in my official capacity as such officer I am responsible for executing and delivering on behalf of the Lessee the Lease with Option to Purchase #03 059 dated as of Dat (the Lease ) by and between Municipal Leasing Associates Inc as lessor (the Corporation ) and the Lessee as lessee This Certificate is being issued pursuant to Section 148 of the Internal Revenue Code of 1986 (the Code ) and Treasury Regulations promulgated thereunder (the Regulations ) The following facts estimates and circumstances are in existence on the date of this Certificate or are reasonably expected to occur hereafter 1 Under the Lease the Corporation is required to lease and sell certain property (the Property ) described in Lease Schedule #03-059 (the Schedule ) to the Lessee and the Lessee is required to lease and purchase the Property from the Corporation by making Rental Payments with respect thereto comprising principal and interest on the dates and in the amounts set forth in the Schedule 2 Pursuant to the Lease and for the purpose of meeting its obligations thereunder and assuring the Lessee of the availability of moneys needed to pay the cost of refinancing the Property by paying the purchase option price under the Lessee s present lease obligation (the Refunded Lease ) the Corporation has assigned all of its rights in and to the Lease and the Rental Payments due thereunder to Citizens Business Bank (the Assignee ) pursuant to Assignment of Lease #03 059 dated as of August 14 2003 3 On the date hereof the Assignee will pay not less than $1 887 170 84 for the Lease to pay the cost of refinancing the Property 4 The Lessee expended all of the proceeds of the Refunded Lease to pay the cost of the Property and costs of issuance of the Refunded Lease by October 15 2002 5 All of the spendable proceeds of the Lease will be expended on the costs of refinancing of the Property and costs of issuance of the Lease on the date hereof 6 The original proceeds of the Lease do not exceed or in any event do not exceed by more than 5% the amount necessary for the governmental purpose for which the Lease is entered into 7 No sinking fund will be maintained for the payment of the Rental Payments due under the Lease 8 The Property has not been and is not expected during the term of the Lease to be sold or otherwise disposed of by the Lessee 9 To the best of the knowledge and belief of the undersigned the expectations of the Lessee as set forth above are reasonable and there are no present facts estimates and circumstances which would change the foregoing expectations 10 The Lessee has not been notified of the listing or proposed listing of it by the Internal Revenue Service as an issuer whose arbitrage certificates may not be relied upon COSTP,/M SA SANIT• \Y DI• TRIC, By l rlene c a er Title President Date August 14, 2003 By dames Fe yman Title Secretary Date August 14, 2003 2 Transfer of Legal Title #92 109 01 City National Bank ( Bank ) holds legal title to the property described on schedule #01-074 AF of Lease with Option to Purchase dated July 12 2002 ( Lease ) made with COSTA MESA SANITARY DISTRICT as lessee In consideration of the Bank receiving its full bargain for prepayment of the Lease as of and pursuant to the direction and authority given the bank by COSTA MESA SANITARY DISTRICT the Bank hereby transfers to MUNICIPAL °INANCE CORPORATION free and clear of any liens or encumbrances all rights interests and legal title to the property that is stipulated on attached schedule #01 074 AF and generally described below Roll out carts (approximately 44 000) CITY NATIONAL BANK COST SA ANITAR DI TRI T By BY I A. Title Arlene Schafer Title Date _ Date August 14, 2003 By James Ffe7r7mrrt Title Secretary Date August 14, 2003 AUTHORIZATION TO DISBURSE AND CERTI=ICATION OF VALUE RECEIVED #03-059 Pursuant to the terms of Section 6 of that certain Lease with Option to Purchase dated August 14 2003 between MUNICIPAL FINANCE CORPORATION ( Corporation ) and COSTA MESA SANITARY DISTRICT ( Lessee ) the undersigned hereby authorizes the Corporation or its assignee to disburse $1 887 170 84 to C_ty National Bank in consideration of refunding Lease with Option to Purchase dated July 12 2001 ( Lease ) The total Rental Payment due on in the amount of $140 591 00 for Lease Schedule #01 074 AF will be paid directly by the Lessee to City National Bank on or before said due date COSTA ES SANITAec�C D STRRICT By •n �J\ Y7� s Oti/ Arlene Schafer Title Pr-sident Date August 14, 2003 ---B _ By — ames rerryma Title Secretary Date August 14, 2003