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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 21, 2001
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LOEWS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-6541 13-2646102
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
667 Madison Avenue, New York, N.Y. 10021-8087
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 521-2000
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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Page 1
Item 5. Other Events.
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On May 21, 2001, Lorillard Tobacco Company, an indirect wholly owned
subsidiary of Registrant, deposited $100 million into an escrow account
established pursuant to the Escrow Agreement (First), dated as of May 16,
2001, entered into in accordance with the terms of the Stipulation and Agreed
Order filed as Exhibit 99.2 to Registrant's Current Report on Form 8-K, dated
May 7, 2001. A copy of such escrow agreement is filed herewith as Exhibit
99.1.
Item 7. Financial Statements and Exhibits.
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(a) Exhibits.
Exhibit 99.1 Escrow Agreement (First)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LOEWS CORPORATION
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(Registrant)
Dated: May 22, 2001 By: /s/ Barry Hirsch
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Barry Hirsch,
Senior Vice President,
Secretary and General
Counsel
Page 2
Exhibit 99.1
ESCROW AGREEMENT
(FIRST)
by and among
PLAINTIFFS AND PLAINTIFF CLASS IN
ENGLE v. R.J. REYNOLDS TOBACCO CO.,
----- -------------------------
CASE NO. 94-08723 CA 22 (Kaye) (Fla. Cir. Ct.),
PHILIP MORRIS INCORPORATED,
LORILLARD TOBACCO CO.,
LIGGETT GROUP INC.,
and
THE BANK OF NEW YORK
Dated as of May 16, 2001
This ESCROW AGREEMENT, dated as of the 16th day of May, 2001 (this
"Escrow Agreement"), is by and among the plaintiffs and the plaintiff class
that has been certified in Engle v. R.J. Reynolds Tobacco Co., Case No. 94-
----- -------------------------
08723 CA 22 (Fla. Cir. Ct.) (the "Action," and such plaintiffs and such
plaintiff class collectively, the "Class"), PHILIP MORRIS INCORPORATED
("Philip Morris"), LORILLARD TOBACCO CO. ("Lorillard"), LIGGETT GROUP INC.
("Liggett," and together with Philip Morris and Lorillard, the "Contributing
Defendants"), and THE BANK OF NEW YORK (the "Escrow Agent").
WHEREAS, on November 3, 2000, the Eleventh Judicial Circuit Court, Dade
County, Florida (the "Court") entered a judgment in the Action against each of
the Contributing Defendants;
WHEREAS, the Class, through its counsel identified in the signature
blocks to this Agreement ("Class Counsel"), and the Contributing Defendants
have entered into a Stipulation and Agreed Order Regarding Stay of Execution
Pending Review and Related Matters (the "Stipulation") and the Court has
approved such Stipulation and adopted it as an order of the Court;
WHEREAS, the Class and the Contributing Defendants agree that this
Agreement is substantially similar to the form of the Escrow Agreement
attached as Exhibit A to the Stipulation; and
WHEREAS, this is therefore the "First Escrow Agreement" referred to in
the Stipulation;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and in the Stipulation, the parties hereto agree as follows:
SECTION 1. Appointment of Escrow Agent. The Class and the Contributing
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Defendants hereby appoint The Bank of New York to serve as Escrow Agent under
this Agreement on the terms and conditions set forth herein, and the Escrow
Agent, by its execution hereof, hereby accepts such appointment and agrees to
perform the duties and obligations of the Escrow Agent as set forth herein.
SECTION 2. Defined Terms. As used in this Agreement, the following
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terms shall have the meanings specified in this Section 2 (it being understood
that defined terms in this Agreement shall include in the singular number the
plural and in the plural the singular):
"Account" shall have the meaning specified therefor in Section 3(c).
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"Agreement" shall mean this Escrow Agreement (First), as the
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same may be amended, modified or supplemented.
"Authorized Officer" shall mean a person authorized to sign
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notices, instructions and other communications on behalf of a
Contributing Defendant as evidenced by an authorization certificate in
the form of Exhibit 2 delivered by such Contributing Defendant to the
Escrow Agent. A Contributing Defendant may amend its authorization
certificate from time to time by delivering a new authorization
certificate in the form of
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Exhibit 2 to the Escrow Agent, and each new such authorization
certificate shall supersede all prior authorization certificates from
such Contributing Defendant.
"Business Day" shall mean any day excluding Saturday, Sunday
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and any day which shall be in the City of New York, New York or the City
of Miami, Florida a legal holiday or a day on which banking institutions
are authorized by law or other governmental actions to close.
"Class Counsel" shall have the meaning specified therefor in
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the WHEREAS clauses above.
"Class Deposited Funds" shall mean the funds deposited
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pursuant to Section 3(a) and all Income earned thereon, less all amounts
from time to time disbursed therefrom in accordance with this Agreement.
"Completion of Review" shall have the meaning specified
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therefor in the Stipulation.
"Court" shall have the meaning specified therefor in the
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WHEREAS clauses above.
"Eligible Money Market Funds" shall mean money market mutual
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funds, the investments of which may include but are not limited to
marketable obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, bank instruments, corporate debt
securities issued by U.S. or foreign companies, commercial paper, demand
instruments, adjustable rate obligations, asset-backed securities,
restricted securities and fully collateralized repurchase agreements,
provided that any such money market mutual fund shall (a) be subject to
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the requirements of the Investment Company Act of 1940, as amended, (b)
have net assets of not less than $2,500,000,000 and (c) have a rating
from Standard & Poor's of not less than "AAA."
"Income" shall mean all interest, profits and other
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investment income earned on any Class Deposited Funds.
"Judgment" shall have the meaning specified therefor in the
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Stipulation.
"Order" shall mean a copy of an order of the Court,
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certified as accurate and complete by the Clerk of the Court.
"Relevant Account" shall have the meaning specified therefor
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in Section 3(c).
"Relevant Contributing Defendant" shall have the meaning
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specified therefor in Section 3(c).
"Relevant Income Period" shall mean with respect to each (a)
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April 10 Tax Disbursement Payment Date, the immediately preceding
December 1 through March 31 period, (b) June 10 Tax Disbursement Payment
Date, the immediately preceding April 1 through May 31 period, (c)
September 10 Tax Disbursement Payment Date, the
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immediately preceding June 1 through August 31 period, and (d) December
10 Tax Disbursement Payment Date, the immediately preceding September 1
through November 30 period.
"Stipulation" shall have the meaning specified therefor in
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the WHEREAS clauses above.
"Tax Disbursement Payment Date" shall mean each April 10,
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June 10, September 10 and December 10 (or, if any such day is not a
Business Day, the next following Business Day) occurring after the date
of this Agreement until such time as no Class Deposited Funds are held in
Escrow hereunder.
"Tax Rate" shall mean, with respect to (a) any disbursement
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on a Tax Disbursement Payment Date in accordance with Section 5, a
percentage equal to the sum of (i) the maximum marginal federal corporate
tax rate (such rate being 35% as of the date of this Agreement) in effect
on last day of the Relevant Income Period, plus (ii) 4.472 percentage
points, and (b) any disbursement in accordance with Section 6(a)(i), a
percentage equal to the sum of (x) the maximum marginal federal corporate
tax rate in effect on the date of such disbursement, plus (y) 4.472
percentage points. The Tax Rate as of the date of this Agreement is
39.472%.
SECTION 3. Escrow and Accounts. (a) On May 21, 2001, the Class shall
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deposit to the applicable account specified in Exhibit 3(a) the sum of
$606,273,077. The Class shall satisfy such obligation by directing the
Contributing Defendants to make such deposit in accordance with paragraph 3 of
the Stipulation. The Escrow Agent shall have no duty to solicit the Class
Deposited Funds.
(b) The Class Deposited Funds shall be held for the benefit of the Class
and disbursed only in accordance with the terms of this Agreement. The Class
Deposited Funds constitute the "Escrow" and shall be held by the Escrow Agent
separate and apart from all other funds and accounts of the Escrow Agent, the
Class and the Contributing Defendants.
(c) The Escrow Agent shall allocate the Class Deposited Funds deposited
in accordance with Section 3(a) among the following separate accounts (each,
an "Account"), representing the amount of the Class Deposited Funds deposited
by each Contributing Defendant on behalf of the Class, as follows:
Account Amount
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Account A $500,000,000
Account B $100,000,000
Account C $ 6,273,077
The term "Relevant Account" shall mean (i) with respect to Philip Morris,
Account A, (ii) with respect to Lorillard, Account B and (iii) with respect to
Liggett, Account C. The term "Relevant
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Contributing Defendant" shall mean (x) with respect to Account A, Philip
Morris, (y) with respect to Account B, Lorillard and (z) with respect to
Account C, Liggett.
(d) The Class Deposited Funds shall include the Income earned on such
funds, including all Income earned on Income. All Income earned on the Class
Deposited Funds in an Account shall be allocated to such Account.
(e) The Class shall deposit from time to time (i) into Account B, funds
in an amount equal to the interest and other investment income (the "Outside
Interest") paid by Lorillard for the benefit of the Class in accordance with
paragraph 3(b) of the Stipulation and (ii) into Account C, funds in an amount
equal to the Outside Interest paid by Liggett for the benefit of the Class in
accordance with paragraph 3(b) of the Stipulation. The Class shall satisfy
such obligation by directing Lorillard and Liggett to make such deposits in
accordance with paragraph 3(b) of the Stipulation. The Escrow Agent shall have
no duty to solicit the funds to be deposited in accordance with this Section
3(e) or to verify that the amount thereof complies with the requirements of
the Stipulation. Notwithstanding anything to the contrary in this Agreement,
all funds that are deposited in an Account shall be deemed to be Income earned
in such Account during the Relevant Income Period with respect to the Tax
Disbursement Payment Date next following the date of such deposit.
(f) The Class Deposited Funds shall be retained in the Escrow, and shall
not be disbursed to or accessible by the Court, the Class or any member
thereof, any Contributing Defendant, any of the representatives of any of the
foregoing, or any other person or entity, except in each case as provided in
Sections 5, 6 and 7.
SECTION 4. Investment of Escrow. (a) The Escrow Agent shall invest and
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reinvest all funds in each Account in either (i) direct obligations of, or
obligations the timely payment of principal and interest on which are fully
and unconditionally guaranteed by, the United States of America or any agency
thereof, maturing no more than 91 days after the date of acquisition thereof,
(ii) repurchase agreements fully collateralized by securities described in
clause (i) above and with a counterparty whose long-term debt securities are
rated "AA" or higher by Standard & Poor's and "Aa" or higher by Moody's,
and/or (iii) Eligible Money Market Funds, provided that the investment in any
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Eligible Money Market Fund shall not constitute more than 5% of the total
assets of such Eligible Money Market Fund at the time of investment.
(b) Each reference in this Agreement to a rating from Standard & Poor's
or Moody's shall be construed as an equivalent rating by another nationally
recognized credit rating agency of similar standing if neither of such
corporations is then in the business of rating debt and if one (but not both)
of Standard & Poor's and Moody's is not then in the business of rating debt
the required rating from the corporation still in such business shall suffice
for purposes of this Section 4.
(c) Obligations purchased as an investment of monies credited to any
Account shall be deemed at all times to be a part of such Account and the
Income earned or losses suffered with respect to such investments (including,
without limitation, any penalty for any liquidation of an investment required
to fund a disbursement to be charged to such Account) shall be credited or
charged, as the case may be, to, such Account.
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(d) In choosing among the investment options described in clauses (i),
(ii) and (iii) of Section 4(a) with respect to the Class Deposited Funds in
any Account, the Escrow Agent shall comply with any written instructions
received from time to time from Class Counsel. In the absence of such
instructions, the Escrow Agent shall invest in accordance with clause (i) of
Section 4(a).
(e) The Escrow Agent shall have the right to liquidate any investments
held hereunder in order to provide funds necessary to make required
disbursements under this Escrow Agreement. None of the Escrow Agent, the
Class, Class Counsel or any Contributing Defendant shall have any liability
for any loss sustained as a result of any investment made pursuant to the
instructions of the parties hereto or as a result of any liquidation of any
investment prior to its maturity in order to make a payment required under
this Agreement.
SECTION 5. Disbursements for Payment of Taxes. On each Tax Disbursement
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Payment Date, the Escrow Agent shall disburse from each Account to the
Relevant Contributing Defendant an amount equal to the product of the Tax Rate
and the Income earned (or deemed earned) in such Account during the Relevant
Income Period.
SECTION 6. Other Disbursements. (a) On the fifteenth Business Day after
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receipt by the Escrow Agent of an Order stating that Completion of Review has
occurred with respect to a Contributing Defendant and that such Contributing
Defendant is obligated to pay on account of the punitive damages component of
the Judgment an amount (whether zero or some larger amount) set forth in any
of paragraphs 12(a)(i)-(iv) of the Stipulation, the Escrow Agent shall, unless
a Protest is in effect:
(i) disburse from the Relevant Account to such Contributing
Defendant an amount equal to the product of the Tax Rate and the Income
earned (or deemed earned) in such Account during the period (A)
commencing on the day next following the end of the most recent Relevant
Income Period in respect of which a disbursement was made from such
Account pursuant to Section 5 and (B) ending on the date of the
disbursement from such Account pursuant to this Section 6(a)(i); and
(ii) disburse all other Class Deposited Funds in the Relevant
Account for the benefit of the Class.
(b) On the fifteenth Business Day after receipt by the Escrow Agent of
(i) an Order stating that the Stipulation has been canceled and terminated as
to a Contributing Defendant or (ii) an Order stating that the Stipulation is
cancelable and terminable at the option of a Contributing Defendant and a
written notice signed by such Contributing Defendant stating that such
Contributing Defendant is exercising such option, the Escrow Agent shall,
unless a Protest is in effect, disburse to such Contributing Defendant all
amounts in the Relevant Account. Following any such disbursement pursuant to
this Section 6(b), such Contributing Defendant shall be released from all of
its obligations under this Agreement and the Class shall be released from all
of its obligations under this Agreement to such Contributing Defendant;
provided, however, that such Contributing Defendant shall remain liable for
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any amounts owing by it under this Agreement to the Escrow Agent that are
attributable to a period on or prior to the date of such disbursement.
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(c) On the fifteenth Business Day after receipt by the Escrow Agent of an
Order stating that the Stipulation is cancelable and terminable at the option
of the Class in accordance with paragraph 27 of the Stipulation and a written
notice signed by Class Counsel stating that the Class is exercising such
option, the Escrow Agent shall, unless a Protest is in effect, disburse all
amounts in each Account to the Relevant Contributing Defendant. Following any
such disbursement pursuant to this Section 6(c), each Contributing Defendant
shall be released from all of its obligations under this Agreement and the
Class shall be released from all of its obligations under this Agreement;
provided, however, that the Class and each Contributing Defendant shall remain
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liable for any respective amounts owing by them under this Agreement to the
Escrow Agent that are attributable to a period on or prior to the date of such
disbursement.
(d) On the fifteenth Business Day after receipt by the Escrow Agent of an
Order stating that the Stipulation is to be adjusted pursuant to paragraph 19
thereof as to a Contributing Defendant (an "Order of Adjustment"), unless a
Protest is in effect: (i) the Escrow Agent shall disburse to such
Contributing Defendant from the Relevant Account such amounts, if any, as are
specified in such Order of Adjustment to be paid to such Contributing
Defendant; and (ii) the parties shall enter into an amendment to this
Agreement as to the Class and such Contributing Defendant to effect such
changes as may be necessary to cause the provisions of this Agreement to be
consistent with such Order of Adjustment.
(e) Notwithstanding any other provision of this Agreement, within one
Business Day of receipt by the Escrow Agent of written instructions signed by
Class Counsel and a Contributing Defendant instructing disbursement of the
funds, or a portion thereof, in the Relevant Account, the Escrow Agent shall
disburse such funds in accordance with the terms of such instructions.
(f) A "Protest" shall be deemed in effect for purposes of this Agreement
with respect to a disbursement from an Account if Class Counsel or the
Relevant Contributing Defendant has provided to the Escrow Agent either:
(i) (x) written notice signed by Class Counsel or such Contributing
Defendant, as the case may be, stating that the Order (including, if
applicable, an Order of Adjustment) required to be delivered to the
Escrow Agent in connection with such disbursement (the "Disbursement
Order") has been stayed, reversed, vacated or otherwise rendered without
present legal force and effect by the Court, the Third District Court of
Appeal of Florida, the Florida Supreme Court or the United States Supreme
Court and (y) a copy of an order of the such court, certified as accurate
and complete by the clerk of the such court (the "Stay Order"), stating
that the Disbursement Order has been stayed, reversed, vacated or
otherwise rendered without present legal force and effect; or
(ii) (x) written notice signed by Class Counsel or such Contributing
Defendant, as the case may be, stating that it has filed in good faith an
application (the "Stay Application") with the Court, the Third District
Court of Appeal of Florida, the Florida Supreme Court or the United
States Supreme Court seeking to stay the Disbursement Order (or an order
with respect to a prior application to stay, reverse, vacate or otherwise
render without legal force and effect the Disbursement Order), and the
Stay Application has not yet been ruled upon by the court in which it was
filed and (y) a copy of the pleading(s) that it caused to be filed with
such court to make the Stay Application.
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A Protest shall be deemed no longer in effect for purposes of this Agreement
with respect to a disbursement from an Account if:
(A) Class Counsel or the Relevant Contributing Defendant has
provided to the Escrow Agent
(1) a written notice signed by Class Counsel or such
Contributing Defendant, as the case may be, stating that the
Disbursement Order is not currently stayed and is in force and
effect; and
(2) either
(X) if such Protest resulted from a Stay Order, a copy of
an order of the Court, the Third District Court of Appeal of
Florida, the Florida Supreme Court or the United States
Supreme Court, certified as accurate and complete by the clerk
of the court that issued such order, stating that the Stay
Order has been stayed, reversed, vacated or otherwise rendered
without legal force and effect, or
(Y) if such Protest resulted from a Stay Application, a
copy of an order issued by the court with which such Stay
Application was filed, certified as accurate and complete by
the clerk of such court, stating that the Stay Application has
been ruled upon and that the Disbursement Order has not been
stayed; and
(B) fifteen Business Days have elapsed since the receipt by the
Escrow Agent of the documents described in clause (A) of this Section
6(f) and no further Protest has become effective by virtue of the
delivery of additional documents described in clause (i) or (ii) of this
Section 6(f).
Any disbursement that has been delayed as a result of a Protest shall be made
by the Escrow Agent as soon as practicable when no Protest is effective with
respect to such disbursement.
(g) On the first Business Day following any disbursement pursuant to
Section 5 or 6, the Escrow Agent shall deliver to each Contributing Defendant
and Class Counsel in accordance with the notice provisions of Section 13(k), a
written statement showing the amount disbursed, the date of such disbursement,
the payee of the disbursed funds and, if applicable, a copy of the Order or
written instructions or notice pursuant to the terms of which such
disbursement was made.
(h) In the event that the Escrow Agent fails to receive in writing a copy
of any Order or any written instructions or notice described in this Section
6, the Escrow Agent shall be fully protected in refraining from taking any
action that would otherwise be required by such Section until such time as a
copy in writing of such Order, instructions and/or notice is provided to the
Escrow Agent.
SECTION 7. Compensation. (a) In consideration of its services
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hereunder, the Escrow Agent shall be entitled to be paid the fees and
reimbursed for the expenses set forth on Exhibit 7.
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The Escrow Agent shall be entitled to withdraw from the Income in Account A
70.450 %, Account B 28.180 % and Account C 1.370 % of the amounts payable to
it pursuant to this Section 7(a) and Section 12(b).
(b) The Contributing Defendants shall be jointly and severally liable,
and shall reimburse the Escrow Agent upon demand for, all fees and expenses
payable or reimbursable to it in connection with this Agreement that it does
not collect from Income as contemplated by Section 7(a), including amounts to
which it is entitled in accordance with Section 12(b).
SECTION 8. Method of Holding Class Deposited Funds; Funds Transfers.
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(a) Class Deposited Funds and investments made therewith shall be held by the
Escrow Agent either directly or through the Federal Reserve/Treasury Book-
Entry System for United States and federal agency securities (the "Book-Entry
System"), The Depository Trust Company ("DTC") or another depository trust
company or clearing corporation, in each case as may be deemed appropriate by
the Escrow Agent. The Escrow Agent shall have no responsibility for the
actions or omissions to act of the Book-Entry System, DTC or any other
depository or clearing corporation reasonably selected by it.
(b) Unless otherwise specified, all transfers of funds contemplated by
this Agreement (including deposits to, and disbursements and withdrawals from,
an Account) shall be effected by wire transfer of immediately available funds
to (i) in the case of a transfer to the Escrow Agent, the account specified in
Exhibit 3(a), (ii) in the case of a transfer for the benefit of the Class, the
registry of the Court or such bank escrow account as may be specified in
written instructions to the Escrow Agent from Class Counsel and (iii) in the
case of a transfer to any Contributing Defendant, an account specified in
written instructions to the Escrow Agent from such Contributing Defendant.
SECTION 9. Duties and Liabilities of Escrow Agent. (a) The Escrow Agent
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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 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 and willful misconduct. The Escrow Agent shall not be
bound in any way by any agreement or contract among the Class and the
Contributing Defendants (whether or not the Escrow Agent has knowledge
thereof) other than this Escrow Agreement, and the duties and responsibilities
of the Escrow Agent shall be the duties and obligations specifically set forth
in this Escrow Agreement.
(b) The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice or instruction furnished to it
hereunder appearing on its face to have been sent by a person or persons
entitled hereunder to deliver such notice and reasonably believed by the
Escrow Agent to be genuine and to have been signed or presented by the proper
party or parties. The Escrow Agent shall be under no duty to inquire into or
investigate the validity, accuracy or content of any such document. In the
administration of the Escrow, the Escrow Agent may execute any of its powers
and perform its duties hereunder directly or through agents or attorneys and
may consult with counsel, accountants and other professional persons to be
selected and retained by it. In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party
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hereto which, in its reasonable opinion, conflict with any of the provisions
of this Escrow Agreement, it shall be entitled to refrain from taking any
action other than investment and reinvestment in accordance with Section 4 and
its sole obligation shall be to keep safely and invest in accordance with
Section 4 all property held in escrow until it shall be directed otherwise in
writing by all of the other parties to this Agreement or by a final order or
judgment of the Court.
(c) The Escrow Agent shall provide monthly statements for each Account to
Class Counsel and the Relevant Contributing Defendant, which statements shall
identify all transactions, transfers or holdings of Class Deposited Funds in
such Account.
SECTION 10. Indemnification. The Class and the Contributing Defendants,
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jointly and severally, shall be liable for and shall reimburse and indemnify
the Escrow Agent (and any predecessor Escrow Agent) and hold the Escrow Agent
harmless from and against any and all claims, losses, actions, liabilities,
costs, damages and reasonable expenses (including reasonable attorneys' fees
and expenses) (collectively "Losses") arising from or in connection with the
performance of its obligations under this Agreement; provided, however, that
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nothing contained herein shall require the Escrow Agent to be indemnified for
Losses caused by its own gross negligence or own willful misconduct. Anything
in this Agreement to the contrary notwithstanding, in no event shall the
Escrow Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits). This
Section 10 shall survive the termination of this Escrow Agreement or the
removal of the Escrow Agent.
SECTION 11. Replacement of Escrow Agent. (a) The Escrow Agent may
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resign at any time by giving not less than 30 Business Days prior written
notice thereof to Class Counsel and all of the Contributing Defendants, and
may be terminated at any time by not less than 30 Business Days prior written
notice to the Escrow Agent from Class Counsel and all of the Contributing
Defendants, but such resignation or termination shall not become effective
until a successor Escrow Agent shall have been appointed and shall have
accepted such appointment in writing. The successor Escrow Agent shall be
selected by the Contributing Defendants from among the following institutions:
Citibank, N.A.; The Chase Manhattan Bank; Credit Suisse First Boston; and
Deutsche Bank Bankers Trust. If none of the institutions listed above agrees
to serve as successor Escrow Agent on substantially the same terms as set
forth in this Agreement (including, without limitation, the provisions of
Section 13(b)), then the Contributing Defendants shall select another banking
or trust institution to serve as successor Escrow Agent that will so agree.
The identity of such other banking or trust institution shall be subject to
the consent of Class Counsel, which consent shall not be unreasonably
withheld. If an instrument of acceptance by a successor Escrow Agent shall not
have been delivered to the resigning Escrow Agent within 90 days after the
giving of such notice of resignation or termination, the resigning or
terminated Escrow Agent may, at the expense of the Contributing Defendants,
petition the Court for the appointment of a successor Escrow Agent.
(b) Upon receipt of an instrument of acceptance by a successor Escrow
Agent, the resigning or terminated Escrow Agent shall deliver the Class
Deposited Funds then held hereunder to the successor Escrow Agent whereupon
the resigning or terminated Escrow Agent shall have no further duties,
responsibilities or obligations hereunder.
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SECTION 12. Ownership of Class Deposited Funds; Taxes. (a) The Escrow
-----------------------------------------
Agent does not have any beneficial interest in the Class Deposited Funds but
is serving as escrow holder only and has only possession thereof. Subject to
Section 7(a), the Escrow Agent acknowledges that it shall not be entitled to
set off against any funds in, or payable from, any Account to satisfy any
liability of the Class or any Contributing Defendant.
(b) The Escrow Agent shall be entitled to be reimbursed in accordance
with Section 7 for any transfer taxes or other taxes relating to the Class
Deposited Funds incurred by the Escrow Agent in connection herewith. Any
payments of income from this Escrow shall be subject to withholding
regulations then in force with respect to United States taxes. The
Contributing Defendants will provide the Escrow Agent, upon request, with
appropriate W-9 forms for tax I.D. number certifications, or W-8 forms for
non-resident alien certifications. The Escrow Agent shall comply with all
applicable tax filing, payment and reporting requirements made known to it by
Class Counsel or any Contributing Defendant. This Section 12 shall survive
notwithstanding any termination of this Agreement or the resignation or
termination of the Escrow Agent.
SECTION 13. Miscellaneous.
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(a) No Third Party Beneficiaries. This Agreement is for the exclusive
----------------------------
benefit of the parties hereto and their respective permitted successors
hereunder, and shall not be deemed to give, either express or implied, any
legal or equitable right, remedy, or claim to any other entity or person
whatsoever.
(b) Governing Law and Jurisdiction. This Agreement is to be governed by,
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and interpreted, construed, enforced and administered in accordance with, the
internal substantive laws (and not the choice of law rules) of the State of
Florida. The parties agree that the Court shall have exclusive subject-matter
jurisdiction over disputes arising out of this Escrow Agreement, and submit to
the jurisdiction of the Court solely for resolution of such disputes.
(c) Amendment. Except as otherwise provided for or permitted herein,
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this Agreement may be modified only by a written amendment signed by all the
parties hereto, and no waiver of any provision hereof shall be effective
unless expressed in a writing signed by the party to be charged.
(d) No Waiver. The rights and remedies conferred upon the parties hereto
---------
shall be cumulative, and the exercise or waiver of any such right or remedy
shall not preclude or inhibit the exercise of any additional rights or
remedies. The waiver of any right or remedy hereunder shall not preclude the
subsequent exercise of such right or remedy.
(e) Representations and Warranties. Each party hereby represents and
------------------------------
warrants (i) that this Agreement has been duly authorized, executed and
delivered on its behalf and constitutes its legal, valid and binding
obligation and (ii) that the execution, delivery and performance of this
Agreement does not and will not violate any applicable law or regulation.
(f) Entire Agreement. This Agreement shall constitute the entire
----------------
agreement of the parties with respect to the subject matter and supersedes all
prior oral or written agreements in regard thereto.
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(g) Termination. This Agreement shall terminate upon the distribution of
-----------
all funds from the Accounts.
(h) Headings; References. The headings contained in this Agreement are
--------------------
for convenience of reference only and shall have no effect on the
interpretation or operation hereof. Unless otherwise specified, references in
this Agreement to Sections and Exhibits refer to Sections of and Exhibits to
this Agreement.
(i) Counterparts. This Agreement may be executed by each of the parties
------------
hereto in any number of counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original and all such
counterparts shall together constitute one and the same agreement.
(j) No Assignment; Successors. No party hereto may assign any of its
-------------------------
rights or obligations under this Agreement without the written consent of the
other parties hereto. Any corporation into which the Escrow Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Escrow
Agent shall be a party, or any corporation succeeding to the business of the
Escrow Agent shall be the successor of the Escrow Agent hereunder without the
execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto except where an instrument of transfer
or assignment is required by law to effect such succession, anything herein to
the contrary notwithstanding.
(k) Notices. Notices, instructions or other communications hereunder
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shall be in writing and shall be given to parties at the addresses set forth
below (or to such other address as may be substituted therefor by written
notification in accordance with the provisions hereof), and shall be deemed
given if delivered personally, sent by overnight courier (providing proof of
delivery) or sent by facsimile (with a confirmatory copy sent by overnight
courier). All notices, directions, instructions and other communications given
to the Escrow Agent (i) under any of subsections (a) through (f) of Section 6
must contain the original signatures of at least (x) in the case of a
communication from Class Counsel, both Class Counsel and (y) in the case of a
communication from a Contributing Defendant, two of the Authorized Officers of
such Contributing Defendant, and (ii) any other provision of this Agreement
must contain the signature (which may be transmitted by facsimile) of at least
(x) in the case of a communication from Class Counsel, one Class Counsel and
(y) in the case of a communication from a Contributing Defendant, one
Authorized Officer of such Contributing Defendant. Whenever the Class, Class
Counsel or any Contributing Defendant provides any written notice, instruction
or other communication to the Escrow Agent (other than an instruction under
Section 4(d)), such providing party shall contemporaneously deliver
personally, by overnight courier or by facsimile to all other parties a copy
of such written notice, instruction or other communication (including copies
of all accompanying Orders and other supporting documents). The Escrow Agent
shall deliver personally, by overnight courier or by facsimile to all other
parties, within one Business Day of its receipt thereof, copies of all written
notices, instructions and other communications (including all accompanying
Orders and other supporting documents) provided to it by the Class, Class
Counsel or any Contributing Defendant (other than instructions under Section
4(d)). All notices to or from the Class shall be given to or from Class
Counsel on behalf of the Class. Notices, instructions and other communications
shall be sent:
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If to the Class:
Stanley M. Rosenblatt
Stanley M. Rosenblatt, P.A.
12th Floor - Concord Building
66 West Flagler Street
Miami, FL 33130
Telephone: 305-374-6131
Facsimile: 305-381-8818
If to Philip Morris:
Denise F. Keane
Senior Vice President and General Counsel
Philip Morris Incorporated
120 Park Avenue - 9th Floor
New York, NY 10017-5592
Telephone: 917-663-3076
Facsimile: 917-663-5473
with a copy to:
Meyer G. Koplow
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-6150
Telephone: 212-403-1224
Facsimile: 212-403-2224
If to Lorillard:
Thomas Staab
Chief Financial Officer
Lorillard Tobacco Co.
714 Green Valley Road
Greensboro, NC 27404
Telephone: 336-335-7126
Facsimile: 336-335-7467
If to Liggett:
John R. Long
Vice President and General Counsel
Liggett Group Inc.
100 Maple Lane
Mebane, North Carolina 27302-8160
Telephone: 919-304-7750
Facsimile: 919-304-7839
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If to the Escrow Agent:
The Bank of New York
Stephen M. Bruce
Assistant Vice President
Corporate Trust Division
101 Barclay Street, 7th Floor West
New York, NY 10286
Telephone: 212-815-7164
Facsimile: 212-815-7181
(l) Business Day Convention. Whenever under the terms hereof the time
-----------------------
for giving a notice or performing an act falls upon a day that is not a
Business Day, such time shall be extended to the next Business Day.
(m) Proportionate Payments. All payments to be made or expenses to be
----------------------
borne by the Contributing Defendants on a joint or collective basis shall be
allocated among the Contributing Defendants in the following proportions:
Philip Morris 70.450%; Lorillard 28.180%; and Liggett 1.370%. Each
Contributing Defendant that pays or bears more than its proportionate share of
any payment or expense shall be entitled to reimbursement of such excess from
each other Contributing Defendant to the extent that such other Contributing
Defendant did not pay or bear its proportionate share of such payment or
expense.
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IN WITNESS WHEREOF, each of the parties have caused this Escrow Agreement
to be executed as of the day and year first written above.
CLASS
By: Stanley M. Rosenblatt
------------------------
Name: Stanley M. Rosenblatt
Title: Class Counsel
By: Susan Rosenblatt
------------------------
Name: Susan Rosenblatt
Title: Class Counsel
PHILIP MORRIS INCORPORATED
By: Denise F. Keane
------------------------
Name: Denise F. Keane
Title: Senior Vice President and General
Counsel
LORILLARD TOBACCO CO.
By: Ronald S. Milstein
------------------------
Name: Ronald S. Milstein
Title: Vice-President and General Counsel
LIGGETT GROUP INC.
By: John R. Long
------------------------
Name: John R. Long
Title: Vice President and General Counsel
THE BANK OF NEW YORK, as Escrow Agent
By: Stephen M. Bruce
------------------------
Name: Stephen M. Bruce
Title: Assistant Vice President
SIGNATURE PAGE TO ESCROW AGREEMENT (FIRST) DATED AS OF MAY 16, 2001
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EXHIBIT 2
Form of Authorization Certificate
---------------------------------
AUTHORIZATION CERTIFICATE
The undersigned hereby certifies to THE BANK OF NEW YORK (the "Escrow
Agent") that [he/she] is the [Assistant] Secretary of [Name of Contributing
Defendant] (the "Contributing Defendant"), that [he/she] is authorized to
execute and deliver this authorization certificate on behalf of the
Contributing Defendant, and that the persons identified below are authorized
to sign notices, instructions and other communications on behalf of the
Contributing Defendant under the Escrow Agreement (First) dated as of May 16,
2001 to which the Escrow Agent and the Contributing Defendant are parties:
Name Title Signature
- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- -----------------------
IN WITNESS WHEREOF the undersigned has executed this authorization
certificate on , 20 .
-------- --
-----------------------
[Name and Title]
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EXHIBIT 3(a)
Escrow Agent Account Information
--------------------------------
ACCOUNT A
BK OF NYC
ABA #021 000 018
A/C # [Number omitted]
F/F/C A/C #: [Number omitted]
F/F/C A/C NAME: PHILIP MORRIS ESCROW AGREEMENT (FIRST) A
ACCOUNT B
BK OF NYC
ABA #021 000 018
A/C # [Number omitted]
F/F/C A/C #: [Number omitted]
F/F/C A/C NAME: LORILLARD ESCROW AGREEMENT (FIRST) B
ACCOUNT C
BK OF NYC
ABA #021 000 018
A/C # [Number omitted]
F/F/C A/C #: [Number omitted]
F/F/C A/C NAME: LIGGETT ESCROW AGREEMENT (FIRST) C
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EXHIBIT 7
Escrow Agent Compensation Schedule
----------------------------------
Acceptance Fee . . . . . . . . . . . . . . . . . . . . . . . . . waived
This one time fee is payable upon closing date and includes:
[ ] Review of Agreement and supporting documents
[ ] Establishment of accounts
Annual Administration Fee, per agreement . . . . . . . . . . . . $10,000
If funds invested in approved money market funds . . . . . . . . waived
This fee is not subject to pro-ration and is payable upon closing and on each
anniversary date and includes:
[ ] Monitoring of accounts
[ ] Reporting
Activity Fees
[ ] Outgoing Wire Transfer/Checks, each . . . . . . . . . . . . $25
(waived if funds invested in approved money market funds)
[ ] Per Investment, each trade . . . . . . . . . . . . . . . . $25
For each directed investment purchase/sale other than The Bank of New York
Cash Reserve and approved money market funds
Out-of-Pocket Expenses . . . . . . . . . . . . . . . . . . . . waived
External Counsel Fees
Counsel fees incurred up to closing will be waived. The Bank of New York will
be entitled to reimbursement, not to exceed $25,000 per annum, at cost for any
reasonable out-of-pocket post-closing external counsel fees incurred by the
Bank in connection with the performance of its duties under the Agreement.
Miscellaneous Services . . . . . . . . . . . . . . . . . . . . waived
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