Document:

Tax Sharing Agreement

 Exhibit 10.3 
 TAX SHARING AGREEMENT 
 BY AND BETWEEN 
 ALTRIA GROUP, INC. 
 AND 
 PHILIP MORRIS INTERNATIONAL INC. 
 DATED AS OF MARCH 28, 2008
  

 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

  

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	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

  

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 TAX SHARING AGREEMENT 
 THIS TAX SHARING AGREEMENT dated as of March 28, 2008 (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. 

 “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. 
  

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 “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 

  

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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 

  

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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. 
  

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 “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. 
  

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 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. 
  

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 (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. 
  

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 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. 
  

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 (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. 
  

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 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. 
  

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 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:	 	 /S/  DINYAR S. DEVITRE

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

		 	 
	Name:	 	Hermann Waldemer
	Title:	 	Chief Financial Officer

  

 19Intellectual Property Agreement

 Exhibit 10.4 
 INTELLECTUAL PROPERTY AGREEMENT 
 BY AND BETWEEN 
 PHILIP MORRIS INTERNATIONAL INC. 
 AND 
 PHILIP MORRIS USA INC. 
 DATED AS OF JANUARY 1, 2008 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
	 ARTICLE I
	 	DEFINITIONS	  	1
			
	 1.01
	 	General	  	1
	 1.02
	 	References to Time	  	6
			
	 ARTICLE II
	 	ALLOCATION OF INTELLECTUAL PROPERTY RIGHTS	  	6
			
	 2.01
	 	General Allocation	  	6
	 2.02
	 	Chrysalis Technologies	  	6
	 2.03
	 	Trade Secrets	  	6
			
	 ARTICLE III
	 	TRANSFER OF PATENTS, PATENT APPLICATIONS AND IDFS	  	7
			
	 3.01
	 	Patent Documents	  	7
	 3.02
	 	IDFs	  	7
			
	 ARTICLE IV
	 	COMPLETED INTERNALLY AND EXTERNALLY CONDUCTED PROJECTS	  	7
			
	 ARTICLE V
	 	INTERNALLY AND EXTERNALLY CONDUCTED PROJECTS IN PROGRESS	  	7
			
	 ARTICLE VI
	 	REQUESTS FOR ATI	  	8
			
	 6.01
	 	During the Transition Period	  	8
	 6.02
	 	After the Transition Period	  	8
	 6.03
	 	ATI Delivery	  	8
	 6.04
	 	Cooperation	  	8
			
	 ARTICLE VII
	 	INDEPENDENT INVENTIONS	  	9
			
	 7.01
	 	Presumption	  	9
	 7.02
	 	Patented Independent Inventions — Transition Period	  	9
	 7.03
	 	Patented Independent Inventions — Option Period	  	10
	 7.04
	 	Independent Inventions — Not Patented	  	12
	 7.05
	 	ATI	  	12
			
	 ARTICLE VIII
	 	CERTAIN ADDITIONAL COVENANTS	  	12
			
	 8.01
	 	General Obligations of the Parties	  	12
	 8.02
	 	Special Situations	  	12
	 8.03
	 	PMT	  	13
	 8.04
	 	Further Assurances	  	13
	 8.05
	 	Confidentiality	  	13
			
	 ARTICLE IX
	 	DISPUTE RESOLUTION	  	14
			
	 9.01
	 	Step Process	  	14
	 9.02
	 	PMT Negotiation	  	14
	 9.03
	 	Management Negotiation and Mediation	  	14
	 9.04
	 	Arbitration.	  	14
	 9.05
	 	Injunctive Relief	  	15

  

 -i- 

					
	 9.06
	 	Remedies	  	15
	 9.07
	 	Expenses	  	15
			
	 ARTICLE X
	 	MISCELLANEOUS	  	15
			
	 10.01
	 	Complete Agreement	  	15
	 10.02
	 	Governing Law	  	15
	 10.03
	 	Notices	  	16
	 10.04
	 	Amendment and Modification	  	16
	 10.05
	 	Successors and Assigns; No Third-Party Beneficiaries	  	16
	 10.06
	 	Counterparts	  	16
	 10.07
	 	Interpretation	  	17
	 10.08
	 	Legal Enforceability	  	17
	 10.09
	 	Construction	  	17

 EXHIBITS 
  

			
	Exhibit A-1	  	Ownership Rights Licensed to One Another
		
	Exhibit A-2	  	Chrysalis Ownership Rights Licensed to Third Parties
		
	Exhibit B	  	Projects Jointly Funded After Effective Date

  

 -ii- 

 INTELLECTUAL PROPERTY AGREEMENT 
 THIS INTELLECTUAL PROPERTY AGREEMENT, dated as of January 1, 2008 (as amended and supplemented pursuant to the terms hereof, this
“Agreement”), is entered into by and between Philip Morris International Inc., a Virginia corporation (“PMI”), and Philip Morris USA Inc., a Virginia corporation (“PM USA” and, together with PMI, the
“Parties”). 
 WITNESSETH: 
 WHEREAS, Altria Group, Inc., a Virginia corporation (“Altria”), currently owns all of the issued and outstanding shares of capital stock of PMI and PM USA; and 
 WHEREAS, Altria has announced that it is considering a pro-rata distribution of all of the outstanding shares of capital stock of PMI owned by Altria on
the Distribution Date to the holders of shares of common stock of Altria (the “Distribution”); and 
 WHEREAS, PM USA and the
Affiliates of PMI have a long history of close collaboration on their research and development work; and 
 WHEREAS, subsequent to 1987, PM
USA and Affiliates of PMI have entered into a series of Cost Sharing Agreements pursuant to which they have continued to collaborate in extensive jointly funded research and development work and created a significant body of Jointly Funded IP; and

 WHEREAS, the R&D Agreement, which constitutes the most recent Cost Sharing Agreement, is expiring in accordance with its terms on
December 31, 2007; and 
 WHEREAS, the Parties intend to enter into this Agreement to set forth the principal arrangements regarding
Intellectual Property and related matters effective as of the Effective Date; and 
 WHEREAS, the Parties previously created the PMT to
prepare for the expiration of the R&D Agreement and address related issues; 
 NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and intending to be legally bound hereby, the Parties agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.01 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): 
 AAA: American Arbitration Association. 

 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 none of Altria, the Subsidiaries of Altria (other than PMI and its
Subsidiaries) and the officers and directors of Altria and of such Altria Subsidiaries shall be deemed to be an Affiliate of PMI; and none of PMI, the Subsidiaries of PMI and the officers and directors of PMI and its Subsidiaries shall be deemed to
be an Affiliate of PM USA. 
 Altria: as defined in the recitals to this Agreement. 
 Arbitration Act: the United States Arbitration Act, 9 U.S.C. ss.ss 1-16, as the same may be amended from time to time. 
 ATI: any additional technological information related to Intellectual Property that is inscribed on, or exists in, a tangible medium or that is
stored in an electronic or other medium and is retrievable, including (i) laboratory notebooks, (ii) research plans, reports or analyses, (iii) databases or other test results, (iv) scientific articles or other presentations or
(v) samples. 
 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 or the city of Lausanne, Switzerland are authorized or obligated by Law or executive order to close. 
 Chrysalis Technologies: all Intellectual Property (i) transferred to Chrysalis Technologies Incorporated, a Virginia corporation (“CTI”), by Affiliates of PMI and by PM USA and its Affiliates as
of April 2, 2000; (ii) created by CTI between April 2, 2000 and January 1, 2005; or (iii) created by the Chrysalis division of PM USA between January 1, 2005 and the Effective Date, in all instances in the following
Fields of Use: (a) aerosol generation, including but not limited to, capillary aerosol generation and fuels and pharmaceutical and medical device applications and (b) intermetallic alloys and processing. 
 Confidential Information: as defined in Section 8.05 hereof. 
 Cost Sharing Agreements: the R&D Agreement, together with all previous cost sharing arrangements related to research and development in the
Fields of Use between PM USA and Affiliates of PMI. 
 Delivery Format: the format in which the Parties will deliver information to
one another pursuant to this Agreement, which format may be paper copy, computer disks or other electronic media, as agreed by the PMT, except that the Delivery Format of the information shall be at least as accessible as the format in which such
information is currently maintained by the Parties for their respective own use. 
 Dispute: as defined in Section 9.01
hereof. 
 Distribution: as defined in the recitals to this Agreement. 
 Distribution Date: the date on which the Distribution becomes effective. 
  

 -2- 

 Effective Date: January 1, 2008. 
 Fields of Use: use of Intellectual Property in the following fields: 
  

	 	(i)	tobacco and tobacco-related, including, but not limited to, smokeable and smokeless tobacco products and tobacco growing, curing and blending; 

  

	 	(ii)	smoking and smoking-related, including, but not limited to, smoking products, articles and devices; 

  

	 	(iii)	non-tobacco convenient oral sensorial products; 

  

	 	(iv)	distillation products; 

  

	 	(v)	all products and processes designed to reduce risk exposure caused by tobacco; 

  

	 	(vi)	sensorial and flavor technologies and know-how used to manufacture or in the manufacture of (i) through (v) above; 

  

	 	(vii)	aerosol generation, including, but not limited to, capillary aerosol generation and fuels and pharmaceutical and medical device applications; 

  

	 	(viii)	intermetallic alloys; 

  

	 	(ix)	technology for diagnosis, treatment or mitigation of tobacco-related disease(s) or condition(s); 

  

	 	(x)	smoke constituent exposure and risk assessment technologies, including, but not limited to, smoke chemistry methods, biomarkers and clinical studies; 

  

	 	(xi)	brand protection and anti-counterfeiting technologies; and 

  

	 	(xii)	machinery, apparatus, processes, methodologies, know-how, direct materials, components or packaging used to manufacture or in the manufacture of (i) through (xi) above.

 Filing Party: as defined in Section 7.02(a) hereof. 
 Governmental Authority: any federal, national, state, provincial, local, foreign, international or other court, government, department,
commission, board, bureau or agency, authority (including any central bank or taxing authority) or instrumentality (including any court, tribunal or grand jury). 
 IDF: invention disclosure forms. 
  

 -3- 

 Independent Invention: an invention or other Intellectual Property made by or on behalf of either
Party or one of its respective Affiliates after the Effective Date and not made by or on behalf of either Party or one of its respective Affiliates in connection with a Project conducted jointly after the Effective Date pursuant to Article V
hereof. 
 Information Exchange Date: January 1, 2000, unless otherwise agreed by the PMT before the Effective Date. 

Intellectual Property: any and all intellectual property except rights relating to trademarks and trade dress. Such Intellectual Property
includes inventions, works of authorship, other copyrighted works, trade secrets, developments, know-how (including improvements made to any of the preceding), patents, patent applications, related divisional, continuation, continuation-in-part
patents and patent applications, reissues, reexaminations, renewals, extensions, substitutions, foreign counterparts, inventor’s certificates, utility models, design patents, plant patents, certificates of plant variety protection, and the
right to claim priority to any of the preceding. 
 Jointly Funded IP: Intellectual Property that arose or arises out of the research,
development and developmental engineering activities conducted (i) by PM USA prior to January 1, 1988; or (ii) by or on behalf of either Party or any of their respective Affiliates (A) in accordance with the terms of such Cost
Sharing Agreements as were in effect between January 1, 1988 and the Effective Date; or (B) pursuant to Article V hereof after the Effective Date, regardless of whether such Intellectual Property was created directly by a Party or
an Affiliate of such Party or obtained through a grant of rights by a third party; including, for the avoidance of doubt, the Chrysalis Technologies. 
 Law: any federal, national, state, provincial, local or foreign 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. 
 Negotiation Notice: as defined in Section 9.03 hereof. 
 Non-Severable: characterization of an
Independent Invention that cannot be exploited commercially without the use of Jointly Funded IP. 
 Notices: as defined in
Section 10.03 hereof. 
 Notice Date: either (i) the later of the date 30 days after filing of a patent application
or upon receipt of a U.S. Patent Office foreign filing license with respect to an Independent Invention or (ii) the date 30 days after the date of commencement of test marketing of a new product in a Field of Use that includes, is made by or
uses an unpatented Independent Invention. 
 Option Period: the period commencing on the Effective Date and ending 10 years after the
later of (i) the Distribution Date or (ii) the Effective Date. 
 Parties: as defined in the preamble to this Agreement.

  

 -4- 

 Patent Documents: pending, allowed, abandoned and non-continued patent applications and patents
and assignments related thereto. 
 Person: an individual, 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. 
 PMI: as defined in the preamble to
this Agreement. 
 PMT: Project Management Team, as further defined in Section 8.03 hereof, with representatives from each
of the Parties or their Affiliates, established prior to the Effective Date. 
 PM USA: as defined in the preamble to the Agreement.

 Projects: projects, research initiatives, technologies and research and development support activities in which PMI and PM USA or
their Affiliates have collaborated under a Cost Sharing Agreement or will be collaborating under this Agreement. 
 R&D Agreement:
the Research and Development Agreement between Philip Morris Products S.A., a wholly-owned Subsidiary of PMI, and PM USA (f/k/a Philip Morris Incorporated), dated as of January 1, 2002, as extended by the Extension Agreement, dated as of
November 15, 2006. 
 Receiving Party: as defined in Section 7.03(b) hereof. 
 Representative: with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants,
attorneys and representatives. 
 Rules: as defined in Section 9.04 hereof. 
 Severable: characterization of an Independent Invention that can be exploited commercially without Jointly Funded IP. 
 Subsidiary: with respect to any specified Person, any corporation or other legal or other entity of which such Person 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. 
 Territory or Territories: with respect to PM USA, the U.S.; with respect to PMI, outside the U.S. 
 Third-Party Offer: as defined in Section 7.03 hereof. 
 Third Party: a Person other than Altria or a
Party hereto or a Subsidiary thereof. 
 Transition Period: the period commencing on the Effective Date and ending two years after the
later of (i) the Distribution Date or (ii) the Effective Date. 
  

 -5- 

 U.S.: the United States of America and its territories and possessions, including the Commonwealth
of Puerto Rico, Guam, the Virgin Islands, American Samoa and the Northern Marianas. 
 Ultra Trade Secrets: as defined in
Section 8.05 hereof. 
 1.02 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 
 ALLOCATION OF INTELLECTUAL PROPERTY RIGHTS 
 2.01 General Allocation. The
Parties hereby acknowledge and confirm that in accordance with the terms of (i) the Plan of Spinoff of the International Business of Philip Morris Incorporated, dated November 4, 1987, and (ii) the Cost-Sharing Agreements: 

(a) PM USA owns all Intellectual Property rights to the Jointly Funded IP in the U.S.; and 
 (b) Affiliates of PMI own all Intellectual Property rights to the Jointly Funded IP outside the U.S., 
 subject in the case of subparagraph (b) to the rights previously licensed to PM USA and its Affiliates and described in Exhibit A-1 hereto. 
 2.02 Chrysalis Technologies. The Parties hereby acknowledge and confirm specifically that: 
 (a) PM USA owns all Intellectual Property rights to the Chrysalis Technologies in the U.S.; and 
 (b) Affiliates of PMI own all Intellectual Property rights to the Chrysalis Technologies outside the U.S., 
 subject in both instances to the rights previously licensed to Third Parties and described in Exhibit A-2 hereto. 
 2.03 Trade Secrets. For the avoidance of doubt, ownership by a Party or its Affiliates of Intellectual Property rights in a trade secret
(including Ultra Trade Secrets) that is Jointly Funded IP shall mean the sole right to use the trade secret, including the right to make, use, sell or offer for sale products in that Party’s respective Territory. 
  

 -6- 

 ARTICLE III 
 TRANSFER OF PATENTS, PATENT APPLICATIONS AND IDFS 
 3.01 Patent Documents. Unless exchanged
through the work of the PMT prior to the Effective Date, no later than 60 days after the Effective Date, each Party shall, or shall cause its Affiliates to, deliver to the other a copy in Delivery Format of all of the Patent Documents identified and
requested by the other Party that it or any of its Affiliates owns that are dated before the Effective Date. 
 3.02 IDFs. Unless
exchanged through the work of the PMT prior to the Effective Date, no later than 60 days after the Effective Date, each Party shall, or shall cause its Affiliates to, deliver to the other a copy in Delivery Format of all IDFs that it or any of its
Affiliates owns that are dated before the Effective Date but after the Information Exchange Date. 
 ARTICLE IV 
 COMPLETED INTERNALLY AND EXTERNALLY CONDUCTED PROJECTS 
 Unless earlier exchanged through the work of the PMT, no later than 60 days after the Effective Date, each Party shall deliver to the other in Delivery Format: 
 (a) lists and summaries of the Projects that were: 
 (i) jointly funded by the Parties or any of their respective Affiliates; 
 (ii) completed
after the Information Exchange Date; and 
 (iii) completed before the Effective Date; 
 (b) a copy of any lists in the possession of a Party or any of their respective Affiliates on the Effective Date of jointly funded Projects that were
completed prior to the Information Exchange Date, provided that neither Party shall be obligated to create such lists if they did not exist as of August 1, 2007; and 
 (c) a list of formulas and ingredient lists and product specifications in the possession of a Party as of the Effective Date. 

ARTICLE V 
 INTERNALLY AND
EXTERNALLY CONDUCTED PROJECTS IN PROGRESS 
 Exhibit B hereto lists all internally and externally conducted Projects in progress
as of the Effective Date that the Parties have agreed that the Parties or their Affiliates will fund jointly after the Effective Date on the same basis as joint funding has occurred under the R&D Agreement. All Intellectual Property obtained or
created in jointly funded Projects after the 

  

 -7- 

 
Effective Date shall constitute Jointly Funded IP and be subject to all applicable provisions of this Agreement with regard to exchange of ATI, ownership of
Jointly Funded IP in the respective Territories and confidentiality. 
 ARTICLE VI 
 REQUESTS FOR ATI 
 6.01 During the
Transition Period. 
 (a) At any time during the Transition Period, either Party shall be entitled to request ATI from the other Party or
its Affiliates regarding: 
 (i) the Patent Documents or the IDFs delivered before the Effective Date or pursuant to
Article III of this Agreement; 
 (ii) any Project included on a list delivered pursuant to Article IV hereof;

 (iii) any other Project completed prior to the Information Exchange Date; or 
 (iv) any of the formulas, ingredient lists or product specifications included on a list delivered pursuant to Article IV hereof.

 (b) At any time during the Transition Period, a Party that has elected not to continue joint funding of a Project after the Effective Date
shall be entitled to request ATI regarding that Project obtained or created before the Effective Date. 
 6.02 After the Transition
Period. At any time after the Transition Period, either Party shall be entitled to request ATI from the other Party or its Affiliates with respect to the Patent Documents or the IDFs delivered before the Effective Date or hereunder. Any request
pursuant to this Section 6.02 shall include the identification of the specific Patent Document or IDF with respect to which ATI is requested. 
 6.03 ATI Delivery. The Party from which ATI is requested pursuant to this Article VI shall, or shall cause its Affiliates to, deliver the requested ATI in Delivery Format to the requesting Party
promptly, and in any event no later than 30 days, after receipt of the request therefor. 
 6.04 Cooperation. The obligations set
forth in this Article VI shall be subject to the general provision on further cooperation and good faith dealing between the Parties as to the Jointly Funded IP, as set forth in Section 8.01 hereof. 
  

 -8- 

 ARTICLE VII 
 INDEPENDENT INVENTIONS 
 7.01 Presumption. The Parties have reviewed the long historical
experience with the Cost Sharing Agreements, including: 
 (a) the time typically required to analyze research and development results and
conceive of an invention; 
 (b) the time that typically elapses between the conception of an invention, its actual reduction to practice and
the filing of a patent application for that invention or the inclusion of that invention in a new product; and 
 (c) the expenditure by the
Parties or their Affiliates of considerable resources and millions of dollars in the course of their long-standing and close research and development cooperation and collaboration. 
 Based on that review, in the judgment of those persons at both Parties (and their Affiliates) who have worked most closely on the creation of the Jointly
Funded IP, the Parties have concluded that it is highly probable that any Independent Invention in a Field of Use: 
 (i) for
which a Party or an Affiliate of that Party files a patent application during the Transition Period; or 
 (ii) that the Party
or an Affiliate of that Party incorporates into a new product during the Transition Period 
 will be Non-Severable and will substantially arise from the
Jointly Funded IP. 
 7.02 Patented Independent Inventions — Transition Period. 
 (a) If, during the Transition Period, either Party or an Affiliate of a Party (collectively, the “filing Party”) files, or a Third Party files
on behalf of a filing Party, a patent application on an Independent Invention that is within a Field of Use, then the filing Party shall notify the other Party in writing no later than the Notice Date. With respect to all Intellectual Property that
is included in such Independent Invention and is described or claimed in such patent application: 
 (i) PM USA shall own all
such Intellectual Property rights in the U.S.; and 
 (ii) PMI or an Affiliate of PMI shall own all such Intellectual Property
rights outside the U.S., 
 unless the filing Party is able to demonstrate to the reasonable satisfaction of the other Party that the Independent Invention
is Severable or does not substantially arise from the Jointly Funded IP. If the Parties are unable to agree, they shall submit the matter for resolution under Article IX hereof. 
  

 -9- 

 (b) If the Parties agree, or the mediator or the arbitrator pursuant to Section 9.03 or
9.04 hereof determines, that the Independent Invention for which a patent application is filed during the Transition Period either: 
 (i) is not within a Field of Use; or 
 (ii) does not substantially arise from the Jointly
Funded IP; 
 then this Agreement shall not apply to such Independent Invention. 
 (c) If the Parties agree, or the mediator or the arbitrator pursuant to Section 9.03 or 9.04 hereof determines, that the Independent
Invention for which a patent application is filed during the Transition Period: 
 (i) is within a Field of Use; and

 (ii) substantially arises from the Jointly Funded IP; but 
 (iii) is Severable; 
 then the terms of
subparagraph (b) of Section 7.03 hereof shall apply. 
 7.03 Patented Independent Inventions — Option Period.

 (a) If, during the Option Period but after the expiration of the Transition Period, a filing Party, or a Third Party on behalf of a filing
Party, files a patent application on an Independent Invention that: 
 (i) is within a Field of Use; and 
 (ii) substantially arises from Jointly Funded IP; 
 then the filing Party shall notify the other Party in writing no later than the Notice Date of the filing of such patent application and the terms of subparagraph (b) of this Section 7.03 shall apply. 
 (b) After final agreement or determination pursuant to subparagraph (c) of Section 7.02 hereof or receipt of notice pursuant to
subparagraph (a) of this Section 7.03, the receiving Party shall have 30 days to notify the filing Party in writing as to whether the receiving Party elects to enter into negotiations pursuant to which the receiving Party or its
Affiliates (collectively, the “receiving Party”) will obtain ownership or license rights in the receiving Party’s Territory with respect to such Independent Invention. Such written notice shall include a summary of the terms upon
which the receiving Party proposes to acquire such ownership or license rights for the Independent Invention, including acquisition or license fees or royalties, length and country or countries of ownership or license, exclusivity and covenants of
use. 
  

 -10- 

 (c) If the receiving Party elects to make an offer and enter into negotiations pursuant to subparagraph
(b) of this Section 7.03, then the Parties or their respective Affiliates shall engage in good faith negotiations on an arm’s length basis with respect to the terms of an agreement regarding the Independent Invention. The
Persons engaged in the negotiations may structure any such agreement in any manner that they shall determine. If any legal deadlines occur with respect to filing of corresponding patent applications on the Independent Invention in the receiving
Party’s Territory during such negotiations, then, if the receiving Party so requests, the filing Party shall file such corresponding patent applications at the sole expense of the receiving Party, subject to the option rights set forth in
subsection (d) of this Section 7.03. 
 (d) If: 
 (i) the receiving Party elects not to make an offer; 
 (ii) the receiving Party breaks off negotiations by written notice; or 
 (iii) no agreement is reached by the Parties within three months from the Notice Date (unless extended by mutual agreement of the
Parties); 
 then the filing Party shall retain sole and exclusive ownership of Intellectual Property rights in the Independent Invention world-wide or may
solicit offers from one or more Third Parties regarding ownership or license of the Independent Invention (each, a “Third-Party Offer”). Before accepting the Third-Party Offer, the filing Party shall deliver to the receiving Party in
writing a summary of those terms of the Third-Party Offer that, the filing Party, considering all aspects of the offers taken as a whole, and acting reasonably and in good faith, believes improve upon the offer of the receiving Party;
provided that if such summary contains competitively sensitive information (e.g., marketing information), the filing Party will deliver such information to an arbitrator chosen in accordance with Section 9.04 hereof
in anticipation of seeking assistance in resolving the matter. The receiving Party shall have 30 days to offer in writing to match or improve upon the disclosed terms of the Third-Party Offer. If the filing Party, acting reasonably and in good
faith, concludes that the receiving Party’s offer matches or improves upon the Third-Party Offer, the filing Party shall accept the receiving Party’s offer. If the filing Party, acting reasonably and in good faith, concludes that the
receiving Party’s offer does not match or improve upon the Third-Party Offer, the filing Party shall so inform the receiving Party in writing within 10 days of receipt of the filing Party’s offer. If the receiving Party believes that the
filing Party has not acted reasonably and in good faith, the receiving Party shall so inform the filing Party in writing within 10 days of receipt of the filing Party’s written notice and the Parties shall submit the matter promptly for
resolution with the assistance of an arbitrator chosen in accordance with Section 9.04 hereof, which assistance shall be restricted to a determination whether the filing Party has acted reasonably and in good faith in concluding that the
receiving Party’s offer does not match or improve upon the Third-Party Offer. If the receiving Party agrees with the filing Party’s conclusion that the receiving Party’s offer does not match or improve upon the Third-Party Offer or if
the matter is resolved in accordance with Section 9.04 hereof in favor of the filing Party’s conclusion, the filing Party shall be free to accept the Third-Party Offer. 
  

 -11- 

 7.04 Independent Inventions — Not Patented. If at anytime during the Option Period, either
Party or an Affiliate of a Party begins test marketing of a new product anywhere in its respective Territory that includes an unpatented Independent Invention that is within a Field of Use, all of the terms of Sections 7.01,
7.02 and 7.03 hereof shall apply to the unpatented Independent Invention used in such product on the same basis as such terms apply to a patent application filed within the Transition Period or Option Period, as appropriate. For
purposes of calculating deadlines pursuant to Sections, 7.01, 7.02 and 7.03 hereof, in conjunction with this Section 7.04, the date of commencement of such test marketing shall have the same effect as the filing of a
patent application. 
 7.05 ATI. Any grant of rights during the Transition Period shall include the transfer of such ATI in Delivery
Format as normally accompanies a patent license. With respect to all other grants of rights under Section 7.02(c), 7.03 or 7.04 hereof in the Option Period, the Parties shall negotiate in good faith as to what ATI will be
transferred to the receiving Party or its Affiliates. 
 ARTICLE VIII 
 CERTAIN ADDITIONAL COVENANTS 
 8.01 General Obligations of the Parties.
During the life of this Agreement, the Parties shall, and shall cause their respective Affiliates to, cooperate generally with each other in a reasonable manner and in good faith and in compliance with applicable Law concerning the subject matter
hereof, such as the prosecution of patents relating to the Jointly Funded IP (including the provision of witnesses and documents as may be required in connection with patent prosecution or enforcement, with all reasonable expenses in connection
therewith to be reimbursed by the Party requesting assistance promptly upon written request by the Party providing assistance). Among other things, the Parties agree that the first patent for each invention shall be filed in the country in which the
invention was created. In addition, all equipment or tangible materials that may be owned by one Party or its Affiliates and used by the other Party or its Affiliates on the Effective Date shall be promptly returned after the Effective Date upon the
written request of the Party in ownership at the sole expense of the requesting Party. 
 8.02 Special Situations. 
 (a) The Parties hereby grant, and shall cause their respective Affiliates to grant, each other, or their Affiliates, perpetual, royalty-free licenses to
the Jointly Funded IP and the patented or unpatented Independent Inventions for which ownership is allocated by Section 7.02 hereof for the limited purposes of: (i) securing the production of equipment and materials (including
tobacco) used in the manufacture of products in the Fields of Use; and (ii) conducting research, development or product assessment activities by or on behalf of a Party or its Affiliates. 
 (b) The Parties will, or will cause their respective Affiliates to, negotiate separate agreements for their respective Territories with Schweizer-Maudit
with regard to banded cigarette paper. 
  

 -12- 

 8.03 PMT. 
 (a) Subsequent to the Effective Date, the PMT shall meet quarterly during the life of this Agreement to initiate, review or terminate jointly funded Projects, to consider Intellectual Property issues or to otherwise
manage research and development relations pursuant to this Agreement. 
 (b) The Parties will determine the size and membership of the PMT
from time to time as necessary and appropriate to fulfill the PMT’s purposes under this Agreement; provided that each Party will have an equal number of representatives on the PMT. Each Party will designate its own Representatives
to serve on the PMT. The PMT will act by unanimous decision. 
 8.04 Further Assurances. In addition to the actions specifically
provided for in this Agreement and unless otherwise expressly provided in this Agreement, each of the Parties hereto shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement. The Parties recognize that issues may arise that the Parties did not
anticipate and plan for. In addressing those issues, the Parties agree to act in good faith, on an arm’s length basis and with flexibility, subject to their respective legal obligations. 
 8.05 Confidentiality. 
 (a) In
performing their respective obligations under the Cost Sharing Agreements and this Agreement, the Parties have exchanged, and will exchange, as part of the Jointly Funded IP: 
 (i) trade secrets regarding product specifications, casings and flavorings, formulas for blends or other trade secret information of a
similarly high proprietary nature (“Ultra Trade Secrets”); and 
 (ii) other trade secrets, know-how and
confidential information (together with Ultra Trade Secrets, the “Confidential Information”). 
 Each of PMI and PM USA shall hold, and shall use
its best efforts to cause its employees, Affiliates and Representatives to hold, in strict confidence all the Ultra Trade Secrets and shall not release or disclose the Ultra Trade Secrets to any other Person, except its Representatives who shall be
bound by the provisions of this Section 8.05; provided, however, that PMI and PM USA and their respective employees, Affiliates and Representatives may disclose such Ultra Trade Secrets: 
 (i) to vendors that must have access to the Ultra Trade Secrets for purposes of providing services to a Party; provided that
agreements are executed with such vendors requiring them to maintain the Ultra Trade Secrets in strict confidence and to use the Ultra Trade Secrets only for the purposes of providing the contracted services; and 
  

 -13- 

 (ii) if disclosure is, or is reasonably likely to be, required by Law or for legal
proceedings in any country; provided that the Party being required to make the disclosure has used its best efforts to obtain undertakings from the relevant Governmental Authority or in such legal proceedings that the Ultra Trade Secrets will
not be made public and, in the event the Party is unable to obtain such an undertaking such Party delivers prompt written notice of the proposed disclosure to the other Party. 
 (b) Each of PMI and PM USA and their respective Representatives shall exercise the same care with regard to Confidential Information other than Ultra
Trade Secrets as it takes to preserve confidentiality for its own similar Confidential Information. 
 ARTICLE IX 
 DISPUTE RESOLUTION 
 9.01 Step
Process. Any controversy or claim arising out of or relating to this Agreement or the breach thereof (a “Dispute”), shall be resolved by a series of three steps in the following sequence: (i) negotiation between members of the
PMT; (ii) negotiation between senior executives with the possibility of mediation; and (iii) then binding arbitration. Each Party agrees on behalf of itself and its respective Affiliates that the procedures set forth in this Article
IX shall be the exclusive means for resolution of any Dispute. 
 9.02 PMT Negotiation. The Parties agree that the PMT shall first
attempt to resolve any Dispute. 
 9.03 Management Negotiation and Mediation. In the event that the Dispute is not settled by the PMT
within 30 days from the time any Party first raises such Dispute in writing to the PMT, then any Party may request in writing (a “Negotiation Notice”) that the Parties attempt to resolve the Dispute by the direct discussions and
negotiations, including if either Party so elects, negotiation among senior executives of PM USA and PMI. If all Parties to the Dispute agree, the Parties may also attempt to settle the Dispute by a mediation administered by the AAA under its
Commercial Mediation Procedures. The Parties agree that any applicable statute of limitations shall be tolled from the submission of a Negotiation Notice until the conclusion of the dispute resolution process outlined in this Article IX.

 9.04 Arbitration. 
 (a)
If a Dispute is not resolved within 30 days after the Negotiation Notice, any Party shall have the right to commence arbitration. In that event, the Dispute shall be resolved by final and binding arbitration administered by the AAA in accordance
with its International Arbitration Rules (the “Rules”). The place of arbitration shall be New York, New York. Any Dispute concerning the propriety of the commencement of the arbitration shall be finally settled by such arbitration.
Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof or having jurisdiction over the relevant party or its assets. 
  

 -14- 

 (b) The number of arbitrators shall be one if the claims in such Dispute aggregate less than $100
million, and three if the claims in such Dispute aggregate $100 million or more. If the Parties are unable to agree on the amount of the claims, there shall be three arbitrators. 
 (c) If one arbitrator is to be chosen, the Parties agree to seek to reach agreement on the identity of the sole arbitrator within 30 days after the
initiation of arbitration. If the parties do not reach agreement on the sole arbitrator within that time period, then the AAA shall appoint the sole arbitrator. 
 (d) If three arbitrators are to be chosen, the claimant shall appoint an arbitrator in its request for arbitration. The respondent shall appoint an arbitrator within 20 days of the receipt of the request for
arbitration. The two arbitrators shall appoint a third arbitrator who shall serve as chair of the tribunal, within 30 days after the appointment of the second arbitrator. If any of the three arbitrators is not appointed within the time prescribed
above, then the AAA shall appoint that arbitrator. 
 9.05 Injunctive Relief. At any time during the resolution of a Dispute between
the parties, including the PMT negotiation, either Party has the right to apply to any court of competent jurisdiction for interim relief, including pre-arbitration attachments or injunctions, necessary to preserve the Parties’ rights or to
maintain the Parties’ relative positions until such time as the arbitration award is rendered or the Dispute is otherwise resolved. 
 9.06 Remedies. The arbitrator(s) shall have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement nor any right or power to award punitive or treble (or other
multiple) damages. 
 9.07 Expenses. Each Party shall bear its own expenses and attorneys’ fees in pursuit and resolution of any
Dispute. The Parties shall share equally the costs and expenses (including the fees of any neutral mediator or arbitrator) of any mediation or arbitration hereunder. 
 ARTICLE X 
 MISCELLANEOUS 
 10.01 Complete Agreement. This Agreement and the Exhibits hereto shall constitute the entire agreement between the Parties hereto with respect to
the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter provided, that Section 2.8.2(a) of the R&D Agreement shall remain in full force and effect.

 10.02 Governing Law. This Agreement shall be governed by, construed and interpreted in accordance with the laws of the Commonwealth
of Virginia, U.S.A. (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 Arbitration Act
shall govern the matters described in Section 9.04 hereof. 
  

 -15- 

 10.03 Notices. All notices, requests, claims, demands and other communications hereunder
(collectively, “Notices”) shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telegram, facsimile, electronic mail or other standard form of telecommunications
(provided confirmation is delivered to the recipient the next Business Day in the case of facsimile, electronic mail or other standard form of telecommunications) or by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows: 
  

					
			
	If to PMI:	  		  	Philip Morris International Inc.
		  		  	120 Park Avenue
		  		  	New York, New York 10017
		  		  	c/o Corporate Secretary
			
	with a copy to:	  		  	Philip Morris International Management SA
		  		  	Avenue de Rhodanie 50
		  		  	1001 Lausanne, Switzerland
		  		  	c/o General Counsel
			
	If to PM USA:	  		  	Philip Morris USA Inc.
		  		  	6601 W. Broad Street
		  		  	Richmond, Virginia 23261
		  		  	c/o Associate General Counsel, Business Counselling
			
	with a copy to:	  		  	Altria Group, Inc.
		  		  	120 Park Avenue
		  		  	New York, New York 10017
		  		  	c/o Corporate Secretary

 or to such other address as any Party hereto may have furnished to the other Parties by a notice in writing in
accordance with this Section 10.03. 
 10.04 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by a written agreement signed by both of the Parties hereto. 
 10.05 Successors and Assigns; No Third-Party
Beneficiaries. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns, but neither this Agreement nor any of the rights, interests and
obligations hereunder shall be assigned by any Party hereto without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed). This Agreement is solely for the benefit of the Parties hereto and their
Subsidiaries and Affiliates and is not intended to confer upon any other Persons any rights or remedies hereunder. 
 10.06
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 
  

 -16 

 10.07 Interpretation. The Article and Section headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the Parties hereto and shall not in any way affect the meaning or interpretation of this Agreement. 
 10.08 Legal Enforceability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Each Party acknowledges that
money damages would be an inadequate remedy for any breach of the provisions of this Agreement and agrees that the obligations of the Parties hereunder shall be specifically enforceable. 
 10.09 Construction. Unless otherwise expressly stated, clauses beginning with the term “including” or words of similar import set forth
examples only and in no way limit the generality of the matters thus exemplified. 
  

 -17- 

 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date
first above written. 
  

			
	PHILIP MORRIS INTERNATIONAL INC.
		
	By:	 	 /s/ Ann Marie Kaczorowski

	Name:	 	Ann Marie Kaczorowski
	Title:	 	Vice President and Secretary
	
	PHILIP MORRIS USA INC.
		
	By:	 	 /s/ John R. Nelson

	Name:	 	John R. Nelson
	Title:	 	President, Operations and Technology

  

 -18- 

 EXHIBITS 
  

			
	Exhibit A-1	  	Ownership Rights Licensed to One Another
		
	Exhibit A-2	  	Chrysalis Ownership Rights Licensed to Third Parties
		
	Exhibit B	  	Projects Jointly Funded After Effective Date

 EXHIBIT A-1 
 An affiliate of PMI has granted to PM USA and each of its Affiliates a non-exclusive, royalty-free, paid-up license under the Jointly Funded IP solely for the purpose of, or in connection with the sale, use or
importation by the U.S. military and its agents in or into PMI’s Territory of products that are sold to the U.S. military by PM USA or any of its Affiliates, without PM USA or any of its Affiliates having the right to sublicense hereunder. This
license shall extend to all further transferees of the U.S. military and its agents. 
  

 A-1-1 

 EXHIBIT A-2 
 (1) Strategic Alliance Agreement by and between Discovery Laboratories, Inc. (“Discovery”) and Philip Morris USA Inc., d/b/a Chrysalis Technologies (“Chrysalis”) 
 (2) License and Assignment Agreement by and between TIAX LLC (“TIAX”) and Chrysalis Technologies, a division of Philip Morris USA Inc. (“Chrysalis”)

 (3) Development and License Agreement by and between Respironics, Inc. and Philip Morris USA Inc., Chrysalis Technologies Division. 
  

 A-2-1 

 EXHIBIT B 
 None 
  

 B-1

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