(30 ILCS 171/3-6)
Sec. 3-6. Bonds of the Authority.
(a) The Authority shall have power and is hereby authorized to issue bonds, in an amount no greater than $1,750,000,000, to provide sufficient funds for the purchase of all or a portion of the tobacco settlement revenues pursuant to Section 3-3 of this Act and the payment or provision for financing costs.
The issuance of bonds shall be authorized by a resolution of the Authority, adopted by a majority of the members of the Authority without further authorization or approval. The issue of the bonds of the Authority shall be special revenue obligations payable from and secured by a pledge of the pledged tobacco revenues, those proceeds of such bonds deposited in a reserve fund for the benefit of bondholders, and earnings on funds of the Authority, upon such terms and conditions as specified by the Authority in the resolution under which the bonds are issued or in a related trust indenture.
The Authority shall have the power and is hereby authorized from time to time to issue bonds, whenever it deems refunding expedient, to refund any outstanding bonds by the issuance of new bonds, provided that the refunding debt matures within the term of the bonds to be refunded. 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.
(b) The bonds of each issue shall be dated, shall bear interest (which 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, not more than 19 years after the date of issuance, as may be determined by the Authority and may be made redeemable before maturity, at the option of the Authority, at such price or prices and under such terms and conditions as may be fixed by the Authority. The principal and interest of such bonds may be made payable in any lawful medium. The resolution or the certificate of the officer of the Authority approving the issuance of the bonds shall determine the form of the bonds 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.
(c) The Authority may sell such bonds pursuant to notice of sale and public bid or by negotiated sale in accordance with the corresponding procedures applicable to like sales of general obligation bonds under Section 11 of the General Obligation Bond Act. 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 the Authority 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.
(d) Any pledge made by the Authority 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 Authority, irrespective of whether such parties have notice thereof. Notwithstanding any other provision of law to the contrary, neither the resolution nor any indenture or other instrument by which a pledge is created or by which the Authority'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 Authority.
(e) Whether or not the bonds of the Authority 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.
(f) At the sole discretion of the Authority, any bonds issued by the Authority and any related bond facility made under the provisions of this Act shall be secured by a resolution or trust indenture by and between the Authority and the 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 shall, without limitation, (i) provide for the creation and maintenance of such reserves as the Authority shall determine to be proper; (ii) include covenants setting forth the duties of the Authority in relation to the bonds, the income of the Authority, the related sale agreement and the related tobacco settlement revenues; (iii) contain provisions relating to the prompt transfer of the residual interest upon receipt of the tobacco settlement revenues; (iv) contain provisions respecting the custody, safeguarding, and application of all moneys and securities; (v) contain such provisions for protecting and enforcing against the Authority or the State the rights and remedies (pursuant thereto and to the sale agreement) of the owners of the bonds and any provider of a related bond facility as may be reasonable and proper and not in violation of law; and (vi) contain such other provisions as the Authority may deem reasonable and proper for priorities and subordination among the owners of the bonds and providers of related bond facilities. Any reference in this Act to a resolution of the Authority shall include any trust indenture authorized thereby.
(g) The net proceeds of bonds and any earnings thereon shall never be pledged to, nor made available for, payment of the bonds or any interest or redemption price thereon or any other debt or obligation of the Authority. The net proceeds of bonds shall be deposited by the State in the Tobacco Settlement Bond Proceeds Account, and shall be used by the State (either directly or by reimbursement) for the payment of outstanding obligations of the General Revenue Fund or to supplement the Tobacco Settlement Residual Account to pay for appropriated obligations of the Tobacco Settlement Recovery Fund for State fiscal year 2011 through 2013. Any residual interest in tobacco settlement revenues shall be deposited in the Tobacco Settlement Residual Account, and shall be used by the State (either directly or by reimbursement) in accordance with Section 6z-43 of the State Finance Act for appropriated obligations of the Tobacco Settlement Recovery Fund. With respect to any bonds of the Authority, the interest on which is intended to be excludable from the gross income of the owners for federal income tax purposes, the Authority and the authorized officers may provide restrictions on the use of net proceeds of bonds and other amounts in the sale agreement or otherwise in a tax regulatory agreement only as necessary to assure such tax-exempt status.
(h) The Authority may enter into, amend, or terminate, as it determines to be necessary or appropriate, any related 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 Authority, including without limitation provisions as to security, default, termination, payment, remedy, jurisdiction and consent to service of process.
(i) The Authority may enter into, amend, or terminate, as it deems to be necessary or appropriate, any related bond facility to place the obligations or investments of the Authority, as represented by the bonds or the investment of reserves securing the bonds or related bond facilities or other tobacco settlement revenues or its other assets, in whole or in part, on the interest rate, cash flow, or other basis approved by the Authority, 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 Authority in connection with, or incidental to, entering into, or maintaining any (i) agreement which secures bonds of the Authority 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 Authority that a related bond facility or the amendment or termination thereof is necessary or appropriate as aforesaid shall be conclusive. Any related bond facility may contain such provisions as to security, default, termination, payment, remedy, jurisdiction, and consent to service of process and other terms and conditions as determined by the Authority, 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.
(j) Bonds or any related 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.
(Source: P.A. 96-958, eff. 7-1-10.)
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Last modified: February 18, 2015