Exhibit 99.3
EXHIBIT 2
MFN ESCROW AGREEMENT
This escrow agreement (the "MFN Escrow Agreement") is entered into as
of _________, 1998 by and among Xxxxxx Xxxxxx Incorporated, X.X. Xxxxxxxx
Tobacco Company, Xxxxx & Xxxxxxxxxx Tobacco Corporation and Lorillard Tobacco
Company (collectively and severally, "MFN Settling Defendants" and each
individually a "MFN Settling Defendant"), the State of Florida and _____ _____
[Bank], as escrow agent (the "MFN Escrow Agent").
WITNESSETH:
WHEREAS, the State of Florida and Settling Defendants entered into a
comprehensive settlement agreement and release as of August 27, 1997 (the
"Settlement Agreement"), setting forth the terms and conditions of an agreement
to settle and resolve with finality all present and future claims relating to
the subject matter of the litigation entitled State of Florida v. American
Tobacco Co., No. 95-1466 AH (Fifteenth Jud. Cir., Palm Beach County) (the
"Action"), in the Circuit Court of Palm Beach County, Florida (the "Court");
WHEREAS, the State of Florida and Settling Defendants entered into a
Stipulation of Amendment to Settlement Agreement and for Entry of Consent Decree
(the "Stipulation of Amendment") on September 11, 1998, paragraph 17 of which
provides for Court approval of the Stipulation of Amendment;
WHEREAS, paragraph 5 of the Stipulation of Amendment provides that, on
the dates specified therein, each MFN Settling Defendant shall severally pay to
the State of Florida, pro rata in proportion to its Market Share, its respective
share of the amounts indicated for each date;
WHEREAS, paragraph 17 of the Stipulation of Amendment further provides
that all payments described in paragraphs 5 and 6 of the Stipulation of
Amendment shall be paid into a special escrow account in an appropriate New York
City bank (and if so paid shall remain in said escrow account) until such time
as (1) the 30 day period for appeal or to seek review of the Court's order
approving the Stipulation of Amendment has expired without the filing of any
notice of appeal or petition for review; or (2) in the event of any such appeal
or petition, the appeal or the petition has been dismissed or the Court's order
has been affirmed in all material respects by the court of last resort to which
such
appeal or petition has been taken and such dismissal or affirmance has become no
longer subject to further appeal or review (the "Availability Date"); and
WHEREAS, the parties hereto believe that at least one of the payments
described in the preceding paragraphs may become due prior to the Availability
Date:
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Appointment of MFN Escrow Agent.
MFN Settling Defendants and the State of Florida hereby appoint the MFN
Escrow Agent to act as escrow agent on the terms and conditions set forth
herein, and the MFN Escrow Agent hereby accepts such appointment on such terms
and conditions.
SECTION 2. Deposit.
In the event that any payment pursuant to paragraph 5 or 6 of the
Stipulation of Amendment becomes due on a date prior to the Availability Date,
each MFN Settling Defendant shall severally deliver to the MFN Escrow Agent in
immediately available funds such MFN Settling Defendant's respective share of
the payment in question (the sum of such shares being the "Initial Deposit").
Upon receipt, the MFN Escrow Agent shall deposit the Initial Deposit into a
separate escrow account established for such purpose and governed by the terms
of this MFN Escrow Agreement (the "MFN Escrow Account"). Any subsequent payment
pursuant to paragraph 5 or 6 of the Stipulation of Amendment that becomes due
prior to the Availability Date shall be delivered to the MFN Escrow Agent and
added to the Initial Deposit (the Initial Deposit and any subsequent payments
deposited into the MFN Escrow Account, including any payments of interest or
other income on investment of the MFN Escrow Amount or any portion thereof,
being the "MFN Escrow Amount") and shall be governed by the terms of this MFN
Escrow Agreement. All such deliveries of funds are subject to the right of MFN
Settling Defendants to obtain, pursuant to section 4(a) of this MFN Escrow
Agreement, prompt return of the entire MFN Escrow Amount (less appropriate
deductions for administrative fees and expenses, including taxes and other
related costs) in the event that the Stipulation of Amendment is cancelled or
terminated pursuant to paragraph 17 of the Stipulation of Amendment. The MFN
Escrow Amount shall be maintained, invested and disbursed by the MFN Escrow
Agent strictly in accordance with this MFN Escrow Agreement.
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SECTION 3. Investment of MFN Escrow Amount.
The MFN Escrow Agent shall invest and reinvest the MFN Escrow Amount in
either (i) direct obligations of, or obligations the principal and interest on
which are unconditionally guaranteed by, the United States of America (including
government-sponsored agencies) or the State of Florida; (ii) repurchase
agreements fully collateralized by securities of the kind specified in clause
(i) above; (iii) 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 a State thereof (a "United States Bank")
and having a combined capital surplus in excess of $250,000,000; or (iv) demand
deposits with any United States Bank or any federal savings and loan institution
having a combined capital surplus in excess of $250,000,000. Any loss on any
such investment, including, without limitation, any penalty for any liquidation
required to fund a disbursement, shall be borne pro rata by the parties in
proportion to their ultimate entitlement to the MFN Escrow Amount. The MFN
Escrow Agent's fees and all expenses, including taxes and other related costs,
shall, to the extent possible, be paid out of income earned. Whenever the MFN
Escrow Agent shall pay all or any part of the MFN Escrow Amount to any party as
provided herein, the MFN Escrow Agent shall also pay to such party all interest
and profits earned to the date of payment on such amount, less deductions for
fees and all expenses, including taxes and other related fees.
SECTION 4. Release of the MFN Escrow Amount.
After receipt, the MFN Escrow Agent shall deliver the MFN Escrow Amount
as set forth below:
(a) Following receipt of written notice signed by counsel for
the MFN Settling Defendants certifying that such notice has been
delivered by counsel for the MFN Settling Defendants to all parties
hereto and stating that the Court has not approved the Stipulation of
Amendment as provided in paragraph 17 thereof or that the Court's
approval has been modified in any respect unacceptable to any of the
parties thereto or set aside on appeal, the MFN Escrow Agent shall upon
the expiration of ten (10) business days following the MFN Escrow
Agent's receipt of such notice disburse the entire MFN Escrow Amount
(including any interest thereon, as provided in Section 3) to the MFN
Settling Defendants on the same pro rata basis as such funds were
contributed to the MFN Escrow Account.
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(b) Upon receipt of (i) written notice signed by counsel for
the MFN Settling Defendants and counsel for the State of Florida
stating that the Availability Date has occurred and (ii) an order of
the Court pursuant to applicable Florida law so directing, the MFN
Escrow Agent shall proceed to distribute the MFN Escrow Amount in
accordance with such Court order.
(c) For its services, the MFN Escrow Agent shall receive fees
in accordance with the MFN Escrow Agent's customary fees in similar
matters. All such fees shall constitute a direct charge against the MFN
Escrow Amount, but the MFN Escrow Agent shall not debit the MFN Escrow
Amount for any such charge until it shall have presented its statement
to and received approval by counsel for the MFN Settling Defendants and
counsel for the State of Florida, which approval shall not be
unreasonably withheld. Such approval shall be deemed given if the MFN
Escrow Agent has not received written objections from either counsel
for MFN Settling Defendants or counsel for the State of Florida within
30 days after presentment of its statement. Such fees and all expenses
charged against the MFN Escrow Amount shall, to the extent possible, be
paid out of interest earned. In the event that counsel for MFN Settling
Defendants or counsel for the State of Florida objects in writing to
such fees, the MFN Escrow Agent shall not debit the MFN Escrow Amount
except upon a court order approving such fees.
SECTION 5. Substitute Form W-9; Qualified Settlement Fund.
Each of the signatories to this MFN Escrow Agreement shall provide the
MFN Escrow Agent with a correct taxpayer identification number on a substitute
Form W-9 within 90 days of the date hereof and indicate thereon that it is not
subject to backup withholding. It is anticipated that the MFN Escrow Account
established pursuant to this MFN Escrow Agreement shall be treated as a
Qualified Settlement Fund for federal tax purposes pursuant to Treas. Reg.
Section 1.468B-1.
SECTION 6. Termination of MFN Escrow Account.
This MFN Escrow Agreement (other than the MFN Escrow Agent's right to
indemnification set forth in Section 7) shall terminate when the MFN Escrow
Agent shall have released from the MFN Escrow Account all amounts pursuant to
Section 4 hereof.
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SECTION 7. MFN Escrow Agent.
(a) The MFN 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 under the provisions hereof, and it shall incur no
liability hereunder or in connection herewith for anything whatsoever
other than as a result of its own negligence or willful misconduct. In
the event the MFN Escrow Agent fails to receive the instructions
contemplated by Section 4 hereof or receives conflicting instructions,
the MFN Escrow Agent shall be fully protected in refraining from acting
until such instructions are received or such conflict is resolved by
written agreement or court order.
(b) MFN Settling Defendants, on the same pro rata basis as the
funds constituting the MFN Escrow Amount were contributed to the MFN
Escrow Account, agree to indemnify, hold harmless and defend the MFN
Escrow Agent from and against any and all losses, claims, liabilities
and reasonable expenses, including the reasonable fees of its counsel,
which it may suffer or incur hereunder or in connection herewith prior
to the Availability Date, except such as shall result solely and
directly from its own negligence or willful misconduct. The MFN Escrow
Agent shall not be bound in any way by any agreement or contract
between MFN Settling Defendants and the State of Florida (whether or
not the MFN Escrow Agent has knowledge thereof) and the only duties and
responsibilities of the MFN Escrow Agent shall be to hold and invest
the MFN Escrow Amount received hereunder and to release such MFN Escrow
Amount in accordance with the terms of this MFN Escrow Agreement.
(c) The MFN Escrow Agent may resign at any time by giving
written notice thereof to the other parties hereto, but such
resignation shall not become effective until a successor MFN Escrow
Agent, selected by the MFN Settling Defendants and agreeable to the
State of Florida, shall have been appointed and shall have accepted
such appointment in writing. If an instrument of acceptance by a
successor MFN Escrow Agent shall not have been delivered to the MFN
Escrow Agent within 30 days after the giving of such notice of
resignation, the resigning MFN Escrow Agent may, at the expense of MFN
Settling Defendants and the State of Florida (to be shared equally
between the State of Florida and the MFN Settling Defendants), petition
the Court for the appointment of a successor MFN Escrow Agent.
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(d) Upon the Availability Date having occurred, provided that
MFN Settling Defendants have performed all of their obligations
required to be performed prior to the Availability Date, all duties and
obligations of MFN Settling Defendants hereunder shall cease, with the
exception of any indemnification obligation of MFN Settling Defendants
incurred prior to the Availability Date.
SECTION 8. Miscellaneous.
(a) Notices. All notices or other communications to any party
or other person hereunder shall be in writing (which shall include
telex, telecopy or similar writing) and shall be given to the
respective parties or persons at the following addresses. Any party or
person may change the name and address of the person designated to
receive notice on behalf of such party or person by notice given as
provided in this paragraph.
State of Florida:
Xxx. Xxxxxx X. Xxxxxxxxxxx
Attorney General's Xxxxxx
Xxx Xxxxxxx
Xxxxx XX00
Xxxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxx, Esq.
Ness, Motley, Loadholt, Xxxxxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
MFN Settling Defendants:
For Xxxxxx Xxxxxx Incorporated:
Xxxxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxx Incorporated
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
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With a copy to:
Xxxxx X. Xxxxxx
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
For X.X. Xxxxxxxx Tobacco Company:
Xxxxxxx X. Xxxxx
X.X. Xxxxxxxx Tobacco Company
000 Xxxxx Xxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
For Xxxxx & Xxxxxxxxxx Tobacco Corporation:
Xxxxxxx Xxxxxx
Xxxxx & Xxxxxxxxxx Tobacco Corporation
200 Xxxxx & Xxxxxxxxxx Tower
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
F. Xxxxxxx Xxxxx
Xxxxx & Xxxxxxxxxx Tobacco Corporation
200 Xxxxx & Xxxxxxxxxx Tower
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
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For Lorillard Tobacco Company:
Xxxxxx X. Xxxxxxx
Lorillard Tobacco Company
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
MFN Escrow Agent:
[Bank]
[Bank Address]
Phone:
Fax:
Wire Transfer Instructions:
ABA #:
Account #:
Account Name:
(b) Successors and Assigns. The provisions of this MFN Escrow
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
(c) Governing Law. This MFN Escrow Agreement shall be
construed in accordance with and governed by the laws of the State of
Florida, without regard to the conflicts of law rules of such state.
(d) Jurisdiction and Venue. The parties hereto irrevocably and
unconditionally submit to the jurisdiction of the United States
District Court for the Southern District of New York for purposes of
any suit, action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this MFN Escrow Agreement, and the
parties hereto agree not to commence any such suit, action or
proceeding except in such court. The parties hereto hereby irrevocably
and unconditionally waive any objection to the laying of venue of any
such suit, action or proceeding in such court and hereby further
irrevocably waive and agree not to plead or claim in such court that
any such suit, action or proceeding has been brought in an inconvenient
forum.
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(e) Definitions. Terms used herein that are defined in the
Settlement Agreement or the Stipulation of Amendment are, unless
otherwise defined herein, used in this MFN Escrow Agreement as defined
in the Settlement Agreement or the Stipulation of Amendment, as
appropriate.
(f) Amendments. This MFN Escrow Agreement may be amended only
by written instrument executed by all parties hereto. The waiver of any
rights conferred hereunder shall be effective only if made by written
instrument executed by the waiving party. The waiver by any party of
any breach of this MFN Escrow Agreement shall not be deemed to be or
construed as a waiver of any other breach, whether prior, subsequent or
contemporaneous, of this MFN Escrow Agreement.
(g) Counterparts; Effectiveness. This MFN Escrow Agreement may
be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This MFN Escrow Agreement shall become
effective when each party hereto shall have signed a counterpart
hereof. Delivery by facsimile of a signed agreement shall be deemed
delivery for purposes of acknowledging acceptance hereof; however, an
original executed signature page must promptly thereafter be appended
to this MFN Escrow Agreement, and an original executed agreement shall
promptly thereafter be delivered to each party hereto.
(h) Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction and
interpretation hereof.
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IN WITNESS WHEREOF, the parties have executed this MFN Escrow Agreement
as of the day and year first hereinabove written.
STATE OF FLORIDA
By:
------------------------------
Xxxxxx X. Xxxxxxxxxxx
Attorney General
XXXXXX XXXXXX INCORPORATED
By:
------------------------------
Xxxxx X. Xxxxxx
Counsel
X.X. XXXXXXXX TOBACCO COMPANY
By:
------------------------------
Xxxxxx X. Xxxxxx
Counsel
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XXXXX & XXXXXXXXXX TOBACCO
CORPORATION
By:
------------------------------
Xxxxxxx X. Xxxxxx
Counsel
LORILLARD TOBACCO COMPANY
By:
------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President &
General Counsel
_________________ [BANK],
as MFN Escrow Agent
By:
------------------------------
Name:
Title:
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