Description of Corporation

The Tobacco Settlement Financing Corporation (the “Corporation”) is a public corporation of the State of Rhode Island (the “State”) established under the Act. The Corporation was created in 2002 and has a legal existence distinct from the State and does not constitute a department of State government. The Corporation is governed by a board of directors comprised of five members.

The Corporation was created to finance the acquisition from the State of the State’s right, title, and interest in the moneys due under the Master Settlement Agreement (the “MSA”), dated November 23, 1998, among the attorneys general of 46 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Territory of the Northern Marianas and Philip Morris, Incorporated, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, and Lorillard Tobacco Company.

The Corporation issued $685,390,000 of Tobacco Settlement Asset-Backed Bonds, 2002 Series A in June 2002, which were fully redeemed on March 19, 2015.

In June 2007, the Corporation issued $197,005,742 of Tobacco Settlement Asset-Backed Bonds, Series 2007A, B, and C, which were structurally subordinate to the payment in full of the 2002 Series Bonds. The Trustee was entitled to receive the “Residual” tobacco settlement revenues pledged to pay the 2007 Series A, B, and C Bonds upon full payment of the 2002 Series A Bonds.

On March 19, 2015, the Corporation issued $620,935,000 of Tobacco Settlement Asset-Backed Bonds that bear interest at annual rates ranging from 0.590% to 5.000% and mature in varying amounts through June 1, 2050. The proceeds of this issuance, along with the release of debt service reserve funds related to the bonds retired and the proceeds received for early termination of investment contracts, were used to fully redeem the 2002 Series bonds and repurchase and retire the principal amount of $76,220,155 of the 2007 Series bonds, as well as pay accreted interest of $13,600,495 on the retired 2007 Series bonds. The remaining 2007 Series A and B bonds (all Series C bonds were repurchased and retired with proceeds from the 2015 issuance) are structurally subordinate to the payment in full of the 2015 Series bonds.

All of the bonds are payable both as to principal and interest solely out of the assets of the Corporation pledged for such purpose, and neither the faith and credit nor the taxing power of the State of Rhode Island or any political subdivision thereof is pledged to the payment of the principal of or the interest on the bonds. The bonds do not constitute an indebtedness of or a general, legal, or “moral” obligation of the State or any political subdivision of the State.