EXHIBIT 10
FORM OF
CALCULATION AGENCY AGREEMENT
AMONG
PHILIP MORRIS COMPANIES INC.,
THE CHASE MANHATTAN BANK, AS TRUSTEE
AND
GOLDMAN, SACHS & CO.
March 16, 1998
Philip Morris Companies Inc., a Virginia corporation (the "Company"),
proposes to issue and sell $800,000,000 aggregate principal amount of its
Puttable Reset Securities (PURS) due March 15, 2010 (the "Bonds") in accordance
with the terms of the Indenture, dated as of December 2, 1996, (the
"Indenture"), between the Company and The Chase Manhattan Bank, as trustee (the
"Trustee"). Terms used but not defined herein shall have the meanings assigned
to them in the Bonds.
For the purpose of appointing an agent to perform the functions of
Calculation Agent as described in the Bonds, and for other reasons related
thereto, the Company and Goldman, Sachs & Co. hereby agree as follows (it being
understood that the references to Goldman, Sachs & Co. in sections 1 through 4
below mean such firm in its capacity as Calculation Agent, in sections 5 and 6
below mean such firm in its individual capacity and not as Calculation Agent,
and in sections 7 through 13 below mean such firm in either capacity, as the
context may require):
1. Upon the terms and subject to the conditions contained herein,
the Company hereby appoints Goldman, Sachs & Co. as agent (solely in such
capacity, the "Calculation Agent") for the purpose of performing the functions
of Calculation Agent as described in the Bonds.
2. (a) Subject to sections 3 and 4 below, the Calculation Agent
agrees to perform the functions of the Calculation Agent described in the Bonds.
The Calculation Agent shall require each financial institution that is to act as
a Reference Dealer to execute a Reference Dealer agreement substantially in the
form attached hereto as Annex A, with such changes as Goldman, Sachs & Co., in
its individual capacity, reasonably may request with the approval of the
Company.
(b) Upon the request of a registered holder of the Bonds, the
Trustee or the Company, the Calculation Agent shall inform such holder, the
Trustee or the Company of the results of any calculation or determination.
3. The Calculation Agent accepts and agrees to perform its
obligations set forth herein, upon the terms and subject to the conditions
hereof, including the following, to all of which the Company and the Trustee
agree:
(a) The Company promises to reimburse the Calculation Agent for the
reasonable out-of-pocket expenses (including counsel fees and expenses) incurred
by it in connection with the services rendered hereunder by it as Calculation
Agent upon receipt of such invoices as the Company shall reasonably require.
The Company also agrees to
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indemnify the Calculation Agent for, and to hold it harmless against, any and
all loss, liability, damage, claims or expense (including the costs and
expenses, including reasonable legal fees and expenses, of defending against any
claim of liability) incurred by the Calculation Agent that arises out of or in
connection with its acting as Calculation Agent hereunder, except such as may
result from the gross negligence, willful misconduct or bad faith of the
Calculation Agent. The Calculation Agent shall incur no liability to and shall
be indemnified and held harmless by the Company for, or in respect of, any
actions taken, omitted to be taken or suffered to be taken in good faith by the
Calculation Agent in reasonable reliance upon (i) the written opinion of counsel
satisfactory to it or (ii) instructions from the Trustee or the Company. The
Calculation Agent shall not be liable for any error resulting from the use of or
reasonable reliance on a source of information used in good faith and with due
care to make any determination, calculation or declaration hereunder. In no
event shall the Calculation Agent be liable to the Company or the Trustee for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Calculation Agent has
been advised of the likelihood of such loss or damage and regardless of the form
of action. The provisions of this paragraph shall survive the termination of
this Agreement.
(b) In acting under this Agreement and in connection with the Bonds,
the Calculation Agent is acting solely as agent of the Company and does not
assume any obligations to, or relationship of agency or trust for or with, any
of the owners or holders of the Bonds.
(c) Notwithstanding any other provision to the contrary set forth in
this Agreement, the Calculation Agent shall be protected against and shall incur
no liability for or in respect of any action taken or omitted to be taken or
anything suffered by it in reliance upon the terms of the Bonds or any notice,
direction, certificate, affidavit, statement or other paper, document or
communication reasonably believed by it to be genuine and to have been approved
or signed by the proper party or parties.
(d) The Calculation Agent shall be obligated to perform such duties
and only such duties as are specifically set forth for the Calculation Agent
herein or in the Bonds, and no implied duties or obligations shall be read into
this Agreement against the Calculation Agent.
(e) The Calculation Agent may, upon obtaining the prior written
consent of the Company, perform any duties hereunder through agents or
attorneys.
(f) The Company will not, without first obtaining the prior written
consent of the Calculation Agent, make any change to the terms of the Bonds if
such change would materially and adversely affect the Calculation Agent's
rights, duties and obligations under this Agreement.
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(g) The Calculation Agent shall be protected and shall incur no
liability for or in respect of any action taken or omitted to be taken in good
faith or anything suffered in good faith by it in reliance upon anything
contained in the Bonds, the Indenture, the Prospectus Supplement dated March 11,
1998 or the Prospectus dated February 19, 1998 relating to the Bonds (together,
the "Prospectus") or any information supplied to the Calculation Agent by the
Company pursuant to this Agreement.
(h) The Calculation Agent, whether acting for itself or in any other
capacity, its partners, officers, directors, employees and shareholders or any
affiliate of the Calculation Agent may become the owner, holder or pledgee of
Bonds (or the owner, holder, pledgee or obligor with respect to any option, swap
or other contract related thereto) with the same rights as it would have had if
it were not acting hereunder as Calculation Agent and may engage or be
interested in any financial or other transaction with the Company as fully as if
it were not the Calculation Agent.
(i) The Calculation Agent shall promptly provide to the Trustee and
the Company a written report of all determinations and calculations required to
be made by the Calculation Agent pursuant to the terms of this Agreement and the
Bonds. The Trustee and the Company may conclusively rely on all of the
information provided to it pursuant to the preceding sentence without further
investigation on its behalf.
Any determination or calculation made by the Calculation Agent in
accordance with the terms of this Agreement and the Bonds shall be final and
binding on the Company, the Trustee and the Holders and owners of the Bonds,
absent manifest error.
4. (a) The Calculation Agent may at any time resign as Calculation
Agent by giving written notice to the Company (with a copy to the Trustee) of
such intention on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall not be earlier
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than 30 days after the receipt of such notice by the Company, unless the Company
agrees in writing to accept less notice. The Company may remove the Calculation
Agent at any time, but only for cause, by filing with the Calculation Agent
(with a copy to the Trustee) any instrument in writing signed on behalf of the
Company and specifying such removal, the reasons for such removal and the date
when such removal is intended to become effective. Such resignation or removal
shall take effect upon the date of the appointment by the Company, as
hereinafter provided, of a successor Calculation Agent. If at least 30 days
prior to the Calculation Date a successor Calculation Agent has not been
appointed, the Calculation Agent may petition a court of competent jurisdiction
to appoint a successor Calculation Agent. A successor Calculation Agent shall
be appointed by the Company by an instrument in writing signed on behalf of the
Company and the successor Calculation Agent. Upon the appointment of a
successor Calculation Agent and acceptance by it of such appointment, the
Calculation Agent so superseded shall cease to be such Calculation Agent
hereunder. Upon its resignation or removal, the Calculation Agent shall
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be entitled to the reimbursement of all reasonable out-of-pocket expenses
incurred in connection with the services rendered hereunder by it as Calculation
Agent.
(b) Any successor Calculation Agent appointed hereunder shall execute
and deliver to its predecessor, the Company and the Trustee an instrument
accepting such appointment hereunder and agreeing to perform the functions of
the Calculation Agent under the Bonds and the obligations of the Calculation
Agent under this Agreement and to be bound by this Agreement, and thereupon such
successor Calculation Agent, without any further act, deed or conveyance, shall
become vested with all the authority, rights, powers, trusts, immunities, duties
and obligations of such predecessor with like effect as if originally named as
such Calculation Agent hereunder, and such predecessor Calculation Agent, upon
payment of its charges and disbursements then unpaid, shall thereupon become
obliged to transfer and deliver, and such successor Calculation Agent shall be
entitled to receive and the predecessor Calculation Agent shall provide, copies
of any relevant records maintained by such predecessor Calculation Agent.
(c) Any corporation, partnership, limited liability company or other
entity into which the Calculation Agent may be merged or converted or with which
the Calculation Agent may be consolidated, or any corporation, partnership,
limited liability company or other entity resulting from any merger, conversion
or consolidation to which the Calculation Agent shall be a party, shall, to the
extent permitted by applicable law, be the successor Calculation Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided that such successor
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Calculation Agent shall assume, or be deemed to have assumed, all of the
obligations and liabilities of its predecessor under this Agreement. Notice of
any such merger, conversion, consolidation or sale shall forthwith be given to
the Company and the Trustee.
(d) The foregoing indemnity, reimbursement and other provisions of
this Agreement will survive any resignation or removal of the Calculation Agent.
The agreements of the parties set forth above will be binding upon and inure to
the benefit of their respective successors.
5. For good and valuable consideration, the sufficiency of which is
hereby acknowledged, the Company hereby agrees with Goldman, Sachs & Co., in its
individual capacity and not as Calculation Agent, as follows:
(a) If at any time Goldman, Sachs & Co., with the advice of its
counsel and after consultation with the Company and its counsel, determines that
registration of the Bonds under the Securities Act of 1933 (or any successor
law), as it may be amended from time to time, is required in order for Goldman,
Sachs & Co. to resell the Bonds on the Reset Date as contemplated in the
Prospectus, the Company will, at its own expense, use its reasonable best
efforts to cause the Bonds to be so registered in time to permit such resale of
the Bonds on the Reset Date.
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(b) Notwithstanding any provision to the contrary set forth in the
Indenture, the Company will not purchase any Bonds prior to the Reset Date in
the open market, by tender offer, in a private transaction or otherwise, except
pursuant to any purchase obligation it may have under the Bonds or with the
prior written consent of Goldman, Sachs & Co., as holder of the Call Option.
(c) Notwithstanding any provision to the contrary set forth in the
Indenture, the Company will not cause or permit the provisions of any Bond (or
the Indenture, as it relates to any Bond) to be modified in any way without the
prior written consent of Goldman, Sachs & Co. (including with respect to the
payment and settlement provisions of paragraph 5 of the Bonds), which consent
shall not be unreasonably withheld; provided, that no consent shall be required
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to effect a modification under Section 802 or 901 of the Indenture or under the
penultimate paragraph of Section 902 of the Indenture.
(d) The Bonds and the Indenture, insofar as they relate to the Call
Option or may affect the interests of Goldman, Sachs & Co. as holder of such
option (including the provisions relating to the interest rate reset and resale
to a Final Dealer, but excluding the provisions referred to in the next
sentence), constitute obligations of the Company that are made for the benefit
of, and are enforceable by, Goldman, Sachs & Co., in its individual capacity and
not as Calculation Agent. In addition, insofar as the provisions of any Bond
purport to provide rights to Goldman, Sachs & Co. against any holder of such
Bond (including the right to purchase such Bond from any holder on the Reset
Date pursuant to the Call Option), the Company shall take all action necessary
or desirable to enforce such rights in its own name, but for the benefit of
Goldman, Sachs & Co. so as to ensure that Goldman, Sachs & Co. receives the full
benefit of such rights as if they were enforceable directly by Goldman, Sachs &
Co., in each case if, to the extent and in the manner, but only if, to the
extent and in the manner, requested by Goldman, Sachs & Co. Among other things,
if requested by Goldman, Sachs & Co., such action by the Company shall include
effecting transfers of Bonds or beneficial interests therein as contemplated in
paragraph 5 of the reverse of the Bonds, exchanging Bonds in book-entry form for
Bonds that are not in such form and vice-versa as contemplated in paragraph 7(c)
of the reverse of the Bonds and instituting suit to enforce specific performance
of such rights or to obtain money damages or other relief in respect of such
rights, whether against the holders or their respective successors, assigns,
estates, heirs or representatives. Without limiting the foregoing, Goldman,
Sachs & Co. may take any action under the Bonds (including giving any notice,
making any determination and effecting any settlement pursuant to paragraphs 2,
4, 5 and 9 thereof) that the provisions of the Bonds contemplate may be taken by
Goldman, Sachs & Co., and the Company will not take any action unless Goldman,
Sachs & Co. requests it to do so. Goldman, Sachs & Co. shall reimburse the
Company for any reasonable, out-of-pocket expenses the Company incurs, including
reasonable counsel fees and expenses, in connection with any action it may take
in this regard at the request of Goldman, Sachs & Co. The Company's agreements
set forth in this paragraph shall not be invalid or unenforceable by reason of
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any provision of the Bonds not being unenforceable by Goldman, Sachs & Co. This
paragraph is not intended to limit any rights that Goldman, Sachs & Co. may have
under the Indenture or the Bonds as a holder or owner of Securities from time to
time.
(e) Notwithstanding any provision to the contrary set forth in the
Bonds or the Indenture (but subject to section 5(d) above), the Company (i) will
use its best efforts to maintain the Bonds in book-entry form with The
Depository Trust Company ("DTC") or any successor thereto and to appoint a
successor depository to the extent necessary to maintain the Bonds in book-entry
form and (ii) will waive any discretionary right it otherwise has under the
Indenture to cause the Bonds to be issued in certificated form. The Company
will perform its obligations, and pursue its rights against DTC, under the DTC
Letter of Representations dated March 16, 1998 among the Company, the Trustee
and DTC.
(f) If Goldman, Sachs & Co. resigns or is removed as Calculation
Agent, the Company will take such steps as are necessary to ensure that there is
at all times thereafter a qualified financial institution appointed and serving
as Calculation Agent pursuant to an agreement with the Company that is
substantially similar to this Agreement (excluding this section 5) or that is
not materially adverse to the interests of Goldman, Sachs & Co. as holder of the
Call Option. The Company will promptly provide Goldman, Sachs & Co. with a copy
of each such agreement.
The agreements made in this section 5 will remain in effect whether or not
Goldman, Sachs & Co. ceases to act as Calculation Agent or to perform its duties
as Calculation Agent hereunder, and regardless of any change in the Trustee.
The agreements of the Company in this section 5 are not contingent in any way
upon the agreements of the parties set forth in the other sections of this
Agreement, will be binding upon the Company and its successors and will inure to
the benefit of Goldman, Sachs & Co. and its successors.
6. Goldman, Sachs & Co., in its individual capacity and not as
Calculation Agent, hereby agrees with the Company and the Trustee, for the
benefit of the Company and the applicable holders of the Bonds from time to
time, that, if Goldman, Sachs & Co. exercises the Call Option, it will purchase
the outstanding Bonds from the registered holders thereof on the Reset Date upon
the terms and subject to the conditions (including the absence of a Market
Disruption Event or Failed Remarketing) set forth in such Bonds, all as provided
in such Bonds. If Goldman, Sachs & Co. exercises the Call Option and becomes
obligated under this Agreement to purchase outstanding Bonds on the Reset Date
but fails to do so, and the Company becomes obligated to purchase such Bonds
within two Business Days following the Reset Date as provided in the Bonds, such
purchase by the Company will not relieve Goldman, Sachs & Co. from any liability
it may have on its obligation under this Agreement to purchase such Bonds.
Goldman, Sachs & Co. further agrees not to assign the Call Option, other than to
an affiliate of Goldman, Sachs & Co., without the prior written consent of the
Company. The holders of the Bonds
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shall have no right, claim or remedy under this Agreement except as provided in
this section 6.
7. Any notice required to be given hereunder shall be delivered in
person, sent by overnight courier, registered mail, return receipt requested, or
facsimile or communicated by telephone (subject, in the case of communication by
telephone, to confirmation dispatched within twenty-four hours by letter or by
facsimile),
in the case of the Company, to:
Philip Morris Companies Inc.
120 Park Avenue
New York, N.Y. 10017
Attention: Vice President and Treasurer
Facsimile: (212) 907-5582
in the case of the Calculation Agent, to:
Goldman, Sachs & Co.
85 Broad Street
New York, N.Y. 10004
Attention: Registration Department
Facsimile: (212) 902-3000;
in the case of Goldman, Sachs & Co. (in its individual capacity, and not as
Calculation Agent), to:
Goldman, Sachs & Co.
85 Broad Street
New York, N.Y. 10004
Attention: Registration Department
Facsimile: (212) 902-3000;
and in the case of the Trustee, to:
The Chase Manhattan Bank, as Trustee
55 Water Street, 2nd Floor
North Building
New York, N.Y. 10041
Attention: Tender Operations Area
Facsimile: (212) 638-7380/81
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or to any other address of which any party shall have notified the others in
writing as herein provided. Any notice hereunder given by facsimile or letter,
first class mail, shall be deemed to be received upon actual receipt thereof.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
9. The rights and obligations of the Company hereunder may not be
assigned or delegated to any other person without the prior written consent of
Goldman, Sachs & Co. The rights and obligations of Goldman, Sachs & Co.
hereunder may not be assigned or delegated to any other person without the prior
written consent of the Company. This Agreement shall inure to the benefit of
and be binding upon the Company and Goldman, Sachs & Co. and their respective
successors and assigns, and will not confer any benefit upon any other person
(other than as provided in section 6 above). The terms "successors" and
"assigns" shall not include any purchaser of Bonds merely because of such
purchase.
10. This Agreement (a) may be terminated by written agreement of all
of the parties hereto, and (b) shall automatically terminate at 11:59 P.M. on
the Reset Date; provided, that the warranties, covenants, agreements and
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obligations set forth in sections 3(a), 3(c), 3(g), 3(h) and 4(d) and 6 of this
Agreement shall survive any such termination or the consummation of the
transactions contemplated hereby.
11. If any provision of this Agreement shall be held invalid or
unenforceable as applied in any particular case in any or all jurisdictions,
such circumstances shall not have the effect of rendering the provision invalid
or unenforceable in any other case or jurisdiction, or of rendering any other
provision of this Agreement invalid or unenforceable.
12. This Agreement may be amended by any instrument in writing signed
by each of the parties hereto.
13. This Agreement may be executed by each of the parties hereto in
any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all such counterparts shall
together constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
PHILIP MORRIS COMPANIES INC.
By: ______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
By: ______________________________
Name:
Title:
__________________________________
(Goldman, Sachs & Co.)
in its individual capacity and as Calculation Agent
ANNEX A
FORM OF REFERENCE
DEALER AGREEMENT
March __, 2000
_____________________
_____________________
_____________________
_____________________
Dear Sirs:
Philip Morris Companies Inc., a Virginia corporation (the "Company"),
has issued $800,000,000 in outstanding principal amount of its Puttable Reset
Securities (PURS) due March 15, 2010 (the "Bonds") pursuant to an Indenture,
dated as of December 2, 1996, [as amended by the [First] Supplemental Indenture,
dated as of ________ __, ____] ([together,] the "Indenture"), [in each case]
between the Company and The Chase Manhattan Bank, as trustee (the "Trustee").
The Bonds provide, on a one-time basis, for a reset of the rate at which
interest will accrue thereon and for their resale. Pursuant to a Calculation
Agency Agreement, dated March 16, 1998, between the Company and Goldman, Sachs &
Co. (as amended from time to time, the "Calculation Agency Agreement"), we have
been appointed as the calculation agent (the "Calculation Agent") for purposes
of determining the new interest rate for the Bonds on the Reset Date. As
Calculation Agent, we would like to extend to you an invitation to participate
in the interest reset and resale process as a Reference Dealer, as described
more fully in the Bonds.
Capitalized terms used in this Agreement and not defined herein will
have the meanings ascribed to them in the Bonds.
The Calculation Date to which this agreement relates is March __,2000
and the Reset Date is March 15, 2000.
Please note that by executing this agreement, you agree that, if you
are selected as the Final Dealer, you will purchase from Goldman, Sachs & Co. on
the Calculation Date for settlement on the Reset Date and at the Final Offer
Price all the Bonds that Goldman, Sachs & Co. may purchase pursuant to the Call
Option and tender for sale to you on the Reset Date. We will inform you whether
you have been selected as the Final Dealer on or shortly after the Calculation
Date. If you are selected as the Final Dealer, (i) the aggregate principal
amount of Bonds which you may be required to
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purchase will not exceed $800,000,000 (we will inform you of the actual amount
on the Reset Date), (ii) the price for such Bonds will be the Final Offer Price,
which we will provide to you when requesting your bid on the Calculation Date,
and (iii) the Adjusted Rate for the Bonds for the Reset Period will be
calculated by us based on the bid submitted (and confirmed in writing) by you on
the Calculation Date.
Notwithstanding anything to the contrary set forth in this Agreement,
you will have no obligation or right to purchase any Bonds on the Reset Date if
you are not selected as the Final Dealer or if Goldman, Sachs & Co. does not
purchase such Bonds on the Reset Date. Neither the Calculation Agent nor the
Company has any obligation hereunder to sell any Bonds to you.
If you are willing to participate as a Reference Dealer under the
terms described above, please fill in the information requested below and have
an appropriate person sign and return this agreement to us by ________________,
____. Upon acceptance hereof by you, this letter shall constitute a binding
agreement between you and us, and for the benefit of the Company and Goldman,
Sachs & Co. (in its individual capacity and not as Calculation Agent).
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THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
______________________________,
as Calculation Agent
By: ___________________________
Name:
Title:
Accepted as of the date hereof:
_______________________________
By: ___________________________
Name:
Title:
Contact: _______________________
Telephone No.: _________________
Facsimile No.: _________________