Section 1. Short title. This act shall be known and may be cited as
the "tobacco settlement financing corporation act".
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.