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MARKET AGENT AGREEMENT This MARKET AGENT AGREEMENT, dated as of March 1, 1994 (the "Agreement"), by and between Meridian Trust Company of California, a state banking corporation duly organized and existing pursuant to the laws of the State of California, as Trustee (the "Trustee"), under an Indenture of Trust, dated as of March 1, 1994 (the "Indenture"), by the Santa Ana Financing Authority (the "Authority") and Smith Barney Shearson Inc., a Delaware corporation (in its role as market agent hereunder, the "Market Agent"). WHEREAS, the Authority proposes to cause the Trustee to authenticate and deliver $107,399,438.50 aggregate principal amount of the its Police Administration and Holding Facility Lease Revenue Bonds, Series 1994A, consisting of $10,600,000 aggregate principal amount of Auction Rate Securities (the "ARS") and $10,600,000 aggregate principal amount of Inverse Rate Securities (the "IRS") pursuant to the Indenture. The Trustee is entering into this Agreement as agent for the Beneficial Owners of the ARS and IRS pursuant to the Indenture. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Trustee and the Market Agent agree as follows: Section 1. Definitions. Capitalized terms used herein and not otherwise defined shall have the respective meanings given such terms in the Indenture. Section 2. Appointment of Market Agent. At the written direction of the Authority, the Trustee hereby appoints Smith Barney Shearson Inc., as Market Agent with respect to any ARS and IRS to be executed and delivered under and pursuant to the Indenture. The Market Agent hereby accepts such appointment for the purpose of determining the Index and adjusting the percentage used in determining the Minimum Rate, the Applicable Percentage used in determining the Maximum Rate and the percentage of the Index used in determining the Non-Payment Rate, if any such adjustment is necessary to reflect any Change of Tax Law such that ARS paying the Maximum Rate, ARS paying the Minimum Rate and ARS paying the Non-Payment Rate in each case shall have substantially equal market values before and after such Change of Tax Law, upon the terms and conditions set forth herein. Section 3. Determination of the Index (a) On the Business Day immediately preceding each Auction Period Accrual Date, other than an Auction Period Accrual Date commencing after (i) the occurrence and during the continuance of a Payment Default and (ii) ownership of the ARS and IRS is no longer maintained in book-entry form by the Securities Depository, the Market Agent shall determine the Index. Not later than 9:00 a.m., New York City time, on such Business Day, the Market Agent shall notify the Auction Agent by telephone of the Index so determined. LA1-69758.1 1