N.Y. Tobacco Settlement Financing Corporation Act § 6: Bonds of the corporation

§ 6. Bonds of the corporation. 1. (i) The corporation shall have power

and is hereby authorized from time to time to issue its bonds in an

aggregate principal amount not exceeding four billion, two hundred

million dollars ($4,200,000,000) plus the amount of any financing costs,

to provide sufficient funds for achieving its corporate purpose,

consisting of the purchase of all or a portion of the state's share

pursuant to section four of this act and the payment or provision for

financing costs. The foregoing limitation shall not apply to bonds

issued to refund bonds. Provided, however, that no bonds may be issued

pursuant to the authority and power granted by this section, except an

issue of bonds in an amount not to exceed seven hundred million dollars

($700,000,000) plus the amount of any applicable financing costs, until

the state comptroller shall determine that legislative passage of the

budget has occurred for the current state fiscal year in accordance with

the provisions of subdivision 3 of section 5 of the legislative law.

Provided, further, no bonds, other than refunding bonds, shall be issued

pursuant to such authority and power on or after July 1, 2004.

(ii) Each issuance of bonds shall be authorized by a resolution of the

corporation, adopted by a majority of the members of the board then in

office without further authorization or approval, provided, however,

that any such resolution authorizing the issuance of bonds may delegate

to an officer of the corporation the power to issue such bonds from time

to time and to fix the details of any such issues of bonds by an

appropriate certificate of such authorized officer. Every issue of the

bonds of the corporation shall be special revenue obligations payable

from and secured by a pledge of pledged tobacco revenues and other

assets, including those proceeds of such bonds deposited in a reserve

fund for the benefit of bondholders, earnings on funds of the

corporation and such other funds and assets as may become available,

upon such terms and conditions as approved by the state representative

and as specified by the corporation in the resolution under which the

bonds are issued or in a related trust indenture.

(iii) The corporation shall have the power and is hereby authorized

from time to time to issue bonds, whenever it deems refunding expedient,

to refund any bonds by the issuance of new bonds, whether the bonds to

be refunded have or have not matured, and to issue bonds partly to

refund bonds then outstanding and partly for any of its other corporate

purposes. The refunding bonds may be exchanged for the bonds to be

refunded or sold and the proceeds applied to the purchase, redemption or

payment of such bonds.

2. The bonds of the corporation of each issue shall be dated, shall

bear interest (which, under the code, in the opinion of transaction

counsel to the corporation, may be includable in or excludable from the

gross income of the owners for federal income tax purposes) at such

fixed or variable rates, payable at or prior to maturity, and shall

mature at such time or times, as may be determined by the corporation

and may be made redeemable before maturity, at the option of the

corporation, at such price or prices and under such terms and conditions

as may be fixed by the corporation. The principal and interest of such

bonds may be made payable in any lawful medium. The resolution or the

certificate of the authorized officer shall determine the form of the

bonds, either registered or book-entry form, and the manner of execution

of the bonds and shall fix the denomination or denominations of the

bonds and the place or places of payment of principal and interest

thereof, which may be at any bank or trust company within or outside the

state. If any officer whose signature or a facsimile thereof appears on

any bonds shall cease to be such officer before the delivery of such

bonds, such signature or facsimile shall nevertheless be valid and

sufficient for all purposes the same as if he had remained in office

until such delivery. The corporation may also provide for temporary

bonds and for the replacement of any bond that shall become mutilated or

shall be destroyed or lost.

3. The corporation with the approval of the state representative may

sell such bonds in such manner, either at a public or private sale and

either on a competitive or negotiated basis. Provided, however, no such

bonds may be sold by the corporation at private sale unless such sale

and the terms thereof have been approved in writing by the comptroller.

The proceeds of such bonds shall be disbursed for the purposes for which

such bonds were issued under such restrictions as the sale agreement and

the resolution authorizing the issuance of such bonds or the related

trust indenture may provide. Such bonds shall be issued upon approval of

both the state representative and the corporation and without any other

approvals, filings, proceedings or the happening of any other conditions

or things other than the approvals, findings, proceedings, conditions,

and things that are specified and required by this act.

4. Any pledge made by the corporation shall be valid and binding at

the time the pledge is made. The assets, property, revenues, reserves or

earnings so pledged shall immediately be subject to the lien of such

pledge without any physical delivery thereof or further act and the lien

of any such pledge shall be valid and binding as against all parties

having claims of any kind in tort, contract or otherwise against the

corporation, irrespective of whether such parties have notice thereof.

Notwithstanding any other provision of law to the contrary, neither the

bond resolution nor any indenture or other instrument by which a pledge

is created or by which the corporation's interest in pledged assets,

property, revenues, reserves or earnings thereon is assigned need be

filed, perfected or recorded in any public records in order to protect

the pledge thereof or perfect the lien thereof as against third parties,

except that a copy thereof shall be filed in the records of the

corporation.

5. Whether or not the bonds of the corporation are of such form and

character as to be negotiable instruments under the terms of the uniform

commercial code, the bonds are hereby made negotiable instruments for

all purposes, subject only to the provisions of the bonds for

registration.

6. At the sole discretion of the corporation, any bonds issued by the

corporation and any ancillary bond facility made under the provisions of

this act may be secured by a resolution or trust indenture by and

between the corporation and the trust indenture trustee, which may be

any trust company or bank having the powers of a trust company, whether

located within or outside the state. Such trust indenture or resolution

providing for the issuance of such bonds may provide for the creation

and maintenance of such reserves as the board shall determine to be

proper and may include covenants setting forth the duties of the

corporation in relation to the bonds, the income of the corporation, the

related sale agreement with respect to the sale of the state's share and

the pledged tobacco revenues and other assets. Such trust indenture or

resolution may contain provisions respecting the custody, safeguarding

and application of all moneys and securities, may contain such

provisions for protecting and enforcing the rights and remedies

(pursuant thereto and to the sale agreement) of the owners of the bonds

and any other benefitted party as may be reasonable and proper and not

in violation of law and may include any or all of the rights, powers and

duties of the trustee appointed by bondholders pursuant to section eight

of this act and limiting or abrogating the right of the bondholders to

appoint a trustee under such section. It shall be lawful for any bank or

trust company incorporated under the laws of the state which may act as

depository of the proceeds of bonds or of any other funds or obligations

received on behalf of the corporation to furnish such indemnifying bonds

or to pledge such securities as may be required by the corporation. Any

such trust indenture or resolution may contain such other provisions as

the corporation may deem reasonable and proper for priorities and

subordination among the owners of the bonds and other beneficiaries. Any

reference in this act to a resolution of the board shall include any

trust indenture authorized thereby.

7. The corporation may enter into, amend or terminate, as it

determines to be necessary or appropriate, any ancillary bond facility

(i) to facilitate the issuance, sale, resale, purchase, repurchase or

payment of bonds, interest rate savings or market diversification or the

making or performance of swap contracts, including without limitation

bond insurance, letters of credit and liquidity facilities, or (ii) to

attempt to manage or hedge risk or achieve a desirable effective

interest rate or cash flow. Such facility shall be made upon the terms

and conditions established by the board, including without limitation

provisions as to security, default, termination, payment, remedy and

consent to service of process.

8. The corporation may enter into, amend or terminate, any ancillary

bond facility that it determines to be necessary or appropriate to place

the obligations or investments of the corporation, as represented by the

bonds or the investment of reserved bond proceeds or other pledged

tobacco revenues or other assets, in whole or in part, on the interest

rate, cash flow or other basis approved by the corporation, which

facility may include without limitation contracts commonly known as

interest rate swap agreements, forward purchase contracts or guaranteed

investment contracts and futures or contracts providing for payments

based on levels of, or changes in, interest rates. These contracts or

arrangements may be entered into by the corporation in connection with,

or incidental to, entering into, or maintaining any (i) agreement which

secures bonds of the corporation or (ii) investment, or contract

providing for investment of reserves or similar facility guaranteeing an

investment rate for a period of years not to exceed the underlying term

of the bonds. The determination by the corporation that an ancillary

bond facility or the amendment or termination thereof is necessary or

appropriate as aforesaid shall be conclusive. Any ancillary bond

facility may contain such payment, security, default, remedy,

termination provisions and payments and other terms and conditions as

determined by the corporation, after giving due consideration to the

creditworthiness of the counterparty or other obligated party, including

any rating by any nationally recognized rating agency, and any other

criteria as may be appropriate.

9. Bonds or any ancillary bond facility may contain a recital that

they are issued or executed, respectively, pursuant to this act, which

recital shall be conclusive evidence of their validity, respectively,

and the regularity of the proceedings relating thereto.

10. The corporation, subject to such agreements with bondholders as

may then exist (including provisions which restrict the power of the

corporation to purchase bonds), or with the providers of any applicable

ancillary bond facility, shall have the power out of any funds available

therefor to purchase bonds of the corporation, which may or may not

thereupon be cancelled, at a price not substantially exceeding:

(i) if the bonds are then redeemable, the redemption price then

applicable, including any accrued interest; and

(ii) if the bonds are not then redeemable, the redemption price and

accrued interest applicable on the first date after such purchase upon

which the bonds become subject to redemption.

11. (i) Notwithstanding the provisions of any general or special law

to the contrary, and subject to the making of annual appropriations

therefor by the state, in order to assist in the undertaking and

financing by the corporation under this act, the state representative is

authorized to and shall enter into one or more contingency contracts

with the corporation upon such terms as the corporation and the state

representative shall agree, so as to provide annually to the corporation

the amount, if any, as necessary to meet the debt service requirements

on one or more series of bonds, including refunding bonds, in any year

if the receipts from pledged tobacco revenues or from an ancillary bond

facility, if any, are inadequate and after application of all collateral

pledged therefor, including any debt service and debt service reserve

fund. Any contingency contract shall terminate when there are no bonds

benefited by the contract outstanding in accordance with the trust

indenture under which such bonds are issued. The contract may provide

for (A) the corporation to request annually, not later than sixty days

prior to the commencement of the state's next succeeding fiscal year,

from the state the amount, as shall be certified by an authorized

officer of the corporation to the director of the budget, to be provided

by the state during its next succeeding fiscal year pursuant to each

contingency contract, and (B) for the director of the budget on behalf

of the state to include, as a requested appropriation item, an amount

equal to such certified amount. Each contingency contract shall include

text to the effect that the obligations of the state thereunder shall be

deemed executory only to the extent of the moneys available to the state

and no liability on account of any such agreement shall be incurred by

the state beyond the moneys available and appropriated for the purpose

thereof.

(ii) The state, through the state representative, is hereby authorized

to enter into a contingency contract on the terms and conditions and

subject to the limitations of this section, it being hereby determined

that the additional net proceeds to be received as a result thereof by

the state are an important public purpose to be achieved. The obligation

of the state to fund or to pay the amounts provided for in the

contingency contract, as in this section provided, shall constitute a

contingent contractual obligation and shall not constitute a debt or

state supported debt of the state within the meaning of any

constitutional or statutory provision and shall be deemed executory only

to the extent of moneys available; no liability shall be incurred by the

state beyond the moneys available for such purpose and such obligation

is subject to annual appropriation by the legislature. The amounts paid

to the corporation pursuant to any such contract shall be used by it

solely to pay or provide for the payment of debt service on the bonds of

the corporation, including refunding bonds, if any.

12. Neither the members of the corporation nor any other person

executing the bonds or an ancillary bond facility of the corporation

shall be subject to any personal liability or accountability by reason

of the issuance or execution and delivery thereof.