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<br />4826-7904-2280v7/200434-0005
<br />Limitation on Remedies; Bankruptcy
<br />General. The enforcement of any remedies that are provided for in the Trust Agreement could prove
<br />both expensive and time consuming. The rights and remedies that are provided in the Trust Agreement may be
<br />limited by and are subject to: (i) the limitations on legal remedies against cities in the State, including State
<br />Constitutional limits on expenditures and limitations on the enforcement of judgments against funds that are
<br />needed to serve the public welfare and interest; (ii) federal bankruptcy laws, as now or later enacted, as discussed
<br />in detail under the caption “—Bankruptcy” below; (iii) applicable bankruptcy, insolvency, reorganization,
<br />moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or later
<br />in effect; (iv) equity principles which may limit the specific enforcement under State law of certain remedies;
<br />(v) the exercise by the United States of America of the powers delegated to it by the Constitution; and (vi) the
<br />reasonable and necessary exercise, in certain exceptional situations, of the police powers that are inherent in the
<br />sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public
<br />purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated,
<br />could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or
<br />otherwise, and consequently may entail risks of delay, limitation or modification of their rights.
<br />The legal opinions that will be delivered concurrently with the delivery of the Bonds will be qualified,
<br />as to the enforceability of the Bonds, the Trust Agreement and other related documents, by bankruptcy,
<br />insolvency, reorganization, moratorium, arrangement, fraudulent conveyance and other laws relating to or
<br />affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in
<br />appropriate cases, and to the limitations on legal remedies against cities in the State.
<br />Failure by the City to pay principal of or interest on the Bonds or failure to observe and perform any
<br />other terms, covenants or conditions of the Trust Agreement for a period of 60 days after written notice of such
<br />failure and request that it be remedied has been given to the City by the Trustee, constitute events of default
<br />under the Trust Agreement and permit the Trustee to pursue the remedies that are described in the Trust
<br />Agreement. In the event of a default, there is no right under any circumstances to accelerate payment of the
<br />Bonds or otherwise declare any Bonds that are not then in default to be immediately due and payable.
<br />Any suit for money damages against the City would be subject to limitations on legal remedies against
<br />cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public
<br />welfare and interest.
<br />Bankruptcy. Enforceability of the rights and remedies of the Owners of the Bonds, and the obligations
<br />incurred by the City, may become subject to the provisions of Title 11 of the United States Code (the
<br />“Bankruptcy Code”) and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
<br />relating to or affecting the enforcement of creditors’ rights generally, now or later in effect, equity principles
<br />which may limit the specific enforcement under State law of certain remedies, the exercise by the United States
<br />of America of the powers delegated to it by the federal Constitution, the reasonable and necessary exercise, in
<br />certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental
<br />bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies
<br />against cities in the State. Bankruptcy proceedings, or the exercise of powers by the federal or State government,
<br />if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in
<br />bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.
<br />Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings for public agencies such
<br />as the City, involuntary petitions are not permitted. If the City were to file a petition under Chapter 9 of the
<br />Bankruptcy Code, the Owners of the Bonds and the Trustee could be prohibited from taking any steps to enforce
<br />their rights under the Trust Agreement or from taking any steps to collect amounts due from the City on the
<br />Bonds.
<br />In particular, if the City were to become a debtor under the Bankruptcy Code, the City would be entitled
<br />to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 case. Among the adverse
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