"Escrow Agreement Form" - Delaware

Escrow Agreement Form is a legal document that was released by the Delaware Department of Justice - a government authority operating within Delaware.

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ESCROW AGREEMENT
This Escrow Agreement is made and entered into this _____ day of _______, 201_, 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 chartered financial institution organized and existing under the laws of the United
States and/or a 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.
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ESCROW AGREEMENT
This Escrow Agreement is made and entered into this _____ day of _______, 201_, 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 chartered financial institution organized and existing under the laws of the United
States and/or a 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.
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SECTION 2. Definitions.
(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.
(c) “Beneficiary State” means a state that is a party to the Master Settlement 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 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
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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.
(c) For each Beneficiary State in which the Company’s tobacco products were sold 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 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-
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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
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.
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(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 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
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