EXHIBIT 10.2

KRAFT FOODS INC.

CHANGE IN CONTROL PLAN FOR KEY EXECUTIVES

ADOPTED: APRIL 24, 2007

REVISED: APRIL 1, 2008*

 

* This exhibit was initially filed with the Company’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2007. It is refiled with the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 to correct
inadvertent administrative errors. This plan was revised on April 1, 2008 to
correct the errors.

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KRAFT FOODS INC.

CHANGE IN CONTROL PLAN FOR KEY EXECUTIVES

1. Definitions

For purposes of the Change in Control Plan for Key Executives, the following
terms are defined as set forth below (unless the context clearly indicates
otherwise):

 

Affiliate    Any entity controlled by, controlling or under common control with
the Company. Annual Base

Salary

   Twelve times the higher of (i) the highest monthly base salary paid or
payable to the Participant by the Company and its Affiliates in respect of the
twelve-month period immediately preceding the month in which the Change in
Control occurs, or (ii) the highest monthly base salary in effect at any time
thereafter, in each case including any base salary that has been earned and
deferred. Board    The Board of Directors of the Company. Annual Incentive
Target    The annual incentive award that the Key Executive would receive in a
fiscal year under the Management Incentive Plan or any comparable annual
incentive plan if the target goals are achieved. Annual Incentive
Target Percentage    The Annual Incentive Target as a percentage of Annual Base
Salary. Cause    As defined in Section 3.2(b) (i) of this Plan.
Change in Control   

“Change in Control” means the occurrence of any of the following events:
(A) Acquisition of 20% or more of the outstanding voting securities of the
Company by another entity or group; excluding, however, the following:

 

(1) any acquisition by the Company or any of its Affiliates;

 

(2) any acquisition by an employee benefit plan or related trust sponsored or
maintained by the Company or any of its Affiliates; or

 

(3) any acquisition pursuant to a merger or consolidation described in clause
(C) of this definition.

 

(B) During any consecutive 24 month period, persons who constitute the Board at
the beginning of such period cease to constitute at least 50% of the Board;
provided that each new Board member who is approved by a majority of the
directors who began such 24 month period shall be deemed to have been a member
of the Board at the beginning of such 24 month period;

 

(C) The consummation of a merger or consolidation of the Company with another
company, and the Company is not the surviving company; or, if after such
transaction, the other entity owns, directly or indirectly, 50% or

 

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more of the outstanding voting securities of the Company; excluding, however, a
transaction pursuant to which all or substantially all of the individuals or
entities who are the beneficial owners of the outstanding voting securities of
the Company immediately prior to such transaction will beneficially own,
directly or indirectly, more than 50% of the combined voting power of the
outstanding securities entitled to vote generally in the election of directors
(or similar persons) of the entity resulting from such transaction (including,
without limitation, an entity which as a result of such transaction owns the
Company either directly or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately prior to such
transaction, of the outstanding voting securities of the Company; or

 

(D) The consummation of a plan of complete liquidation of the Company or the
sale or disposition of all or substantially all of the Company’s assets, other
than a sale or disposition pursuant to which all or substantially all of the
individuals or entities who are the beneficial owners of the outstanding voting
securities of the Company immediately prior to such transaction will
beneficially own, directly or indirectly, more than 50% of the combined voting
power of the outstanding securities entitled to vote generally in the election
of directors (or similar persons) of the entity purchasing or acquiring the
Company’s assets in substantially the same proportions relative to each other as
their ownership, immediately prior to such transaction, of the outstanding
voting securities of the Company.

Code    The Internal Revenue Code of 1986, as amended from time to time.
Committee    The Board’s Compensation Committee or a subcommittee thereof, any
successor thereto or such other committee or subcommittee as may be designated
by the Board to administer the Plan. Company    Kraft Foods Inc., a corporation
organized under the laws of the Commonwealth of Virginia, or any successor
thereto. Date of

Termination

  

If the Participant's employment is terminated by:

 

(i)     The Company for Cause or by the Participant for Good Reason, the Date of
Termination shall be the date on which the Participant or the Company, as the
case may be, receives the Notice of Termination (as described in Section 3.2(c))
or any later date specified therein, as the case may be.

 

(ii)    The Company other than for Cause, death or Disability, the Date of
Termination shall be the date on which the Company notifies the Participant of
such termination.

 

(iii)  Reason of death or Disability, the Date of Termination shall be the date
of death of the Participant or the Disability Effective Date, as the case may
be.

Disability    As defined in Section 3.2(b) (ii). Disability Effective

Date

   As defined in Section 3.2(b) (ii).

 

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Effective Date    April 24, 2007 Employer    The Company or any of its
Affiliates. Excise Tax    The excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.
Good Reason    As defined in Section 3.2(a). Key Executive    An employee who is
employed on a regular basis by the Employer in a salary band D or more senior
position. Long-Term
Incentive Plan
Award Target    The long-term cash award that the Participant would receive
during a performance cycle under the Long-Term Incentive Plan or any comparable
annual incentive plan if the target goals specified under the Long-Term
Incentive Plan or such annual incentive plan are achieved. Long-Term
Incentive Plan
Target Percentage    The Long-Term Incentive Plan Target as a percentage of
Annual Base Salary. Non-Competition
Agreement    The agreement of a Participant, not to, without the Company’s prior
written consent, engage in any activity or provide any services, whether as a
director, manager, supervisor, employee, adviser, consultant or otherwise, for a
period of up to one (1) year following the date of the Participant’s termination
of employment with the Company, with a company that is substantially competitive
with a business conducted by the Company. Non-Solicitation
Agreement    The agreement of a Participant that he or she will not solicit,
directly or indirectly, any employee of the Company, or a surviving entity
following a Change-in-Control, to leave the Company and to work for any other
entity, whether as an employee, independent contractor or in any other capacity,
for a period of up to one (1) year following the Participant’s Date of
Termination of employment with the Company. Non-U.S.
Executive    A Key Executive whose designated home country, for purposes of the
Employer's personnel and benefits programs and policies, is other than the
United States. Participant    A Key Executive who meets the eligibility
requirements of Section 2.1; provided, however, that any Non-U.S. Executive who,
under the laws of his or her designated home country or the legally enforceable
programs or policies of the Employer in such designated home country, is
entitled to receive, in the event of termination of employment (whether or not
by reason of a Change in Control), separation benefits at least equal in
aggregate amount to the Separation Pay prescribed under Section 3.3(b), of this
Plan shall not be considered a Participant for the purposes of this Plan.

 

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Payment    Any payment or distribution in the nature of compensation (within the
meaning of Section 280G (b) (2) of the Code) to or for the benefit of the
Participant, whether paid or payable pursuant to this Plan or otherwise. Plan   
The Kraft Foods Inc. Change in Control Plan for Key Executives, as set forth
herein. Plan Administrator    The third-party accounting, actuarial, consulting
or similar firm retained by the Company prior to a Change in Control to
administer this Plan following a Change in Control. Separation Benefits    The
amounts and benefits payable or required to be provided in accordance with
Section 3.3 of this Plan. Separation Pay    The amount or amounts payable in
accordance with Section 3.3(b) of this Plan. U.S. Executive    A Participant
whose designated home country, for purposes of the Employer's personnel and
benefits programs and policies, is the United States.

2. Eligibility

2.1. Participation. Except as set forth in the definition of Participant above,
each employee who is a Key Executive on the Effective Date shall be a
Participant in the Plan effective as of the Effective Date and each other
employee shall become a Participant in the Plan effective as of the date of the
employee's promotion or hire as a Key Executive.

2.2. Duration of Participation. A Participant shall cease to be a Participant in
the Plan if (i) the Participant ceases to be employed by the Employer under
circumstances not entitling him or her to Separation Benefits or (ii) the
Participant otherwise ceases to be a Key Executive, provided that no Key
Executive may be so removed from Plan participation in connection with or in
anticipation of a Change in Control that actually occurs. However, a Participant
who is entitled, as a result of ceasing to be a Key Executive of the Employer,
to receive benefits under the Plan shall remain a Participant in the Plan until
the amounts and benefits payable under the Plan have been paid or provided to
the Participant in full.

3. Separation Benefits

3.1. Right to Separation Benefits. A Participant shall be entitled to receive
from the Company the Separation Benefits as provided in Section 3.3, if a Change
in Control has occurred and the Participant's employment by the Employer is
terminated under circumstances specified in Section 3.2(a), whether the
termination is voluntary or involuntary, and if (i) such termination occurs
after such Change in Control and on or before the second anniversary thereof, or
(ii) such termination is reasonably demonstrated

 

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by the Participant to have been initiated by a third party that has taken steps
reasonably calculated to effect a Change in Control or otherwise to have arisen
in connection with or in anticipation of such Change in Control.

3.2. Termination of Employment.

 

(a) Terminations which give rise to separation benefits under this Plan. The
circumstances specified in this Section 3.2(a) are any termination of employment
with the Employer by action of the Company or any of its Affiliates or by a
Participant for Good Reason, other than as set forth in Section 3.2(b) below.
For purposes of this Plan, "Good Reason" shall mean:

 

  (i) the assignment to the Participant of any duties substantially inconsistent
with the Participant's position, authority, duties or responsibilities in effect
immediately prior to the Change in Control, or any other action by the Company
or the Employer that results in a marked diminution in the Participant’s
position, authority, duties or responsibilities, excluding for this purpose:

 

  a. changes in the Participant’s position, authority, duties or
responsibilities which are consistent with the Participant’s education,
experience, etc.;

 

  b. an isolated, insubstantial and inadvertent action not taken in bad faith
and that is remedied by the Company and/or the Employer promptly after receipt
of notice thereof given by the Participant;

 

  (ii) any reduction in the Participant’s base salary, annual incentive or
long-term incentive opportunity as in effect immediately prior to the Change in
Control, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and that is remedied by the Company and/or the Employer
promptly after receipt of notice thereof given by the Participant;

 

  (iii) the Company's or the Affiliate's requiring the Participant to be based
at any office or location other than any other location which does not extend
the Participant’s current home to work location commute by more than 50 miles;

 

  (iv) the Company's or the Affiliate's requiring the Participant to travel on
business to a substantially greater extent than required immediately prior to
the Change in Control;

 

  (v) any alleged termination by the Company or the Affiliate of the
Participant's employment otherwise than as expressly permitted by this Plan; or

 

  (vi) any failure by the Company to require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place, as required by Article 5.

 

(b) Terminations which DO NOT give rise to separation benefits under this Plan.
Notwithstanding Section 3.2(a), if a Participant's employment is terminated for
Cause or Disability (as those terms are defined below) or as a result of the
Participant's death, or the Participant terminates his or her own employment
other than for Good Reason, the Participant shall not be entitled to Separation
Benefits under the Plan, regardless of the occurrence of a Change in Control.

 

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  (i) A termination for ”Cause" shall have occurred where a Participant is
terminated because of:

 

  a. Continued failure to substantially perform the Participant’s job’s duties
(other than resulting from incapacity due to disability);

 

  b. Gross negligence, dishonesty, or violation of any reasonable rule or
regulation of the Company where the violation results in significant damage to
the Company; or

 

  c. Engaging in other conduct which adversely reflects on the Company in any
material respect.

 

  (ii) A “Termination for Disability" shall have occurred where a Participant is
absent from the Participant's duties with the Employer on a full-time basis for
180 consecutive days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Participant or the Participant's
legal representative. In such event, the Participant's employment with the
Employer shall terminate effective on the 30th day after receipt of such notice
by the Participant (the "Disability Effective Date"), provided that, within the
30 days after such receipt, the Participant shall not have returned to full-time
performance of the Participant's duties.

 

(c) Notice of termination. Any termination by the Company for Cause, or by the
Participant for Good Reason, shall be communicated by a Notice of Termination to
the other party. For purposes of this Plan, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Plan relied upon, (ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Participant's employment under the provision so indicated and (iii) if the Date
of Termination is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 30 days after the giving of
such notice). The failure by the Participant or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Participant or the
Company, respectively, hereunder or preclude the Participant or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Participant's or the Company's rights hereunder.

3.3. Separation Benefits. If a Participant's employment is terminated under the
circumstances set forth in Section 3.2(a) entitling the Participant to
Separation Benefits, and if the Participant signs a Non-Competition Agreement
and a Non-Solicitation Agreement, the Company shall pay or provide, as the case
may be, to the Participant the amounts and benefits set forth in items
(a) through (e) below (the "Separation Benefits"):

 

(a)

The Company shall pay to the Participant, in a lump sum in cash within 30 days
after the Date of Termination (or, if later, 30 days after the date of the
Change in Control), or on such later date as required under Section 3.3(g), the
sum of (A) the

 

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Participant's Annual Base Salary through the Date of Termination to the extent
not theretofore paid, (B) the product of (x) the Participant's Target Annual
Incentive Award and (y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination and the denominator
of which is 365, (C) the product of (x) the Participant's Long-Term Incentive
Award Target and (y) a fraction, the numerator of which is the number of days
completed in the applicable performance cycle through the Date of Termination
and the denominator of which is total number of days in the performance cycle,
and (D) any accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in sub clauses (A), (B), (C) and (D), the
"Accrued Obligations".

 

(b) The Company also shall pay to the Participant, in a lump sum in cash within
30 days after the Date of Termination (or, if later, 30 days after the date of
the Change in Control), or on such later date as required under Section 3.3(g),
an amount ("Separation Pay") equal to the product of (A) two (or in the case of
a Participant who served as Chairman and Chief Executive Officer immediately
prior to the Change in Control, three) and (B) the sum of (x) the Participant's
Annual Base Salary and (y) the Participant's Target Annual Incentive Award,
reduced (but not below zero) in the case of any Participant who is a Non-U.S.
Executive by the U.S. dollar equivalent (determined as of the Participant's Date
of Termination) of any payments made to the Participant under the laws of his or
her designated home country or any program or policy of the Employer in such
country on account of the Participant's termination of employment.

 

(c) Solely with respect to U.S. Participants, for two years after the
Participant's Date of Termination (or, if later, the date of the Change in
Control), (or in the case of a Participant who served as Chairman and Chief
Executive Officer immediately prior to the Change in Control, three years), or
such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue welfare benefits to the
Participant and/or the Participant's family at least equal to those which would
have been provided to them in accordance with the plans, programs, practices and
policies (including, without limitation, medical, prescription, dental,
disability, employee/spouse/child life insurance, executive life, estate
preservation (second-to-die life insurance) and travel accident insurance plans
and programs), as if the Participant's employment had not been terminated, or,
if more favorable to the Participant, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
Affiliates and their families; provided, however, that if the Participant
becomes reemployed with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. For purposes
of determining the Participant's eligibility for retiree benefits pursuant to
such welfare plans, practices, programs and policies, the Participant shall be
considered to have remained employed until two years (or in the case of a
Participant who served as Chairman and Chief Executive Officer immediately prior
to the Change in Control, three years) after the Date of Termination, provided,
however, that the Participant's commencement of such retiree benefits shall not
be any sooner than the date on which the Participant attains 55 years of age.

 

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(d) The Company shall, at its sole expense, provide the Participant with
outplacement services through the provider of the Company's choice, the scope of
which shall be chosen by the Participant in his or her sole discretion within
the terms and conditions of the Company's outplacement services policy as in
effect immediately prior to the Change in Control, but in no event shall such
outplacement services continue for more than two years after the calendar year
in which the Participant separates from service.

 

(e) The Company shall, for two years after the Participant's Date of Termination
(or in the case of a Participant who served as Chairman and Chief Executive
Officer immediately prior to the Change in Control, three years), or after the
Change in Control, if later, or such longer period as may be provided by the
terms of the appropriate perquisite, continue the perquisites at least equal to
those which would have been provided to them in accordance with the perquisites
in effect at the immediately prior to the Change in Control. This clause does
not apply to personal use of the Company aircraft to the extent that this
perquisite is in effect for any Key Executive immediately prior to the Change in
Control.

 

(f) To the extent not theretofore paid or provided, the Employer shall timely
pay or provide to the Participant any other amounts or benefits required to be
paid or provided or that the Participant is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
Affiliates.

 

(g) Notwithstanding the foregoing, if the Participant is a “specified employee”
within the meaning of Section 409A of the Code, then (i) any payments described
in Sections 3.3(a) and (b) which the Company determines constitute the payment
of nonqualified deferred compensation, within the meaning of Section 409A of the
Code, shall be delayed and become payable within five days after the six-month
anniversary of the date on which the Participant separates from service and
(ii) any benefits provided under Sections 3.3(c) and (e) which the Company
determines constitute the payment of nonqualified deferred compensation, within
the meaning of Section 409A of the Code, shall be provided at the Participant’s
sole cost during the six-month period after the date on which the Participant
separates from service, and within five days after the expiration of such period
the Company shall reimburse the Participant for the portion of such costs
payable by the Company pursuant to Sections 3.3(c) and (e) hereof.

 

(h) For all purposes under the applicable Company non-qualified defined benefit
pension plan, the Company shall credit the Participant with two (or in the case
of a Participant who served as Chairman and Chief Executive Officer immediately
prior to the Change in Control, three) additional years of service and shall add
two (or in the case of a Participant who served as Chairman and Chief Executive
Officer immediately prior to the Change in Control, three) years to the
Participant’s age.

 

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3.4. Certain Additional Payments by the Company.

 

(a) Anything in this Plan to the contrary notwithstanding, with respect to any
Participant who is a citizen or resident of the United States, in the event it
shall be determined that any Payment would be subject to the Excise Tax, then
the Participant shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Participant of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Participant retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 3.4(a), if it shall be determined that any Participant, other than a
Participant who served as Chairman and Chief Executive Officer of the Company
immediately prior to the Change in Control, is entitled to a Gross-Up Payment,
but that the Participant, after taking into account the Payments and the
Gross-Up Payment, would not receive a net after-tax benefit (taking into account
both income taxes and any Excise Tax) which is at least ten percent
(10%) greater than the net after-tax proceeds to the Participant resulting from
an elimination of the Gross-Up Payment and a reduction of the Payments, in the
aggregate, to an amount (the “Reduced Amount”) that is one dollar less than the
smallest amount that would give rise to any Excise Tax, then no Gross-Up Payment
shall be made to the Participant and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.

 

(b) Subject to the provisions of Section 3.4(c), all determinations required to
be made under this Section 3.4, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Company’s
independent auditors or such other nationally recognized certified public
accounting firm as may be designated by the Company and approved by the
Participant (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Participant within 15 business days of
the receipt of notice from the Participant that there has been a Payment, or
such earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Subject to Section 3.4(e)
below, any Gross-Up Payment, as determined pursuant to this Section 3.4, shall
be paid by the Company to the Participant within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Participant. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 3.4(c) and the Participant thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Participant.

 

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(c) The Participant shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Participant is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Participant shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Participant in writing prior to the
expiration of such period that it desires to contest such claim, the Participant
shall:

 

  (i) give the Company any information reasonably requested by the Company
relating to such claim,

 

  (ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

 

  (iii) cooperate with the Company in good faith in order effectively to contest
such claim, and

 

  (iv) permit the Company to participate in any proceedings relating to such
claim;

PROVIDED, HOWEVER, that (A) the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Participant
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3.4(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Participant to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Participant
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; (B) that if the Company directs the
Participant to pay such claim and sue for a refund, the Company shall advance
the amount of such payment to the Participant, on an interest-free basis and
shall indemnify and hold the Participant harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Participant with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Participant shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

 

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(d) If, after the receipt by the Participant of an amount advanced by the
Company pursuant to Section 3.4(c), the Participant becomes entitled to receive
any refund with respect to such claim, the Participant shall (subject to the
Company's complying with the requirements of Section 3.4(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Participant of an amount advanced by the Company pursuant to Section 3.4(c), a
determination is made that the Participant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

 

(e) Notwithstanding any other provision of this Section 3.4, the Company may
withhold and pay over to the Internal Revenue Service for the benefit of the
Participant all or any portion of the Gross-Up Payment that it determines in
good faith that it is or may be in the future required to withhold, and the
Participant hereby consents to such withholding.

3.5. Payment Obligations Absolute. Upon a Change in Control, the obligations of
the Company and its Affiliates to pay or provide the Separation Benefits
described in Section 3.3 shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any of the
Affiliates may have against any Participant. In no event shall a Participant be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to a Participant under any of the provisions of this
Plan, nor shall the amount of any payment or value of any benefits hereunder be
reduced by any compensation or benefits earned by a Participant as a result of
employment by another employer, except as specifically provided under
Section 3.3.

3.6. Non-Competition and Non-Solicitation. Upon a Change in Control, the
obligations of the Company and its Affiliates to pay or provide the Separation
Benefits described in Section 3.3 are contingent on the Participant’s adhering
to the Non-Competition Agreement and the Non-Solicitation Agreement. Should the
Participant violate the Non-Competition Agreement or Non-Solicitation Agreement,
the Participant will be obligated to pay back to the Employer all payments
received pursuant to this Plan and the Employer will have no further obligation
to pay the Participant any payments that may be remaining due under this Plan.

3.7. Non-Disparagement. Upon a Change in Control, the obligations of the Company
and its Affiliates to pay or provide the Separation Benefits described in
Section 3.3 are contingent on the Participant’s adhering to certain
non-disparagement provisions. The Participant agrees that, in discussing their
relationship with Employer, such Participant will not disparage, discredit or
otherwise treat in a detrimental manner the Employer, its affiliated and parent
companies or their officers, directors and employees. The Employer agrees that,
in discussing its relationship with the Participant, it will not disparage or
discredit such Participant or otherwise treat such Participant in a detrimental
way.

 

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3.8 General Release of Claims. Upon a Change in Control, the obligations of the
Company and its Affiliates to pay or provide the Separation Benefits described
in Section 3.3 are contingent on the Participant’s (for him/herself, his/her
heirs, legal representatives and assigns) agreement to release the Employer, its
affiliated companies and their officers, directors, agents and employees from
any claims or causes of action of any kind that the Participant might have
against any one or more of them as of the date of this Release, regarding
his/her employment or the termination of that employment. The Participant
understands that this Release applies to all claims (s)he might have under any
federal, state or local statute or ordinance, or the common law, for employment
discrimination, wrongful discharge, breach of contract, violations of Title VII
of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, the
Employee Retirement Income Security Act, the Americans With Disabilities Act, or
the Family and Medical Leave Act, and all other claims related in any way to
Participant's employment or the termination of that employment.

3.9. Non-Exclusivity of Rights. Nothing in this Plan shall prevent or limit the
Participant's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of the Affiliates and for which the
Participant may qualify, nor, subject to Section 6.2, shall anything herein
limit or otherwise affect such rights as the Participant may have under any
contract or agreement with the Company or any of the Affiliates. Amounts or
benefits which the Participant is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of the Affiliates shall be payable in accordance with such plan, policy,
practice or program or contract or agreement, except as explicitly modified by
this Plan.

4. Successor to Company

This Plan shall bind any successor of the Company, its assets or its businesses
(whether direct or indirect, by purchase, merger, consolidation or otherwise),
in the same manner and to the same extent that the Company would be obligated
under this Plan if no succession had taken place.

In the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company's obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term "Company," as used in this Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the business or
assets which by reason hereof becomes bound by this Plan.

5. Duration, Amendment and Termination

5.1. Duration. This Plan shall remain in effect until terminated as provided in
Section 5.2. Notwithstanding the foregoing, if a Change in Control occurs, this
Plan shall continue in

 

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full force and effect and shall not terminate or expire until after all
Participants who become entitled to any payments or benefits hereunder shall
have received such payments or benefits in full.

5.2. Amendment and Termination. The Plan may be terminated or amended in any
respect by resolution adopted by the Committee unless a Change in Control has
previously occurred. However, after the Board has knowledge of a possible
transaction or event that if consummated would constitute a Change in Control,
this Plan may not be terminated or amended in any manner which would adversely
affect the rights or potential rights of Participants, unless and until the
Board has determined that all transactions or events that, if consummated, would
constitute a Change in Control have been abandoned and will not be consummated,
and, provided that, the Board does not have knowledge of other transactions or
events that, if consummated, would constitute a Change in Control. If a Change
in Control occurs, the Plan shall no longer be subject to amendment, change,
substitution, deletion, revocation or termination in any respect that adversely
affects the rights of Participants, and no Participant shall be removed from
Plan participation.

6. Miscellaneous

6.1. Legal Fees. The Company agrees to pay, to the full extent permitted by law,
all legal fees and expenses which the Participant may reasonably incur as a
result of any contest by the Company or the Affiliates, the Participant or
others of the validity or enforceability of, or liability under, any provision
of this Plan or any guarantee of performance thereof (including as a result of
any contest by the Participant about the amount of any payment pursuant to this
Plan), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided that
the Company shall have no obligation under this Section 6.1 to the extent the
resolution of any such contest includes a finding denying, in total, the
Participant’s claims in such contest.

6.2. Employment Status. This Plan does not constitute a contract of employment
or impose on the Participant, the Company or the Participant's Employer any
obligation to retain the Participant as an employee, to change the status of the
Participant's employment as an "at will" employee, or to change the Company's or
the Affiliates' policies regarding termination of employment.

6.3. Tax Withholding. The Company may withhold from any amounts payable under
this Plan such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

6.4. Validity and Severability. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

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6.5. Governing Law. The validity, interpretation, construction and performance
of the Plan shall in all respects be governed by the laws of the Commonwealth of
Virginia, without reference to principles of conflict of law.

6.6. Claim Procedure. If a Participant makes a written request alleging a right
to receive Separation Benefits under the Plan or alleging a right to receive an
adjustment in benefits being paid under the Plan, the Company shall treat it as
a claim for benefits. All claims for Separation Benefits under the Plan shall be
sent to the General Counsel of the Company and must be received within 30 days
after the Date of Termination. If the Company determines that any individual who
has claimed a right to receive Separation Benefits under the Plan is not
entitled to receive all or a part of the benefits claimed, it will inform the
claimant in writing of its determination and the reasons therefore in terms
calculated to be understood by the claimant. The notice will be sent within 90
days of the written request, unless the Company determines additional time, not
exceeding 90 days, is needed. The notice shall make specific reference to the
pertinent Plan provisions on which the denial is based, and describe any
additional material or information that is necessary. Such notice shall, in
addition, inform the claimant what procedure the claimant should follow to take
advantage of the review procedures set forth below in the event the claimant
desires to contest the denial of the claim. The claimant may within 90 days
thereafter submit in writing to the Plan Administrator a notice that the
claimant contests the denial of his or her claim by the Company and desires a
further review. The Plan Administrator shall within 60 days thereafter review
the claim and authorize the claimant to appear personally and review the
pertinent documents and submit issues and comments relating to the claim to the
persons responsible for making the determination on behalf of the Plan
Administrator. The Plan Administrator will render its final decision with
specific reasons therefor in writing and will transmit it to the claimant within
60 days of the written request for review, unless the Plan Administrator
determines additional time, not exceeding 60 days, is needed, and so notifies
the Participant. If the Plan Administrator fails to respond to a claim filed in
accordance with the foregoing within 60 days or any such extended period, the
Plan Administrator shall be deemed to have denied the claim.

6.7. Unfunded Plan Status. This Plan is intended to be an unfunded plan and to
qualify as a severance pay plan within the meaning of Labor Department
Regulations Section 2510.3-2(b). All payments pursuant to the Plan shall be made
from the general funds of the Company and no special or separate fund shall be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company as a result of participating in
the Plan. Notwithstanding the foregoing, the Committee may authorize the
creation of trusts or other arrangements to assist in accumulating funds to meet
the obligations created under the Plan; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

6.8. Reliance on Adoption of Plan. Subject to Section 5.2, each person who shall
become a Key Executive shall be deemed to have served and continue to serve in
such capacity in reliance upon the Change in Control provisions contained in
this Plan.

 

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6.9. Plan Supersedes prior U.S. Arrangements with one Exception. For the period
of two years following the occurrence of a Change in Control, the provisions of
this Program shall supersede, with respect to U.S. Participants, any and all
plans, programs, policies and arrangements of the Company providing severance
benefits, EXCEPT FOR the 2005 Performance Incentive Plan.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly
authorized officer effective as of the Effective Date set forth above.

 

KRAFT FOODS INC. By:  

/s/ Karen May

  EVP, Global Human Resources

 

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