(REPRINTED WITH ADOPTED AMENDMENTS)

 

Senate Bill No. 500–Committee on Finance

 

March 26, 2001

____________

 

Referred to Committee on Finance

 

SUMMARY—Revises various provisions of University Securities Law. (BDR 34‑915)

 

FISCAL NOTE:            Effect on Local Government: No.

                                    Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to the University Securities Law; authorizing the board of regents of the University of Nevada to delegate its authority concerning the sale of securities; authorizing variable rates of interest on securities; authorizing the investment of pledged revenues and the proceeds of securities in certain investment contracts; authorizing agreements for an exchange of interest rates; removing certain exceptions concerning the applicability of the Uniform Commercial Code—Secured Transactions; creating an exception for transfers of a local government from the provisions of the Uniform Commercial Code—Secured Transactions; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1. Chapter 396 of NRS is hereby amended by adding thereto

1-2  the provisions set forth as sections 2 to 5, inclusive, of this act.

1-3    Sec. 2.  1.  The board may, before any sale of securities, whether by

1-4  competitive bid or negotiated sale, delegate to the chancellor of the

1-5  university or the vice chancellor for finance of the university the

1-6  authority to sign a contract for the purchase of the securities or to accept

1-7  a binding bid for the securities subject to the requirements specified by

1-8  the board concerning:

1-9    (a) The rate of interest on the securities;

1-10    (b) The dates on which and the prices at which the securities may be

1-11  called for redemption before maturity;

1-12    (c) The price at which the securities will be sold; and

1-13    (d) The principal amount of the securities and the amount of principal

1-14  maturing in any particular year.

1-15    2.  All terms of the securities other than:

1-16    (a) The rate of interest;

1-17    (b) The dates and prices for the redemption of the securities;

1-18    (c) The price for the sale of the securities;

2-1    (d) The principal amount of the securities; and

2-2    (e) The requirements for the principal maturing in particular

2-3  years,

2-4  must be approved by the board before the securities are delivered.

2-5    3.  The final rate of interest, dates and prices of redemption, price for

2-6  the sale of the securities, principal amount and the requirements for the

2-7  principal amount maturing in particular years are not required to be

2-8  approved by the board if each of those terms complies with the

2-9  requirements specified by the board before the contract for the purchase

2-10  of the securities is signed or the bid for the securities is accepted.

2-11    Sec. 3.  1.  The resolution authorizing the issuance of any securities

2-12  or any trust indenture or other instrument appertaining thereto may fix a

2-13  rate or rates of interest or provide for the determination of the rate or

2-14  rates from time to time by a designated agent according to the procedure

2-15  specified in that resolution or other instrument. The rate so determined

2-16  must approximate the rates then being paid for other securities which

2-17  contain similar provisions and have an equivalent rating. The board may

2-18  contract with or select any person to make that determination.

2-19    2.  The board may enter into an agreement with a third party for an

2-20  assurance of payment of the principal of, the interest on, or premiums, if

2-21  any, due in connection with any securities issued by the board. The

2-22  obligation of the board to reimburse that third party for any advances

2-23  made pursuant to that agreement may be provided in that agreement,

2-24  recited in those securities or evidenced by another instrument as

2-25  designated in the resolution authorizing the issuance of those securities

2-26  or any other instrument appertaining thereto. The board may assign its

2-27  rights under that agreement.

2-28    3.  In fixing the rate or rates of interest for securities pursuant to

2-29  subsection 1 or the rate or rates of interest imposed on the board for

2-30  reimbursement of any advances made under an agreement pursuant to

2-31  subsection 2, the board is not subject to any limitations on rates of

2-32  interest provided by statute, including, without limitation, NRS 396.852.

2-33  The resolution fixing that rate or rates of interest must contain the

2-34  findings of the board that the procedure specified therein for determining

2-35  that rate or rates is reasonable under existing or anticipated conditions in

2-36  the market and is necessary and advisable for marketing the securities.

2-37  These findings are conclusive. This section does not prohibit the board

2-38  from fixing a maximum rate of interest.

2-39    Sec. 4.  In addition to the investments permitted by NRS 396.861, the

2-40  board, subject to any contractual limitations from time to time imposed

2-41  upon the university by any resolution authorizing the issuance of

2-42  outstanding securities or by any trust indenture or other proceedings

2-43  appertaining thereto, may cause to be invested and reinvested, except as

2-44  otherwise provided in NRS 396.876, any pledged revenues and any

2-45  proceeds of securities issued hereunder in an investment contract that is

2-46  collateralized with securities issued by the Federal Government or

2-47  agencies of the Federal Government if:

2-48    1.  The collateral has a market value of at least 102 percent of the

2-49  amount invested and any accrued unpaid interest thereon;

3-1    2.  The university receives a security interest in the collateral that is

3-2  fully perfected and the collateral is held in custody for the university or

3-3  its trustee by a third-party agent of the university which is a commercial

3-4  bank authorized to exercise trust powers;

3-5    3.  The market value of the collateral is determined not less

3-6  frequently than weekly and, if the ratio required by subsection 1 is not

3-7  met, sufficient additional collateral is deposited with the agent of the

3-8  university to meet that ratio within 2 business days after the

3-9  determination; and

3-10    4.  The party with whom the investment contract is executed is a

3-11  commercial bank, or that party or a guarantor of the performance of that

3-12  party is:

3-13    (a) An insurance company which has a rating on its ability to pay

3-14  claims of not less than “Aa2” by Moody’s Investors Service, Inc., or

3-15  “AA” by Standard and Poor’s Ratings Services, or their equivalent; or

3-16    (b) An entity which has a credit rating on its outstanding long-term

3-17  debt of not less than “A2” by Moody’s Investors Service, Inc., or “A” by

3-18  Standard and Poor’s Ratings Services, or their equivalent.

3-19    Sec. 5.  1.  The university, in connection with securities it has issued

3-20  or proposes to issue, may enter into an agreement for an exchange of

3-21  interest rates as provided in this section if the board finds that such an

3-22  agreement would be in the best interests of the university.

3-23    2.  The university may enter into an agreement to exchange interest

3-24  rates only if:

3-25    (a) The long-term debt obligations of the person with whom the

3-26  university enters the agreement are rated “A” or better by a nationally

3-27  recognized rating agency; or

3-28    (b) The obligations pursuant to the agreement of the person with

3-29  whom the university enters the agreement are either:

3-30      (1) Guaranteed by a person whose long-term debt obligations are

3-31  rated “A” or better by a nationally recognized rating agency; or

3-32      (2) Collateralized by obligations deposited with the university or an

3-33  agent of the university which would be legal investments for the state

3-34  pursuant to NRS 355.140 and which have a market value at the time the

3-35  agreement is made of not less than 100 percent of the principal amount

3-36  upon which the exchange of interest rates is based.

3-37    3.  The university may agree, with respect to securities that the

3-38  university has issued or proposes to issue bearing interest at a variable

3-39  rate, to pay sums equal to interest at a fixed rate or rates or at a different

3-40  variable rate determined pursuant to a formula set forth in the agreement

3-41  on an amount not to exceed the principal amount of the securities with

3-42  respect to which the agreement is made, in exchange for an agreement to

3-43  pay sums equal to interest on the same principal amount at a variable

3-44  rate determined pursuant to a formula set forth in the agreement.

3-45    4.  The university may agree, with respect to securities that the

3-46  university has issued or proposes to issue bearing interest at a fixed rate

3-47  or rates, to pay sums equal to interest at a variable rate determined

3-48  pursuant to a formula set forth in the agreement on an amount not to

3-49  exceed the outstanding principal amount of the securities with respect to

4-1  which the agreement is made, in exchange for an agreement to pay sums

4-2  equal to interest on the same principal amount at a fixed rate or rates set

4-3  forth in the agreement.

4-4    5.  The term of an agreement entered into pursuant to this section

4-5  must not exceed the term of the securities with respect to which the

4-6  agreement was made.

4-7    6.  The university’s obligations to make payments under the

4-8  agreement may be secured by any of the pledged revenues that are

4-9  pledged to the securities in connection with the agreement as executed,

4-10  so long as the pledge does not violate the terms of any resolution or other

4-11  instrument appertaining to outstanding securities issued hereunder.

4-12    7.  Limitations upon the rate of interest on securities do not apply to

4-13  interest paid pursuant to an agreement entered into pursuant to this

4-14  section.

4-15    8.  If the university has entered into an agreement pursuant to this

4-16  section with respect to those securities, it may treat the amount or rate of

4-17  interest on the securities as the amount or rate of interest payable after

4-18  giving effect to the agreement for the purpose of calculating:

4-19    (a) Rates and charges of a revenue-producing enterprise whose

4-20  revenues are pledged to or used to pay the securities;

4-21    (b) Statutory requirements concerning revenue coverage that are

4-22  applicable to the securities; and

4-23    (c) Any other amounts which are based upon the rate of interest of the

4-24  securities.

4-25    9.  Subject to covenants applicable to the securities, any payments

4-26  required to be made by the university under the agreement may be made

4-27  from pledged revenues that are pledged to pay debt service on the

4-28  securities with respect to which the agreement was made or from any

4-29  other legally available source.

4-30    Sec. 6.  NRS 396.809 is hereby amended to read as follows:

4-31    396.809  NRS 396.809 to 396.885, inclusive, [shall] and sections 2 to

4-32  5, inclusive, of this act may be known as the University Securities Law.

4-33    Sec. 7.  NRS 104.9109 is hereby amended to read as follows:

4-34    104.9109  1.  Except as otherwise provided in subsections 3 and 4,

4-35  this article applies to:

4-36    (a) A transaction, regardless of its form, that creates a security interest

4-37  in personal property or fixtures by contract;

4-38    (b) An agricultural lien;

4-39    (c) A sale of accounts, chattel paper, payment intangibles or promissory

4-40  notes;

4-41    (d) A consignment;

4-42    (e) A security interest arising under NRS 104.2401, 104.2505,

4-43  subsection 3 of NRS 104.2711, or subsection 5 of NRS 104A.2508, as

4-44  provided in NRS 104.9110; and

4-45    (f) A security interest arising under NRS 104.4210 or 104.5118.

4-46    2.  The application of this article to a security interest in a secured

4-47  obligation is not affected by the fact that the obligation is itself secured by

4-48  a transaction or interest to which this article does not apply.

4-49    3.  This article does not apply to the extent that:

5-1    (a) A statute, regulation or treaty of the United States preempts this

5-2  article; or

5-3    (b) [Another statute of this state expressly governs the creation,

5-4  perfection, priority or enforcement of a security interest created by this

5-5  state or a governmental unit of this state;

5-6    (c) A statute of another state, a foreign country, or a governmental unit

5-7  of another state or a foreign country, other than a statute generally

5-8  applicable to security interests, expressly governs creation, perfection,

5-9  priority, or enforcement of a security interest created by the state, country,

5-10  or governmental unit; or

5-11    (d)] The rights of a transferee beneficiary or nominated person under a

5-12  letter of credit are independent and superior under NRS 104.5114.

5-13    4.  This article does not apply to:

5-14    (a) A landlord’s lien, other than an agricultural lien;

5-15    (b) A lien, other than an agricultural lien, given by statute or other rule

5-16  of law for services or materials, but NRS 104.9333 applies with respect to

5-17  priority of the lien;

5-18    (c) An assignment of a claim for wages, salary or other compensation of

5-19  an employee;

5-20    (d) A sale of accounts, chattel paper, payment intangibles or promissory

5-21  notes as part of a sale of the business out of which they arose;

5-22    (e) An assignment of accounts, chattel paper, payment intangibles or

5-23  promissory notes which is for the purpose of collection only;

5-24    (f) An assignment of a right to payment under a contract to an assignee

5-25  that is also obligated to perform under the contract;

5-26    (g) An assignment of a single account, payment intangible or

5-27  promissory note to an assignee in full or partial satisfaction of a preexisting

5-28  indebtedness;

5-29    (h) A transfer of an interest in or an assignment of a claim under a

5-30  policy of insurance, other than an assignment by or to a health-care

5-31  provider of a health-care-insurance receivable and any subsequent

5-32  assignment of the right to payment, but NRS 104.9315 and 104.9322 apply

5-33  with respect to proceeds and priorities in proceeds;

5-34    (i) An assignment of a right represented by a judgment, other than a

5-35  judgment taken on a right to payment that was collateral;

5-36    (j) A right of recoupment or set-off, but:

5-37      (1) NRS 104.9340 applies with respect to the effectiveness of rights

5-38  of recoupment or set-off against deposit accounts; and

5-39      (2) NRS 104.9404 applies with respect to defenses or claims of an

5-40  account debtor;

5-41    (k) The creation or transfer of an interest in or lien on real property,

5-42  including a lease or rents thereunder, except to the extent that provision is

5-43  made for:

5-44      (1) Liens on real property in NRS 104.9203 and 104.9308;

5-45      (2) Fixtures in NRS 104.9334;

5-46      (3) Fixture filings in NRS 104.9501, 104.9502, 104.9512, 104.9516

5-47  and 104.9519; and

5-48      (4) Security agreements covering personal and real property in NRS

5-49  104.9604;

6-1    (l) An assignment of a claim arising in tort, other than a commercial tort

6-2  claim, but NRS 104.9315 and 104.9322 apply with respect to proceeds and

6-3  priorities in proceeds; [or]

6-4    (m) An assignment of a deposit account in a consumer transaction, but

6-5  NRS 104.9315 and 104.9322 apply with respect to proceeds and priorities

6-6  in proceeds [.] ; or

6-7    (n) A transfer by a government or governmental unit.

6-8    Sec. 8.  1.  This section and sections 1 through 6, inclusive, of this act

6-9  become effective on July 1, 2001.

6-10    2.  Section 7 of this act becomes effective at 12:01 a.m. on July 1,

6-11  2001.

 

6-12  H