BEAR STEARNS - Amazon S3s3.amazonaws.com/flysfo.proofic.net/assets/investor/2005SwapBea… · Leo Fermin (650) 821-5035 (650) 821-5005 Derivatives Documentation 212-272-4163 212-272-9594

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 Documentation212-272-4163212-272-9594

Fixed Income Derivatives Confirmation

REFERENCE NUMBER(S): CXNE146614

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 Financial Guaranty Insurance Company as the SwapInsurer, between BSCM and Counterparty (the agreement, as amended and supplemented fromtime to time, being referred to herein as the "Master Agreement"). All provisions contained in, orincorporated by reference to, the Master Agreement shall govern the Transaction referenced in thisConfirmation except as expressly modified herein. In the event of any inconsistency between thisConfirmation and the Definitions or Master Agreement, this Confirmation shall prevail. ThisTransaction constitutes an "Insured Transaction" as defined in the Master Agreement specifiedbelow and it is therefore subject to the special provisions of the Master Agreement which apply toInsured Transactions.

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

Notional Amount: (i) USD 29,970,000 for the initial Calculation Period, and

D:\Documents and Sellings\CGeorge\Local Sellings\Temporary Internet Files\OLKI09\San Francisco Airport (29970000).doc

Airport Commission of the City and County of San FranciscoReference Number: CXNE146614December 16, 2004Page 2 of6

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

Trade Date:

Effective Date:

Termination 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 PayerPeriod End Dates:

December 16,2004

February 10, 2005

May 1, 2026 (such date shall be subject to adjustment inaccordance with the Following Business Day Convention).

Counterparty

The first day of each month during the Term of thisTransaction, commencing March 1, 2005, 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, 2005 upto and including the Termination Date during the Term ofthis Transaction, not subject to adjustment in accordance withthe Following Business Day Convention.

3.445%

30/360

BSCM

The first day of each month during the Term of thisTransaction, commencing March 1,2005, up to and includingthe Termination Date, subject to adjustment in accordancewith the Following Business Day Convention.

The first day of each month during the Term of thisTransaction, commencing March 1, 2005 up to and including

Airport Commission of the City and County of San FranciscoReference Number: CXNE146614December 16,2004Page 3 of6

the Termination Date, not subject to adjustment III

accordance with Following Business Day Convention.

Floating Rate for initialCalculation Period:

Floating Rate Option:

Designated Maturity

Spread:

Floating Rate DayCount Fraction:

Reset Dates:

Method of Averaging:

Compounding:

Business Days:

Calculation Agent:

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

63.5% of USD-LIBOR-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 Coonterparty:The Bank of New YorkABA #021000018GLA 111-565Account Name: SFIA Issue #32Account Number: 412292


REF: 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 Swap Insurer that (i) such Adjustment Payment willnot cause Party B to be in violation of, or in default under, the documentation relating to theRelated Bonds, and (ii) Party B has (or will have on or prior to the date of any AdjustmentPayment) sufficient funds available to pay any Adjustment Payment that would be payable byParty B to Party 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 32 Bonds.


REF: 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 Swap Insurer that (i) such Adjustment Payment willnot cause Party B to be in violation of, or in default under, the documentation relating to theRelated Bonds, and (ii) Party B has (or will have on or prior to the date of any AdjustmentPayment) sufficient funds available to pay any Adjustment Payment that would be payable byParty B to Party 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 32 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 of the Swap Insurer.

This Confirmation may be executed in several counterparts, each of which shall be deemed anoriginal but all of which 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.


Weare 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 {fJ--Name: JohnL. Martin LfTitle: Airport Director

APPROVED AS TO FORM:DENNIS 1. HERRERACity Attorney

By:


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,


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 Date05/0111705/01/1805/01/1905/01/2005/01/2105/01/2205/0112305/0112405/01/25

To but excluding

05/01/1705/01/1805/01/1905/01/2005/01/2105/01/2205/01/2305/01/2405/01/25

Termination Date

Applicable Notional Amount

$29,970,000$27,915,000$24,750,000$21,435,000$17,962,500$14,932,500$11,752,500$8,430,000$4,957,500$1,327,500

D:\Documents and Settings\CGeorge\Local Settings\Temporary Internet Files\OLKI09\San Francisco Airport (29970000).doc


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 of the Swap Insurer.

This Confirmation may be executed in several counterparts, each of which shall be deemed anoriginal but all of which 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.


Weare 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,


By:Name:Title:


By {fJ--Name: JohnL. Martin LfTitle: Airport Director

APPROVED AS TO FORM:DENNIS 1. HERRERACity Attorney

By:


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,


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 Date05/0111705/01/1805/01/1905/01/2005/01/2105/01/2205/0112305/0112405/01/25

To but excluding

05/01/1705/01/1805/01/1905/01/2005/01/2105/01/2205/01/2305/01/2405/01/25

Termination Date

Applicable Notional Amount

$29,970,000$27,915,000$24,750,000$21,435,000$17,962,500$14,932,500$11,752,500$8,430,000$4,957,500$1,327,500

D:\Documents and Settings\CGeorge\Local Settings\Temporary Internet Files\OLKI09\San Francisco Airport (29970000).doc