Document:

Form of Tax Sharing Agreement

 Exhibit 10.2 
 FORM OF 
 TAX SHARING AGREEMENT 
 BY AND BETWEEN 
 ALTRIA GROUP, INC. 
 AND 
 PHILIP MORRIS INTERNATIONAL
INC. 
 DATED AS OF
                                        
             
  

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
	 ARTICLE I DEFINITIONS
	  	1
			
	1.01	 	General	  	1
		
	 ARTICLE II TAX SHARING
	  	6
			
	2.01	 	General	  	6
	2.02	 	Payment of Taxes	  	7
	2.03	 	Carrybacks from Post-Distribution Period	  	8
	2.04	 	Preparation of Returns	  	9
		
	ARTICLE III REFUNDS	  	9
			
	3.01	 	Refunds	  	9
		
	ARTICLE IV INDEMNIFICATION	  	10
			
	4.01	 	General Indemnification	  	10
	4.02	 	Indemnification for Distribution Taxes	  	11
	4.03	 	Indemnification Payments	  	11
		
	ARTICLE V REPRESENTATIONS	  	11
			
	5.01	 	Altria and PMI Representations	  	11
		
	ARTICLE VI COVENANTS	  	12
			
	6.01	 	Altria and PMI Covenants	  	12
	6.02	 	Specific PMI Covenants	  	12
		
	ARTICLE VII TAX CONTESTS	  	13
			
	7.01	 	Representation with Respect to Tax Contests	  	13
		
	ARTICLE VIII PAYMENTS	  	14
			
	8.01	 	Method of Payment	  	14
	8.02	 	Interest	  	14

  

 i 

					
	8.03	  	Characterization of Payments	  	14
		
	 ARTICLE IX MISCELLANEOUS
	  	15
			
	9.01	  	Allocation	  	15
	9.02	  	Payment of Reserves	  	15
	9.03	  	Cooperation and Exchange of Information	  	15
	9.04	  	Retention of Records	  	16
	9.05	  	Dispute Resolution	  	16
	9.06	  	Changes in Law	  	16
	9.07	  	Confidentiality	  	17
	9.08	  	Successors	  	17
	9.09	  	Authorization	  	17
	9.10	  	Notices	  	17
	9.11	  	Entire Agreement	  	18
	9.12	  	Section Captions	  	18
	9.13	  	Governing Law	  	18
	9.14	  	Counterparts	  	18
	9.15	  	Waiver and Amendments	  	18
	9.16	  	Effective Date	  	19
	9.17	  	Termination	  	19

  

 ii 

 TAX SHARING AGREEMENT 
 THIS TAX SHARING AGREEMENT dated as of
                         (the “Agreement”) is between Altria Group, Inc., a Virginia corporation
(“Altria”), and Philip Morris International Inc., a Virginia corporation (“PMI”) (sometimes referred to herein individually as “Party”, or together, as “Parties”). 
 W I T N E S S E T H: 
 WHEREAS, Altria
is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”); 
 WHEREAS, PMI is a member of the affiliated group of corporations with respect to which Altria is the common parent corporation; 
 WHEREAS, as set forth in the Distribution Agreement by and between Altria and PMI, dated as of January 30, 2008 (the “Distribution Agreement”),
and subject to the terms and conditions thereof, Altria will distribute on a pro rata basis to the holders of Altria common stock all of the outstanding shares of PMI common stock then owned by Altria (the “Distribution”); 
 WHEREAS, the Distribution is intended to qualify as a tax-free distribution to Altria and its shareholders under Section 355 of the Code; and

 WHEREAS, in contemplation of the Distribution, pursuant to which PMI (and its direct and indirect Subsidiaries) will cease to be a member
of the affiliated group of corporations with respect to which Altria is the common parent corporation, the Parties hereto have determined to enter into this Agreement, setting forth their agreement with respect to certain tax matters; 
 NOW, THEREFORE in consideration of the premises and mutual covenants herein contained, the Parties hereby agree as follows: 
 ARTICLE I 
 DEFINITIONS

 1.01 General. For the purposes of this Agreement, the terms set forth below shall have the following meanings. 
  

 1 

 “Altria Consolidated Return Group” means Altria and any direct or indirect Subsidiary of
Altria that is, from time to time, a member of the affiliated group of corporations with respect to which Altria is the common parent corporation. For the avoidance of doubt, the Altria Consolidated Return Group includes, but is not limited to, any
company that for any period prior to the execution of this Agreement was a direct or indirect Subsidiary of Altria and that during such period was eligible to join with Altria, with respect to Federal Income Taxes, in the filing of a consolidated
United States Federal Income Tax return. 
 “Altria U.S. Group” means Altria and any direct or indirect Subsidiary of Altria
that is not also a member of the PMI Group or otherwise a direct or indirect Subsidiary of PMI and that would be eligible, from time to time, to join with Altria, with respect to Federal Income Taxes, in the filing of a consolidated United States
Federal Income Tax return and/or, with respect to Combined State Taxes, in the filing of a consolidated, combined or unitary income or franchise tax return. For the avoidance of doubt, the Altria U.S. Group includes, but is not limited to, any
company that for any period prior to the execution of this Agreement was a direct or indirect Subsidiary of Altria and that during such period was eligible to join with Altria, with respect to Federal Income Taxes, in the filing of a consolidated
United States Federal Income Tax return and, with respect to Combined State Taxes, in the filing of a consolidated, combined or unitary income or franchise tax return, but only if and to the extent that such company was not a member of the PMI Group
during such period. 
 “Altria U.S. Group Tax” means with respect to any taxable period (or portion thereof) (i) the
Federal Income Tax liability of the Altria Consolidated Return Group less the PMI Federal Income Tax Liability; (ii) the Altria Combined State Tax liability less the PMI Combined State Tax Liability; (iii) any other Tax imposed on any
member of the Altria U.S. Group or, with respect to any taxable year, any other Tax imposed on any direct or indirect Subsidiary of Altria (excluding, however, the PMI Group and any direct or indirect Subsidiary of PMI) that is not a member of the
Altria U.S. Group; and (iv) liability of any member of the Altria U.S. Group for the payment of any amounts of the type described in (i), (ii) or (iii) as a result of any express or implied obligation to indemnify any other person.

 “Combined State Tax” means, with respect to each state or local taxing jurisdiction, any income or franchise tax payable
to such state or local taxing jurisdiction in which a member of the PMI Group files tax returns with a member of the Altria U.S. Group on a consolidated, combined or unitary basis for purposes of such income or franchise tax. 
 “Distribution Date” shall mean the date on which the Distribution becomes effective. 
  

 2 

 “Distribution Taxes” shall mean any Taxes imposed on, increase in Taxes incurred by, or
reduction of a Tax Asset of Altria, and any Taxes of an Altria shareholder that are paid or reimbursed by Altria, together with any fines or penalties, pursuant to a Final Determination resulting from, or arising in connection with, the failure of
the Distribution to qualify as a tax-free transaction under Section 355 of the Code (including, without limitation, any Tax resulting from the application of Section 355(d) or Section 355(e) to the Distribution) or corresponding
provisions of the laws of any other jurisdictions. Any Tax referred to in the immediately preceding sentence shall be determined using the highest applicable statutory corporate income tax rate for the relevant taxable period (or portion thereof).

 “Effective Realization” (and the correlative term “Effectively Realized”) means, with respect to a tax saving
or tax benefit, including from the use of any Tax Asset, the earliest to occur of (i) the receipt by Altria or PMI (or any other member of Altria U.S. Group or PMI Group) of cash from a Taxing Authority reflecting such tax saving or tax
benefit, or (ii) the application of such tax saving or tax benefit to reduce any payments, including estimated tax payments, with respect to (A) the tax liability on a return of any of such entities or of any consolidated group of which
any of such entities is a member, or (B) any other outstanding tax liability of any of such entities or of any such consolidated group, provided that any reference in this definition to tax shall include, without limitation, a reference to a
recovery of statutory interest. 
 “Federal Income Tax” means any Tax imposed under Subtitle A of the Code and any related
interest and any penalties, additions to such Tax, or additional amounts imposed with respect thereto. 
 “Final
Determination” shall mean (i) with respect to Federal Income Taxes, a “determination” as defined in Section 1313(a) of the Code or execution of an Internal Revenue Service Form 870-AD and, with respect to taxes other
than Federal Income Taxes, any decision, judgment, decree or other order by a court of competent jurisdiction that, under applicable law, is not subject to further appeal, review or modification through proceedings or otherwise; (ii) a closing
agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of a State, local, or foreign taxing jurisdiction; (iii) the payment of tax by any member of the Altria Consolidated
Return Group with respect to any item disallowed or adjusted by a Taxing Authority, provided that Altria determines that no action should be taken to recoup such payment; or (iv) any other final disposition, by mutual agreement of the Parties
or by reason of the expiration of a statute of limitations or period for the filing of claims for refunds, amended returns, or appeals from adverse determinations. 
 “PMI Combined State Tax Liability” shall mean, with respect to any taxable period (or portion thereof) in the Pre-Distribution Period, an amount of Combined State Taxes, including any interest,
penalties and other additions to such taxes for such taxable year except to the extent attributable to Altria’s negligence, determined by taking 

  

 3 

 
the total separately computed state income or franchise tax liabilities of the PMI Group over the total separately computed state income or franchise tax
liabilities of the Altria Consolidated Return Group multiplied by the combined state income or franchise tax liability of the Altria Consolidated Return Group. 
 “PMI Current Federal Income Tax Provision” shall mean, with respect to any financial statement year (or portion thereof) in the Pre-Distribution Period, the sum of the PMI Group’s current federal
income tax provision determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) recorded on the PMI Group’s books and records and reported in the PMI Group’s published financial statements. 

“PMI Federal Income Tax Liability” shall mean, with respect to any taxable period (or portion thereof) in the Pre-Distribution
Period, the sum of the PMI Group’s Federal Income Tax liability and other additions to such Taxes except to the extent attributable to Altria’s negligence (as determined under the applicable principles of agency law rather than
Section 6662 of the Code) for such taxable period (or portion thereof), computed as if the PMI Group were not and never were part of the Altria Consolidated Return Group, but rather were a separate affiliated group of corporations filing a
consolidated United States Federal Income Tax return pursuant to Section 1501 of the Code (provided, however, that transactions with members of the Altria U.S. Group or between members of the PMI Group shall be reflected according to the
provisions of the consolidated return regulations promulgated under the Code governing intercompany transactions). Such computation shall be made: (A) without regard to the income, deductions (including net operating loss and capital loss
deductions) and credits in any year of any member of the Altria Consolidated Return Group that is not a member of the PMI Group, (B) by taking account of any Tax Asset of the PMI Group in accordance with Section 2.02(e) hereof,
(C) with regard to net operating loss and capital loss carryforwards and carrybacks and minimum tax credits from earlier years of the PMI Group, (D) as though the highest rate of tax specified in Section 11(b) of the Code were the
only rate set forth in that subsection, and (E) reflecting the positions, elections and accounting methods and periods used with respect to the PMI Group in preparing the Altria consolidated Federal Income Tax return. 
 “PMI Group” shall mean PMI and any direct or indirect Subsidiary of PMI that would be eligible, from time to time, to join with PMI,
with respect to Federal Income Taxes, in the filing of a consolidated United States Federal Income Tax return and, with respect to Combined State Taxes, in the filing of a consolidated, combined or unitary income or franchise tax return if PMI were
not a member of the Altria Consolidated Return Group. For the avoidance of doubt, the PMI Group includes, but is not limited to, any company that for any period prior to the execution of this Agreement was a direct or indirect Subsidiary of PMI and
that during such period would have been eligible to join with PMI, with respect to Federal Income Taxes, in the filing of a consolidated United States Federal Income Tax return and, with respect to Combined 

  

 4 

 
State Taxes, in the filing of a consolidated, combined or unitary income or franchise tax return if PMI were not a member of the Altria Consolidated Return
Group, but only if and to the extent that such company was not a member of the Altria U.S. Group during such period. 
 “PMI Group
Tax” means (i) PMI Federal Income Tax Liability; (ii) PMI Combined State Tax Liability; (iii) any other Tax imposed on any member of the PMI Group or, with respect to any taxable year, any other Tax imposed on any direct or
indirect Subsidiary of PMI that is not a member of the PMI Group; and (iv) liability of any member of the PMI Group for the payment of any amounts of the type described in (i), (ii) or (iii) as a result of any express or implied
obligation to indemnify any other person. 
 “PMI Pro Forma Combined State Return” means, for each state in which a combined
state income tax return may be filed, either a formal combined state income tax return, or, in the alternative, a schedule on which the PMI Combined State Tax Liability is reflected. 
 “PMI Pro Forma Federal Return” means either a formal Form 1120, or, in the alternative, a schedule on which the PMI Federal Income Tax
Liability is reflected. 
 “Post-Distribution Period” means any taxable period (or portion thereof) beginning after the
close of business on the Distribution Date. 
 “Pre-Distribution Period” means any taxable period (or portion thereof)
ending on or before the close of business on the Distribution Date. 
 “Ruling and Tax Opinion Documents” means (i) the
private letter ruling received from the Internal Revenue Service regarding certain tax consequences of the Distribution, (ii) the request for private letter ruling submitted to the Internal Revenue Service in connection with the Distribution
(including all supplemental submissions) and (iii) the tax opinion related to the Distribution delivered by Sutherland Asbill & Brennan LLP (“Tax Advisor”), including all exhibits to each, which contain, inter alia,
information and representations provided by Altria and PMI in connection with the Distribution. 
 “Subsidiary” means any
corporation or other legal entity (or any successor thereto) directly or indirectly “controlled”, where “control” means the ownership of 50% or more of the ownership interests (by vote or value) of such corporation or other legal
entity (or any successor thereto) or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such corporation or other legal entity. 
  

 5 

 “Tax” or “Taxes” shall mean all national, federal, state (including,
but not limited to the Ohio Commercial Activities tax or the Texas Margin tax), county, local, foreign or other taxes, levies, or imposts, including any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, capital stock, occupation, property, real property gains, social security or disability, environmental or windfall profit tax,
premium, custom duty or other tax, governmental fee, or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Taxing Authority responsible for the imposition
of any such tax (United States or non-United States). 
 “Tax Asset” means any federal or state net operating loss, net
capital loss, general business credit, foreign tax credit, charitable deduction, or any other loss, credit, deduction, or tax attribute which could reduce any Tax (including, without limitation, deductions, credits, alternative minimum net operating
loss carryforwards related to alternative minimum taxes or additions to the basis of property). 
 “Taxing Authority” means
any governmental authority (whether United States or non-United States, and including, without limitation, any state, municipality, political subdivision or governmental agency) responsible for the imposition of any Tax. 
 “Tax Contest” means any audit, review, examination, assessment, notice of deficiency or any other administrative or judicial proceeding
with the purpose or effect of redetermining any Taxes (including any administrative or judicial review of any claim for refund). 
 “Tax-Free Status” means qualification of the Distribution as tax-free under Section 355 of the Code. 
 ARTICLE II 
 TAX SHARING 
 2.01 General. For each taxable year of the Altria Consolidated Return Group for which a United States consolidated Federal Income Tax return is filed that includes any Pre-Distribution Period of the PMI Group,
PMI shall pay to Altria an amount equal to the sum of the PMI Federal Income Tax Liability for such taxable year as shown on a PMI Pro Forma Federal Return. For each taxable year of the Altria Consolidated Return Group for which a Combined State Tax
return is filed that includes any Pre-Distribution Period of the PMI Group, PMI shall pay to Altria an amount equal to the PMI Combined State Tax Liability for such taxable year as shown on a PMI Pro Forma Combined State Return. 
  

 6 

 2.02 Payment of Taxes. 
 (a) Estimated Payments. Not later than thirty days after the Distribution Date, PMI shall identify on its books the PMI Current Federal Income Tax
Provision for that portion of the current quarter that ends on the Distribution Date, determined in accordance with United States GAAP, and shall transfer such amount to Altria within thirty days after the Distribution Date. 
 (b) Preparation and Delivery of Estimated Pro Formas. On a date that is at least thirty days prior to the due date for the Altria Consolidated
Return Group’s consolidated Federal Income Tax return for a taxable year to which Section 2.01 of this Agreement applies, PMI shall deliver to Altria a PMI Pro Forma Federal Return reflecting the PMI Federal Income Tax Liability on an
estimated basis. On a date that is at least ten days prior to the due date for each Combined State Tax return for a taxable year to which Section 2.01 of this Agreement applies, PMI shall deliver to Altria a PMI Pro Forma Combined State Return
(together with the PMI Pro Forma Federal Return, the “PMI Pro Forma Returns”) reflecting the relevant PMI Combined State Tax Liability on an estimated basis. PMI’s preparation and delivery of the PMI Pro Forma Federal Return shall
include related schedules and returns, including, but not limited to, preparation of Form 1118 or in the alternative, a schedule reflecting what is on Form 1118, for purposes of computing any separate foreign tax credit limitation under
Section 904(d) of the Code. 
 (c) Preparation and Delivery of Final Pro Formas. On or before November 1 following the end
of any taxable year to which Section 2.01 of this Agreement applies, Altria shall deliver to PMI a PMI Pro Forma Federal Return reflecting the PMI Federal Income Tax Liability. On or before December 15 following the end of any taxable year
to which Section 2.01 of this Agreement applies, Altria shall deliver to PMI a PMI Pro Forma Combined State Return reflecting the relevant PMI Combined State Tax Liability. Altria’s preparation and delivery of the PMI Pro Forma Federal
Return hereunder shall include related schedules and returns, including, but not limited to, preparation of Form 1118 or in the alternative, a schedule reflecting what is on Form 1118, for purposes of computing any separate foreign tax credit
limitation under Section 904(d) of the Code. 
 (d) Reconciliation of Payments. On or before November 1 following the end of
any taxable year to which Section 2.01 of this Agreement applies, PMI shall pay to Altria, or Altria shall pay to PMI, as appropriate, an amount equal to the difference, if any, between: (x) the PMI Federal Income Tax Liability reflected
on the PMI Pro Forma Federal Return for such year; and (y) the aggregate amount of the payments of the PMI Current Federal Income Tax Provision for such year made pursuant to Section 2.02(a) of this Agreement. On or before December 15
following the end of any taxable year to which Section 2.01 of this Agreement applies, PMI shall pay to Altria the PMI Combined State Tax Liability as reflected on the PMI Pro Forma Combined State Return. 
  

 7 

 (e) Use of Tax Assets. If a PMI Pro Forma Return reflects a Tax Asset that may under applicable
law be used to reduce a Federal Income Tax or Combined State Tax liability of the Altria U.S. Group for any taxable period, Altria shall pay to PMI, or shall reduce the amount owed by PMI to Altria by, an amount equal to the actual tax saving
produced by such Tax Asset within thirty days after such tax saving has been Effectively Realized by the Altria U.S. Group. The amount of any such tax saving for any taxable period shall be the amount of the reduction in Taxes payable to a Taxing
Authority with respect to such tax period, including with respect to any estimated Tax payments, as compared to the Taxes that would have been payable to a Taxing Authority by the Altria U.S. Group with respect to such tax period in the absence of
such Tax Asset. To the extent PMI has been compensated for any Tax Asset prior to the filing of a final tax return for any year, including with respect to any estimated payments for such year, Altria shall pay to PMI, or PMI shall pay to Altria, as
appropriate, the difference between the amount Effectively Realized with respect to each Tax Asset with respect to such interim payments and the amount Effectively Realized with respect to the filing of the final tax return. 
 2.03 Carrybacks from Post-Distribution Period. 
 (a) Within thirty days after Effective Realization by the Altria Consolidated Return Group, Altria agrees to pay to PMI the actual tax benefit from the carryback of any Tax Asset of the PMI Group from a
Post-Distribution Period. Such benefit shall be equal to (i) the amount of Federal Income Taxes or Combined State Taxes, as the case may be, that would have been payable (or of the Federal Income Tax or Combined State Tax refund actually
receivable) by the Altria Consolidated Return Group for such period in the absence of such carryback, minus (ii) the amount of Federal Income Taxes or Combined State Taxes, as the case may be, actually payable for such period (or of the Federal
Income Tax or Combined State Tax refund that would have been receivable) by the Altria Consolidated Return Group. 
 (b) If, subsequent to
the payment by Altria to PMI of any amount pursuant to (or in accordance with the principles of) Section 2.03(a), there shall be a Final Determination that results in a disallowance or a reduction of the Tax Asset of the PMI Group so carried
back, PMI shall repay to Altria, within thirty days after such Final Determination, any amount that would not have been payable to PMI pursuant to (or in accordance with the principles of) Section 2.03(a) of this Agreement had the amount of the
tax benefit been determined in light of the Final Determination. In addition, PMI shall hold each member of the Altria U.S. Group harmless from any penalty or interest payable by any member of the Altria U.S. Group as a result of any such Final
Determination. Any such amount shall be paid by PMI within thirty days of the payment by the Altria U.S. Group of any such penalty or interest. 
  

 8 

 2.04 Preparation of Returns. 
 (a) For each taxable year to which Section 2.01 of this Agreement applies that the Altria Consolidated Return Group elects to file a consolidated
Federal Income Tax return as permitted by Section 1501 of the Code or any Combined State Tax return, Altria shall prepare and file such return and any other returns, documents or statements required to be filed with the Internal Revenue Service
with respect to the determination of the Federal Income Tax liability of the Altria Consolidated Return Group and with the appropriate Taxing Authorities with respect to the determination of the Combined State Tax liability of the Altria
Consolidated Return Group. With respect to such return preparation, Altria shall not discriminate among any members of the Altria Consolidated Return Group. Altria shall have the right with respect to any consolidated Federal Income Tax returns or
Combined State Tax returns that it has filed or will file to determine (i) the manner in which such returns, documents or statements shall be prepared and filed, including, without limitation, the manner in which any item of income, gain, loss,
deduction or credit shall be reported; (ii) whether any extensions should be requested; and (iii) the elections that will be made by any member of the Altria Consolidated Return Group. Each member of the PMI Group hereby irrevocably
appoints Altria as its agent and attorney-in-fact to take any action (including the execution of documents) Altria may deem necessary or appropriate to implement this Section 2.04. 
 (b) With respect to any Tax return other than a United States consolidated Federal Income Tax return that includes any Pre-Distribution Period of the PMI
Group or any Combined State Tax return, the Party that bears indemnification responsibility under Article IV of this Agreement shall be responsible for the preparation and filing of such Tax return; provided, however, that in the preparation and
filing of such Tax return, such Party shall not take any position (or make any election) that is inconsistent with any position or election made by Altria in connection with the preparation and filing of any United States consolidated Federal Income
Tax return that includes any Pre-Distribution Period of the PMI Group or any Combined State Tax return. 
 ARTICLE III 
 REFUNDS 
 3.01 Refunds.

 (a) If, with respect to any PMI Group Tax, Altria receives a refund, offset or credit, Altria shall remit to PMI within thirty days of
Effective Realization the amount of such refund, offset or credit, together with any interest received thereon. 
  

 9 

 (b) If, with respect to any Altria U.S. Group Tax, PMI receives a refund, offset or credit, PMI shall
remit to Altria within thirty days of Effective Realization the amount of such refund, offset or credit, together with any interest received thereon. 
 (c) Any payments required to be made by Sections 3.01(a) or 3.01(b) of this Agreement shall be paid net of any Tax liability to a Party resulting from such Party’s receipt of such refund from the Taxing
Authority. 
 ARTICLE IV 
 INDEMNIFICATION 
 4.01 General Indemnification. 
 (a) Altria will indemnify each member of the PMI Group or any other direct or indirect Subsidiary of PMI against and hold it harmless from (1) any
Altria U.S. Group Tax or any adjustments made by a Taxing Authority that would result in an increase in any Altria U.S. Group Tax; and (2) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and
attorney’s fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax or adjustment described in this subsection. Notwithstanding any other
provision of this Agreement to the contrary, Altria’s indemnification responsibility for Distribution Taxes, if any, shall be determined solely under Section 4.02(a) of this Agreement. 
 (b) PMI will indemnify each member of the Altria U.S. Group or any other direct or indirect Subsidiary of Altria other than a member of the PMI Group or
any other direct or indirect Subsidiary of PMI against and hold it harmless from (1) any PMI Group Tax, or any adjustments made by a Taxing Authority that would result in an increase in any PMI Group Tax, or any adjustments by a Taxing
Authority that result in a disallowance or reduction of any Tax Asset of the PMI Group that was used to reduce any Altria U.S. Group Tax; and (2) all liabilities, costs, expenses (including, without limitation, reasonable expenses of
investigation and attorney’s fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax or adjustment described in this subsection. Notwithstanding
any other provision of this Agreement to the contrary, PMI’s indemnification responsibility for Distribution Taxes, if any, shall be determined solely under Section 4.02(b) of this Agreement. 
  

 10 

 4.02 Indemnification for Distribution Taxes. 
 (a) Notwithstanding any other provision of this Agreement to the contrary, Altria shall indemnify and hold harmless each member of the PMI Group or any
other direct or indirect Subsidiary of PMI from and against (1) any and all Distribution Taxes that are not the responsibility of PMI pursuant to Section 4.02(b) of this Agreement and (2) all liabilities, costs, expenses (including,
without limitation, reasonable expenses of investigation and attorney’s fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax or adjustment
described in this subsection. 
 (b) Notwithstanding any other provision of this Agreement to the contrary, PMI agrees to indemnify and hold
harmless each member of the Altria U.S. Group or any other direct or indirect Subsidiary of Altria other than a member of the PMI Group or any other direct or indirect Subsidiary of PMI from and against (1) any and all Distribution Taxes
resulting from or attributable to (i) any act or failure to act on the part of PMI (or any member of the PMI Group or any other direct or indirect Subsidiary of PMI) following the Distribution; or (ii) any breach by PMI (or any other
member of PMI Group or any other direct or indirect Subsidiary of PMI) of any of the representations or covenants set forth in Articles V and VI of this Agreement or any representations with respect to PMI in the Ruling and Tax Opinion Documents and
(2) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorney’s fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any Tax or adjustment described in this subsection. 
 4.03 Indemnification Payments. In
the event that a Party is entitled to receive indemnification under this Article IV with respect to any Tax for which there has been a Final Determination, such Party (“Indemnified Party”) shall send to the other Party (“Indemnifying
Party”) an invoice requesting payment accompanied by a statement describing in reasonable detail the amount owed and the particulars relating thereto. The Indemnifying Party shall pay to the Indemnified Party any payment owed under this Article
IV within thirty days (or within another time period mutually agreed to by the Parties) after the receipt of the invoice for such payment.  
 ARTICLE V 
 REPRESENTATIONS 
 5.01 Altria and PMI Representations. Altria and PMI each represent that the information and representations with respect to Altria or PMI, as the case may be, that are included in the Ruling and Tax Opinion
Documents are accurate and complete as of the date hereof. 
  

 11 

 ARTICLE VI 
 COVENANTS 
 6.01 Altria and PMI Covenants. Altria and PMI each covenant (1) to use their
best efforts to verify that the foregoing representations made by it in Article V are accurate and complete as of the Distribution Date and (2) if, after the date hereof, either obtains information indicating, or otherwise becomes aware,
that any such representations are or may be inaccurate or incomplete, promptly to inform Altria or PMI, as the case may be. 
 6.02
Specific PMI Covenants. PMI may take actions inconsistent with the representations in Section 5.01 of this Agreement and covenants in this Section 6.02 only if, prior to taking such action, PMI (1) provides notification, upon
determining that it shall pursue such action, to Altria of its plans with respect to such action, and promptly responds to any inquiries made by Altria following such notification, and (2) obtains Altria’s written consent to such action
(such consent not to be unreasonably withheld). Notwithstanding the foregoing, any Altria consent shall not relieve PMI of any of its liabilities or obligations under this Agreement, including, but not limited to, any PMI indemnity obligation
arising under Section 4.02(b) of this Agreement. PMI covenants to Altria that: 
 (a) During the two-year period following the
Distribution Date, PMI will not liquidate or merge or consolidate with any other person in one or more transactions pursuant to which the shareholders of the other person(s) in such transaction(s) hold directly or indirectly a forty percent or
greater interest (by vote or value) in the combined company. 
 (b) During the two-year period following the Distribution Date, PMI and each
of its Subsidiaries will not transfer all or substantially all of its assets in a transaction, including all or substantially all of the assets of PMI’s active trade or business used to satisfy Section 355(b) of the Code. 
 (c) During the two-year period following the Distribution Date, PMI will continue the active conduct of its trade or business used to satisfy
Section 355(b) of the Code. 
 (d) PMI will not redeem or repurchase PMI stock in a manner contrary to the requirements of Revenue
Procedure 96-30 or in any other manner contrary to the representations made in the Ruling and Tax Opinion Documents. 
 (e) During the
two-year period following the Distribution Date, PMI will not issue, in one or more transactions, PMI stock (or any instrument that is convertible or exchangeable into such PMI stock) that in the aggregate represents more than a forty percent
interest (by vote or value) of PMI. 
  

 12 

 (f) During the two-year period following the Distribution Date, PMI will not enter into any negotiations,
agreements, understandings, or arrangements with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of options or otherwise, option grants, capital contributions or acquisitions or a series of
such transactions or events, but excluding the Distribution) that may alone or in the aggregate cause the Distribution to be treated as part of a plan (i) pursuant to which one or more persons would acquire directly or indirectly stock of PMI
representing a forty percent or greater interest (by vote or value); or (ii) which would result in a transaction described in Section 6.02(a) above. 
 (g) PMI will not otherwise take any action or fail to take any other action, which action or failure to act may result in Distribution Taxes. 
 (h) For purposes of paragraphs (a), (e) and (f) of Section 6.02, whether a forty percent or greater ownership change is or would be
involved in one or more transactions shall be determined under multiple methods that reflect the differing number of PMI shares outstanding at various times (e.g., on the Distribution Date, immediately prior to each transaction, etc.) and the method
chosen shall be the one that results in the largest potential ownership change. For the avoidance of doubt, for purposes of paragraphs (a), (e) and (f) of Section 6.02, whether a forty percent or greater ownership change is or would
be involved in one or more transactions shall be measured by aggregating the ownership change attributable to all transactions of the types described in (a), (e) and (f). 
 ARTICLE VII 
 TAX CONTESTS 
 7.01 Representation with Respect to Tax Contests. Altria shall have the right to (i) contest, compromise, or settle any adjustment or
deficiency proposed, asserted or assessed as a result of any audit of any consolidated or combined return filed by the Altria Consolidated Return Group; (ii) file, prosecute, compromise or settle any claim for refund; and (iii) determine
whether any refunds to which the Altria Consolidated Return Group may be entitled shall be received by way of refund or credited against the tax liability of the Altria Consolidated Return Group; provided, however, that Altria shall be obligated to
act in good faith with respect to any Tax Contest of any consolidated or combined return filed by the Altria Consolidated Return Group which involves a Tax or adjustment for which PMI is liable pursuant to this Agreement (“PMI Tax
Contest”). Specifically, Altria shall, in good faith, (i) consult with PMI regarding its comments with respect to any such PMI Tax Contest, including any correspondence or filings submitted 

  

 13 

 
in connection therewith; (ii) consult with PMI as to strategy and settlement decisions with respect to any PMI Tax Contest, including any correspondence
or filings submitted in connection therewith; and (iii) use its best efforts to arrive at a settlement of any such PMI Tax Contest that reflects the ultimate merits of the issues without taking into account the fact that PMI is liable for the
Tax or adjustment under this Agreement. 
 (a) With respect to any PMI Tax Contest, Altria shall (i) keep PMI informed in a timely
manner of all actions taken or proposed to be taken by Altria and (ii) timely provide PMI with copies of any correspondence or filings submitted to any Taxing Authority in connection with any contest, litigation, compromise or settlement
relating to any such adjustment in any such Tax Contest. In addition, with respect to any Tax Contest in which a Taxing Authority has asserted a position that may result in a PMI indemnification obligation arising under Section 4.02(b) of this
Agreement, PMI shall have the right, at its own expense, to attend and participate in any such Tax Contest. 
 (b) The failure of Altria
timely to forward notification in accordance with Section 7.01(a) shall not relieve PMI of any obligation to pay such Tax or adjustment or indemnify Altria, except to the extent PMI was actually materially prejudiced by such failure, and in no
event shall such failure relieve PMI from any other liability or obligation which it may have to Altria. 
 ARTICLE VIII 
 PAYMENTS 
 8.01 Method of
Payment. All payments required by this Agreement shall be made by (1) wire transfer to the appropriate bank account as may from time to time be designated by the Parties for such purpose, or (2) any other method agreed to by the
Parties. All payments due under this Agreement shall be deemed to be paid when available funds are actually received by the payee. 
 8.02
Interest. Any payment required by this Agreement that is not made on or before the date required hereunder shall bear interest, from and after such date through the date of payment, calculated at the rate determined under
Section 6621(a)(2) of the Code as modified by Section 6621(c) of the Code or as otherwise determined by any relevant Taxing Authority. 
 8.03 Characterization of Payments. For all Tax purposes, the Parties hereto agree to treat, and to cause their respective affiliates to treat, (1) any payment required by this Agreement (to the extent not otherwise treated as a
payment in respect of an existing intercompany account) either as a contribution by Altria to PMI or a distribution by PMI to Altria, as the case may be, occurring immediately prior to the Distribution and (2) any payment of interest or
non-Federal Income Taxes by or to a Tax Authority, as taxable or deductible, as the case may be, to the Parties entitled under this Agreement to retain such 

  

 14 

 
payment or required under this Agreement to make such payment, in either case, except as otherwise mandated by applicable law or a Final Determination;
provided that in the event it is determined (i) pursuant to applicable law that it is more likely than not, or (ii) pursuant to a Final Determination, that any such treatment is not permissible (or that an Indemnified Party nevertheless
suffers an income Tax or other Tax detriment as a result of such payment), the payment in question shall be adjusted to place the Indemnified Party in the same after-tax position it would have enjoyed absent such applicable law or Final
Determination. 
 ARTICLE IX 
 MISCELLANEOUS 
 9.01 Allocation. Altria may, at its option, elect, and the PMI Group shall join it in electing (if
necessary), to ratably allocate items (other than extraordinary items) of the PMI Group in accordance with relevant provisions of Treasury Regulations Section 1.1502-76. If Altria makes such an election, the members of the PMI Group shall
provide to Altria such statements as are required under the regulations and other appropriate assistance. 
 9.02 Payment of Reserves.
Within thirty days after the Distribution Date, Altria shall pay to PMI an amount equal to the Federal Income Tax reserve for uncertain Tax positions attributable to the PMI Group and recorded on the books and records of Altria as of the
Distribution Date. 
 9.03 Cooperation and Exchange of Information. 
 (a) Altria and PMI shall each cooperate fully with all reasonable requests from the other Party in connection with the preparation and filing of Tax
returns, claims for refund, and audits concerning issues or other matters covered by this Agreement (including, without limitation, cooperating in meeting those deadlines as established and reasonably determined by Altria to be necessary to
facilitate the timely filing of any United States consolidated Federal Income Tax return of the Altria Consolidated Return Group). Such cooperation shall include, without limitation: 
 (i) the retention until the expiration of the applicable statute of limitations, and the provision upon request, of Tax returns, books, records
(including information regarding ownership and Tax basis of property), documentation and other information relating to the Tax returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations
by Taxing Authorities; 
 (ii) the execution of any document that may be necessary or reasonably helpful in connection with any audit, or
the filing of a Tax return or refund claim by a member of the Altria U.S. Group or the PMI Group, including certification, to the best of a Party’s knowledge, of the accuracy and completeness of the information it has supplied; 
  

 15 

 (iii) for each taxable year of the Altria Consolidated Return Group for which a United States
consolidated Federal Income Tax return is filed that includes any Pre-Distribution Period of the PMI Group, the use of the same tax preparation software required to facilitate the filing of the Altria Group Consolidated Return; 
 (iv) the use of the Party’s best efforts to obtain any documentation that may be necessary or reasonably helpful in connection with any of the
foregoing. Each Party shall make its employees and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters; and 
 (v) the participation in regularly scheduled meetings between the Parties to further the purposes of this Agreement. 
 (b) If a Party fails to comply with any of its obligations set forth in Section 9.03(a) of this Agreement upon reasonable request and notice by the other Party, and such failure results in the imposition of
additional Taxes, the nonperforming Party shall be liable in full for such additional Taxes. 
 9.04 Retention of Records. A
Party intending to dispose of documentation of Altria (or any other member of the Altria U.S. Group) or PMI (or any other member of the PMI Group), including without limitation, books, records, Tax returns and all supporting schedules and
information relating thereto (after the expiration of the applicable statute of limitations), which relates to Tax returns described in Section 2.04 (to the extent it affects the separate Tax liability of PMI (or any other member of the PMI
Group) or Altria (or any other member of the Altria U.S. Group)) shall provide written notice to the other Party describing the documentation to be destroyed or disposed of at least sixty days prior to taking such action. The other Party may
arrange to take delivery of the documentation described in the notice at its expense during the succeeding sixty day period. The documentation described in the notice will not be disposed of without the affirmative written consent of an officer
of the notified Party. 
 9.05 Dispute Resolution. Any and all disputes between the Parties relating to this Agreement,
including the interpretation or application thereof, shall be resolved through the procedures provided in Article VI of the Distribution Agreement. 
 9.06 Changes in Law. Any reference to a provision of the Code or a law of another jurisdiction shall include a reference to any applicable successor provision or law. If, due to any change in applicable law or
regulations or their interpretation by any court of law or other governing body having jurisdiction subsequent to the date of this Agreement, performance of any provision of this Agreement or any transaction contemplated thereby shall become
unlawful, impracticable or impossible, the Parties 

  

 16 

 
hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such provision. 
 9.07 Confidentiality. Each Party shall hold and cause its directors, officers, employees, advisors
and consultants to hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information (other than any such information relating solely to the
business or affairs of such Party) concerning the other Party hereto furnished to it by such other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (1) in the public
domain through no fault of such Party, (2) later lawfully acquired from other sources not known to be under a duty of confidentiality by the Party to which it was furnished, or (3) independently developed), and each Party shall not release
or disclose such information to any other person, except its directors, officers, employees, auditors, attorneys, financial advisors, bankers and other consultants who shall be advised of and agree to be bound by the provisions of this
Section 9.07. Each Party shall be deemed to have satisfied its obligation to hold confidential information concerning or supplied by the other Party if it exercises the same care as it takes to preserve confidentiality for its own similar
information. 
 9.08 Successors. This agreement shall be binding on and inure to the benefit of any successor, by merger, acquisition
of assets or otherwise, to any of the Parties hereto (including, but not limited to, any successor of Altria and PMI succeeding to the tax attributes of such Party under Section 381 of the Code), to the same extent as if such successor had been
an original Party hereto. 
 9.09 Authorization, etc. Each of the Parties hereto hereby represents and warrants that it has the power
and authority to execute, deliver and perform this Agreement; that this Agreement has been duly authorized by all necessary corporate action on the part of such Party; that this Agreement constitutes a legal, valid and binding obligation of each
such Party; and that the execution, delivery and performance of this Agreement by such Party does not contravene or conflict with any provision of law or of its charter or bylaws or any agreement, instrument or order binding on such Party.

 9.10 Notices. All notices, requests, and other communications to any Party hereunder shall be in writing (including electronic mail
and facsimile transmission) and shall be given to: 
 If to Altria, to: 
 Altria Group, Inc. 
 6601 W. Broad Street

 Richmond, Virginia 23261 
 Attn: Vice President, Taxes 
  

 17 

 If to PMI, to: 
 c/o Philip Morris International Management SA 
 Avenue de Rhodanie 
 1001 Lausanne, Switzerland 
 Attn: Vice
President, Taxes 
 9.11 Entire Agreement. This Agreement contains the entire agreement among the Parties hereto with respect
to the subject matter hereof and supersedes any prior tax sharing agreements, and such prior tax sharing agreements shall have no further force and effect. If and to the extent that the provisions of this Agreement conflict with the Distribution
Agreement or any other agreement entered into in connection with the Distribution, the provisions of this Agreement shall control. If and to the extent that the rights and obligations with respect to Philip Morris Duty Free Inc. (as a direct or
indirect Subsidiary of Altria or PMI, respectively) provided for in this Agreement conflict with the rights and obligations with respect to Philip Morris Duty Free Inc. provided for in the Indemnification Agreement dated as of August 1, 2007
between Philip Morris USA Inc. and PMI, the provisions of this Agreement shall control. 
 9.12 Section Captions. Section
captions used in this Agreement are for convenience and reference only and shall not affect the construction of this Agreement. 
 9.13
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia (other than the laws regarding choice of laws and conflicts of laws) as to all matters, including matters of
validity, construction, effect, performance and remedies; provided, however, that the United States Arbitration Act, 9 U.S.C. §§ 1-16 (as may be amended from time to time) shall govern the matters described in Section 9.05 of this
Agreement. 
 9.14 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement. 
 9.15 Waivers and Amendments. This Agreement shall
not be waived, amended or otherwise modified except in writing, duly executed by all of the Parties hereto. 
  

 18 

 9.16 Effective Date. This Agreement shall be effective as of the Distribution Date. 
 9.17 Termination. The Agreement shall remain in force and be binding so long as the applicable period of assessments (including extensions)
remains unexpired for any taxes contemplated by the Agreement. 
 IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to
be executed by a duly authorized officer as of the date first above written. 
  

			
	ALTRIA GROUP, INC.
		
	By:	 	  

	Name:	 	Dinyar S. Devitre
	Title:	 	Chief Financial Officer
	
	PHILIP MORRIS INTERNATIONAL INC.
		
	By:	 	  

	Name:	 	Hermann Waldemer
	Title:	 	Chief Financial Officer

  

 19Form of Employee Matters Agreement

 Exhibit 10.3 
 FORM OF 
 EMPLOYEE MATTERS AGREEMENT 
 BY AND BETWEEN 
 ALTRIA GROUP, INC. 
 AND 
 PHILIP MORRIS INTERNATIONAL
INC. 
 DATED AS OF
                     

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
			
	 ARTICLE I
	 	DEFINITIONS	  	1
			
	 1.1
	 	General	  	1
	 1.2
	 	References to Time	  	9
			
	 ARTICLE II
	 	GENERAL PRINCIPLES	  	9
			
	 2.1
	 	Altria Group Employees	  	9
	 2.2
	 	PMI Group Employees	  	10
			
	 ARTICLE III
	 	PMI Group Plans	  	10
			
	 3.1
	 	PMI Group Plans	  	10
			
	 ARTICLE IV
	 	EMPLOYEE TRANSFERS	  	13
			
	 4.1
	 	PMI Transferees	  	13
	 4.2
	 	Altria Transferees	  	14
	 4.3
	 	Payments	  	15
			
	 ARTICLE V
	 	EQUITY COMPENSATION	  	15
			
	 5.1
	 	Altria Options	  	15
	 5.2
	 	Kraft SARs Issued by Altria	  	17
	 5.3
	 	Restricted Stock and pre-January 31, 2007 Deferred Stock	  	17
	 5.4
	 	Deferred Stock	  	18
	 5.5
	 	Existing Kraft Equity Compensation	  	19
	 5.6
	 	Payments Previously Made By PMI	  	20
	 5.7
	 	Other	  	20
			
	 ARTICLE VI
	 	PROFIT-SHARING PLANS	  	23
			
	 6.1
	 	Maintenance of Stock Investment Options	  	23
			
	 ARTICLE VII
	 	ALTRIA STOCK PURCHASE PLAN	  	24
			
	 7.1
	 	Termination of Participation	  	24
			
	 ARTICLE VIII
	 	GENERAL AND ADMINISTRATIVE	  	24
			
	 8.1
	 	Sharing of Participant Information	  	24
	 8.2
	 	No Third-Party Beneficiaries	  	24
	 8.3
	 	Audit Rights with Respect to Information Provided	  	25
	 8.4
	 	Fiduciary Matters	  	25
	 8.5
	 	Collective Bargaining	  	25
	 8.6
	 	Consent of Third Parties	  	26
			
	 ARTICLE IX
	 	INDEMNIFICATION	  	26
			
	 9.1
	 	Indemnification	  	26
			
	 ARTICLE X
	 	MISCELLANEOUS	  	26
			
	 10.1
	 	Relationship of Parties	  	26
	 10.2
	 	Affiliates	  	26

  

 i 

					
	 10.3
	 	Employee Communications	  	26
	 10.4
	 	Incorporation of Distribution Agreement Provisions	  	26
	 10.5
	 	Governing Law	  	27
	 10.6
	 	References	  	27

  

 -ii- 

 EMPLOYEE MATTERS AGREEMENT 
 THIS EMPLOYEE MATTERS AGREEMENT, dated as of
                            (as amended and supplemented pursuant to the terms hereof, this
“Agreement”), is entered into by and between Altria Group, Inc., a Virginia corporation (“Altria”), and Philip Morris International Inc., a Virginia corporation (“PMI”). 
 WITNESSETH: 
 WHEREAS, Altria
and PMI have entered into a Distribution Agreement, dated as of                             (the
“Distribution Agreement”), providing for, among other things, the distribution by Altria of its entire ownership interest in PMI through a pro-rata distribution of all of the outstanding shares of PMI Common Stock owned by Altria on the
Distribution Date to the holders of Altria Common Stock pursuant to the terms and subject to the conditions of the Distribution Agreement (the “Distribution”); and 
 WHEREAS, Altria and PMI wish to set forth their agreement as to certain matters regarding the treatment of, and the compensation and employee
benefits provided to, employees and former employees of the Altria Group and the PMI Group (as hereinafter defined). 
 NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined): 
 Adjusted Altria Option: an Altria Option as adjusted pursuant to
Section 5.1 hereof. 
 Affiliate: with respect to any specified Person, a Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that for purposes of this Agreement, no member of either Group and no officer or director of any
member of either Group shall be deemed to be an Affiliate of any member of the other Group. 
 Altria: as defined in the preamble to
this Agreement. 
 Altria Benefit Liabilities: as defined in Section 2.1 hereof. 
 Altria Common Stock: the common stock, par value $0.33  1
/3 per share, of Altria. 

 Altria Deferred Stock: a deferred stock obligation relating to Altria Common Stock granted by
Altria before the Distribution Date under an Altria Performance Incentive Plan. 
 Altria Group: Altria and the Subsidiaries of Altria
other than members of the PMI Group. 
 Altria Group Employee: any individual, excluding a PMI Transferee, who (i), as of the close of
business on the Distribution Date, is either employed by, or on a leave of absence (as defined by the personnel policies of the Altria Group) from, a member of the Altria Group; (ii) is a Former Altria Group Employee; or (iii) is or
becomes an Altria Transferee. 
 Altria Group Plans: 
 (i) the Altria Pension Plans; 
 (ii) the Altria Profit-Sharing Plans; 
 (iii) the Altria Welfare and Other Plans; and

 (iv) the Altria Performance Incentive Plans. 
 Altria Option: an option to acquire Altria Common Stock granted by Altria under an Altria Performance Incentive Plan before the Distribution Date. 
 Altria Participating Company: any company of the Altria Group whose eligible employees participate in the Altria Pension Plans and Altria
Profit-Sharing Plans. 
 Altria Pension Plan: any of the Retirement Plan for Salaried Employees, the Retirement Plan for Hourly
Employees, the Benefit Equalization Plan, the Supplemental Management Employees’ Retirement Plan, the Retirement Plan for Employees of Philip Morris de Puerto Rico and any other qualified or non-qualified defined benefit plan or program that is
identified by Altria before the Distribution Date as providing retirement income to Altria Group Employees, all as in effect as of the time relevant to the applicable provisions of this Agreement. 
 Altria Performance Incentive Plans: any of the 1992 Incentive Compensation and Stock Option Plan, the 1997 Performance Incentive Plan, the 2000
Performance Incentive Plan or the 2005 Performance Incentive Plan, or any stock-based or other incentive plan for Altria Group Employees that is identified by Altria before the Distribution Date, all as in effect as of the time relevant to the
applicable provisions of this Agreement. 
 Altria Post-Adjustment Price: the Altria Pre-Adjustment Price multiplied by a fraction,
the numerator of which is the closing price of Altria Common Stock on the NYSE on the Distribution Date (as traded on the “when issued” market) and the denominator of which is the sum of the numerator plus the closing price of PMI Common
Stock on the NYSE on the Distribution Date (as traded on the “when issued” market). 
  

 2 

 Altria Pre-Adjustment Price: the closing price of Altria Common Stock on the NYSE on the
Distribution Date (as traded on the “regular way” market). 
 Altria Profit-Sharing Plan: any of the Deferred Profit-Sharing
Plan for Salaried Employees, the Deferred Profit-Sharing Plan for Tobacco Workers, the Deferred Profit-Sharing Plan for Craft Employees, the Benefit Equalization Plan, the Supplemental Management Employees’ Retirement Plan, the Savings Plan for
Employees of Philip Morris de Puerto Rico and any other qualified or non-qualified defined contribution plan or program for Altria Group Employees that is identified by Altria before the Distribution Date, all as in effect as of the time relevant to
the applicable provisions of this Agreement. 
 Altria Restricted Stock: restricted Altria Common Stock granted by Altria before the
Distribution Date under an Altria Performance Incentive Plan. 
 Altria Stock Investment Option: the investment option offered under
the following Altria Profit-Sharing Plans: the Deferred Profit-Sharing Plan for Salaried Employees, the Deferred Profit-Sharing Plan for Tobacco Workers, the Deferred Profit-Sharing Plan for Craft Employees; and the investment option offered under
the PMI Deferred Profit-Sharing Plan whose value in each case is based on the value of Altria Common Stock. 
 Altria Stock Purchase
Plan: the Plan sponsored by Altria and administered by Computershare Trust Company, N.A., that allows eligible employees of Altria and its subsidiaries to purchase shares of Altria Common Stock through automatic payroll deductions, additional
cash contributions and dividend reinvestment without incurring any brokerage commissions or other costs. 
 Altria Transferee: any
employee of a member of the PMI Group who will transfer employment to a member of the Altria Group on or after the Distribution Date, but on or prior to December 31, 2008. 
 Altria Welfare and Other Plans: any plan, fund or program that provides health, medical, surgical, hospital or dental care, severance, survivor
income, long-term disability, cafeteria, flexible benefits or other welfare benefits or benefits in the event of sickness, accident or disability, or death benefits to Altria Group Employees, all as in effect as of the time relevant to the
applicable provisions of this Agreement. 
 Arbitration Act: the United States Arbitration Act, 9 U.S.C. §§ 1-16, as
the same may be amended from time to time. 
 Auditing Party: as defined in Section 8.3(a) hereof. 
 Business Day: any day other than a Saturday, a Sunday or a day on which banking institutions located in the Commonwealth of Virginia or the State
of New York are authorized or obligated by law or executive order to close. 
 Code: the Internal Revenue Code of 1986, as amended.

 Distribution: as defined in the recitals to this Agreement. 
 Distribution Agreement: as defined in the recitals to this Agreement. 
  

 3 

 Distribution Date: the date on which the Distribution becomes effective. 
 Equity Compensation: Altria Options, Adjusted Altria Options, PMI Options, Kraft SARs, Altria Restricted Stock, PMI Restricted Stock, Altria
Deferred Stock and PMI Deferred Stock. 
 ERISA: Employee Retirement Income Security Act of 1974, as amended. 
 Existing Kraft Deferred Stock: a deferred stock obligation relating to Kraft Class A Common Stock granted by Kraft as of or before
March 30, 2007 under a Kraft Performance Incentive Plan. 
 Existing Kraft Options: an option to acquire Kraft Class A
Common Stock, granted by Kraft as of or before March 30, 2007 under a Kraft Performance Incentive Plan. 
 Existing Kraft Restricted
Stock: restricted Kraft Class A Common Stock granted by Kraft as of or before March 30, 2007 under a Kraft Performance Incentive Plan. 
 Fair Value: in the case of PMI Options and Adjusted Altria Options, the anticipated value of the options, determined using the Modified Black-Scholes option pricing model used by Altria in the preparation of
its most recent annual or quarterly financial reporting prepared before the Distribution Date with such modifications as may be determined before the Distribution Date by Altria. 
 In the case of Existing Kraft Options, the Fair Value shall be the Fair Value used for such options pursuant to the Employee Matters Agreement By and
Between Altria Group, Inc. and Kraft Foods Inc. 
 Former Altria Group Employee: any individual who: (i) before the Distribution
Date has retired from or otherwise separated from service from a member of the Altria Group and has not been re-employed by a member of the PMI Group before the Distribution Date; or (ii) has transferred from a member of the Altria Group or
Former Altria Group that was an Altria Participating Company to a member of the Former Altria Group that was not an Altria Participating Company and thereafter separated from service from a member of the Former Altria Group and has not been
re-employed by a member of the PMI Group before the Distribution Date; and, in all cases participates in, receives, or is entitled to receive, benefits under, any Altria Group Plan; provided, however, that a Former Altria Group
Employee shall not include a PMI Group Transferee. 
 Former Altria Group: shall mean the Altria Group as in existence on and prior to
March 30, 2007 and shall include Altria and the then Subsidiaries of Altria other than members of the PMI Group. 
 Former PMI Group
Employee: any individual who: (i) before the Distribution Date has retired from or otherwise separated from service from a member of the PMI Group and has not been re-employed by a member of the Altria Group before the Distribution Date; or
(ii) has transferred from a member of the PMI Group to a member 

  

 4 

 
of the Former Altria Group that was not an Altria Participating Company and thereafter is separated from service from a member of the Former Altria Group
that was not an Altria Participating Company and has not been re-employed by a member of the Altria Group before the Distribution Date; and, in each such case, participates in, receives or is entitled to receive, benefits under, any PMI Group Plan;
or (iii) was employed by a PMI Participating Company, died before the Distribution Date while so employed and whose spouse and/or child are in receipt of a survivor income benefit allowance from the Survivor Income Benefit Plan for Salaried
Employees on the Distribution Date; or (iv) was employed by a PMI Participating Company, suffered a disability (as defined in the Long-Term Disability Plan for Salaried Employees) before the Distribution Date while so employed and is in receipt
of a disability allowance from the Long-Term Disability Plan for Salaried Employees on the Distribution Date; provided, however, that a Former PMI Group Employee shall not include an Altria Transferee. 
 Governmental Authority: any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency,
authority (including, but not limited to, any central bank or taxing authority) or instrumentality (including, but not limited to, any court, tribunal or grand jury) exercising executive, prosecutorial, legislative, judicial, regulatory or
administrative functions of or pertaining to government or any other regulatory, administrative or governmental authority, including the NYSE or any other exchange on which Altria or PMI Common Stock may be listed. 
 Group: the Altria Group or the PMI Group, as the context requires. 
 Information: all records, books, contracts, instruments, computer data and other data and information. 
 Intrinsic Value: with respect to the relevant options, the product of (i) the number of such options and (ii) the difference between the exercise price of such options and, for Altria Options, the Altria Pre-Adjustment
Price, for Adjusted Altria Options, the Altria Post-Adjustment Price, and for PMI Options, the PMI Price, as applicable. 
 Kraft:
Kraft Foods Inc., a Virginia corporation. 
 Kraft Class A Common Stock: the Class A common stock, no par value, of Kraft.

 Kraft Group: Kraft and the Kraft Subsidiaries. 
 Kraft Price: the closing price of Kraft Class A Common Stock on the NYSE on the Distribution Date. 
 Kraft Performance Incentive Plan: the 2001 Kraft Foods Inc. Performance Incentive Plan or the Kraft Foods Inc. 2005 Performance Incentive Plan. 
 Kraft SAR: a cash-settled stock appreciation right based on the value of Kraft Class A Common Stock resulting from an option to acquire Kraft Class A Common Stock originally granted by Altria as of
June 12, 2001. 
  

 5 

 Kraft Stock Investment Option: the investment option offered under the PMI Deferred Profit-Sharing
Plan whose value is based on the value of Kraft Class A Common Stock. 
 Kraft Subsidiaries: all of the Subsidiaries of Kraft as
of March 30, 2007. 
 Law: any federal, state or local statute, ordinance, regulation, code, license, permit, authorization,
approval, consent, common law, legal doctrine, order, judgment, decree, injunction or requirement of any Governmental Authority or any order or award of any arbitrator, now or hereafter in effect. 
 Liabilities: any and all claims, debts, liabilities, assessments, guarantees, assurances, commitments, obligations, fines, excise taxes,
penalties, damages (whether compensatory, punitive, consequential, multiple or other), losses, disgorgements and obligations, of any kind, character or description (whether absolute, contingent, matured, not matured, liquidated, unliquidated,
accrued, known, unknown, direct, indirect, derivative or otherwise) whenever arising, including, but not limited to, those arising under or in connection with any Law, and those arising under any contract, guarantee, commitment or undertaking,
whether sought to be imposed by any Governmental Authority or arbitrator, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and including all costs, expenses and interest
relating thereto (including, but not limited to, all expenses of investigation, all attorneys’ fees and all out-of-pocket expenses in connection with any action or threatened action). 
 Losses: with respect to any Person, all losses, Liabilities, damages, claims, demands, judgments or settlements of any nature or kind, known or
unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated, including all costs and expenses (legal, accounting or otherwise as such costs are incurred) relating thereto, including punitive damages and criminal fines and penalties,
but excluding damages in respect of actual or alleged lost profits, suffered by such Person, regardless of whether any such losses, Liabilities, damages, claims, demands, judgments, settlements, costs, expenses, fines and penalties relate to or
arise out of such Person’s own alleged or actual negligent, grossly negligent, reckless or intentional misconduct or the capacity in which such Person was acting. 
 Non-parties: as defined in Section 8.3(b) hereof. 
 Non-PMI Group: the Altria
Group, the Kraft Group, and SABMiller. 
 NYSE: the New York Stock Exchange, Inc. 
 Option Conversion Ratio: the ratio of the pre-adjustment exercise price of the applicable Altria Options to the Altria Pre-Adjustment Price.

 Permissible Offset: with respect to an Altria Pension Plan, any benefit earned under a PMI Pension Plan (including, for this
purpose, any defined benefit plan or program that provides retirement income for PMI Group Employees, regardless of 

  

 6 

 
whether such PMI Group Employee is a U.S. payroll-based PMI Group Employee) that may be used to offset a benefit earned under an Altria Pension Plan, but
only if such benefit is attributable to a period of service used to determine the amount of his or her benefit under the Altria Pension Plan; and with respect to a PMI Pension Plan, any benefit earned under an Altria Pension Plan that may be used to
offset a benefit earned under a PMI Pension Plan, but only if such benefit is attributable to a period of service used to determine the amount of his benefit under the PMI Pension Plan. 
 Person: an individual, a committee, a partnership, a joint venture, a corporation, a trust, a limited liability company, an unincorporated
organization, or a government or any department or agency thereof. 
 Personal Data: as defined in Section 8.1 hereof.

 PMI: as defined in the preamble to this Agreement. 
 PMI Benefit Liabilities: as defined in Section 2.2 hereof. 
 PMI Common Stock: the
common stock, no par value, of PMI. 
 PMI Deferred Stock: a deferred stock obligation relating to PMI Common Stock granted by PMI as
of the Distribution Date under a PMI Performance Incentive Plan pursuant to Section 5.3(a) and Section 5.4(a) hereof. 
 PMI Group: PMI and the PMI Subsidiaries; provided, however, that solely for the purpose of determining whether a former employee of the PMI Group is a Former PMI Group Employee, PMI Group shall include PM Duty Free, Inc. 

PMI Group Employee: any individual, excluding an Altria Transferee, who (i), as of the close of business on the Distribution Date, is either
employed by, or on leave of absence (as defined by the personnel policies of the PMI Group) from, a member of the PMI Group; (ii) is a Former PMI Group Employee; or (iii) is or becomes a PMI Transferee. 
 PMI Group Plans: 
 (i)
the PMI Pension Plans; 
 (ii) the PMI Profit-Sharing Plans; 
 (iii) the PMI Welfare and Other Plans; and 
 (iv) the PMI Performance Incentive Plans. 
 PMI Option: an option to acquire PMI Common Stock granted
by PMI as of the Distribution Date under the PMI Performance Incentive Plan in partial substitution for the Altria Options. 
  

 7 

 PMI Participating Company: any company of the PMI Group whose eligible employees participated in
the Altria Pension Plans and Altria Profit-Sharing Plans prior to January 1, 2008. 
 PMI Pension Plans: any of PMI Retirement
Plan, the PMI Benefit Equalization Plan, the PMI Supplemental Management Plan for Salaried Employees, and any other qualified or non-qualified defined benefit plan or program that provides retirement income for U.S. payroll-based PMI Group Employees
that is identified by PMI no later than the Distribution Date, all as in effect as of the time relevant to the applicable provisions of this Agreement. 
 PMI Performance Incentive Plans: the PMI 2008 Performance Incentive Plan, or any other stock-based or other incentive plan for PMI Group Employees that is identified by PMI before the Distribution Date, all as
in effect as of the time relevant to the applicable provisions of this Agreement. 
 PMI Price: the Altria Pre-Adjustment Price
multiplied by a fraction, the numerator of which is the closing price of PMI Common Stock on the NYSE on the Distribution Date (as traded on the “when issued” market) and the denominator of which is the sum of the numerator plus the
closing price of Altria Common Stock on the NYSE on the Distribution Date (as traded on the “when issued” market). 
 PMI
Profit-Sharing Plans: any of the PMI Deferred Profit-Sharing Plan, the PMI Benefit Equalization Plan, the PMI Supplemental Management Plan for Salaried Employees, the Philip Morris Products Inc. 401(k) Savings Plan and any other qualified or
non-qualified defined contribution plan or program that provides retirement income for U.S. payroll-based PMI Group Employees that is identified by PMI before the Distribution Date, all as in effect as of the time relevant to the applicable
provisions of this Agreement. 
 PMI Restricted Stock: restricted PMI Common Stock distributed as of the Distribution Date and subject
to terms and conditions pursuant to Section 5.3(a) hereof. 
 PMI Stock Investment Option: the investment option to be
offered under the following Altria Profit-Sharing Plans: the Deferred Profit-Sharing Plan for Salaried Employees, the Deferred Profit-Sharing Plan for Tobacco Workers, the Deferred Profit-Sharing Plan for Craft Employees and the investment option to
be offered under the PMI Deferred Profit-Sharing Plan whose value in each case is based on the value of PMI Common Stock. 
 PMI
Subsidiaries: all of the Subsidiaries of PMI. 
 PMI Transferee: any employee of a member of the Altria Group who will transfer
employment to a member of the PMI Group on or after the Distribution Date, but on or prior to December 31, 2008. 
 PMI Welfare and
Other Plans: any plan, fund or program that provides health, medical, surgical, hospital or dental care, severance, survivor income, long-term 

  

 8 

 
disability, cafeteria, flexible benefits or other welfare benefits or benefits in the event of sickness, accident or disability, or death benefits to PMI
Group Employees, all as in effect as of the time relevant to the applicable provisions of this Agreement. 
 Record Date: the close of
business on the date to be determined by Altria’s Board of Directors as the record date for determining the holders of Altria Common Stock entitled to receive shares of PMI Common Stock pursuant to the Distribution. 
 SEC: the United States Securities and Exchange Commission. 
 Securities Act: the Securities Act of 1933, as amended, or any successor statute. 
 Securities
Exchange Act: the Securities Exchange Act of 1934, as amended, or any successor statute. 
 Subsidiary: with respect to any
specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of members to the
board of directors or similar governing body; provided, however, that for purposes of this Agreement, (1) the PMI Subsidiaries shall be deemed to be Subsidiaries of PMI; and (2) no member of the PMI Group shall be
deemed to be a Subsidiary of any member of the Altria Group. 
 1.2 References to Time. All references in this Agreement to
times of the day shall be to Richmond, Virginia time, except as otherwise specifically provided herein. 
 ARTICLE II 
 GENERAL PRINCIPLES 
 2.1 Altria
Group Employees. 
 (a) Obligations. Except as specifically provided in this Agreement, to the exclusion of the
PMI Group, the appropriate member of the Altria Group shall continue to be responsible for and pay, perform and discharge each and every of the employment, compensation and employee benefits Liabilities relating to the Altria Group Employees and
Former PMI Group Employees described in clauses (iii) and (iv) of the definition of Former PMI Group Employees that arise from employment with the Altria Group, the Former Altria Group and the PMI Group before the Distribution Date, and
that arise with respect to Altria Group Employees from employment with the Altria Group on or after the Distribution Date, including each and every Liability arising under an Altria Group Plan or assumed pursuant to the terms of this Agreement
(collectively, the “Altria Benefit Liabilities”); provided, however, that nothing shall preclude any Altria Pension Plan to reduce or eliminate any such Altria Benefit Liability by a Permissible Offset. 
 (b) Reimbursement. As soon as practicable following the Distribution Date, PMI shall reimburse Altria in an amount equal to the
present value of the 

  

 9 

 
Altria Benefit Liabilities retained by Altria with respect to Former PMI Group Employees described in clauses (iii) and (iv) of the definition of
Former PMI Group Employees. 
 (c) Crediting Service. As of the Distribution Date, the service used to determine the
eligibility for, the vested portion of and the amount of, any benefit under any Altria Group Plan of each Altria Group Employee shall not be less than the service that such Altria Group Employee earned with the Altria Group, the Former Altria Group
and the PMI Group with respect to such Altria Group Plan to such date. 
 2.2 PMI Group Employees. 
 (a) Obligations. Except as specifically provided in this Agreement, to the exclusion of the Altria Group, the appropriate member of
the PMI Group shall continue to be responsible for and pay, perform and discharge each and every of the employment, compensation and employee benefits Liabilities relating to PMI Group Employees (other than Former PMI Group Employees described in
clauses (iii) and (iv) of the definition of Former PMI Group Employees) that arise from employment with the PMI Group, the Altria Group and the Former Altria Group before the Distribution Date, and that arise with respect to PMI Group
Employees from employment with the PMI Group on or after the Distribution Date, including each and every Liability arising under a PMI Group Plan or assumed pursuant to the terms of this Agreement (collectively, the “PMI Benefit
Liabilities”); provided, however, that nothing shall preclude any PMI Pension Plan to reduce or eliminate any such PMI Benefit Liability by a Permissible Offset. 
 (b) Crediting of Service. As of the Distribution Date, the service used to determine the eligibility for, the vested portion of and
the amount of, any benefit under any PMI Group Plan (including, for purposes of this subparagraph (b), any PMI Group employee benefit plan that provides retirement income, regardless of whether it covers only U.S. payroll-based PMI Group Employees)
of each PMI Group Employee (including, for purposes of this subparagraph (b), any PMI Group employee, regardless of whether such employee is a U.S. payroll-based PMI Group Employee) shall not be less than the service that such PMI Group Employee
earned with the Altria Group, the Former Altria Group and the PMI Group with respect to such PMI Group Plan to such date. 
 ARTICLE III

 PMI GROUP PLANS 
 3.1 PMI Group Plans. The following principles shall apply. 
 (a) PMI Pension Plans. A member of
the PMI Group has previously adopted and established the PMI Pension Plans for the benefit of eligible PMI Group Employees. PMI shall timely take all actions necessary to obtain a favorable determination letter from the Internal Revenue Service that
the PMI 

  

 10 

 
Retirement Plan is qualified under Section 401(a) of the Code and the related trust forms part of a qualified plan and is therefore exempt from tax
under Section 501(a) of the Code. 
 (b) Transfer of Assets. 
 (i) Prior Asset Transfer. At or about the time of the establishment of the PMI Retirement Plan by a member of the PMI Group, Altria
caused the trust under the Retirement Plan for Salaried Employees to make a direct transfer of assets to the trust established under the PMI Retirement Plan. The value of the assets transferred and to be transferred from the Retirement Plan for
Salaried Employees to the trust under the PMI Retirement Plan was and will be the amount required to be transferred pursuant to Section 414(l) of the Code. Such amount was determined by the actuary for the Retirement Plan for Salaried
Employees and the PMI Retirement Plan. Any amount required to be transferred pursuant to this section shall be adjusted for (i) allocable gains and/or losses of the trust under the Retirement Plan for Salaried Employees, (ii) benefit
payments on behalf of the PMI Retirement Plan, and (iii) allocable expenses. 
 (ii) Subsequent Asset Transfer.

 (A) As soon as practicable after December 31, 2008, or such earlier date that may be agreed upon by the Altria Group
and the PMI Group, but in no event earlier than 30 days following the filing of Form 5310-A with the Internal Revenue Service, if required, Altria agrees to cause the trust under the Retirement Plan for Salaried Employees to make a direct transfer
(or transfers) of assets to the trust established under the PMI Retirement Plan in an amount determined by the actuary for the Retirement Plan for Salaried Employees and agreed to by the actuary for the PMI Retirement Plan, equal to the amount
required to be transferred pursuant to Section 414(l) of the Code with respect to those PMI Group Employees who were participants in the Retirement Plan for Salaried Employees and for whom assets were not transferred pursuant to clause
(i) hereof. The value of the assets to be transferred from the trust under the Retirement Plan for Salaried Employees to the trust under the PMI Retirement Plan will be determined in accordance with Section 414(l) of the Code
without regard to Section 414(l)(2) of the Code. 
 (B) Altria and PMI shall reasonably cooperate with each other
in order to facilitate the foregoing provisions of this clause (ii). 
  

 11 

 (c) Credit for Service with the Altria Group. The PMI Pension Plans shall provide
that each PMI Group Employee (regardless of the date of employment with the PMI Group) shall be credited with eligibility and vesting service that is not less than the eligibility and vesting service that the PMI Group Employee had earned under the
comparable or equivalent Altria Group Pension Plan. 
 (d) Credit under all other PMI Group Plans. No later than as of
the Distribution Date, each PMI Group Plan shall provide that each PMI Group Employee (regardless of the date of employment with the PMI Group) shall be credited with eligibility and vesting service that is not less than the eligibility and vesting
service that the PMI Group Employee had earned under the comparable or equivalent Altria Group Plan. 
 (e) PMI
Profit-Sharing Plans. 
 (i) Creation and Qualification of Plans. PMI has previously adopted and established the
PMI Profit-Sharing Plans with respect to eligible PMI Group Employees. PMI shall take all actions necessary to timely obtain a favorable determination letter from the Internal Revenue Service that the PMI Deferred Profit-Sharing Plan is qualified
under Section 401(a) of the Code and the related trust forms part of a qualified plan and is therefore exempt from tax under Section 501(a) of the Code. 
 (f) Transfer of Assets. 
 (i) Prior Asset Transfer. Contemporaneously with the establishment of the PMI Profit-Sharing Plan, Altria caused the Deferred Profit-Sharing Plan for Salaried Employees to make a direct transfer of assets from
such plan to the trust established under the PMI Deferred Profit-Sharing Plan. The value of the assets transferred from the trust under the Deferred Profit-Sharing Plan for Salaried Employees to the trust under the PMI Deferred Profit-Sharing Plan
was determined in accordance with Section 414(l) of the Code, to be equal to the value of the accounts of the then identified PMI Group Employees. 
 (ii) Subsequent Asset Transfer. 
 (A) On or before April 30, 2008, but in no event earlier than 30 days following the filing of Form 5310-A with the Internal Revenue Service, if required, Altria agrees to cause the trust under the Deferred
Profit-Sharing Plan for Salaried Employees to make a direct transfer (or transfers) of assets to the trust established under the PMI Deferred Profit-Sharing Plan in an amount equal to the accounts of the PMI Group Employees for whom assets were not
transferred pursuant to clause (i) hereof, except that Altria shall not cause the transfer of assets with respect to PMI Transferees who 

  

 12 

 
have transferred to a member of the PMI Group after the Distribution Date, such assets to be retained in the trust under the Deferred Profit-Sharing Plan for
Salaried Employees pending further direction from the PMI Transferee. The value of the assets to be transferred will be determined in accordance with Section 414(l) of the Code. 
 (B) Altria and PMI shall reasonably cooperate with each other in order to facilitate the foregoing provisions of clause (ii). 

(g) PMI Welfare and Other Benefits. PMI Group Employees shall be entitled to participate in the PMI Welfare and Other Plans in
accordance with the Altria Group practices in effect as of the Distribution Date, provided, however, that nothing herein shall preclude PMI Group Employees from continuing to participate in Altria Group Welfare and Other Plans for the calendar year
of the Distribution if mutually agreed to by PMI and Altria. 
 (h) PMI Directors’ Plans. PMI has adopted the PMI
Deferred Fee Plan for Non-Employee Directors and the PMI Stock Compensation Plan for Non-Employee Directors effective as of January 29, 2008. Effective as of the Distribution Date, PMI shall assume, under the PMI directors’ plans, the liability
for deferred amounts under the Altria Group, Inc. Deferred Fee Plan for Non-Employee Directors, the Altria Group, Inc. Stock Compensation Plan for Non-Employee Directors, and the Altria Group, Inc. Unit Plan for Incumbent Non-Employee Directors with
respect to each individual who is a member of the Board of Directors of Altria in 2008 before the Distribution Date and who is a member of the Board of Directors of PMI on the Distribution Date. As soon as practicable following the Distribution
Date, Altria shall pay to PMI an amount equal to such liability determined as of the close of business on the Distribution Date. 
 ARTICLE
IV 
 EMPLOYEE TRANSFERS 
 4.1 PMI Transferees. The following principles shall apply to any PMI Transferee. Except as specifically noted in this Agreement as otherwise agreed in writing by the parties, each PMI Transferee will become, or continue to be,
eligible upon transfer for the rights and benefits of similarly situated PMI Group Employees. 
 (a) Amendments. No member of the PMI
Group shall cause any amendments to be made to the PMI Group Plans or any policies regarding the PMI Group Plans (other than amendments to provide for Permissible Offsets) to be implemented that have the direct or indirect effect of treating the PMI
Transferees less favorably than the other PMI Group Employees similarly situated in seniority and job responsibilities. 
 (b)
Profit-Sharing Plans. 
 (i) Participation. As soon as administratively practicable following the date on which
the PMI Transferee transfers, the PMI Transferee shall be eligible to commence participation in the appropriate PMI Profit-Sharing Plan. Any service requirements contained in such PMI Profit-Sharing Plan with respect to eligibility to participate
generally or eligibility to share in any employer contributions thereunder shall be waived for the PMI Transferee. 
 (c) Company Contribution for PMI Transferee. If any PMI Transferee is transferred to the PMI Group after the Distribution Date but on or prior to December 31st of the calendar year in which the
Distribution Date occurs and would otherwise be eligible for a company contribution (within the meaning of the Deferred Profit-Sharing Plan for Salaried Employees) under the Deferred Profit-Sharing Plan for Salaried Employees for that calendar year,
the appropriate member of the Altria Group will contribute (or credit, as applicable) to each such PMI Transferee’s account in the Altria 

  

 13 

 
Profit-Sharing Plans the pro-rated amount of any employer contribution to which the PMI Transferee is entitled based on his compensation (as defined in the
Deferred Profit-Sharing Plan for Salaried Employees) received from an Altria Participating Company through the date of transfer and irrespective of whether such PMI Transferee is employed by the PMI Group on the last day of the calendar year in
which he or she transferred. Any PMI Transferee who has an outstanding loan from the Deferred Profit-Sharing Plan for Salaried Employees as of the date of transfer to PMI may continue to repay such loan in accordance with the terms of such Deferred
Profit-Sharing Plan for Salaried Employees. 
 4.2 Altria Transferees. The following principles shall apply to any Altria
Transferee. Except as specifically noted in this Agreement as otherwise agreed in writing by the parties, each Altria Transferee will become, or continue to be, eligible upon transfer for the rights and benefits of similarly situated Altria Group
Employees. 
 (a) Amendments. No member of the Altria Group shall cause any amendments to be made to the Altria Group Plans or any
policies regarding the Altria Group Plans (other than amendments to provide for Permissible Offsets) to be implemented that have the direct or indirect effect of treating the Altria Transferees less favorably than the other Altria Group Employees
similarly situated in seniority and job responsibilities. 
 (b) Profit-Sharing Plan. 
 (i) Participation. As soon as administratively practicable following the date on which the Altria Transferee transfers, the Altria
Transferee shall be eligible to commence participation in the appropriate Altria Profit-Sharing Plan. Any service requirements contained in such Altria Profit-Sharing Plan with respect to eligibility to participate generally to share in any employer
contributions thereunder shall be waived for the Altria Transferee. 
 (c) Company
Contribution for Altria Transferee. If any Altria Transferee is transferred to the Altria Group after the Distribution Date but on or prior to December 31st of the calendar year in which the Distribution Date occurs and would
otherwise be eligible for a company contribution (within the meaning of the PMI Deferred Profit-Sharing Plan) under the PMI Deferred Profit-Sharing Plan for that calendar year, the appropriate member of the PMI Group will contribute (or credit, as
applicable) to each such Altria Transferee’s account in the PMI Profit-Sharing Plans the pro-rated amount of any employer contribution to which the Altria Transferee is entitled based on his compensation (as defined in the PMI Deferred
Profit-Sharing Plan) received from a Participating Company (as defined in the PMI Deferred Profit-Sharing Plan) through the date of transfer and irrespective of whether such Altria Transferee is employed by the Altria Group on the last day of the
calendar year in which he transferred. Any Altria Transferee who has an outstanding loan from the PMI Deferred Profit-Sharing Plan as of the date of transfer to the Altria Group may continue to repay such loan in accordance with the terms of such
PMI Deferred Profit-Sharing Plan. 
  

 14 

 4.3 Payments. As soon as practicable following the Distribution Date, Altria shall pay to
PMI an amount representing the excess of the reasonably estimated present values of (a), with respect to certain employees of the Altria Group scheduled to transfer to the PMI Group, (i) liabilities accrued for financial reporting purposes for
post-retirement medical and life insurance benefits and certain other agreed post-employment benefits as of December 31, 2007, (ii) defined benefit obligations under Altria’s Benefit Equalization Plan and Altria’s Supplemental Management
Employees’ Retirement Plan as of December 31, 2007 (less relevant offsets for amounts previously paid pursuant to the Altria Secular Trust Program and the Altria Executive Trust Arrangement) plus (iii) those target payments that would
reasonably be anticipated to be earned, assuming continued payment of target payments, during such employees’ service with PMI no later than December 31, 2012 that are in lieu of the increase in the value of benefits with respect to service
before January 1, 2008 to which the transferees would have become entitled (assuming continued employment) as a result of attaining early retirement eligibility, had they been covered by Altria’s Benefit Equalization Plan and Altria’s
Supplemental Management Employees’ Retirement Plan, over (b) the results of similar calculations for post-retirement medical, life insurance and other post-employment benefit liabilities, defined benefit obligations and anticipated target
payments to be paid by Altria with respect to an employee of the PMI Group who transferred to the Altria Group in anticipation of the Distribution and any other mutually agreed employees of the PMI Group scheduled to transfer to the Altria Group.

 ARTICLE V 
 EQUITY
COMPENSATION 
 5.1 Altria Options. 
 (a) Adjustment Methodology. Each Altria Option shall be adjusted in the manner described below, effective as of the time of the Distribution, so that each Altria Option holder shall hold Adjusted Altria Options
and PMI Options in lieu of the Altria Options previously held. The following procedure shall be applied to each grant of Altria Options with the same grant date and exercise price held by each Altria Option holder. For the avoidance of doubt, the
term “exercise price” refers to the amount payable by an option holder in order to acquire shares pursuant to a stock option award. 
 (i) The Adjusted Altria Options shall have an exercise price equal to the Altria Post-Adjustment Price multiplied by the Option Conversion Ratio. The number of Adjusted Altria Options shall equal the number of Altria
Options. 
 (ii) The PMI Options shall have an exercise price equal to the PMI Price multiplied by the Option Conversion
Ratio. The number of PMI Options shall equal the number of Altria Options. If the resulting aggregate Intrinsic Value of the Adjusted Altria Options and PMI Options is less than the Intrinsic Value of the Altria Options, then the difference shall be
paid to the option holder in cash as soon as practicable following the Distribution Date. If the resulting aggregate Intrinsic Value of the Adjusted Altria Options and PMI Options is greater than the Intrinsic Value of the Altria Options, then the
number of PMI Options shall be reduced until the aggregate Intrinsic Value of the Adjusted Altria 

  

 15 

 
Options and PMI Options is less than or equal to the Intrinsic Value of the Altria Options, and any difference shall be paid to the option holder in cash as
soon as practicable following the Distribution Date. Notwithstanding the foregoing, if the Intrinsic Value of the Altria Options is negative, only the first two sentences of this Section 5.1(a)(ii) shall be applied. The cash payment
described above shall be made by Altria to individuals who are Non-PMI Group employees on the Distribution Date (or individuals no longer performing services for the Non-PMI Group or the PMI Group but whose last employment was with the Non-PMI
Group), and by PMI to individuals who are PMI Group employees on the Distribution Date (or individuals no longer performing services for the Non-PMI Group or the PMI Group but whose last employment was with the PMI Group). 
 (iii) The calculation described in the preceding sentence shall be applied using the rounding conventions determined by Altria to carry
out the purpose of this Section 5.1. 
 (b) Issuing Entity and Settlement. Altria will adjust the exercise price of the
Altria Options to become Adjusted Altria Options pursuant to the Altria Performance Incentive Plan. After the Distribution Date, Adjusted Altria Options, regardless of by whom held, shall be settled by Altria pursuant to the Altria Performance
Incentive Plan. PMI will issue the PMI Options pursuant to the PMI Performance Incentive Plan. After the Distribution Date, PMI Options, regardless of by whom held, shall be settled by PMI pursuant to the PMI Performance Incentive Plan. 

(c) Option Agreement Terms. The Adjusted Altria Options and the PMI Options shall have terms that are substantially identical to the terms of
the Altria Options, provided, however, that (i) the Adjusted Altria Options shall provide that individuals who are employees of the PMI Group on the Distribution Date or who are PMI Transferees shall continue while employed
by the PMI Group to be treated as employees of an Altria Affiliate solely for purposes of determining the exercise period under the option agreements; (ii) the PMI Options shall provide that individuals who are employees of the Non-PMI Group on
the Distribution Date or who are Altria Transferees shall continue while employed by the Non-PMI Group to be treated as employees of a PMI Affiliate solely for purposes of determining the exercise period under the option agreements; and
(iii) the PMI Options shall refer to both PMI and members of the Non-PMI Group as appropriate to effectuate the intent of this Section 5.1 including references to the Non-PMI Group disability and retirement plans. 
 (d) Consideration. As soon as practicable following the Distribution Date, Altria shall pay to PMI the Fair Value of the PMI Options held by
individuals who are Non-PMI Group employees on the Distribution Date (or individuals no longer performing services for the Non-PMI Group or the PMI Group but whose last employment was with the Non-PMI Group) and PMI shall pay to Altria the Fair
Value of the Adjusted Altria Options held by individuals who are PMI Group employees on the Distribution Date (or individuals no longer performing services for the Non-PMI Group or the PMI Group but whose last employment was with the PMI Group). The
parties shall settle the obligations of the preceding sentence in cash on a net basis such that the party required to pay the greater amount to the other shall pay the difference between the two amounts to the other. 
  

 16 

 5.2 Kraft SARs Issued by Altria. Upon the Distribution Date, PMI shall assume the liability
for Kraft SARs held by individuals who are employees of the PMI Group on the Distribution Date (or individuals no longer performing services for the Non-PMI Group or the PMI Group but whose last employment was with the PMI Group). PMI shall settle
such Kraft SARs upon exercise and assume all other obligations under such Kraft SARs. Altria and PMI shall amend such Kraft SARs effective as of the Distribution Date to replace references to Altria with references to PMI and otherwise as
appropriate to effectuate the intent of this Section 5.2. 
 5.3 Restricted Stock and pre-January 31, 2007 Deferred
Stock. 
 (a) Adjustment. Pursuant to the Distribution, each holder of Altria Restricted Stock will receive from Altria as of
the time of the Distribution shares of PMI Common Stock in the same manner and based on the same ratio as other shareholders of Altria Common Stock. Such PMI Common Stock shall be subject to the same vesting requirements and dates and other terms
and conditions as the Altria Restricted Stock to which it relates (including the right to receive all dividends or other distributions paid on PMI Common Stock). Effective at the time of the Distribution, each holder of Altria Deferred Stock that
was granted before January 31, 2007 shall receive a number of PMI Deferred Stock shares based on the same ratio as shareholders of Altria Common Stock. Such PMI Deferred Stock shall be subject to the provisions of Section 5.4(b) through
Section 5.4(e). 
 (b) Restricted Stock Agreement Terms. The PMI Restricted Stock shall have the same terms as the Altria
Restricted Stock; provided, however, that (i) the Altria Restricted Stock shall provide that individuals who are employees of the PMI Group on the Distribution Date or who are PMI Transferees shall continue to be treated
while so employed as employees of an Altria Affiliate for purposes of continued vesting in the restricted stock; (ii) the PMI Restricted Stock shall provide that individuals who are employees of the Non-PMI Group on the Distribution Date or who
are Altria Transferees shall continue to be treated while so employed as employees of a PMI Affiliate for purposes of continued vesting in the restricted stock; and (iii) the PMI Restricted Stock shall refer to both PMI and members of the
Non-PMI Group as appropriate to effectuate the intent of this Section 5.3. 
 (c) Forfeiture of PMI Stock and Consideration. If
a holder of PMI Restricted Stock forfeits such stock under the terms of the PMI Restricted Stock, the forfeited stock shall be returned to PMI, not Altria. In consideration of the anticipated receipt of such forfeitures, PMI shall pay in cash to
Altria as soon as practicable following the Distribution Date the anticipated value of forfeitures attributable to PMI Restricted Stock held by individuals who are Non-PMI Group employees on the Distribution Date. In addition, PMI shall pay in cash
to Altria as soon as practicable following the Distribution Date the value of the Altria Restricted Stock held by the PMI Group employees on the 

  

 17 

 
Distribution Date. The anticipated value of the PMI Restricted Stock that may be forfeited by holders and returned to PMI shall be determined using the PMI
Price and the forfeiture assumption used for Statement of Financial Accounting Standards 123(R) purposes in Altria’s most recent quarterly or annual financial reporting prepared before the Distribution Date for forfeitures of Altria Restricted
Stock. The value of the Altria Restricted Stock shall be equal to the Altria Pre-Adjustment Price of the underlying Altria shares, reduced by assumed forfeitures based on the assumptions used for Statement of Financial Accounting Standards 123(R)
purposes in Altria’s most recent quarterly or annual financial reporting prepared before the Distribution Date for forfeitures of Altria Restricted Stock. 
 5.4 Deferred Stock. 
 (a) Adjustment. Effective at the time of the Distribution, each
holder of Altria Deferred Stock that was granted on or after January 31, 2007 and before January 30, 2008 shall receive a number of PMI Deferred Stock shares based on the same ratio as holders of Altria Common Stock. Effective at the time
of the Distribution, each holder of Altria Deferred Stock that was granted on or after January 30, 2008 shall receive (i) in the case of a holder who is an employee of the Non-PMI Group on the Distribution Date, additional Altria Deferred
Stock, such that following the Distribution Date the holder will have the number of shares of Altria Deferred Stock equal to the number of shares of Altria Deferred Stock held before the Distribution multiplied by the ratio of the Altria
Pre-Adjustment Price to the Altria Post-Adjustment Price; and (ii) in the case of a holder who is a PMI Group Employee on the Distribution Date, PMI Deferred Stock in substitution for such holder’s Altria Deferred Stock, such that
following the Distribution Date the holder will have the number of shares of PMI Deferred Stock equal to the number of shares of Altria Deferred Stock held before the Distribution multiplied by the ratio of the Altria Pre-Adjustment Price to the PMI
Price. Any fractional shares of Altria or PMI Deferred Stock resulting from the adjustment in the preceding sentence shall be paid to the holder in cash as soon as practicable following the Distribution Date; provided, however,
that with respect to any individual holding Deferred Stock that is subject to Code Section 409A, any fractional shares of Altria or PMI Deferred Stock shall instead be rounded up to a whole share of Altria or PMI Deferred Stock. The cash
payment described above shall be made by Altria to individuals who are Non-PMI Group employees on the Distribution Date, and by PMI to individuals who are PMI Group employees on the Distribution Date. 
 (b) Issuing Entity and Settlement. After the Distribution Date, Altria shall be responsible for any cash payments in lieu of dividends required
pursuant to the terms of the Altria Deferred Stock, and such Altria Deferred Stock, regardless of by whom held, shall be settled by Altria pursuant to the Altria Performance Incentive Plan. PMI will issue PMI Deferred Stock pursuant to the PMI
Performance Incentive Plan. After the Distribution Date, PMI shall be responsible for any cash payments in lieu of dividends required pursuant to the terms of the PMI Deferred Stock, and such deferred stock, regardless of by whom held, shall be
settled by PMI pursuant to the PMI Performance Incentive Plan. 
  

 18 

 (c) Deferred Stock Agreement Terms. The PMI Deferred Stock shall have the same terms as the Altria
Deferred Stock, provided, however, that (i) the Altria Deferred Stock shall provide that individuals who are employees of the PMI Group on the Distribution Date or who are PMI Transferees shall continue to be treated while
so employed as employees of an Altria Affiliate for purposes of continued vesting in the deferred stock; (ii) the PMI Deferred Stock shall provide that individuals who are employees of the Non-PMI Group on the Distribution Date or who are
Altria Transferees shall continue to be treated while so employed as employees of a PMI Affiliate for purposes of continued vesting in the deferred stock; and (iii) the PMI Deferred Stock shall refer to both PMI and members of the Non-PMI Group
as appropriate to effectuate the intent of this Section 5.4. 
 (d) Consideration. As soon as practicable following the
Distribution Date, Altria shall pay to PMI the value of the PMI Deferred Stock held by individuals who are Non-PMI Group employees on the Distribution Date and PMI shall pay to Altria the value of the Altria Deferred Stock held by individuals who
are PMI Group employees on the Distribution Date. The parties shall settle the obligations of the preceding sentence in cash on a net basis such that the party required to pay the greater amount to the other shall pay the difference between the two
amounts to the other. For purposes of this Section 5.4(d), the value of the Altria Deferred Stock or PMI Deferred Stock shall be determined based on the Altria Post-Adjustment Price and the PMI Price, respectively, reduced by assumed
forfeitures based on the assumptions used for Statement of Financial Accounting Standards 123(R) purposes in Altria’s most recent quarterly or annual financial reporting prepared before the Distribution Date for forfeitures of Altria Deferred
Stock. 
 (e) Taxes. Altria shall reimburse any Altria Group employee, and PMI shall reimburse any PMI Group employee, who becomes
liable for income taxes with respect to Altria or PMI Deferred Stock earlier or in an amount greater than would have been the case absent the implementation of Section 5.3(a) or Section 5.4(a) in an amount equal to the excess
of (i) any income taxes to which such employee becomes liable over (ii) the present value of such income taxes had such income taxes been paid at such time as the Altria or PMI Deferred Stock would otherwise have been subject to income
taxes, assuming, for purposes of determining present value, the same value for Deferred Stock used for purposes of clause (i) of this sentence and a discount rate equal to the weighted average discount rate used for Altria’s domestic
pension plans at December 31, 2007, which was 6.2%. Any such reimbursement shall be further adjusted to hold the employee harmless from all additional taxes on the reimbursement payment itself. The amounts payable pursuant to this
Section 5.4(e) shall be calculated using reasonable assumptions (in addition to those specified above) as may be determined by the third-party accounting firm or firms selected by the party responsible for the reimbursement. 

5.5 Existing Kraft Equity Compensation. 
 (a) Consideration. As soon as practicable following the Distribution Date, PMI shall pay to Altria the Fair Value of the Existing Kraft Options held by individuals who are PMI Group employees on the
Distribution Date (or individuals no longer 

  

 19 

 
performing services for the Non-PMI Group or the PMI Group, but whose last employment was with PMI Group). As soon as practicable following the Distribution
Date, PMI shall also pay to Altria the value of Existing Kraft Restricted Stock and the Existing Kraft Deferred Stock held by individuals who are PMI Group employees on the Distribution Date (or individuals no longer performing services for the
Non-PMI Group or the PMI Group but whose last employment was with the PMI Group). The value of the Existing Kraft Restricted Stock and Existing Kraft Deferred Stock shall be determined based on a Kraft stock price of $31.66, and reduced by assumed
forfeitures based on the assumptions used for purposes of Section 4.4(d) of the Employees Matters Agreement by and between Altria Group, Inc. and Kraft with respect to Kraft Deferred Stock held by Altria Group Employees. 
 (b) Employment Treatment. Equity compensation issued by Kraft before the Distribution Date shall provide that individuals who are PMI Group
Employees on the Distribution Date shall continue while employed by the PMI Group to be treated as employees of a member of the Kraft Group for purposes of determining the exercise period of Existing Kraft Options and continued vesting in Existing
Kraft Restricted Stock and Deferred Stock. 
 5.6 Payments Previously Made By PMI. Any payments to be made by PMI to Altria
under this Article V with respect to Equity Compensation shall be reduced by payments previously made by PMI to Altria with respect to such Equity Compensation in the normal course of business before the Distribution Date. 
 5.7 Other. 
 (a)
Administration and Withholding. 
 (i) Altria and PMI agree that UBS Financial Services Inc. shall be the administrator
and recordkeeper for the Adjusted Altria Options, PMI Options, Kraft SARs, Altria Restricted Stock, PMI Restricted Stock, Altria Deferred Stock and PMI Deferred Stock for the life of the options, restricted stock and deferred stock, unless the
parties mutually agree otherwise. 
 (ii) Altria will be responsible for all payroll taxes, withholding and reporting with
respect to Equity Compensation of Altria Group employees (or individuals no longer performing services for the Non-PMI Group or PMI Group but whose last employment was with the Altria Group). PMI will be responsible for all payroll taxes,
withholding and reporting with respect to Equity Compensation of PMI Group employees (or individuals no longer performing services for the Non-PMI Group or the PMI Group but whose last employment was with the PMI Group). Altria and PMI agree to
designate the other party as an agent for withholding pursuant to IRS Revenue Procedure 70-6 and to accept such designation to effectuate the intent of this Section 5.7(a). 
 (iii) Upon the exercise of an Adjusted Altria Option or PMI Option held by Altria Group or PMI Group employees (or individuals no longer

  

 20 

 
performing services for the Non-PMI Group or PMI Group but whose last employment was with the Altria Group or PMI Group), the exercise price shall be
remitted in cash by the option administrator to the issuer of the option (Altria or PMI, as applicable) and the applicable withholding shall be remitted in cash by the option administrator to the entity (Altria or PMI, as applicable) responsible for
payroll taxes, withholding and reporting with respect to the option. Upon vesting or payment, as applicable, of Altria and PMI Restricted Stock, Altria and PMI Deferred Stock and Kraft SARs held by Altria Group or PMI Group employees (or individuals
no longer performing services for the Non-PMI Group or PMI Group but whose last employment was with the Altria Group or PMI Group), the applicable withholding shall be remitted in cash by the administrator to the entity (Altria or PMI, as
applicable) responsible for payroll taxes, withholding and reporting with respect to the Restricted or Deferred Stock or Kraft SARs. To the extent necessary to provide the withholding amount in cash to the entity responsible for payroll taxes,
withholding, and reporting, the issuer of the applicable Equity Compensation shall provide the withholding amount in cash. 
 (iv) With respect to dividends on PMI Restricted Stock or dividend equivalents on PMI Deferred Stock payable by PMI to an Altria Group employee, PMI shall make such payments to Altria, and Altria, as an agent for PMI, shall make such
payments to its employees and former employees and shall be responsible for payroll taxes, withholding and reporting in accordance with this Section 5.7(a). With respect to dividends on Altria Restricted Stock or dividend equivalents on
Altria Deferred Stock payable by Altria to a PMI Group employee, Altria shall make such payments to PMI, and PMI, as an agent for Altria, shall make such payments to its employees and former employees and shall be responsible for payroll taxes,
withholding and reporting in accordance with this Section 5.7(a). 
 (v) PMI will cooperate with Kraft to
establish appropriate procedures consistent with this Section 5.7(a) for tax withholding, remitting withholding taxes, payroll taxes, dividends, dividend equivalents, fractional shares and exercise prices to the appropriate party, and
tax reporting, including, to the extent necessary, withholding agency designations pursuant to IRS Revenue Procedure 70-6, with respect to (A) PMI Options, PMI Restricted Stock and PMI Deferred Stock of employees of the Kraft Group (or
individuals no longer performing services for the Kraft Group, the Non-PMI Group or the PMI Group but whose last employment was with the Kraft Group) and (B) Existing Kraft Options, Existing Kraft Restricted Stock and Existing Kraft Deferred
Stock of PMI Group employees (or individuals no longer performing services for the Kraft Group, the Non-PMI Group or the PMI Group but whose last employment was with the PMI Group). 
 (vi) If, after the Distribution Date, Altria or PMI identify an administrative error in the individuals identified as holding Equity
Compensation, the amount of Equity Compensation so held, the vesting level of such Equity Compensation, or any other similar error, Altria and PMI shall mutually cooperate 

  

 21 

 
in taking such actions as are necessary or appropriate to place, as nearly as reasonable practicable, the individual and Altria and PMI in the position in
which they would have been had the error not occurred. 
 (b) Scheduled Transfers. For purposes of this Article V only, if an
individual is, by mutual agreement between the parties, scheduled to transfer employment shortly after the Distribution Date between the PMI Group and the Altria Group, such individual shall be treated as employed on the Distribution Date by the
entity to which he or she is scheduled to transfer. 
 (c) Tax Deductions. With respect to the Equity Compensation held by individuals
who are Altria Group employees at the time the Equity Compensation becomes taxable and individuals who are not employees of the PMI Group or Non-PMI Group at such time but were last employees of the Altria Group, Altria shall claim any federal,
state and/or local tax deductions after the Distribution Date, and PMI shall not claim such deductions. With respect to the Equity Compensation held by individuals who are employees of the PMI Group at the time the Equity Compensation becomes
taxable and individuals who are not employees of the PMI Group or Non-PMI Group at such time but were last employees of the PMI Group, PMI shall claim any federal, state and/or local tax deductions after the Distribution Date, and Altria shall not
claim such deductions. If either Altria or PMI determines in its reasonable judgment that there is a substantial likelihood that a tax deduction that was assigned to Altria or PMI pursuant to this Section 5.7(c) will instead be available
only to the other party (whether as a result of a determination by the Internal Revenue Service, a change in the Code or the regulations or guidance thereunder, or otherwise), it will notify the other party and both parties will negotiate in good
faith to resolve the issue in accordance with the following principle: the party entitled to the deduction shall pay to the other party an amount that places the other party in a financial position equivalent to the financial position the party
would have been in had the party received the deduction as intended under this Section 5.7(c). Such amount shall be paid within 90 days of filing the last tax return necessary to make the determination described in the preceding
sentence. 
 (d) Intended Results; Tax Benefit. If Altria determines in its reasonable judgment that any action required under this
Article IV will not achieve the intended tax, accounting and legal results, including, without limitation, the intended results under Code Section 409A and Statement of Financial Accounting Standards 123(R), then at the request of Altria, PMI
and Altria shall mutually cooperate in taking such actions as are necessary or appropriate to achieve such results, or most nearly achieve such results if the originally-intended results are not fully attainable. 
 (e) Registration. PMI shall register the PMI Common Stock relating to the PMI Options and PMI Deferred Stock and make any necessary filings with
the appropriate Governmental Authorities as required under U.S. and foreign securities Laws. 
  

 22 

 ARTICLE VI 
 PROFIT-SHARING PLANS 
 6.1 Maintenance of Stock Investment Options. 
 (a) PMI Deferred Profit-Sharing Plan. The PMI Deferred Profit-Sharing Plan will be amended as of the Distribution Date: 
 (i) to provide that no new amounts may be contributed to the Altria Stock Investment Option whether through employee contribution,
employer contribution, dividend payment or intra-plan transfers. PMI further will cause the Altria Stock Investment Option in the PMI Deferred Profit-Sharing Plan to be maintained until the fiduciary for the PMI Deferred Profit-Sharing Plan in
determines that the maintenance of such Altria Stock Investment Option is no longer consistent with ERISA. 
 (ii) to provide
that the Kraft Stock Investment Option in the PMI Deferred Profit-Sharing Plan will be maintained until the fiduciary for the Plan determines that the maintenance of such Kraft Stock Investment Option is no longer consistent with ERISA. 

(iii) (A) to create a PMI Stock Investment Option; (B) to enable the PMI Stock Investment Option to receive shares of PMI
Common Stock to be distributed in the Distribution on behalf of PMI Deferred Profit-Sharing Plan participants; (C) to provide that, following the Distribution, new purchases of PMI Common Stock via an investment in the PMI Stock Investment
Option will be permitted, whether through employee contribution, employer contribution, reinvestment of dividends on shares of PMI Common Stock or intra-plan transfer; and (D) to permit eligible employees to have any dividends on shares of PMI
Common Stock paid to the eligible employee in accordance with Section 404(k) of the Code or paid to the PMI Deferred Profit-Sharing Plan and reinvested in PMI Common Stock. PMI further will cause the PMI Stock Investment Option in the PMI
Deferred Profit-Sharing Plan to be maintained until the fiduciary for the Plan determines that the maintenance of such PMI Stock Investment Option is no longer consistent with ERISA. 
 (b) Altria Profit-Sharing Plans. Each of the Altria Profit-Sharing Plans that offer Altria Stock in the Altria Stock Investment Option as of the
Distribution Date will be amended as of the Distribution Date: (A) to create a PMI Stock Investment Option; (B) to enable the PMI Stock Investment Option to receive shares of PMI Common Stock to be distributed in the Distribution on behalf
of Altria Profit-Sharing Plan participants; and (C) to provide that, following the Distribution, no new amounts may be contributed to a PMI Stock Investment Option whether through employee contribution, employer contribution, dividend payment
or intra-plan transfer. Altria further will cause the PMI Stock Investment Option in each of the Altria Profit-Sharing Plans that offer Altria Stock in the Altria Stock Investment Option as of the Distribution Date to be maintained until the
fiduciary for the Altria Profit-Sharing Plan determines that the maintenance of such PMI Stock Investment Option is no longer consistent with ERISA. 
  

 23 

 ARTICLE VII 
 ALTRIA STOCK PURCHASE PLAN 
 7.1 Termination of Participation. As of the Distribution
Date, the PMI Group Employees shall cease to be eligible to participate in the Altria Stock Purchase Plan, in accordance with the terms of such plan. 
 ARTICLE VIII 
 GENERAL AND ADMINISTRATIVE 
 8.1 Sharing of Participant Information. Altria and PMI shall share, Altria shall cause each applicable member of the Altria Group to share,
and PMI shall cause each applicable member of the PMI Group to share, with each other and their respective agents and vendors (without obtaining releases), all participant information necessary for the efficient and accurate administration of each
of the Altria Group Plans and the PMI Group Plans, as well as the performance of their respective obligations under this Agreement. Altria and PMI and their respective authorized agents shall, subject to applicable Laws on confidentiality, data
protection and labor, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other party, to the extent necessary for such administration. All participant
information shall be provided in a manner and medium that is compatible with the data processing systems of Altria as in effect as of the Distribution Date, unless otherwise agreed to by Altria and PMI. Altria and PMI shall ensure that they each
have in place appropriate technical and organizational security measures to protect the personal data of the transferring participants (“Personal Data”). Each of Altria and PMI shall comply fully with its obligations
under applicable Laws as controller of any Personal Data and shall do all such things as may be necessary to discharge such obligations. 
 8.2 No Third-Party Beneficiaries. No provision of this Agreement or the Distribution Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any
Person (other than parties thereto and their respective successors and permitted assigns), including any PMI Transferee, any Altria Transferee or other future, present, or former employee of Altria, a member of the Altria Group, PMI or a member of
the PMI Group under any Altria Group Plan or PMI Group Plan or otherwise. Without limiting the generality of the foregoing: (i) except as expressly provided in this Agreement, nothing in this Agreement shall preclude PMI or any member of the
PMI Group, at any time after the Distribution Date, from amending, merging, modifying, terminating, eliminating, reducing or otherwise altering in any respect any PMI Group Plan, any benefit under any plan or any trust, insurance policy or funding
vehicle related to any PMI Group Plan; and (ii) except as expressly provided in this Agreement, nothing in this Agreement shall preclude Altria or any member of the Altria Group, at any time after the Distribution modifying, terminating,
eliminating, reducing or otherwise altering in any respect any Altria Group 

  

 24 

 
Plan, any benefit under any plan or any trust, insurance policy or funding vehicle related to any Altria Group Plan. In no event shall any provision of this
Agreement be deemed to amend any Altria Group Plan or PMI Group Plan. 
 8.3 Audit Rights with Respect to Information Provided.

 (a) Each of Altria and PMI, and their duly authorized representatives, shall have the right to conduct audits with respect to all
information provided to it by the other party. The party conducting the audit (the “Auditing Party”) shall have the sole discretion to determine the procedures and guidelines for conducting audits and the selection of audit representatives
under this Section 8.3(a). The Auditing Party shall have the right to make copies of any records at its expense, subject to the confidentiality provisions set forth in the Distribution Agreement, which are incorporated by reference
herein. The party being audited shall provide the Auditing Party’s representatives with reasonable access during normal business hours to its operations, computer systems and paper and electronic files, and provide workspace to its
representatives. After any audit is completed, the party being audited shall have the right to review a draft of the audit findings and to comment on those findings in writing within five business days after receiving such draft. 
 (b) The Auditing Party’s audit rights under this Section 8.3(b) shall include the right to audit, or participate in an audit facilitated
by the party being audited, any Subsidiaries and Affiliates of the party being audited and any benefit providers and third parties with whom the party being audited has a relationship, or agents of such party, to the extent any such persons are
affected by or addressed in this Agreement (collectively, the “Non-parties”). The party being audited shall, upon written request from the Auditing Party, provide an individual (at the Auditing Party’s expense) to supervise any audit
of a Non-party. The Auditing Party shall be responsible for supplying, at the Auditing Party’s expense, additional personnel sufficient to complete the audit in a reasonably timely manner. The responsibility of the party being audited shall be
limited to providing, at the Auditing Party’s expense, a single individual at each audited site for purposes of facilitating the audit. 
 8.4 Fiduciary Matters. Altria and PMI each acknowledge that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no party
shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination that to do so would violate such a fiduciary duty or standard. Each party shall be responsible for taking
such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities. 
 8.5 Collective
Bargaining. To the extent any provision of this Agreement is contrary to the provisions of any collective bargaining agreement to which Altria or PMI or their respective Affiliates is a party, the terms of such collective bargaining
agreement shall prevail. Should any provisions of this Agreement be deemed to relate to a topic determined by an appropriate authority to be a mandatory subject of collective bargaining, Altria or PMI may be obligated to bargain with the union
representing affected employees concerning those subjects. 
  

 25 

 8.6 Consent of Third Parties. If any provision of this Agreement is dependent on the
consent of any third party (such as a vendor or a union) and such consent is withheld, Altria and PMI shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the full extent practicable. If any provision
of this Agreement cannot be implemented due to the failure of such third party to consent, Altria and PMI shall negotiate in good faith to implement the provision in a mutually satisfactory manner. The phrase “reasonable best efforts” as
used herein shall not be construed to require the incurrence of any non-routine or unreasonable expense or Liability or the waiver of any right. 
 ARTICLE IX 
 INDEMNIFICATION 
 9.1 Indemnification. All Liabilities retained or assumed by or allocated to Altria or the Altria Group pursuant to this Agreement shall be deemed to be Altria Group Liabilities for purposes of Article
III of the Distribution Agreement, and all Liabilities retained or assumed by or allocated to PMI or the PMI Group pursuant to this Agreement shall be deemed to be PMI Group Liabilities for the purposes of Article III of the Distribution Agreement.

 ARTICLE X 
 MISCELLANEOUS 
 10.1 Relationship of Parties. Nothing in this Agreement shall be deemed or construed by the
parties or any third party as creating the relationship of principal and agent, partnership or joint venture between or among the parties, it being understood and agreed that no provision contained herein, and no act of the parties, shall be deemed
to create any relationship between the parties other than the relationship set forth herein. 
 10.2 Affiliates. Each of Altria
and PMI shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by a member of the Altria Group or a member of the PMI Group. 
 10.3 Employee Communications. PMI will coordinate with Altria all written and electronic communications to the PMI Group employees
regarding the terms of this Employee Matters Agreement to assure that all such communications are uniform, consistent and accurate. 
 10.4 Incorporation of Distribution Agreement Provisions. The following provisions of the Distribution Agreement are hereby incorporated herein by reference, and unless otherwise expressly specified herein, such provisions
shall apply as if fully set forth herein (references in this Section 10.4 to an “Article” or “Section” shall mean Articles or Sections of the Distribution Agreement, and, except as expressly set forth below,
references in the material incorporated herein by reference shall be references to 

  

 26 

 
the Distribution Agreement): Article III (relating to Mutual Releases and Indemnification); Article IV (relating to certain Additional Covenants); Article V
(relating to Access to Information); Article VI (relating to Dispute Resolution); and Article IX (relating to Miscellaneous). 
 10.5
Governing Law. To the extent not preempted by applicable federal law, this Agreement shall be governed by, construed and interpreted in accordance with the laws of the Commonwealth of Virginia (other than the laws regarding the choice of
laws and conflict of laws as to all matters), including matters of validity, construction, effect, performance and remedies provided, however, that the Arbitration Act shall govern the matter described in Article IX. 

10.6 References. Except as provided in Section 10.4 hereof, all references to Sections, Articles or Schedules contained
herein mean Sections, Articles or Schedules of or to this Agreement, as the case may be, unless otherwise stated. 
  

 27 

 IN WITNESS WHEREOF, the parties have caused this Employee Matters Agreement to be duly executed as
of the day and year first above written. 
  

			
	ALTRIA GROUP, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	PHILIP MORRIS INTERNATIONAL INC.
		
	By:	 	  

	Name:	 	
	Title:	 	

  

 28

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]