WHEREAS the City of Toronto (the “City”) and MFP Financial Services Ltd. (“MFP”) signed Master Equipment Lease Agreement No. 838 (“Master Lease”) dated as of July 30, 1999;

AND WHEREAS the Master Lease was an umbrella agreement between MFP and the City which contemplated the execution of Equipment Schedules which would set out the equipment to be leased, the length of leases and the payment terms;

AND WHEREAS the City and MFP or Aztec Limited Partnership (“AZTEC”) signed 15 Equipment Schedules pursuant to the Master Lease, three of which have been cancelled, which are set out hereto as Schedule “A” (“Leases”);

AND WHEREAS the City has raised several issues with respect to the Leases;

AND WHEREAS as of December 1, 2001, the City owes to MFP outstanding lease payments with respect to the Leases in the amount of $8,373,182.00 (“Open Receivables”);

AND WHEREAS the City is in possession of equipment purchased by MFP at the City’s request and on its behalf with a capital value of $3,901,788.00 for which no leases have been executed (“Equipment Not Under Lease”);

AND WHEREAS the City is also in possession of equipment which MFP has ordered at the City’s request an on its behalf, but which MFP has not paid for, with a capital value of $1,662,574.86, for which no leases have been executed (“Further Equipment”);

AND WHEREAS the City, MFP and AZTEC wish to resolve the issues between them in relation to the Leases without any admission of liability:


  1. The City will forthwith pay MFP $9,054,970.00 in full satisfaction of the Open Receivables and for full and clear title to the Equipment Not Under Lease. For greater clarity, MFP agrees to waive $3,220,000.00 of the amount otherwise owing to it by the City.
  2. MFP will entirely waive any and all interest amounts owing to it as a result of the Open Receivables up to the date hereof.
  3. MFP represents and warrants that upon payment of the amount set out in Clause 1, MFP’s assigns will be fully paid and satisfied with respect to the Leases as of the date hereof.
  4. The City will forthwith directly pay the owners/suppliers of the Further Equipment the full amount of $1,662,574.86 and, if so requested, any interest owing on that sum attributable to late payment of the purchase price, for full and clear title to the Further Equipment.
  5. As of December 31, 2004, Leases 838-5, 838-6, 838-7, 838-8, 838-9 will be deemed to have reached the Expiration Date within the meaning of Appendix “B” to the Leases, such that the End of Term terms and conditions shall then apply. For greater clarity, the City shall make the lease payments due on January 1, 2005 under the said Leases.
  6. The City shall execute and deliver to MFP and AZTEC a Release in the form attached hereto as Schedule “B”.
  7. MFP and AZTEC shall execute and deliver to the City a Release in the form attached hereto as Schedule “C”.
  8. MFP and the City will make a public statement in the form attached hereto as Schedule “D” (“Statement”). MFP and the City shall use their best efforts to ensure that they do not make any public statements inconsistent with the Statement.
  9. MFP agrees to cooperate with the City in the City’s investigation into the processes by which the leases were agreed upon. More particularly, MFP agrees to grant reasonable access to: 1) MFP’s Chief Financial Officer, its Sales Representative Dash Domi and such other employees as the City may reasonably request for interviews by a representative of the City; and 2) MFP’s financial records documenting entertainment expenses or benefits of any other form given by MFP to former or current City employees and/or councilors.
  10. MFP acknowledges that no other amounts are owed by the City pursuant to the Leases as of December 18, 2001.
  11. MFP consents to the public disclosure of the Master Lease and Leases.
  12. Except as expressly provided in these Minutes of Settlement, the City shall comply with the terms of the Leases.