____________________ PURCHASE AND SALE AGREEMENT ____________________ between THE STATE OF LOUISIANA and TOBACCO SETTLEMENT FINANCING CORPORATION Dated as of June 1, 2015 Table of Contents Page ARTICLE I Section 1.01. Definitions................................................................................................ 1 Section 1.02. Other Definitional Provisions .................................................................. 3 ARTICLE II Section 2.01. Conveyance of Tobacco Assets ............................................................... 4 Section 2.02. Benefits Provided ...................................................................................... 4 Section 2.03. Notice as to Representations and Warranties........................................... 5 ARTICLE III Section 3.01. Representations of State ........................................................................... 5 Section 3.02. Limitation on Liability ............................................................................. 6 ARTICLE IV Section 4.01. Pledges; Protection of Title; Non-Impairment Covenant ........................ 7 Section 4.02. Further Actions ......................................................................................... 8 Section 4.03. State Tax Covenants ................................................................................ 8 ARTICLE V Section 5.01. Further Actions ......................................................................................... 8 Section 5.02. Operating Budget ...................................................................................... 9 Section 5.03. Annual Report ........................................................................................... 9 Section 5.04. Residual..................................................................................................... 9 Section 6.01. Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08. Section 6.09. Section 6.10. ARTICLE VI Amendment .............................................................................................. 9 Use of the Purchase Price ...................................................................... 10 Notices ................................................................................................... 10 Limitations on Rights of Others ............................................................. 10 Severability ............................................................................................ 11 Separate Counterparts ............................................................................ 11 Headings ................................................................................................ 11 Governing Law ...................................................................................... 11 Assignment by the Corporation ............................................................. 11 Limitation of Liability of Board Members ............................................ 11 Appendix A - Form of Residual Certificate PURCHASE AND SALE AGREEMENT dated as of June 1, 2015, between the STATE OF LOUISIANA (the “State”) and the TOBACCO SETTLEMENT FINANCING CORPORATION (the “Corporation”), a special purpose, public corporate entity and an instrumentality independent of the State of Louisiana. WHEREAS, pursuant to the Act, the Corporation desires to purchase from the State certain Tobacco Assets (as such terms are defined herein); WHEREAS, the State, acting through the State Bond Commission with the approval of the Joint Legislative Committee on the Budget, is willing to sell such Tobacco Assets to the Corporation; WHEREAS, the Corporation is willing to purchase from the State such Tobacco Assets and will finance the purchase of such Tobacco Assets by selling the Series 2015 Bonds pursuant to the Bond Purchase Agreement (as such terms are defined herein); WHEREAS, pursuant to the Act including the legislative findings and intent declared therein, the Corporation is exercising the power and authority granted by the Act in all respects for the benefit of the citizens of the State and is acting in the best interest of the State to convert future tobacco settlement payments receivable as a result of the Master Settlement Agreement into current assets and thereby reducing the State’s exposure to the payment risks associated with the Master Settlement Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: “Act” means the Tobacco Settlement Financing Corporation Act, now codified at R.S. 39:99.1 et seq. “Agreement” means this Purchase and Sale Agreement, as amended from time to time in accordance with the terms hereof. “Board” means the governing body of the Corporation, as established by the Act. “Bondholders” or “Holders” means the registered owners of outstanding Bonds. “Bonds” shall have the meaning ascribed thereto in the Indenture. “Closing Date” means June ___, 2015. 1 “Consent Decree” means the Consent Decree and Final Judgment relating to the MSA, as the same has been and may be corrected, amended or modified, in the action entitled Richard P. Ieyoub, Attorney General, ex rel. State of Louisiana v. Phillip Morris, Inc., et al., bearing Number 98-6473 on the docket of the Fourteenth Judicial District Court for the Parish of Calcasieu, State of Louisiana. “Corporation” means the Tobacco Settlement Financing Corporation. “Federal Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, codified as Title 11, United States Code. “Financing Costs” means (i) all costs, fees, expenses incurred by the Corporation in connection with the issuance of the Series 2015 Bonds; (ii) all proceeds of the Series 2015 Bonds deposited in any debt service reserve fund to secure the Series 2015 Bonds; and (iii) the cost of any credit or liquidity enhancement for the Series 2015 Bonds. “Indenture” means the Indenture, dated as of June 1, 2015, between the Corporation and the Trustee, as amended, supplemented and in effect from time to time. “Master Settlement Agreement” or “MSA” means the Master Settlement Agreement identified in the Consent Decree, including the related Escrow Agreement. “NPM Adjustment Settlement Term Sheet” means the Term Sheet, dated November 14, 2012 (including all appendices, addenda and exhibits thereto), constituting Exhibit A to the Stipulated Partial Settlement and Award, dated March 12, 2013, in the arbitration styled In the 2003 NPM Adjustment Proceedings, JAMS Ref No. 1100053390. “Opinion of Counsel” means one or more written opinions of counsel who may be an employee of or counsel to the State, which counsel shall be acceptable to the Trustee. “Outstanding” when used with respect to bonds, shall exclude bonds that shall have been paid in full at maturity, or shall have otherwise been refunded, redeemed, defeased or discharged, or that may be deemed not outstanding pursuant to agreements with the holders thereof. “Previously Sold Assets” means the right, title and interest to sixty percent 60%) of the “state allocation” as defined in the Act, from and after November 7, 2001. “Qualifying Statute” means, collectively, (i) House Bill No. 641, Act No. 221, which became effective on June 11, 2013 (“HB 641”), and (ii) Louisiana Revised Statutes 13:5061 through 13:5063, which became effective on July 1, 1999, as amended by HB 641. “Rating Confirmation” means written confirmation from each national rating agency which, at the request of the Corporation, assigned a rating and continues to have a rating assigned to the Bonds, to the effect that the then-current rating assigned by such rating agency to the Bonds, without regard to any bond insurance or any other form of credit enhancement, will not be adversely affected by the proposed action for which a Rating Confirmation is sought. 2 “Residual Certificate” means that residual certificate issued, authenticated and delivered pursuant to the Indenture and substantially in the form attached as Appendix A hereto. “Responsible Officer” means, with respect to the State, the State Treasurer, the Commissioner of Administration, or any other official of the State customarily performing functions similar to those performed by any of the above designated officials, and also with respect to a particular matter, any other official to whom such matter is referred because of such official’s knowledge of and familiarity with the particular subject. “Series 2015 Bonds” means the Tobacco Settlement Asset-Backed Bonds, Series 2015, issued by the Corporation on the Closing Date. “State” means the State of Louisiana. “State Lien” means a security interest, lien, charge, pledge, equity or encumbrance of any kind, attaching to the interests of the State in and to the Tobacco Assets, whether or not as a result of any act or omission by the State. “Tax Code” means the Internal Revenue Code of 1986, as amended. “Tax-Exempt Bonds” means any Bonds issued by the Corporation the interest on which is intended to be excluded from gross income of the owner thereof for federal income tax purposes. “Tobacco Assets” means the right, title and interest to [**forty**] percent ([**40**]%) of the “state allocation” as defined in the Act, from and after the Closing Date. “Transaction Documents” means this Agreement and the Indenture. “Trustee” means the institution serving as Trustee from time to time under the Indenture. “2001 Agreement” means Purchase and Sale Agreement dated as of September 1, 2001 between the State and the Corporation, as amended and restated on July 10, 2013, and as further as amended, supplemented and in effect from time to time. Section 1.02. Other Definitional Provisions. (a) Capitalized terms used herein and not otherwise defined herein have the meanings assigned to them in the Indenture. (b) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (c) As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective 3 meanings given to them under generally accepted accounting principles. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such certificate or other document shall control. (d) The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Article, Section, Schedule and Exhibit references contained in this Agreement are references to Articles, Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.” (e) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. (f) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns. (g) The phrases “to the knowledge of the State,” “to the State’s knowledge,” “to the best knowledge of the State” or other similar phrase used herein or in any certificate delivered pursuant hereto, shall mean that a Responsible Officer had actual knowledge with respect to the information referred to in connection with such phrase. ARTICLE II CONVEYANCE OF TOBACCO ASSETS Section 2.01. Conveyance of Tobacco Assets. (a) The State does hereby sell and convey to the Corporation, without recourse (subject to certain continuing obligations herein), all right, title and interest of the State on the Closing Date in and to the Tobacco Assets. As consideration for such sale and conveyance of the Tobacco Assets by the State to the Corporation, the Corporation does hereby promise to sell, transfer, assign, set over and otherwise convey to the State, without recourse, on the Closing Date, the net proceeds (after Financing Costs and capitalized operating expenses of the Corporation) of the Bonds issued on the Closing Date and the Residual Certificate in accordance with and subject to the terms and conditions of the Indenture. (b) The right of the Corporation to receive payments as Tobacco Assets as described in paragraph (a) of this Section 2.01 is on a parity with and is not inferior or superior to (i) the right of the Corporation to receive other payments representing the Previously Sold Assets conveyed by the State under the 2001 Agreement, and (ii) the right of the State to receive other payments under the MSA not conveyed by the State under the 2001 Agreement or under this Agreement. The intent of this Agreement is that each payment under the MSA shall be paid 4 sixty percent (60%) to the Corporation as Previously Sold Assets, ______ percent (___%) to the Corporation as Tobacco Assets, and ______ percent (___%) to the State or its assigns. If payments under the MSA at any time are less than required to be paid under the terms of the MSA, neither the Corporation, nor the Trustee on behalf of holders of the Series 2015 Bonds, shall have any right to make a claim against the State’s taxing power nor any other asset or revenues of the State to make up all or any portion of such deficiency (including, without limitation, any claim that more than ______ percent (___%) of any such MSA payment be designated as Tobacco Assets hereunder). Section 2.02. Benefits Provided. The State shall cooperate with the Corporation to the full extent permitted by the terms of the Act and the MSA to assure receipt by the Corporation of all of the Tobacco Assets when and as due in accordance with the true intent and meaning of this Agreement and in furtherance thereof and without restriction the State agrees to provide to the Corporation a copy of all reports and materials received under the MSA, including but not limited to (except as restricted by the terms of the MSA) the reports of the Independent Auditor (as defined in the MSA) delivered pursuant to the MSA from time to time. Section 2.03. Notice as to Representations and Warranties. Upon discovery by the State or the Corporation of a breach of any of the representations and warranties of either party hereto that materially and adversely affects the value of the Tobacco Assets, the party discovering such breach shall give prompt written notice thereof to the other parties. ARTICLE III THE STATE Section 3.01. Representations of State. The State, as seller, makes the following representations on which the Corporation is deemed to have relied in acquiring the Tobacco Assets. The representations are made as of the date of this Agreement and as of the Closing Date, and shall survive the sale of the Tobacco Assets to the Corporation and the pledge of the Tobacco Assets to the Trustee pursuant to the Indenture. (a) Power and Authority. The State Bond Commission is duly authorized by the State through the Act to sell the Tobacco Assets on behalf of the State (which has been approved by the Joint Legislative Committee on the Budget) and has full power and authority to execute and deliver this Agreement and to carry out its terms. (b) Binding Obligation. This Agreement has been duly executed and delivered by the State and, assuming the due authorization, execution and delivery of this Agreement by the Corporation, constitutes a legal, valid and binding obligation of the State enforceable in accordance with its terms. (c) No Consents. No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement, except for those which have been obtained, including the approval of the Joint Legislative Committee on the Budget, and are in full force and effect. 5 (d) No Violation. The consummation by the State of the transactions contemplated by the Transaction Documents and the fulfillment of the terms hereof and thereof do not, to the State’s knowledge, in any material way conflict with, result in any material breach of any of the material terms and provisions of, or constitute (with or without notice or lapse of time) a material default under any indenture, agreement or other instrument to which the State is a party or by which it shall be bound; nor violate any law or, to the State’s knowledge, any order, rule or regulation applicable to the State of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the State or its property. (e) No Proceedings. To the State’s knowledge, except as disclosed in the Corporation’s Offering Circulars regarding the Series 2015 Bonds, there are no proceedings or investigations pending against the State, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the State: (i) asserting the invalidity of any of the Transaction Documents, the Series 2015 Bonds, (ii) seeking to prevent the issuance of the Series 2015 Bonds or the consummation of any of the transactions contemplated by any of the Transaction Documents, or (iii) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of any of the Transaction Documents, the Series 2015 Bonds, the MSA or the Consent Decree. (f) Title to Tobacco Assets. The State is the sole owner of the Tobacco Assets to be sold to the Corporation hereunder. On and after the Closing Date, (i) the State shall have no right, title or interest in or to the Tobacco Assets, and (ii) the Tobacco Assets shall be property of the Corporation, and not of the State, and shall be owned, received, held and disbursed by the Corporation or the Trustee and not by the State or the State Treasury. (g) True Sale; Absence of Liens on Tobacco Assets. The State is selling the Tobacco Assets free and clear of any and all State Liens, pledges, charges, security interests or any other statutory impediments to transfer of any nature encumbering the Tobacco Assets. The sale of the Tobacco Assets is, and shall be treated as, a true sale and absolute conveyance and transfer of the property, and all of the right, title and interest in and to such property, so conveyed and transferred, and not as a pledge or any other security interest or lien for borrowing. The characterization by the State of such sale as an absolute transfer shall not be negated or adversely affected by (i) less than all of the state allocation being conveyed or transferred to the Trustee, (ii) the issuance and delivery of the Residual Certificate or any other subordinate interest in the Tobacco Assets to the State, (iii) any characterization of the Corporation or its bonds for purposes of accounting, taxation or securities regulation, or (iv) any other factor whatsoever. (h) Assignment to Bondholders. The State acknowledges that the Corporation will assign to the Trustee for the benefit of the Bondholders all of its rights and remedies with respect to the breach of any obligations, representations and warranties of the State under this Agreement. 6 Section 3.02. Limitation on Liability. (a) The State and any officer or employee or agent of the State may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any person respecting any matters arising hereunder. (b) Neither the State nor any of the officers or employees or agents of the State shall be under any liability to the Corporation, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; but this sentence shall not protect the State or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. ARTICLE IV COVENANTS OF THE STATE Section 4.01. Pledges; Protection of Title; Non-Impairment Covenant. (a) Pursuant to the Act, the State covenants and agrees with the Corporation, and the Corporation is authorized to include such covenant and agreement in the Indenture for the benefit of the Bondholders, that the State will (i) irrevocably direct the Escrow Agent and Independent Auditor (as such terms are defined in the MSA) to transfer all Tobacco Assets directly to the Trustee, (ii) enforce the Corporation’s rights to receive the Tobacco Assets to the full extent permitted by the MSA, (iii) not amend the MSA in any manner that would materially impair the rights of the Bondholders, (iv) not limit or alter the rights of the Corporation to fulfill the terms of its agreements with the Bondholders, and (v) not in any way impair the rights and remedies of the Bondholders or the security for the Bonds until the Bonds, together with the interest thereon and all costs and expenses in connection with any action or proceeding by or on behalf of the Bondholders, are fully paid and discharged. (b) The State covenants and agrees with the Corporation, and the Corporation is authorized to include such covenant and agreement in the Indenture for the benefit of the Bondholders, that (i) the State shall take all actions as may be required by law and the MSA fully to preserve, maintain, defend, protect and confirm the interest of the Corporation in the Tobacco Assets and in the proceeds thereof in all material respects, and the State will not take any material action that will adversely affect the Corporation’s legal right to receive the Tobacco Assets; (ii) the State will promptly pay to the Trustee any Tobacco Assets received by the State; and (iii) without the prior written consent of the Corporation and the Trustee, the State will not take any action and will use its best reasonable efforts not to permit any action to be taken by others that (x) would release any person from any of such person’s covenants or obligations under the MSA or (y) would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, the MSA or waive timely performance or observance under such document, in each case if the effect thereof would be materially adverse to the Bondholders; provided, however, that if a Rating Confirmation is received relating to such proposed action then such proposed action will be deemed not to be materially adverse to the Bondholders. The State shall deliver to the Corporation and to the Trustee written notice of 7 any action described in clause (iii)(x) or (iii)(y) of the preceding sentence which it intends to take. The State shall deliver such written notice a reasonable period of time before taking any such action. (c) In accordance with the Act, prior to the date which is one year and one day after which the Corporation no longer has any Bonds Outstanding, the Corporation is prohibited from filing and shall have no authority to file a voluntary petition under the Federal Bankruptcy Code as it may, from time to time, be in effect, and neither any public official nor any organization, entity or other person shall authorize the Corporation to be or to become a debtor under the Federal Bankruptcy Code during such period. In accordance with the Act, this contractual obligation shall not subsequently be modified by State law during the period of this contractual obligation, and the State covenants with the Corporation, and the Corporation is authorized to include such covenant and agreement in the Indenture for the benefit of the Bondholders, that the State shall not limit or alter the denial of authority under this subsection during the period referred to in the preceding sentence. (d) The State covenants and agrees with the Corporation that the State will diligently enforce the Qualifying Statute, as contemplated in Section IX(d)(2)(B) of the MSA, and in the NPM Adjustment Settlement Term Sheet (as long as the NPM Adjustment Settlement Term Sheet remains binding and enforceable), against all Non-Participating Manufacturers selling tobacco products in the State that are not in compliance with the Qualifying Statute, in each case in the manner and to the extent deemed necessary in the sole judgment of, and consistent with the legal authority and discretion of the Attorney General of the State; provided, however, that the remedies available to the Corporation and the Bondholders for any breach of this pledge shall be limited to injuctive relief. (e) For purposes of subsections (a) and (b) of this Section 4.01, any amendment to the MSA entered into by the State in good faith, and in the furtherance of the best interests of the State, shall not be deemed to materially impair the rights of the Bondholders so long as (i) the State’s percentage allocations of total settlement payments due from the Participating Manufacturers under the MSA as of June 1, 2015 are not decreased, (ii) all Tobacco Assets continue to be paid to the Trustee in the manner and for the time period provided in this Agreement and the Indenture, and (iii) the State reasonably expects that such amendment will not materially and adversely affect the receipt of payments required to be made under the MSA and that payments as Tobacco Assets, after giving effect to such amendment, will be available in such amounts and at such times as are sufficient to pay the operating expenses of the Corporation and the principal of and interest on the Bonds as and when due. Section 4.02. Further Actions. (a) Instruments and Acts. Upon request of the Corporation or the Trustee, the State will execute and deliver such further instruments and do such further acts as the parties reasonably agree are reasonably necessary or proper to carry out more effectively the purposes of this Agreement. 8 (b) Rights and Remedies. The State shall exercise each and every right and remedy under the MSA (except as restricted by the terms of the MSA). All documents produced or received by the State in connection with such exercise of rights and remedies shall be provided to the Corporation and the Trustee. Section 4.03. State Tax Covenants. (a) The State shall at all times do and perform all acts and things permitted by law and necessary or desirable to assure that interest paid by the Corporation on the Tax-Exempt Bonds shall be excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Tax Code; (b) The State will not directly or indirectly use or permit the use of any of the proceeds of the Bonds that would cause the Tax-Exempt Bonds to be “private activity bonds” within the meaning of Section 141(a) of the Tax Code or would cause interest on the Tax-Exempt Bonds to not be excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Tax Code; and (c) The State agrees that no gross proceeds (as such term is defined in Section 1.148-1 of the Treasury Regulations promulgated under Section 148 of the Tax Code, as such Treasury Regulations and the Tax Code may be amended from time to time) of the Tax-Exempt Bonds shall at any time be used directly or indirectly to acquire securities or obligations the acquisition or holding of which would cause any Tax-Exempt Bond to be an “arbitrage bond” as defined in the Tax Code and any applicable Treasury Regulations promulgated thereunder. ARTICLE V COVENANTS OF THE CORPORATION Section 5.01. Further Actions. Upon request of the State or the Trustee, the Corporation will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Agreement. The Corporation shall, as soon as practicable, pay to the State any amounts due to the State that are received by the Corporation in error. Section 5.02. Operating Budget. In accordance with the requirements of the Act, the Corporation shall prepare an operating budget annually which shall be submitted for approval to the State Bond Commission and the Joint Legislative Committee on the Budget. Section 5.03. Annual Report. In accordance with the requirements of the Act, the Corporation shall prepare and submit an annual report to the Governor of the State, the State Bond Commission, the Senate Committee on Finance and the House of Representatives Committee on Appropriations on or before March 1 of each year. The annual report shall contain, among other appropriate matters, the annual operating and financial statements of the Corporation for the fiscal year ending the preceding June 30. 9 Section 5.04. Residual. In accordance with the requirements of the Act, the Corporation shall determine the amounts of the residual interests represented by the Residual Certificate, and pay and transfer such residual interests to the State Treasurer pursuant to the terms of the Residual Certificate, at the time or times determined pursuant to the Indenture. ARTICLE VI MISCELLANEOUS Section 6.01. Amendment. After the Closing Date, this Agreement may be amended by agreement of the State, and the Corporation with the consent of the Trustee but without the consent of any of the Bondholders: (i) to cure any ambiguity; (ii) to correct or supplement any provisions in this Agreement; (iii) to correct or amplify the description of the Tobacco Assets; (iv) to add additional covenants for the benefit of the Corporation; or (v) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement that shall not, as evidenced by a Rating Confirmation delivered to the Trustee, adversely affect in any material respect the Bonds. Except as otherwise provided in the preceding paragraph, this Agreement may also be amended from time to time by the State acting though the State Bond Commission with the approval of the Joint Legislative Committee on the Budget and the Corporation with (x) the consent of the Trustee and (y) a Rating Confirmation for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Bondholders; but no such amendment shall reduce the aforesaid portion of the outstanding amount of the Bonds, the holders of which are required to consent to any such amendment, without the consent of all of the Bondholders. It shall not be necessary for the consent of Bondholders pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. Prior to the execution of any amendment to this Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement. Without the prior written consent of the Trustee, no amendment, supplement or other modification of this Agreement shall be entered into or be effective if such amendment, supplement or modification affects the Trustee’s own rights, duties or immunities under this Agreement or otherwise. Section 6.02. Use of the Purchase Price. Subject to Section 4.03 hereof, the portion of the purchase price of the Tobacco Assets payable to the State pursuant to this Agreement corresponding directly or indirectly to the net proceeds (after Financing Costs and capitalized operating expenses of the Corporation) of the Series 2015 Bonds are received as a result of the MSA and shall be used by the State in accordance with the Constitution and statutes of the State, including Article VII, Sections 10.8 and 10.9 of the Louisiana Constitution and R.S. 39:99.12(B). Section 6.03. Notices. All demands, notices and communications upon or to the State, the Corporation, or the Trustee under this Agreement shall be in writing, personally delivered or 10 mailed by certified mail, return receipt requested, and shall be deemed to have been duly given upon receipt at: (a) in the case of the State: And: (b) State Treasurer’s Office State Capitol Building, 3rd Floor 900 North Third Street Baton Rouge, LA 70802 Department of Justice P.O. Box 94005 Baton Rouge, LA 70804 Attn: Tobacco Enforcement Unit in the case of the Corporation: Tobacco Settlement Financing Corporation Claiborne Building 1201 North Third Street, Suite 7-210 Baton Rouge, LA 70802 Attn: Commissioner of Administration (c) in the case of the Trustee: The Bank of New York Mellon Trust Company, N.A. 301 Main Street, Suite 1510 Baton Rouge, LA 70801 As to each of the foregoing, at such other address as shall be designated by written notice to the other parties. Section 6.04. Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the State, the Corporation, the Trustee, the owner of the Residual Certificate, and the Bondholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisions contained herein. Section 6.05. Severability. Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Section 6.06. Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 6.07. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. 11 Section 6.08. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Louisiana, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. The parties hereto agree that any and all claims asserted by or against any party under this Agreement or related thereto shall be heard and determined in the Nineteenth Judicial District Court for the State of Louisiana and in accordance with R.S. 39:99.11. Section 6.09. Assignment by the Corporation. The State hereby acknowledges and consents to any pledge, assignment and grant of a security interest by the Corporation to the Trustee pursuant to the Indenture for the benefit of the Bondholders of any or all right, title and interest of the Corporation in, to and under the Tobacco Assets or the assignment of any or all of the Corporation’s rights and obligations hereunder to the Trustee. Section 6.10. Limitation of Liability of Board Members. Notwithstanding anything contained herein to the contrary, members of the board of the Corporation and persons acting on the Corporation’s behalf, while acting within the scope of their duties or employment, shall not be subject to any personal liability resulting from carrying out the powers and duties conferred on them pursuant to Chapter 1 of Subtitle 1 of Title 39 of the Louisiana Revised Statutes of 1950, and shall have the indemnification rights provided in R.S. 13:5108.1 with respect to such actions. [Remainder of page left blank intentionally; signature page follows immediately.] 12 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written. STATE OF LOUISIANA By: State Bond Commission By: Name: John Neely Kennedy Title: Chairperson of the State Bond Commission TOBACCO SETTLEMENT FINANCING CORPORATION By: Name: Kristy H. Nichols Title: Chairperson of the Tobacco Settlement Financing Corporation 13 APPENDIX A TOBACCO SETTLEMENT FINANCING CORPORATION RESIDUAL CERTIFICATE REGISTERED OWNER: STATE OF LOUISIANA The TOBACCO SETTLEMENT FINANCING CORPORATION (the “Corporation”), a special purpose, public corporate entity and an instrumentality independent of the State of Louisiana (the “State”), having a legal existence separate and distinct from the State, for value received, promises to pay to the registered owner of this Residual Certificate, at the time or times determined pursuant to the Indenture, all amounts then payable to the registered owner of this Residual Certificate pursuant to the Indenture. Such amounts shall be transferred and paid by the Corporation to the state treasurer for deposit in and credit to the Millennium Trust. Capitalized terms used but not defined in this Residual Certificate shall have the meaning given to them in the Purchase and Sale Agreement dated as of June 1, 2015 between the State and the Issuer, as amended and restated on July 10, 2013, and as further amended, supplemented and in effect from time to time. Notwithstanding anything to the contrary in the Indenture or this Residual Certificate, no amounts shall be due and payable through or in respect of this Residual Certificate, and the registered owner of the Residual Certificate shall have no right to, or interest of any kind, in the payment of any such amount, unless and until the Trustee shall determine that funds are available therefor in accordance with the Indenture and the Trustee shall in fact withdraw funds from the Funds and Accounts for such payment and transfer the same to the registered owner of the Residual Certificate. Reference is made to the Indenture for a description of the funds pledged and for the provisions with respect to the incurring of indebtedness and to the rights, limitations of rights, duties, obligations and immunities of the Corporation, the Trustee, the Bondholders, and the registered owner of this Residual Certificate. This Residual Certificate is issuable only in fully registered form and may not be converted into bearer form. The Corporation and the Trustee may treat the registered owner as the absolute owner of this Residual Certificate for all purposes, notwithstanding any notice to the contrary. [Remainder of page left blank intentionally; signature page follows immediately.] 1 This Residual Certificate shall not be valid or become obligatory for any purpose until the certificate of authentication hereon has been dated and manually signed by the Trustee. IN WITNESS WHEREOF, the TOBACCO SETTLEMENT FINANCING CORPORATION has caused this Residual Certificate to be executed in its name by its Chairperson as of the _____ day of _____________, 2015. TOBACCO SETTLEMENT FINANCING CORPORATION By:______________________________ Name: Kristy H. Nichols Title: Chairperson CERTIFICATE OF AUTHENTICATION This Residual Certificate is the Residual Certificate described in and issued in accordance with the within mentioned Indenture. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By:_________________________ Authorized Officer Date of Authentication: _____________________ 2