ModelEscrowAgreement.docx

ModelEscrowAgreement.docx

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ModelEscrowAgreement

ESCROWAGREEMENT

ThisEscrowAgreementismadeandenteredintothisdayof,200,by

（the“Company”）and（the“EscrowAgent”）.

WITNESSETH:

WHEREAS,anumberofStateshaveenactedNon-ParticipatingManufacturerStatutes（"NPMStatutes"）thatrequireTobaccoProductManufacturersthathavenotenteredintotheMasterSettlementAgreementtoestablishQualifiedEscrowFunds,and

WHEREAS,theCompanyisaTobaccoProductManufacturerthathasnotenteredintotheMasterSettlementAgreementandintendstocomplywithsuchNPMStatutesbyestablishingQualifiedEscrowFundswithrespecttostateswheretheCompany’stobaccoproductsaresold.

NOWTHEREFORE,inconsiderationofthemutualpromisescontainedhereinandothergoodandvaluableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged,theundersignedpartiesheretoagreeasfollows:

SECTION1.AppointmentofEscrowAgent.

TheCompanyherebyappointstoserveasEscrowAgentunderthisEscrowAgreementonthetermsandconditionssetforthherein.TheEscrowAgentwarrantsthatitisafederallyorstatecharteredfinancialinstitutionorganizedandexistingunderthelawsoftheStateof,havingassetsofatleastonebilliondollars（$1,000,000,000）,andisnotanAffiliateofanyTobaccoProductManufacturerasdefinedintheNPMStatute.Byitsexecutionhereof,theEscrowAgentherebyacceptssuchappointmentandagreestoperformitsdutiesandobligationssetforthherein.

SECTION2.Definitions.

（a）CapitalizedtermsusedinthisEscrowAgreementandnototherwisedefinedhereinorintheBeneficiaryState’sNPMStatutesshallhavethemeaninggiventosuchtermsintheMasterSettlementAgreement.

（b）“Account”meansanescrowaccountconsistingofsegregatedsub-accountsforeachBeneficiaryStatemaintainedbytheEscrowAgentasaQualifiedEscrowFundinwhichthefundsrequiredtobeplacedinaQualifiedEscrowFundaredepositedincompliancewiththisEscrowAgreement.

（c）“BeneficiaryState”meansastatethatisapartytotheMasterSettlementAgreementforwhosebenefitfundsarebeingescrowedpursuanttothisEscrowAgreement.ForpurposesofthisEscrowAgreement,theinitialBeneficiaryStatesarethoselistedinAttachment“A”heretowhichisherebyincorporatedhereinbyreference,andthoseotherStatesthattheCompanyandtheEscrowAgentmayhereafteragreetoincludeasBeneficiaryStates.EscrowAgentisauthorizedtoincludeotherBeneficiaryStatesunderthisAgreementbywrittennoticefromtheCompanyandisfurtherauthorizedtoreviseAttachment“A”fromtimetotimetoreflectadditionsasinstructedbytheCompany.

（d）“MasterSettlementAgreement”meansthesettlementagreement（andrelateddocuments）enteredintoonNovember23,1998bynumerousStatesandmajorUnitedStatesTobaccoProductManufacturers,acopyofwhichhasbeenprovidedtotheEscrowAgentbytheCompany.

（e）“NPMStatutes”or“NPMStatute”arethelawsenactedineachoftheStatesthatarepartiestotheMasterSettlementAgreementandthatrequireaNon-ParticipatingManufacturertoestablishaQualifiedEscrowFund.TheCompanyshallprovideacopyoftheNPMStatutesforeachBeneficiaryStateunderthisEscrowAgreementtotheEscrowAgent.

（f）“QualifiedEscrowFund”meansanescrowarrangementwithaU.S.federalorU.S.statecharteredfinancialinstitutionhavingnoaffiliationwithanyTobaccoProductManufacturer

andhavingassetsofatleastonebilliondollars（$1,000,000,000）wheresucharrangementrequiresthatthefinancialinstitutionholdtheescrowedfunds’principalforthebenefitofReleasingPartiesandprohibitstheTobaccoProductManufacturerplacingthefundsintoescrowfromusing,accessingordirectingtheuseofthefunds’principalexceptasconsistentwiththeapplicableNPMStatutes.

SECTION3.TheEscrowFundandReleaseofFundsTherefrom.

（a）FromtimetotimetheCompanyshalltendertotheEscrowAgentfordepositintheAccountthefundswhichtheCompanyisrequiredtoplaceintoaQualifiedEscrowFundpursuanttotheNPMStatutesofeachBeneficiaryState.

（b）AllfundsreceivedbytheEscrowAgentpursuanttothetermsofthisEscrowAgreementshallbeheld,investedanddisbursedinaccordancewiththetermsandconditionsofthisEscrowAgreementandtheNPMStatutes.

（c）ForeachBeneficiaryStateinwhichtheCompany’stobaccoproductsweresoldafterenactmentofthatstate’sNPMStatute,byApril15oftheyearfollowingeachyearofsuchenactment,theCompanyshalldelivertotheEscrowAgentfordepositpursuanttothissectionthefollowingamounts（assuchamountsareadjustedforinflationpursuanttoExhibitCoftheMasterSettlementAgreement）–1999:

$.0094241perUnitSold;2000:

$.0104712perUnitSold;foreachof2001and2002:

$.0136125perUnitSold;foreachof2003through2006:

$.0167539perUnitSold;foreachof2007andeachyearthereafter:

$.0188482perUnitSold.FortheyearinwhichtheNPMStatutewasfirstenacted,theamountduebyApril15ofthefollowingyearshallbebasedonlyonthoseUnitsSoldonandafterthestatute’seffectivedate.

（d）SegregatedMulti-StateSubaccounts:

（i）TheCompanyshalldesignatetotheEscrowAgenttheamounttobeplacedintheAccountandeachsub-accountforeachBeneficiaryStatebasedontheUnitsSoldthereininaccordancewiththeapplicableBeneficiaryState’sNPMStatute.AllfundsshallbeheldbytheEscrowAgentinsub-accountsseparateandapartfromallotherfundsandsub-

accountsofeachBeneficiaryState,theEscrowAgent,andtheCompany.TheEscrowAgentshallallocateallfundsasdesignatedbytheCompanyandreceivedbytheEscrowAgentamongthefollowingBeneficiaryStates,eachwithitsownseparate,segregatedsub-accountandownsub-accountnumber,asfollows:

Sub-accountnumber1（NameofBeneficiaryState）Sub-accountnumber2（NameofBeneficiaryState）Sub-accountnumber3（NameofBeneficiaryState）Sub-accountnumber4（NameofBeneficiaryState）Sub-accountnumber5（NameofBeneficiaryState）Sub-accountnumber6（NameofBeneficiaryState）Sub-accountnumber7（NameofBeneficiaryState）Sub-accountnumber8（NameofBeneficiaryState）Sub-accountnumber9（NameofBeneficiaryState）Sub-accountnumber10（NameofBeneficiaryState）

（ii）TheEscrowAgentshallplaceandholdsuchfundsinsuchsub-accountforthebenefitoftheapplicableBeneficiaryStateoranyReleasingPartylocatedorresidingintheapplicableBeneficiaryState.TheEscrowAgentmayfurthersegregateaparticularBeneficiaryState’ssub-accounttoidentifytheannualescrowpaymentsforthesameBeneficiaryStateforpurposesofreleaseoffundsfromthesameBeneficiaryState’ssub-accountunderSection3（f）（iii）.

（iii）WithintheAccountestablishedunderthisEscrowAgreement,theEscrowAgentshallmaintainaseparatesub-accountledgerforeachBeneficiaryStatesufficienttoenabletrackingoftheprincipalamountsallocatedtoeachoftheBeneficiaryStatesunderthisEscrowAgreementandalldates,purposes,andamountofdeposits,withdrawals,orinterestoneachsub-accountforeachapplicableBeneficiaryState.TheEscrowAgentmayalsomaintainwithintheAccountaseparatesub-accountforthebenefitoftheCompanytowhichinterestorappreciationontheprincipal（the“InterestAccount”）maybedeposited.

（iv）UponwrittennoticefromtheCompany,theEscrowAgentshallestablishadditionalsub-accountsforadditionalBeneficiaryStateswhichshallbesubjecttothetermsandconditionsofthisAgreement.

（e）TheCompanyshallreceivetheinterestorotherappreciationonthefundsdepositedpursuanttoSection3asearned.WheneveranyinterestorotherfundsarepayableunderthisAgreementtotheCompany,suchpaymentshallbesubjecttothepaymentofEscrowAgent’sfees,costsandexpensesasprovidedinSection9.

（f）ThefundsdepositedpursuanttoSection3shallbereleasedfromtheapplicableBeneficiaryState’ssub-accountonlyunderthefollowingcircumstances:

（i）TopayajudgmentorsettlementonanyReleasedClaimbroughtagainsttheCompanybytheapplicableBeneficiaryStateorbyanyReleasingPartylocatedorresidingintheapplicableBeneficiaryState.Promptlyafterreceivingawrittenrequestforreleaseoffundsunderthissubsectionandpriortoanysuchrelease,theEscrowAgentshallprovidewrittennoticetotheCompany,totheReleasingParty,andtotheAttorneyGeneralorAttorneyGeneral’sDesigneeoftheapplicableBeneficiaryStateassetforthanddefinedinSection13herein.Thenoticeshallspecifyinreasonabledetailtheamountofthefundstobereleased,thepayeeandthebasisfortherequestedrelease（whichshallbeprovidedtotheEscrowAgentbythepersonrequestingpayment）.TheCompanyandtheAttorneyGeneralorAttorneyGeneral’sDesigneeoftheapplicableBeneficiaryStateassetforthinSection13whosesub-accountwouldbereducedbythereleaseoffundsshallprovideawrittenresponsetotheEscrowAgentwithcopiestoeachother,withinthirty（30）calendardaysfromthedateofreceiptofthisnotice.ShouldtheCompanyortheapplicableBeneficiaryStatetimelyobjectinwritingtoarequestedreleaseoffundsunderthissubsection,theEscrowAgentshallnotauthorizetherequestedreleaseoffundsuntilsuchobjectionhasbeenfinallyresolved.Ifnoobjectionisreceived,theEscrowAgentshallpaytheReleasedClaimaftertheexpirationofthethirty（30）calendardayperiod.Fundsshallbereleasedfromescrowfromthesub-accountoftheapplicableBeneficiaryStateunderthissubsection（A）intheorderinwhichtheywereplacedintotheapplicableBeneficiaryState’ssub-accountescrowand（B）onlytotheextent