52:18B-5 - Sale, purchase of tobacco receipts
52:18B-5 Sale, purchase of tobacco receipts.
5. a. The State representative 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 tobacco receipts pursuant to the terms of one or more sale agreements. Any such sale agreement shall provide, among other matters, that the purchase price payable by the corporation to the State for such TSRs shall consist of the net proceeds and the residual interests, if any. Any such sale shall be pursuant to one or more sale agreements that may contain such terms and conditions deemed appropriate by the State representative to carry out and effectuate the purposes of this section, including without limitation covenants binding the State in favor of the corporation and its assignees, including without limitation the owners of its securities and benefitted parties, such as a requirement that the State enforce the provisions of the master settlement agreement that require payment of the TSRs, a requirement that the State enforce the provisions of the qualifying statute, a provision authorizing inclusion of the State's pledge and agreement, as set forth in section 10 of this act, in any agreement with owners of the securities or any benefitted parties, and covenants with respect to the application and use of the proceeds of the sale of the State's tobacco receipts to preserve the tax-exemption of the interest on any securities, if issued as tax-exempt. The State representative in any sale agreement may agree to, and the corporation may provide for, the assignment of the corporation's right, title and interest under such sale agreement for the benefit and security of the owners of securities and benefitted parties.
b.Any sale of TSRs to the corporation pursuant to a sale agreement 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 tobacco receipts is transferred, nor by the acquisition or retention by the State of a residual interest, nor by the participation by any State official as a member or officer of the corporation, nor by the commingling of amounts arising with respect to the TSRs with other amounts, nor by whether the State is responsible for collecting the TSRs or otherwise enforcing the master settlement agreement or retains legal title to such portion of the State's tobacco receipts for the purposes of these collection activities, nor by any characterization of the corporation or its obligations for purposes of accounting, taxation or securities regulation, nor by any other factor whatsoever.
c.On and after the effective date of each sale of TSRs, the State shall have no right, title or interest in or to the TSRs sold, and the TSRs so sold shall be property of the corporation and not of the State, and shall be owned, received, held and disbursed by the corporation and not the State. On or before the effective date of any such sale, the State through the Attorney General shall notify the escrow agent under the master settlement agreement that such TSRs have been sold to the corporation and irrevocably instruct such escrow agent that, subsequent to such date, such TSRs are to be paid directly to the corporation or the trustee under the applicable corporation resolution, trust agreement or trust indenture for the benefit of the owners of the securities and benefitted parties until such securities and ancillary facilities are no longer outstanding. Thereafter, any officer or agent of the State who shall receive any such TSRs shall hold the same in trust for the corporation or such trustee, as applicable, and shall promptly remit the same to the corporation or such trustee, as applicable.
d.The net proceeds and any earnings thereon shall never be pledged to, nor made available for, payment of the securities or ancillary facilities or any interest or redemption price thereon or any other debt or obligation of the corporation. The net proceeds, any earnings thereon and any residual interests shall be applied, transferred, or paid to, and upon the order of, the State, as directed by the State representative, and shall be used by the State for any bona fide governmental purposes as determined by the State, including without limitation for capital expenditures, debt service on outstanding bonds of the State, working capital expenditures or operating deficit needs of the State, endowments, or grants or aid to political subdivisions, including without limitation school districts, of the State. Pending such direction by the State representative, the corporation shall invest such moneys such that funds will be available at such times as the State representative shall deem necessary for the expenditure thereof. The State is authorized and may arrange for the availability of the net proceeds and residual interests from the corporation on such terms and conditions as the State representative deems appropriate and may include in the sale agreement provisions for interfund transactions with respect thereto between the State and the corporation. Notwithstanding any provisions of this subsection, the corporation shall not pay to the State during State fiscal year 2003 funds from any net proceeds, earnings thereon or residual interests in excess of the amount appropriated from such funds pursuant to the State annual appropriation act for State fiscal year 2003.
L.2002,c.32,s.5.