State Codes and Statutes

Statutes > California > Gov > 63049-63049.55

GOVERNMENT CODE
SECTION 63049-63049.55



63049.  The definitions contained in this section are in addition to
the definitions contained in Section 63010 and together with the
definitions contained in that section shall govern the construction
of this article, unless the context requires otherwise:
   (a) "California escrow agreement" means the escrow agreement dated
April 12, 2000, as amended, between the Attorney General, on behalf
of the state, and the California escrow agent named in the agreement
relating to the division between the state and the participating
jurisdictions of amounts payable under the Master Settlement
Agreement.
   (b) "Consent decree and final judgment" means, collectively, the
Consent Decree and Final Judgment entered in the Superior Court of
the State of California for San Diego County on December 9, 1998,
approving the Master Settlement Agreement, the memorandum of
understanding, and the orders entered by the court on January 18,
2000, and July 30, 2001, approving the Agreement Regarding
Interpretation of Memorandum of Understanding.
   (c) "Master Settlement Agreement" means the settlement dated
November 23, 1998, as amended, among the attorneys general of 46
states (including California), the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, American
Samoa, and the Commonwealth of the Northern Mariana Islands, and
Philip Morris Incorporated, R. J. Reynolds Tobacco Company, Brown and
Williamson Tobacco Corporation, Lorillard Tobacco Company, and the
other Subsequent Participating Manufacturers as defined therein.
   (d) "Memorandum of understanding" means, collectively, the
memorandum of understanding dated August 5, 1998, as amended,
together with the Agreement Regarding Interpretation of Memorandum of
Understanding, as amended, among the state and various local
governments of the state to coordinate their pending cases and to
allocate certain portions of the recovery under the Master Settlement
Agreement.
   (e) "Operating expenses" means the reasonable operating expenses
of the special purpose trust, including, without limitation, the
costs of preparation of accounting and other reports, maintenance of
the ratings on the bonds, insurance premiums, or other required
activities of the special purpose trust, and fees and expenses
incurred for professional consultants and fiduciaries.
   (f) "Tobacco assets" means all moneys required to be paid to the
state under the Master Settlement Agreement, as further provided in
the memorandum of understanding and the California escrow agreement,
and all of the state's rights to receive those payments.



63049.1.  (a) Subject to subdivision (c) and subdivision (d), as
applicable, the bank is hereby authorized to sell for, and on behalf
of, the state, solely as its agent, all or any portion of the tobacco
assets, or any residual interests therein, to a special purpose
trust which is hereby established as a not-for-profit corporation
solely for that purpose and for the purposes necessarily incidental
thereto, and to enter into one or more sales agreements with the
special purpose trust as and on the terms it deems appropriate, which
may include covenants of, and binding on, the state necessary to
establish and maintain the security of the bonds and exemption of
interest on the bonds from federal income taxation. The principal
office of the special purpose trust shall be located in Sacramento
County. The articles of incorporation of the special purpose trust
shall be prepared and filed, on behalf of the state, with the
Secretary of State by the bank, and the five voting members of the
State Public Works Board shall serve ex officio as the directors of
the special purpose trust. Directors of the special purpose trust
shall not be subject to personal liability for carrying out the
powers and duties conferred by this article. The special purpose
trust shall be treated as a separate legal entity with its separate
corporate purpose as described in this article, and the assets,
liabilities, and funds of the special purpose trust shall be neither
consolidated nor commingled with those of the bank or the State
Public Works Board.
   The special purpose trust is hereby authorized to issue bonds,
including, but not limited to, refunding bonds, on the terms it shall
determine, and do all things contemplated by, and authorized by,
this division with respect to the bank, and enjoy all rights,
privileges, and immunities the bank enjoys pursuant to this division,
or as authorized by Section 5140 of the Corporations Code with
respect to public benefit nonprofit corporations, or as necessary or
appropriate in connection with the issuance of bonds, and may enter
into agreements with any public or private entity and pledge the
tobacco assets, or any residual interests therein, that it purchased
as collateral and security for its bonds. The pledge of any of these
assets and interests and of any revenues, reserves, and earnings
pledged in connection therewith shall be valid and binding in
accordance with its terms and have priority in accordance with its
terms from the time the pledge is made and property so pledged shall
immediately be subject to the lien of the pledge without the need for
physical delivery, recordation, filing, or other further act. The
pledge shall not be subject to Division 9 (commencing with Section
9101) of the Commercial Code or Sections 954.5 and 955.1 of the Civil
Code. The special purpose trust, and its assets and income, and
bonds issued by the special purpose trust, and their transfer and the
income therefrom, shall be exempt from all taxation by the state and
by its political subdivisions.
   (b) (1) In order to assist the special purpose trust in financing
or refinancing the purchase of tobacco assets, or any residual
interests therein, by enhancing the security of the bonds issued for
that purpose, upon request by the Director of Finance, the bank may
include in, or add to, the sales agreement with the special purpose
trust a covenant, binding on the state, to the effect that the
Governor shall each year request from the Legislature an
appropriation line item in the annual Budget Act, in a manner
described further in this subdivision, from the General Fund for
allocation by the Department of Finance to the special purpose trust
in an amount equal to the debt service and operating expenses
scheduled, or, in the case of bonds bearing variable rates of
interest, estimated, to become due during the next succeeding fiscal
year on the bonds, including refunding bonds, issued by the special
purpose trust to finance or refinance the purchase of tobacco assets,
or any residual interests therein, pursuant to that sales agreement.
   (2) The appropriation referred to in paragraph (1) may provide
that it will have an initial zero funding amount, but shall contain
provisions authorizing the Director of Finance to make allocations in
augmentation of the appropriation, without further legislative
approval, from the General Fund, up to the amount certified by the
special purpose trust to be necessary to cover the difference, if
negative, between the amount of tobacco assets received by the
special purpose trust pursuant to the sales agreement by the end of
April of any calendar year, plus any other amounts available in the
debt service reserve fund or other fund held by the trustee for the
bonds, less the amount of debt service on the bonds and operating
expenses scheduled, or in the case of bonds bearing variable rates of
interest, estimated, to become due during the next succeeding 12
months.
   (3) Any amounts appropriated as provided in this subdivision shall
be disbursed to the trustee for the bonds for the purpose of paying
the debt service on the bonds and operating expenses specified in the
certificate of the special purpose trust. Notwithstanding any other
provision of this article, the Legislature shall not be obligated by
this subdivision or any covenant made in a sales agreement, or any
other provision of law, to appropriate or otherwise make funds
available to pay debt service on the bonds or operating expenses.
   (c) Based upon the terms of the sale agreements and bonds as
established by the special purpose trust pursuant to subdivision (a)
or (b), tobacco assets, or any residual interests therein, may be
sold pursuant to this article, whether at one time or from
time-to-time. The net proceeds of sale of any tobacco assets by the
bank shall be deposited in the General Fund, except that the proceeds
from the sale of any residual interests therein shall be deposited
in the Tobacco Asset Sales Revenue Fund established pursuant to
Section 63049.55. The use and application of the proceeds of any sale
of tobacco assets, or any residual interests therein, or bonds shall
not in any way affect the legality or validity of that sale or those
bonds.
   (d) On or after January 1, 2007, no bonds issued by the special
purpose trust to finance or refinance the purchase of any tobacco
assets, or any residual interests therein, shall include any
enhancement of security pursuant to subdivision (b), other than
refunding bonds for the purpose of refinancing or refunding existing
enhanced bonds previously issued.



63049.2.  Notwithstanding any other provision of this division,
Article 3 (commencing with Section 63040), Article 4 (commencing with
Section 63042), and Article 5 (commencing with Section 63043) do not
apply to any bonds issued by the special purpose trust established
by this article. All matters authorized in this article are in
addition to powers granted to the bank in this division.



63049.3.  Any sale of some or all of the tobacco assets under this
article shall be treated as a true sale and absolute transfer of the
property so transferred to the special purpose trust and not as a
pledge or grant of a security interest by the state, the bank board,
the State Public Works Board, or the bank for any borrowing. The
characterization of the sale of any of those assets as an absolute
transfer by the participants shall not be negated or adversely
affected by the fact that only a portion of the tobacco assets is
transferred, nor by the state's acquisition of an ownership interest
in any residual interest or a subordinate interest in the tobacco
assets, nor by any characterization of the special purpose trust or
its bonds for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever.



63049.4.  (a) On and after the effective date of each sale of
tobacco assets, the state shall have no right, title, or interest in
or to the tobacco assets sold, and the tobacco assets so sold shall
be property of the special purpose trust and not of the state, the
bank board, the State Public Works Board, or the bank, and shall be
owned, received, held, and disbursed by the special purpose trust or
the trustee for the financing. None of the tobacco assets sold by the
state pursuant to this article shall be subject to garnishment,
levy, execution, attachment, or other process, writ, including, but
not limited to, a writ of mandate, or remedy in connection with the
assertion or enforcement of any debt, claim, settlement, or judgment
against the state, the bank board, the State Public Works Board, or
the bank.
   On or before the effective date of any sale, the state, acting
through its Attorney General, upon direction of the bank, shall
notify the California escrow agent under the Master Settlement
Agreement and the California escrow agreement that the sold tobacco
assets have been sold to the special purpose trust and irrevocably
instruct the California escrow agent that, as of the applicable
effective date, the tobacco assets sold are to be paid directly to
the trustee for the applicable bonds of the special purpose trust.
The state pledges to and agrees with the holders of any bonds issued
by the special purpose trust that it will not amend the Master
Settlement Agreement, the memorandum of understanding, or the
California escrow agreement, or take any other action, in any way
that would materially adversely alter, limit, or impair the rights to
receive tobacco assets sold to the special purpose trust pursuant to
this article, nor in any way materially impair the rights and
remedies of bondholders or the security for their bonds until those
bonds, together with the interest thereon and costs and expenses in
connection with any action or proceeding on behalf of the
bondholders, are fully paid and discharged. The state further pledges
and agrees that it shall enforce its rights to collect all moneys
due from the participating tobacco products manufacturers under the
Master Settlement Agreement and, in addition, shall diligently
enforce the model statute as contemplated in the Master Settlement
Agreement (Article 3 (commencing with Section 104555) of Chapter 1 of
Part 3 of Division 103 of the Health and Safety Code) against all
tobacco product manufacturers selling tobacco products in the state
and that are not signatories to the Master Settlement Agreement, in
each case in the manner and to the extent necessary in the judgment
of the Attorney General to collect all moneys to which the state is
entitled under the Master Settlement Agreement. The special purpose
trust may include these pledges and undertakings in its bonds.
Notwithstanding these pledges and undertaking by the state, the
Attorney General may in his or her discretion enforce any and all
provisions of the Master Settlement Agreement, without limitation.
   (b) Bonds issued pursuant to this article shall not be deemed to
constitute a debt of the state or a pledge of the faith or credit of
the state, and all bonds shall contain on the face thereof a
statement to the effect that neither the faith and credit nor the
taxing power nor any other assets or revenues of the state or of any
political subdivision thereof, other than the special purpose trust,
is or shall be pledged to the payment of the principal of or the
interest on the bonds.
   (c) Whether or not the bonds are of a 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.
   (d) The special purpose trust and the bank shall be treated as
public agencies for purposes of Chapter 9 (commencing with Section
860) of Title 10 of Part 2 of the Code of Civil Procedure, and any
action or proceeding challenging the validity of any matter
authorized by this article shall be brought in accordance with, and
within the time specified in, that chapter.
   (e) Notwithstanding any other provision of law, the exclusive
means to obtain review of a superior court judgment entered in an
action brought pursuant to Chapter 9 (commencing with Section 860) of
Title 10 of Part 2 of the Code of Civil Procedure to determine the
validity of any bonds to be issued, or any other contracts to be
entered into, or any other matters authorized by this article, shall
be by petition to the Supreme Court for writ of review. Any petition
shall be filed within 15 days following the notice of entry of the
superior court judgment, and no extension of that period may be
allowed. If no petition is filed within the time allowed therefor, or
the petition is denied, with or without opinion, the decision of the
superior court shall be final and enforceable as provided in
subdivision (a) of Section 870 of the Code of Civil Procedure. In any
case in which a petition has been filed within the time allowed
therefor, the Supreme Court shall make any orders, as it may deem
proper in the circumstances. If no answering party appeared in the
superior court action, the only issues that may be raised in the
petition are those related to the jurisdiction of the superior court.
   (f) The Attorney General may negotiate amendments to the Master
Settlement Agreement, the memorandum of understanding, and the
California escrow agreement, provided that those amendments do not
materially adversely alter, limit, or impair the rights to receive
tobacco assets sold to the special purpose trust pursuant to this
article, nor in any way materially impair the rights and remedies of
bondholders or the security for their bond until those bonds,
together with the interest on the bonds and costs and expenses in
connection with any action or proceeding on behalf of the
bondholders, are fully paid and discharged.



63049.5.  The state acknowledges and agrees that its 57 counties,
the Cities of San Jose, Los Angeles, and San Diego, and the City and
County of San Francisco, commonly and collectively known as the
"participating jurisdictions," have rights and interests in the
memorandum of understanding. In recognition of the rights of the
participating jurisdictions of the state contained in the memorandum
of understanding, the state pledges that the sale of tobacco assets
authorized by this article shall in no way include and the state
shall not otherwise materially adversely alter, limit, or impair the
rights of the participating jurisdictions, including, but not limited
to, rights to receive payments, set forth in the memorandum of
understanding. Nothing in this article shall be construed to alter
the right of each of the participating jurisdictions to sell or
assign some or all of its interest, and rights to receive payments,
under the memorandum of understanding in the manner deemed
appropriate by its governing body.



63049.55.  (a) The Tobacco Asset Sales Revenue Fund is hereby
established in the State Treasury for the purpose of maintaining a
separate account for the investment of proceeds received from the
sale of any residual interests in tobacco assets and for the
investment earnings on those proceeds.
   (b) Pursuant to Article 4 (commencing with Section 16740) of
Chapter 3 of Part 2 of Division 4 of Title 2, moneys in the fund may
be transferred to the Surplus Money Investment Fund for investment,
as long as that transfer does not jeopardize the tax-exempt status of
the bonds.
   (c) Upon direction by the Director of Finance, moneys in the fund
shall be transferred to the General Fund.
   (d) Pursuant to Section 16310, moneys in the fund may be borrowed
for daily cashflow use by the General Fund.


State Codes and Statutes

Statutes > California > Gov > 63049-63049.55

GOVERNMENT CODE
SECTION 63049-63049.55



63049.  The definitions contained in this section are in addition to
the definitions contained in Section 63010 and together with the
definitions contained in that section shall govern the construction
of this article, unless the context requires otherwise:
   (a) "California escrow agreement" means the escrow agreement dated
April 12, 2000, as amended, between the Attorney General, on behalf
of the state, and the California escrow agent named in the agreement
relating to the division between the state and the participating
jurisdictions of amounts payable under the Master Settlement
Agreement.
   (b) "Consent decree and final judgment" means, collectively, the
Consent Decree and Final Judgment entered in the Superior Court of
the State of California for San Diego County on December 9, 1998,
approving the Master Settlement Agreement, the memorandum of
understanding, and the orders entered by the court on January 18,
2000, and July 30, 2001, approving the Agreement Regarding
Interpretation of Memorandum of Understanding.
   (c) "Master Settlement Agreement" means the settlement dated
November 23, 1998, as amended, among the attorneys general of 46
states (including California), the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, American
Samoa, and the Commonwealth of the Northern Mariana Islands, and
Philip Morris Incorporated, R. J. Reynolds Tobacco Company, Brown and
Williamson Tobacco Corporation, Lorillard Tobacco Company, and the
other Subsequent Participating Manufacturers as defined therein.
   (d) "Memorandum of understanding" means, collectively, the
memorandum of understanding dated August 5, 1998, as amended,
together with the Agreement Regarding Interpretation of Memorandum of
Understanding, as amended, among the state and various local
governments of the state to coordinate their pending cases and to
allocate certain portions of the recovery under the Master Settlement
Agreement.
   (e) "Operating expenses" means the reasonable operating expenses
of the special purpose trust, including, without limitation, the
costs of preparation of accounting and other reports, maintenance of
the ratings on the bonds, insurance premiums, or other required
activities of the special purpose trust, and fees and expenses
incurred for professional consultants and fiduciaries.
   (f) "Tobacco assets" means all moneys required to be paid to the
state under the Master Settlement Agreement, as further provided in
the memorandum of understanding and the California escrow agreement,
and all of the state's rights to receive those payments.



63049.1.  (a) Subject to subdivision (c) and subdivision (d), as
applicable, the bank is hereby authorized to sell for, and on behalf
of, the state, solely as its agent, all or any portion of the tobacco
assets, or any residual interests therein, to a special purpose
trust which is hereby established as a not-for-profit corporation
solely for that purpose and for the purposes necessarily incidental
thereto, and to enter into one or more sales agreements with the
special purpose trust as and on the terms it deems appropriate, which
may include covenants of, and binding on, the state necessary to
establish and maintain the security of the bonds and exemption of
interest on the bonds from federal income taxation. The principal
office of the special purpose trust shall be located in Sacramento
County. The articles of incorporation of the special purpose trust
shall be prepared and filed, on behalf of the state, with the
Secretary of State by the bank, and the five voting members of the
State Public Works Board shall serve ex officio as the directors of
the special purpose trust. Directors of the special purpose trust
shall not be subject to personal liability for carrying out the
powers and duties conferred by this article. The special purpose
trust shall be treated as a separate legal entity with its separate
corporate purpose as described in this article, and the assets,
liabilities, and funds of the special purpose trust shall be neither
consolidated nor commingled with those of the bank or the State
Public Works Board.
   The special purpose trust is hereby authorized to issue bonds,
including, but not limited to, refunding bonds, on the terms it shall
determine, and do all things contemplated by, and authorized by,
this division with respect to the bank, and enjoy all rights,
privileges, and immunities the bank enjoys pursuant to this division,
or as authorized by Section 5140 of the Corporations Code with
respect to public benefit nonprofit corporations, or as necessary or
appropriate in connection with the issuance of bonds, and may enter
into agreements with any public or private entity and pledge the
tobacco assets, or any residual interests therein, that it purchased
as collateral and security for its bonds. The pledge of any of these
assets and interests and of any revenues, reserves, and earnings
pledged in connection therewith shall be valid and binding in
accordance with its terms and have priority in accordance with its
terms from the time the pledge is made and property so pledged shall
immediately be subject to the lien of the pledge without the need for
physical delivery, recordation, filing, or other further act. The
pledge shall not be subject to Division 9 (commencing with Section
9101) of the Commercial Code or Sections 954.5 and 955.1 of the Civil
Code. The special purpose trust, and its assets and income, and
bonds issued by the special purpose trust, and their transfer and the
income therefrom, shall be exempt from all taxation by the state and
by its political subdivisions.
   (b) (1) In order to assist the special purpose trust in financing
or refinancing the purchase of tobacco assets, or any residual
interests therein, by enhancing the security of the bonds issued for
that purpose, upon request by the Director of Finance, the bank may
include in, or add to, the sales agreement with the special purpose
trust a covenant, binding on the state, to the effect that the
Governor shall each year request from the Legislature an
appropriation line item in the annual Budget Act, in a manner
described further in this subdivision, from the General Fund for
allocation by the Department of Finance to the special purpose trust
in an amount equal to the debt service and operating expenses
scheduled, or, in the case of bonds bearing variable rates of
interest, estimated, to become due during the next succeeding fiscal
year on the bonds, including refunding bonds, issued by the special
purpose trust to finance or refinance the purchase of tobacco assets,
or any residual interests therein, pursuant to that sales agreement.
   (2) The appropriation referred to in paragraph (1) may provide
that it will have an initial zero funding amount, but shall contain
provisions authorizing the Director of Finance to make allocations in
augmentation of the appropriation, without further legislative
approval, from the General Fund, up to the amount certified by the
special purpose trust to be necessary to cover the difference, if
negative, between the amount of tobacco assets received by the
special purpose trust pursuant to the sales agreement by the end of
April of any calendar year, plus any other amounts available in the
debt service reserve fund or other fund held by the trustee for the
bonds, less the amount of debt service on the bonds and operating
expenses scheduled, or in the case of bonds bearing variable rates of
interest, estimated, to become due during the next succeeding 12
months.
   (3) Any amounts appropriated as provided in this subdivision shall
be disbursed to the trustee for the bonds for the purpose of paying
the debt service on the bonds and operating expenses specified in the
certificate of the special purpose trust. Notwithstanding any other
provision of this article, the Legislature shall not be obligated by
this subdivision or any covenant made in a sales agreement, or any
other provision of law, to appropriate or otherwise make funds
available to pay debt service on the bonds or operating expenses.
   (c) Based upon the terms of the sale agreements and bonds as
established by the special purpose trust pursuant to subdivision (a)
or (b), tobacco assets, or any residual interests therein, may be
sold pursuant to this article, whether at one time or from
time-to-time. The net proceeds of sale of any tobacco assets by the
bank shall be deposited in the General Fund, except that the proceeds
from the sale of any residual interests therein shall be deposited
in the Tobacco Asset Sales Revenue Fund established pursuant to
Section 63049.55. The use and application of the proceeds of any sale
of tobacco assets, or any residual interests therein, or bonds shall
not in any way affect the legality or validity of that sale or those
bonds.
   (d) On or after January 1, 2007, no bonds issued by the special
purpose trust to finance or refinance the purchase of any tobacco
assets, or any residual interests therein, shall include any
enhancement of security pursuant to subdivision (b), other than
refunding bonds for the purpose of refinancing or refunding existing
enhanced bonds previously issued.



63049.2.  Notwithstanding any other provision of this division,
Article 3 (commencing with Section 63040), Article 4 (commencing with
Section 63042), and Article 5 (commencing with Section 63043) do not
apply to any bonds issued by the special purpose trust established
by this article. All matters authorized in this article are in
addition to powers granted to the bank in this division.



63049.3.  Any sale of some or all of the tobacco assets under this
article shall be treated as a true sale and absolute transfer of the
property so transferred to the special purpose trust and not as a
pledge or grant of a security interest by the state, the bank board,
the State Public Works Board, or the bank for any borrowing. The
characterization of the sale of any of those assets as an absolute
transfer by the participants shall not be negated or adversely
affected by the fact that only a portion of the tobacco assets is
transferred, nor by the state's acquisition of an ownership interest
in any residual interest or a subordinate interest in the tobacco
assets, nor by any characterization of the special purpose trust or
its bonds for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever.



63049.4.  (a) On and after the effective date of each sale of
tobacco assets, the state shall have no right, title, or interest in
or to the tobacco assets sold, and the tobacco assets so sold shall
be property of the special purpose trust and not of the state, the
bank board, the State Public Works Board, or the bank, and shall be
owned, received, held, and disbursed by the special purpose trust or
the trustee for the financing. None of the tobacco assets sold by the
state pursuant to this article shall be subject to garnishment,
levy, execution, attachment, or other process, writ, including, but
not limited to, a writ of mandate, or remedy in connection with the
assertion or enforcement of any debt, claim, settlement, or judgment
against the state, the bank board, the State Public Works Board, or
the bank.
   On or before the effective date of any sale, the state, acting
through its Attorney General, upon direction of the bank, shall
notify the California escrow agent under the Master Settlement
Agreement and the California escrow agreement that the sold tobacco
assets have been sold to the special purpose trust and irrevocably
instruct the California escrow agent that, as of the applicable
effective date, the tobacco assets sold are to be paid directly to
the trustee for the applicable bonds of the special purpose trust.
The state pledges to and agrees with the holders of any bonds issued
by the special purpose trust that it will not amend the Master
Settlement Agreement, the memorandum of understanding, or the
California escrow agreement, or take any other action, in any way
that would materially adversely alter, limit, or impair the rights to
receive tobacco assets sold to the special purpose trust pursuant to
this article, nor in any way materially impair the rights and
remedies of bondholders or the security for their bonds until those
bonds, together with the interest thereon and costs and expenses in
connection with any action or proceeding on behalf of the
bondholders, are fully paid and discharged. The state further pledges
and agrees that it shall enforce its rights to collect all moneys
due from the participating tobacco products manufacturers under the
Master Settlement Agreement and, in addition, shall diligently
enforce the model statute as contemplated in the Master Settlement
Agreement (Article 3 (commencing with Section 104555) of Chapter 1 of
Part 3 of Division 103 of the Health and Safety Code) against all
tobacco product manufacturers selling tobacco products in the state
and that are not signatories to the Master Settlement Agreement, in
each case in the manner and to the extent necessary in the judgment
of the Attorney General to collect all moneys to which the state is
entitled under the Master Settlement Agreement. The special purpose
trust may include these pledges and undertakings in its bonds.
Notwithstanding these pledges and undertaking by the state, the
Attorney General may in his or her discretion enforce any and all
provisions of the Master Settlement Agreement, without limitation.
   (b) Bonds issued pursuant to this article shall not be deemed to
constitute a debt of the state or a pledge of the faith or credit of
the state, and all bonds shall contain on the face thereof a
statement to the effect that neither the faith and credit nor the
taxing power nor any other assets or revenues of the state or of any
political subdivision thereof, other than the special purpose trust,
is or shall be pledged to the payment of the principal of or the
interest on the bonds.
   (c) Whether or not the bonds are of a 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.
   (d) The special purpose trust and the bank shall be treated as
public agencies for purposes of Chapter 9 (commencing with Section
860) of Title 10 of Part 2 of the Code of Civil Procedure, and any
action or proceeding challenging the validity of any matter
authorized by this article shall be brought in accordance with, and
within the time specified in, that chapter.
   (e) Notwithstanding any other provision of law, the exclusive
means to obtain review of a superior court judgment entered in an
action brought pursuant to Chapter 9 (commencing with Section 860) of
Title 10 of Part 2 of the Code of Civil Procedure to determine the
validity of any bonds to be issued, or any other contracts to be
entered into, or any other matters authorized by this article, shall
be by petition to the Supreme Court for writ of review. Any petition
shall be filed within 15 days following the notice of entry of the
superior court judgment, and no extension of that period may be
allowed. If no petition is filed within the time allowed therefor, or
the petition is denied, with or without opinion, the decision of the
superior court shall be final and enforceable as provided in
subdivision (a) of Section 870 of the Code of Civil Procedure. In any
case in which a petition has been filed within the time allowed
therefor, the Supreme Court shall make any orders, as it may deem
proper in the circumstances. If no answering party appeared in the
superior court action, the only issues that may be raised in the
petition are those related to the jurisdiction of the superior court.
   (f) The Attorney General may negotiate amendments to the Master
Settlement Agreement, the memorandum of understanding, and the
California escrow agreement, provided that those amendments do not
materially adversely alter, limit, or impair the rights to receive
tobacco assets sold to the special purpose trust pursuant to this
article, nor in any way materially impair the rights and remedies of
bondholders or the security for their bond until those bonds,
together with the interest on the bonds and costs and expenses in
connection with any action or proceeding on behalf of the
bondholders, are fully paid and discharged.



63049.5.  The state acknowledges and agrees that its 57 counties,
the Cities of San Jose, Los Angeles, and San Diego, and the City and
County of San Francisco, commonly and collectively known as the
"participating jurisdictions," have rights and interests in the
memorandum of understanding. In recognition of the rights of the
participating jurisdictions of the state contained in the memorandum
of understanding, the state pledges that the sale of tobacco assets
authorized by this article shall in no way include and the state
shall not otherwise materially adversely alter, limit, or impair the
rights of the participating jurisdictions, including, but not limited
to, rights to receive payments, set forth in the memorandum of
understanding. Nothing in this article shall be construed to alter
the right of each of the participating jurisdictions to sell or
assign some or all of its interest, and rights to receive payments,
under the memorandum of understanding in the manner deemed
appropriate by its governing body.



63049.55.  (a) The Tobacco Asset Sales Revenue Fund is hereby
established in the State Treasury for the purpose of maintaining a
separate account for the investment of proceeds received from the
sale of any residual interests in tobacco assets and for the
investment earnings on those proceeds.
   (b) Pursuant to Article 4 (commencing with Section 16740) of
Chapter 3 of Part 2 of Division 4 of Title 2, moneys in the fund may
be transferred to the Surplus Money Investment Fund for investment,
as long as that transfer does not jeopardize the tax-exempt status of
the bonds.
   (c) Upon direction by the Director of Finance, moneys in the fund
shall be transferred to the General Fund.
   (d) Pursuant to Section 16310, moneys in the fund may be borrowed
for daily cashflow use by the General Fund.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Gov > 63049-63049.55

GOVERNMENT CODE
SECTION 63049-63049.55



63049.  The definitions contained in this section are in addition to
the definitions contained in Section 63010 and together with the
definitions contained in that section shall govern the construction
of this article, unless the context requires otherwise:
   (a) "California escrow agreement" means the escrow agreement dated
April 12, 2000, as amended, between the Attorney General, on behalf
of the state, and the California escrow agent named in the agreement
relating to the division between the state and the participating
jurisdictions of amounts payable under the Master Settlement
Agreement.
   (b) "Consent decree and final judgment" means, collectively, the
Consent Decree and Final Judgment entered in the Superior Court of
the State of California for San Diego County on December 9, 1998,
approving the Master Settlement Agreement, the memorandum of
understanding, and the orders entered by the court on January 18,
2000, and July 30, 2001, approving the Agreement Regarding
Interpretation of Memorandum of Understanding.
   (c) "Master Settlement Agreement" means the settlement dated
November 23, 1998, as amended, among the attorneys general of 46
states (including California), the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, American
Samoa, and the Commonwealth of the Northern Mariana Islands, and
Philip Morris Incorporated, R. J. Reynolds Tobacco Company, Brown and
Williamson Tobacco Corporation, Lorillard Tobacco Company, and the
other Subsequent Participating Manufacturers as defined therein.
   (d) "Memorandum of understanding" means, collectively, the
memorandum of understanding dated August 5, 1998, as amended,
together with the Agreement Regarding Interpretation of Memorandum of
Understanding, as amended, among the state and various local
governments of the state to coordinate their pending cases and to
allocate certain portions of the recovery under the Master Settlement
Agreement.
   (e) "Operating expenses" means the reasonable operating expenses
of the special purpose trust, including, without limitation, the
costs of preparation of accounting and other reports, maintenance of
the ratings on the bonds, insurance premiums, or other required
activities of the special purpose trust, and fees and expenses
incurred for professional consultants and fiduciaries.
   (f) "Tobacco assets" means all moneys required to be paid to the
state under the Master Settlement Agreement, as further provided in
the memorandum of understanding and the California escrow agreement,
and all of the state's rights to receive those payments.



63049.1.  (a) Subject to subdivision (c) and subdivision (d), as
applicable, the bank is hereby authorized to sell for, and on behalf
of, the state, solely as its agent, all or any portion of the tobacco
assets, or any residual interests therein, to a special purpose
trust which is hereby established as a not-for-profit corporation
solely for that purpose and for the purposes necessarily incidental
thereto, and to enter into one or more sales agreements with the
special purpose trust as and on the terms it deems appropriate, which
may include covenants of, and binding on, the state necessary to
establish and maintain the security of the bonds and exemption of
interest on the bonds from federal income taxation. The principal
office of the special purpose trust shall be located in Sacramento
County. The articles of incorporation of the special purpose trust
shall be prepared and filed, on behalf of the state, with the
Secretary of State by the bank, and the five voting members of the
State Public Works Board shall serve ex officio as the directors of
the special purpose trust. Directors of the special purpose trust
shall not be subject to personal liability for carrying out the
powers and duties conferred by this article. The special purpose
trust shall be treated as a separate legal entity with its separate
corporate purpose as described in this article, and the assets,
liabilities, and funds of the special purpose trust shall be neither
consolidated nor commingled with those of the bank or the State
Public Works Board.
   The special purpose trust is hereby authorized to issue bonds,
including, but not limited to, refunding bonds, on the terms it shall
determine, and do all things contemplated by, and authorized by,
this division with respect to the bank, and enjoy all rights,
privileges, and immunities the bank enjoys pursuant to this division,
or as authorized by Section 5140 of the Corporations Code with
respect to public benefit nonprofit corporations, or as necessary or
appropriate in connection with the issuance of bonds, and may enter
into agreements with any public or private entity and pledge the
tobacco assets, or any residual interests therein, that it purchased
as collateral and security for its bonds. The pledge of any of these
assets and interests and of any revenues, reserves, and earnings
pledged in connection therewith shall be valid and binding in
accordance with its terms and have priority in accordance with its
terms from the time the pledge is made and property so pledged shall
immediately be subject to the lien of the pledge without the need for
physical delivery, recordation, filing, or other further act. The
pledge shall not be subject to Division 9 (commencing with Section
9101) of the Commercial Code or Sections 954.5 and 955.1 of the Civil
Code. The special purpose trust, and its assets and income, and
bonds issued by the special purpose trust, and their transfer and the
income therefrom, shall be exempt from all taxation by the state and
by its political subdivisions.
   (b) (1) In order to assist the special purpose trust in financing
or refinancing the purchase of tobacco assets, or any residual
interests therein, by enhancing the security of the bonds issued for
that purpose, upon request by the Director of Finance, the bank may
include in, or add to, the sales agreement with the special purpose
trust a covenant, binding on the state, to the effect that the
Governor shall each year request from the Legislature an
appropriation line item in the annual Budget Act, in a manner
described further in this subdivision, from the General Fund for
allocation by the Department of Finance to the special purpose trust
in an amount equal to the debt service and operating expenses
scheduled, or, in the case of bonds bearing variable rates of
interest, estimated, to become due during the next succeeding fiscal
year on the bonds, including refunding bonds, issued by the special
purpose trust to finance or refinance the purchase of tobacco assets,
or any residual interests therein, pursuant to that sales agreement.
   (2) The appropriation referred to in paragraph (1) may provide
that it will have an initial zero funding amount, but shall contain
provisions authorizing the Director of Finance to make allocations in
augmentation of the appropriation, without further legislative
approval, from the General Fund, up to the amount certified by the
special purpose trust to be necessary to cover the difference, if
negative, between the amount of tobacco assets received by the
special purpose trust pursuant to the sales agreement by the end of
April of any calendar year, plus any other amounts available in the
debt service reserve fund or other fund held by the trustee for the
bonds, less the amount of debt service on the bonds and operating
expenses scheduled, or in the case of bonds bearing variable rates of
interest, estimated, to become due during the next succeeding 12
months.
   (3) Any amounts appropriated as provided in this subdivision shall
be disbursed to the trustee for the bonds for the purpose of paying
the debt service on the bonds and operating expenses specified in the
certificate of the special purpose trust. Notwithstanding any other
provision of this article, the Legislature shall not be obligated by
this subdivision or any covenant made in a sales agreement, or any
other provision of law, to appropriate or otherwise make funds
available to pay debt service on the bonds or operating expenses.
   (c) Based upon the terms of the sale agreements and bonds as
established by the special purpose trust pursuant to subdivision (a)
or (b), tobacco assets, or any residual interests therein, may be
sold pursuant to this article, whether at one time or from
time-to-time. The net proceeds of sale of any tobacco assets by the
bank shall be deposited in the General Fund, except that the proceeds
from the sale of any residual interests therein shall be deposited
in the Tobacco Asset Sales Revenue Fund established pursuant to
Section 63049.55. The use and application of the proceeds of any sale
of tobacco assets, or any residual interests therein, or bonds shall
not in any way affect the legality or validity of that sale or those
bonds.
   (d) On or after January 1, 2007, no bonds issued by the special
purpose trust to finance or refinance the purchase of any tobacco
assets, or any residual interests therein, shall include any
enhancement of security pursuant to subdivision (b), other than
refunding bonds for the purpose of refinancing or refunding existing
enhanced bonds previously issued.



63049.2.  Notwithstanding any other provision of this division,
Article 3 (commencing with Section 63040), Article 4 (commencing with
Section 63042), and Article 5 (commencing with Section 63043) do not
apply to any bonds issued by the special purpose trust established
by this article. All matters authorized in this article are in
addition to powers granted to the bank in this division.



63049.3.  Any sale of some or all of the tobacco assets under this
article shall be treated as a true sale and absolute transfer of the
property so transferred to the special purpose trust and not as a
pledge or grant of a security interest by the state, the bank board,
the State Public Works Board, or the bank for any borrowing. The
characterization of the sale of any of those assets as an absolute
transfer by the participants shall not be negated or adversely
affected by the fact that only a portion of the tobacco assets is
transferred, nor by the state's acquisition of an ownership interest
in any residual interest or a subordinate interest in the tobacco
assets, nor by any characterization of the special purpose trust or
its bonds for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever.



63049.4.  (a) On and after the effective date of each sale of
tobacco assets, the state shall have no right, title, or interest in
or to the tobacco assets sold, and the tobacco assets so sold shall
be property of the special purpose trust and not of the state, the
bank board, the State Public Works Board, or the bank, and shall be
owned, received, held, and disbursed by the special purpose trust or
the trustee for the financing. None of the tobacco assets sold by the
state pursuant to this article shall be subject to garnishment,
levy, execution, attachment, or other process, writ, including, but
not limited to, a writ of mandate, or remedy in connection with the
assertion or enforcement of any debt, claim, settlement, or judgment
against the state, the bank board, the State Public Works Board, or
the bank.
   On or before the effective date of any sale, the state, acting
through its Attorney General, upon direction of the bank, shall
notify the California escrow agent under the Master Settlement
Agreement and the California escrow agreement that the sold tobacco
assets have been sold to the special purpose trust and irrevocably
instruct the California escrow agent that, as of the applicable
effective date, the tobacco assets sold are to be paid directly to
the trustee for the applicable bonds of the special purpose trust.
The state pledges to and agrees with the holders of any bonds issued
by the special purpose trust that it will not amend the Master
Settlement Agreement, the memorandum of understanding, or the
California escrow agreement, or take any other action, in any way
that would materially adversely alter, limit, or impair the rights to
receive tobacco assets sold to the special purpose trust pursuant to
this article, nor in any way materially impair the rights and
remedies of bondholders or the security for their bonds until those
bonds, together with the interest thereon and costs and expenses in
connection with any action or proceeding on behalf of the
bondholders, are fully paid and discharged. The state further pledges
and agrees that it shall enforce its rights to collect all moneys
due from the participating tobacco products manufacturers under the
Master Settlement Agreement and, in addition, shall diligently
enforce the model statute as contemplated in the Master Settlement
Agreement (Article 3 (commencing with Section 104555) of Chapter 1 of
Part 3 of Division 103 of the Health and Safety Code) against all
tobacco product manufacturers selling tobacco products in the state
and that are not signatories to the Master Settlement Agreement, in
each case in the manner and to the extent necessary in the judgment
of the Attorney General to collect all moneys to which the state is
entitled under the Master Settlement Agreement. The special purpose
trust may include these pledges and undertakings in its bonds.
Notwithstanding these pledges and undertaking by the state, the
Attorney General may in his or her discretion enforce any and all
provisions of the Master Settlement Agreement, without limitation.
   (b) Bonds issued pursuant to this article shall not be deemed to
constitute a debt of the state or a pledge of the faith or credit of
the state, and all bonds shall contain on the face thereof a
statement to the effect that neither the faith and credit nor the
taxing power nor any other assets or revenues of the state or of any
political subdivision thereof, other than the special purpose trust,
is or shall be pledged to the payment of the principal of or the
interest on the bonds.
   (c) Whether or not the bonds are of a 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.
   (d) The special purpose trust and the bank shall be treated as
public agencies for purposes of Chapter 9 (commencing with Section
860) of Title 10 of Part 2 of the Code of Civil Procedure, and any
action or proceeding challenging the validity of any matter
authorized by this article shall be brought in accordance with, and
within the time specified in, that chapter.
   (e) Notwithstanding any other provision of law, the exclusive
means to obtain review of a superior court judgment entered in an
action brought pursuant to Chapter 9 (commencing with Section 860) of
Title 10 of Part 2 of the Code of Civil Procedure to determine the
validity of any bonds to be issued, or any other contracts to be
entered into, or any other matters authorized by this article, shall
be by petition to the Supreme Court for writ of review. Any petition
shall be filed within 15 days following the notice of entry of the
superior court judgment, and no extension of that period may be
allowed. If no petition is filed within the time allowed therefor, or
the petition is denied, with or without opinion, the decision of the
superior court shall be final and enforceable as provided in
subdivision (a) of Section 870 of the Code of Civil Procedure. In any
case in which a petition has been filed within the time allowed
therefor, the Supreme Court shall make any orders, as it may deem
proper in the circumstances. If no answering party appeared in the
superior court action, the only issues that may be raised in the
petition are those related to the jurisdiction of the superior court.
   (f) The Attorney General may negotiate amendments to the Master
Settlement Agreement, the memorandum of understanding, and the
California escrow agreement, provided that those amendments do not
materially adversely alter, limit, or impair the rights to receive
tobacco assets sold to the special purpose trust pursuant to this
article, nor in any way materially impair the rights and remedies of
bondholders or the security for their bond until those bonds,
together with the interest on the bonds and costs and expenses in
connection with any action or proceeding on behalf of the
bondholders, are fully paid and discharged.



63049.5.  The state acknowledges and agrees that its 57 counties,
the Cities of San Jose, Los Angeles, and San Diego, and the City and
County of San Francisco, commonly and collectively known as the
"participating jurisdictions," have rights and interests in the
memorandum of understanding. In recognition of the rights of the
participating jurisdictions of the state contained in the memorandum
of understanding, the state pledges that the sale of tobacco assets
authorized by this article shall in no way include and the state
shall not otherwise materially adversely alter, limit, or impair the
rights of the participating jurisdictions, including, but not limited
to, rights to receive payments, set forth in the memorandum of
understanding. Nothing in this article shall be construed to alter
the right of each of the participating jurisdictions to sell or
assign some or all of its interest, and rights to receive payments,
under the memorandum of understanding in the manner deemed
appropriate by its governing body.



63049.55.  (a) The Tobacco Asset Sales Revenue Fund is hereby
established in the State Treasury for the purpose of maintaining a
separate account for the investment of proceeds received from the
sale of any residual interests in tobacco assets and for the
investment earnings on those proceeds.
   (b) Pursuant to Article 4 (commencing with Section 16740) of
Chapter 3 of Part 2 of Division 4 of Title 2, moneys in the fund may
be transferred to the Surplus Money Investment Fund for investment,
as long as that transfer does not jeopardize the tax-exempt status of
the bonds.
   (c) Upon direction by the Director of Finance, moneys in the fund
shall be transferred to the General Fund.
   (d) Pursuant to Section 16310, moneys in the fund may be borrowed
for daily cashflow use by the General Fund.