Exhibit 10.2


 


AMENDED AND RESTATED

AIRCRAFT MANAGEMENT AGREEMENT


 


THIS AMENDED AND RESTATED AIRCRAFT MANAGEMENT
AGREEMENT (the “Agreement”) is made and entered into
as of this 16th day of December, 2005 (the “Effective Date”), by and between
KRAFT FOODS GLOBAL, INC., a Delaware corporation with a principal place of
business located at Three Lakes Drive, Northfield, IL 60093 (“Kraft”), and
ALTRIA CORPORATE SERVICES, INC., a New York corporation with a principal place
of business located at 120 Park Avenue, New York, NY 10017 (“Manager”).


 


WITNESSETH:


 


WHEREAS, Kraft
rightfully possesses the aircraft described in Exhibit A (which may be
amended from time to time by mutual agreement of the parties to provide for
substitution, replacement, addition or removal of certain aircraft)
(collectively, the “Aircraft”);


 


WHEREAS, Kraft
desires Manager to continue to provide aircraft management, pilot services,
maintenance and other aviation services (the “Services”) to Kraft to allow
Kraft to continue to conduct operations pursuant to Federal Aviation
Regulations (“FARs”) Part 91 under Kraft’s operational control pursuant to
the terms and conditions of this Agreement;


 


WHEREAS, Manager has
flight department personnel experienced in the business of managing, operating,
maintaining, and scheduling corporate aircraft and desires to continue to
perform these services for Kraft on the terms and conditions stated herein;


 


WHEREAS, Kraft and
Manager are parties to an Aircraft Management Agreement dated as of December 29,
2004 (the “2004 Management Agreement”);


 


WHEREAS, on December 16,
2005, Kraft acquired title to the Hangar Facility situated at the Base of
Operations and entered into an assignment of the Ground Lease pursuant to which
Kraft became the lessee of the Airport Leased Premises (the terms Hangar
Facility, Base of Operations, Ground Lease and Airport Leased Premises are
defined in Article 11.1 hereof); and


 


WHEREAS, Kraft and
Manager desire to amend and restate the 2004 Management Agreement primarily as
the result of Kraft’s acquiring title to the Hangar Facility and becoming the
lessee under the Ground Lease.


 


NOW THEREFORE, in
consideration of the promises and the mutual covenants contained herein, and
for good and valuable consideration, Kraft and Manager hereby agree as follows:


 





















 


ARTICLE ONE

TERM


 


1.1                                 Term.
The term of this Agreement (the “Term”) shall commence on the Effective Date
and shall remain in effect until such time as it has been terminated as to the
Services in accordance with Article 1.2 below.


 


1.2                                 Termination.
Either Party may terminate this Agreement without cause by providing one
hundred twenty (120) days’ prior written notice to the other Party or as
otherwise agreed between the Parties hereto.


 


1.3                                 Accounting
after Termination. Within one hundred twenty (120) days after the
termination date, Manager shall make a full accounting and the parties shall
settle all accounts between them.


 


1.4                                 Redelivery
of Aircraft and Records. Upon termination of this Agreement, Manager shall
redeliver the Aircraft, along with all Aircraft-specific books and records to
Kraft.


 


1.5                                 Termination
Assistance Services.  Manager agrees
that, upon termination of this Agreement, and at Kraft’s expense, Manager will
cooperate in good faith with Kraft to provide Kraft (or its designee) with
reasonable assistance to make an orderly transition from Manager to another
supplier of the Services. Transition assistance services shall include the
following:


 


(a)                                  Developing
a transition plan with assistance from Kraft or its designee;


(b)                                 Providing
training to Kraft personnel or its designee’s personnel to perform Services;
and


(c)                                  Organizing
and delivering to Kraft records and documents necessary to allow continuation
of the Services, including delivering such materials in electronic forms and
versions as requested by Kraft.


 


ARTICLE TWO

MANAGER’S OBLIGATIONS


 


2.1                                 Provision
of Aircraft Management and Aviation Services. Manager hereby agrees to
manage the Aircraft and furnish certain aviation support services described
below to Kraft during the Term.  Such
services shall be provided in accordance with any applicable FARs and in
accordance with Manager’s established procedures with respect to its own
aircraft, as such procedures may be modified from time to time, including but
not limited to the Altria Corporate Services, Inc. Aviation and Travel
Services Policy and Operations Manual (the “Manual”).


 


2.2                                 Pilot
and Flight Attendant Services. Manager agrees to provide pilot services to
Kraft. Manager agrees to employ and provide a sufficient number of fully
qualified pilots to operate the Aircraft in accordance with the Manual.  Manager reserves the right to utilize the
services of temporary qualified pilots, acceptable to both Manager and Kraft,
to supplement full-time staff, from time to time, when deemed necessary by
Manager.  It is agreed that the term “qualified
pilot” shall be deemed to refer to an individual who meets the following
minimum requirements:


 


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(a)                                  Holds
a valid Airline Transport Pilot’s Certificate with appropriate category, class
and type ratings for the Aircraft;


(b)                                 Holds
a current first class medical certificate in accordance with FAR §61.23(a)(1);


(c)                                  Is
current with respect to FAR Part 61, to conduct operations under FAR Part 91;


(d)                                 Is
familiar with Manager’s written policies and procedures;


(e)                                  Has
satisfactorily completed a recommended or approved ground and flight training
course for the Aircraft;


(f)                                    Is
approved as pilot with respect to the Aircraft insurance coverage; and


(g)                                 Is
approved as a pilot under the Manual.


 


Manager agrees to provide flight attendant
services to Kraft.  Manager agrees to
employ and provide a sufficient number of fully qualified flight attendants to
perform flight attendant services in accordance with the Manual.  Manager reserves the right to utilize the
services of temporary qualified flight attendants, acceptable to both Manager
and Kraft, to supplement full-time staff, from time to time, when deemed necessary
by Manager.


 


In accordance with the applicable FARs, each
flight crew member provided by Manager will exercise all of his or her duties
and responsibilities with the highest regard for the safety of each flight
conducted hereunder.  Kraft specifically
agrees that the pilot-in-command, in his or her sole discretion, may terminate
any flight, refuse to commence any flight, or take any other such action which
in the considered judgment of such pilot in command is necessitated by safety
considerations. No such action by the pilot in command shall create or support
any liability for loss, injury, damage or delay to Kraft or any other
person.  Kraft further agrees that
Manager shall not be liable for delay or failure to furnish or return the
Aircraft or flight crew pursuant to this Agreement when such failure is caused
by government regulation or authority, mechanical difficulty, war, civil
commotion, strikes or labor disputes, weather conditions or acts of God or is
necessary to adhere to the requirements of the Manual.


 


2.3                                 Maintenance
and Inspections of Aircraft. Manager shall be responsible for providing
maintenance, preventive maintenance, and required or otherwise necessary
inspections of the Aircraft. No period of maintenance, preventive maintenance
or inspection shall be delayed or postponed for the purpose of scheduling the
Aircraft, unless said maintenance or inspection can be safely conducted at a
later time in compliance with all applicable laws and regulations, and within
the sound discretion of the assigned pilot in command and Manager’s maintenance
manager.


 


It is expected by the parties that Manager
will perform, or arrange to be performed by qualified third parties, all
required pre-flight inspections and maintenance of the Aircraft, will keep the
interior and the exterior of the Aircraft clean, and will repair discrepancies
and perform scheduled inspections. 
Subject to the provisions of Article 3.4 below, it is expected by
the parties that Manager or Kraft may subcontract with outside maintenance
providers to perform any additional necessary maintenance on the Aircraft.


 


Kraft appoints Manager as its agent for the
limited purpose of executing, for and on behalf of Kraft, any maintenance
program and maintenance inspection agreements or any other 


 


3





















 


agreement as
shall be necessary in order for Manager to fulfill its obligations under this
Agreement.  Kraft agrees to indemnify and
hold Manager harmless from and against any claims, damages, losses or expenses
arising pursuant to any such maintenance program and maintenance inspection
agreements, or any other agreement necessary in order for Manager to fulfill
its obligations under this Agreement.


 


2.4                                 Logbooks
and Records. Manager shall maintain all logbooks and records pertaining to
the Aircraft in accordance with applicable FARs.  Manager shall make such logbooks and records
available for examination and copying by Kraft or Kraft’s duly authorized
agents, at Kraft’s reasonable advance request, at the location of such books
and records at the Hangar Facility.  At
the termination of this Agreement, Manager shall deliver such logbooks and
records to Kraft.


 


2.5                                 Additional
Duties of Manager. In addition to those duties assumed by Manager elsewhere
herein, Manager also agrees to perform the following:


 


(a)                                  Arrange
for and coordinate and schedule use of the Aircraft;


(b)                                 Arrange
for aircraft commissary, catering and rental car, limousine or taxi cab
passenger ground transportation, as requested by Kraft;


(c)                                  Utilize
and maintain the Hangar Facility and perform Kraft’s maintenance obligations
under Sections 9 and 10 of the Ground Lease in order to provide Services
pursuant to this Agreement, including but not limited to:  assisting the flight crew in the performance
of their duties; achieving scheduling of flights and flight personnel, flight
following and communication; performing routine scheduled and unscheduled
maintenance to the Aircraft; and assisting Kraft in the planning and support of
Kraft’s flight operation;


(d)                                 Advise,
assist and cooperate with Kraft in establishing the annual budget (“Original
Budget” or “OB”) and semi-annual budget update (“Second Revised Forecast” or “SRF”)
for each year during the Term for fixed and variable expenses respecting the
Aircraft, the Hangar Facility and the Airport Leased Premises (including the
performance of Manager’s responsibilities hereunder).  Manager shall also assist Kraft in the
process of transitioning to Kraft the direct payment by Kraft of all such fixed
and variable expenses (except for employee costs and insurance expenses which
shall continue to be paid by Manager and subsequently billed to Kraft, as
provided in Articles 3 and 5 of this Agreement);


(e)                                  At
Kraft’s request, arrange for backup aircraft coverage with a commercial
certificated air carrier or other provider operating in accordance with FARs
and acceptable to Manager and Kraft when the Aircraft is unavailable for Kraft’s
use due to scheduled or unscheduled maintenance.  Manager shall provide Kraft with a copy of
its list of acceptable providers upon request;


(f)                                    Assist
Kraft in obtaining and maintaining such insurance covering the Aircraft and its
operation as further described in Article 5.1 below;


(g)                                 Provide
such proof of insurance as required of Manager pursuant to Article 5.1(g) below;
and


 


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(h)                                 Arrange
for initial and recurrent training for each flight crew member, maintenance
technician and dispatcher.


 


ARTICLE THREE

KRAFT’S OBLIGATIONS


 


3.1                                 Operational
Control and Possession, Command and Control.  It is hereby agreed and acknowledged between
Kraft and Manager that during all phases of flights conducted under this
Agreement, Kraft shall retain and have (i) operational control of the
Aircraft, and (ii) possession, command and control of the Aircraft.  In addition, Kraft further acknowledges
operational control by exercising Kraft’s authority over initiating, conducting
and terminating each flight.  Kraft
chooses not to hire its own pilots but contract for the pilot services of
Manager. Although the flight crew is supplied by Manager for Kraft’s flights,
the flight crew is under the exclusive command and control of Kraft in all
phases of those flights and at all times. Kraft acknowledges that all of Kraft’s
flights are classified as “noncommercial” for Federal Aviation regulatory
purposes and, for Federal excise tax purposes, are subject to the appropriate
federal tax on aviation fuels. In exercising operational control, Kraft shall
comply with the FARs, insurance requirements and any pertinent regulations of
the United States or any country where the Aircraft may be operated from time
to time.  Kraft shall operate the
Aircraft in accordance with FAR Part 91.


 


3.2                                 Advance
Notification. Kraft shall provide Manager with information regarding proposed
flight schedules as far in advance of any given flight as possible.  Information that must be provided to Manager
shall be in a format mutually acceptable to the parties and shall include the
following information for each proposed flight:


 


(a)                                  Name
of requisitioner;


(b)                                 Date
requisition prepared;


(c)                                  Proposed
departure airport;


(d)                                 Proposed
destination airport;


(e)                                  Date
and time of flight;


(f)                                    The
number, names and social security numbers of anticipated employee passengers
and the flight legs on which each will travel;


(g)                                 The
number, names, addresses, telephone numbers and social security numbers of
anticipated non-employee passengers and the flight legs on which each will
travel;


(h)                                 The
nature and extent of any non-customary luggage and/or cargo, to include
firearms and/or hazardous materials, to be carried;


(i)                                     The
date and time of a return flight, if any;


(j)                                     Ground
transportation requests;


(k)                                  Special
catering requests; and


(l)                                     Any
other information concerning the proposed flight that may be pertinent or
required by the other party.


 


Kraft shall ensure that all passengers meet
all applicable requirements of US and foreign customs during travel aboard the
Aircraft.


 


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Manager hereby designates Drew Barnes,
telephone (414) 574-2101, as its contact for aircraft scheduling. Manager may
change its contact for aircraft scheduling by providing written notice of such
change to Kraft in accordance with Article 11.3 below.


 


Kraft is currently not a “citizen of the
United States” as defined in 49 U.S.C. §40102(a)(15), and is, therefore,
required to comply with the Department of Transportation regulations set forth
in 14 C.F.R. Part 375, one effect of which is to prohibit carriage of
candidates in elections where payment for the carriage is required.  During any time when Kraft is a “citizen of
the United States” as defined in 49 U.S.C. §40102(a)(15), with respect to any
persons required by federal or state law to make payment for such flights,
Kraft agrees to comply with FAR 91.321 and to provide Manager with advance
notification and such additional information as may be reasonably requested by
Manager.


 


3.3                                 Management
Fee and Variable Expenses.


 


(a)                                  Kraft
shall pay Manager a monthly management fee in order to reimburse Manager for a
ratable (i.e., 1/12th) portion of Manager’s fixed annual (i) employee
costs for Manager’s flight department senior management, to the extent such
senior management is engaged in providing services under this Agreement, and (ii) insurance
expenses associated with the performance of Manager’s obligations and duties
under this Agreement.  Kraft shall also
pay all other fixed expenses associated with its use of the Aircraft and
operation of the Aircraft and the utilization and maintenance of the Hangar
Facility and the Airport Leased Premises, whether incurred directly by Kraft or
incurred by Manager in the performance of its services under this Agreement and
billed back to Kraft, and shall pay to Manager the employee costs of Manager’s
personnel based at the Hangar Facility who are engaged in the provision of
services under this Agreement.  (All
fixed employee costs to be paid by Kraft hereunder shall include a 5% mark-up).


 


(b)                                 Kraft
shall pay all variable expenses associated with its use of the Aircraft and
operation of the Aircraft under this Agreement and the utilization and
maintenance of the Hangar Facility and the Airport Leased Premises whether
incurred directly by Kraft or incurred by Manager in the performance of its
services under this Agreement and billed back to Kraft.


 


(c)                                  Manager
shall not, without the prior consent of Kraft, perform any capital improvement
on the Hangar Facility having an anticipated cost exceeding $10,000 unless such
capital improvement is provided for in the then-current OB or SRF.  In the event that, in the reasonable judgment
of Manager, any repair or maintenance of the Hangar Facility (not provided for
in the the-current OB or SRF) is necessary or appropriate, Manager is
authorized to perform such Hangar Facility repair or maintenance at Kraft’s
expense.  Manager shall use all
reasonable efforts under the circumstances to notify Kraft in advance of any
Hangar Facility repair or maintenance expense not provided for in the
then-current OB or SRF which has an anticipated cost exceeding $10,000.  Any consent or notification under this Article 3.3(c) may
be given orally.


 


(d)                                 Manager
shall not, without the prior consent of Kraft, perform any capital improvement
on any of the Aircraft having an anticipated cost exceeding $100,000 unless
such capital improvement is provided for in the then-current OB or SRF.  Any capital improvement 


 


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performed by the Manager on any of the Aircraft shall be consistent
with the provisions of Article 7 hereof. 
Kraft shall also pay for all alterations, modifications, additions or
improvements to any of the Aircraft made pursuant to Article 7 hereof at
the time Manager performs such services. 
In the event that, in the reasonable judgment of Manager, any repair or
maintenance of any Aircraft (not provided for in the then-current OB or SRF) is
necessary or appropriate, Manager is authorized to perform such Aircraft repair
or maintenance at Kraft’s expense. 
Manager shall use all reasonable efforts under the circumstances to
notify Kraft in advance of any Aircraft repair or maintenance expense not
provided for in the then-current OB or SRF which has an anticipated cost
exceeding $100,000.  Any consent or
notification under this Article 3.3(d)may be given orally.


 


(e)                                  Kraft
shall pay all expenses required to comply with its obligations under the Ground
Lease.


 


3.4                                 Payment
of Fixed and Variable Expenses.


 


(a)                                  Kraft
shall pay Manager through inter-company cash transfer the monthly management fee
on or before the third Wednesday of each month during the Term hereof.


 


(b)                                 Manager
shall deliver to Kraft, on or about the 15th day of each month, an invoice for
the aggregate fixed expenses (to the extent not included in the management fee)
and variable expenses incurred for the previous month and paid by Manager on
behalf of Kraft.  Kraft will pay the
amount specified on such invoice to Manager, through inter-company cash
transfer no later than the third Wednesday of the month following the month that
such invoice was sent to Kraft.


 


(c)                                  At
the end of each six months during the term of the Agreement, Manager will
review the fixed expenses comprising the management fee actually incurred by
Manager (collectively, “Actual Cost”) during the previous six months.  In the event that Manager determines that the
Actual Cost differs from the aggregate fixed expenses comprising the management
fee as set forth in the preceding OB or SRF (as the case may be) by more than
2%, Manager will deliver to Kraft documentation for such Actual Cost and the
Parties will adjust the monthly management fee accordingly, retroactively or
prospectively.


 


On or before November 15 of each
calendar year, in connection with the annual review of services provided to
Kraft Foods Inc. and its wholly owned subsidiaries under the Services Agreement
dated as of January 1, 2001, an estimate of the fixed and variable
expenses for the next calendar year will be submitted to the Controller and
Chief Financial Officer (“CFO”) of Kraft Foods Inc. by the Controller of Altria
Group, Inc. on behalf of Manager, for review and approval. Approval by the
CFO of Kraft Foods Inc. and the CFO of Altria Group, Inc. will constitute
approval by the Manager and Kraft of the estimate of the fixed and variable
expenses for the ensuing year.


 


3.5                                 Insurance.
Kraft shall pay all costs and expenses relating to the insurance required to be
borne by Kraft pursuant to Article 5 and any other applicable provision of
this Agreement.


 


3.6                                 Facilities
and Equipment. Kraft shall be responsible, at its sole cost and expense, to
provide (and subsequently repair or replace as necessary) the Hangar Facility
at the Base of 


 


7





















 


Operations and keep the Ground Lease in
effect so as to allow Manager to perform its duties under this Agreement.  Kraft shall be solely responsible for all
claims arising by virtue of the provision or existence of the items comprising
the Hangar Facility hereof and all claims arising out of the provisions of the
Ground Lease.


 


3.7                                 Manual
Compliance. Kraft agrees to abide by and advise its passengers of all
applicable procedures set forth in the Manual. 
Manager shall deliver to a representative designated by Kraft a copy of
the Manual and any updates.


 


3.8                                 Training.
Kraft shall provide Manager with reasonable access to and use of the Aircraft
for the purpose of conducting all training and testing that is necessary for
compliance with the FARs and the Manual (including, without limitation,
proficiency checks, line checks, and type training and certification).


 


ARTICLE FOUR

USE OF FACILITIES & EQUIPMENT


 


4.1                                 Use
of Facilities and Equipment. Kraft hereby grants Manager usage of the
Hangar Facility as well as all other of Kraft’s facilities and equipment at the
Base of Operations and access to the Airport Leased Premises as Manager
requires to perform its services relating to the Aircraft, the Hangar Facility
and the Airport Leased Premises during the Term in accordance with this
Agreement.


 


ARTICLE FIVE

INSURANCE


 


5.1                                 Manager
Procured Insurance. During the Term until such time as Kraft is no longer
majority owned by Altria Group, Inc., Manager hereby agrees to arrange for
and procure, at Kraft’s expense, insurance coverage of the types, in the
amounts, and including the special provisions set forth below, under separate
aviation insurance policies relating to the Aircraft (“Manager’s Policies”).  The types, amounts and provisions of the
Manager’s Policies may be varied (at Kraft’s expense) to the extent required by
applicable law or regulation.


 


(a)                                  All
risk physical damage (hull) insurance, including war, hijacking and allied
perils coverage, with respect to the Aircraft insuring against any loss, theft
or damage to the Aircraft, and extended coverage with respect to any engines or
parts while removed from the Aircraft, in an amount equal to the agreed value
as listed in Exhibit B hereto, with no deductible. Such insurance shall
provide that all losses shall be adjusted with Kraft and be payable to the
beneficial owner of the Aircraft. Such insurance shall also contain a waiver of
subrogation in favor of Manager.


 


(b)                                 Aircraft
liability insurance, including war, hijacking and allied perils coverage, with
respect to the Aircraft insuring against liability for bodily injury to or
death of persons, including passengers, and damage to or loss of property, in
an amount not less than Two Hundred Fifty Million Dollars ($250,000,000)
combined limit per occurrence (except with respect to war risks, hijacking and
allied perils coverage, which shall be subject to a policy sub-limit in an
amount not less than Fifty Million Dollars ($50,000,000) combined limit per 


 


8





















 


occurrence and in the annual aggregate for bodily injury to or death
of, and property damage to, third parties).


 


(c)                                  Excess/Umbrella
Liability insurance in excess of the Aviation Liability policy limits set forth
above and where applicable in Exhibit B. 
Such Excess/Umbrella policy will include the provision that the primary
Liability policy be scheduled to such program for full policy limits.


 


(d)                                 Additional
coverages as set forth in Exhibit B hereto.


 


(e)                                  All
liability coverages required by this Article 5.1 (except for clause (c) of
such Article) and Exhibit B hereto shall include the following provisions:


 


(i)                                     such
insurance shall be primary without any right of contribution from any other
insurance available to Manager or Kraft; and


 


(ii)                                  such
insurance shall contain a standard clause as to cross liability or severability
of interests among insured parties providing that the insurance shall operate
in all respects as if a separate policy had been issued covering each party
insured except for limits of liability.


 


(f)                                    All
insurance required by this Article 5.1 and Exhibit B hereto shall
include the following provisions:


 


(i)                                     such
insurance shall cover the operation of the Aircraft;


 


(ii)                                  such
insurance shall name Kraft Foods Inc. and all of its subsidiaries and
affiliates as the Named Insured and shall name Manager, its affiliates,
successors and assigns and their respective officers, directors, members,
managers, employees, agents and representatives (the “Manager Additional
Insureds”) as additional insureds;


 


(iii)                               the
geographic limits of such insurance shall be worldwide, except that in the case
of war, hijacking and allied perils coverage, the coverage territory shall be
subject to such excluded territories as is usual in the aviation insurance
industry;


 


(iv)                              such
insurance shall provide that not less than thirty (30) calendar days advance
written notice (except ten (10) days written notice for non-payment of
premium and such shorter period as is customarily available under the war,
hijacking and allied perils insurance) shall be given to Manager and Kraft of
cancellation by any party or adverse material change or reduction in the limits
of coverage applicable to Manager or Kraft under the policies; and


 


(v)                                 such
insurance shall contain an invalidation of interest/breach of warranty clause
in favor of Manager Additional Insureds providing that the coverage afforded to
such parties will not be voided or invalidated by any act or neglect of Kraft
or any other insured party.


 


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(g)                                 Manager
shall provide to Kraft prior to the first operation of the Aircraft under
Manager’s Policies an insurance certificate reflecting the coverage required by
this Agreement and thereafter, when it becomes available, a copy of the policy
showing the applicable coverages.


 


5.2                                 Kraft
Provided Insurance. If at any time during the Term, Kraft is no longer
majority owned by Altria Group, Inc., Kraft shall immediately arrange and
procure, at Kraft’s expense, insurance for the Aircraft (“Kraft’s Policies”).  The provisions of Kraft’s Policies shall be
at least as comprehensive and advantageous as the provisions of Manager’s
Policies, including terms, limitations, conditions and exclusions, and shall
provide the specific coverages and provisions outlined in Articles 5.1(a)-(f) and
5.2(a) and Exhibit B. Furthermore, Kraft’s Policies shall be issued
by an insurance company reasonably acceptable to Manager. Upon Kraft’s notice
to Manager of commencement of insurance coverage under Kraft’s insurance,
Manager’s responsibilities under Article 5.1 above shall cease.


 


(a)                                  Kraft
shall provide to Manager (with its notice of commencement of insurance coverage
as described in this Article 5.2) an insurance certificate reflecting the
coverage required by this Agreement and thereafter, when it becomes available,
a copy of the policy showing the applicable coverages. The insurance policy
shall waive all rights of subrogation against the Manager Additional Insureds
and shall recognize in writing this Agreement.


 


5.3                                 Manager’s
Insurance Obligations. During the Term, Manager will maintain in full force
and effect, at its own expense:


 


(a)                                  Workers’
Compensation Coverage that provides applicable statutory benefits and Employer
Liability Coverage in an amount of not less than Five Hundred Thousand Dollars
($500,000) covering all employees of Manager.


 


(b)                                 Commercial
General Liability insurance, including premises liability coverage, in the
amount of Five Million Dollars ($5,000,000) per occurrence, and products and
completed operations coverage in the amount of Ten Million Dollars ($10,000,000)
per occurrence and in the aggregate.


 


(c)                                  Fire
and extended coverage insurance on Manager’s personal property, trade fixtures
and equipment located in or at the Hangar Facility, in an amount equal to the
full replacement value thereof.


 


5.4                                 Kraft’s
Insurance Obligations. In addition to and notwithstanding Articles 5.1 and
5.2 above, during the Term, Kraft will maintain in full force and effect, at
its own expense:


 


(a)                                  Commercial
General Liability insurance, including premises liability and environmental
coverage,  in the amount of Five Million
Dollars ($5,000,000) per occurrence, and products and completed operations
coverage in the amount of Ten Million Dollars ($10,000,000) combined single
limit per occurrence and in the aggregate.


 


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(b)                                 Fire
and extended coverage insurance on Kraft’s personal property, trade fixtures
and equipment located in or at the Hangar Facility, in an amount equal to the
full replacement value thereof.


 


(c)                                  “All
Risk Property” insurance coverage for the Hangar Facility valued on a “replacement
cost” basis.


 


5.5                                 Insurance
Validity. In the event that any insurance on the Aircraft which is required
by this Article 5 is invalidated for any reason, the Aircraft shall not be
operated until such time as all such insurance is again valid and in full force
and effect.


 


ARTICLE SIX

INDEPENDENT CONTRACTOR


 


6.1                                 Independent
Contractor. Manager shall be deemed to be an independent contractor.  Manager shall be free to devote to its other
business such portion of its entire time, energy, efforts and skill, as it sees
fit.  Manager shall have no mandatory
duties, except those which are specifically set out in this Agreement.  Nothing contained in this Agreement shall be
regarded as creating any relationship (employer/employee, joint venture,
partnership) between the parties other than as set forth herein.


 


6.2                                 No
Agent Status. Except as specifically set forth in Article 2.3, Manager
shall never at any time during the Term become the agent of Kraft and Kraft
shall not be responsible for the acts or omissions of Manager or its agents
except as set forth herein.


 


6.3                                 No
Employee Status. No employee of Manager will, at any time, represent
himself or herself to be an employee of Kraft.


 


ARTICLE SEVEN

ALTERATIONS


 


7.1                                 Alterations.  Manager shall not have the right to alter,
modify or make any additions or improvements to the Aircraft or engines, other
than those necessary to obtain and maintain FAA certification, to maintain the
Aircraft in accordance with the terms hereof or to ensure the Aircraft conforms
to Manager’s criteria and guidelines for aircraft owned and operated by Manager
including alterations to the Aircraft necessary to ensure that the Aircraft are
substantially similar to the aircraft of the same make and model flown by the
flight crew for the Aircraft, without prior written permission from Kraft. All
such alterations, modifications, additions and improvements as are so made
shall become the property of Kraft and shall be subject to the terms of this
Agreement.


 


ARTICLE EIGHT

TITLE


 


8.1                                 Title.  Kraft has the right to operate the Aircraft
pursuant to that certain Dry Lease dated as of December 22, 2004 between
Kraft and Kraft Foods Aviation, LLC, the beneficial owner of the Aircraft, and
has full right, power and authority and has secured all necessary consents to
enter into this Agreement with Manager. 
Kraft acquired the Hangar Facility from 


 


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Manager pursuant to the Purchase and Sale
Agreement dated as of December 15, 2005 between Manager and Kraft.  Kraft became the lessee under the Ground
Lease pursuant to the Assignment of Lease to Airport Agreement No. HP-695
dated as of December 16, 2005, 2005 and executed by Milwaukee County,
Wisconsin, Manager and Kraft.  It is
expressly understood and agreed that this is a management contract, and that
Manager acquires no ownership, title, property rights or interests in or to the
Aircraft and their engines, accessories and equipment or the Hangar Facility or
the Airport Leased Premises.


 


ARTICLE NINE

RISK OF LOSS OR DAMAGE TO AIRCRAFT AND/OR THE HANGAR FACILITY


 


9.1                                 Risk
of Loss or Damage.  Risk of loss or
damage to the Aircraft and/or the Hangar Facility shall be borne by Kraft. If,
during the Term, any of the Aircraft is destroyed, lost or damaged beyond
repair, this Agreement shall terminate immediately, as to such Aircraft, unless
otherwise agreed


 


ARTICLE TEN

INDEMNIFICATION


 


10.1                           Indemnification.
Each party to this Agreement hereby indemnifies and holds harmless the other
party and its respective officers, directors, partners, employees, shareholders
and affiliates for any claim, damage, loss or reasonable expense, including
reasonable attorneys’ fees, resulting from bodily injury or property damage to
third parties caused by an occurrence and arising out of the ownership,
maintenance or use of the Aircraft which results from the negligence or willful
misconduct of such indemnifying party (an “Indemnified Loss”), provided,
however, that neither party to this Agreement will be liable for any
Indemnified Loss:


 


(a)                                  to
the extent that such loss is covered by the insurance policies described in Article 5
(the “Policies”), or in the event the other party fails to maintain the
insurance coverages it is required to maintain pursuant to Article 5, such
loss would have been covered under the required coverages had they been in
effect;


 


(b)                                 with
respect to a loss covered by the Policies, to the extent that the amount of
such loss exceeds the policy limits required by Article 5;


 


(c)                                  with
respect to a loss consisting of expenses incurred in connection with a loss
covered in whole or in part by the Policies, to the extent that such expenses
are not fully covered by the Policies, or


 


(d)                                 to
the extent of the comparative negligence or willful misconduct of the
indemnified party or its officers, directors, partners, employees, shareholders
and affiliates.


 


10.2                           Indemnification
by Manager. Manager will indemnify Kraft for direct physical damage to the
Aircraft proven to have been caused by Manager’s gross negligence (“Gross
Negligence Aircraft Damage”); provided, however, that Manager will not
indemnify Kraft for any Gross Negligence Aircraft Damage:


 


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(a)                                  to
the extent that coverage for such damage is provided by Manager’s Policies
required to be maintained by Manager by Article 5 and Exhibit B;


 


(b)                                 with
respect to such damage for which coverage is provided by Manager’s Policies, to
the extent that the amount of such damage exceeds the agreed insured value
specified in Exhibit B;


 


(c)                                  to
the extent that coverage for such damage is provided by Kraft’s Policies
required to be maintained by Kraft by Article 5 and Exhibit B, or in
the event Kraft fails to maintain such required insurance coverages, coverage
for such damage would have been provided under such required coverages had they
been in effect; or


 


(d)                                 with
respect to such damage for which coverage is provided by Kraft’s Policies, to
the extent that the amount of such damage exceeds the agreed insured value
specified in Exhibit B.


 


If any Gross Negligence Aircraft Damage is
not covered by Manager’s or Kraft’s Policies solely because it is less than an
applicable deductible amount set forth in Exhibit B, Manager will
indemnify Kraft for the amount of any such damage up to the amount of such
deductible. Manager will not indemnify Kraft for any other uninsured damage to
the Aircraft.


 


10.3                           LIMITATION
OF LIABILITY. EACH PARTY ACKNOWLEDGES AND AGREES THAT


 


(a)                                  THE
PROCEEDS OF INSURANCE TO WHICH IT IS ENTITLED;


 


(b)                                 ITS
RIGHTS TO INDEMNIFICATION FROM THE OTHER PARTY UNDER ARTICLE 10.1 (AND IN
THE CASE OF KRAFT, ITS RIGHTS TO INDEMNIFICATION UNDER ARTICLE 10.2) (AND
IN THE CASE OF MANAGER, ITS RIGHTS TO INDEMNIFICATION UNDER ARTICLES 2.3 AND
10.4); AND


 


(c)                                  ITS
RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A MATERIAL BREACH OF THE OTHER
PARTY’S OBLIGATIONS UNDER THIS AGREEMENT ARE THE SOLE REMEDIES FOR ANY DAMAGE,
LOSS OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED
HEREUNDER OR CONTEMPLATED HEREBY.  KRAFT
WAIVES ALL RIGHTS OF RECOVERY AGAINST MANAGER AND MANAGER ADDITIONAL INSUREDS
FOR ANY LOSS OR DAMAGE TO THE AIRCRAFT, EXCEPT AS SET FORTH IN ARTICLE 10.2
ABOVE.  EXCEPT AS EXPRESSLY SET FORTH IN
THIS ARTICLE 10.3 AND ARTICLE 10.4, EACH PARTY WAIVES ANY RIGHT TO
RECOVER ANY DAMAGE, LOSS OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE
SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
OR HAVE ANY DUTY FOR INDEMNIFICATION OR CONTRIBUTION TO THE OTHER PARTY FOR ANY
CLAIMED INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR
FOR ANY DAMAGES CONSISTING OF DAMAGES FOR LOSS OF USE, REVENUE, PROFIT,
BUSINESS OPPORTUNITIES AND THE LIKE, OR DEPRECIATION OR DIMINUTION IN VALUE OF
THE AIRCRAFT, EVEN IF THE 


 


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PARTY HAD BEEN ADVISED, OR KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY
OF SUCH DAMAGES.


 


10.4                           Failure
of Insurance Policies. When Kraft’s Policies are utilized, any
indemnification provided by Manager to Kraft, any waiver of any claim and any
agreements to be liable for damages set forth in this Article 10 shall not
apply to the extent that Kraft’s Policies have failed to provide the insurance
coverage required by Article 5, including Exhibit B. Furthermore,
Kraft agrees to indemnify Manager for any Indemnified Loss resulting from the
failure of Kraft’s Policies to comply with the requirements of Article 5,
including Exhibit B.


 


10.5                           Survival.
The provisions of this Article 10 will survive the termination or
expiration of this Agreement.


 


ARTICLE ELEVEN

MISCELLANEOUS PROVISIONS


 


11.1                           Base
of Operations, Hangar Facility, Ground Lease and Airport Leased Premises


 


For purposes of this Agreement:


 


(a)                                  the
Base of Operations of the Aircraft shall be General Mitchell International
Airport (MKE), Milwaukee, Wisconsin;


 


(b)                                 the
Hangar Facility shall consist of the hangar, fuel farm, fuel truck (when
transferred by Manager to Kraft), aircraft ramp facilities, parking facilities,
office space and aircraft support equipment and spare parts owned by Kraft
which are located on the Airport Leased Premises;


 


(c)                                  the
Ground Lease shall mean that certain Lease Agreement No. HP-695 dated as
of July 14, 1980, as amended, with respect to the Airport Leased Premises;
and


 


(d)                                 the
Airport Leased Premises shall mean those premises at the Base of Operations
which are the subject of the Ground Lease and on which the Hangar Facility is
located.


 


11.2                           Entire
Agreement. This Agreement constitutes the entire understanding between the
parties as of the Effective Date and supersedes all prior agreements between
the parties with respect to the subject matter hereof.  Any change, modification or amendment to this
Agreement must be in writing signed by both parties.


 


11.3                           Notices.
Unless specifically provided to the contrary herein, any notice required or
permitted under this Agreement shall be given in writing and shall be effective
for all purposes if hand delivered to the party designated below or if sent by (a) certified
or registered United States mail, 
postage prepaid; or (b) by expedited delivery service, either
commercial or United States Postal Service, with proof of delivery; or (c) by
telecopy (provided that such telecopy is confirmed by expedited delivery
service or by mail in the manner previously described), addressed as follows:


 


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If to Manager:                    Altria
Corporate Services, Inc.


180 Airport
Road, Hangar D-2

Westchester County Airport, White Plains

New York, NY 10604

Attn: George Saling

Tel: 914-335-3011

Fax: 914-335-3070


 


If to Kraft:                                         Kraft
Foods Inc.

Three Lakes Drive

Northfield, IL 60093

Attn: Marc S. Firestone

Tel: 847-646-2000

Fax: 847-646-2950


 


or to such other address and person as shall
be designated from time to time by Manager or Kraft, as the case may be, in a
written notice to the other in the manner provided for in this paragraph. The
notice shall be deemed to have been given at the time of delivery if hand
delivered or sent by confirmed telecopy, or in the case of registered or
certified mail, three (3) business days after deposit in the United States
mail, or if by expedited delivery, upon first attempted delivery on a business
day.  A party receiving notice which does
not comply with the technical requirements for notice under this paragraph may
elect to waive any deficiencies and treat the notice as having been properly
given.


 


11.4                           Compliance
with Laws. Manager and Kraft shall comply with all federal, state and local
laws and executive orders and regulations issued pursuant thereto, including
without limitation, and to the extent applicable to this Agreement, all FARs,
to the extent of their obligations under this Agreement.


 


11.5                           Rights
and Remedies. Manager and Kraft’s rights and remedies with respect to any
of the terms and conditions of this Agreement shall be cumulative and
non-exclusive and shall be in addition to all other rights and remedies which
either party possesses at law or in equity except as otherwise provided in this
Agreement.


 


11.6                           Invalidity.
In the event that any one or more of the provisions of this Agreement shall be
determined to be invalid, unenforceable or illegal, such invalidity,
unenforceability and illegality shall not affect any other provisions of this
Agreement, and the Agreement shall be construed as if such invalid,
unenforceable or illegal provisions had never been contained herein.


 


11.7                           Force
Majeure. Exclusive of Kraft’s obligations to pay for the operating expenses
and other expenses associated with the Aircraft, each party shall be relieved
of its obligations hereunder in the event and to the extent that the party’s
performance is delayed or prevented by any cause reasonably beyond such party’s
control, including but not limited to, acts of God, public enemies, war, civil
disorder, fire, flood, explosion, labor disputes or strikes, or any acts or
order of any governmental authority.


 


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11.8                           Waiver.
No delay or omission in the exercise or enforcement of any right or remedy
hereunder by either party shall be construed as a waiver of such right or
remedy.  All remedies, rights,
undertakings, obligations and agreements contained herein shall be cumulative
and not mutually exclusive.


 


11.9                           Assignment.
Neither this Agreement nor any party’s interest herein shall be assignable to
any other party without the consent of the other party. This Agreement shall
inure to the benefit of and be binding upon the parties hereto, their heirs,
representatives and successors.


 


11.10                     Confidentiality.
Manager and Kraft shall not disclose to any third party (other than their
respective affiliates) in any manner information regarding the terms of this
Agreement without the non-disclosing party’s prior written consent; provided,
however, that neither party shall be prohibited from making any disclosures to
the extent required by law.


 


11.11                     Review
of Records. Each party shall permit the other, upon reasonable request, to
review its accounting and other cost records relating to the Aircraft, so the
other party can conduct an audit of such records as that other party reasonably
deems necessary.


 


ARTICLE TWELVE

APPLICABLE LAW


 


12.1                           Governing
Law and Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.  Without limiting in any way the jurisdiction
of the courts of any state, nation or province, or Manager’s right to invoke
the jurisdiction of such courts, Kraft hereby consents to the jurisdiction of
the courts of the United States of America and the State of New York in any
dispute which arises out of this Agreement and agrees that service of process
shall be sufficient if made on the Secretary of State of New York with a copy
to be sent, by registered mail, to Kraft at the address set forth in Article 11.3
above.


 


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IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.


 


	
  Manager:

  	
  Kraft:

  
	
  ALTRIA CORPORATE SERVICES, INC.

  	
  KRAFT FOODS GLOBAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jim R. West

  	
   

  	
  By:

  	
  /s/ Bruce
  Windedahl

  	
   

  
	
   

  	
   

  
	
  Title: Director,
  Technical and Financial Services

  	
  Title: Sr. Director

  
						



 


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