8D Consent 2007 0416 - Laserfiche WebLink

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effect and seek to collect the Lease Payments as they become due. The Lease Agreement further provides that so long as an event of default exists under the Lease Agreement, the Authority, or its assignee, may re-enter the Leased Premises for the purpose of taking possession of any portion of the Leased Premises and to re-Iet the Leased Premises and, in addition, at its option, with or without such entry to terminate the Lease Agreement as described therein. See "APPENDIX D -Summary Of Principal Legal Documents - The Lease Agreement." No assurance can be given that the Trustee will be able to re-Iet Leased Premises so as to provide rental income sufficient to pay principal and interest evidenced by the Certificates in a timely manner or that such re-Ietting will not adversely affect the exclusion of interest with respect thereto from gross income for federal or State income tax purposes. Furthermore, it is not certain whether a court would permit the exercise of the remedies of repossession and re- letting with respect to the Leased Premises. In the event of a default, there is no remedy of acceleration of the total Lease Payments due over the term of the Lease Agreement and the Trustee is not empowered to sell the Leased Premises and use the proceeds of such sale to prepay the Certificates or pay debt service with respect thereto. The City will be liable only for Lease Payments on an annual basis and, in the event of a default, the Trustee would be required to seek a separate judgment each year for that year's defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments were due and against funds needed to serve the public welfare and interest. Abatement Under certain circumstances related to damage, destruction, condemnation or title defects which cause a substantial interference with the use and occupancy of the Leased Premises, the City's obligation to make Lease Payments will be subject to full or partial abatement and could result in the Trustee having inadequate funds to pay the principal and interest with respect to the Certificates as and when due. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES - Abatement" and "APPENDIX D - Summary Of Principal Legal Documents -The Lease Agreement." Earthquakes Several active fault zones lie within Northern California. The Hayward Fault, the San Andreas Fault, and other related faults in the region are potentially active within a 10 to 15 mile radius of the City. Seismic activity also can occur on previously undetected faults. In the event of a significant earthquake, substantial damage could occur to the Leased Premises. Such damage could result in an abatement of Lease Payments as described above under "RISK FACTORS - Abatement Risk." The City is required under the Lease to procure and maintain earthquake insurance on the Leased Premises only if and to the extent available at reasonable cost from reputable insurers. Such earthquake insurance may be subject to a deductible clause of not to exceed 10% of the replacement cost of the insured property for anyone loss to the insured improvements. The City has determined that earthquake insurance on the Leased Premises is presently not available at reasonable cost from reputable insurers. Therefore, upon the initial execution and delivery of the Certificates the City will not have -38-