If there is in this article a provision relating to a matter embraced in the business corporation law and not in conflict therewith, both provisions shall apply.

3. The governor in consultation with the president pro tem of the senate and the speaker of the assembly, on behalf of the people of the state of New York, the New York business development corporation, and the voting shareholders, on or before April thirtieth, nineteen hundred ninety-four, shall enter into a memorandum of understanding on an agreed upon plan for establishing the NYSBIC and the NYSSBIC including the legal organizational and financial and financial structure of the NYSBIC and the

NYSSBIC.

§ 228-b. Definitions. As used in this article, the following terms and abbreviations shall have the meanings indicated: 1. "NYSBIC" means the New York small business investment company which shall be organized and operated in conformity with Section 301(c) and applicable regulations.

2. "NYSSBIC" means the New York specialized small business investment company which shall be organized and operated in conformity with Section 301(d) and applicable regulations.

3. "Highly distressed area" means: (a) a census tract or tracts or block numbering area or areas or such census tract or block numbering area contiguous thereto which, according to the most recent census data available, has:

(i) a poverty rate of at least twenty percent for the year to which the data relates or at least twenty percent of the households receiving public assistance; and

(ii) an unemployment rate of at least one and twenty-five one hundredths times the statewide unemployment rate for the year to which the data relates; or

(b) a city, town, village or county within a city with a population of one million or more for which: (i) the ratio of the full value property wealth, as determined by the comptroller for the year nineteen hundred ninety, per resident to the statewide average full value property wealth per resident; and (ii) the ratio of the income per resident, as shown in the nineteen hundred ninety census to the statewide average income per resident; are each fifty-five percent or less of the statewide average. 4. "Investment companies" means the NYSBIC and the NYSSBIC collectively.

5. "Section 301(c)" ection

681(c)section

means Section 301(c) of Title III, 15 U.S.C.

6. "Section 301(d)" means Section 301(d) of Title III, 15 U.S.C.

681(d) Title III" means Title III of the Small Business Investment Act of

1958, United States Pub. L. 85-699 (as amended).

8. "Voting shareholders" means those shareholders of the NYSBIC or the NYSSBIC that contribute to the capitalization and ongoing funding of the investment companies.

§228-c. Purposes, powers and operation. 1. (a) The purposes of the NYSBIC shall be to serve the needs of the small business community in the state of New York. The NYSBIC shall direct its efforts towards providing small business with start-up, venture, operating or working capital, particularly where general economic and historical conditions, such as recent employment displacement caused by international, national, state, regional, and local economic developments, have prevented traditional capital sources from extending credit to such small busi

nesses.

(b) The purposes of the NYSSBIC shall be to provide financing to facilitate small business ownership by minorities and persons who reside in highly distressed areas as defined in section two hundred twentyeight-b of this article, neighborhood based alliance communities, and persons eligible for the earned income tax credit under an act to amend the internal revenue code of 1954, Pub. L. 94-12, 89 Sṭat. 30 (1975), as amended, and the regulations promulgated thereunder, whose participation in the free enterprise system is hampered by an inability to compete effectively for capital in the marketplace due to prevailing or past restrictive practices. The NYSSBIC shall direct its efforts toward providing these businesses with start-up, venture, operating or working capital. The NYSSBIC will adopt an investment policy consistent with the policy set forth in Section 301(d).

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law to be omitted.

(c) The NYSBIC and the NYSSBIC shall function as licensees and perform the respective functions set forth in Title III and applicable regulations.

2. In furtherance of the purposes set forth in subdivision one of this section, and in addition to the powers conferred on stock corporations by the business corporation law, the NYSBIC and the NYSSBIC shall, subject to the restrictions and limitations contained in this article and without limiting any power otherwise conferred herein, have the following powers:

(a) To lend money and conduct other financing transactions at such rate or rates as may be available to banking organizations licensed under this chapter; and

(b) To enter such business and financing transactions and arrangements at such rates and under such terms and conditions as may be permitted to licensees under Sections 301(c), 301(d) and applicable regulations.

§ 228-d. New York small business investment company; board of directors. 1. The corporate powers of the New York small business investment companies shall be exercised by a board of directors, which shall consist of thirty persons, all of whom shall be of full age, citizens of the United States, and residents of this state. Of the thirty members of the board of directors, twenty shall be selected by the voting shareholders and ten shall be selected by the governor, two upon the recommendation of the president pro tem of the New York state senate, one upon recommendation of the senate minority leader, two upon the recommendation of the speaker of the New York state assembly and one upon recommendation of the assembly minority leader.

2. The president of the investment company shall be elected by a majority of the board of directors.

3.

Nothing contained in this section shall prevent a director of the New York small business investment company from serving as a director of the New York specialized small business investment company nor prevent the president of the NYSBIC from serving as the president of the NYSSBIC.

§ 228-e. New York specialized small business investment company; board of directors. 1. The corporate powers of the New York specialized small business investment companies shall be exercised by a board of directors, which shall consist of thirty persons, all of whom shall be of full age, citizens of the United States, and residents of this state. Of the thirty members of the board of directors, twenty shall be selected by the voting shareholders and ten shall be selected by the governor two upon the recommendation of the president pro tem of the New York state senate, one upon recommendation of the senate minority leader, two upon the recommendation of the speaker of the New York state assembly and one upon recommendation of the assembly minority leader.

2.

The president of the investment company shall be elected by a majority of the board of directors. 3. Nothing contained in this section shall prevent a director of the New York specialized small business investment company from serving as a director of the New York small business investment company nor prevent the president of the NYSSBIC from serving as the president of the NYSBIC.

§ 228-f. Reports. 1. The investment companies shall make an annual report of their conditions to the governor, the legislature and the superintendent of banks, on or before January first of each year:

2. Commencing January first, nineteen hundred ninety-five, such annual report shall contain but not be limited to the following:

(a) information on the cost and source of funds and capital and the total allowable amount available from the voting shareholders, and the maximum amount committed by each individual voting shareholder; (b) classification of the businesses in the investment companies' portfolio by standard industrial code;

(c) information on the types of financing provided by the investment companies, including start-up, venture, operating or working capital loans, the size and term of loans, and a breakdown of investments by senior debt, subordinated debt and equity financing;

(d) information on interest rates of loans, including the percentage of fixed and variable rate loans;

(e) information on how the NYSBIC is fulfilling its mission to provide small businesses with credit assistance, particularly where general economic and historical conditions have prevented traditional capital sources from extending credit to such small business;

(f) information on how the NYSSBIC is fulfilling its mission to provide credit assistance to facilitate small business ownership by minorities, persons who reside in highly distressed area and neighborhood based alliance communities and persons eligible for the earned income credit as provided by paragraph (b) of subdivision one of section two hundred twenty-eight-c of this article;

(8) information on resources and actions taken to advance the investment companies' marketing programs, including their coordination and efforts to solicit the assistance of local bankers and local economic development corporations, the state department of economic development, the job development authority, the urban development corporation, the Science and technology foundation, the state university of New York small business development centers, the centers for advanced technology and other New York state agencies and organizations the investment panies deem appropriate.

com

§ 8. Subdivision 1 of section 212 of the banking law, as amended by chapter 384 of the laws of 1985, is amended to read as follows:

1. (a) The purposes of such corporation shall be to assist, promote, encourage and, through the cooperative efforts of the institutions and corporations which shall, from time to time, become members thereof, develop and advance the business prosperity and economic welfare of the state; to encourage and assist in the location of new business and industry in the state and to rehabilitate and retain existing business and industry; to stimulate and assist in the expansion of all kinds of business activity which will tend to promote the business development and maintain the economic stability of the state, provided* maximum opportunities for employment, encourage thrift and improve the standard of living of the citizens of the state; to cooperate and act in conjunction with other organizations, public or private, the objects of which are the promotion and advancement of industrial, commercial, agricultural and recreational developments in the state; to furnish money and credit to approved and deserving applicants, for the promotion, development and conduct of all kinds of business activity in the state, thereby establishing a source of credit not otherwise readily available [therefor]; and to provide financial assistance in the form of loans to small businesses unable to obtain financing from other private sources, including, but not limited to, assistance to women and minority-owned business enterprises and small businesses located in economically distressed areas. For the purposes of this article, "economically distressed areas" shall mean areas determined by the commissioner of the department of economic development on the basis of criteria indicative of economic distress, including poverty rates, numbers of persons receiving public assistance, unemployment rates, rate of employment decline, population loss, rate of per capita income change, decline in economic activity and private investment, and such other indicators as the commissioner deems appropriate. Economically distressed areas may include cities, municipalities, block numbering areas, and census tracts.

(b) The corporation shall undertake the following programs in furtherance of the above objectives: (i) establish regional offices at locations throughout New York, with sufficient staffing to advise, develop and package financial assistance for small and medium sized businesses; (ii) develop a comprehensive outreach program to increase the visibility and awareness of the corporation's programs, including allocating budget and staff to establish and maintain an aggressive and [extension] extensive marketing program of the corporation's program of assistance to small and medium sized businesses, providing for specific outreach to [the] minority and women owned [sector of the small business community enterprises, and entering into cooperative relationships with local chambers of commerce [and], local development agencies, local development corporations and other community based financial intermediaries as set forth in subdivision three of this section; (iii) establish and operate, or affiliate with a [minority enterprise] small business investment company [MESBIC] and a specialized small business investment company; and (iv) establish a pilot export financing program, using personnel from the private sector, to evaluate whether the corporation play a significant role in the growth of the export industry in the * So in original. ("provided" should be "provide".)

can

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law to be omitted.

state. The corporation shall undertake the programs enumerated herein at such times as its board of directors determines that the corporation's capital base and available funds are adequate to support the operation of such program. The programs enumerated herein may be modified by the corporation as may be necessary to meet the changing needs of the state's economy, as determined by the board of directors.

$ 9. Subdivision 2 of section 212 of the banking law is amended by adding a new paragraph (h) to read as follows:

(h) With respect to funds administered by the corporation, to obtain loan guarantees from any state or federal program to guarantee loans made to small businesses by the corporation with such funds.

§ 10. Section 212 of the banking law is amended by adding a new subdivision 3 to read as follows:

3. The corporation may contract or otherwise affiliate with local development corporations and other local development organizations certified for this purpose by the commissioner of the department of economic development throughout the state, including, but not limited to, not-for-profit corporations established pursuant to article nine of the economic development law, to market the programs of the corporation to small and medium sized businesses, to provide technical, financial packaging and loan application assistance to business owners seeking financial assistance from the corporation, including but not limited to minority owned business enterprises and small and medium sized businesses located in economically distressed areas.

§ 11. Subdivisions 1, 3, 4 and 7 of section 213 of the banking law, as amended by chapter 384 of the laws of 1985, are amended to read follows:

as

1. All the corporate powers of such corporation shall be exercised by a board of directors consisting of a maximum of [twenty-one] thirty persons, all of whom shall be of full age, citizens of the United States and residents of the state.

3. At each annual meeting of such corporation, the members of such corporation shall elect up to [seven] ten directors for a term of one year, who shall, to the extent possible, represent different economic regions as defined in section two hundred eleven of this article. The exact number shall be established in the by-laws by the board of directors. In such elections, members of such corporation shall have one vote each.

4.

At such annual meetings the stockholders of such corporation shall elect up to [five] seven directors for a term of one year each. The exact number shall be established in the the by-laws by the board of directors.

7. [As non-voting members, the] The state commissioner of [commerce the state superintendent of banks, and the state superintendent of insurance] the department of economic development shall be [directors] a director exofficio*.

§ 12. Section 213 of the banking law is amended by adding a new subdivision 7-a to read as follows:

7-a. Two directors shall be appointed by the governor, who shall serve at the pleasure of the governor; one director shall be appointed by the temporary president of the senate, who shall serve at the pleasure of the temporary president; one director shall be appointed by the senate minority leader, who shall serve at the pleasure of the minority leader; and one appointed by the assembly minority leader, who shall serve at the pleasure of the minority leader; and one director shall be appointed by the speaker of the assembly, who shall serve at the pleasure of the speaker.

§ 13. Paragraph (a) of subdivision 3 of section 413 of the personal property law, as amended by chapter 5 of the laws of 1992, is amended to read as follows:

(a) A seller may, in a retail instalment credit agreement, contract for and, if so contracted for, the seller or holder thereof may charge, receive and collect the service charge authorized by this article, which service charge shall not exceed the rate or rates agreed upon by the seller and the buyer, including, in accordance with the provisions of the credit agreement, rates that may vary, from time to time computed, for the purposes of this section, on the outstanding indebtedness from month to month, or if the service charge SO computed is less than seventy cents for any month, seventy cents. If the credit agreement provides for a variable rate of service charge, such rate shall be * So in original. ("exofficio" should be "ex-officio".)

determined at regular intervals as set forth in the credit agreement and in accordance with such regulations as the banking board shall prescribe but said rate shall not vary more often than once in any three month period and shall be based on a published index that is (a) readily available, (b) independently verifiable, (c) beyond the control of the seller and (d) approved by the superintendent, (e) such charges in credit agreements shall be based on the index values, or the index numbers plus or minus additional percentage points provided, however, that variations in the charge must correspond directly to the movements of the index values plus or minus additional percentage points only. Once such charge is established no lending institution may add any factors to increase the charge other than variations in the established index without the prior approval of the banking board.

The banking board shall adopt regulations with respect to credit agreements that provide for a variable rate of service charge, including but not limited to: (a) providing for disclosure to the buyer by the seller of the circumstances under which the rate may increase, any limitations on the increase, the effect of an increase and an example of the payment terms that would result from an increase; (b) providing for disclosure to the buyer by the seller of a history of the fluctuations of the index over a reasonable period of time; and (c) providing for notice to the buyer by the seller prior to any rate increase or change in the terms of payment. The regulations shall allow a seller, holder or financing agency after choosing an approved index to choose a spread and a minimum and maximum rate of service charge at its discretion. A retail instalment credit agreement, whether it provides for a fixed or variable service charge, may provide for an introductory rate of service charge at either a fixed or variable rate, provided that the terms of such introductory rate, including, if applicable, the date on which the introductory rate shall terminate, are disclosed to the buyer. Such disclosure shall be contained on an application form or pre-approved written solicitation as specified pursuant to subdivisions one and one-a of section five hundred twenty of the general business law. A change in the service charge rate upon expiration of an introductory rate shall not be considered a variable rate or a change in terms. The service charge rate in effect after expiration of an introductory rate may apply to all amounts due under the credit agreement regardless of when incurred, and disclosure of the same shall be provided to the buyer in the written agreement.

§ 14. Paragraph (e) of subdivision 3 of section 413 of the personal property law is amended by adding a new closing paragraph

follows:

to read as

no

Any service charge, whether assessed by a fixed or variable rate, may be reduced on such terms as the seller may determine, provided that the terms of such reduction, including, if applicable, the date on which the reduction will terminate, are disclosed to the buyer on the written tice announcing the reduction, prior to the effective date of the reduction. A new method of determining a service charge is a reduction in the service charge if the charge determined under the new method never exceeds the charge under the original method. The original service charge or original method of determining the service charge may be applied after the reduction ends to the entire outstanding indebtedness, including any indebtedness incurred when the reduced service charge applied, and disclosure of the same shall be provided to the buyer in the written notice announcing the reduction. A reduction to a service charge, including the resumption of the original service charge or the original method of determining the service charge, shall not be considered a change in terms for purposes of this paragraph.

15. Subdivision 5 of section 413 of the personal property law, as amended by chapter 5 of the laws of 1992, is amended to read as follows: 5. (a) The [service charge] fees and charges authorized by this subdivision and subdivision three of this section shall [include] be inclusive of all charges incident to investigating and making the retail instalment credit agreement and for the extension of credit thereunder. No fee, expense, delinquency, collection or other charge whatsoever shall be taken, received, reserved or contracted for by the seller under or holder of a retail instalment credit agreement except as provided in this section [and except that the]. A retail instalment credit agreement may provide for the payment of attorney's fees not exceeding twenty per EXPLANATION-Matter in italics is new; matter in brackets [] is old law to be omitted.