Exhibit 10.4
FORM OF
SUPPLEMENTAL EMPLOYEE GRANTOR TRUST ENROLLMENT
AGREEMENT
This agreement
(“Agreement”) is made the
day of
, 2005, between
(the “Employee”), the person, if any, to whom the
Employee is legally married (the “Employee’s
Spouse”), Altria Corporate Services, Inc.
(“ALCS”) and those affiliates of ALCS set forth on
Exhibit B (the “Company”) by whom the Employee is or
has been employed.
Introduction
The Company has
established and maintained the Benefit Equalization Plan and the
Supplemental Management Employees’ Retirement Plan (the
“Supplemental Plans” or the
“Plans”).
Previously the
Employee, the Employee’s Spouse and the Company entered into
one or more Employee Grantor Trust Enrollment Agreements (the most
recent of which, including any amendments thereto, is hereinafter
referred to as the “Original Enrollment Agreement”)
providing for payments to or on behalf of the Employee by the
relevant participating employer or employers in discharge of their
respective obligations under the Supplemental Plans, such payments
to be made to an Employee Grantor Trust established by the Employee
(the “Trust”). The parties wish to acknowledge that the
Original Enrollment Agreement will apply to those accrued benefits
under the Supplemental Plans attributable to service rendered
before January 1, 2005, to provide in this Agreement for the
payment of additional current compensation to the Employee for
services rendered in each year after 2004 in the amount specified
below in consideration for the Employee’s agreement to waive
participation in the Supplemental Plans with respect to service
attributable to periods after December 31, 2004, and to
provide for the payment of such additional compensation into the
Employee Grantor Trust established by the Employee pursuant to the
Original Enrollment Agreement in accordance with the terms
specified below.
In consideration
of their mutual undertakings, the Company, the Employee, and the
Employee’s Spouse agree as follows:
I. Waiver of
Right to Accrue Further Benefits in Supplemental Plans and
Continued
Maintenance of
Grantor Trust
1.1 In
consideration of the Company’s agreement to make the Target
Payments as provided for in Article II, the Employee hereby waives
the right to accrue any benefits under the Supplemental Plans with
respect to service performed after December 31, 2004 and
agrees to cease active participation in the Supplemental Plans
effective as of that date.
1.2 The Employee
agrees to continue to maintain the Trust for the purpose
of
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Exhibit 10.4
receiving and holding
(a) the cash deposits made pursuant to the Original Enrollment
Agreement and (b) any additional cash deposits made pursuant
to Article II of this Agreement. The cash deposits made pursuant to
the Original Enrollment Agreement, including any Funding Payments
made under that Agreement with respect to service performed by the
Employee for periods before January 1, 2005 and earnings on
those deposits, shall offset the benefits accrued by the Employee
under the Supplemental Plans as of December 31, 2004, as
provided in the Original Enrollment Agreement. Such Funding
Payments, and any earnings thereon, shall be maintained by the
Trustee in a separate subaccount in the Trust (hereinafter referred
to as “Subaccount FP-A”). This Agreement shall govern
the terms of any current compensation payments deposited by the
Company on behalf of the Employee in the Trust pursuant to Article
II below, which compensation payments and earnings thereon shall be
maintained by the Trustee in a separate subaccount (hereinafter
referred to as “Subaccount TP”).
1.3 The Employee
and the Employee’s Spouse, if any, agree that they will not
directly contribute any additional funds to Subaccount TP. The
Employee and the Employee’s Spouse also understand that
assets held in Subaccount TP will be available for distribution or
withdrawal only (a) after the Employee’s retirement,
death or other termination of employment with the Company (for this
purpose treating Kraft Foods, Inc. or one of its subsidiaries
(“Kraft”) as part of the Company so long as Kraft is
then a member of a controlled group of corporations including the
Company), which may include termination by reason of long-term
disability, (b) in certain circumstances in which there has
been a transfer of the Employee’s employment with the Company
or Kraft to a foreign jurisdiction resulting in a termination of
the Trust, (c) in other limited circumstances permitted under
the Employee Grantor Trust Agreement, and (d) to the extent
that Trust withdrawals are necessary to pay taxes on Trust earnings
as provided in Section 3.1.
1.4 The Employee
and the Employee’s Spouse, if any, understand that, under the
terms of the Employee Grantor Trust Agreement, the Trustee intends
to exercise its investment discretion in a manner consistent with
the purpose of the Trust specified in Section I.(3) of the Trust
Agreement and acknowledge that they have been informed that the
Trustee currently intends to invest the Trust assets in one or more
of the Fidelity Freedom Funds in the manner set forth in
Item 3 of Schedule A of the Employee Grantor Trust Agreement,
but that the Trustee retains discretion to change the assets in
which the Trust will be invested.
1.5 The Employee
(or in the event of the Employee’s death, the
Employee’s Beneficiary(ies) as designated by the Employee in
the manner specified by the Administrator) may exercise the rights
of withdrawal provided for in Section 1.3 above by directing
the Trustee in writing to liquidate the Trust assets and distribute
the proceeds to the Employee or Beneficiary(ies) as the case may
be. In the absence of such written direction, the assets in
Subaccount TP shall be distributed to the Employee or his or her
Beneficiary(ies), as relevant, following the Employee’s
termination of employment in kind to the extent feasible and
otherwise in cash, except to the extent any new trust agreement
entered into between the Employee (or the Employee’s
Beneficiary(ies)) and Fidelity Management Trust Company as
contemplated by Section I.(7) of the Grantor Trust Agreement
otherwise provides.
1.6 Under no
circumstances whatever shall the Company, any other employer, or
the
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Exhibit 10.4
Administrator have any
interest in, or be entitled to receive, any of the Trust
assets.
II. Payments to
Trust and Maintenance of Assumed Trust Balances
2.1 Subject to its
right provided in Section 2.5 to discontinue making payments
described in Section 2.2, for each year that the Employee is
employed by the Company or by Kraft (if Kraft is then a member of a
controlled group of corporations including the Company), the
Company agrees to make a payment of additional cash compensation to
the Employee for that year in the form of a payment to the Trust
established by the Employee of an amount determined in accordance
with the provisions of Section 2.2 (the “Target
Payment”). The Employee directs the Company and its agents
(a) to deduct federal, state, and local taxes, using the
tax-rate assumptions set forth on Exhibit A (except to the extent
that applicable law requires withholding at a higher rate), and any
employment or other applicable taxes from the Target Payment, and
remit such taxes to the appropriate authorities, and (b) to
pay the remainder of the Target Payment into Subaccount TP in
cash.
2.2 For any
calendar year, the Target Payment to be made early in the following
year will be determined in accordance with the following
provisions.
(a) The Target
Payment will include the sum of the amounts determined under
Sections 2.2(a)(i), (ii) and (iii) below:
(i) an amount
equal to:
(A) the present
value of the after-tax benefit that the Employee would have accrued
for the year if he or she had been a participant in the defined
benefit portions of the Supplemental Plans for the year, based
solely on the benefit service for that year (but not more than one
year) that would have been taken into account under the
Supplemental Plans, calculated using reasonable assumptions
relating to factors such as, but not limited to, retirement age,
earnings in Subaccount TP, and interest rates, all as determined by
the Company, and the tax-rate assumptions set forth in Exhibit A;
plus
(B) the present
value of any after-tax benefits other than those described in
Section 2.2(a)(i)(A) above that the Employee would have
accrued under the defined benefit portions of the Supplemental
Plans during the year, if he or she had been a participant in the
Supplemental Plans for the year, as a result of continued service
with, or changes in compensation from, the Company (or Kraft, if
Kraft is then a member of a controlled group of corporations
including the Company) during the year, determined using the
assumptions set forth in Section 2.2(a)(i)(A) immediately
above;
(ii) an amount
equal to the estimated after-tax value (calculated using
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Exhibit 10.4
the tax-rate
assumptions set forth in Exhibit A) of the deemed Company
contribution that would have been allocated to the Employee’s
account for the year if he or she had been a participant in the
defined contribution portion of the Supplemental Plans for the
year; and
(iii) an amount
estimated by the Company to be sufficient to enable the Employee to
pay the applicable income taxes on the earnings of Subaccount TP
for the year with respect to which the Target Payment is to be made
and on any hypothetical earnings of Assumed Trust Account TP
maintained for the Employee pursuant to Section 2.3 for such
year if those amounts had been actual earnings;
(b) For Target
Payments made with respect to 2006 and subsequent years, the amount
determined in accordance with Section 2.2(a) will be adjusted,
positively or negatively, to reflect:
(i) the amount by
which the earnings on the assets in Subaccount TP for the year for
which the Target payment is being made deviate from the amount the
assets in Subaccount TP would have earned if (A) the rate of
return for such year on the assets in Subaccount TP attributable to
the portions of prior Target Payments that were determined as if
the Employee had participated in the defined benefit components of
the Supplemental Plans equaled the corresponding earnings rates
incorporated in the assumptions described in
Section 2.2(a)(i), and (B) the rate of return on the
assets in Subaccount TP attributable to the portions of prior
Target Payments that were determined as if the Employee had
participated in the defined contribution component of the
Supplemental Plans equaled the amount that would have been credited
under the Supplemental Plans, in both cases treating Subaccount TP
as though it contained any balance in Assumed Trust Account TP
maintained pursuant to Section 2.3;
(ii) the
decrease, if any, in the present value of the accrued benefit that
would have resulted from not commencing benefits under the defined
benefit components of the Supplemental Plans if the Employee had
participated in such plans during the year with respect to which
the Target Payment is being made, as measured by the decrease, if
any, resulting from substituting in the Target Payment calculation
made for the year immediately preceding the year with respect to
which the Target Payment is being made the Employee’s age as
of the end of the year with respect to which the Target Payment is
being made;
(iii) the
increase or decrease that would result from recalculating (as if
the Employee had continued participating in the Supplemental Plans
and disregarding the present value of the benefit the Employee
actually accrued as a participant under the Supplemental Plans
before 2005)
(A) the present
value of the accrued benefit the Employee would have had under the
defined benefit components of the Supplemental Plans as of the end
of the year immediately preceding the year with respect
to
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Exhibit 10.4
which the Target
Payment is to be made, determined using the Employee’s age at
the end of the year with respect to which the Target Payment is to
be made and the interest rate used under Section 2.2(a)(i) in
determining the lump sum value as of the assumed retirement age for
purposes of calculating the present value referred to in that
section, as in effect for the year immediately preceding the year
with respect to which the Target Payment is to be made, by
using
(B) the interest
rate used under Section 2.2(a)(i) in determining the lump sum
value as of the assumed retirement age for purposes of calculating
the present value referred to in that section, as in effect for the
year with respect to which the Target Payment is to be
made;
(iv) the effect
of any difference between the rates at which contributions were
made to any qualified defined contribution plans for the year
immediately preceding the year with respect to which the Target
Payment is to be made and those assumed in determining the portion
of the Target Payment for such preceding year that was determined
as if the Employee had participated in the defined contribution
component of the Supplemental Plans;
(v) the effect of
any discrepancies from actual data (such as service, compensation,
elective deferrals, etc.) from those used in determining the Target
Payment for the preceding year;
(vi) the amount
by which the portion of the Target Payment determined under
Section 2.2(a)(iii) for the year preceding the year with
respect to which the Target Payment is being made differs from the
amount that such portion of such Target Payment would have been if
the actual amount and character of the relevant earnings on the
assets in Subaccount TP (treating
