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including use and occupancy insurance with respect to certain insured risks, in an amount equal to twenty-four (24) months of Base Rental (but such risks may not include lost use and occupancy resulting from an earthquake). See the caption "SECURITY FOR THE BONDS -- The Lease -- Insurance" and APPENDIX A under the caption "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -- SUMMARY OF CERTAIN PROVISIONS OF THE LEASE -- Insurance". Abatement • Except to the extent of amounts legally available to the City for payments under the Lease and except as otherwise specifically provided in the Lease with respect to use and occupancy insurance proceeds and amounts on deposit in the Revenue Fund, during any period in which, by reason of material damage, destruction, title defect or condemnation there is substantial interference with the use and possession by the City of any portion of the Leased Property, rental payments due under the Lease will be abated proportionately by an amount such that the portion of Base Rental remaining unabated represents the fair rental value of the remaining portion of the Leased Property, as calculated by the City and set forth in writing to the Authority and the Trustee. Any abatement of rental payments pursuant to the Lease will not be considered an event of default as defined in the Lease. The City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1932(4) and any and all other rights to terminate the Lease by virtue of any such interference and the Lease shall continue in full force and effect. Such abatement will continue for the period commencing with the date of such damage, destruction, title defect or condemnation and ending with the substantial completion of the work of repair or replacement of the portions of the Leased Property so damaged, destroyed, defective or condemned. Insurance The City has covenanted under the Lease to procure or cause to be procured a variety of insurance policies against loss or damage to the Leased Property, including casualty insurance against loss or damage caused by fire, lightning or earthquake and certain other casualties, public entity liability insurance, title insurance and worker's compensation insurance. In addition, the City has covenanted to provide use and occupancy insurance against total or partial loss of the Leased Property as a result of hazards covered by the casualty insurance described above in an amount sufficient to pay the total Base Rental payable by the City attributable to the Leased Property for a period of at least twenty-four (24) months. The Lease permits the City to decline to insure for earthquake damage under certain circumstances. Upon issuance of the Bonds, the City will provide earthquake insurance on the Leased Property if available from reputable insurers at commercially reasonable rates. Subject to certain conditions, the City may self-insure against any of the risks required to be insured against in the Lease except rental interruption and earthquake insurance and title insurance. See APPENDIX A under the caption "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -- SUMMARY OF CERTAIN PROVISIONS OF THE LEASE - Insurance" for a complete summary of the insurance requirements of the Lease. If the City self-insures against loss or damage, there is no assurance that sufficient moneys will be available to rebuild the Leased Property in the event of loss or damage. If sufficient moneys are available to rebuild the Leased Property, there is no legal assurance that such moneys can be applied to rebuild the Leased Property under current California law. Limited Recourse on Default The enforcement of any remedies provided in the Lease or the Ground Lease could prove both expensive and time consuming. Although the Lease provides that if the City defaults the Trustee may reenter the leased property and relet it, portions of the Leased Property may not be easily recoverable, and even if recovered, could be of little value to others because of the Leased Property's specialized nature. Additionally, the Trustee may have limited ability to relet the leased property to provide a source of rental payments sufficient to pay the principal and interest on the Bonds consistent with the preservation of the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Alternatively, if the City defaults on its 17