§ 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.