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WHEREAS, the terms of the repayment to the Owner Communities of any payments made by the Owner Communities under the Guaranty Agreement are set forth in a Reimbursement Agreement among SPSA and the Owner Communities (the "Reimbursement Agreement" and, together with the Guaranty Agreement, the "Guaranty Documents"), the form of which has been presented to this meeting; WHEREAS, the City Council of the City (the "Council") has determined that it is advisable to pledge the full faith and credit of the City to severally guaranty the timely payment of a portion of the principal of and interest on the Remaining SPSA Local Bonds pursuant to the Guaranty Documents; and WHEREAS, a public hearing on the guaranty of the City has been held after notice was published in accordance with the requirements of Section 15.2-2606 of the Code of Virginia of 1950, as amended. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PORTSMOUTH, THAT: 1. Authorization of Guaranty. The Council hereby determines that it is advisable and in the best interest of the City to severally guaranty the timely payment of a portion of the principal of and interest on the Remaining SPSA Local Bonds, subject to the conditions outlined in Section 3, in the maximum amount of $5,135,000 pursuant to the Guaranty Documents; provided, however, the principal amount of the Remaining SPSA Local Bonds shall not exceed $50,000,000. 2. Pledge of Full Faith and Credit. The full faith and credit of the City are hereby irrevocably pledged for the payment when due of any amounts payable by the City under the Guaranty Agreement. The Council shall levy and collect annually, at the same time and in the same manner as other taxes of the City are assessed, levied and collected, a tax upon all taxable property within the City, over and above all other taxes, authorized or limited by law and without limitation as to rate or amount, sufficient to pay when due any amounts payable by the City under the Guaranty Agreement unless other funds are lawfully available and appropriated for the timely payment thereof. 3. Conditions to Guaranty. The guaranty authorized in Section 1 above is expressly conditioned upon the following: (a) Timely participation by VRA with SPSA, prior to the WTE Sale closing, in seeking a closing agreement with the Internal Revenue Service to protect the existing tax status of the Remaining SPSA Local Bonds and all other SPSA indebtedness not retired by the WTE Sale; (b) Timely participation by VRA with SPSA, prior to the WTE Sale closing, in requesting an allocation of volume cap in such amount as is required to preserve the tax status of the interest on the Remaining SPSA Local Bonds and all other SPSA indebtedness not retired by the WTE Sale; -2-