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<br />In lieu of making the Reserve Fund deposits, or in replacement of moneys then on
<br />deposit in the Reserve Fund, the Authority may, [with the prior written consent of the Insurer,]
<br />deliver to the Trustee an irrevocable letter of credit issued by a financial institution having
<br />unsecured debt :lbligations rated in the highest rating categories of Moody's and S &P, in an
<br />amowit, together with moneys, or surety bonds or insurance policies (as described below) on
<br />deposit in the Reserve Fund, equal to the Reserve Requirement Such letter of credit shall have
<br />an original term of no less than three years or, if less, the final maturity of the Bonds and such
<br />letter of credit shall provide by its terms that it may be drawn upon as provided in the
<br />Indenture. See "APPENDIX A - Summary of Principal Legal Documents ".
<br />Insurance
<br />The Lease Agreement constitutes a sublease of interests of the City and the Authority
<br />under a lease entered into in 1998 in connection with the 1998 Bonds. U.S. Bank National
<br />Association, as trustee under the 1998 Bonds, will continue to have a first priority lien on the
<br />Leased Property with regard to obligations created in connection with the 1998 Bonds.
<br />Accordingly, the Trustee will have a subordinate interest in the Net Proceeds of insurance or
<br />condemnation with respect to the Leased Property. See "THE FINANCING PLAN. "
<br />The City agrees in the Lease Agreement that for the term of the Lease Agreement it will
<br />maintain insurance with respect to the Leased Property against the risks and in the amounts
<br />described in the following paragraphs.
<br />Comprehensive General Liability lnswance. Under the Lease Agreement, the City is
<br />required to maintain or cause to be maintained, throughout the term of the Lease Agreement, a
<br />standard comprehensive commercial general insurance policy or policies in protection of the
<br />Authority, City, Trustee and their respective members, officers, agents and employees. Said
<br />policy or policies shall provide for indemnification of said parties against direct or contingent
<br />loss or liability for damages for bodily and personal injury, death or property damage
<br />occasioned by reason of the operation of the Leased Property. Said policy or policies shall
<br />provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of
<br />each person and $5,000,000 for personal injury or deaths of two or more persons in each
<br />accident or event, and in a minimum amount of $100,000 (subject to a deductible clause of not
<br />to exceed $25,000) for damage to property resulting from each accident or event. Such public
<br />liability and property damage insurance may, however, be in the form of a single limit policy in
<br />the amount of $5,000,000 per occurrence covering all such risks. Such liability insurance may be
<br />maintained as part of or in conjunction with any other liability insurance coverage carried by the
<br />City, and may be maintained in whole or in part in the form of self - insurance by the City or
<br />through a joint powers authority created for such purpose. The proceeds of such liability
<br />insurance shall be applied toward extinguishment or satisfaction of the liability with respect to
<br />which the proceeds of such insurance shall have been paid.
<br />Fire and Extended Coverage hmnznce. Under the Lease Agreement, the City is required
<br />to procure and maintain, or cause to be procured and maintained, insurance against loss or
<br />damage to any structures constituting any part of the Leased Property by flood, earthquake,
<br />fire and lightning, with extended coverage and vandalism and malicious mischief insurance.
<br />Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by
<br />explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are
<br />normally covered by such insurance. Such insurance shall be in an amount equal to one hundred
<br />percent (100 %) of the replacement cost of the Leased Property or Outstanding Bonds and 1998
<br />Bonds, whichever is less. However, with respect to earthquake insurance, such insurance shall
<br />be carried only if available from reputable insurers at a reasonable cost as determined by the
<br />Finance Director of the City. Other fire and extended coverage insurance may be subject to
<br />deductible clauses of not to exceed $100,000 for any one loss.
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