Fillable Printable Escrow Agreement Form - Maryland

Escrow Agreement Form - Maryland

ESCROW AGREEMENT

This Escrow Agreement is made and entered into this _____ day of _______, 20__,

by ___________________ (the “Company”) and_______________________(the “Escrow

Agent”).

WITNESSETH:

WHEREAS, a number of States have enacted Non-Participating Manufacturer

Statutes ("NPM Statutes") that require Tobacco Product Manufacturers that have not entered

into the Master Settlement Agreement to establish Qualified Escrow Funds, and

WHEREAS, the Company is a Tobacco Product Manufacturer that has not entered

into the Master Settlement Agreement and intends to comply with such NPM Statutes by

establishing Qualified Escrow Funds with respect to states where the Company’s tobacco

products are sold.

NOW THEREFORE, in consideration of the mutual promises contained herein and

other good and valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the undersigned parties hereto agree as follows:

SECTION 1. Appointment of Escrow Agent.

The Company hereby appoints _______________________ to serve as Escrow Agent under

this Escrow Agreement on the terms and conditions set forth herein. The Escrow Agent

warrants that it is a federally or state chartered financial institution organized and existing

under the laws of the State of _____________, having assets of at least one billion dollars

($1,000,000,000), and is not an Affiliate of any Tobacco Product Manufacturer as defined

in the NPM Statute. By its execution hereof, the Escrow Agent hereby accepts such

appointment and agrees to perform its duties and obligations set forth herein.

SECTION 2. Definitions.

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(a) Capitalized terms used in this Escrow Agreement and not otherwise defined herein

or in the Beneficiary State’s NPM Statutes shall have the meaning given to such terms in the

Master Settlement Agreement.

(b) “Account” means an escrow account consisting of segregated sub-accounts for

each Beneficiary State maintained by the Escrow Agent as a Qualified Escrow Fund in which

the funds required to be placed in a Qualified Escrow Fund are deposited in compliance with

this Escrow Agreement.

Agreement for whose benefit funds are being escrowed pursuant to this Escrow Agreement.

For purposes of this Escrow Agreement, the initial Beneficiary States are those listed in

Attachment “A” hereto which is hereby incorporated herein by reference, and those other

States that the Company and the Escrow Agent may hereafter agree to include as Beneficiary

States. Escrow Agent is authorized to include other Beneficiary States under this Agreement

by written notice from the Company and is further authorized to revise Attachment “A” from

time to time to reflect additions as instructed by the Company

(d) Master Settlement Agreement” means the settlement agreement (and related

documents) entered into on November 23, 1998 by numerous States and major United States

Tobacco Product Manufacturers, a copy of which has been provided to the Escrow Agent by

the Company.

(e) “NPM Statutes” or “NPM Statute” are the laws enacted in each of the States that

are parties to the Master Settlement Agreement and that require a Non-Participating

Manufacturer to establish a Qualified Escrow Fund. The Company shall provide a copy of

the NPM Statutes for each Beneficiary State under this Escrow Agreement to the Escrow

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Agent.

(f) “Qualified Escrow Fund” means an escrow arrangement with a U.S. federal or U.S.

state chartered financial institution having no affiliation with any Tobacco Product

Manufacturer and having assets of at least one billion dollars ($1,000,000,000) where such

arrangement requires that the financial institution hold the escrowed funds’ principal for the

benefit of Releasing Parties and prohibits the Tobacco Product Manufacturer placing the

funds into escrow from using, accessing or directing the use of the funds’ principal except

as consistent with the applicable NPM Statutes.

SECTION 3. The Escrow Fund and Release of Funds Therefrom.

(a) From time to time the Company shall tender to the Escrow Agent for deposit in

the Account the funds which the Company is required to place into a Qualified Escrow Fund

pursuant to the NPM Statutes of each Beneficiary State.

(b) All funds received by the Escrow Agent pursuant to the terms of this Escrow

Agreement shall be held, invested and disbursed in accordance with the terms and conditions

of this Escrow Agreement and the NPM Statutes.

after enactment of that state’s NPM Statute, by April 15 of the year following each year of

such enactment, the Company shall deliver to the Escrow Agent for deposit pursuant to this

section the following amounts (as such amounts are adjusted for inflation pursuant to Exhibit

C of the Master Settlement Agreement) – 1999: $.0094241 per Unit Sold; 2000: $.0104712

per Unit Sold; for each of 2001 and 2002: $.0136125 per Unit Sold; for each of 2003 through

2006: $.0167539 per Unit Sold; for each of 2007 and each year thereafter: $.0188482 per

Unit Sold. For the year in which the NPM Statute was first enacted, the amount due by April

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15 of the following year shall be based only on those Units Sold on and after the statute’s

effective date.

(d) Segregated Multi-State Subaccounts

(i) The Company shall designate to the Escrow Agent the amount to be placed

in the Account and each sub-account for each Beneficiary State based on the Units Sold

therein in accordance with the applicable Beneficiary State’s NPM Statute. All funds shall

be held by the Escrow Agent in sub-accounts separate and apart from all other funds and sub-

accounts of each Beneficiary State, the Escrow Agent, and the Company. The Escrow Agent

shall allocate all funds as designated by the Company and received by the Escrow Agent

among the following Beneficiary States, each with its own separate, segregated sub-account

and own sub-account number, as follows:

Sub-account number 1 (Name of Beneficiary State)

Sub-account number 2 (Name of Beneficiary State)

Sub-account number 3 (Name of Beneficiary State)

Sub-account number 4 (Name of Beneficiary State)

Sub-account number 5 (Name of Beneficiary State)

Sub-account number 6 (Name of Beneficiary State)

Sub-account number 7 (Name of Beneficiary State)

Sub-account number 8 (Name of Beneficiary State)

Sub-account number 9 (Name of Beneficiary State)

Sub-account number 10 (Name of Beneficiary State)

(ii) The Escrow Agent shall place and hold such funds in such sub-account for

the benefit of the applicable Beneficiary State or any Releasing Party located or residing in

the applicable Beneficiary State. The Escrow Agent may further segregate a particular

Beneficiary State’s sub-account to identify the annual escrow payments for the same

Beneficiary State for purposes of release of funds from the same Beneficiary State’s sub-

account under Section 3(f)(iii).

(iii) Within the Account established under this Escrow Agreement, the Escrow

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Agent shall maintain a separate sub-account ledger for each Beneficiary State sufficient to

enable tracking of the principal amounts allocated to each of the Beneficiary States under this

Escrow Agreement and all dates, purposes, and amount of deposits, withdrawals, or interest

on each sub-account for each applicable Beneficiary State. The Escrow Agent may also

maintain within the Account a separate sub-account for the benefit of the Company to which

interest or appreciation on the principal (the “Interest Account”) may be deposited.

(iv) Upon written notice from the Company, the Escrow Agent shall establish

additional sub-accounts for additional Beneficiary States which shall be subject to the terms

and conditions of this Agreement.

(e) The Company shall receive the interest or other appreciation on the funds

deposited pursuant to Section 3 as earned. Whenever any interest or other funds are payable

under this Agreement to the Company, such payment shall be subject to the payment of

Escrow Agent’s fees, costs and expenses as provided in Section 9.

(f) The funds deposited pursuant to Section 3 shall be released from the applicable

Beneficiary State’s sub-account only under the following circumstances:

(i) To pay a judgment or settlement on any Released Claim brought

against the Company by the applicable Beneficiary State or by any Releasing Party located

or residing in the applicable Beneficiary State. Promptly after receiving a written request for

release of funds under this subsection and prior to any such release, the Escrow Agent shall

provide written notice to the Company, to the Releasing Party, and to the Attorney General

or Attorney General’s Designee of the applicable Beneficiary State as set forth and defined

in Section 13 herein. The notice shall specify in reasonable detail the amount of the funds to

be released, the payee and the basis for the requested release (which shall be provided to the

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Escrow Agent by the person requesting payment). The Company and the Attorney General

or Attorney General’s Designee of the applicable Beneficiary State as set forth in Section 13

whose sub-account would be reduced by the release of funds shall provide a written response

to the Escrow Agent with copies to each other, within thirty (30) calendar days from the date

of receipt of this notice. Should the Company or the applicable Beneficiary State timely

object in writing to a requested release of funds under this subsection, the Escrow Agent shall

not authorize the requested release of funds until such objection has been finally resolved.

If no objection is received, the Escrow Agent shall pay the Released Claim after the

expiration of the thirty (30) calendar day period. Funds shall be released from escrow from

the sub-account of the applicable Beneficiary State under this subsection (A) in the order in

which they were placed into the applicable Beneficiary State’s sub-account escrow and (B)

only to the extent and at the time necessary to make payments required under such judgment

or settlement; or

(ii) To the extent that the Company establishes, pursuant to subsection 3(g),

that the amount it was required to place into escrow in a particular year for the applicable

Beneficiary State was, depending on the law of such Beneficiary State, greater than either

(A) that State’s Allocable Share of the total payments that the Company would have been

required to make in that year had it been a Participating Manufacturer under the Master

Settlement Agreement (as determined pursuant to Section IX(i)(2) of the Master Settlement

Agreement, and before any of the adjustments or offsets described in Section IX(i)(3) of that

Agreement other than the Inflation Adjustment); or (B) the Master Settlement Agreement

payments, as determined pursuant to Section IX(I) of that Agreement including after final

determination of all adjustments, that the Company would have been required to make on

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account of such Units Sold in the Beneficiary State had it been a Participating Manufacturer

under the Master Settlement Agreement (in either case the difference being referred to herein

as the “Excess Amount”), such Excess Amount shall be released and revert back to the

Company. To the extent established, the Escrow Agent shall pay the Excess Amount to the

Company upon the joint written instructions of the Company and the Attorney General or

Attorney General’s Designee of the applicable Beneficiary State as set forth in Section 13

or upon entry of a final binding, non-appealable order of a court of competent jurisdiction

handling such matter after any appeal or any right of appeal has been exhausted; or

(iii) To the extent not released from escrow under subsections (i), or (ii),

funds shall be released from escrow and revert back to the Company twenty-five (25) years

after the date on which the applicable annual installments thereof were placed into escrow.

The Escrow Agent shall notify in writing the applicable Beneficiary State of the release of

such State’s funds at least thirty (30) days prior to the proposed date of such release of funds.

(g) In connection with the release from escrow provided for in subsection 3(f)(ii) of

this Escrow Agreement, the Company shall submit in writing to the Attorney General for the

applicable Beneficiary State the Company’s calculation establishing the Excess Amount. If

the applicable Beneficiary State and the Company cannot agree on the existence of an Excess

Amount, or the calculation of the Excess Amount, the dispute shall be resolved in a court of

competent jurisdiction located in the applicable Beneficiary State, or if the laws of any

Beneficiary State so require, then under the applicable Administrative Procedures Act of that

Beneficiary State.

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(h) When the Company has made the first deposit into a Qualified Escrow Fund for

the benefit of a Beneficiary State, the Escrow Agent shall notify the Attorney General of the

applicable Beneficiary State that the Qualified Escrow Fund has been established, and

provide to the Beneficiary State a copy of this Escrow Agreement along with all relevant

instructions from the Company and the amount of the deposit made for the Beneficiary State.

Thereafter, at any time upon the request of the applicable Beneficiary State and in any event

on an annual basis by April 30 of each year, the Escrow Agent shall provide written

information to each Beneficiary State on the amount of deposits and withdrawals made by

the Company for the applicable Beneficiary State’s benefit under the Escrow Agreement

including the identity of the payor(s) or payee(s), and the date(s), purpose, and dollar

amount(s) of any deposits and withdrawals.

(i) All amounts credited to an Account or sub-account, except for interest accrued on

the funds which shall be payable to the Company as earned, shall be retained in such

Account or sub-account, until disbursed therefrom in accordance with the provisions of this

Escrow Agreement pursuant to subsections 3(e), 3(f), or Section 8.

(j) Notwithstanding anything to the contrary contained herein, the Escrow Agent shall

not be authorized to make distributions for any particular Released Claims in excess of the

principal amount held hereunder for the benefit of the applicable Beneficiary State making

the claim (or the Beneficiary State in which the Releasing Party making the claim is located

or resides). The Escrow Agent is prohibited from: (i) exercising set-off, recoupment, or any

other claim or right against any of the principal funds escrowed pursuant to this Escrow

Agreement; or (ii) accessing, or allowing the Company to access, the Account or sub-account

of one Beneficiary State to remove or transfer funds to the Account or sub-account of another

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Beneficiary State without the written consent of the Company and the Attorneys General of

all Beneficiary States involved in the request for transfer of funds; provided however, that

nothing contained herein shall prohibit the release or transfer of any funds from the

Company’s Interest Account to another Account or sub-account upon written direction of the

Company.

SECTION 4. Failure of Escrow Agent to Receive Instructions.

Except as to responses or objections to notice of a request for payment on any

Released Claim, which shall be governed by subsection 3(f)(i), in the event that the Escrow

Agent fails to receive any written instructions contemplated by this Escrow Agreement, the

Escrow Agent shall refrain from taking any action required to be taken under any section of

this Escrow Agreement pursuant to written instructions until such written instructions are

received by the Escrow Agent. In so refraining, the Escrow Agent shall be fully protected

from any liability arising out of its inaction.

SECTION 5. Investment of Funds by the Escrow Agent.

The Escrow Agent shall invest and reinvest all amounts from time to time credited to

the Accounts in (a) the Escrow Agent’s U.S. Treasury money market fund; (b) direct

obligations of, or obligations the principal and interest on which are unconditionally

guaranteed by, the United States of America; (c) repurchase agreements fully collateralized

by securities described in clause (b) above; (d) money market accounts maturing within 30

days of the acquisition thereof and issued by a bank or trust company organized under the

laws of the United States of America or of any of the 50 states thereof (a “United States

Bank”) and having combined capital, surplus and undistributed profits in excess of

$500,000,000; or (e) demand deposits with any United States Bank having combined capital,

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surplus and undistributed profits in excess of $500,000,000. To the extent practicable, monies

credited to any Account or sub-account shall be invested in such a manner so as to be

available for use at the times when monies are expected to be disbursed by the Escrow Agent

and charged to such Account or sub-account. In choosing among the investment options

described in clauses (a) through (e) above, the Escrow Agent shall comply with any written

instructions received from time to time from the Company if mutually agreed upon by

Escrow Agent and Company. In the absence of such written instructions or mutual agreement

on such instructions, the Escrow Agent shall invest such sums in accordance with clause (a)

above.

SECTION 6. Duties and Liabilities of Escrow Agent.

The Escrow Agent shall have no duty or obligation hereunder other than to take such

specific actions as are required of it from time to time by the provisions of this Escrow

Agreement and it shall incur no liability hereunder or in connection herewith for anything

whatsoever other than any liability resulting from its own gross negligence or willful

misconduct or unlawful acts or omissions. The only duties and responsibilities of the Escrow

Agent shall be the duties and obligations specifically set forth in this Escrow Agreement. The

Escrow Agent has no duty to perform any calculations with respect to the proper amount to

be deposited by the Company in any given year or to insure that the Company deposits the

proper amount in any given year.

SECTION 7. Indemnification of Escrow Agent.

The Company shall indemnify, hold harmless and defend the Escrow Agent from and

against any and all losses, claims, liabilities, and reasonable expenses, including the

reasonable fees of its counsel, specifically including in-house counsel fees, which it may

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suffer or incur in connection with the performance of its duties and obligations under this

Escrow Agreement and including any action taken under Section 19 hereof, except for those

losses, claims, liabilities and expenses resulting solely and directly from its own gross

negligence, willful misconduct, or unlawful act or omission. The Escrow Agent may seek the

advice of counsel at any time and such reasonable attorney fees shall be in addition to the

administrative fees charged by the Escrow Agent for serving as Escrow Agent and the

Escrow Agent may charge such costs against the interest which accrues on the Escrow Funds

if not otherwise paid by the Company, but the principal in any or all of the Beneficiary

States’ Accounts and sub-accounts shall not be charged, used as an offset or otherwise

encumbered by the Escrow Agent or the Company.

SECTION 8. Resignation or Removal of Escrow Agent.

The Escrow Agent may resign at any time by giving the Company and all of the

Attorneys General of the Beneficiary States covered by this Escrow Agreement ninety (90)

days’ prior written notice of such intention. The Company may remove the Escrow Agent,

as such, by giving the Escrow Agent and all of the Attorneys General of the Beneficiary

States covered by this Escrow Agreement ninety (90) days’ prior written notice of such

removal. Upon the effective date of its resignation or removal, the Escrow Agent will deliver

the Escrow Funds held hereunder only to such successor escrow agent directed by the written

instructions of the Company. After the effective date of its resignation or removal, the

Escrow Agent shall have no duty with respect to the Escrow Funds except to hold such

property in safekeeping and to deliver same to its successor or as is directed in writing by the

Company. If no successor escrow agent has been appointed by the Company within ninety

(90) days from the date such notice of resignation or removal has been given, the Escrow