onecle

New York Tobacco Settlement Financing Corporation Act

Chapter 62 of 2003
                                   PART D3
 
    Section 1. The tobacco settlement financing corporation act is enacted
  to read as follows:
 
                Tobacco Settlement Financing Corporation Act
 
  Section 1.  Short title.
          2.  The tobacco settlement financing corporation.
          3.  Definitions.
          4.  The sale agreement.
          5.  Powers of the corporation.
          6.  Bonds of the corporation.
          7.  State not liable on bonds or any ancillary bond facility.
          8.  Remedies of bondholders.
          9.  Tax exemption and tax contract by the state.
          10. Agreement with state.
          11. Bonds as legal investments.
          12. Actions against the corporation.
          13. Assistance to the corporation.
          14. Preference   for   actions   or   proceedings   against  the
                corporation.
          15. Construction.
          16. Severability clause.
            Section 1. Short title. This act shall be  known  and  may  be
          cited as the "tobacco settlement financing corporation act".
            §  2.  The  tobacco settlement financing corporation. There is
          hereby created and established a subsidiary of the authority  to
          be  known as the "tobacco settlement financing corporation" as a
          public benefit corporation, separate and apart from  the  state.
          The directors of the authority shall serve as the members of the
          corporation  and  shall  receive  no  additional salary or other
          compensation, either direct or indirect, for serving as  members
          of  the  corporation,  other  than  reimbursement for actual and
          necessary expenses incurred in the performance of such  person's
          duties.  Any one or more members of the board may participate in
          a meeting of such board by means of a  conference  telephone  or
          similar    communications   equipment   allowing   all   persons
          participating in the meeting to hear  each  other  at  the  same
          time.  Participation  by such means shall constitute presence in
          person at a meeting. The corporation may delegate to one or more
          of its members, or officers, agents and employees,  such  powers
          and  duties  as the members may deem proper. Except as otherwise
          expressly provided by this act, actions by the  corporation  and
          the  members  of  its  board,  and exercise of the corporation's
          powers, shall be taken in the same manner  and  subject  to  the
          same requirements, as are set forth or imposed under chapter 902
          of   the  laws  of  1972,  as  amended,  for  such  actions  and
          performance by the authority and its directors.  Notwithstanding
          the  existence  of  common  management, the corporation shall be
          treated as a separate legal entity with its  separate  corporate
          purpose   as  set  forth  in  section  six  of  this  act;  and,
          accordingly,  the  assets,  liabilities   and   funds   of   the
          corporation  shall  be  neither consolidated nor commingled with
          those of  the  authority.  The  corporation  and  its  corporate
          existence   shall  continue  until  six  months  after  all  its
          liabilities have been met  or  otherwise  discharged.  Upon  the

          termination  of  the  existence  of  the corporation, all of its
          rights and property shall pass to and be vested in the state.
            §  3.  Definitions.  1.  "Ancillary  bond  facility" means any
          interest  rate  exchange  or  similar  agreement  or  any   bond
          insurance  policy,  letter of credit or other credit enhancement
          facility,   liquidity   facility,   guaranteed   investment   or
          reinvestment  agreement, or other similar agreement, arrangement
          or contract.
            2. "Authority" means the state of New York municipal bond bank
          agency established in section 2433  of  the  public  authorities
          law.
            3.  "Benefited  party"  means  any person, firm or corporation
          that enters into an ancillary bond facility with the corporation
          according to the provisions of this act.
            4. "Board" means the members of the corporation.
            5.  "Bonds"  means   any   bonds,   notes,   certificates   of
          participation  and  other evidence of indebtedness issued by the
          corporation pursuant to section six of this act.
            6. "Code" means the United States  Internal  Revenue  Code  of
          1986, as amended.
            7. "Complementary legislation" means sections 480-b, paragraph
          (c)  of  subdivision  1  of section 481 and subdivision (a-1) of
          section 1846 of the tax law.
            8.  "Consent  decree"  means  the  consent  decree  and  final
          judgment  of  the supreme court of the state of New York, county
          of New York, dated December 23, 1998, as the same has  been  and
          may  be  corrected,  amended or modified, in the action entitled
          State of New York, et al. v. Philip Morris Incorporated, et  al.
          (Index No. 400361/97).
            9.  "Contingent contractual obligation" means a contract under
          which the obligation of the state is  a  contingent  contractual
          obligation  as  such  term  is used in section 67-a of the state
          finance law.
            10. "Costs of issuance" means any item of expense directly  or
          indirectly  payable  or  reimbursable  by  the  corporation  and
          related to  the  authorization,  sale,  or  issuance  of  bonds,
          including,  but  not  limited to, underwriting fees and fees and
          expenses of professional consultants and fiduciaries.
            11. "Director of the budget" means the director of the  budget
          of the state of New York.
            12. "Financing costs" means all costs of issuance, capitalized
          interest,   capitalized  operating  expenses  and  debt  service
          reserves, fees, cost of any ancillary  bond  facility,  and  any
          other  fees,  discounts,  expenses and costs related to issuing,
          securing and marketing the bonds including, without  limitation,
          any net original issue discount.
            13. "Investment securities" means, subject to or, as otherwise
          provided  in, the provisions of any contract with bondholders of
          the corporation, (i)  general  obligations  of,  or  obligations
          guaranteed  by,  any  state  of  the United States of America or
          political subdivision thereof, or the District  of  Columbia  or
          any  agency  or instrumentality of any of them, receiving one of
          the three highest long-term  unsecured  debt  rating  categories
          available for such securities of at least one independent rating
          agency,  or (ii) certificates of deposit, savings accounts, time
          deposits or other obligations or  accounts  of  banks  or  trust
          companies  in  the  state,  secured, if the corporation shall so
          require, in such manner as the corporation may so determine,  or

          (iii)   otherwise,   in   the  discretion  of  the  corporation,
          obligations in which the comptroller is  authorized  to  invest,
          pursuant to either section 98 or 98-a of the state finance law.
            14.  "Interest  rate  exchange  or  similar agreement" means a
          written contract entered into in connection with the issuance of
          bonds or with such bonds  outstanding  with  a  counterparty  to
          provide  for  an  exchange  or swap of payments based upon fixed
          and/or variable interest rates, and shall be  for  exchanges  in
          currency of the United States of America only.
            15.  "Master settlement agreement" means the master settlement
          agreement, dated November 23, 1998, among the attorneys  general
          of 46 states, including the state, the District of Columbia, the
          Commonwealth  of  Puerto  Rico,  Guam,  the United States Virgin
          Islands, American  Samoa  and  the  Territory  of  the  Northern
          Mariana   Islands,   on   the  one  hand,  and  certain  tobacco
          manufacturers, on the other hand, and the subject of the consent
          decree.
            16. "Member" means any director  of  the  authority  including
          each  person  that  has  been  duly  appointed to represent such
          director at meetings of the authority from which  such  director
          may be absent.
            17.  "Net  proceeds"  means  the  amount of proceeds remaining
          following each sale of bonds  which  are  not  required  by  the
          corporation to pay or provide for the financing costs.
            18.  "Operating  expenses"  means  the reasonable or necessary
          operating  expenses  of  the  corporation,  including,   without
          limitation,   administrative  expenses  of  the  corporation  or
          authority, the cost  of  preparation  of  accounting  and  other
          reports,  costs  of  maintenance  of  the  ratings on the bonds,
          funding of any operating expense reserve fund, if any, insurance
          premiums, costs of any ancillary bond facilities, and  costs  of
          annual meetings or other required activities of the corporation,
          and  fees and expenses incurred for professional consultants and
          fiduciaries.
            19. "Other assets" means assets and/or revenues,  constituting
          a  portion  of the state's share, other than the pledged tobacco
          revenues, that are purchased pursuant to the sale agreement  and
          pledged  by  the  corporation  for  the  payment  of bonds or an
          ancillary bond facility.
            20. "Other participating jurisdictions" means the  fifty-seven
          (57)  counties  of  the  state  and  the city of New York, which
          together with the state,  are  entitled  to  receive  settlement
          payments under the consent decree.
            21.  "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.
            22.  "Participating  manufacturer"  means  a  tobacco  product
          manufacturer that is  or  becomes  a  signatory  to  the  master
          settlement agreement.
            23.  "Pledged tobacco revenues" means each such portion of the
          state's share constituting tobacco settlement payments  sold  to
          the corporation pursuant to section four of this act and pledged
          by the corporation for the payment of bonds or an ancillary bond
          facility.

            24.  "Qualifying  statute"  has the meaning given that term in
          the master settlement agreement, constituting  article  13-G  of
          the public health law of the state.
            25.  "Residual interests" means the income of the corporation,
          and bond proceeds, if any, or reserves not  previously  paid  to
          the  state, that are in excess of the corporation's requirements
          to pay its operating expenses, debt  service,  sinking  fund  or
          other  redemption  requirements,  reserve  fund,  and  any other
          contractual obligations under any resolution  or  any  ancillary
          bond  facility  or  that  may be incurred in connection with the
          issuance of the bonds.
            26. "Sale agreement" means any agreement  authorized  pursuant
          to  this section in which the state provides for the sale of all
          or a portion of the state's share to the corporation.
            27. "State" means the state of New York.
            28. "State representative" means the  governor  of  the  state
          acting through the director of the budget.
            29.  "State's  share"  means  all  tobacco settlement payments
          received by the state on and after January 1, 2004 and  required
          to  be  made,  pursuant  to  the  terms of the master settlement
          agreement, by participating manufacturers  to  the  state  which
          have  not  otherwise  been  allocated to any other participating
          jurisdictions pursuant to the terms of the consent  decree,  and
          the  state's  rights to receive such tobacco settlement payments
          and other assets of the state and other payments received by the
          state on and after January 1, 2004  and  the  state's  right  to
          receive  such  payments,  under  any  other agreement, contract,
          statute or other provision available for sale or  authorized  to
          be  sold,  and  determined  by  the  state  representative to be
          included in the sale agreement.
            30.  "Tobacco  settlement  financing  corporation"   or   "the
          corporation"  means  the  corporation  created by section two of
          this act.
            § 4. The sale agreement. 1. The state representative, upon the
          execution of a sale agreement on behalf of the state may sell to
          the corporation, and the corporation may purchase, for  cash  or
          other  consideration  and  in one or more installments, all or a
          portion of the state's share. Any such agreement shall  provide,
          among  other  matters,  that  the  purchase price payable by the
          corporation to the state  for  such  state's  share  or  portion
          thereof shall consist of the net proceeds of the bonds issued to
          finance  such purchase price and the residual interests, if any.
          The residual interests  shall  be  deposited  into  the  tobacco
          settlement  fund  pursuant  to section 92-x of the state finance
          law, unless otherwise directed  by  statute;  provided,  however
          that  any  residual  interest derived from other assets shall be
          applied as directed by statute. Any such sale shall be  pursuant
          to  one or more sale agreements which may contain such terms and
          conditions deemed necessary by the state representative to carry
          out and effectuate  the  purposes  of  this  section,  including
          covenants  binding the state in favor of the corporation and its
          assignees, including the owners of its bonds such  as  covenants
          with  respect  to the enforcement at the expense of the state of
          the payment provisions of the master settlement  agreement,  the
          diligent  enforcement  at  the  expense  of  the  state  of  the
          qualifying statute, the application and use of the  proceeds  of
          the  sale  of the state's share to preserve the tax-exemption on
          the bonds, the interest on which is intended to be  exempt  from

          federal  income  tax, issued to finance the purchase thereof and
          otherwise  as  provided  in  this   act.   Notwithstanding   the
          foregoing,  neither the state representative nor the corporation
          shall  be  authorized  to  make any covenant, pledge, promise or
          agreement purporting to bind the state with respect  to  pledged
          tobacco revenues, except as otherwise specifically authorized by
          this act.
            2.  Any  sale  of  all  or  part  of  the state's share to the
          corporation shall  be  treated  as  a  true  sale  and  absolute
          transfer  of  the property so transferred and not as a pledge or
          other security interest for any borrowing. The  characterization
          of such a sale as an absolute transfer by the participants shall
          not  be  negated  or  adversely affected by the fact that only a
          portion  of  the  state's  share  is  transferred,  nor  by  the
          acquisition  or  retention  by the state of a residual interest,
          nor  by  any  characterization  of  the   corporation   or   its
          obligations  for  purposes of accounting, taxation or securities
          regulation, nor by the pledge of any other funds  or  assets  of
          the  corporation  to  secure  bonds,  nor  by  any  other factor
          whatsoever.
            3. On and after the effective date of each sale of any portion
          (including all) of the state's share, the state  shall  have  no
          right,  title  or  interest  in or to the portion of the state's
          share sold, and the portion of the state's share so  sold  shall
          be  the  property  of  the corporation and not of the state, and
          shall be owned, received, held and disbursed by the  corporation
          and  not the state treasury. Notwithstanding section 92-x of the
          state finance law, on the effective date of any such  sale  with
          respect  to  tobacco  settlement payments, the state through the
          attorney general shall notify the independent  auditor  and  the
          escrow  agent  under  the  master settlement agreement that such
          portion of the state's share has been sold  to  the  corporation
          and  irrevocably  instruct  such  independent auditor and escrow
          agent that, subsequent to such date, such portion of the state's
          share is to be paid directly to the indenture  trustee  for  the
          benefit  of the owners of the bonds of the corporation which are
          secured by a pledge of such amounts, until  such  bonds  are  no
          longer   outstanding  pursuant  to  the  resolution  or  related
          indenture under which such bonds are issued.
            4. The net proceeds of the  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 corporation. The net proceeds of
          the  bonds shall be deposited in the general fund as directed by
          the state representative as specified in, or otherwise  provided
          for  by,  the  sale  agreement,  and  shall be used by the state
          (either directly or by reimbursement of the  general  fund)  for
          any  of  the following purposes: (i) for health care purposes in
          accordance  with  section  2807-v  of  the  public  health  law,
          including  but  not  limited to the treatment of smoking-related
          illnesses and for smoking cessation efforts, (ii) for any of its
          capital purposes or for any of its capital programs,  (iii)  for
          payment  of  debt  service on any of its outstanding bonds or on
          any state supported bonds, notes  or  other  obligations  or  in
          respect of debt service on any outstanding bonds, notes or other
          obligations  of  local  governments,  school districts or public
          benefit corporations  for  which  state  aid  is  applicable  or
          required  to be paid or for which there is a contract subject to

          state appropriation provided that such  bonds,  notes  or  other
          obligations  funded capital projects or programs, (iv) for other
          grants to local governments, school districts or public  benefit
          corporations,  or (v) to provide a revenue resource for personal
          service expenses of the state and general  state  charges.  With
          respect  to  any bonds of the corporation, the interest on which
          is  intended  to  be  exempt  from  federal  income   tax,   the
          corporation   and   the   state   representative   may   provide
          restrictions on the use of net proceeds of the bonds  and  other
          amounts  in  the sale agreement or otherwise in a tax regulatory
          agreement only as necessary to assure such exempt status.
            5. The director of the budget  shall  notify  in  writing  the
          chairs of the senate finance committee and the assembly ways and
          means  committee  of  any  plans to sell all or a portion of the
          state's share of tobacco settlement payments prior  to  entering
          any  sale  agreement  with  the  corporation.  At  the time this
          notification is  given,  the  chief  executive  officer  of  the
          corporation  and  the  director  of  the  budget shall provide a
          report to the chairs of the senate  finance  committee  and  the
          assembly  ways and means committee on a planned bond sale of the
          corporation and such report shall include, but  not  be  limited
          to:  (A)  the maximum amount of bonds expected to be sold by the
          corporation  in  connection  with  a  sale  agreement;  (B)  the
          expected  maximum interest rate and maturity date of such bonds;
          (C) the expected amount of the bonds that will be  fixed  and/or
          variable interest rate; (D) the estimated costs of issuance; (E)
          the  estimated level or levels of reserve fund or funds, if any;
          (F) the estimated cost  of  bond  insurance,  if  any;  (G)  the
          anticipated  use  or  uses  of the proceeds; and (H) the maximum
          expected net proceeds that will be paid to the state as a result
          of the  issuance  of  such  bonds.  Any  such  expectations  and
          estimates  in  the  report  shall  not  be  deemed a substantive
          limitation on the authority of the corporation contained in this
          act.
            § 5. Powers of the corporation.  The  corporation  also  shall
          have the power to:
            1. sue and be sued;
            2. have a seal and alter the same at pleasure;
            3.  make  and  alter by-laws for its organization and internal
          management and make rules and regulations governing the  use  of
          its property and facilities;
            4.  make  and  execute  contracts  and  all  other instruments
          necessary or convenient for  the  exercise  of  its  powers  and
          functions  under  this  section  and  to  commence any action to
          protect or enforce any right  conferred  upon  it  by  any  law,
          contract or other agreement;
            5.  appoint  officers,  agents  and employees, prescribe their
          duties and qualifications, fix their compensation and engage the
          services of private consultants and counsel on a contract  basis
          for  rendering  professional and technical assistance and advice
          provided that the chief executive  officer  of  the  corporation
          shall  be  the  chief executive officer of the authority and any
          other officers or employees, if appointed, shall be those having
          similar positions with the authority, provided, however, that no
          such  officer  or  employee   shall   receive   any   additional
          compensation as a result of such appointment;
            6. pay its operating expenses and its financing costs;

            7.  borrow  money  in  its name and issue negotiable bonds and
          provide for the rights of the holders thereof;
            8.  procure  insurance against any loss in connection with its
          activities, properties and assets in such amount and  from  such
          insurers as it deems desirable;
            9.  invest  any  funds  or  other moneys under its custody and
          control in investment securities or  under  any  ancillary  bond
          facility;
            10.  as  security  for  the  payment  of  the principal of and
          interest on any bonds issued by it pursuant to this act and  any
          agreement  made  in connection therewith and for its obligations
          under any ancillary bond facility, pledge all or any part of its
          revenues or assets;
            11. with the approval of the state representative, enter into,
          modify, amend, replace or renew any ancillary bond facility with
          any person under such terms and conditions  as  the  corporation
          may  determine  including,  without limitation, provisions as to
          default  or  early  termination  and  indemnification   by   the
          corporation or any other party thereto for loss of benefits as a
          result  thereof  and  with  respect to execution of any interest
          rate exchange or similar  agreement  and  prior  thereto,  adopt
          guidelines  and make the determinations set forth in subdivision
          seven or eight of section six of this act; and
            12. do any and all things necessary or convenient to carry out
          its purposes and exercise the powers expressly given and granted
          in this section.
            § 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.
            § 7. State not liable on bonds or any ancillary bond facility.
          Neither  any  bond  nor  any  ancillary  bond  facility  of  the
          corporation  shall  constitute a debt or moral obligation of the
          state or a state supported obligation within the meaning of  any
          constitutional  or  statutory provision or a pledge of the faith
          and credit of the state or of the taxing power of the state, and
          the state shall not be liable to make any payments  thereon  nor
          shall  any bond or any ancillary bond facility be payable out of
          any funds or assets other  than  pledged  tobacco  revenues  and
          other  assets,  if  any, sold to the corporation and other funds
          and assets of or available to the corporation pledged  therefor,
          and the bonds and any ancillary bond facility of the corporation

          shall  contain  on  the  face  thereof  or other prominent place
          thereon a statement to the foregoing effect.
            §  8. Remedies of bondholders. 1. Subject to the provisions of
          section six of this act, in the event that the corporation shall
          default in the payment of  principal  of,  or  interest  on,  or
          sinking fund payment on, any issue of bonds after the same shall
          become  due, whether at maturity or upon call for redemption, or
          in the event that the corporation or the state shall default  in
          any  agreement  made with the holders of any issue of bonds, the
          holders of twenty-five per centum in aggregate principal  amount
          of  the  bonds  of such issue then outstanding, by instrument or
          instruments filed in the office of the clerk of  the  county  of
          Albany  and  proved or acknowledged in the same manner as a deed
          to be recorded, may appoint a trustee to represent  the  holders
          of such bonds for the purposes herein provided.
            2. Such trustee, or any trustee appointed under this act, may,
          and  upon  written  request  of  the  holders of twenty-five per
          centum in principal amount of such bonds then outstanding shall,
          in his or its own name:
            (i) by suit, action or proceeding in accordance with the civil
          practice law and rules, enforce all rights of  the  bondholders,
          including  the right to require the corporation to carry out any
          agreement with such holders and to perform its duties under this
          act;
            (ii) bring suit upon such bonds;
            (iii) by action or suit, require the corporation to account as
          if it were the trustee of an express trust for  the  holders  of
          such bonds;
            (iv) by action or suit, enjoin any acts or things which may be
          unlawful  or  in  violation of the rights of the holders of such
          bonds; and
            (v) declare all  such  bonds  due  and  payable,  and  if  all
          defaults  shall  be  made  good,  then,  with the consent of the
          holders of twenty-five per centum of  the  principal  amount  of
          such  bonds  then  outstanding,  annul  such declaration and its
          consequences,  provided,  however,  that  nothing  herein  shall
          preclude  the  corporation  from  agreeing  that  consent of the
          provider of an  ancillary  bond  facility  is  required  for  an
          acceleration  of  related  bonds in the event of a default other
          than a failure to pay principal of or interest on the bonds when
          due.
            3. The supreme court shall  have  jurisdiction  of  any  suit,
          action   or   proceeding  by  the  trustee  on  behalf  of  such
          bondholders. The venue of any such suit,  action  or  proceeding
          shall be laid in the county of Albany.
            4.  Before  declaring  the principal of bonds due and payable,
          the trustee shall first give thirty days notice  in  writing  to
          the corporation.
            §  9.  Tax  exemption  and tax contract by the state. 1. It is
          hereby determined that the creation of the corporation  and  the
          carrying  out  of its corporate purposes are in all respects for
          the benefit of the people of the  state  of  New  York  and  are
          public  purposes. Accordingly, the corporation shall be regarded
          as performing an essential governmental function in the exercise
          of the powers conferred upon it by this act.   The  property  of
          the  corporation,  its income and its operations shall be exempt
          from taxation, assessments, special assessments and  ad  valorem
          levies.  The  corporation shall not be required to pay any fees,

          taxes, special ad valorem levies or  assessments  of  any  kind,
          whether  state  or  local,  including, but not limited to, fees,
          taxes,  special  ad  valorem  levies  or  assessments  on   real
          property,  franchise  taxes, sales taxes or other taxes, upon or
          with  respect  to  any  property  owned  by  it  or  under   its
          jurisdiction,  control or supervision, or upon the uses thereof,
          or upon or with respect  to  its  activities  or  operations  in
          furtherance of the powers conferred upon it by this act, or upon
          or  with  respect  to any fares, tolls, rentals, rates, charges,
          fees, revenues or other income received by the corporation.
            2. Any bonds issued pursuant to this act, their  transfer  and
          the  income  therefrom  shall,  at  all  times,  be  exempt from
          taxation.
            3. The state hereby covenants with the purchasers and with all
          subsequent holders  and  transferees  of  bonds  issued  by  the
          corporation  pursuant  to  this  act,  in  consideration  of the
          acceptance of and payment for the bonds, that the bonds  of  the
          corporation issued pursuant to this act and the income therefrom
          and  all  revenues, moneys, and other property pledged to pay or
          to secure the payment of such bonds shall at all times be exempt
          from taxation.
            4. In the case of any bonds of the  corporation,  interest  on
          which  is  intended  to  be  exempt from federal income tax, the
          corporation shall prescribe  restrictions  on  the  use  of  the
          proceeds  thereof  and  related matters only as are necessary to
          assure such exemption, and the recipients of such proceeds shall
          be bound thereby to the extent such restrictions shall  be  made
          applicable  to  them.  Any  such  recipient,  including, but not
          limited to, the state, a public benefit  corporation,  a  school
          district   or  municipality  is  authorized  to  execute  a  tax
          regulatory agreement with the corporation or the state,  as  the
          case  may  be,  and  the  execution  of such an agreement may be
          treated by the corporation  or  the  state  as  a  condition  to
          receiving any such proceeds.
            §  10.  Agreement  with state. 1. The state pledges and agrees
          with the corporation,  and  the  owners  of  the  bonds  of  the
          corporation  in  which  the corporation has included such pledge
          and agreement, that the  state  shall  (i)  irrevocably  direct,
          through  the  attorney  general, the independent auditor and the
          escrow agent under the master settlement agreement  to  transfer
          all  pledged tobacco revenues directly to the corporation or its
          assignee, (ii) enforce its right to collect all moneys due  from
          the  participating  manufacturers  under  the  master settlement
          agreement  and,  in  addition,  shall  diligently  enforce   the
          qualifying statute as contemplated in section IX(d)(2)(B) of the
          master   settlement   agreement   against  all  tobacco  product
          manufacturers selling tobacco products in the state and that are
          not in compliance with the qualifying statute, in each  case  in
          the manner and to the extent deemed necessary in the judgment of
          the attorney general, provided, however, that the sale agreement
          may  provide  (a) that the remedies available to the corporation
          and the bondholders for any breach of the pledges and agreements
          of the state set forth  in  this  clause  shall  be  limited  to
          injunctive  relief,  and  (b)  that the state shall be deemed to
          have diligently enforced the qualifying statute so long as there
          has been no judicial  determination  by  a  court  of  competent
          jurisdiction  in  this  state,  in  an  action  commenced  by  a
          participating tobacco manufacturer under the  master  settlement

          agreement,  that  the state has failed to diligently enforce the
          qualifying statute for the purposes of  section  IX(d)(2)(B)  of
          the  master settlement agreement, (iii) neither amend the master
          settlement  agreement  nor  the consent decree or take any other
          action in any way that would  materially  adversely  (a)  alter,
          limit  or  impair  the  corporation's  right  to receive pledged
          tobacco revenues, or (b) limit or alter the rights hereby vested
          in the corporation to fulfill the terms of its  agreements  with
          such  bondowners,  or  (c)  in  any  way  impair  the rights and
          remedies of such bondowners or the security for such bonds until
          such bonds, together with the interest thereon and all costs and
          expenses in connection with any action or proceedings by  or  on
          behalf  of  such  bondowners,  are  fully  paid  and  discharged
          (provided, that nothing herein shall be  construed  to  preclude
          the state's regulation of smoking and taxation and regulation of
          the  sale  of cigarettes or the like or to restrict the right of
          the state to amend, modify, repeal or otherwise  alter  statutes
          imposing  or  relating  to  the  taxes),  and  (iv)  not  amend,
          supersede or repeal the qualifying statute and the complementary
          legislation, in any way that would materially  adversely  affect
          the amount of any payment to, or materially adversely affect the
          rights  of,  the  corporation  or  such  bondholders.  The state
          representative is authorized and directed to include this pledge
          and agreement in the sale agreement and authorizes  and  directs
          the  corporation,  as  agent of the state to include this pledge
          and agreement in  any  contract  with  the  bondholders  of  the
          corporation. Notwithstanding these pledges and agreements by the
          state, the attorney general may in his or her discretion enforce
          any  and  all  provisions  of  the  master settlement agreement,
          without limitation.
            2. Prior to the date which is one year and one day  after  the
          corporation no longer has any bonds outstanding, the corporation
          shall  have  no  authority  to  file  a voluntary petition under
          chapter 9 of the federal bankruptcy code or  such  corresponding
          chapter or sections as may, from time to time, be in effect, and
          neither any public officer nor any organization, entity or other
          person  shall authorize the corporation to be or become a debtor
          under chapter 9 or any successor  or  corresponding  chapter  or
          sections during such period. The state hereby covenants with the
          owners  of  the bonds of the corporation that the state will not
          limit or alter the denial of authority  under  this  subdivision
          during  the  period  referred  to in the preceding sentence. The
          corporation is authorized and directed as agent of the state  to
          include  this  covenant  as  an  agreement  of  the state in any
          contract with the bondholders of the corporation.
            3. To the extent deemed appropriate  by  the  corporation  and
          with  the  approval  of the state representative, any pledge and
          agreement of the state with respect to the bonds as provided  in
          this  section may be extended to, and included in, any ancillary
          bond facility as a pledge and agreement of the  state  with  the
          corporation and the benefited party.
            4.   The   state   acknowledges  and  agrees  that  the  other
          participating jurisdictions have rights  and  interests  in  the
          consent  decree.  In  recognition  of  the  rights  of the other
          participating jurisdictions contained in the consent decree, the
          state pledges that the sale of the state's share  authorized  by
          this  act  shall  in no way include or be deemed to include, and
          the state shall not  otherwise  alter,  limit,  or  impair,  the

          rights  of  the other participating jurisdictions including, but
          not limited to, rights to receive payments,  set  forth  in  the
          consent  decree. Nothing in this act shall be construed to alter
          the right of each of the other participating jurisdictions under
          the consent decree to receive payments or to sell or assign some
          or all of its interest in the manner deemed appropriate pursuant
          to law by its governing body.
            § 11. Bonds as legal investments. The bonds of the corporation
          are  hereby  made  securities  in  which all public officers and
          bodies of  this  state  and  all  municipalities  and  political
          subdivisions, all insurance companies and associations and other
          persons  carrying  on an insurance business, all banks, bankers,
          trust  companies,  savings  banks  and   savings   associations,
          including  savings  and  loan  associations,  building  and loan
          associations, investment companies and other persons carrying on
          a banking business, all  administrators,  guardians,  executors,
          trustees and other fiduciaries, and all other persons whatsoever
          who are now or may hereafter be authorized to invest in bonds or
          in  other  obligations  of  the  state, may properly and legally
          invest funds, including capital, in their control  or  belonging
          to  them. The bonds are also hereby made securities which may be
          deposited with and may be received by all  public  officers  and
          bodies   of   the   state   and  all  municipalities,  political
          subdivisions and public corporations for any purpose  for  which
          the deposit of bonds or other obligations of the state is now or
          may hereafter be authorized.
            §  12.  Actions  against the corporation. 1. An action against
          the corporation for death, personal injury or property damage or
          founded on tort shall not be commenced more than  one  year  and
          ninety days after the cause of action thereof shall have accrued
          nor  unless a notice of claim shall have been served on a member
          of the corporation or officer or employee thereof designated  by
          the  corporation  for  such purpose, within the time limited by,
          and in compliance with the requirements of section 50-e  of  the
          general municipal law.
            2.  The  venue  of  every  action,  suit or special proceeding
          brought against the corporation shall be laid in the  county  of
          Albany.
            3.  Neither  any  member  of  the corporation nor any officer,
          employee, or agent of the corporation, while acting  within  the
          scope  of  their  authority,  shall  be  subject to any personal
          liability resulting from exercising or carrying out  of  any  of
          the corporation's purposes or powers.
            §  13.  Assistance to the corporation. The corporation may use
          agents, employees and facilities of the authority and, with  the
          consent  of the governor, comptroller or attorney general as the
          case may be, the  corporation  may  use  agents,  employees  and
          facilities of the state, paying to the authority or the affected
          agency,  office  or  department  its  agreed  proportion  of the
          compensation or costs.
            § 14.  Preference  for  actions  or  proceedings  against  the
          corporation.  Any  action or proceeding to which the corporation
          or the people of the state may be parties, in which any question
          arises as to the validity of this act, shall be  preferred  over
          all  other  civil  causes  of  action  or cases, except election
          causes of action or cases, in all courts of the state and  shall
          be  heard  and  determined  in  preference  to  all  other civil
          business pending therein, except election  causes,  irrespective

          of  position  on  the  calendar.  The  same  preference shall be
          granted upon application of the corporation or  its  counsel  in
          any action or proceeding questioning the validity of this act in
          which  the corporation may be allowed to intervene. The venue of
          any such action or proceeding shall be laid in the supreme court
          of the county of Albany.
            § 15. Construction. This act and  all  powers  granted  hereby
          shall  be liberally construed to effectuate its intent and their
          purposes, without implied limitations thereon.  This  act  shall
          constitute  full  and  complete  authority for all things herein
          contemplated to be done. All rights and  powers  herein  granted
          shall  be  cumulative  with those derived from other sources and
          shall not, except as expressly stated herein,  be  construed  in
          limitation  thereof.  Insofar  as the provisions of this act are
          inconsistent with the provisions of any other  act,  general  or
          special, the provisions of this act shall be controlling.
            § 16. Severability clause. If any clause, sentence, paragraph,
          section  or  part  of  this  act  be  adjudged  by  any court of
          competent jurisdiction to be invalid, such  judgment  shall  not
          affect,  impair  or invalidate the remainder hereof but shall be
          applied in its operation to  the  clause,  sentence,  paragraph,
          section  or  part hereof directly involved in the controversy in
          which such judgment shall have been rendered.

  
Section:

Last modified: September 11, 2016