AgdaPkt 2013-05-20 Closed Cancelled and Special

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Atta 7.A. - Page 66 Insurance The Installment Purchase Contract obligates the City to obtain and keep in force various forms of insurance or self-insurance, subject to deductibles, for repair or replacement of a portion of the Enterprise in the event of damage or destruction to such portion of the Enterprise. The City expects to self-insure a portion of the risk of loss as permitted by the Installment Purchase Contract. No assurance can be given as to the adequacy of any such self-insurance or any additional insurance to fund necessary repair or replacement of any other portion of the Enterprise. Significant damage to the Enterprise could result in a lack of the ability to generate sufficient Net Revenues to repay the Bonds. The City does not, and does not expect to, maintain earthquake insurance on the Enterprise. Tax Exemption The Authority and the City have covenanted that they will take all actions necessary to assure the exclusion of interest with respect to the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Internal Revenue in the gross income of the Owners thereof for federal tax purposes. See "TAX MATTERS." Parity Obligations As described in "SECURITY FOR THE BONDS—Parity Obligations" above, the Installment Purchase Contract permits the City to issue or incur Parity Obligations which would be payable from Net Revenues on a parity with the payment of the Installment Payments. In the event of a decline in Net Revenues available to pay the Installment Payments, the existence of Parity Obligations could adversely affect the City's ability to pay the Installment Payments. Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price. APPROVAL OF LEGAL PROCEEDINGS The legality and enforceability of the Bonds is subject to the approval of Nossaman LLP, Irvine, California, California, acting as Bond Counsel. Certain disclosure matters will be passed upon for the City and the Authority by Quint &Thimmig LLP, San Francisco, California, acting as Disclosure Counsel. Certain legal matters will be passed upon for the City and the Authority by Pamela Thompson,Esq.,the City Attorney. LITIGATION At the time of delivery of and payment for the Bonds, the City and the Authority will certify that there is no action, suit, proceedings, inquiry or investigation, at law or in equity, -43-