Rhode Island § 42-133-7 - Tobacco Settlement Financing Corporation Act

§ 42-133-7. Sale of state’s tobacco receipts.

(a) On or before June 30, 2002, the state shall sell and assign to and the corporation shall acquire all or a portion of the state’s tobacco receipts. The attorney general shall assist the governor in the preparation and review of all necessary documentation to effect such sale and transfer by such date. The terms and conditions of the sale shall be established in order to accomplish the purpose and intent set forth in this chapter and shall include, but not be limited to, the price, the net proceeds of the sale of the bonds to be issued by the corporation and secured by a portion of the state’s tobacco receipts, and the beneficial interest of the state in any trust fund created in accordance with this chapter.

(b) The sale of the state’s tobacco receipts to the corporation shall be irrevocable during the time when any bonds issued by the corporation are outstanding, and shall constitute a contractual obligation owed to the holders of such bonds. The sale of the state’s tobacco receipts 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 shall not be negated or adversely affected by the fact that only a portion of the state’s tobacco receipts is being sold or by the state’s acquisition or retention of an ownership interest in any residual assets.

(c) On or after the effective date of the sale, the state shall not have any right, title, or interest in all or such portion of the state’s tobacco receipts sold which shall be the sole property of the corporation, and not of the state, and shall be owned, received, held, and disbursed by the corporation or its trustee or assignee in accordance with this chapter, and not by the state.

(d) On or before the effective date of the sale and at the request of the corporation, the state, through the attorney general, shall notify the independent auditor of the sale and instruct the independent auditor to direct the escrow agent that, subsequent to that date and irrevocably during the time when any bonds are outstanding, the state’s tobacco receipts acquired by the corporation are to be paid directly to the corporation or its designee.

(e) With respect to the issuance of the corporation’s bonds and in compliance with all applicable federal law, including, but not limited to, the Internal Revenue Code, the state and the corporation may enter into agreements for the benefit of the corporation’s bondholders with respect to the application of the proceeds of the bonds and certain other monies of the state, the investment thereof, and the periodic reporting of certain information, and such other matters related thereto.