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RISK FACTORS AND INVESTMENT CONSIDERATIONS The purchase of the Certificates involves certain investntent risks that are discussed throughout this Official Statement. Each prospective purchaser of the Certificates should make an independent evaluation of all of the information presented in this Official Statement in order to make att informed #tvestment decision. Certain risk factors relating to the Certificates are described below. Limited Obligations Each Certificate evidences the undivided, proportionate interest of the Owner thereof in the right to receive Base Rentals to be paid by the City under the Lease. The Certificates are payable solely from the Base Rentals and other money and investments held by the Trustee under the Indenture. The Base Rentals constitute currently budgeted expenditures of the City, payable only if the City Council appropriates sufficient money to extend the term of the Lease for each successive fiscal year. The Initial Term of the Lease commences as of November 1, 2003, and expires on June 30, 2004. The Lease is thereafter subject to successive one-year Renewal Terms commencing on July 1 of each year, with a final renewal term commencing July 1, 2018 and ending February 2, 2019. The City's obligations under the Lease do not constitute an indebtedness within the meaning of any constitutional, statutory or charter debt limitation or restriction. The City intends to satisfy its obligation~lo make Base Rentals under the Lease from a one-quarter cent local park sales tax collected within the City and from other available funds of the City. Purchasers of the Certificates should be aware, however, that such sales tax and other funds are not pledged to the payment of the Certificates. The City Council has declared its current intention and expectation that the Lease will be renewed annually until the City exercises its option to acquire the Trustee's interest in the Leased Property. However, such a declaration may not be construed as contractually obligating or otherwise binding the City. Accordingly, the likelihood that the City will renew the Lease for all Renewal Terms and continue to pay the Base Rentals thereunder to enable the Trustee to timely pay the Principal Components and Interest Components of Base Rentals represented by the Certificates is dependent upon certain factors which are beyond the control of the Owners, including (1) the availability of funds from the Certificates or other sources in an amount sufficient to complete the Project, (2) the City's continuing need for the Leased Property, (3) the delnographic conditions within the City, (4) the City's ability to generate sufficient property taxes, sales taxes, utility fees and charges and revenues from other sources to pay its obligations under the Lease and its other obligations and (5) the value of the Leased Property if the Trustee's interest therein is relet or sold in a foreclosure or other liquidation proceeding instituted by the Trustee upon the termination of the Lease as a result of an Event of Default or Event of Nonappropriation. Expiration or Termination of the Lease The Lease will expire by its terms on June 30 during each year commencing in 2004 and ending in 2018 with a final Renewal Term commencing July 1, 2018 mid ending February 2, 2019, unless the City in its sole discretion exercises the option provided in the Lease to extend its term for each next succeeding Renewal Tenn. If in any year the City does not extend the term of the Lease, the City's obligation to make payments will terminate on the June 30 occurring at the end of the then current Renewal Term. Upon (1) the expiration of any Renewal Term during which an Event of Nonappropriation occurs (which is not waived by the Trustee as provided in the Lease) or (2) a default under the Lease and an election by the Trustee to terminate the City's possessory interest under the Lease, the City's right of possession and use of the Leased Property under the Lease will expire or be temfinated, as appropriate. See "SUMMARY OF THE LEASE -- Events of Default" and "-- Remedies on Default" in AppendLr C hereto. If the City's right of possession and use of the Leased Property under the Lease expires or is terminated for either of the reasons described in the preceding paragraph, (1) the City's obligation to make -11-