N.Y. Education Law § 489: Remedies of noteholders and bondholders

§ 489. Remedies of noteholders and bondholders. 1. In the event that

the fund shall default in the payment of principal of or interest on any

issue of notes or bonds after the same shall become due, whether at

maturity or upon call for redemption, and such default shall continue

for a period of thirty days, or in the event that the fund shall fail or

refuse to comply with the provisions of this article, or shall default

in any agreement made with the holders of any issue of notes or bonds,

the holders of twenty-five per centum in aggregate principal amount of

the notes or bonds of such issue then outstanding, by instrument or

instruments filed in the office of the city clerk of the city of Yonkers

and approved or acknowledged in the same manner as a deed to be

recorded, may appoint a trustee to represent the holders of such notes

or bonds for the purposes herein provided.

2. Such trustee may, and upon written request of the holders of

twenty-five per centum in principal amount of such notes or bonds then

outstanding shall, in his or its own name:

(a) by suit, action or proceeding in accordance with the civil

practice law and rules, enforce all rights of the noteholders or

bondholders and require the fund to carry out agreements with such

noteholders or bondholders and to perform its duties under this article;

(b) bring suit upon such notes or bonds;

(c) by action or suit, require the fund to account as if it were the

trustee of an express trust for the holders of such notes or bonds;

(d) by action or suit, enjoin any acts or things which may be unlawful

or in violation of the rights of the holders of such notes or bonds;

(e) declare all such notes or bonds due and payable, and if all

defaults shall be made good, then, with the consent of the holders of

twenty-five per centum of the principal amount of such notes or bonds

then outstanding, annul such declaration and its consequences.

3. Such trustees shall in addition to the foregoing have and possess

all of the powers necessary or appropriate for the exercise of any

functions specifically set forth herein or incident to the general

representation of bondholders or noteholders in the enforcement and

protection of their rights.

4. The supreme court shall have jurisdiction of any suit, action or

proceeding by the trustee on behalf of such noteholders or bondholders.

The venue of any such suit, action or proceeding shall be laid in the

county of Westchester.

5. Before declaring the principal of notes or bonds due and payable,

the trustee shall first give thirty days' notice in writing to the mayor

of the city of Yonkers, to the fund, to the board of education of the

city of Yonkers and to the attorney general of the state.