2023 New York Laws › TSF - 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.
Notwithstanding section 121 of the  state  finance  law  or  any
other  law  to  the  contrary,  the  residual interests shall be
deposited into the Medicaid management information system (MMIS)
statewide escrow fund within thirty days upon  the  availability
of  such  residual interests to fund a portion of the cumulative
non-federal share of expenses related to the state  takeover  of
the local share of Medicaid growth pursuant to part F of chapter
56 of the laws of 2012. Such deposit shall be in an amount equal
to  (a)  the  amount of residual interests scheduled for deposit
into the MMIS statewide escrow fund  in  the  applicable  year's
enacted budget financial plan as updated or (b) the total amount
of  residual  interests  available  if  the total amount of such
residual interests is less than the  total  amount  of  residual
interests  scheduled  for deposit into the MMIS statewide escrow
fund in the applicable year's enacted budget financial  plan  as
updated.  At  the  discretion  of  the state representative, any
residual interests which exceed the amount scheduled for deposit
into the MMIS statewide escrow fund  in  the  applicable  year's
enacted budget financial plan as updated may either be deposited
into  the  (i)  MMIS statewide escrow fund to fund a portion, as
determined  by  the  state  representative,  of  the  cumulative
non-Federal  share  of expenses related to the state takeover of
the local share of  Medicaid  growth,  pursuant  to  part  F  of
chapter  56 of the laws of 2012, or (ii) the state general fund;
provided, however that any residual interest derived from  other
assets  shall be applied as directed by statute. Notwithstanding
any other law to the contrary, the amount used from such deposit
to fund  a  portion  of  the  cumulative  non-Federal  share  of
expenses  related  to  the  State takeover of the local share of
Medicaid growth shall be paid without  appropriation.  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.
* NB Effective until March 31, 2027
* 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.
* NB Effective March 31, 2027
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.