\RESOLUTION NO. HDT2116 t;> RESOLUTION OF THE BOARD OF HARBOR COMMISSIONERS OF THE CITY OF LONG BEACH, CALIFORNIA AUTHORIZING THE ISSUANCE AND SALE OF

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1 \RESOLUTION NO. HDT2116 t;> RESOLUTION OF THE BOARD OF HARBOR COMMISSIONERS OF THE CITY OF LONG BEACH, CALIFORNIA AUTHORIZING THE ISSUANCE AND SALE OF $300,000,000 AGGREGATE PRINCIPAL AMOUNT OF HARBOR REVENUE BONDS OF SAID CITY; AND PROVIDING FOR THE TERMS AND CONDITIONS OF SAID BONDS (NINTH SUPPLEMENTAL RESOLUTION)

2 qi :At RESOLUTION NO. HD-2116 Resolution of the Board of Harbor Commissioners of The City of Long Beach, California Authorizing the Issuance and Sale of $300,000,000 Aggregate Principal Amount Of Harbor Revenue Bonds of Said City; and Providing for the Terms and Conditions of Said Bonds (NINTH SUPPLEMENTAL RESOLUTION) WHEREAS, the City of Long Beach (the "City") is a city organized and existing under a charter duly and regularly adopted pursuant to the provisions of the Constitution of the State of California; WHEREAS, pursuant to Article XII of said charter, the City, acting by and through its Board of Harbor Commissioners (the "Board"), is authorized to issue, on behalf of the City, revenue bonds for harbor purposes; WHEREAS, pursuant to Resolution No. HD-1475 adopted by the Board on November 8, 1989 (together with all amendments and modifications thereto, the "Master Resolution"), the Board has heretofore authorized the issuance of Harbor Revenue Bonds (the "Bonds") on behalf of the City by adoption of supplemental resolutions from time to time, with the payment of the principal, interest on and any redemption premiums thereon being secured by and payable solely from the Revenues (as defined in the Master Resolution) of the Port (as defined in the Master Resolution); WHEREAS, pursuant to Resolution No. HD-1476 adopted by the Board on November 8, 1989, the Board, on behalf of the City, issued $242,000,000 principal amount of Bonds (the "Series 1989 Bonds"), which were subsequently refunded by the Series 1998 Bonds, as defined below; WHEREAS, pursuant to Resolution No. HD-1504 adopted by the Board on May 14, 1990 as amended and restated by Resolution No. HD-1511 adopted by the Board on June 11, 1990, the Board, on behalf of the City, issued $79,200,000 principal amount of Bonds (the "Series 1991 Bonds"), which have been paid in full; WHEREAS, pursuant to Resolution No. HD-1677 adopted by the Board on October 4, 1993, the Board, on behalf of the City, issued $166,500,000 principal amount of Bonds (the "Series 1993 Bonds"); WHEREAS, pursuant to Resolution IID-1787 adopted by the Board on November 20, 1995, the Board, on behalf of the City, issued $343,420,000 principal amount of Bonds (the "Series 1995 Bonds");

3 WHEREAS, pursuant to Resolution HD-1891 adopted by the Board on December 15, 1997, the Board, on behalf of the City, issued $206,330,000 principal amount of Bonds (the "Series 1998 Bonds"), the proceeds of such Series 1998 Bonds being utilized to refund the Series 1989 Bonds; WHEREAS, pursuant to Resolution HD-2037 adopted by the Board on October 30, 2000, the Board, on behalf of the City, issued $275,000,000 principal amount of Bonds (the "Series 2000 Bonds"); WHEREAS, public interest and necessity require that the Board proceed under the Master Resolution to issue and sell on behalf of the City $150,000,000 aggregate principal amount of City of Long Beach, California Harbor Revenue Bonds, Series 2002A (the "Series 2002A Bonds") and $150,000,000 aggregate principal amount of City of Long Beach, California Harbor Revenue Bonds, Series 2002B (the "Series 2002B Bonds," and collectively with the Series 2002A Bonds, the "Series 2002 Bonds") secured by and payable from the Revenues of the Port for the purpose of financing and refinancing the acquisition, construction and equipping of the Project (as defined herein), current refunding the Refunded Notes (as defined herein), purchasing the Series 2002 Reserve Fund Surety Bond (as defined herein), paying the premium on the Series 2002A Bond Insurance Policy (as defined herein), paying the premium on the Series 2002B Bond Insurance Policy (as defined herein) and paying the costs of issuance of the Series 2002 Bonds; WHEREAS, a majority of the members of the City Council has approved the issuance of the Series 2002 Bonds; WHEREAS, there has been presented to this Board a form of Fiscal Agent Agreement, to be dated as of June 1, 2002 (the "Fiscal Agent Agreement") by and between the City, acting by and through the Board, and U.S. Bank, N.A., as fiscal agent (the "Initial Fiscal Agent"); WHEREAS, there has been presented to this Board a form of Remarketing Agreement, to be dated as of June 1, 2002 (the "Series 2002A Remarketing Agreement") by and between Salomon Smith Barney Inc., as remarketing agent (the "Series 2002A Remarketing Agent"), and the City, acting by and through the Board; WHEREAS, there has been presented to this Board a form of Remarketing Agreement, to be dated as of June 1, 2002 (the "Series 2002B Remarketing Agreement") by and between UBS PaineWebber Inc., as remarketing agent (the "Series 2002B Remarketing Agent"), and the City, acting by and through the Board; WHEREAS, there has been presented to this Board a form of Standby Bond Purchase Agreement, to be dated as of June 1, 2002 (the "Series 2002A Initial Liquidity Facility") by and between the City, acting by and through the Board, and Dexia Credit Local, acting through its New York Agency (the "Series 2002A Initial Liquidity Facility Provider"); WHEREAS, there has been presented to this Board a form of Standby Bond Purchase Agreement, to be dated as of June 1, 2002 (the "Series 2002B Initial Liquidity Facility") by and between the City, acting by and through the Board, and JPMorgan Chase Bank (the "Series 2002B Initial Liquidity Facility Provider"); 2

4 WHEREAS, there has been presented to this Board a form of Insurance and Indemnity Agreement (the "Series 2002 Insurance and Indemnity Agreement") by and between the City, acting by and through the Board, and MBIA Insurance Corporation (the "Bond Insurer"); WHEREAS, there has been presented to this Board a form of Financial Guaranty Agreement (the "Series 2002 Reserve Fund Guaranty Agreement") by and between the City, acting by and through the Board, and MBIA Insurance Corporation (the "Series 2002 Reserve Fund Surety Provider"); WHEREAS, there has been presented to this Board a form of Tax Compliance Certificate (the "Tax Compliance Certificate") to be executed and delivered by the City, acting by and through the Board; WHEREAS, there has been presented to this Board a form of Continuing Disclosure Certificate (the "Continuing Disclosure Certificate") to be executed and delivered by the City, acting by and through the Board; WHEREAS, there has been presented to this Board an executed copy of the Bond Purchase Agreement, dated June 19, 2002 (the "Series 2002A Bond Purchase Agreement") by Salomon Smith Barney Inc. (the "Series 2002A Underwriter") and accepted by the City, acting by and through the Board; and WHEREAS, there has been presented to this Board an executed copy of the Bond Purchase Agreement, dated June 19, 2002 (the "Series 2002B Bond Purchase Agreement") by UBS PaineWebber Inc. (the "Series 2002B Underwriter") and accepted by the City, acting by and through the Board. NOW, THEREFORE, the Board of Harbor Commissioners of the City of Long Beach, California, DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: ARTICLE I AUTHORIZATION OF SERIES 2002 BONDS; DEFINITIONS Section Ninth Supplemental Resolution; Determinations. This Ninth Supplemental Resolution (this "Ninth Supplemental Resolution") is adopted in accordance with the provisions of the Master Resolution. The Board hereby determines that the Project (as defined below) and the issuance of the Series 2002 Bonds for the purpose of financing the Project and refunding the Refunded Notes (as defined below) is advisable from an economic and financial viewpoint. The Board hereby determines that the issuance of the Series 2002 Bonds in the principal amounts hereinafter authorized is needed to finance the Project as described in Exhibit A hereto, refund the Refunded Notes, pay the premium for a debt service reserve fund surety bond, pay the premiums for the Series 2002A Bond Insurance Policy and the Series 2002B Bond Insurance Policy, and pay the costs of issuance of the Series 2002 Bonds. Section Definitions. All terms which are defined in Section 1.02 of the Master Resolution shall, unless otherwise defined herein, have the same meanings, respectively, in this 3

5 Ninth Supplemental Resolution. Unless the context otherwise requires, the terms defined in this Section 1.02 shall, for all purposes of this Ninth Supplemental Resolution and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and the plural forms of any of the terms herein defined. Unless otherwise defined in the Master Resolution, this Ninth Supplemental Resolution or the Fiscal Agent Agreement all terms used herein shall have the meanings assigned to such terms by the Law. "Assistant Executive Director" means the person at a given time who is the assistant executive director of the Department or such other title as the Board may from time to time assign for such position and the officer of officers succeeding to such position as certified by the Board. "Bond Counsel" means such law firm of national standing in the field of public finance selected by the Board. "Bond Insurer" means MBIA Insurance Corporation, a New York stock insurance company, or any successor thereto. "Business Day" has the meaning provided for in the Fiscal Agent Agreement. "Closing Date" means the date of delivery of the Series 2002 Bonds to the Series 2002 Underwriters against payment therefor. "Code" means the Internal Revenue Code of 1986, as amended, including regulations, rulings and judicial decisions promulgated thereunder. "Demand for Payment" has the meaning given such term under the Series 2002 Reserve Fund Guaranty Agreement. "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns. "Director of Finance" means the person at a given time who is the director of finance of the Department or such other title as the Board may from time to time assign for such position and the officer of officers succeeding to such position as certified by the Board. "Executive Director" means the person at a given time who is the executive director of the Department or such other title as the Board may from time to time assign for such position and the officer of officers succeeding to such position as certified by the Board. "Executive Secretary of the Board' means the person at a given time who is the executive secretary of the Board or such other title as the Board may from time to time assign for such position and the officer of officers succeeding to such position as certified by the Board. "Fiscal Agent Agreement" means the Fiscal Agent Agreement, dated as of June 1, 2002, by and between the City, acting by and through the Board, and the Initial Fiscal Agent. 4

6 "Initial Fiscal Agent" means U.S. Bank, N.A., and any successor appointed in accordance with Article VII of the Master Resolution and Section 7.01 of the Fiscal Agent Agreement. "Investment Securities" means for purposes of this Ninth Supplemental Resolution and subject to the limitations set forth in the defined term "Investment Securities" under the Master Resolution and the laws of the State: A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA guaranteed mortgage-backed bonds GNMA guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) 7. U.S. Maritime Administration Guaranteed Title XI financing 8. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds U.S. government guaranteed pubic housing notes and bonds 5

7 C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae") Mortgage-backed securities and senior debt obligations 4. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations 5. Resolution Funding Corp. (REFCORP) obligations 6. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's of AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aal or Aa2. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the Bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. G. Investment Agreements, including GIC's, Forward Purchase Agreements and Reserve Fund Put Agreements acceptable to the Bond Insurer (Investment Agreement criteria is available upon request). H. Commercial paper rated, at the time of purchase, "Prime 1" by Moody's and "A-1" or better by Standard & Poor's. I. Bonds or notes issued by a state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies. 6

8 J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime 1" or "A3" or better by Moody's and "A-1" or "A" or better by Standard & Poor's. K. Repurchase Agreements for 30 days or less must follow the following criteria. Repurchase Agreements which exceed 30 days must be acceptable to the Bond Insurer (criteria available upon request) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/bonower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. 1. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated "A" or better by Standard & Poor's and Moody's, or b. Banks rated "A" or above by Standard & Poor's and Moody's. 2. The written repo contract must include the following: a. Securities which are acceptable for transfer are: i. Direct U.S. governments, or ii. Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) b. The term of the repo may be up to 30 days c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral i. The securities must be valued weekly, marked-tomarket at current market price plus accrued interest X0 7

9 1. The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. 3. Legal opinion which must be delivered to the municipal entity: a. Repo meets guidelines under state law for legal investment of public funds. L. The City's investment pool maintained by the City Treasurer in accordance with the City's adopted investment policy; provided, however that all investments in such investment pool meet the requirements of this definition of Investment Securities (provided, however, moneys in the Series 2002 Construction Account may be invested in the City's investment pool until June 26, 2004, notwithstanding if such investment pool does not meet the requirements of this definition of Investment Securities). "Issuing and Paying Agent" means U.S. Bank, N.A., as successor Issuing and Paying Agent to Bank America National Trust Company, and any successor thereto. "Issuing and Paying Agent Agreement" means the Issuing and Paying Agent Agreement, dated as of January 1, 1994, by and between the City, acting by and through the Board, and the Issuing and Paying Agent, as amended and supplemented. "Master Resolution" has the meaning given thereto in the third recital paragraph of this Ninth Supplemental Resolution. "Ninth Supplemental Resolution" means this Resolution No. HD-2116 of the Board, and any amendments, modifications or supplements hereto. "Notes Resolution" means Resolution HD-1689 adopted by the Board on January 10, 1994, as amended and supplemented, pursuant to which the Refunded Notes were issued. "Official Statement" means the Official Statement relating to the Series 2002 Bonds dated June 19, 2002, including all appendices thereto. "Payment Fund" means the fund of such name established and maintained by the Issuing and Paying Agent pursuant to the terms of the Notes Resolution and the Issuing and Paying Agent Agreement. 8

10 "President of the Board" means the person at a given time who is the president of the Board or such other title as the Board may from time to time assign for such position and the officer of officers succeeding to such position as certified by the Board. "Project" means the project to be acquired, constructed and installed with a portion of the proceeds of the Series 2002 Bonds as described in Exhibit A. "Rating Agency" or "Rating Agencies" shall have the meaning set forth in the Fiscal Agent Agreement. "Rebate Requirements" means the Rebate Requirements set forth in the Tax Compliance Certificate. "Refunded Notes" means $75,000,000 aggregate principal amount of the City's Outstanding Harbor Department Commercial Paper Notes, Series A (AMT), to be refunded and defeased with a portion of the proceeds of the Series 2002 Bonds. "Resolution" means the Master Resolution as supplemented, including this Ninth Supplemental Resolution. "Series A Account" means the Series A Account of the Payment Fund established and maintained by the Issuing and Paying Agent pursuant to the Notes Resolution and the Issuing and Paying Agent Agreement. "Series 2002 Bond Insurance Policies" means collectively, the Series 2002A Bond Insurance Policy and the Series 2002B Bond Insurance Policy. "Series 2002 Bonds" means collectively the Series 2002A Bonds and the Series 2002B Bonds. "Series 2002 Costs of Issuance Fund" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002 Costs of Issuance Fund established pursuant to Section 3.04 hereof. "Series 2002 Construction Account" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002 Construction Account established and maintained in the Series 2002 Project Fund pursuant to Section 3.02 hereof. "Series 2002 Insurance and Indemnity Agreement" means the Insurance and Indemnity Agreement, dated as of June 1, 2002, by and between the City, acting by and through the Board, and the Bond Insurer. "Series 2002 Project Fund" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002 Project Fund established pursuant to Section 3.02 hereof. "Series 2002 Rebate Fund" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002 Rebate Fund established pursuant to Section 3.05 hereof. 9

11 "Series 2002 Reserve Fund" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002 Reserve Fund established pursuant to Section 3.03 hereof. "Series 2002 Reserve Fund Surety Bond" means the debt service reserve fund surety bond issued by the Series 2002 Reserve Fund Surety Provider to be deposited with the Fiscal Agent. "Series 2002 Reserve Fund Surety Provider" means MBIA Insurance Corporation, or any successor thereto. "Series 2002 Reserve Fund Guaranty Agreement" means the Financial Guaranty Agreement by and between the City, acting by and through the Board, and the Series 2002 Reserve Fund Surety Provider. "Series 2002 Underwriters" means collectively the Series 2002A Underwriter and the Series 2002B Underwriter. "Series 2002A Bond Insurance Policy" means the financial guaranty insurance policy issued by the Bond Insurer that guarantees the payment of the principal of and interest on the Series 2002A Bonds. "Series 2002A Bond Purchase Agreement" means the Bond Purchase Agreement, dated June 19, 2002, by the Series 2002A Underwriter and accepted by the City, acting by and through the Board. "Series 2002A Bonds" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002A, authorized and issued pursuant to the Master Resolution as supplemented by this Ninth Supplemental Resolution. "Series 2002A Initial Liquidity Facility" means the Standby Bond Purchase Agreement, dated as of June 1, 2002, by and between the City, acting by and through the Board, and the Series 2002A Initial Liquidity Facility Provider. "Series 2002A Initial Liquidity Facility Provider" means Dexia Credit Local, acting through its New York Agency, and its successors and assigns. "Series 2002A Maturity Date" means May 15, "Series 2002A Remarketing Agent" means Salomon Smith Barney Inc. or any successor appointed pursuant to Section 6.01(a) of the Fiscal Agent Agreement. "Series 2002A Remarketing Agreement" means, initially, the Remarketing Agreement, dated as of June 1, 2002, by and between the Series 2002A Remarketing Agent and the City, acting by and through the Board, relating to the Series 2002A Bonds, as it may be amended, supplemented or otherwise modified from time to time, and, subsequently, any similar agreement between the City, acting by and through the Board, and any successor Series 2002A Remarketing Agent, as any such agreement may be amended, supplemented or otherwise modified from time to time. 10

12 1/0 "Series 2002A Underwriter" means Salomon Smith Barney Inc., or any successor thereto. "Series 2002B Bond Insurance Policy" means the financial guaranty insurance policy issued by the Bond Insurer that guarantees the payment of the principal of and interest on the Series 2002B Bonds. "Series 2002B Bond Purchase Agreement" means the Bond Purchase Agreement, dated June 19, 2002, by the Series 2002B Underwriter and accepted by the City, acting by and through the Board. "Series 2002B Bonds" means the City of Long Beach, California Harbor Revenue Bonds, Series 2002B, authorized and issued pursuant to the Master Resolution as supplemented by this Ninth Supplemental Resolution. "Series 2002B Initial Liquidity Facility" means the Standby Bond Purchase Agreement, dated as of June 1, 2002, by and between the City, acting by and through the Board, and the Series 2002B Initial Liquidity Facility Provider. "Series 2002B Initial Liquidity Facility Provider" means JPMorgan Chase Bank, and its successors and assigns. "Series 2002B Maturity Date" means May 15, "Series 2002B Remarketing Agent" means UBS PaineWebber Inc. or any successor appointed pursuant to Section 6.01(a) of the Fiscal Agent Agreement. "Series 2002B Remarketing Agreement" means, initially, the Remarketing Agreement, dated as of June 1, 2002, by and between the Series 2002B Remarketing Agent and the City, acting by and through the Board, relating to the Series 2002B Bonds, as it may be amended, supplemented or otherwise modified from time to time, and, subsequently, any similar agreement between the City, acting by and through the Board, and any successor Series 2002B Remarketing Agent, as any such agreement may be amended, supplemented or otherwise modified from time to time. "Series 2002B Underwriter" means UBS PaineWebber Inc., or any successor thereto. "Tax Compliance Certificate" means the Tax Compliance Certificate delivered by the City, acting by and through the Board, at the time of the issuance of the Series 2002 Bonds, as the same may be amended or supplemented in accordance with its terms. ARTICLE II THE SERIES 2002 BONDS Section Authorization. The Board hereby authorizes the issuance of the Series 2002 Bonds pursuant to the terms of the Resolution. There is hereby created a seventh Series of Bonds issued pursuant to the Law and under the Resolution in the aggregate principal amount of $150,000,000 which Bonds shall be designated as the "City of Long Beach, California Harbor 11

13 s Revenue Bonds, Series 2002A" and shall be Current Interest Bonds and an eighth Series of Bonds issued pursuant to the Law and under the Resolution in the aggregate principal amount of $150,000,000 which Bonds shall be designated as the "City of Long Beach, California Harbor Revenue Bonds, Series 2002B" and shall be Current Interest Bonds. The Series 2002 Bonds will initially be issued as Variable Rate Indebtedness. Section Terms of the Series 2002 Bonds. The Series 2002A Bonds shall initially bear interest at a Long-Term Interest Rate (as such term in defined in the Fiscal Agent Agreement) of 4.00% per annum until May 14, 2004, at which time, the Board, with the prior written consent of the Bond Insurer (which consent shall not be unreasonably withheld), shall designate a new Interest Rate Period (as such term is defined in the Fiscal Agent Agreement) in accordance with the terms of the Fiscal Agent Agreement. The Series 2002B Bonds shall initially bear interest at a Long-Term Interest Rate of 4.00% per annum until May 14, 2004, at which time, the Board, with the prior written consent of the Bond Insurer (which consent shall not be unreasonably withheld), shall designate a new Interest Rate Period in accordance with the terms of the Fiscal Agent Agreement. The Series 2002A Bonds shall niature on the Series 2002A Maturity Date and the Series 2002B Bonds shall mature on the Series 2002B Maturity Date. Pursuant to the provisions of Section 3.01 of the Master Resolution, the Board hereby elects to provide for the additional terms and conditions of the Series 2002 Bonds (including, but in no way by limitation, the items listed in the second paragraph of Section 3.01 of the Master Resolution) in the Fiscal Agent Agreement. All of the terms and conditions of the Series 2002 Bonds shall be governed by the terms and provisions of the Resolution and the Fiscal Agent Agreement. Section Fiscal Agent and Fiscal Agent Agreement. U.S. Bank, N.A. is hereby appointed as the Initial Fiscal Agent with respect to the Series 2002 Bonds. The form, terms and provisions of the Fiscal Agent Agreement are in all respects approved, and the President of the Board, the Executive Director, the Assistant Executive Director and/or the Director of Finance, any one or more thereof, are hereby authorized, empowered and directed to execute, acknowledge and deliver the Fiscal Agent Agreement including counterparts thereof, in the name and on behalf of the Board. The Fiscal Agent Agreement, as executed and delivered, shall be in substantially the form now before this meeting and hereby approved, or with such changes therein as shall be approved by the officer or officers of the Board executing the same; the execution thereof shall constitute conclusive evidence of the Board's approval of any and all changes or revisions therein from the form of the Fiscal Agent Agreement now before this meeting; and from and after the execution and delivery of the Fiscal Agent Agreement, the officers, agents and employees of the Board are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Fiscal Agent Agreement. ARTICLE III SALE OF SERIES 2002 BONDS; APPLICATION; FUNDS Section Sale of Series 2002 Bonds; Application of the Proceeds of the Series 2002 Bonds. The Series 2002A Bonds shall be sold to the Series 2002A Underwriter in the manner and on the terms and conditions set forth in the Series 2002A Bond Purchase Agreement, 12

14 and consistent with the terms of Article 11 hereof and the Fiscal Agent Agreement. The Series 2002B Bonds shall be sold to the Series 2002B Underwriter in the manner and on the terms and conditions set forth in the Series 2002B Bond Purchase Agreement, and consistent with the terms of Article II hereof and the Fiscal Agent Agreement. The proceeds of (a) the sale of the Series 2002A Bonds in the amount of $153,214, (which sum represents the par amount of the Series 2002A Bonds of $150,000,000.00, plus an original issue premium of $4,389,000.00, less an underwriter's discount on the Series 2002A Bonds of $312,500.00, less the premium for the Series 2002A Bond Insurance Policy in the amount of $724, (which premium shall be transferred to the Bond Insurer by the Series 2002A Underwriter on behalf of the Board on the Closing Date), less a portion of the premium for the Series 2002 Reserve Fund Surety Bond in the amount of $138, (which premium shall be transferred to the Series 2002 Reserve Fund Surety Provider by the Series 2002A Underwriter on behalf of the Board on the Closing Date)), and (b) the sale of the Series 2002B Bonds in the amount of $153,214, (which sum represents the par amount of the Series 2002B Bonds of $150,000,000.00, plus an original issue premium of $4,389,000.00, less an underwriter's discount on the : Series 2002B Bonds of $312,500.00, less the premium for the Series 2002B Bond Insurance Policy in the amount of $724, (which premium shall be transferred to the Bond Insurer by the Series 2002B Underwriter on behalf of the Board on the Closing Date), less a portion of the premium for the Series 2002 Reserve Fund Surety Bond in the amount of $138, (which premium shall be transferred to the Series 2002 Reserve Fund Surety Provider by the Series 2002B Underwriter on behalf of the Board on the Closing Date)), shall be deposited with the Treasurer and shall be held in trust and set aside by the Treasurer as follows: (i) The Treasurer shall deposit the sum of $230,835,000.00, in the Series 2002 Construction Account, established and maintained in the Series 2002 Project Fund pursuant to Section 3.02(a) hereof. (ii) The Treasurer shall deposit the sum of $593,000.00, in the Series 2002 Costs of Issuance Fund, established pursuant to Section 3.04 hereof. (iii) The Treasurer shall deposit the sum of $75,000, in the Series A Account in the Payment Fund maintained with the Issuing and Paying Agent, who shall use such amounts to pay the principal of the Refunded Notes. The Treasurer may, in its discretion, establish a temporary fund or account on its books and records to facilitate such transfers and is hereby authorized to make any necessary adjustments in the amounts to be deposited in the funds and accounts described in this Article HI required by Bond Counsel on the Closing Date Section Establishment and Application of Series 2002 Project Fund. (a) The Treasurer shall establish, maintain and hold in trust a separate fund designated as the "City of Long Beach, California Harbor Revenue Bonds, Series 2002 Project Fund" (the "Series 2002 Project Fund"). Within the Series 2002 Project Fund, the Treasurer shall establish, maintain and hold in trust a separate account designated as the 13

15 "City of Long Beach, California Harbor Revenue Bonds, Series 2002 Construction Account" (the "Series 2002 Construction Account"). (b) (i) The moneys in the Series 2002 Construction Account shall be held by the Treasurer in trust and applied to the costs of acquisition, construction, expansion, improvement, financing and refinancing of the Project and the expenses incident thereto or connected therewith, including, if necessary, reimbursement to the Board for expenses incurred prior to the issuance of the Series 2002 Bonds. (ii) The Treasurer shall keep a record of all payments from the Series 2002 Construction Account, which record shall state: (A) the item number of such payment; (B) the name and address of the person to whom each such payment is due, which may be the Department in the case of reimbursement for costs theretofore paid by the Board; (C) the respective amounts to be paid; and (D) the purpose by general classification for which each obligation to be paid was incurred. (iii) Moneys held in the Series 2002 Construction Account shall be invested and reinvested by the Treasurer in Investment Securities. Earnings on the Series 2002 Construction Account shall be retained in the Series 2002 Construction Account and utilized to pay for the Project or for other lawful uses so long as the Board first obtains an Opinion of Bond Counsel to the effect that the Board's intended use of such balance is a lawful purpose for which such proceeds may be used under the Law and such use will not adversely affect the exclusion of interest on the Series 2002 Bonds from gross income for federal income tax purposes, except that such exclusion will not apply with respect to interest on any Series 2002 Bonds held by a Bondholder who is or was a "substantial user" or "related party" to such substantial user (both as defined in Section 147(a) of the Code) of the facilities financed by the Series 2002 Bonds. (iv) The completion of the Project shall be evidenced by the filing with the Treasurer of a certificate of a representative of the Board stating either (A) the date of completion of the Project and the amount, if any, required in the opinion of such Board representative for the payment of any remaining part of the costs of the Project or (B) that all amounts in such account have been disbursed or expenses in respect thereof have been incurred. Any amount remaining in the Series 2002 Construction Account following the delivery of such certificate, or upon the determination of the Board not to proceed with the Project, may, at the determination of the Board, be applied upon written requisition of a Board representative to any other lawful purpose designated in such requisition and for which purpose such proceeds may be used under the Law. As a condition to the disbursement of funds under the provisions of the prior sentence, there shall be delivered to the Fiscal Agent with the requisition an Opinion of Bond Counsel that the purpose for which such funds are to be used is a lawful purpose for which such proceeds may be used under the Law and that such use shall not result in the inclusion of interest on any Series 2002 Bonds in gross income of the recipient X0 14

16 thereof for federal income tax purposes, except that such exclusion of interest will not apply with respect to interest on any Series 2002 Bonds held by a Bondholder who is or was a "substantial user" or "related party" to such substantial user (both as defined in Section 147(a) of the Code) of the facilities financed by the Series 2002 Bonds. Section Establishment, Pledge, Funding and Application of Series 2002 Reserve Fund. (a) The Treasurer shall establish, maintain and hold in trust within the Harbor Revenue Fund a separate subfund designated as the "City of Long Beach, California Harbor Revenue Bonds, Series 2002 Reserve Fund" (the "Series 2002 Reserve Fund"). The Series 2002 Reserve Fund shall be funded and applied as set forth below. There is hereby pledged to secure the payment of the principal of and interest on the Series 2002 Bonds in accordance with their terms the Series 2002 Reserve Fund Surety Bond and all drawings thereunder. (b) Except with respect to a deficiency caused by a drawing on the Series 2002 Reserve Fund Surety Bond as described in (d) below, in the event of any deficiency in the Series 2002 Reserve Fund, none of the Board, the City or the Treasurer shall be required to replenish such deficiency in accordance with the provisions of Section 5.03(B)(3) of the Master Resolution. (c) All amounts drawn under the Series 2002 Reserve Fund Surety Bond shall be used by the Treasurer or the Treasurer shall cause the Fiscal Agent to use, as hereinafter provided, solely for the purpose of paying principal of and interest on the Series 2002 Bonds in the event moneys in the Principal Account and the Interest Account are insufficient therefore. (d) At the time the Series 2002 Bonds are delivered, the Series 2002 Reserve Fund Surety Bond will be provided to the Fiscal Agent in the amount of $11,082, (equal to one-half Maximum Annual Debt Service on the Series 2002 Bonds). The Fiscal Agent shall make drawings thereunder (by delivering a Demand for Payment at least three (3) days prior to the date such funds are required) to pay the principal of and interest on the Series 2002 Bonds in the event moneys in the Principal Account and the Interest Account are insufficient therefore. Any drawing under the Series 2002 Reserve Fund Surety Bond shall be considered a deficiency in the Series 2002 Reserve Fund to the extent of the drawing, under Section 5.03(B)(3) of the Master Resolution. The Treasurer shall make payments in accordance with said Section 5.03(B)(3) of the Master Resolution to replenish any amounts drawn under the Series 2002 Reserve Fund Surety Bond directly to the Series 2002 Reserve Fund Surety Provider. (e) The Series 2002 Reserve Fund Surety Bond provides that upon the later of: (i) three (3) days after receipt by the Series 2002 Reserve Fund Surety Provider of a Demand for Payment in the form attached to the Series 2002 Reserve Fund Surety Bond, duly executed by the Fiscal Agent; or (ii) the payment date of the Series 2002 Bonds as specified in the Demand for Payment presented by the Fiscal Agent to the Series X0 15

17 Reserve Fund Surety Provider, the Series 2002 Reserve Fund Surety Provider will make a deposit of funds in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment to the Fiscal Agent, of amounts which are then due to the Fiscal Agent (as specified in the Demand for Payment) subject to the Surety Bond Coverage (as defined in the Series 2002 Reserve Fund Surety Bond). (0 Provided the Series 2002 Reserve Fund Surety Bond is in full force and effect, the Board shall not or shall not cause an optional redemption of the Series 2002 Bonds if at such time amounts are due and owning to the Series 2002 Reserve Fund Surety Provider in accordance with the terms of the Series 2002 Reserve Fund Guaranty Agreement. (g) The form, terms and provisions of the Series 2002 Reserve Fund Guaranty Agreement are in all respects approved, and the President of the Board, the Executive Director, the Assistant Executive Director and/or the Director of Finance, any one or more thereof, are hereby authorized, empowered and directed to execute, acknowledge and deliver the Series 2002 Reserve Fund Guaranty Agreement including counterparts thereof, in the name and on behalf of the City, acting by and through the Board. All amounts which may become due under the Series 2002 Reserve Fund Guaranty Agreement shall be secured by the Revenues on a parity with the Bonds and any Parity Debt Outstanding. The Series 2002 Reserve Fund Guaranty Agreement, as executed and delivered, shall be in substantially the form now before this meeting and hereby approved, or with such changes therein as shall be approved by the officer or officers of the Board executing the same; the execution thereof shall constitute conclusive evidence of the Board's approval of any and all changes or revisions therein from the form of the Series 2002 Reserve Fund Guaranty Agreement now before this meeting; and from and after the execution and delivery of the Series 2002 Reserve Fund Guaranty Agreement, the officers, agents and employees of the Board are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Series 2002 Reserve Fund Guaranty Agreement. Section Establishment and Application of Series 2002 Costs of Issuance Fund. (a) The Treasurer shall establish, maintain and hold in trust a separate fund designated as the "City of Long Beach, California Harbor Revenue Bonds, Series 2002 Costs of Issuance Fund" (the "Series 2002 Costs of Issuance Fund"). The moneys in the Series 2002 Costs of Issuance Fund shall be used and withdrawn by the Treasurer to pay the Costs of Issuance of the Series 2002 Bonds. Moneys held in the Series 2002 Costs of Issuance Fund shall be invested and reinvested by the Treasurer in Investment Securities. All investment earnings on funds held in the Series 2002 Costs of Issuance Fund shall be deposited in the Interest Account of the Bond Service Fund. (b) The Treasurer shall keep a record of all payments from the Series 2002 Costs of Issuance Fund, which record shall state: (i) the item number of such payment; (ii) the name and address of the person to whom each such payment is due, which may be 16

18 the Department in the case of reimbursement for costs theretofore paid by the Board; (iii) the respective amounts to be paid; and (iv) the purpose by general classification for which each obligation to be paid was incurred. (c) Any amounts remaining in the Series 2002 Costs of Issuance Fund on November 30, 2002 shall be transferred to the Series 2002 Construction Account and the Series 2002 Costs of Issuance Fund shall be closed. Section Establishment and Application of Series 2002 Rebate Fund. (a) The Treasurer shall establish, maintain and hold a fund separate from any other fund established and maintained hereunder or under the Master Resolution designated as the "City of Long Beach, California Harbor Revenue Bonds, Series 2002 Rebate Fund" (the "Series 2002 Rebate Fund"). Within the Series 2002 Rebate Fund, the Treasurer shall maintain such accounts as shall be necessary in order to comply with the terms and requirements of the Tax Compliance Certificate. All money at any time deposited in the Series 2002 Rebate Fund shall be held by the Treasurer for the account of the City in trust, to the extent required to satisfy the Rebate Requirements, for payment to the federal government of the United States of America, and neither the City or the Owner of any Series 2002 Bonds shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Series 2002 Rebate Fund shall be governed by this Ninth Supplemental Resolution and by the Tax Compliance Certificate (which is incorporated herein by reference). The Board hereby covenants to comply with the directions contained in the Tax Compliance Certificate. (b) Pursuant to the Tax Compliance Certificate, the Treasurer shall transfer from funds and accounts maintained under the Resolution such amounts so that the balance in the Series 2002 Rebate Fund on deposit shall be equal to the Rebate Requirements. The Treasurer shall compute the Rebate Requirements, or cause the same to be computed, in accordance with the Tax Compliance Certificate. (c) The Treasurer shall invest all amounts held in the Series 2002 Rebate Fund, in accordance with the Tax Compliance Certificate. Moneys shall not be transferred from the Series 2002 Rebate Fund except in accordance with the Tax Compliance Certificate. (d) Notwithstanding any other provision of the Master Resolution, including in particular Article IX of the Master Resolution, the obligation to remit the Rebate Requirements to the federal government of the United States of America and to comply with all other requirements of this Section and the Tax Compliance Certificate shall survive the defeasance or payment in full of the Series 2002 Bonds. The Board shall or shall cause to retain all records with respect to the calculations and instructions required by this Section for at least six years after the date on which the last of the principal of and interest on the Series 2002 Bonds has been paid, whether upon maturity, redemption, or acceleration thereof. 17

19 ARTICLE IV COVENANTS Section Tax Covenants. (a) In order to maintain the exclusion from gross income for federal income tax purposes of interest on the Series 2002 Bonds, the Board covenants to comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Code and the Board agrees to comply with the provisions of the Tax Compliance Certificate. (b) The Board shall not use or permit the use of any proceeds of Series 2002 Bonds or any other funds of the Board held by the Treasurer under this Ninth Supplemental Resolution, attributable to the Series 2002 Bonds, directly or indirectly, to acquire any securities or obligations, and shall not use or permit the use of any amounts received by the Board or the Treasurer with respect to the Series 2002 Bonds in any manner, and shall not take or permit to be taken any other action or actions, which would cause any Series 2002 Bond to be "federally guaranteed" within the meaning of Section 149(b) of the Code or an "arbitrage bond" within the meaning of Section 148 of the Code and applicable regulations promulgated from time to time thereunder and under Section 103(c) of the Code. The Board shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. In the event the Board is of the opinion that it is necessary to restrict or limit the yield on the investment of money held by the Treasurer or to use such money in certain manners, in order to avoid the Series 2002 Bonds from being considered "arbitrage bonds" within the meaning of Section 148 of the Code and the regulations thereunder as such may be applicable to the Series 2002 Bonds at such time, the Board shall issue to the Treasurer a certificate to such effect together with appropriate instructions, in which event the Treasurer shall take such action as it is directed to take to use such money in accordance with such certificate and instructions, irrespective of whether the Treasurer shares such opinion. (c) The Board shall at all times do and perform all acts and things permitted by law and this Ninth Supplemental Resolution which are necessary or desirable in order to assure that interest paid on the Series 2002 Bonds will not be included in gross income for federal income tax purposes (except for any interest paid on any Series 2002 Bonds held by a Bondholder who is or was a "substantial user" or "related party" to such substantial user (both as defined in Section 147(a) of the Code) of the facilities financed by the Series 2002 Bonds) and shall take no action that would result in such interest being included in gross income for federal income tax purposes. (d) Notwithstanding any provision of Section 3.05 or this Section hereof, if the Board shall receive an Opinion of Bond Counsel to the effect that any action required under Section 3.05 and/or this Section hereof is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Series 2002 Bonds pursuant to Section 103 of the Code, the Board and the Treasurer may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent

20 (e) The form, terms and provisions of the Tax Compliance Certificate are in all respects approved, and the President of the Board, the Executive Director, the Assistant Executive Director and/or the Director of Finance of the Harbor Department of the City of Long Beach, any one or more thereof, are hereby authorized, empowered and directed to execute, acknowledge and deliver the Tax Compliance Certificate including counterparts thereof, in the name and on behalf of the Board. The Tax Compliance Certificate, as executed and delivered, shall be in substantially the form now before this Board and hereby approved,. or with such changes therein as shall be approved by the officer or officers executing the same; the execution thereof shall constitute conclusive evidence of the Board's approval of any and all changes or revisions therein from the form of the Tax Compliance Certificate now before this Board; and from and after the execution and delivery of the Tax Compliance Certificate, the officers, agents and employees of the Board are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Tax Compliance Certificate. The Board hereby covenants and agrees that it will comply with and carry out all of the provisions of the Tax Compliance Certificate. Section Event of Default Under Liquidity Facilities The Board, on behalf of the City, hereby covenants, except in accordance with the provisions of the Fiscal Agent Agreement, (a) not to take any action or cause any action to be taken that would cause the Bond Insurer to be substituted as insurer of the Series 2002 Bonds and either Series 2002 Bond Insurance Policy to be cancelled, without first receiving the applicable Liquidity Facility Provider's prior written consent, or (b) not to take any action or cause any action to be taken that would cause either Series 2002 Bond Insurance Policy to be surrendered, cancelled, or terminated, or modified, or amended or modified in any material respect, without first receiving the applicable Liquidity Facility Provider's prior written consent. Section Distribution of Revenues. The Board hereby covenants that all Revenues used to pay debt service on the Bonds and any Parity Debt shall be distributed on a pro rata basis without taking into account amounts or investments deposited in the reserve funds established and maintained for such Bonds and Parity Debt. ARTICLE V SERIES 2002 BOND INSURANCE POLICIES Section Series 2002 Bond Insurance Policies. The Series 2002A Bonds will be insured by the Bond Insurer for the timely payment of all interest and principal at scheduled maturity in accordance with the terms of the Series 2002A Bond Insurance Policy. All amounts received under the Series 2002A Bond Insurance Policy shall be used solely for the payment of principal of and interest on the Series 2002A Bonds. The Series 2002B Bonds will be insured by the Bond Insurer for the timely payment of all interest and principal at scheduled maturity in accordance with the terms of the Series 2002B Bond Insurance Policy. All amounts received under the Series 2002B Bond Insurance Policy shall be used solely for the payment of principal of and interest on the Series 2002B Bonds. 19

21 Section Payments Under Series 2002 Bond Insurance Policies. (a) In the event that, on the second Business Day, and again on the Business Day, prior to any payment date on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, the Treasurer has not received sufficient moneys to pay all principal of and interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, due on the second following or following, as the case may be, Business Day, the Treasurer shall immediately notify the Bond Insurer or its designee and the Fiscal Agent or its designee on the same Business Day by telephone or telecopy, confirmed in writing by registered or certified mail, of the amount of the deficiency. (b) If the deficiency is made up in whole or in part prior to or on the payment date, the Treasurer shall so notify the Bond Insurer or its designee and the Fiscal Agent or its designee. (c) In addition, if the Treasurer or the Fiscal Agent has notice that any Bondowner has been required to disgorge payments of principal of or interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction and such payment constitutes an avoidable preference to such bondowner within the meaning of any applicable bankruptcy laws, then the Treasurer or the Fiscal Agent shall notify the Bond Insurer or its designee of such fact by telephone or telecopy notice, confirmed in writing by registered or certified mail. (d) (d) The Fiscal Agent is irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Owners of the Series 2002 Bonds as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, the Fiscal Agent shall (A) execute and deliver to State Street Bank and Trust Company, N.A., or its successors under the Series 2002 Bond Insurance Policies (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Bond Insurer as agent for such Owners in any legal proceeding related to the payment of such interest and an assignment to the Bond Insurer of the claims for interest to which such deficiency relates and which are paid by the Bond Insurer, (B) receive as designee of the respective Owners (and not as Fiscal Agent) in accordance with the tenor of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (C) disburse the same to such respective Owners; and (ii) If and to the extent of a deficiency in amounts required to pay principal of the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, the Fiscal Agent shall (A) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Bond Insurer as agent for such Owners in any legal proceeding relating to the payment of such principal and an assignment to the Bond Insurer of any of the 20

22 Series 2002A Bonds or the Series 2002B Bonds, as the case may be, surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Fiscal Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (B) receive as designee of the respective Owners (and not as Fiscal Agent) in accordance with the tenor of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, payment therefor from the Insurance Paying Agent, and (C) disburse the same to such Owners. (e) Payment with respect to claims for interest on and principal of Series 2002A Bonds or Series 2002B Bonds, as the case may be, disbursed by the Fiscal Agent from proceeds of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, shall not be considered to discharge the obligation of the Board with respect to such Series 2002A Bonds or Series 2002B Bonds, as the case may be, and the Bond Insurer shall become the Owner of such unpaid Series 2002A Bonds or Series 2002B Bonds, as the case may be, and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (0 Irrespective of whether any such assignment is executed and delivered, the Board and the Fiscal Agent agree for the benefit of the Bond Insurer that: They recognize that to the extent the Bond Insurer makes payments, directly or indirectly (as by paying through the Fiscal Agent), on account of principal of or interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, the Bond Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the Board, with interest thereon as provided and solely from the sources stated in the Resolution and the Series 2002A Bonds and the Series 2002B Bonds, as the case may be; and (ii) They will accordingly pay to the Bond Insurer the amount of such principal and interest (including principal and interest covered under subparagraph (ii) of the first paragraph of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in the Resolution and the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, but only from the sources and in the manner provided in the Resolution for the payment of principal of and interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, to Owners, and will otherwise treat the Bond Insurer as the Owner of such rights to the amount of such principal and interest. Section Notices To Bond Insurer, Series 2002A Initial Liquidity Facility Provider, Series 2002B Initial Liquidity Facility Provider and Rating Agencies. The following notices and documents shall be delivered to the Bond Insurer, the Series 2002A Initial M 21

23 Liquidity Facility Provider, the Series 2002B Initial Liquidity Facility Provider and the Rating Agencies as indicated: (a) The Board shall give the Bond Insurer, the Series 2002A Initial Liquidity Facility Provider, the Series 2002B Initial Liquidity Facility Provider and the Rating Agencies written notice of any proposed amendment or supplement to this Ninth Supplemental Resolution, the Master Resolution, the Fiscal Agent Agreement, the Series 2002A Initial Liquidity Facility, the Series 2002B Initial Liquidity Facility, the Series 2002A Remarketing Agreement or the Series 2002B Remarketing Agreement. (b) The Board shall give the Bond Insurer, the Series 2002A Initial Liquidity Facility Provider, the Series 2002B Initial Liquidity Facility Provider and the Rating Agencies written notice of the resignation or removal of the Fiscal Agent and the appointment of a successor thereto. (c) The Bond Insurer shall receive copies of all notices that are required hereunder to be given to the Fiscal Agent or to any of the Bondowners and, on an annual basis, copies of the Department's audited combined financial statements and annual budget. All notices required to be given to the Bond Insurer under this Ninth Supplemental Resolution shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: IPM-PFG-West. (d) The Board and the Fiscal Agent shall give the Bond Insurer, the Series 2002A Initial Liquidity Facility Provider, the Series 2002B Initial Liquidity Facility and the Rating Agencies written notice of the occurrence of any event of default under this Ninth Supplemental Resolution or the Resolution. (e) Copies of any amendments made to the documents executed in connection with the issuance of the Series 2002 Bonds which are not subject to the consent of the Bond Insurer shall be sent to the Bond Insurer. (f) Copies of any amendments made to the documents executed in connection with the issuance of the Series 2002 Bonds which are consented to by the Bond Insurer shall be sent to each Rating Agency at the time providing a rating on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be. (g) In connection with the initial sale or subsequent remarketing of any securities of the Board with respect to which a new disclosure document was prepared, if any, a copy of such disclosure document shall be delivered to the Bond Insurer. Section Events of Default with Respect to the Series 2002 Bonds. An event of default with respect to the Series 2002 Bonds, as described in the second sentence of Section 5.05 hereof and as otherwise described in the Series 2002 Bond Insurance Policies, shall mean: (a) a failure to pay the principal of or premium, if any, on any of the Series 2002 Bonds when the same shall become due and payable at maturity or upon redemption; 22

24 (b) a failure to pay any installment of interest on any of the Series 2002 Bonds when such interest shall become due and payable; (c) a failure by the Board to observe and perform any material covenant, condition, agreement or provision that are to be observed or performed by the Board and which are contained in this Ninth Supplemental Resolution or the Master Resolution, which failure shall continue for a period of 60 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Board by the Fiscal Agent, which notice may be given at the discretion of the Fiscal Agent and shall be given at the written request of Bondholders of 25% or more of the principal amount of the Series 2002 Bonds then Outstanding, unless the Fiscal Agent, or the Fiscal Agent and the Bondholders of Series 2002 Bonds in a principal amount not less than the principal amount of Series 2002 Bonds the Bondholders of which requested such notice, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Fiscal Agent or the Fiscal Agent and the Bondholders of such principal amount of Series 2002 Bonds shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Board within such period and is being diligently pursued until such failure is corrected; or (d) bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, including without limitation proceedings under Chapter 9 of the United States Bankruptcy Code, or other proceedings for relief under any federal or state bankruptcy law or similar law for the relief of debtors are instituted by or against the Board or the Port and, if instituted against the Board or the Port, said proceedings are consented to or are not dismissed within 60 days after such institution. Section Bond Insurer Direction of Acceleration and Remedies. The Fiscal Agent shall not, without the prior written approval of the Bond Insurer, exercise any power under the Resolution, which is otherwise wholly within its discretion, to accelerate the principal payments on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, other than pursuant to the optional and mandatory sinking fund redemption provisions in the Fiscal Agent Agreement. The Bond Insurer acting alone shall have the right to direct all remedies upon an event of default with respect to the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, and to waive events of default. The Bond Insurer shall be recognized as the registered Owner of each Series 2002A Bond or Series 2002B Bond, as the case may be, which it insures for the purposes of exercising all rights and privileges available to Bondowners (other than the right of the owners of the Bank Bonds to receive the amounts payable in connection therewith pursuant to the applicable Liquidity Facility and the Fiscal Agent Agreement including, without limitation, interest at the Bank Bond Rate and principal thereon as provided in Section 5.01(a)(iv) of the Fiscal Agent Agreement). For Series 2002A Bonds or Series 2002B Bonds, as the case may be, which it insures, the Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a Bondowner in accordance with applicable provisions of Resolution, the Fiscal Agent Agreement, Series 2002A Initial Liquidity Facility, the Series 2002B Initial Liquidity Facility, the Series 2002A Remarketing Agreement or the Series 2002B Remarketing Agreement

25 Section Consents of the Bond Insurer. (a) Any amendment or supplement to the Master Resolution or this Ninth Supplemental Resolution or any other principal financing documents with respect to the Series 2002 Bonds, which would require the consent of the Owners of the Series 2002 Bonds, as set forth in Article VM of the Master Resolution (which shall be determined without giving any consideration to the Series 2002 Bond Insurance Policies), shall also be subject to the prior written consent of the Bond Insurer. (b) Except with respect to Refunding Bonds and additional Parity Debt issued pursuant to Sections 3.02, 3.03 and 6.11 of the Master Resolution, the prior written consent of the Bond Insurer is required prior to the issuance of any Refunding Bonds or additional Parity Debt and the execution of any amendments or supplements to the legal documents providing such Refunding Bonds or additional Parity Debt. Section Bond Insurer Access to Information, Books and Records. While the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, is in effect, the Board and the Fiscal Agent, as appropriate, will furnish the Bond Insurer with such information as it may reasonably request regarding the security for the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, as appears from the books and records under its custody and control, or as otherwise known to it. The Board and the Fiscal Agent, as appropriate, will permit the Bond Insurer to have access to and to make copies of all such books and records at any reasonable time. The Bond Insurer is entitled to have access to and to make copies of the bond register maintained by the Fiscal Agent at any reasonable time. Section Rights of the Bond Insurer. The provisions set forth in this Article shall apply for so long as the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, are Outstanding and the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, remains in effect, the Bond Insurer is not insolvent and is not in default of its payment obligations under the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, unless any such provision is waived by the Bond Insurer or modified by agreement between the Bond Insurer and the Board. Anything contained in this Ninth Supplemental Resolution or in the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, to the contrary notwithstanding, the existence of all rights given to the Bond Insurer under this Ninth Supplemental Resolution with respect to the giving of consents or approvals or the direction of proceeding are expressly conditioned upon its timely and full performance of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be. Any such rights shall not apply if at any time the Bond Insurer is in default with respect to any payment under the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, or is insolvent; provided, that the Resolution shall not in any way limit or affect the rights of the Bond Insurer as a Bondowner, as subrogee of a Bondowner or as assignee of a Bondowner or to otherwise be reimbursed and indemnified for its costs and expenses and other payment on or in connection with the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, or Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, either by operation of law or at equity or by contract. 24

26 Section Transfer, Surrender, etc. of Series 2002 Bond Insurance Policies. (a) Upon the appointment of any successor Fiscal Agent pursuant to the Resolution and the Fiscal Agent Agreement, the former Fiscal Agent shall promptly transfer to the successor Fiscal Agent the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be. (b) The Fiscal Agent shall not surrender or suffer the cancellation or termination of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, or permit the modification or amendment of any provision thereof relating to the payment of principal of or interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be (including Bank Bonds), or any other material provision of the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, or permit the substitution of a substitute bond insurance policy for the Series 2002A Bond Insurance Policy or the Series 2002B Bond Insurance Policy, as the case may be, in each case without the prior written consent of the Series 2002A Initial Liquidity Facility Provider or the Series 2002B Initial Liquidity Facility Provider, as the case may be. Section Current Refunding of Series 2002 Bonds. At any time the Board determines to current refund (as such term is defined in the Code) the Series 2002 Bonds in accordance with the provisions of the Resolution and the Fiscal Agent Agreement, the Board shall comply with following conditions, in addition to the conditions set forth in the Resolution and the Fiscal Agent Agreement: (a) Lawful money of the United States of America or investments provided for such refunding shall be in an amount equal to the Bond Obligation or Redemption Price of such Series 2002A Bonds or Series 2002B Bonds, as the case may be, and all unpaid interest thereon to the redemption date. (b) If investments are provided for such refunding, the principal and interest on such investments when due shall, in the opinion of an independent certified public accountant delivered to the Fiscal Agent (upon which opinion the Fiscal Agent may conclusively rely), provide moneys sufficient to pay the Bond Obligation or Redemption Price of and all unpaid interest on the Series 2002A Bonds or the Series 2002B Bonds, as the case may be, to the redemption date. (c) Investments provided for such refunding shall be limited to direct obligations of the United States of America. Section Conditions to Issuance of Additional Parity Debt as Variable Rate Indebtedness. In addition to the conditions to the issuance of additional Parity Debt as Variable Rate Indebtedness set forth in the Resolution, as long as the Series 2002 Bond Insurance Policies are in effect, the following conditions (unless otherwise waived in writing by the Bond Insurer) shall be complied with prior to or concurrently with the issuance of additional Parity Debt as Variable Rate Indebtedness: 25

27 (a) Reserve Fund. A reserve fund shall be funded at the lesser of (a) one-half of Maximum Annual Debt Service on such Parity Debt or (b) the maximum amount allowed under the Code. When determining the funding requirement of such reserve fund, interest shall be calculated at the lesser of (i) the 30-year Revenue Bond Index reported in The Bond Buyer no more than two weeks prior to the sale of such additional Parity Debt, or (ii) the maximum rate allowed by law. (b) Addllional Bonds Test. If the provisions of Section 6.11 of the Master Resolution are required to be complied with when issuing such additional Parity Debt, when calculating Maximum Annual Debt Service for such additional Parity Debt, interest on such additional Parity Debt shall be calculated at the lesser of (i) the 30-year Revenue Bond Index reported in The Bond Buyer no more than two weeks prior to the sale of such additional Parity Debt, or (ii) the maximum rate allowed by law. (c) Rate Covenant. With respect to setting rates and charges in accordance with Section 6.10 of the Master Resolution, clause (b) of the defined term "Maximum Annual Debt Service" shall be read as follows: "(b) if the Parity Debt or Bonds are Variable Rate Indebtedness and (i) are secured pursuant to a credit or liquidity instrument which, if drawn upon, could create a repayment obligation which has a lien on Revenues subordinate to the lien of the Parity Debt or Bonds or (ii) are not secured by any credit or liquidity instrument, the interest rate on such Parity Debt or Bonds for periods when the actual interest rate cannot yet be determined shall be assumed to be equal to an interest rate calculated, by multiplying 1.20 times the greater of: (A) the interest rate on the Parity Debt or Bonds on the date of calculation, or (B) the lesser of (1) the maximum short-term interest rate borne by the Parity Debt or Bonds in the preceding 12-month period, or (2) the maximum rate on the Parity Debt or Bonds allowed pursuant to the instruments that provide for the issuance of such Parity Debt or Bonds, or, if such Parity Debt or Bonds are not currently Outstanding, 1.20 times the greater of: (A) the interest rate that such Parity Debt or Bonds would bear if they were Outstanding on such date, or (B) the lesser of (1) the maximum short-term interest rate in the preceding 12-months that the Parity Debt or Bonds would have borne if they were Outstanding, or (2) the maximum rate on the Parity Debt or Bonds which the agreements that would have provided for the issuance of such Parity Debt or Bonds would have required if such Parity Debt or Bonds were Outstanding, as certified by a certificate of a financial advisor or investment banker delivered to the Board:" (d) Interest Rate Caps. A maximum interest rate on the additional Parity Debt and on any amounts payable to a liquidity facility provider appointed by the Board in connection with the issuance of such additional Parity Debt, if any, shall be specified at the time of issuance of such additional Parity Debt. 26

28 (e) Repayment Obligations. Except as provided in the following sentence, any accelerated principal payments due a liquidity facility provider appointed by the Board in connection with the issuance of such additional Parity Debt, if any, or any interest due in excess of the maximum interest rate on any amounts payable to such liquidity facility provider, shall be subordinate to the payment of debt service on all Bonds Outstanding at such time. Any accelerated principal payments due a liquidity facility provider appointed by the Board in connection with the issuance of such additional Parity Debt, if any, or any interest due in excess of the maximum interest rate on any amounts payable to such liquidity facility provider, may be payable on parity with the payment of debt service on all Bonds Outstanding at such time, provided, that when calculating the Maximum Annual Debt Service on such additional Parity Debt required in Section 6.11 of the Master Resolution, the Board shall have calculated the interest due on such additional Parity Debt at the maximum interest rate on any amounts payable to such liquidity facility provider and assumes that the accelerated principal payments will be paid to the liquidity facility provider. (0 Rating of Liquidity Facility Provider. Any liquidity facility provider appointed by the Board in connection with the issuance of such additional Parity Debt shall be rated in the highest short term Rating Category of Moody's and Standard and Poor's. Section Series 2002 Insurance and Indemnity Agreement. The form, terms and provisions of the Series 2002 Insurance and Indemnity Agreement are in all respects approved, and the President of the Board, the Executive Director, the Assistant Executive Director and/or the Director of Finance, any one or more thereof, are hereby authorized, empowered and directed to execute, acknowledge and deliver the Series 2002 Insurance and Indemnity Agreement including counterparts thereof, in the name and on behalf of the City, acting by and through the Board. All amounts which may become due under the Series 2002 Insurance and Indemnity Agreement shall be secured by the Revenues on a parity with the Bonds and any Parity Debt Outstanding. The Series 2002 Insurance and Indemnity Agreement, as executed and delivered, shall be in substantially the form now before this meeting and hereby approved, or with such changes therein as shall be approved by the officer or officers of the Board executing the same; the execution thereof shall constitute conclusive evidence of the Board's approval of any and all changes or revisions therein from the form of the Series 2002 Insurance and Indemnity Agreement now before this meeting; and from and after the execution and delivery of the Series 2002 Insurance and Indemnity Agreement, the officers, agents and employees of the Board are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Series 2002 Insurance and Indemnity Agreement. ARTICLE VI LIQUIDITY FACILITIES The form, terms and provisions of the Series 2002A Initial Liquidity Facility and the Series 2002B Initial Liquidity Facility are in all respects approved, and the President of the Board, the Executive Director, the Assistant Executive Director and/or the Director of Finance, 27

29 any one or more thereof, are hereby authorized, empowered and directed to execute, acknowledge and deliver the Series 2002A Initial Liquidity Facility and the Series 2002B Initial Liquidity Facility including counterparts thereof, in the name and on behalf of the Board. The Series 2002A Initial Liquidity Facility and the Series 2002B Initial Liquidity Facility, as executed and delivered, shall be in substantially the form now before this meeting and hereby approved, or with such changes therein as shall be approved by the officer or officers of the Board executing the same; the execution thereof shall constitute conclusive evidence of the Board's approval of any and all changes or revisions therein from the form of Series 2002A Initial Liquidity Facility and the Series 2002B Initial Liquidity Facility now before this meeting; and from and after the execution and delivery of the Series 2002A Initial Liquidity Facility and the Series 2002B Initial Liquidity Facility, the officers, agents and employees of the Board are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Series 2002A Initial Liquidity Facility and the Series 2002B Initial Liquidity Facility. ARTICLE VII REMARKETING AGENTS AND REMARKETING AGREEMENTS Section Appointment of Remarketing Agents. Salomon Smith Barney Inc. is hereby appointed as the initial Series 2002A Remarketing Agent. The Series 2002A Remarketing Agent shall perform its duties and obligations as provided in the Series 2002A Remarketing Agreement. I.MS PaineWebber Inc. is hereby appointed as the initial Series 2002B Remarketing Agent. The Series 2002B Remarketing Agent shall perform its duties and obligations as provided in the Series 2002B Remarketing Agreement. The forms, terms and provisions of the Series 2002A Remarketing Agreement and the Series 2002B Remarketing Agreement are in all respects approved, and the President of the Board, the Executive Director, the Assistant Executive Director and/or the Director of Finance, any one or more thereof, are hereby authorized, empowered and directed to execute, acknowledge and deliver the Series 2002A Remarketing Agreement and the Series 2002B Remarketing Agreement including counterparts thereof, in the name and on behalf of the Board. The Series 2002A Remarketing Agreement and the Series 2002B Remarketing Agreement, as executed and delivered, shall be in substantially the forms now before this meeting and hereby approved, or with such changes therein as shall be approved by the officer or officers of the Board executing the same; the execution thereof shall constitute conclusive evidence of the Board's approval of any and all changes or revisions therein from the forms of the Series 2002A Remarketing Agreement and the Series 2002B Remarketing Agreement now before this meeting; and from and after the execution and delivery of the Series 2002A Remarketing Agreement and the Series 2002B Remarketing Agreement, the officers, agents and employees of the Board are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Series 2002A Remarketing Agreement and the Series 2002B Remarketing Agreement. Section Qualifications of Remarketing Agent. The Series 2002A Remarketing Agent and the Series 2002B Remarketing Agent shall be members of the National Association of Securities Dealers, each separately having a combined capital stock, surplus and undivided X0 28