BEAR· STEARNS - Amazon S3s3.amazonaws.com/flysfo.proofic.net/assets/investor/2005SwapBear3.pdfBear, Stearns & Co. Inc. Account Number: 0925-3186,for further credit to Bear Stearns

BEAR· STEARNSBEAR STEARNS CAPITAL MARKETS INC.

383 MADISON AVENUENEW YORK, NEW YORK 10179

(212) 272-2000

CONFIRMATION

DATE:

TO:ATTENTION:TELEPHONE:FACSIMILE:

FROM:TELEPHONE:FACSIMILE:

SUBJECT:

December 16, 2004

Airport Commission of the City and County of San FranciscoLeo Fermin(650) 821-5035(650) 821-5005

Derivatives Documentation212~272-4163

212-272-9594

Fixed Income Derivatives Confirmation

REFERENCE NUMBER(S): CXNE146613

The purpose of this letter agreement is to confirm the terms and conditions of the Transactionentered into on the Trade Date specified below (the "Transaction") between Bear Stearns CapitalMarkets Inc. ("BSCM") and Airport Commission of the City and County of San Francisco("Counterparty"). This letter agreement constitutes the sole and complete "Confirmation," asreferred to in the Master Agreement specified below, with respect to this Transaction.

This Confirmation is subject to and incorporates the 2000 Definitions ("the "Definitions"), each aspublished by the International Swaps and Derivatives Association, Inc. ("ISDA"). ThisConfirmation supplements, forms a part of and is subject to the ISDA Master Agreement dated asof December 16, 2004, which specifies XL Capital Assurance Inc. as the Insurer, between BSCMand Counterparty (the agreement, as amended and supplemented from time to time, being referredto herein as the "Master Agreement"). All provisions contained in, or incorporated by reference to,the Master Agreement shall govern the Transaction referenced in this Confirmation except asexpressly modified herein. In the event of any inconsistency between this Confirmation and theDefinitions or Master Agreement, this Confirmation shall prevail. This Transaction constitutes an"Insured Transaction" as defined in the Master Agreement specified below and it is thereforesubject to the special provisions ofthe Master Agreement which apply to Insured Transactions.

1. The terms of the particular Transaction to which this Confirmation relates are as follows:

Notional Amount: (i) USD 31,530,000 for the initial Calculation Period, and

C:\Documents and Settings\dyl \Local Settings\Temporary Internet Files\OLK18\San Francisco Airport (31530000)1.doc

Airport Commission of the City and County of San FranciscoReference Number: CXNE146613December 16, 2004Page 2 of6

(ii) the amount as detailed III the Schedule of NotionalAmounts attached hereto.

Trade Date:

Effective Date:

Tennination Date:

Fixed Amounts:

Fixed Rate Payer:

Fixed Rate PayerPayment Dates:

Fixed Rate PayerPeriod End Dates:

Fixed Rate:

Fixed Rate DayCount Fraction:

Floating Amounts:

Floating Rate Payer:

Floating Rate PayerPayment Dates:

Floating Rate Payer

December 16, 2004

February 15, 2006

May 1, 2019 (such date shall be subject to adjustment inaccordance with the Following Business Day Convention).

Counterparty

The first day of each month during the Tenn of thisTransaction, commencing March 1, 2006, up to and includingthe Termination Date, subject to adjustment in accordancewith the Following Business Day convention.

The first day of each month, commencing March 1, 2006 upto and including the Tennination Date during the Tenn ofthis Transaction, not subject to adjustment in accordance withthe Following Business Day Convention.

3.393%

30/360

BSCM

The first day of each month during the Tenn of thisTransaction, commencing March 1, 2006, up to and includingthe Tennination Date, subject to adjustment in accordancewith the Following Business Day Convention.


Period End Dates:

Floating Rate for initialCalculation Period:

Floating Rate Option:

Designated Maturity

Spread:

Floating Rate DayCount Fraction:

Reset Dates:

Method ofAveraging:

Compounding:

Business Days:

Calculation Agent:

The first day of each month, commencing March 1, 2006 upto and including the Termination Date during the Term ofthis Transaction, not subject to adjustment in accordance withFollowing Business Day Convention.

To be determined as of the Monday immediately precedingthe Effective Date and such rate shall be effective from andincluding the Effective Date to but excluding the nextsucceeding Reset Date.

63.5% ofUSD-LffiOR-BBA, plus the Spread.

1 month

29 basis points

Actual/360

The Effective Date and each Floating Rate Payer PaymentDate thereafter.

Inapplicable

Inapplicable

New York

BSCM

2. Account Details/Settlements: Payments to BSCM:Citibank, N.A., New YorkABA Number: 021-0000-89, for the account ofBear, Stearns & Co. Inc.Account Number: 0925-3186, for further credit toBear Stearns Capital Markets Inc.Sub-account Number: 101-90012-1-1Attention: Matthew J. Redshaw

Payments to Counterparty:The Bank ofNew YorkABA #021000018GLA 111-565


Account Name: SFIA #33Account Number: 412295REF: Josephine Libunao(415) 263-2418

3. Contact Names at BSCM:

4. Adjustment Event.

Rate Fixings: Derivatives Operations- 347-643-1840Payments: Derivatives Operations- 347-643-1842Confirmation andISDA Queries: Derivatives Documentation- 212-272-4163

(A) If on the Effective Date or any date thereafter (each, an "Adjustment EventDate"), the Notional Amount is greater than the outstanding principal amount of the RelatedBonds, an "Adjustment Event" occurs and the Notional Amount shall be reduced to the extentnecessary to make such Notional Amount as of the Adjustment Event Date equal to theoutstanding principal amount of the Related Bonds on such date.

(B) Upon an adjustment to the Notional Amount, a payment (each, an "AdjustmentPayment") will be due and owing by one party to the other equal to the Market Quotation for thisTransaction determined by Party A as if (i) a Termination Event occurred in respect of Party B,(ii) Party B was the only Affected Party with respect to such Termination Event, Party A was theparty entitled to calculate the Market Quotation, and the Transaction is the Affected Transaction,(iii) the relevant Adjustment Event Date was designated as the Early Termination Date, and (iv)the Notional Amount of the Transaction was an amount equal to the difference between (X) theNotional Amount, and (Y) the outstanding principal amount of the Related Bonds on theAdjustment Event Date. If an Adjustment Payment is a negative number, Party A will pay anamount equal to the absolute value of such Adjustment Payment to Party B. An AdjustmentPayment shall be paid by the relevant party on the date on which the Adjustment Event occurs.

(C) Notwithstanding anything to the contrary in this Agreement, Party B will notoptionally cause an Adjustment Event if, in connection with such Adjustment Event, anAdjustment Payment would be payable by Party B to Party A unless Party B provides evidencereasonably satisfactory to Party A and the Insurer that (i) such Adjustment Payment will notcause Party B to be in violation of, or in default under, the documentation relating to the RelatedBonds, and (ii) Party B has (or will have on or prior to the date of any Adjustment Payment)sufficient funds available to pay any Adjustment Payment that would be payable by Party B toParty A in connection with such Adjustment Event.

"Related Bonds" means the Airport Commission City and County of San Francisco, CaliforniaSan Francisco International Airport Second Series Variable Rate Revenue Refunding BondsIssue 33 Bonds.


5. Non-Issuance Termination Event. It shall be an Additional Termination Event with respect toParty B if the Related Bonds are not issued on or before the Effective Date. For purposes of theforegoing Additional Termination Event, Party B shall be the sole Affected Party and thisTransaction shall be the sole Affected Transaction. Notwithstanding anything to the contrary in theSchedule, Party A may designate an Early Termination Date with respect to the foregoingAdditional Termination Event without the consent ofthe Insurer.

This Confirmation may be executed in several counterparts, each of which shall be deemed anoriginal but all ofwhich together shall constitute one and the same instrument.

Counterparty hereby agrees to check this ConfIrmation and to confirm that the foregoing correctlysets forth the terms of the Transaction by signing in the space provided below and returning toBSCM a facsimile of the fully-executed ConfIrmation to 212/272-4933. For inquiries pleasecontact Cindy Ashmore by telephone at 212/272-4163. Originals will be provided for yourexecution upon your request.


We are very pleased to have executed this Transaction with you and we look forward to completingother transactions with you in the near future.

.Very truly yours,

BEAR STEARNS CAPITAL MARKETS INC.

By:Name:Title:

AIRPORT COMMISSION OF THE CITYAND COUNTY OF SAN FRANCISCO,CALIFORNIA

By: _cII....=...::·,_--- _Name: John L. MartinTitle: Airport Director

APPROVED AS TO FORM:DENNIS 1. HE RACity Attornex

By:

Airport Commission of the City and County of San FranciscoReference Number: CXNE146613December 16,2004Page 6of6


Very truly yours,


By:


By: _Name: John L. MartinTitle: Airport Director

APPROVED AS TO FORM:DENNIS J. HERRERACity Attorney

By:Deputy City Attorney

SCHEDULE OF NOTIONAL AMOUNTS(all such dates subject to adjustment in accordance with the Following Business Day Convention) .

From and including

Effective Date05/01/1105/01/1205/01/1305/01/1405/01/1505/01/1605/01/1705/01/18

To but excluding

05/01/1105/01/1205/01/1305/01/1405/01/1505/01/1605/01/1705/01/18

Termination Date

Applicable Notional Amount

$31,530,000$30,270,000$28,530,000$25,710,000$22,050,000$18,240,000$14,310,000$9,690,000$4,920,000

C:\Docurnents and Settings\dyl \Local Settings\Ternporary Internet Files\OLKI8\San Francisco Airport (31530000)I.doc

GUARANTY

GUARANfY, dated as of December 16,2004 by THE BEAR STEARNS COMPANIES INC., aDelaware corporation (the "Guarantor"), in favor of the Airport Commission of the City andCounty of San Francisco, (the "Beneficiary").

1. Guaranty

(a) To induce the Beneficiary to enter into an ISDA Master Agreement as of even dateherewith and one or more Transactions as of various dates (together, the"Agreement"; terms capitalized but not otherwise defined herein being used hereinas therein defmed) with BEAR STEARNS CAPITAL MARKETS INC. ("BSCM"),subject to the terms and conditions set forth herein, the Guarantor irrevocably andunconditionally guarantees to the Beneficiary, its successors and permitted assigns,the prompt payment by BSCM on demand, of any amount due and payable to theBeneficiary under the Agreement, subject to any applicable grace period thereunder(the "Obligations").

(b) The Guarantor hereby waives acceptance of this Guaranty, diligence, promptness,presentment, demand on BSCM for payment, protest of nonpayment and all noticesof any kind. ill addition, the Guarantor's obligations hereunder shall not be affectedby the existence, validity, enforceability, perfection, or extent of any collateraltherefor. The Beneficiary shall not be obligated to proceed against BSCM beforeclaiming under the Guaranty nor to file any claim relating to the Obligations in theevent that BSCM becomes subject to a bankruptcy, reorganization or similarproceeding, and the failure of the Beneficiary so to file shall not affect theGuarantor's obligations hereunder. The Guarantor agrees that its obligations underthis Guaranty constitute a guaranty of payment and not of collection.

2. Consents, Waivers and Renewals

The Guarantor agrees that the Beneficiary, may at any time and from time to time, eitherbefore or after the maturity thereof, without notice to or further consent of the Guarantor,extend the time of payment of, exchange or surrender any collateral for, or renew any of theObligations, and may also make any agreement with BSCM or with any other party to orperson liable on any of the Obligations, or interested therein, for the extension, renewal,payment, compromise, discharge or release thereof, in whole or in part, or for anymodification of the terms thereof or of any agreement between the Beneficiary and BSCMor any such other party or person, without in any way impairing or affecting this Guaranty.The Guarantor agrees that the Beneficiary may resort to the Guarantor for payment of any ofthe Obligations, whether or not the Beneficiary shall have resorted to any collateral security,or shall have proceeded against any other obligor principally or secondarily obligated withrespect to any of the Obligations.

3. Ex~nses

The Guarantor agrees to pay on demand all out-of-pocket expenses (including withoutlimitation the reasonable fees and disbursements of Beneficiary's counsel) incurred in theenforcement or protection of the rights of the Beneficiary hereunder; provided that theGuarantor shall not be liable for any expenses of the Beneficiary if no payment under thisGuaranty is due.

GUARANTY


1. Guaranty





3. Ex~nses


4. Subrogation

The Guarantor will not exercise any rights that it may acquire by way of subrogation until allObligations to the Beneficiary shall have been paid in full. Ifany amount shall be paid to theGuarantor in violation of the preceding sentence, such amount shall be held for the benefit ofthe Beneficiary and shall forthwith be paid to the Beneficiary to be credited and applied tothe Obligations, whether matured or unmatured. Subject to the foregoing, upon payment ofall the Obligations, the Guarantor shall be subrogated to the rights of the Beneficiary againstBSCM and the Beneficiary agrees to take at the Guarantor's expense such steps as theGuarantor may reasonably request to implement such subrogation.

5. Cumulative Rights

No failure on the part of the Beneficiary to exercise, and no delay in exercising, any right,remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partialexercise by the Beneficiary of any right, remedy or power hereunder preclude any other orfuture exercise of any right, remedy or power. Each and every right, remedy and powerhereby granted to the Beneficiary or allowed it by law or other agreement shall becumulative and not exclusive of any other, and may be exercised by the Beneficiary fromtime to time.

6. Representations and Warranties

(a) The Guarantor is a corporation duly existing under the laws of the State ofDelaware.

(b) The execution, delivery and performance of this Guaranty have been dulyauthorized by all necessary corporate action and do not conflict with any provisionof law or any regulation or of the Guarantor's charter or by-laws or of anyagreement binding upon it.

(c) No consent, licenses, approvals and authorizations of and registrations with ordeclarations to any governmental authority are required in connection with theexecution, delivery and performance of this Guaranty.

(d) This Guaranty constitutes the legal, valid and binding obligation of the Guarantor,enforceable against the Guarantor in accordance with its terms, subject as toenforcement to bankruptcy, insolvency, reorganization and other laws of generalapplicability relating to or affecting creditors'rights and to general equity principles.

7. Continuing Guaranty

The Guaranty shall remain in full force and effect and be binding upon the Guarantor and itssuccessors and permitted assigns, and inure to the benefit of the Beneficiary and itssuccessors and permitted assigns, until all of the Obligations have been satisfied in full. Inthe event that any payment by BSCM in respect of any Obligations is rescinded or mustotherwise be returned for any reason whatsoever, the Guarantor shall remain liablehereunder in respect of such Obligations as if such payment had not been made.

8. Notices

By:

All notices in connection with this Guaranty shall be deemed effective, if in writing anddelivered in person or by courier, on the date delivered to the following address (or suchother address which the Guarantor shall notify the Beneficiary of in writing):

THE BEAR STEARNS COMPANIES INC.383 Madison Avenue, New York, New York 10179Attention: Derivatives - 4th FloorWith a copy to: Legal- 6th Floor

9. Governing Law

The Guaranty shall be governed by, and construed in accordance with, the laws of the Stateof New York, without reference to choice oflaw doctrine.IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered by

the Guarantor to the Beneficiary as of the date fIrst above written.

THE BEAR STEARNS COl\.fPANIES INC.

1:~4~~Name:~~ L-~ dlbWTitle:~



Very truly yours,


By:






From and including

Effective Date05/01/1105/01/1205/01/1305/01/1405/01/1505/01/1605/01/1705/01/18

To but excluding

05/01/1105/01/1205/01/1305/01/1405/01/1505/01/1605/01/1705/01/18

Termination Date


$31,530,000$30,270,000$28,530,000$25,710,000$22,050,000$18,240,000$14,310,000$9,690,000$4,920,000


GUARANTY


1. Guaranty





3. Ex~nses


4. Subrogation











8. Notices

By:



9. Governing Law





4. Subrogation











8. Notices

By:



9. Governing Law







Very truly yours,


By:






From and including

Effective Date05/01/1105/01/1205/01/1305/01/1405/01/1505/01/1605/01/1705/01/18

To but excluding

05/01/1105/01/1205/01/1305/01/1405/01/1505/01/1605/01/1705/01/18

Termination Date


$31,530,000$30,270,000$28,530,000$25,710,000$22,050,000$18,240,000$14,310,000$9,690,000$4,920,000


GUARANTY


1. Guaranty





3. Ex~nses


4. Subrogation











8. Notices

By:



9. Governing Law



