Exhibit 10.1

TAX ALLOCATION AGREEMENT dated as of             , 2007 (this “ Agreement ”) among Kraft Foods Inc., a Virginia corporation (“ Parent ”), Cable Holdco, Inc., a newly organized Delaware corporation and direct wholly-owned Subsidiary of KFG (“ Splitco ”) and Ralcorp Holdings, Inc., a Missouri corporation (“ RMT Partner ”, collectively, the “ Companies ”). Capitalized terms used in this Agreement are defined in Article I below or in the RMT Transaction Agreement.

WHEREAS, as of the date of this Agreement, Parent is the common parent of an Affiliated Group of corporations, including KFG and Splitco, which has elected to file consolidated U.S. Federal income Tax Returns;

WHEREAS, the Companies have entered into the RMT Transaction Agreement, which sets forth the corporate transactions pursuant to which:

 

A.

at the time of, or prior to, the RMT Debt Incurrence, pursuant to the Newco Contribution, KFG shall transfer, or cause to be transferred, the U.S. Acquired Assets (excluding the Modesto Facility) and cash as set forth in the RMT Transaction Agreement to Newco in exchange for the assumption by Newco of the U.S. Assumed Liabilities (other than the RMT Debt) and, pursuant to the Modesto Purchase, Parent shall cause the Modesto Facility to be transferred to Newco in exchange for a cash payment and certain other consideration;

 

B.

immediately prior to the Splitco Contribution, KFG shall incur the RMT Debt and receive the RMT Debt Proceeds pursuant to the RMT Debt Incurrence;

 

C.

following the RMT Debt Incurrence, pursuant to the Splitco Contribution, Parent will cause KFG to contribute the limited liability company interests in Newco to Splitco in exchange for (i) the issuance by Splitco to KFG of the Splitco Securities, (ii) the issuance by Splitco to KFG of a certain number of shares of Splitco Common Stock pursuant to the Splitco Share Issuance and (iii) the assumption by Splitco of the RMT Debt;

 

D.

immediately following the Splitco Contribution, the Splitco Share Issuance and the issuance of Splitco Securities, and prior to the Distribution, KFG shall distribute all the issued and outstanding shares of Splitco Common Stock held by KFG to Parent pursuant to the Internal Spin;

 

E.

immediately following the Internal Spin, KFG shall consummate the Internal Debt Repayment by transferring the RMT Debt Proceeds to Parent in exchange for the retirement of outstanding intercompany debt;

 

F.

immediately following the Internal Debt Repayment, KFG may consummate the Internal Debt Exchange by transferring the Splitco Securities to Parent in exchange for the retirement of outstanding intercompany debt;

 

G.

following the Internal Spin, the Internal Debt Repayment and the Internal Debt Exchange, if applicable, and on the Distribution Date, Parent shall consummate the Distribution of the Splitco Common Stock to Eligible Parent Stockholders;

 

H.

immediately following the Distribution, pursuant to the Splitco Merger, Splitco shall merge with and into Merger Sub, whereby each issued share of Splitco Common Stock shall be converted into the right to receive one fully paid and nonassessable share of RMT Partner Common Stock;

 

I.

immediately following the Splitco Merger, pursuant to the Short Form Merger, the Splitco Merger Surviving Company shall merge with and into RMT Partner;

 

J.

immediately following the Short Form Merger, pursuant to the Non-U.S. Transfers, Parent shall cause the Non-U.S. Transferors to sell and transfer the Non-U.S. Acquired Assets to the Non-U.S. Transferees, in exchange for the irrevocable assumption by the Non-U.S. Transferees of the Non-U.S. Assumed Liabilities and certain other consideration; and

 

K.

on or following the Distribution Date, Parent may cause the External Debt Exchange to be effected;

 

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WHEREAS, the parties intend the Proposed Transactions to qualify for the Intended Tax-Free Treatment;

WHEREAS, as a result of the Distribution, Splitco and its Subsidiaries will cease to be members of the Parent Group;

WHEREAS, the Companies desire to allocate among the Companies the Tax responsibilities, liabilities and benefits of transactions arising prior to, as a result of, and subsequent to the Proposed Transactions, and to provide for and agree upon other matters relating to Taxes; and

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Companies (each on behalf of itself, each of its Affiliates, and its future Affiliates) hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01 Definition of Terms . The following terms shall have the following meanings (such meanings to apply equally to both the singular and the plural forms of the terms defined). All section and Exhibit references are to this Agreement unless otherwise stated.

“ Acquired Assets ” has the meaning set forth in the RMT Transaction Agreement.

“ Active Trade or Business ” means the active conduct by Splitco of the businesses conducted by the members of the Splitco Group as of the Distribution (determined in accordance with Code Section 355(b)).

“ Affiliate ” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person. For purposes of this definition, “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise.

“ Affiliated Group ” means an affiliated group as that term is defined in Section 1504(a) of the Code.

“ Agreement ” has the meaning set forth in the preamble.

“ Business Employees ” has the meaning set forth in the RMT Transaction Agreement.

“ Closing Date ” has the meaning set forth in the RMT Transaction Agreement.

“ Code ” has the meaning set forth in the RMT Transaction Agreement.

“ Collateral Agreements ” has the meaning set forth in the RMT Transaction Agreement.

“ Companies ” has the meaning set forth in the preamble.

“ Consolidated or Combined State Income Tax ” means any State Income Tax computed on a consolidated, combined or unitary basis.

“ Consolidated or Combined State Income Tax Return ” means any Tax Return relating to Consolidated or Combined State Income Tax.

“ Contribution ” has the meaning set forth in the RMT Transaction Agreement.

 

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“ Distribution ” has the meaning set forth in the RMT Transaction Agreement.

“ Distribution Date ” has the meaning set forth in the RMT Transaction Agreement.

“ Eligible Parent Stockholders ” has the meaning set forth in the RMT Transaction Agreement.

“ Employee Equity Grants ” has the meaning set forth in Section 4.01(c)(i).

“ External Debt Exchange ” has the meaning set forth in the RMT Transaction Agreement.

“ Federal Consolidated Return ” means any U.S. Federal Tax Return for an Affiliated Group.

“ Final Determination ” means the final resolution of liability for any Tax for any taxable period by or as a result of (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Code Sections 7121 or 7122, or a comparable arrangement under the laws of another jurisdiction; (iii) any allowance of a refund in respect of an overpayment of Tax, but only after the expiration of all periods during which such amount may be recovered by the Taxing Authority imposing the Tax; or (iv) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

“ Group ” means the Parent Group or the Splitco Group, or both, as the context requires.

“ Indemnitee ” has the meaning set forth in Section 5.01.

“ Indemnifying Party ” has the meaning set forth in Section 5.01.

“ Intended Tax-Free Treatment ” has the meaning set forth in the RMT Transaction Agreement.

“ Internal Debt Exchange ” has the meaning set forth in the RMT Transaction Agreement.

“ Internal Debt Repayment ” has the meaning set forth in the RMT Transaction Agreement.

“ Internal Spin ” has the meaning set forth in the RMT Transaction Agreement.

“ IRS ” means the U.S. Internal Revenue Service.

“ IRS Ruling ” has the meaning set forth in the RMT Transaction Agreement.

“ KFG ” has the meaning set forth in the RMT Transaction Agreement.

“ Merger Sub ” has the meaning set forth in the RMT Transaction Agreement.

“ Mergers ” has the meaning set forth in the RMT Transaction Agreement.

“ Modesto Facility ” has the meaning set forth in the RMT Transaction Agreement.

“ Modesto Purchase ” has the meaning set forth in the RMT Transaction Agreement.

“ Newco ” has the meaning set forth in the RMT Transaction Agreement.

“ Newco Contribution ” has the meaning set forth in the RMT Transaction Agreement.

“ Non-U.S. Acquired Assets ” has the meaning set forth in the RMT Transaction Agreement.

 

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“ Non-U.S. Assumed Liabilities ” has the meaning set forth in the RMT Transaction Agreement.

“ Non-U.S. Transfer ” has the meaning set forth in the RMT Transaction Agreement.

“ Non-U.S. Transferees ” has the meaning set forth in the RMT Transaction Agreement.

“ Non-U.S. Transferors ” has the meaning set forth in the RMT Transaction Agreement.

“ Parent ” has the meaning set forth in the preamble.

“ Parent Deferred Stock Awards ” has the meaning set forth in the RMT Transaction Agreement.

“ Parent Group ” means the Affiliated Group of which Parent is the common parent. The Parent Group shall include Splitco and other members of the Splitco Group only for taxable periods ending on or before the Distribution Date.

“ Parent Group Federal Consolidated Return ” means any Federal Consolidated Return for the Parent Group.

“ Past Practices ” has the meaning set forth in Section 3.03(a).

“ Planned Acquisitions ” has the meaning set forth in Section 4.02(c)(ii).

“ Post-Distribution Period ” means any taxable period (or portion thereof) beginning after the Distribution Date.

“ Pre-Distribution Period ” means any taxable period (or portion thereof) ending on or before the Distribution Date.

“ Prohibited Act ” has the meaning set forth in Section 4.02(c).

“ Property Taxes ” means real, personal and intangible property Taxes.

“ Proposed Transactions ” has the meaning set forth in the RMT Transaction Agreement.

“ Recoverable Taxes ” has the meaning set forth in Section 2.03.

“ Related Persons ” has the meaning set forth in Section 4.01(d)(iii).

“ Responsible Party ” means, with respect to any Tax Return, the party having responsibility for preparing and filing such Tax Return under this Agreement.

“ Restricted Period ” means the two-year period commencing on the day following the Distribution Date.

“ RMT Debt ” has the meaning set forth in the RMT Transaction Agreement.

“ RMT Debt Incurrence ” has the meaning set forth in the RMT Transaction Agreement.

“ RMT Debt Proceeds ” has the meaning set forth in the RMT Transaction Agreement.

“ RMT Partner ” has the meaning set forth in the preamble.

“ RMT Partner Canada ” has the meaning set forth in the RMT Transaction Agreement.

“ RMT Partner Common Stock ” has the meaning set forth in the RMT Transaction Agreement.

 

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“ RMT Transaction Agreement ” means the RMT Transaction Agreement, as amended from time to time, by and among Parent, Splitco, RMT Partner and Merger Sub, dated as of November 15, 2007.

“ Ruling ” means all private letter rulings (including the IRS Ruling) granted by the IRS relating to the Proposed Transactions (whether granted prior to, on or after the date hereof), requests for such rulings, including all supplemental ruling requests and information submissions, and any exhibit to any of the foregoing.

“ Short Form Merger ” has the meaning set forth in the RMT Transaction Agreement.

“ Spin-off ” has the meaning set forth in the RMT Transaction Agreement.

“ Splitco ” has the meaning set forth in the preamble.

“ Splitco Capital Stock ” means (i) all classes of stock of Splitco, Merger Sub or RMT Partner, as the case may be, including common stock and all other instruments treated as equity in Splitco, Merger Sub or RMT Partner, as the case may be, for U.S. Federal income tax purposes and (ii) all options, warrants and other rights to acquire such stock. If Splitco, Merger Sub or RMT Partner merges into another entity or consolidates with another entity to form a new entity, Splitco Capital Stock shall refer to the capital stock of such new entity.

“ Splitco Carryback ” means any net operating loss, net capital loss, excess Tax credit or other similar Tax item of any member of the Splitco Group that may or must be carried from one taxable period to a prior taxable period under applicable tax law.

“ Splitco Common Stock ” has the meaning set forth in the RMT Transaction Agreement.

“ Splitco Contribution ” has the meaning set forth in the RMT Transaction Agreement.

“ Splitco Group ” means Splitco and each entity that is a Subsidiary of Splitco on the Distribution Date.

“ Splitco Merger ” has the meaning set forth in the RMT Transaction Agreement.

“ Splitco Merger Surviving Company ” has the meaning set forth in the RMT Transaction Agreement.

“ Splitco Securities ” has the meaning set forth in the RMT Transaction Agreement.

“ Splitco Share Issuance ” has the meaning set forth in the RMT Transaction Agreement.

“ Split-off ” has the meaning set forth in the RMT Transaction Agreement.

“ State Income Tax ” means any Tax imposed by any state of the United States or by any political subdivision of any such state which is imposed on or measured by net income, including state and local franchise or similar Taxes measured by net income.

“ Straddle Period ” means any taxable period that begins on or before and ends after the Distribution Date.

“ Subsidiary ” of any person means, at any date, any corporation, partnership, joint venture or other entity of which the applicable person owns, directly or indirectly, more than 50% of the outstanding voting securities or equity interests.

“ Supplemental Ruling ” means a Ruling to the effect that a Prohibited Act would not adversely affect any of the conclusions with respect to the Intended Tax-Free Treatment set forth in the original Ruling.

 

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“ Supplemental Tax Opinion ” means a tax opinion to the effect that a Prohibited Act would not adversely affect any of the conclusions with respect to the Intended Tax-Free Treatment set forth in any Ruling or any other Tax Opinion (including any other Supplemental Tax Opinion or Supplemental Ruling).

“ TAA Dispute ” means any dispute arising in connection with this Agreement.

“ Tax Representations ” has the meaning set forth in the RMT Transaction Agreement.

“ Taxes ” means any tax, wherever created or imposed, and whether of the United States or elsewhere, and whether imposed by a Taxing Authority or by contract, and, without limiting the generality of the foregoing, shall include income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, unemployment insurance, social security, stamp, environmental, value added, alternative or added minimum, ad valorem, trade, recording, withholding, occupation or transfer tax, custom or duty or other like governmental assessment or charge of any kind whatsoever, together with any related interest, penalties and additions imposed by any Taxing Authority or by contract.

“ Tax Advisor ” means a U.S. tax counsel of recognized national standing reasonably acceptable to both parties.

“ Tax Benefit ” means any item of loss, deduction, credit, refund or any other Tax Item that decreases Taxes paid or payable. Tax Benefits are to be determined using the assumption that each party pays Federal, state, local and foreign Tax at the highest applicable marginal corporate Tax rate and can fully utilize any available Tax Benefits.

“ Tax Contest ” means an audit, review, examination or any other administrative or judicial proceeding with the purpose or effect of determining or redetermining Taxes.

“ Tax Detriment ” means any item of income, gain, recapture of credit or any other Tax Item that increases Taxes paid or payable.

“ Tax Item ” means, with respect to any income Tax, any item of income, gain, loss, deduction and credit.

“ Tax Loss ” means the increase in Tax paid or payable to the relevant Taxing Authority (or, without duplication, the reduction in any Tax Benefit) attributable to a Tax Detriment.

“ Tax Opinion ” means the opinions of Tax Advisors relating to the Proposed Transactions, including those issued at the time of the Distribution.

“ Tax Return ” or “ Return ” means any return, filing, report, questionnaire, information statement, claim for refund, or other document required or permitted to be filed, including any amendments that may be filed, for any taxable period with any Taxing Authority.

“ Taxing Authority ” means any governmental authority imposing Taxes.

“ Transaction Taxes ” means all (i) Taxes of any member of the Parent Group or the Splitco Group resulting from, or arising in connection with, the failure of the Proposed Transactions to have the Intended Tax-Free Treatment, (ii) Taxes of the type described in clause (i) of any third party for which any member of the Parent Group or the Splitco Group is or becomes liable, and (iii) reasonable out of pocket legal, accounting and other advisory and court fees in connection with liability for Taxes described in clauses (i) or (ii). For the avoidance of doubt, “Transaction Taxes” does not include Transfer Taxes.

“ Transfer Tax Return ” means any Tax Return for Transfer Taxes.

 

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“ Transfer Taxes ” has the meaning set forth in Section 2.03.

“ U.S. Acquired Assets ” has the meaning set forth in the RMT Transaction Agreement.

“ U.S. Assumed Liabilities ” has the meaning set forth in the RMT Transaction Agreement.

“ Worksheet ” has the meaning set forth in Section 4.01(c)(i).

ARTICLE II

Payment of Taxes

SECTION 2.01 Pre-Distribution/Post-Distribution Taxes . (a) Except as provided in Sections 2.01(f), 2.02 and 2.03, Parent shall indemnify and hold harmless RMT Partner, Splitco and each member of the Splitco Group from and against (i) all Taxes of the Parent Group (including, for all Pre-Distribution Periods, each member of the Splitco Group and the portion of any Taxes for a Straddle Period that are allocated to the Pre-Distribution Period pursuant to Section 2.01(c) below) and (ii) all Taxes of any affiliated, consolidated, combined or unitary group of which Splitco or any member of Splitco Group was a member before the Distribution Date, including pursuant to Treas. Reg. 1.1502-6 or analogous or similar state, local or foreign law or regulation.

(b) Except as provided in Sections 2.01(a), 2.01(e), 2.02 and 2.03, RMT Partner and Splitco shall indemnify and hold harmless Parent and each member of the Parent Group from and against (i) all Taxes of the Splitco Group for any Post-Distribution Period (including the portion of any Taxes for a Straddle Period that are allocated to the Post-Distribution Period pursuant to Section 2.01(c) below) and (ii) any Tax Losses that result from the failure by RMT Partner, Splitco or any member of the Splitco Group to use a consistent position as provided in Section 3.03 (without regard to whether Parent’s written consent was obtained). For the avoidance of doubt, RMT Partner and Splitco shall have no obligation to indemnify and hold harmless Parent or any member of the Parent Group pursuant to this Section 2.01(b) with respect to any Taxes arising from any action by RMT Partner or Splitco expressly required by the RMT Transaction Agreement.

(c) In the case of any Straddle Period (i) Property Taxes and related exemptions, allowances or deductions that are calculated on an annualized basis shall be apportioned between the Pre-Distribution Period and the Post-Distribution Period on a daily pro-rata basis and (ii) all other Taxes and related items shall be apportioned between the Pre-Distribution Period and the Post-Distribution Period on a closing of the books basis as of the close of business on the Distribution Date.

(d) The amount or economic benefit of any Tax Benefit of any member of the Splitco Group (i) arising in any Pre-Distribution Period shall be for the account of the Parent Group, (ii) arising in any Post-Distribution Period shall be for the account of the Splitco Group and (iii) arising in any Straddle Period shall be apportioned between the Pre-Distribution Period and the Post-Distribution Period pursuant to the principles set forth in Section 2.01(c) above. For the avoidance of doubt, the amount or economic benefit of any deductions with respect to the exercise of Parent stock options or other stock awards held by the Business Employees as of the Distribution Date shall be treated as arising in the Pre-Distribution Period, regardless of the date on which such stock options or other awards are exercised, and such treatment shall not result in a Tax indemnification obligation of RMT Partner or Splitco. Any wage or payroll withholding Taxes attributable to the exercise or vesting of Parent’s stock options or other stock awards shall be the sole responsibility of Parent.

(e) Other Income Taxes . For the avoidance of doubt, any Tax Item resulting from Splitco ceasing to be a member of the Parent Group (including any Tax Items required to be taken into account by the Parent Group under Treas. Reg. §§ 1.1502-13 and 1.1502-19) shall be treated as arising in the Pre-Distribution Period.

 

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(f) Except as provided in Sections 2.01(e) (Other Income Taxes), 2.02 (Transaction Taxes) and 2.03 (Transfer Taxes), which Taxes, for the avoidance of doubt, are provided for exclusively in such sections, RMT Partner and Splitco shall indemnify and hold harmless Parent and each member of the Parent Group from and against Taxes of Parent or any member of the Parent Group imposed as a result of actions taken by, or at the direction of, RMT Partner or the Splitco Group on the Distribution Date but following the Distribution, other than actions by RMT Partner and Splitco expressly required by the RMT Transaction Agreement.

SECTION 2.02 Transaction Taxes . (a) Parent shall indemnify and hold harmless RMT Partner, Splitco and each member of the Splitco Group from and against any Transaction Taxes other than those described in Section 2.02(b). For the avoidance of doubt, Parent shall indemnify and hold harmless RMT Partner, Splitco and each member of the Splitco Group from and against any Transaction Taxes attributable to the distribution by Parent of Splitco Common Stock to holders of Parent Deferred Stock Awards.

(b) RMT Partner and Splitco shall indemnify and hold harmless Parent and each member of the Parent Group from and against any Transaction Taxes that are attributable to:

(i) other than Transaction Taxes attributable to actions by RMT Partner and Splitco expressly required by the RMT Transaction Agreement:

(A) any inaccurate representation made in Sections 4.01(b), 4.01(c) or 4.01(d);

(B) any inaccurate statement of fact or inaccurate Tax Representation (or omission to state a material fact, the omission of which causes the facts stated or Tax Representations made not to be complete and accurate in all material respects) made by RMT Partner in a letter or certificate that forms the basis for any Tax Opinion or Ruling;

(C) any action or failure to take action by RMT Partner, the Splitco Group (taken at the direction of RMT Partner) or any of their Affiliates, after the date of the RMT Transaction Agreement until the Distribution Date, that violates the covenants made by RMT Partner or Splitco set forth in this Agreement; or

(D) any other action or failure to take action (including Prohibited Acts) by RMT Partner, the Splitco Group or any of their Affiliates after the Distribution Date that violates the covenants made by RMT Partner or Splitco set forth in this Agreement.

(ii) the failure of the Mergers to qualify for the Intended Tax-Free Treatment, except where such failure is a result of a breach of a Tax Representation or covenant by Parent; provided , however, (A) RMT Partner and Splitco shall have no liability under this Section 2.02(b)(ii) with respect to or as a result of any deemed sale of Splitco Common Stock attributable to such stock being treated for Federal income tax purposes as not having been distributed to the stockholders of Parent or any resulting failure by Parent to distribute an amount of Splitco Common Stock constituting “control” of Splitco within the meaning of Section 368(c) of the Code, and (B) RMT Partner and Splitco shall have no liability under this Section 2.02(b)(ii) with respect to the failure of the Splitco Merger to qualify for the Intended Tax-Free Treatment if Splitco is the surviving entity in the Splitco Merger.

For the avoidance of doubt, Parent’s right to be indemnified and held harmless under this Section 2.02(b) shall be determined without regard to whether a written waiver from Parent, a Supplemental Ruling or a Supplemental Opinion was obtained under Sections 4.02(d) or 4.02(f).

(c) The party responsible for any Transaction Taxes under Sections 2.02(a) or 2.02(b), as the case may be, shall be entitled to the economic benefit of any Tax Benefits of such Transaction Taxes.

SECTION 2.03 Transfer Taxes . RMT Partner and Splitco shall be liable and shall indemnify Parent and each member of the Parent Group for any value-added, sales or other Taxes incurred in connection with the Non-U.S. Transfers or the Proposed Transactions (including transactions undertaken before the Contribution for

 

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the purpose