GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1999
SESSION LAW 1999-2
SENATE BILL 6
AN ACT TO APPROVE THE CREATION OF THE NONPROFIT CORPORATION
ESTABLISHED PURSUANT TO COURT ORDER FOR THE PURPOSES OF RECEIPT
AND DISTRIBUTION OF FIFTY PERCENT OF THE FUNDS RECEIVED BY THE
STATE IN STATE OF NORTH CAROLINA V. PHILIP MORRIS INCORPORATED,
ET AL., INCLUDING THE MANNER, TERMS, AND CONDITIONS OF
APPOINTMENT OF THE CORPORATION'S BOARD OF DIRECTORS, TO
CONDITIONALLY ASSIGN TO THE NONPROFIT CORPORATION THE RIGHT,
TITLE, AND INTEREST IN THE ANNUAL PAYMENTS CONSTITUTING FIFTY
PERCENT OF NORTH CAROLINA'S STATE SPECIFIC ACCOUNT, TO REQUIRE
THE ATTORNEY GENERAL TO DRAFT AND FILE ARTICLES OF
INCORPORATION FOR THE NONPROFIT CORPORATION CONCERNING
CONSULTATION AND REVIEW, APPLICABILITY OF PUBLIC RECORDS AND
OPEN MEETINGS LAWS, TRANSFER OF ASSETS AND DISSOLUTION, AND
CHARTER REPEAL AND AMENDMENT AS A CONDITION PRECEDENT TO THE
ASSIGNMENT OF PAYMENTS TO THE CORPORATION, TO EXPRESS THE
INTENT OF THE GENERAL ASSEMBLY THAT TOBACCO PRODUCTION
INTERESTS, TOBACCO MANUFACTURING INTERESTS, TOBACCO-RELATED
EMPLOYMENT INTERESTS, HEALTH INTERESTS, AND ECONOMIC
DEVELOPMENT INTERESTS SHALL BE REPRESENTED ON THE CORPORATION'S
BOARD OF DIRECTORS, TO EXPRESS THE INTENT OF THE GENERAL
ASSEMBLY TO ESTABLISH A TRUST FUND TO RECEIVE AND DISTRIBUTE
TWENTY-FIVE PERCENT OF THE TOBACCO LITIGATION MASTER SETTLEMENT
AGREEMENT FUNDS FOR THE BENEFIT OF TOBACCO PRODUCERS, TOBACCO
ALLOTMENT HOLDERS, AND PERSONS ENGAGED IN TOBACCO-RELATED
BUSINESSES, INCLUDING DIRECT AND INDIRECT FINANCIAL ASSISTANCE
AND INDEMNIFICATION TO THESE BENEFICIARIES TO THE EXTENT
ALLOWED BY LAW AND IN ACCORDANCE WITH CRITERIA ESTABLISHED BY
THE TRUST FUND'S BOARD OF TRUSTEES, WITH THE TRUST FUND
GOVERNED BY TRUSTEES REPRESENTING THESE INTERESTS, AND TO
EXPRESS THE INTENT OF THE GENERAL ASSEMBLY TO ESTABLISH A
SEPARATE TRUST FUND TO RECEIVE AND DISTRIBUTE TWENTY-FIVE
PERCENT OF THE TOBACCO LITIGATION MASTER SETTLEMENT AGREEMENT
FUNDS FOR THE BENEFIT OF HEALTH, WITH THE TRUST FUND GOVERNED
BY A BOARD OF TRUSTEES COMPRISED OF A BROAD REPRESENTATION OF
HEALTH INTERESTS.
Whereas, the State of North Carolina filed an action
against Philip Morris Incorporated, R.J. Reynolds Tobacco
Company, Brown & Williamson Tobacco Corporation (individually and
as successor by merger to The American Tobacco Company),
Lorillard Tobacco Company, and Liggett Group, Inc., on December
21, 1998, entitled State of North Carolina v. Philip Morris
Incorporated, Et Al., 98 CVS 14377, in the General Court of
Justice, Superior Court Division, Wake County, North Carolina;
and
Whereas, the State of North Carolina entered into a
Consent Decree and Final Judgment with the defendants to resolve
the action in a manner that addresses the State's claims, while
conserving the resources of the parties and the Court; and
Whereas, the Consent Decree and Final Judgment directs
the Attorney General to create a nonprofit corporation for
purposes of receipt and distribution of fifty percent of the
funds allocated to North Carolina; and
Whereas, the Consent Decree and Final Judgment provides
that, as a condition precedent to the organization of the
nonprofit corporation, the creation of the corporation must be
approved by the North Carolina General Assembly not later than
March 15, 1999, unless extended by the Court, and must be
approved by the Court; Now, therefore,
The General Assembly of North Carolina enacts:
Section 1. The creation of the nonprofit corporation
pursuant to subparagraph VI.A.1 of the Consent Decree and Final
Judgment entered in that action of 98 CVS 14377 on December 21,
1998, is hereby approved for the purposes and on the terms and
conditions set forth in subparagraph VI.A.1 of the Consent Decree
and Final Judgment.
Section 2(a). Except as provided in subsection 2(b),
transfer and assignment to the nonprofit corporation referred to
in Section 1 of this act of the right, title, and interest of the
State to each annual installment payment constituting the fifty
percent (50%) of North Carolina's State Specific Account
specified in subparagraph VI.A.1 of the Consent Decree is hereby
approved.
Section 2(b). Unless provided otherwise by an act of
the General Assembly before the installment payment is received
in North Carolina's State Specific Account, the right, title, and
interest to each installment payment vests in the nonprofit
corporation upon receipt of that payment in North Carolina's
State Specific Account for the public charitable purposes of
providing economic impact assistance to economically affected or
tobacco dependent regions of North Carolina. These funds shall
be distributed to the nonprofit corporation under the Consent
Decree and shall constitute support of the nonprofit corporation
from the State of North Carolina.
Section 2(c). The General Assembly also approves the
provisions in the Consent Decree concerning the governance of the
nonprofit corporation by 15 directors holding staggered, four-
year terms, five directors to be appointed by the Governor of the
State of North Carolina, five by the President Pro Tempore of the
North Carolina Senate, and five by the Speaker of the North
Carolina House of Representatives, respectively in their sole
discretion; and that the Governor shall appoint the first Chair
among his appointees, and the directors shall elect their own
Chair from among their number for subsequent terms. Members of
the General Assembly may not be appointed to serve on the board
of directors while serving in the General Assembly.
Section 3. The Attorney General shall draft articles
of incorporation for the nonprofit corporation to enable the
nonprofit corporation to carry out its mission as set out in the
Consent Decree. The articles of incorporation shall provide for
the following:
(1) Consultation; reporting. -- The nonprofit
corporation shall consult with the Joint Legislative
Commission on Governmental Operations ("Commission") prior
to the corporation's board of directors (i) adopting bylaws
and (ii) adopting the annual operating budget. The
nonprofit corporation shall also report on its programs and
activities to the Commission on or before March 1 of each
fiscal year and more frequently as requested by the
Commission. The report shall include information on the
activities and accomplishments during the fiscal year,
itemized expenditures during the fiscal year, planned
activities and goals for at least the next 12 months, and
itemized anticipated expenditures for the next fiscal year.
The nonprofit corporation shall also annually provide to the
Commission an itemized report of its administrative expenses
and copies of its annual report and tax return information.
(2) Public records; open meetings. -- The nonprofit
corporation is subject to the Open Meetings Law as provided
in Article 33C of Chapter 143 of the General Statutes and
the Public Records Act as provided in Chapter 132 of the
General Statutes. The nonprofit corporation shall publish
at least annually a report, available to the public and
filed with the Joint Legislative Commission on Governmental
Operations, of every expenditure or distribution in
furtherance of the public charitable purposes of the
nonprofit corporation.
(3) Transfer of assets. -- The nonprofit
corporation may not dispose of assets pursuant to G.S. 55A-
12-02 without the approval of the General Assembly.
(4) Charter repeal. -- The charter of the nonprofit
corporation may be repealed at any time by the legislature
pursuant to Article VIII, Section 1 of the North Carolina
Constitution. The nonprofit corporation may not amend its
articles of incorporation without the approval of the
General Assembly.
(5) Dissolution. -- The nonprofit corporation may
be dissolved pursuant to Chapter 55A of the General
Statutes, by the General Assembly, or by the Court pursuant
to the Consent Decree. Upon dissolution, all unencumbered
assets and funds of the nonprofit corporation, including the
right to receive future funds pursuant to Section 2 of this
act, are transferred to the Settlement Reserve Fund
established pursuant to G.S. 143-16.4.
Section 4. The nonprofit corporation's right to receive
funds pursuant to Section 2 of this act is contingent upon the
filing of articles of incorporation that comply with Section 3 of
this act.
Section 5. It is the intent of the General Assembly
that the Governor, Speaker of the House of Representatives, and
President Pro Tempore of the Senate, in appointing directors to
the nonprofit corporation, shall, in their sole discretion,
include among their appointments representatives of tobacco
production, tobacco manufacturing, tobacco-related employment,
health, and economic development interests, with each appointing
authority selecting at least two directors from these interests.
It is also the intent of the General Assembly that the appointing
authorities, in appointing directors, shall appoint members that
represent the geographic, gender, and racial diversity of the
State.
Section 6. It is the intent of the General Assembly
that the funds under the Master Settlement Agreement, which is
incorporated into the Consent Decree, be allocated as follows:
(1) Fifty percent (50%) to the nonprofit
corporation as provided by the Consent Decree.
(2) Twenty-five percent (25%) to a trust fund to be
established by the General Assembly for the benefit of
tobacco producers, tobacco allotment holders, and persons
engaged in tobacco-related businesses, with this trust fund
to be governed by a board of trustees representing these
interests. To carry out this purpose, this trust fund may
provide direct and indirect financial assistance, in
accordance with criteria established by the trustees of the
trust fund and to the extent allowed by law, to (i)
indemnify tobacco producers, allotment holders, and persons
engaged in tobacco-related businesses from the adverse
economic effects of the Master Settlement Agreement, (ii)
compensate tobacco producers and allotment holders for the
economic loss resulting from lost quota, and (iii)
revitalize tobacco dependent communities.
(3) Twenty-five percent (25%) to a trust fund to be
established by the General Assembly for the benefit of
health, with this trust fund to be governed by a board of
trustees comprised of a broad representation of health
interests.
Section 7. Chapter 55A of the General Statutes is
amended by adding a new section to read:
"§ 55A-3-07. Certain corporations subject to Public Records
Act and Open Meetings Law.
Any corporation organized under this Chapter under the
terms of any consent decree and final judgment in any civil
action calling on a state officer to create the corporation, for
the purposes of receipt and distribution of funds allocated to
the State of North Carolina to provide economic impact assistance
on account of one industry, is subject to the Public Records Act
(Chapter 132 of the General Statutes) and the Open Meetings Law
(Article 33C of Chapter 143 of the General Statutes)."
Section 8. This act is effective when it becomes law.
In the General Assembly read three times and ratified
this the 16th day of March, 1999.
s/ Dennis A. Wicker
President of the Senate
s/ James B. Black
Speaker of the House of Representatives
s/ James B. Hunt, Jr.
Governor
Approved 5:21 p.m. this 16th day of March, 1999