Opinion ID: 1033737
Heading Depth: 4
Heading Rank: 3

Heading: Ownership. As of the Closing Date the

Text: Purchaser shall become the legal and equitable owner of the Assigned Escrow Releases, and shall be entitled to all of the rights, privileges, duties and remedies applicable to said ownership. . . . . . . . Section 3.03. Related Documents. Concurrently herewith and as a condition for closing the transaction, the parties shall execute and deliver the Indemnity Agreement and Acknowledgement Agreement. . . . . Section 5.01. . . . . . . . 9 (m) Qualified Settlement Funds. The Seller shall pay all applicable federal and state taxes, if any, required to be paid by the Seller and the Qualified Settlement Funds accrued on or prior to the Closing Date with respect to the Escrowed Funds. . . . In the event that a final determination, judgment or settlement of any dispute between the Internal Revenue Service, any state taxing authority, the Seller and/or the Qualified Settlement Funds and the Purchaser, if applicable, with respect to any federal or state tax liability (including any penalties or fines) owed by the Seller and/or the Qualified Settlement Funds accrued on or prior to the Closing Date, the Seller shall indemnify the Purchaser and its Assignees for any loss of Assigned Escrow Releases or Related Escrow Funds proximately caused bye the Seller’s or the Qualified Settlement Funds’ failure to pay such liability and breach of this Section 5.01(m). In addition, the Seller shall also promptly pay all reasonable legal and other directly related expenses incurred by the Purchaser or its Assignees in connection with any such dispute as invoiced by the Purchaser or its Assignees to the Seller. . . . The Seller shall use its best efforts to cause the Escrow Agent to annually deliver to the Purchaser or its Assignee a Form 1099–INT with respect to the Assigned Escrow Releases. In the event that the Internal Revenue Service or any state taxing authority makes any claim that the Seller or the Qualified Settlement Funds owe any federal or state tax liability (including any penalties or fines) with respect to the Assigned Escrow Releases or Related Escrow Funds accrued after the Closing Date, the Seller shall use its best efforts to cooperate with the Purchaser or its Assignee to defend such claim, subject to Section 5.01(e). For such disputes, the Purchaser or its Assignee shall promptly pay all reasonable legal and directly related expenses incurred by the Seller as invoiced by the Seller to the Purchaser or its Assignee. . . . . Section 5.02. . . . (a) Taxes and Fees. The Purchaser shall pay all applicable federal and state taxes, if any, required 10 to be paid by the Purchaser with respect to the Assigned Escrow Releases or Related Escrow Funds received by it. The Purchaser shall pay all fees and expenses of the Escrow Agent related to the maintenance of the Related Escrowed Funds. . . . . Section 8.12. Schedules, Annexes and Exhibits. The schedules, annexes and exhibits attached hereto and referred to herein, as the same may be supplemented and amended from time to time as contemplated herein, shall constitute a part of this Agreement and are incorporated into this Agreement for all purposes. In addition, the ERTA provided options to purchase escrow releases in the future, subject to certain timing requirements. Finally, as noted above, section 2.01(b) requires that the Purchaser of the escrow releases comply with “the applicable Escrow Agreement and the Tobacco Escrow Statutes.” Relevant here, the Escrow Agreement includes a provision that requires the Escrow Agent to “comply with all applicable tax filing, payment and reporting requirements, including, without limitation, those imposed under Treas. Reg. [section] 1.468B . . . .” As we already observed, Treasury Regulation section 1.468B stipulates that a QSF is a person subject to a tax on its modified gross income. 26 C.F.R. § 1.468B-2(a). 11