<PAGE>
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
Philip Morris Companies Inc.
(Exact name of registrant as specified in its charter)
Virginia 13-326-245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
120 Park Avenue
New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
------------------
Oscar Mayer Foods Corporation
Long Term Savings Plan for Union Employees
(Full title of the plan)
------------------
G. PENN HOLSENBECK
Vice President, Associate General Counsel and Secretary
Philip Morris Companies Inc.
120 Park Avenue
New York, New York 10017
(Name and address of agent for service)
(212) 880-5000
(Telephone number, including area code, of agent for service)
------------------
<TABLE>
<CAPTION>
================================================================================================
CALCULATION OF REGISTRATION FEE
================================================================================================
Proposed Proposed
Amount maximum maximum Amount of
Title of securities to be offering price aggregate registration
to be registered registered per share(1) offering price(1) fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1 par value... 400,000 shs. $115.13 $46,052,000 $13,955
================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee and
calculated in accordance with Rule 457(c) under the Securities Act of 1933,
based upon the average of the high and low prices for the Common Stock reported
in the consolidated reporting system on January 27, 1997.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be filed with the Securities and Exchange Commission (the
"Commission").
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with the Commission.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Philip Morris Companies Inc. (the
"Company") with the Commission (File No. 1-8940) are incorporated herein by
reference and made a part hereof: (i) the description of the Company's Common
Stock contained in the Company's Registration Statement on Form 8-B, dated July
1, 1985, as amended by Amendment No. 1 on Form 8, dated April 27, 1989; (ii) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995; (iii)
the Company's Current Reports on Form 8-K, dated February 1, 1996, September 20,
1996 and January 30, 1997; and (iv) the Company's Quarterly Reports on Form 10-Q
for the periods ended March 31, 1996, June 30, 1996 and September 30, 1996.
All annual reports of the Oscar Mayer Foods Corporation Long Term Savings
Plan For Union Employees (the "Plan") filed by the Plan pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and all documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of the Prospectus and prior to
the filing of a post-effective amendment that indicates that all securities
offered have been sold or that deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in the Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of the Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that is
incorporated by reference herein modifies or supersedes such earlier statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-2
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Virginia Stock Corporation Act (the "Virginia Act") permits the Company
to indemnify its officers and directors in connection with certain actions,
suits and proceedings brought against them if they acted in good faith and
believed their conduct to be in the best interests of the Company and, in the
case of criminal actions, had no reasonable cause to believe that the conduct
was unlawful. The Virginia Act requires such indemnification when a director
entirely prevails in the defense of any proceeding to which he was a party
because he is or was a director of the Company, and further provides that the
Company may make any other or further indemnity (including indemnity with
respect to a proceeding by or in the right of the Company), and may make
additional provision for advances and reimbursement of expenses, if authorized
by its articles of incorporation or stockholder-adopted by-laws, except an
indemnity against willful misconduct or a knowing violation of the criminal law.
The Virginia Act establishes a statutory limit on liability of officers and
directors of the Company for damages assessed against them in a suit brought by
or in the right of the Company or brought by or on behalf of stockholders of the
Company and authorizes the Company, with stockholder approval, to specify a
lower monetary limit on liability in the Company's articles of incorporation or
by-laws; however, the liability of an officer or director shall not be limited
if such officer or director engaged in willful misconduct or a knowing violation
of the criminal law or of any federal or state securities law. The Company's
articles of incorporation provide that an officer or director or former officer
or director of the Company shall be indemnified to the full extent permitted by
the Virginia Act as currently in effect or as hereafter amended in connection
with any action, suit or proceeding brought by or in the right of the Company or
brought by or on behalf of stockholders of the Company. The Company's articles
of incorporation further provide for the limitation or elimination of the
liability of an officer or director or former officer or director of the Company
for monetary damages to the Company or its stockholders in any action, suit or
proceeding, to the full extent permitted by the Virginia Act as currently in
effect or as hereafter amended. In addition, the Company carries insurance on
behalf of directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No.
- -----------
4.1 Long Term Savings Plan For Union Employees (filed herewith).
4.2 Articles of Incorporation (filed as Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1989, and incorporated
herein by reference).
4.3 By-Laws (filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-
Q for the period ended September 30, 1996, and incorporated herein by
reference).
5 Opinion of Hunton & Williams as to the legality of the securities being
registered (filed herewith).
23.1 Consent of Hunton & Williams (included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P. (filed herewith).
24 Powers of Attorney (filed as Exhibit 24 to the Company's Registration
Statement No. 333-16127, and incorporated herein by reference).
II-3
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change in such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, State of New York, on the 30th day of
January, 1997.
Philip Morris Companies Inc.
By: /s/ Geoffrey C. Bible
------------------------------------------
Geoffrey C. Bible, Chairman of the Board
and Chief Executive Officer
-------------------
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Geoffrey C. Bible Director, Chairman of the January 30, 1997
- ------------------------------------------------- Board and Chief
(Geoffrey C. Bible) Executive Officer
/s/ Louis C. Camilleri Senior Vice President and January 30, 1997
- ------------------------------------------------- Chief Financial Officer
(Louis C. Camilleri)
/s/ Katherine P. Clark Vice President and January 30, 1997
- ------------------------------------------------- Controller
(Katherine P. Clark)
Elizabeth E. Bailey, Murray H. Bring, Harold
Brown, William H. Donaldson, Jane Evans, Robert
E. R. Huntley, Rupert Murdoch, John D. Nichols,
Richard D. Parsons, Roger S. Penske, John S.
Reed, Stephen M. Wolf Directors
By: /s/ Louis C. Camilleri January 30, 1997
-------------------------------------------
(Louis C. Camilleri, Attorney-in-fact)
</TABLE>
-------------------
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
Benefits Department of Kraft Foods, Inc., a subsidiary of the Company,
administrator of the Plan, has duly caused this Form S-8 to be signed by the
undersigned thereunto duly authorized, in the Village of Northfield, State of
Illinois, on the 30th day of January, 1997.
Oscar Mayer Foods Corporation
Long Term Savings Plan
for Union Employees
By: /s/ Kay Yanacheck
------------------------------------------
Kay Yanacheck, Vice President Benefits,
Kraft Foods, Inc.
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 Long Term Savings Plan For Union Employees
(filed herewith).
4.2 Articles of Incorporation (filed as Exhibit
3.1 to the Company's Annual Report on
Form 10-K for the year ended December 31,
1989, and incorporated herein by reference).
4.3 By-Laws (filed as Exhibit 3.2 to the
Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1996,
and incorporated herein by reference).
5 Opinion of Hunton & Williams as to the
legality of the securities being registered
(filed herewith).
23.1 Consent of Hunton & Williams (included in
Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
(filed herewith).
24 Powers of Attorney (filed as Exhibit 24 to
the Company's Registration Statement No.
333-16127, and incorporated herein by
reference).
</TABLE>
<PAGE>
EXHIBIT 4.1
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(As Amended and Restated
Effective as of January 1, 1997)
Mayer, Brown & Platt
Chicago
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
<S> <C>
INDEX OF DEFINED TERMS.......................................... iv
SECTION 1 - General............................................. 1
History, Purpose and Effective Date.......................... 1
Related Companies and Employers.............................. 1
Plan Administration, Trust and Fiduciary..................... 1
Plan Year 2
Accounting Dates............................................. 2
Applicable Laws.............................................. 2
Gender and Number............................................ 2
Notices 2
Form of Election............................................. 2
Evidence 3
Action by Employers.......................................... 3
Plan Supplements............................................. 3
Defined Terms 3
SECTION 2 - Participation in Plan............................... 3
Eligibility for Participation................................ 3
Inactive Participation....................................... 4
Plan Not Contract of Employment.............................. 5
Leased Employees............................................. 5
SECTION 3 - Service............................................. 5
Years of Service............................................. 5
One Year Break in Service.................................... 6
Prior Service Crediting Method............................... 7
Qualified Military Service................................... 7
SECTION 4 - Basic and Supplemental Contributions................ 7
Basic Contributions.......................................... 7
Supplemental Contributions................................... 8
Total Basic and Supplemental Contributions................... 9
Payment of Basic and Supplemental Contributions.............. 9
Election, Modification, Discontinuance and Resumption of
Basic or Supplemental Contributions.......................... 9
SECTION 5 - Matching Contributions.............................. 10
Matching Contributions....................................... 10
Limitations on Amount of Employer Contributions.............. 10
Payment of Employer Contributions............................ 10
SECTION 6 - Investment of the Trust Fund........................ 11
Investment Funds............................................. 11
Investment Fund Accounting................................... 11
Investment Fund Elections.................................... 11
Transfers Between Investment Funds........................... 12
SECTION 7 - Plan Accounting..................................... 12
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Participants' Accounts......................................... 12
Allocation of Fund Earnings and Changes in Value............. 12
Allocation and Crediting of Contributions.................... 13
Correction of Error.......................................... 13
Statement of Plan Interest................................... 13
SECTION 8 - Limitations on Compensation, Contributions and
Allocations.................................................. 14
Reduction of Contribution Rates.............................. 14
Compensation for Limitation/Testing Purposes................. 14
Limitations on Annual Additions.............................. 15
Excess Annual Additions...................................... 15
Combined Plan Limitation..................................... 16
Section 402(g) Limitation.................................... 16
Section 401(k)(3) Testing.................................... 17
Correction Under Section 401(k) Test......................... 18
Highly Compensated........................................... 18
Forfeiture of "Orphaned" Matching Contributions.............. 19
SECTION 9 - Vesting and Termination Dates....................... 19
Determination of Vested Interest............................... 19
Accelerated Vesting.......................................... 19
Termination Date............................................. 20
Distribution Only Upon Separation From Service............... 20
SECTION 10 - Distributions...................................... 20
Distributions to Participants After Termination of
Employment................................................... 20
Distributions to Beneficiaries............................... 21
Limits on Commencement and Duration of Distributions......... 21
Beneficiary Designations..................................... 22
Forfeitures and Restoration of Non-vested Contributions...... 22
Form of Payment.............................................. 23
Facility of Payment.......................................... 24
Interests Not Transferable................................... 24
Absence of Guaranty.......................................... 24
Missing Participants or Beneficiaries........................ 24
Direct Rollover Option....................................... 25
SECTION 11 - No Reversion to Employers.......................... 25
SECTION 12 - Administration..................................... 26
Committee Membership and Authority........................... 26
Allocation and Delegation of Committee Responsibilities and
Powers....................................................... 27
Uniform Rules 27
Information to be Furnished to Committee..................... 27
Committee's Decision Final................................... 27
Exercise of Committees' Duties............................... 28
Remuneration and Expenses.................................... 28
Indemnification of the Committees............................ 28
Resignation or Removal of Committee Member................... 28
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Appointment of Successor Committee Members..................... 28
SECTION 13 - Amendment and Termination.......................... 29
Amendment 29
Termination.................................................. 29
Merger and Consolidation of the Plan, Transfer of
Plan Assets.................................................. 29
Distribution on Termination and Partial Termination.......... 30
Notice of Amendment, Termination or Partial Termination...... 30
</TABLE>
SUPPLEMENT A - Coshocton Employees
SUPPLEMENT B - Davenport Employees
SUPPLEMENT C - Madison Employees
SUPPLEMENT D - Special Provisions Applicable to Woodstock
Employees
SUPPLEMENT E - Special Provisions Applicable to
Nashville Employees
SUPPLEMENT F - Special Provisions Applicable to Sherman
Employees
SUPPLEMENT G - Special Provisions Applicable to Farmdale
Employees
-4-
<PAGE>
INDEX OF DEFINED TERMS
----------------------
<TABLE>
<C> <C> <S>
1.5 - Accounting Date
7.1 - Accounts
7.1(b) - After-Tax Account
4.1(a) - After-Tax Contribution
8.3 - Annual Additions
4.1(a) - Basic Before-Tax Contribution
4.1 - Basic Contribution
7.1(a) - Before-Tax Account
4.2 - Before-Tax Contribution
10.4 - Beneficiary
1.1 - Code
1.2 - Committee
1.3 - Committees
6.1 - Common Stock
1.1 - Company
8.2 - Compensation
2.1(b) - Coshocton Employees
2.1(b) - Davenport Employees
8.7 - Deferral Percentage
1.1 - Effective Date
1.2 - Employer
1.3 - ERISA
8.8 - Excess Contributions
2.1(b) - Farmdale Employees
2.1(b) - Fullerton Employees
8.9 - Highly Compensated
8.7 - Highly Compensated Group
Deferral Percentage
1.3 - Investment Committee
6.1 - Investment Funds
2.4 - Leased Employee
2.1(b) - Madison Employees
7.1(c) - Matching Account
5.1 - Matching Contribution
8.7 - Non-highly Compensated Group
Deferral Percentage
9.2 - Normal Retirement Age
3.2 - One Year Break in Service
2.1 - Participant
6.1 - Philip Morris Stock Fund
1.1 - Plan
1.4 - Plan Year
1.2 - Related Company
10.3(b) - Required Beginning Date
8.3 - Section 415 Affiliate
10.4 - Separation from service
2.1(b) - Sherman Employees
4.2 - Supplemental Contribution
</TABLE>
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<PAGE>
<TABLE>
<C> <C> <S>
9.3 - Termination Date
1.3 - Trust
1.3 - Trust Agreement
1.3 - Trustee
2.1(b) - Woodstock Employees
3.1 - Years of Service
</TABLE>
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<PAGE>
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(As Amended and Restated
Effective as of January 1, 1997)
SECTION 1
---------
General
-------
1.1 History, Purpose and Effective Date. Kraft Foods, Inc. (the
-----------------------------------
"COMPANY"), a Delaware corporation, maintains the Long Term Savings Plan for
Union Employees (formerly known as Oscar Mayer Foods Corporation Long Term
Savings Plan for Union Employees) (the "PLAN") to encourage eligible employees
to save a portion of their earnings on a regular basis and to accumulate capital
for their future economic security. Prior to January 1, 1996 the Plan was
maintained by the Company's subsidiary, Oscar Mayer Foods Corporation ("OSCAR
MAYER"), and effective as of January 1, 1996 the Company became the sponsor of
the Plan. The following provisions constitute an amendment, restatement and
continuation of the Plan as in effect immediately prior to January 1, 1997, the
"EFFECTIVE DATE" of the Plan as set forth herein. The Plan is intended to
qualify as a profit sharing plan under section 401(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and is further intended to include a
qualified cash or deferred arrangement under section 401(k) of the Code.
1.2 Related Companies and Employers. The term "RELATED COMPANY" means any
-------------------------------
corporation or trade or business during any period during which it is, along
with the Company, a member of a controlled group of corporations or a controlled
group of trades or businesses, as described in sections 414(b) and 414(c),
respectively, of the Code. The Company and each Related Company which adopts
the Plan with the consent of the Management Committee for Employee Benefits (the
"COMMITTEE") are referred to below collectively as the "EMPLOYERS" and
individually as an "EMPLOYER".
1.3 Plan Administration, Trust and Fiduciary Responsibility. The
-------------------------------------------------------
authority to control and manage the non-investment operations of the Plan is
vested in the Committee, as more fully described in subsection 12.1. Except as
otherwise expressly provided herein, the Committee shall have the rights, duties
and obligations of an "administrator" as that term is defined in section
3(16)(A) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and of a "plan administrator" as that term is defined in section
414(g) of the Code. With respect to the Plan's funding and the investment of
its assets, the Corporate Employee Plans Investment Committee of Philip Morris
Companies Inc. (the "INVESTMENT COMMITTEE") has the authority and responsibility
to appoint or select trustees, custodians, investment managers and insurance
companies to handle Plan assets and to allocate assets to each of them, to
determine the advisability of establishing or
-7-
<PAGE>
modifying the description of any Investment Fund (as defined in subsection 6.1)
made available under the Plan, to establish investment guidelines, proxy voting
policies and securities trading procedures, and to monitor the investment
performance of the fiduciaries responsible for the investment of Plan assets.
The Committee and the Investment Committee are collectively referred to as the
"COMMITTEES". The Company and the Committees shall be "named fiduciaries", as
described in section 402 of ERISA, with respect to their authority under the
Plan. All assets of the Plan will be held, managed and controlled by one or
more trustees (the "TRUSTEE") acting under a "TRUST" established pursuant to a
"TRUST AGREEMENT" which forms a part of the Plan. As of the Effective Date, the
assets of the Plan are held under the trust established pursuant to the Master
Savings Plan Trust Agreement by and between the Corporate Employee Plans
Investment Committee of Philip Morris Companies Inc., Philip Morris Companies
Inc. and Bankers Trust Company, Trustee, dated as of April 1, 1992.
1.4 Plan Year. The term "PLAN YEAR" means the twelve-consecutive-month
---------
period beginning on each January 1 and ending on the following December 31.
1.5 Accounting Dates. The term "ACCOUNTING DATE" means the last day of
----------------
each calendar month, or such other dates as the Committee determines in its sole
discretion (but at least once in each month).
1.6 Applicable Laws. The Plan shall be construed and administered in
---------------
accordance with the internal laws of the State of Illinois to the extent that
such laws are not preempted by the laws of the United States of America.
1.7 Gender and Number. Where the context permits, words in any gender
-----------------
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
1.8 Notices. Any notice or document required to be filed with the
-------
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company, at
its principal executive offices. Any notice required under the Plan may be
waived by the person entitled to notice.
1.9 Form of Election. Unless otherwise specified herein, each election
----------------
permitted to be made by any Participant or other person entitled to benefits
under the Plan, and any permitted modification or revocation thereof, shall be
in writing filed with the Committee at such times and in such form as the
Committee shall require.
1.10 Evidence. Evidence required of anyone under the Plan may be by
--------
certificate, affidavit, document or other information
-8-
<PAGE>
which the person acting on it considers pertinent and reliable, and signed, made
or presented by the proper party or parties.
1.11 Action by Employers. Any action required or permitted to be taken by
-------------------
any Employer which is a corporation shall be by resolution of its Board of
Directors or a duly appointed committee thereof, or by a duly authorized officer
of the Employer. Any action required or permitted to be taken by any Employer
which is a partnership shall be by a general partner of such partnership or by a
duly authorized officer thereof.
1.12 Plan Supplements. The provisions of the Plan as applied to any
----------------
Employer or any group of employees of any Employer may be modified or
supplemented from time to time by the Company by the adoption of one or more
Supplements. Each Supplement shall form a part of the Plan as of the
Supplement's effective date. In the event of any inconsistency between a
Supplement and the Plan document, the terms of the Supplement shall govern.
1.13 Defined Terms. Terms used frequently with the same meaning are
-------------
indicated by initial capital letters, and are defined throughout the Plan. The
Index of Defined Terms contains an alphabetical listing of all such terms and
the subsections in which they are defined.
SECTION 2
---------
Participation in Plan
---------------------
2.1 Eligibility for Participation. Subject to the conditions and
-----------------------------
limitations of the Plan, each individual who was participating in the Plan
immediately prior to the Effective Date will continue to be a "PARTICIPANT" in
the Plan on and after that date, and each other employee of an Employer who was
not participating in the Plan immediately prior to the Effective Date will
become a Participant in the Plan on the first day of the month following the
date on which he meets the following requirements:
(a) he has completed one Year of Service (as defined in subsection 3.1);
and
(b) he is a member of a group of employees to whom the Plan has been and
continues to be extended through a currently effective collective
bargaining agreement between his Employer and the collective
bargaining representative of such group of employees. As of the
Effective Date, the Plan has been extended to the following collective
bargaining units:
(i) Claussen Pickle Co., Woodstock, Illinois: Local 738, Grocery
and Food Products, Food Processors,
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<PAGE>
Food Canneries, Frozen Food Plants Warehouse, & Related Office
Employees Union (the "WOODSTOCK EMPLOYEES");
(ii) Coshocton Foods Company, Coshocton, Ohio: Local No. 17A,
United Food and Commercial Workers International Union, AFL-CIO
(the "COSHOCTON EMPLOYEES");
(iii) Fullerton Foods, Fullerton, California: Local 952, Sales
Drivers, Food Processors, Warehousemen and Helpers Union,
affiliated with the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America (the "FULLERTON
EMPLOYEES");
(iv) Oscar Mayer Foods, Davenport, Iowa: Local 431, United Food
and Commercial Workers International Union, AFL-CIO (the
"DAVENPORT EMPLOYEES");
(v) Oscar Mayer Foods, Madison, Wisconsin: Local 538, United Food
and Commercial Workers International Union, AFL-CIO (the "MADISON
EMPLOYEES"); and
(vi) Oscar Mayer Foods, Sherman, Texas: Local 540, United Food and
Commercial Workers International Union, AFL-CIO (the "SHERMAN
EMPLOYEES").
Effective as of February 1, 1997 or as soon as administratively
practicable thereafter, the Plan is extended to:
(vii) Kraft Foods, Farmdale, Ohio: Local 261, International
Brotherhood of Teamsters (the "FARMDALE EMPLOYEES").
Notwithstanding the foregoing provisions of this subsection 2.1, if an
individual is employed or reemployed by an Employer on or after the first day of
the month next following the date on which he first completes one Year of
Service, he shall become a Participant in the Plan immediately upon meeting the
requirements of paragraph (b) next above.
2.2 Inactive Participation. Once an eligible employee becomes a
----------------------
Participant in the Plan, he will remain a Participant as long as he continues to
have an Account balance under the Plan, even after his Termination Date, for all
purposes under the Plan except the contribution provisions of Sections 4 and 5.
2.3 Plan Not Contract of Employment. The Plan does not constitute a
-------------------------------
contract of employment, and participation in the Plan will not give any employee
or Participant the right to be retained in the employ of any Employer nor any
right or claim to any benefit
-10-
<PAGE>
under the Plan, unless such right or claim has specifically accrued under the
terms of the Plan.
2.4 Leased Employees. If a person satisfies the requirements of section
----------------
414(n) of the Code and applicable Treasury regulations for treatment as a
"LEASED EMPLOYEE", such Leased Employee shall not be eligible to participate in
this Plan or in any other plan maintained by an Employer which is qualified
under section 401(a) of the Code, but, to the extent required by section 414(n)
of the Code and applicable Treasury regulations, such person shall be treated as
if the services performed by him in such capacity were performed by him as an
employee of a Related Company which has not adopted the Plan; provided, however,
that no such service shall be credited for any period during which not more than
20% of the non-Highly Compensated workforce of the Employers and the Related
Companies consists of Leased Employees and the Leased Employee is a participant
in a money purchase pension plan maintained by the leasing organization which
(i) provides for a non-integrated employer contribution of at least 10 percent
of compensation, (ii) provides for full and immediate vesting, and (iii) covers
all employees of the leasing organization (beginning with the date they become
employees), other than those employees excluded under section 414(n)(5) of the
Code. For purposes of this subsection 2.4, "HIGHLY COMPENSATED" shall have the
meaning set forth in subsection 8.12.
SECTION 3
---------
Service
-------
3.1 Years of Service. An employee's "YEARS OF SERVICE" shall be
----------------
determined in accordance with the following provisions:
(a) An employee shall be credited with Years of Service for the aggregate
of all time periods commencing on the employee's first day of
employment or reemployment and ending on the day he commences a One
Year Break in Service (as defined in subsection 3.2). An employee's
first day of employment or reemployment is the first day for which he
is paid, or entitled to payment, for the performance of duties for the
Employers or a Related Company. An employee's Years of Service shall
include his periods of service (if any) with Oscar Mayer at all times
prior to the date Oscar Mayer became a member of the Company's
controlled group of corporations as described in section 414(b) of the
Code.
(b) A Participant's number of Years of Service accrued after five
consecutive One Year Breaks in Service shall be disregarded for
purposes of determining the nonforfeitable percentage of his benefit
under the Plan
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<PAGE>
derived from Employer contributions which accrued prior to such break.
(c) Periods of service shall be computed in whole years and fractional
portions thereof. Any fractional portion of a year will be calculated
in twelfths of a year on the basis of the number of whole months of
service credited under the foregoing provisions of this subsection.
For any period of service, a fractional portion of a month shall be
rounded up and treated as one whole month of service.
3.2 One Year Break in Service. Except with respect to an employee whose
-------------------------
absence from employment constitutes a Maternity or Paternity Absence (as defined
below), the term "ONE YEAR BREAK IN SERVICE" means the 12-consecutive-month
period commencing on the earlier of
(a) the day an employee's employment with the Employers and Related
Companies is terminated for any reason (or if later, the date on which
he ceases to be eligible for pay continuation under a severance plan
or severance agreement with his Employer), or
(b) in the event an employee remains absent from service with the
Employers and Related Companies for any reason other than a quit,
retirement, discharge or death, the later of (i) the first anniversary
of the first day of such period of absence, or (ii) the last day for
which the employee receives compensation from the Employer or a
Related Company during such period of absence,
if he is not paid or entitled to payment for the performance of duties for an
Employer or a Related Company during that 12-consecutive-month period. With
respect to an individual whose absence from employment constitutes a Maternity
or Paternity Absence, the term "One Year Break in Service" means the 12-
consecutive-month period commencing on the second anniversary of the first day
of such absence if he is not paid or entitled to payment for the performance of
duties for an Employer or a Related Company during that 12-consecutive-month
period. The period between the first and second anniversaries of the first day
of a Maternity or Paternity Absence shall not constitute a Year of Service. The
term "MATERNITY OR PATERNITY ABSENCE" means an employee's or Participant's
absence from work because of the pregnancy of such individual, the birth of a
child of such individual, the placement of a child with such individual in
connection with the adoption of a child by such individual, or for purposes of
caring for the child by such individual immediately following such birth or
placement. The Committee may require the employee or Participant to furnish
such information as it considers
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<PAGE>
necessary to establish that such individual's absence was a Maternity or
Paternity Absence.
3.3 Prior Service Crediting Method. Notwithstanding the foregoing
------------------------------
provisions of this Section 3, for purposes of determining the nonforfeitable
percentage of benefits under the Plan of a Participant who has completed at
least three Years of Service as of October 12, 1992, such Participant's Years of
Service shall not be less than the Years of Service computed using the method in
effect under the terms of the Plan in effect immediately prior to April 1, 1992,
by disregarding clause (b) of the first sentence of subsection 3.2.
3.4 Qualified Military Service. Notwithstanding any provision of this
--------------------------
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with section 414(u) of
the Code.
SECTION 4
---------
Basic and Supplemental Contributions
------------------------------------
4.1 Basic Contributions. Except as otherwise provided in this subsection
-------------------
4.1 or under the provisions of any applicable Supplement, each Participant shall
contribute to the Plan, or have contributed on his behalf to the Plan, a "BASIC
CONTRIBUTION". Basic Contributions shall be made in accordance with the
provisions of paragraph (a) below, in an amount equal to the cents per hour set
forth in paragraph (b) below.
(a) Basic Contributions shall be made for each hour for which the
Participant is paid by his Employer, including all hours worked,
vacation hours, holiday hours, jury duty hours and funeral leave
hours. If elected by the Participant in accordance with procedures
established by the Committee, a Participant's Basic Contributions may
be made on a before-tax basis through a reduction of the Participant's
wages (a "BASIC BEFORE-TAX CONTRIBUTION"). If a deferral election is
not made as described in the preceding sentence, a Participant's Basic
Contributions shall be made on an after-tax basis through payroll
deduction (an "AFTER-TAX CONTRIBUTION").
(b) The Basic Contribution amounts in effect as of the Effective Date (or
such later date as may be set forth in this paragraph) for
Participants in each collective bargaining unit are as follows:
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<PAGE>
(i) Woodstock Employees: 20c per hour.
(ii) Coshocton Employees: 30c per hour.
(iii) Fullerton Employees: 30c per hour.
(iv) Davenport Employees: 35c per hour.
(v) Madison Employees: 10c per hour.
(vi) Sherman Employees: 30c per hour.
(vii) Farmdale Employees (effective as of February 1, 1997):
Basic Contributions are not required and may not be made.
4.2 Supplemental Contributions. Subject to the limitations set forth in
--------------------------
subsection 4.3 and Section 8:
(a) in addition to the Basic Contributions made by or for him for any Plan
Year, a Participant may also elect to have his wages reduced and a
corresponding amount contributed on his behalf to the Plan by his
Employer as a "SUPPLEMENTAL CONTRIBUTION", in an amount equal to the
cents per hour set forth below. While such election is in effect,
Supplemental Contributions shall be made for each hour for which the
Participant is paid by his Employer, including all hours worked,
vacation hours, holiday hours, jury duty hours and funeral leave
hours. Any election pursuant to this subsection 4.2 shall be
submitted to the Committee in accordance with the requirements of
subsection 4.5. Supplemental Contributions made pursuant to paragraph
4.2(a) may be made by Participants in each collective bargaining unit
in the following amounts:
(i) Woodstock Employees: any whole multiple of 5c per hour.
(ii) Coshocton Employees: any whole multiple of 10c per hour.
(iii) Fullerton Employees: any whole multiple of 10c per hour.
(iv) Davenport Employees: any whole multiple of 10c per hour.
(v) Madison Employees: any whole multiple of 10c per hour.
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<PAGE>
(vi) Sherman Employees: any whole multiple of 10c per hour.
(vii) Farmdale Employees: any whole multiple of 10c per hour.
(b) a Participant may make an advance election, at such times and with
respect to such amounts as the Committee permits, to have special lump
sum payments contributed on his behalf to the Plan by his Employer as
a "Supplemental Contribution", in lieu of receiving such amounts in
cash.
Supplemental Contributions may only be made on a before-tax basis. Basic
Before-Tax Contributions made pursuant to subsection 4.1, and Supplemental
Contributions made pursuant to this subsection 4.2 are collectively referred to
as "BEFORE-TAX CONTRIBUTIONS".
4.3 Total Basic and Supplemental Contributions. Notwithstanding the
------------------------------------------
foregoing provisions of this Section 4, Basic Contributions made by or on behalf
of a Participant and Supplemental Contributions made on behalf of a Participant
pursuant to paragraph 4.2(a) may not together exceed the amount set forth in the
following provisions of this subsection 4.3. The maximum combined amount of
such Basic Contributions and Supplemental Contributions for any Plan Year for
each Participant in each collective bargaining unit is:
(a) Madison Employees, Davenport Employees, Woodstock Employees and
Farmdale Employees: 15 percent of the Participant's plant base wage
for all paid hours for such year.
(b) All other collective bargaining units: 10 percent of the Participant's
plant base wage for all paid hours for such year.
4.4 Payment of Basic and Supplemental Contributions. Basic Contributions
-----------------------------------------------
and Supplemental Contributions shall be made by payroll deduction and shall be
paid to the Trustee by the Employer on the earliest date on which such
contributions can reasonably be segregated from the Employer's general assets,
but not later than the 15th day of the business month following the month in
which such amounts would otherwise have been payable to the Participant.
4.5 Election, Modification, Discontinuance and Resumption of Basic or
-----------------------------------------------------------------
Supplemental Contributions. An employee may elect whether to have his Basic
- --------------------------
Contributions made as Basic Before-Tax Contributions or After-Tax Contributions,
and he may elect to make Supplemental Contributions, upon meeting the
eligibility requirements described in subsection 2.1. Each Participant's
contribution election shall be in writing in advance of its effective date and
shall be filed with the Committee in such form
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<PAGE>
and at such time as it may require; provided, however, that if no election is
filed with the Committee regarding an employee's Basic Contributions prior to
the date on which the employee is required to commence making such Basic
Contributions, then the employee shall make his Basic Contributions as After-Tax
Contributions. If a Participant wishes to change his Basic Contributions from
before-tax to after-tax, or vice versa, or to vary the amount of his
Supplemental Contributions, the Participant may change his elections effective
January 1 of any subsequent year by a writing filed with the Committee before
such change or variance is to be effective. If a Participant wishes to revoke
his election to make Supplemental Contributions, he may do so at any time during
the year by a writing filed with the Committee in advance of the date on which
the revocation is to be effective. Such revocation shall be effective for the
balance of the year in which the revocation was elected, and for subsequent
years, unless the Participant elects to resume such contributions, effective as
of January 1 of any subsequent year, by filing a new election with the Committee
in advance of such January 1 date.
SECTION 5
---------
Matching Contributions
----------------------
5.1 Matching Contributions. Subject to the conditions and limitations of
----------------------
Section 8, for each Plan Year, each Employer shall contribute to the Plan, on
behalf of each Participant employed by such Employer, a "MATCHING CONTRIBUTION"
in an amount equal to the Basic Contributions which such Participant makes, or
has made on his behalf, to the Plan for such year. Supplemental Contributions
shall be unmatched contributions.
5.2 Limitations on Amount of Employer Contributions. In no event shall
-----------------------------------------------
the sum of all Before-Tax Contributions and Matching Contributions made by an
Employer for any Plan Year exceed the limitations imposed by section 404 of the
Code on the maximum amount deductible on account thereof by the Employer for
that year.
5.3 Payment of Employer Contributions. Each Employer's Matching
---------------------------------
Contributions under the Plan for any Plan Year shall be paid to the Trustee,
without interest, no later than the time prescribed by law for filing the
Employer's federal income tax return, including any extensions thereof.
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<PAGE>
SECTION 6
---------
Investment of the Trust Fund
----------------------------
6.1 Investment Funds. The Participants represented by a particular
----------------
collective bargaining unit shall be entitled to direct the investment of their
Accounts among one or more "INVESTMENT FUNDS" established by the Investment
Committee and maintained by the Trustee as of the later of the Effective Date or
such other date agreed to by and between the Company and the collective
bargaining representative for such collective bargaining unit. One of the
Investment Funds may be a fund intended to be invested primarily in the common
stock of Philip Morris Companies Inc. (the "COMMON STOCK"). The Investment
Committee in its discretion may add additional Investment Funds, may delete any
Investment Fund or may change the investment strategy of any Investment Fund
without prior notice to Participants. Prior to the date as of which
Participants represented by a particular collective bargaining unit are
permitted to direct the investment of their Accounts among one or more
Investment Funds, the Investment Committee shall determine the investment funds
maintained under the Trust in which the assets of the Plan shall be invested
with respect to the Participants of such collective bargaining unit.
6.2 Investment Fund Accounting. As applicable, the Committee shall
--------------------------
maintain or cause to be maintained separate subaccounts for each Participant in
each of the Investment Funds to separately reflect his interests in each such
Fund and the portion thereof that is attributable to each of his Accounts.
6.3 Investment Fund Elections. Each Participant, commencing as of the
-------------------------
date that investment elections are made available to his collective bargaining
unit or such later time that he becomes eligible for and enrolls in the Plan,
may specify the percentage, in increments of 25%, of contributions subsequently
credited to his Accounts that are to be invested in each of the Investment
Funds. Any such investment direction shall be deemed to be a continuing
direction until changed. During any period in which no investment direction has
been given in accordance with rules established by the Committee, contributions
credited to a Participant shall be invested in the fund known as of the
Effective Date as the Interest Income Fund. Subject to uniform rules
established by the Committee, effective as of any January 1, April 1, July 1 and
October 1 each Participant may elect to modify prospectively his investment
direction with respect to future contributions. Subject to uniform procedures
established by the Committee, a Participant may make one investment election
with respect to future contributions allocated to his Before-Tax and After-Tax
Accounts, and a separate investment fund election with respect to future
contributions allocated to his Matching Account.
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<PAGE>
6.4 Transfers Between Investment Funds. Subject to uniform rules
----------------------------------
established by the Committee, each Participant may prospectively elect to re-
allocate the investment of his Accounts among the Investment Funds then made
available to him, in increments of 25%, effective as of any January 1, April 1,
July 1 and October 1. One investment fund re-allocation election may be made
with respect to a Participant's Before-Tax and After-Tax Accounts, and a
separate investment fund re-allocation election may be made with respect to a
Participant's Matching Account. Notwithstanding the foregoing, if a Participant
terminates employment before he is fully vested in his Accounts, and forfeiture
of the non-vested portion of his Accounts is delayed pending distribution of the
vested portion, such non-vested portion shall be invested in accordance with
rules established by the Committee to minimize the risk of loss, and shall not
be subject to the investment direction of the Participant.
SECTION 7
---------
Plan Accounting
---------------
7.1 Participants' Accounts. The Committee shall maintain or cause to be
----------------------
maintained the following "ACCOUNTS", as applicable, in the name of each
Participant:
(a) A "BEFORE-TAX ACCOUNT," which shall reflect Before-Tax Contributions,
if any, made on his behalf and the income, losses, appreciation and
depreciation attributable thereto;
(b) An "AFTER-TAX ACCOUNT," which shall reflect After-Tax Contributions,
if any, made by him and the income, losses, appreciation and
depreciation attributable thereto; and
(c) A "MATCHING ACCOUNT," which shall reflect Matching Contributions, if
any, made on his behalf and the income, losses, appreciation and
depreciation attributable thereto.
The Accounts and subaccounts provided for by subsection 6.2 or this subsection
7.1 shall be for accounting purposes only, and there shall be no segregation of
assets within the Investment Funds or the Trust on account of such separate
Accounts or subaccounts. Reference to the "balance" in a Participant's Accounts
means the aggregate of the balances in the subaccounts maintained in the
Investment Funds attributable to those Accounts.
7.2 Allocation of Fund Earnings and Changes in Value. As of each
------------------------------------------------
Accounting Date, interest, dividends and changes in value in each Investment
Fund since the preceding Accounting Date shall be
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<PAGE>
allocated to each Participant's subaccounts invested in such Investment Fund by
adjusting upward or downward the balance of his subaccounts invested in such
Investment Fund in the ratio which the subaccounts of such Participant invested
in such Investment Fund bears to the total of the subaccounts of all
Participants invested in such Investment Fund as of such Accounting Date,
excluding therefrom, for purposes of this allocation only, all Before-Tax,
After-Tax and Matching Contributions received since the preceding Accounting
Date, so that the total of the subaccounts of all Participants in each
Investment Fund shall equal the total value of such fund (exclusive of such
contributions) as determined by the Trustee in accordance with uniform
procedures consistently applied.
7.3 Allocation and Crediting of Contributions. Subject to the provisions
-----------------------------------------
of Section 8, Before-Tax, After-Tax, or Matching Contributions made by or on
behalf of any Participant for any payroll period ending within a calendar month
shall be allocated to that Participant's appropriate Accounts as of the
Accounting Date coinciding with the end of such calendar month. Notwithstanding
the foregoing, unless the Committee establishes uniform rules to the contrary,
contributions made to the Plan shall share in the gains and losses of the
Investment Funds only when actually made to the Trustee.
7.4 Correction of Error. In the event of an error in the adjustment of a
-------------------
Participant's Accounts, the Committee, in its sole discretion, may correct such
error by either crediting or charging the adjustment required to make such
correction to or against income and expenses of the Trust for the Plan Year in
which the correction is made or the Employer may make an additional contribution
to permit correction of the error. Except as provided in this subsection 7.4,
the Accounts of other Participants shall not be readjusted on account of such
error.
7.5 Statement of Plan Interest. As soon as practicable after the last day
--------------------------
of each Plan Year and at such other intervals as the Committee may determine,
the Committee shall provide each Participant with a statement reflecting the
balances of his Accounts. Each Participant is responsible for reviewing his
statement and any Participant who discovers an error shall bring it to the
attention of the Committee within 90 days of receipt of the statement. If a
Participant does not bring errors in his statement to the attention of the
Committee within 90 days of receipt of his statement, the Participant will be
deemed to have confirmed the accuracy of the statement.
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<PAGE>
SECTION 8
---------
Limitations on Compensation, Contributions and Allocations
----------------------------------------------------------
8.1 Reduction of Contribution Rates. To conform the operation of the Plan
-------------------------------
to sections 401(a)(4), 401(k)(3), 401(m)(2), 402(g) and 415(c) of the Code, the
Committee may establish limits on the contribution rates that may be elected by
Participants, and may unilaterally modify or revoke any contribution election
made by a Participant pursuant to subsections 4.1 and 4.2. Notwithstanding any
other provision of the Plan to the contrary, a Participant may not make or have
made on his behalf any Basic or Supplemental Contributions for a Plan Year with
respect to any Compensation (as defined in subsection 7.2 below) in excess of
the maximum level of compensation permitted to be taken into account by the Plan
for such Plan Year under section 401(a)(17) of the Code, taking into account for
purposes of such limitation any proration of such amount required under
applicable Treasury regulations.
8.2 Compensation for Limitation/Testing Purposes. "COMPENSATION" for
--------------------------------------------
purposes of this Section 8 shall mean:
(a) the Participant's wages, salary, commissions, bonuses and other
amounts received (in cash or kind) during the Plan Year from any
Employer or Related Company for personal services actually rendered in
the course of employment and includable in gross income, including
taxable fringe benefits, nonqualified stock options taxable in the
year of grant, amounts taxable under a section 83(b) election and
nondeductible moving expenses, but excluding distributions from any
deferred compensation plan (qualified or nonqualified), amounts
realized from the exercise of (or disposition of stock acquired under)
any nonqualified stock option or other benefits given special tax
treatment and lump sum severance pay, plus,
(b) any amounts contributed on the Participant's behalf for the Plan Year
to a plan sponsored by an Employer or Related Company pursuant to a
salary reduction agreement which are not includible in gross income
under sections 125, 402(e)(3), 402(h) or 403(b) of the Code,
up to a maximum limit of $150,000 or such other amount as may be permitted for
any Plan Year under Code section 401(a)(17), taking into account for purposes of
such limitation any proration of such amount required under applicable Treasury
regulations.
8.3 Limitations on Annual Additions. Notwithstanding any other provisions
-------------------------------
of the Plan to the contrary, a Participant's Annual Additions (as defined below)
for any Plan Year shall not exceed an amount equal to the lesser of:
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<PAGE>
(a) $30,000 (indexed for cost-of-living adjustments under section 415(d)
of the Code); or
(b) 25 percent of the Participant's Compensation for that Plan Year,
determined without regard to either (i) the limitation under section
401(a)(17) of the Code, and (ii) for Plan Years beginning prior to
January 1, 1998, clause (b) of subsection 8.2, and calculated as if
each Section 415 Affiliate (defined below) were a Related Company,
reduced by any Annual Additions for the Participant for the Plan Year under any
other defined contribution plan of an Employer or a Related Company or Section
415 Affiliate, provided that, if any other such plan has a similar provision,
the reduction shall be pro rata. The term "ANNUAL ADDITIONS" means, with
respect to any Participant for any Plan Year, the sum of all contributions
allocated to a Participant's Accounts under the Plan for such year, excluding
any Before-Tax Contributions that are distributed as excess deferrals in
accordance with subsection 8.6, but including any Before-Tax Contributions
treated as excess contributions under subsection 8.8. The term Annual Additions
shall also include, solely with respect to the dollar limit in (a) above,
employer contributions allocated for a Plan Year to any individual medical
account (as defined in section 415(l) of the Code) of a Participant and any
amount allocated for a Plan Year to the separate account of a Participant for
payment of post-retirement medical benefits under a funded welfare benefit plan
(as described in section 419A(d)(2) of the Code), which is maintained by an
Employer or a Related Company or Section 415 Affiliate. "SECTION 415 AFFILIATE"
means any entity that would be a Related Company if the ownership test of
section 414 of the Code was "more than 50%" rather than "at least 80%".
8.4 Excess Annual Additions. If, as a result of a reasonable error in
-----------------------
estimating a Participant's Compensation, a reasonable error in determining the
amount of Before-Tax Contributions that may be made with respect to a
Participant under the limits of section 415 of the Code or such other mitigating
circumstances as the Commissioner of Internal Revenue shall prescribe, the
Annual Additions for a Participant for a Plan Year exceed the limitations set
forth in subsection 8.3, the excess amounts shall be treated as necessary, in
accordance with Treas. Reg. (S) 1.415-6(b)(6)(ii), after any After-Tax
Contributions, and then any Before-Tax Contributions, and any income, losses,
appreciation or depreciation attributable to the foregoing, are first returned
to the extent they would reduce the excess amount. Any Before-Tax or After-Tax
Contributions returned to a Participant in accordance with this subsection 8.4
shall be disregarded for purposes of subsections 8.6, 8.7 and 8.9.
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8.5 Combined Plan Limitation. If a Participant also participates in any
------------------------
defined benefit plan (as defined in section 415(k) of the Code) maintained by an
Employer or a Related Company or Section 415 Affiliate, the aggregate benefits
payable to, or on account of, the Participant under such plan together with this
Plan will be determined in a manner consistent with section 415(e) of the Code.
The benefit provided for the Participant under the defined benefit plan shall be
adjusted to the extent necessary so that the sum of the "defined benefit
fraction" and the "defined contribution fraction" (as such terms are defined in
section 415(e) of the Code and applicable regulations thereunder) calculated
with regard to such Participant does not exceed 1.0. For purposes of this
subsection 8.5, all qualified defined benefit plans (whether or not terminated)
of the Employers, Related Companies and Section 415 Affiliates shall be treated
as one defined benefit plan. The provisions of this subsection 8.5 shall not
apply to Plan Years beginning after December 31, 1999.
8.6 Section 402(g) Limitation. In no event shall the Before-Tax
-------------------------
Contributions for a Participant under the Plan and any other elective deferrals
(as defined in section 402(g)(3) of the Code) under any other cash-or-deferred
arrangement maintained by an Employer or a Related Company for any taxable year
exceed $9,500 or such larger amount as may be permitted under section 402(g) of
the Code. If during any taxable year a Participant is also a participant in any
other cash-or-deferred arrangement, and if his elective deferrals made under
such other arrangements together with his Before-Tax Contributions made under
the Plan exceed the maximum amount permitted for the Participant for that year
under section 402(g) of the Code, the Participant, not later than March 1
following the close of such taxable year, may request the Committee to direct
the Trustee to distribute all or a portion of such excess to him, with any gains
or losses allocable thereto for that Plan Year, determined in accordance with
any reasonable method adopted by the Committee for that Plan Year that either
(i) conforms to the accounting provisions of Section 7 and is consistently
applied to the distribution of excess contributions under this subsection 8.6
and subsection 8.8 to all affected Participants, or (ii) satisfies any
alternative method set forth in applicable Treasury regulations. Any such
request shall be in writing and shall include adequate proof of the existence of
such excess, as determined by the Committee in its sole discretion. If the
Committee is so notified, such excess amount shall be distributed to the
Participant no later than the April 15 following the close of the Participant's
taxable year. In addition, if the applicable limitation for a Plan Year happens
to be exceeded with respect to this Plan alone, or this Plan and another plan or
plans of the Employers and Related Companies, the Committee shall direct such
excess Before-Tax Contributions (with allocable gains or losses) to be
distributed to the Participant as soon as practicable after the Committee is
notified of the excess deferrals by the Company, an Employer or the Participant,
or otherwise discovers the error (but
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<PAGE>
no later than the April 15 following the close of the Participant's taxable
year). Notwithstanding the foregoing provisions of this subsection 8.6, the
dollar amount of any distribution due hereunder shall be reduced by the dollar
amount of any Before-Tax contributions previously distributed to the same
Participant pursuant to subsection 8.8, provided, however, that for purposes of
subsections 8.3 and 8.7, the correction under this subsection 8.6 shall be
deemed to have occurred before the correction under subsection 8.8.
8.7 Section 401(k)(3) Testing. For any Plan Year, the amount by which the
-------------------------
average of the Deferral Percentages (as defined below) for the Plan Year of each
eligible employee who is Highly Compensated for such Plan Year (the "HIGHLY
COMPENSATED GROUP DEFERRAL PERCENTAGE") exceeds the average of the Deferral
Percentages for the preceding Plan Year of each eligible employee who is not
Highly Compensated in such preceding Plan Year (the "NON-HIGHLY COMPENSATED
GROUP DEFERRAL PERCENTAGE"), shall be less than or equal to either (i) a factor
of 1.25 or (ii) both a factor of 2 and a difference of 2. The "DEFERRAL
PERCENTAGE" for any eligible employee for a Plan Year shall be determined by
dividing his Before-Tax Contributions for that Plan Year by his Compensation for
that Plan Year, subject to the following special rules:
(a) any employee eligible to participate in the Plan at any time during a
Plan Year in accordance with subsection 2.1 shall be counted, whether
or not any Before-Tax Contributions are made on his behalf for the
year;
(b) the Deferral Percentage for any Highly Compensated Participant who is
eligible to participate in the Plan and who is also eligible to make
elective deferrals under one or more other arrangements described in
section 401(k) of the Code that are maintained by an Employer or a
Related Company for a plan year that ends with or within the same
calendar year as the Plan Year (other than a plan or arrangement
subject to mandatory disaggregation under applicable Treasury
regulations) shall be determined as if all of such elective deferrals
were made on his behalf under the Plan;
(c) excess Before-Tax Contributions distributed to a Participant under
subsection 8.6 shall be counted in determining such Participant's
Deferral Percentage, except in the case of a distribution to a non-
Highly Compensated Participant required to comply with section
401(a)(30) of the Code; and
(d) all Participants who are members of a single collective bargaining
unit shall be tested separately under this subsection 8.7.
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<PAGE>
Application of the provisions of this subsection 8.7 shall be made in accordance
with the requirements of section 401(k)(3) of the Code and applicable
regulations thereunder.
8.8 Correction Under Section 401(k) Test. In the event that the Highly
------------------------------------
Compensated Group Deferral Percentage for any Plan Year does not initially
satisfy one of the tests referred to in subsection 8.7, the Committee shall
direct the Trustee to distribute to the Highly Compensated Participants to whose
accounts Excess Contributions (as defined below) were allocated for such year,
the amount of each such Participant's Excess Contributions, with any gains or
losses allocable thereto for that Plan Year. The "EXCESS CONTRIBUTIONS" for any
Plan Year shall mean the excess of the aggregate amount of Before-Tax
Contributions taken into account in computing the Deferral Percentages of Highly
Compensated Participants for such year over the maximum amount of Before-Tax
Contributions permitted under the test set forth in subsection 8.7, determined
by reducing the amount of Before-Tax Contributions made on behalf of Highly
Compensated Participants in order of the dollar amount of the Before-Tax
Contributions made on behalf of such Participants. The gain or loss allocable
to Excess Contributions shall be determined in accordance with any reasonable
method adopted by the Committee for that Plan Year that either (i) conforms to
the accounting provisions of Section 7 and is consistently applied to making
corrective distributions under this subsection 8.8 and subsection 8.6 to all
affected Participants or (ii) satisfies any alternative method set forth in
applicable Treasury regulations. The amounts to be distributed to any
Participant pursuant to this subsection 8.8 shall be reduced by the amount of
any Before-Tax Contributions distributed to him for the taxable year ending with
or within such Plan Year pursuant to subsection 8.6. The Committee shall take
such actions and cause any distribution to be made no later than the close of
the Plan Year following the Plan Year for which the Excess Contributions were
made.
8.9 Highly Compensated. An active employee (that is, an employee who
------------------
performs services for the Employer or any Related Company during the year in
question) or Participant shall be "HIGHLY COMPENSATED" for any Plan Year if:
(a) he was at any time during that Plan Year or the preceding Plan Year a
5 percent owner of an Employer or a Related Company; or
(b) received Compensation in excess of $80,000 (indexed for cost-of-living
adjustments under section 415(d) of the Code).
A former employee (that is, any employee who separated from service, or was
deemed to have separated, prior to the year in question and who performs no
services for the Employers and Related
-24-
<PAGE>
Companies during that year) shall be Highly Compensated if he was a Highly
Compensated active employee for either the separation year or any Plan Year
ending on or after his 55th birthday. Notwithstanding the foregoing provisions
of this subsection 8.9, for any Plan Year the Committee may use any alternative
definition of "highly compensated" permitted under section 414(q) of the Code
and applicable regulations thereunder.
8.10 Forfeiture of "Orphaned" Matching Contributions. If Before-Tax
-----------------------------------------------
Contributions are returned to a Highly Compensated Participant to satisfy the
contribution limits of section 415(c) of the Code, the deferral limits of
section 402(g) of the Code or the nondiscrimination requirements of section
401(k)(3) of the Code, any Matching Contributions allocable thereto shall be
forfeited and used to reduce the amount of Employer contributions otherwise
required to be made to the Plan.
SECTION 9
---------
Vesting and Termination Dates
-----------------------------
9.1 Determination of Vested Interest. A Participant shall have a fully
--------------------------------
vested, nonforfeitable interest in his Matching Account upon his completion of
five Years of Service. A Participant at all times shall have a fully vested,
nonforfeitable interest in his Before-Tax and After-Tax Accounts.
9.2 Accelerated Vesting. Notwithstanding the foregoing provisions of this
-------------------
Section 8, a Participant shall have a fully vested, nonforfeitable interest in
all his Accounts when he attains age 65 ("NORMAL RETIREMENT AGE") or dies while
employed by an Employer or a Related Company. In addition, in the event of the
Plan's termination (in accordance with subsection 13.2) or partial termination
(as determined under applicable law and regulations) or the complete
discontinuance of Employer contributions to the Plan, each Participant shall
have a fully vested, nonforfeitable interest in all his Accounts. The Committee
in its discretion may also determine that the Accounts of Participants affected
by a divestiture, plant closing or termination of an operation shall be fully
vested, even though such event does not constitute a partial termination.
9.3 Termination Date. A Participant's "TERMINATION DATE" will be the date
----------------
on which his employment with the Employers and the Related Companies terminates
for any reason, or if later, the date on which he ceases to be eligible for pay
continuation under a severance plan or severance agreement with his Employer.
9.4 Distribution Only Upon Separation From Service. Notwithstanding any
----------------------------------------------
other provision of the Plan to the contrary, a Participant may not commence
distribution of his Accounts pursuant
-25-
<PAGE>
to Section 10 prior to the date he attains age 59 1/2, even though his
employment with the Employers and Related Companies has terminated, unless or
until he also has a "separation from service" within the meaning of section
401(k)(2)(B) of the Internal Revenue Code. The foregoing restriction shall not
apply, however, if the Participant's termination of employment occurs in
connection with the sale by an Employer or a Related Company to an unrelated
corporation of at least 85% of the assets of a trade or business or the sale of
its interest in a subsidiary to an unrelated entity, provided (a) the
Participant remains employed in such trade or business or by such subsidiary
after the sale, (b) the Employers continue to maintain the Plan after the sale,
(c) no transfer of the Participant's Accounts occurs or is scheduled to occur
after the sale pursuant to subsection 13.3 to a plan of such subsidiary or of
the purchaser of such assets (or any entity affiliated therewith), and (d) the
Participant receives distribution of his Accounts under the Plan in a lump sum
by the end of the second calendar year after the year in which the sale occurs.
SECTION 10
----------
Distributions
-------------
10.1 Distributions to Participants After Termination of Employment. If a
-------------------------------------------------------------
Participant's Termination Date occurs (for a reason other than his death), the
vested portions of his Accounts shall be distributed in accordance with the
following provisions of this subsection 10.1, subject to the rules of
subsections 10.3 and 9.4:
(a) If the value of the vested portions of the Participant's Accounts does
not exceed $3,500, determined as of the Accounting Date next following
his Termination Date, and did not exceed $3,500 at the time of any
prior distribution, such vested portions shall be distributed to him
as soon as practicable after such Accounting Date, in a lump sum
payment.
(b) If the value of the vested portions of the Participant's Accounts
exceeds $3,500, determined as of the Accounting Date next following
his Termination Date, or exceeded $3,500 at the time of any prior
distribution, such vested portions shall be distributed to the
Participant in a lump sum payment as soon as practicable after the
Accounting Date coincident with or next following the date he attains
his Normal Retirement Age; provided, however, that the Participant may
elect, in writing, to receive his benefit distribution as soon as
practicable after the Accounting Date coincident with or next
following his Termination Date.
-26-
<PAGE>
10.2 Distributions to Beneficiaries. If a Participant dies while any
------------------------------
vested portions of his Accounts remain undistributed, the vested balance of his
Accounts shall be distributed as soon as practicable after the Accounting Date
following the date of his death to his Beneficiary (as defined in subsection
10.4) in a lump sum payment.
10.3 Limits on Commencement and Duration of Distributions. The following
----------------------------------------------------
distribution rules shall be applied in accordance with sections 401(a)(9) and
401(a)(14) of the Code and applicable regulations thereunder, including the
minimum distribution incidental benefit requirement of Treas. Reg. (S)
1.401(a)(9)-2, and shall supersede any other provision of the Plan to the
contrary:
(a) In no event shall distribution commence later than 60 days after the
close of the Plan Year in which the latest of the following events
occurs: the Participant's attainment of age 65; the 10th anniversary
of the year in which the Participant began participating in the Plan;
or the Participant's Termination Date. The failure of a Participant
to consent to a distribution is deemed to be an election to defer
commencement of payment for purposes of the preceding sentence.
(b) Notwithstanding any other provision herein to the contrary,
distribution of a Participant's Accounts shall commence to be made to
him (or on his behalf) in a lump sum distribution on or before his
Required Beginning Date (as defined below). A Participant's "REQUIRED
BEGINNING DATE" shall mean April 1 of the calendar year following the
later of (i) the calendar year in which the Participant attains age
70-1/2, or (ii) the calendar year in which the Participant's
Termination Date occurs; provided, however, that clause (ii) shall not
apply to any Participant who is a 5-percent owner of any Employer or
Related Company (as defined in section 416 of the Code).
(c) Distribution payments shall be made over the life of the Participant
or over the lives of such Participant and his Beneficiary (or over a
period not extending beyond the life expectancy of such Participant or
the life expectancy of such Participant and his Beneficiary).
(d) If a Participant dies after distribution of his vested interest in the
Plan has begun, the remaining portion of such vested interest, if any,
shall be distributed to his Beneficiary at least as rapidly as under
the method of distribution used prior to the Participant's death.
(e) If a Participant dies before distribution of his vested interest in
the Plan has begun, distribution of such
-27-
<PAGE>
vested interest to his Beneficiary shall be completed by December 31
of the calendar year in which the fifth anniversary of the
Participant's death occurs.
(f) For purposes of this subsection 10.3, the life expectancy of a
Participant or a Beneficiary will be determined in accordance with
Table V of Treas. Reg. (S) 1.72-9, and will not be recalculated.
10.4 Beneficiary Designations. The term "BENEFICIARY" shall mean the
------------------------
Participant's surviving spouse. However, if the Participant is not married, or
if the Participant is married but his spouse consents (as provided below) to the
designation of a person other than the spouse, the term Beneficiary shall mean
such person or persons as the Participant designates to receive the vested
portions of his Accounts upon his death. Such designation may be made, revoked
or changed (without the consent of any previously-designated Beneficiary except
his spouse) only by an instrument signed by the Participant and filed with the
Committee prior to his death. A spouse's consent to the designation of a
Beneficiary other than the spouse shall be in writing, shall acknowledge the
effect of such designation, shall be witnessed by a Plan representative or a
notary public and shall be effective only with respect to such consenting
spouse. In default of such designation, or at any time when there is no
surviving spouse and no surviving Beneficiary designated by the Participant, his
Beneficiary shall be his surviving children or, if he has no children, his
estate. For purposes of the Plan, "spouse" means the person to whom the
Participant is legally married at the relevant time. Notwithstanding the
foregoing provisions of this subsection 10.4, no special consent to the
designation of a person other than, or in addition to, the spouse as Beneficiary
shall be required if (i) the Participant and his spouse are legally separated or
the Participant has been abandoned (under applicable state law) and the
Participant has a court order to that effect or (ii) it is established to the
satisfaction of the Committee that the spouse's consent cannot be obtained
because there is no spouse, because the spouse cannot be located or because of
such other circumstances as may be prescribed in applicable Treasure
regulations.
10.5 Forfeitures and Restoration of Non-vested Contributions. If a
-------------------------------------------------------
Termination Date occurs with respect to a Participant who is not fully vested in
all his Accounts (as determined under Section 9), the following rules shall
apply:
(a) The non-vested portion of his Accounts shall be forfeited as of the
earlier of the date as of which the vested portion of his Accounts is
distributed to him or the date the Participant incurs five consecutive
One Year Breaks in Service.
-28-
<PAGE>
(b) If a forfeiture occurs due to the distribution of the vested portion
of the Participant's Accounts, and the Participant is reemployed by an
Employer or a Related Company before he incurs five consecutive One
year Breaks in Service, the Matching Contributions and earnings
thereon forfeited under paragraph (a) above shall be restored, without
adjustment for earnings and losses after the forfeiture, as soon as
practicable after his reemployment.
(c) If a forfeiture occurs due to the distribution of the vested portion
of the Participant's Accounts, and the Participant is reemployed by an
Employer or Related Company after he incurs five consecutive One Year
Breaks in Service, such reemployment shall have no effect on the
forfeiture under paragraph (a) above.
(d) The restoration referred to in paragraph (b) above shall be made first
from current forfeitures, if any, under the Plan and then, if
necessary, from a special Employer contribution to the Plan.
(e) A restoration pursuant to paragraph (b) above shall not be considered
an Annual Addition for purposes of subsection 8.3.
(f) During the period between the Participant's Termination Date and the
date he is either reemployed by an Employer or Related Company or the
date the non-vested portion of his Matching Account is forfeited such
non-vested portion shall be credited to a forfeiture subaccount and
invested in accordance with rules established by the Committee to
minimize the risk of loss.
(g) All forfeitures under this subsection 10.5 shall be used to reduce
Matching Contributions under Section 5, except to the extent needed to
restore prior forfeitures under paragraph (b) above.
10.6 Form of Payment. Distributions from the Philip Morris Stock Fund
---------------
shall be made in cash, except to the extent the Participant or Beneficiary
elects to receive whole shares of Common Stock. Distributions from the other
Investment Funds shall be made in cash.
10.7 Facility of Payment. Notwithstanding the provisions of subsections
-------------------
10.1 and 10.2, if, in the Committee's opinion, a Participant or other person
entitled to benefits under the Plan is under a legal disability or is in any way
incapacitated so as to be unable to manage his financial affairs, the Committee
may direct the Trustee to make payment to a relative or friend of such person
for his benefit until claim is made by a conservator or other
-29-
<PAGE>
person legally charged with the care of his person or his estate. Thereafter,
any benefits under the Plan to which such Participant or other person is
entitled shall be paid to such conservator or other person legally charged with
the care of his person or his estate.
10.8 Interests Not Transferable. The interests of Participants and other
--------------------------
persons entitled to benefits under the Plan are not subject to the claims of
their creditors and may not be voluntarily or involuntarily assigned, alienated
or encumbered, except in the case of qualified domestic relations orders that
relate to the provision of child support, alimony or marital rights of a spouse,
child or other dependent and which meet such other requirements as may be
imposed by section 414(p) of the Code or regulations issued thereunder.
Notwithstanding any other provision of the Plan to the contrary, distribution of
the entire portion of the Account balances of a Participant awarded to his
alternate payee may be made in a lump sum payment, as soon as practicable after
the Committee determines that such order is qualified, without regard to whether
the Participant would himself be entitled under the terms of the Plan to
withdraw or receive a distribution of such amount at that time, but only if the
terms of the order provide for such immediate distribution either specifically
or by general reference to any manner of distribution permitted under the Plan.
10.9 Absence of Guaranty. None of the Committees, the Trustee, or the
-------------------
Employers in any way guarantee the assets of the Plan from loss or depreciation.
The Employers do not guarantee any payment to any person. The liability of the
Trustee to make any payment is limited to the available assets of the Plan held
under Trust.
10.10 Missing Participants or Beneficiaries. Each Participant and each
-------------------------------------
designated Beneficiary must file with the Committee from time to time in writing
his post office address and each change of post office address. Any
communication, statement or notice addressed to a Participant or designated
Beneficiary at his last post office address filed with the Committee, or, in the
case of a Participant, if no address is filed with the Committee, then at his
last post office address as shown on the Employers' records, will be binding on
the Participant and his designated Beneficiary for all purposes of the Plan.
None of the Committee, the Employers, or the Trustee will be required to search
for or locate a Participant or designated Beneficiary.
10.11 Direct Rollover Option. In accordance with uniform rules
----------------------
established by the Committee, each Participant, surviving spouse of a
Participant or alternate payee under a qualified domestic relations order within
the meaning of section 414(p) of the Code who is due to receive an eligible
rollover distribution from the Plan may direct the Committee to transfer all or
a portion of such distribution directly to another eligible retirement plan.
-30-
<PAGE>
For purposes of this subsection, the terms "eligible rollover distribution" and
"eligible retirement plan" as applied to any such individual shall have the
meaning accorded such terms under section 401(a)(31) of the Code (or any
successor provision thereto) and applicable regulations thereunder.
SECTION 11
----------
No Reversion to Employers
-------------------------
No part of the corpus or income of the Trust shall revert to the Employers
or be used for, or diverted to, purposes other than the exclusive benefit of
Participants and Beneficiaries, subject to the following:
(a) Employer contributions under the Plan are conditioned upon the
deductibility of the contributions under section 404 of the Code, and,
to the extent any such deduction is disallowed, the Trustee shall,
upon written request of the Employer, return the amount of any
contribution (to the extent disallowed), reduced by the amount of any
losses thereon, to the Employer within one year after the date the
deduction is disallowed.
(b) If a contribution or any portion thereof is made by an Employer by a
mistake of fact, the Trustee shall, upon written request of that
Employer, return the amount of such contribution or portion, reduced
by the amount of any losses thereon, to that Employer within one year
after the date of payment.
(c) If, upon termination of the Plan, any amounts are held under the Plan
in a suspense account pursuant to Treas. Reg. (S) 1.415-6(b)(6)(ii)
and such amounts may not be credited to the Accounts of Participants,
such amount will be returned to the Employers as soon as practicable
after the termination of the Plan.
SECTION 12
----------
Administration
--------------
12.1 Committee Membership and Authority. The Committee referred to in
----------------------------------
subsection 1.3 shall consist of one or more members appointed by the Company.
Except as otherwise specifically provided in this Section 12, the Committee
shall act by a majority of its then members, by meeting or by writing filed
without meeting, and shall have the following discretionary authority, powers,
rights and duties in addition to those vested in it elsewhere in the Plan or
Trust Agreement:
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<PAGE>
(a) to adopt such rules of procedure and regulations as, in its opinion,
may be necessary for the proper and efficient administration of the Plan and as
are consistent with the provisions of the Plan;
(b) to enforce the Plan in accordance with its terms and with such
applicable rules and regulations as may be adopted by the Committee;
(c) to determine conclusively all questions arising under the Plan,
including the power to determine the eligibility of employees and the
rights of Participants and other persons entitled to benefits under
the Plan and their respective benefits, to make factual findings and
to remedy ambiguities, inconsistencies or omissions of whatever kind;
(d) to maintain and keep adequate records concerning the Plan and
concerning its proceedings and acts in such form and detail as the
Committee may decide;
(e) to direct all payments of benefits under the Plan;
(f) to perform the functions of a "plan administrator", as defined in
section 414(g) of the Code, for all purposes of the Plan, including
for purposes of establishing and implementing procedures to determine
the qualified status of domestic relations orders (in accordance with
the requirements of section 414(p) of the Code) and to administer
distributions under such qualified orders;
(g) to employ agents, attorneys, accountants or other persons (who may
also be employed by or represent the Employers) for such purposes as
the Committee considers necessary or desirable to discharge its
duties;
(h) to establish a claims procedure in accordance with section 503 of
ERISA; and
(i) to furnish the Employers, the Investment Committee and the Trustee
with such information with respect to the Plan as may be required by
them for tax or other purposes.
The certificate of a majority of the members of the Committee that the Committee
has taken or authorized any action shall be conclusive in favor of any person
relying on the certificate.
12.2 Allocation and Delegation of Committee Responsibilities and Powers.
------------------------------------------------------------------
In exercising its authority to control and manage the operation and
administration of the Plan, the Committee may allocate all or any part of its
responsibilities and powers to any
-32-
<PAGE>
one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked at any time. Any member or delegate
exercising Committee responsibilities and powers under this subsection shall
periodically report to the Committee on its exercise thereof and the discharge
of such responsibilities.
12.3 Uniform Rules. In managing the Plan, the Committee shall uniformly
-------------
apply rules and regulations adopted by it to all persons similarly situated.
12.4 Information to be Furnished to Committee. The Employers and Related
----------------------------------------
Companies shall furnish the Committee such data and information as may be
required for it to discharge its duties. The records of the Employers and
Related Companies as to an employee's or Participant's period of employment,
termination of employment and the reason therefor, leave of absence,
reemployment and Compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to benefits
under the Plan must furnish to the Committee such evidence, data or information
as the Committee considers desirable to carry out the Plan.
12.5 Committee's Decision Final. Any interpretation of the Plan and any
--------------------------
decision on any matter within the discretion of the Committee made by the
Committee shall be binding on all persons. A misstatement or other mistake of
fact shall be corrected when it becomes known, and the Committee shall make such
adjustment on account thereof as it considers equitable and practicable.
12.6 Exercise of Committees' Duties. Notwithstanding any other provisions
------------------------------
of the Plan, the Committees shall discharge their duties hereunder solely in the
interests of the Participants and other persons entitled to benefits under the
Plan, and:
(a) for the exclusive purpose of providing benefits to Participants and
other persons entitled to benefits under the Plan; and
(b) with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims.
12.7 Remuneration and Expenses. No remuneration shall be paid from the
-------------------------
Plan to a member of any of the Committees who is an employee of any Employer or
Related Company. Except as otherwise determined by the Committee, the reasonable
expenses of administering the Plan and the fees and expenses incurred in
connection with the collection, administration, management,
-33-
<PAGE>
investment, protection and distribution of the Plan assets under the Trust shall
be paid directly by the Trust out of Plan assets or, if paid by one or more
Employers, reimbursed by the Trust to the maximum extent permitted by law.
12.8 Indemnification of the Committees. To the extent not reimbursed by
---------------------------------
any applicable insurance policy, the Committees, the individual members thereof
and the secretary (if any) of each of the Committees shall be indemnified by the
Employers against any and all liabilities, losses, costs and expenses (including
legal fees and expenses) of whatsoever kind and nature which may be imposed on,
incurred by or asserted against any of them by reason of the performance of the
Committees' functions if the Committees or such members or secretary did not act
dishonestly or in willful violation of the law or regulation under which such
liability, loss, cost or expense arises.
12.9 Resignation or Removal of Committee Member. A Committee member may
------------------------------------------
resign at any time by giving ten days' advance written notice to the Company,
the Trustee and the other Committee members. The Company may remove a Committee
member by giving advance written notice to him and the other Committee members.
12.10 Appointment of Successor Committee Members. The Company may fill
------------------------------------------
any vacancy in the membership of the Committee and shall give prompt written
notice thereof to the other Committee members. While there is a vacancy in the
membership of the Committee, the remaining Committee members shall have the same
powers as the full Committee until the vacancy is filled.
SECTION 13
----------
Amendment and Termination
-------------------------
13.1 Amendment. While it is expected that the Plan will be continued, the
---------
Company nevertheless has the right to terminate the Plan or to amend it from
time to time, except that no amendment will reduce a Participant's interest in
the Plan to less than an amount equal to the amount he would have been entitled
to receive if he had resigned from the employ of the Employers and the Related
Companies on the day of the amendment, and no amendment will eliminate an
optional form of benefit with respect to a Participant or Beneficiary except as
otherwise permitted by law.
13.2 Termination. The Plan will terminate as to all of the Employers and
-----------
all employee groups on any day specified by the Company upon advance written
notice of the termination given to the Employers. Affected employees of an
Employer shall cease active participation in the Plan (and will be treated as
inactive participants in accordance with subsection 2.2) on the first to occur
of the following:
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<PAGE>
(a) the date on which that Employer ceases to be a contributing sponsor of
the Plan as to such employee group, by appropriate action communicated in
writing to the Company;
(b) as to all employee groups of the Employer, on the date that Employer
is judicially declared bankrupt or insolvent; or
(c) as to all employee groups of the Employer, upon the dissolution,
merger, consolidation, reorganization or sale of that Employer, or the
sale by that Employer of all or substantially all of its assets,
except that, subject to the provisions of subsection 13.3, with the
consent of the Company, in any such event arrangements may be made
whereby the Plan will be continued by any successor to that Employer
or any purchaser of all or substantially all of that Employer's
assets, in which case the successor or purchaser will be substituted
for the Employer under the Plan.
13.3 Merger and Consolidation of the Plan, Transfer of Plan Assets. The
-------------------------------------------------------------
Company in its discretion may direct the Trustee to transfer all or a portion of
the assets of this Plan to another defined contribution plan of the Employers or
Related Companies which is qualified under section 401(a) of the Code or, in the
event of the sale of stock of an Employer or all or a portion of the assets of
an Employer, to a qualified plan of an employer which is not a Related Company.
In the case of any merger or consolidation with, or transfer of assets and
liabilities to, any other plan, provisions shall be made so that each affected
Participant in the Plan on the date thereof (if the Plan, as applied to that
Participant, then terminated) would receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately prior to the merger,
consolidation or transfer if the Plan, as applied to him, had then terminated.
13.4 Distribution on Termination and Partial Termination. Upon
---------------------------------------------------
termination or partial termination of the Plan, all benefits under the Plan
shall continue to be paid in accordance with Section 10 as that Section may be
amended from time to time.
13.5 Notice of Amendment, Termination or Partial Termination. Affected
-------------------------------------------------------
Participants will be notified of an amendment, termination or partial
termination of the Plan as required by law.
-35-
<PAGE>
SUPPLEMENT A
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(As Amended and Restated Effective
January 1, 1997)
(Coshocton Employees)
<TABLE>
<S> <C>
Application A-1. This Supplement A to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
eligibility provisions applicable to Coshocton
Employees.
Definitions A-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement A.
Eligibility A-3. The one-year service requirement of paragraph
Provisions 2.1(a) of the Plan shall not apply to Coshocton
- ----------- Employees, and in lieu thereof, a Coshocton Employee
shall be required to complete his probationary period
of 45 working days.
Distribution A-4. The distribution provisions of Section 10 of the
Provisions Plan, as applicable to Coshocton Employees, are
- ------------ modified in the following respects:
(a) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Coshocton Employee who has
incurred a Termination Date and who is not subject
to the lump sum cash out provisions of paragraph
10.1(a) may elect to receive his distribution in
one of the following payment forms:
(i) by payment in a single lump sum of his
entire vested benefit; or
(ii) by payment of his vested benefit in a series
of monthly, installments over a period of
not less than two years and not more than
fifteen years. The
</TABLE>
-36-
<PAGE>
<TABLE>
<S> <C>
amount of each installment shall be equal to
the product of the Participant's vested
Account balances on such date multiplied by
a fraction, the numerator of which is one
and the denominator of which is the
difference between the number of
installments selected and the number of
installments previously paid; provided,
however, that the Participant may elect to
have his first installment paid in any
dollar amount specified by him, with the
balance of his installments payable under
the foregoing fractional rule.
</TABLE>
-37-
<PAGE>
SUPPLEMENT B
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(As Amended and Restated Effective
January 1, 1997)
(Davenport Employees)
<TABLE>
<S> <C>
Application B-1. This Supplement B to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
provisions applicable to Davenport Employees.
Definitions B-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement B.
Basic B-3. Notwithstanding the provisions of Sections 4 and
Contributions 5 of the Plan, the Davenport Employees described in
- ------------- subparagraphs (a) and (b) of this paragraph B-3 are
not required or permitted to make Basic Contributions
effective on and after the applicable date set forth
below, and shall not receive any Matching Contributions
under the Plan effective on and after such applicable
date. These Participants may, however, make unmatched
Supplemental Contributions to the Plan, subject to the
conditions and limitations of the Plan. The requirement
to make Basic Contributions and the right to receive
Matching Contributions are not applicable to
Participants described in subparagraph (a) effective
April 3, 1989, and are not applicable to Participants
described in subparagraph (b) effective May 1, 1992.
(a) A Participant is described in this subparagraph
(a) if he is a Davenport Employee who is at least
52 years of age or has at least 27 calendar years
of service as of March 1, 1989, and he elects,
during the 1989 election period and in accordance
with procedures established by the Committee, to
</TABLE>
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<TABLE>
<S> <C>
receive a higher pension amount under Pension Plan
No. 1 of Oscar Mayer Foods Corporation ("Pension
Plan No. 1") in lieu of receiving future matching
contributions under the Plan.
(b) A Participant is described in this subparagraph
(b) if he is a Davenport Employee who is at least
52 years of age or has at least 27 calendar years
of service as of April 5, 1992, he was not
eligible to or did not elect a higher pension
amount in 1989 (as described in subparagraph (a)
above), and he elects, during the election period
ending April 24, 1992 and in accordance with
procedures established by the Committee, to
receive a higher pension amount under Pension Plan
No. 1 in lieu of receiving future matching
contributions under the plan.
Distribution B-4. The distributions provisions of
Provisions Section 10 of the Plan, as applied to Davenport
- ------------ Employees, are modified in the following respects:
(a) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Davenport Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to receive his distribution in one of the
following payment forms:
(i) by payment in a single lump sum of his
entire vested benefit; or
(ii) by payment of his vested benefit in a series
of monthly, quarterly, semiannual or annual
installments over a period of not less than
two years and not more than fifteen years.
The amount of each installment shall be
equal to the product
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
of such Participant's vested Account
balances on such date multiplied by a
fraction, the numerator of which is one and
the denominator of which is the difference
between the number of installments selected
and the number of installments previously
paid; provided, however, that the
Participant may elect to have his first
installment paid in any dollar amount
specified by him, with the balance of his
installments payable under the foregoing
fractional rule.
(b) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Davenport Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to commence distribution of his Accounts from the
Plan as of any Accounting Date occurring on or
after his Termination Date but not later than the
date on which he attains age 70-1/2.
(c) Notwithstanding the provisions of subsection 10.2
of the Plan, if a Participant who is a Davenport
Employee dies after benefit payments to him have
commenced in the installment form provided under
subparagraph (a)(ii) of this paragraph B-4, the
vested balance, if any, of his Accounts shall
continue to be distributed to his Beneficiary in
accordance with the method of distribution
selected by the Participant; provided, however,
that the Beneficiary may elect to accelerate the
payments and to have such remaining vested
balances distributed in a lump sum payment as soon
as practicable after the Accounting Date next
following the date the Beneficiary's acceleration
</TABLE>
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<PAGE>
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<S> <C>
election is filed with the Committee.
In all other respects the distribution provisions of
Section 10 shall continue to apply to Davenport
Employees.
Changes to Basic B-5. Notwithstanding the provisions of subsection
and Supplemental 4.5 of the Plan, if a Davenport Employee wishes to
Contributions change his Basic Contributions from before-tax to
- ----------------- after-tax, or vice-versa, he may change his election
effective as of the next January 1 or July 1. If a
Davenport Employee wishes to vary the amount of his
Supplemental Contributions, he may change his election,
in accordance with procedures established by the
Committee, effective as of the next January 1 or July
1. If a Davenport Employee wishes to prospectively
revoke his election to make Supplemental Contributions
he may do so at any time during the year in accordance
with procedures established by the Committee. Such
revocation shall remain in effect until such time as
the Davenport Employee elects to resume such
contributions, effective as of any subsequent January 1
or July 1, by filing a new election with the Committee
in advance of such date.
</TABLE>
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<PAGE>
SUPPLEMENT C
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(As Amended and Restated Effective
January 1, 1997)
(Madison Employees)
<TABLE>
<S> <C>
Application C-1. This Supplement C to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
provisions applicable to Madison Employees.
Definitions C-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement C.
Distribution C-3. The distributions provisions of Section 10 of
Provisions the Plan, as applied to Madison Employees, are
- ------------ modified in the following respects:
(a) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Madison Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to receive his distribution in one of the
following payment forms:
(i) by payment in a single lump sum of his
entire vested benefit; or
(ii) by payment of his vested benefit in a series
of monthly, quarterly, semiannual or annual
installments over a period of not less than
two years and not more than fifteen years.
The amount of each installment shall be
equal to the product of such Participant's
vested Account balances on such dated
multiplied by a fraction, the numerator of
which is one and
</TABLE>
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<PAGE>
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<S> <C>
the denominator of which is the difference
between the number of installments selected
and the number of installments previously
paid; provided, however, that the
Participant may elect to have his first
installment paid in any dollar amount
specified by him, with the balance of his
installments payable under the foregoing
fractional rule.
(b) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Madison Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to commence distribution of his Accounts from the
Plan as of any Accounting Date occurring on or
after his Termination Date but not later than the
date on which he attains age 70- 1/2.
(c) Notwithstanding the provisions of subsection 10.2
of the Plan, if a Participant who is a Madison
Employee dies after benefit payments to him have
commenced in the installment form provided under
subparagraph (a)(ii) of this paragraph C-3, the
vested balance, if any, of his Accounts shall
continue to be distributed to his Beneficiary in
accordance with the method of distribution
selected by the Participant; provided, however,
that the Beneficiary may elect to accelerate the
payments and to have such remaining vested
balances distributed in a lump sum payment as soon
as practicable after the Accounting Date next
following the date the Beneficiary's acceleration
election is filed with the Committee.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
In all other respects the distribution provisions of
Section 10 shall continue to apply to Madison
Employees.
Basic C-4. Notwithstanding the provisions of Sections 4 and
Contributions 5 of the Plan, the Madison Employees described in the
- ------------- next sentence of this paragraph C-4 are not required
or permitted to make Basic Contributions and shall not
receive any Matching Contributions under the Plan, all
effective as of May 1, 1996. These Participants may,
however, make unmatched Supplemental Contributions to
the Plan, subject to the conditions and limitations of
the Plan. The provisions of this paragraph C-4 apply to
a Participant if he is a Madison Employee who is at
least 50 years of age or has at least 25 calendar years
of service as of April 1, 1996, and he elects, during
the election period ending April 30, 1996 and in
accordance with procedures established by the
Committee, to receive a higher pension amount under
Pension Plan No. 1 of Oscar Mayer Foods Corporation
("Pension Plan No. 1") in lieu of receiving future
matching contributions under this Plan.
[Dual Coverage C-5. Subject to the conditions and limitations of
Contributions. Section 8, for each Plan Year the Company shall make a
- ------------- "DUAL COVERAGE CONTRIBUTION" to the Plan on behalf of
each Participant described in paragraph (a) next below,
in the amount set forth in paragraph (b) next below.
(a) A Participant is described in this paragraph (a)
if:
(i) he is a Madison Employee;
(ii) he does not receive the health insurance
coverage which would otherwise be provided
to him by the Company during all or a
portion of the Plan Year as a result of
alternate health insurance coverage provided
through his spouse; and
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(iii) he does not, on account of such alternate
health insurance coverage, receive a Company
contribution to a dependent care
reimbursement plan sponsored by the Company.
(b) The amount of Dual Coverage Contribution made for
any Participant for any Plan Year shall be equal
to $50 for each month during such Plan Year that
the Participant meets the conditions set forth in
subparagraph (a) of this paragraph C-5, up to a
maximum of $600 for any Plan Year.
(c) The limitations and payment provisions of
subsections 5.2 and 5.3 of the Plan shall apply to
Dual Coverage Contributions. In addition to the
Accounts described at subsection 7.1 of the Plan,
the Committee shall maintain or cause to be
maintained a "Dual Coverage Account" for any
Participant for whom Dual Coverage Contributions
are made, which account shall reflect the Dual
Coverage Contributions made on his behalf and the
income, losses, appreciation and depreciation
attributable thereto. A Participant shall at all
times have a fully vested, nonforfeitable interest
in his Dual Coverage Account.]
</TABLE>
-45-
<PAGE>
SUPPLEMENT D
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(Woodstock Employees)
<TABLE>
<S> <C>
Application D-1. This Supplement D to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
provisions applicable to Woodstock Employees.
Definitions D-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement D.
Distribution D-3. The distribution provisions of Section 10 of the
Provisions Plan, as applied to Woodstock Employees, are modified
- ------------ in the following respects:
(a) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Woodstock Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to receive his distribution in one of the
following payment forms:
(i) by payment in a single lump sum of his
entire vested benefit; or
(ii) by payment of his vested benefit in a series
of monthly, quarterly, semiannual or annual
installments over a period of not less than
two years and not more than fifteen years.
The amount of each installment shall be
equal to the product of such Participant's
vested Account balances on such date
multiplied by a fraction, the numerator of
which is one and the denominator of which is
the difference between the number of
installments selected and the number of
installments
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
previously paid; provided, however, that the
Participant may elect to have his first
installment paid in any dollar amount
specified by him, with the balance of his
installments payable under the foregoing
fractional rule.
(b) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Woodstock Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to commence distribution of his Accounts from the
Plan as of any Accounting Date occurring on or
after his Termination Date but not later than the
date on which he attains age 70-1/2.
(c) Notwithstanding the provisions of subsection 10.2
of the Plan, if a Participant who is a Woodstock
Employee dies after benefit payments to him have
commenced in the installment form provided under
subparagraph (a)(ii) of this paragraph D-3, the
vested balance, if any, of his Accounts shall
continue to be distributed to his Beneficiary in
accordance with the method of distribution
selected by the Participant; provided, however,
that the Beneficiary may elect to accelerate the
payments and to have such remaining vested
balances distributed in a lump sum payment as soon
as practicable after the Accounting Date next
following the date the Beneficiary's acceleration
election is filed with the Committee. In all
other respects the distribution provisions of
Section 10 shall continue to apply to Woodstock
Employees.
</TABLE>
-47-
<PAGE>
SUPPLEMENT E
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(Nashville Employees)
<TABLE>
<S> <C>
Application E-1. This Supplement E to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
provisions applicable to those Participants who
continue to have Accounts under the Plan as of the
Effective Date and who previously were employed at the
Oscar Mayer plant in Nashville, Tennessee and were in
the collective bargaining unit whose collective
bargaining representative was Local 405 of the United
Food and Commercial Workers International Union, AFL-
CIO ("Nashville Employees").
Definitions E-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement E.
Distribution E-3. The distribution provisions of Section 10 of the
Provisions Plan, as applied to Nashville Employees, are modified
- ------------ in the following respects:
(a) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Nashville Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to receive his distribution in one of the
following payment forms:
(i) by payment in a single lump sum of his
entire vested benefit; or
(ii) by payment of his vested benefit in a series
of monthly, quarterly, semiannual or annual
installments over a period of not less than
two years and not more than fifteen years.
The
</TABLE>
-48-
<PAGE>
<TABLE>
<S> <C>
amount of each installment shall be equal to
the product of such Participant's vested
Account balances on such date multiplied by
a fraction, the numerator of which is one
and the denominator of which is the
difference between the number of
installments selected and the number of
installments previously paid; provided,
however, that the Participant may elect to
have his first installment paid in any
dollar amount specified by him, with the
balance of his installments payable under
the foregoing fractional rule.
(b) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Nashville Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to commence distribution of his Accounts from the
Plan as of any Accounting Date occurring on or
after his Termination Date but not later than the
date on which he attains age 70-1/2.
(c) Notwithstanding the provisions of subsection 10.2
of the Plan, if a Participant who is a Nashville
Employee dies after benefit payments to him have
commenced in the installment form provided under
subparagraph (a)(ii) of this paragraph E-3, the
vested balance, if any, of his Accounts shall
continue to be distributed to his Beneficiary in
accordance with the method of distribution
selected by the Participant; provided, however,
that the Beneficiary may elect to accelerate the
payments and to have such remaining vested
balances distributed in a lump sum payment as soon
as practicable after the Accounting Date next
following the
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
date the Beneficiary's acceleration election is
filed with the Committee.
In all other respects the distribution provisions of
Section 10 shall continue to apply to Nashville
Employees.
Vesting E-4. Any Participant who is a Nashville Employee whose
- ------- employment terminates due to the closure of the
Nashville plant and who is eligible for the contractual
separation allowance described in Article 25 of the
1990-1993 Labor Agreement with Local 405, United Food
and Commercial Workers International Union, AFL-CIO,
shall have a fully vested nonforfeitable interest in
all his Accounts effective upon his termination date.
</TABLE>
-50-
<PAGE>
SUPPLEMENT F
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(Sherman Employees)
<TABLE>
<S> <C>
Application F-1. This Supplement F to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
provisions applicable to Sherman Employees.
Definitions F-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement F.
Distribution F-3. The distribution provisions of Section 10 of the
Provisions Plan, as applied to Sherman Employees, are modified in
- ------------ the following respects:
(a) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Sherman Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to receive his distribution in one of the
following payment forms:
(i) by payment in a single lump sum of his
entire vested benefit; or
(ii) by payment of his vested benefit in a series
of monthly, quarterly, semiannual or annual
installments over a period of not less than
two years and not more than fifteen years.
The amount of each installment shall be
equal to the product of such Participant's
vested Account balances on such date
multiplied by a fraction, the numerator of
which is one and the denominator of which is
the difference between the number of
installments selected and the number of
installments
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
previously paid; provided, however, that the
Participant may elect to have his first
installment paid in any dollar amount
specified by him, with the balance of his
installments payable under the foregoing
fractional rule.
(b) Notwithstanding the provisions of paragraph
10.1(b) of the Plan, a Participant who is a
Sherman Employee who has incurred a Termination
Date and who is not subject to the lump sum
cashout provisions of paragraph 10.1(a) may elect
to commence distribution of his Accounts from the
Plan as of any Accounting Date occurring on or
after his Termination Date but not later than the
date on which he attains age 70-1/2.
(c) Notwithstanding the provisions of subsection 10.2
of the Plan, if a Participant who is a Sherman
Employee dies after benefit payments to him have
commenced in the installment form provided under
subparagraph (a)(ii) of this paragraph F-3, the
vested balance, if any, of his Accounts shall
continue to be distributed to his Beneficiary in
accordance with the method of distribution
selected by the Participant; provided, however,
that the Beneficiary may elect to accelerate the
payments and to have such remaining vested
balances distributed in a lump sum payment as soon
as practicable after the Accounting Date next
following the date the Beneficiary's acceleration
election is filed with the Committee.
In all other respects the distribution provisions of
Section 10 shall continue to apply to Sherman
Employees.
</TABLE>
-52-
<PAGE>
SUPPLEMENT G
TO
LONG TERM SAVINGS PLAN FOR UNION EMPLOYEES
------------------------------------------
(As Amended and Restated Effective
January 1, 1997)
(Farmdale Employees)
<TABLE>
<S> <C>
Application G-1. This Supplement G to Long Term Savings Plan for
- ----------- Union Employees (the "Plan") sets forth special
enrollment and election provisions applicable to
Farmdale Employees.
Definitions G-2. Unless the context clearly implies or indicates
- ----------- the contrary, a word, term or phrase used or defined in
the Plan is similarly used or defined for purposes of
this Supplement G.
Election G-3. Each Farmdale Employee who is eligible to
Requirements participate in the Plan is required to make an
for Participation election to participate prior to his commencement of
- ----------------- participation in the Plan. An election to participate
shall require that the eligible employee elect to make
Supplemental Contributions as provided under subsection
4.2 of the Plan. If a Farmdale Employee does not
properly elect to make Supplemental Contributions and
commence participation in the Plan at the time he first
becomes eligible to do so, he may elect to commence
participation in the Plan effective as of any
subsequent January 1 by filing a proper election form
with the Committee in advance of such January 1 date.
</TABLE>
-53-
<PAGE>
EXHIBIT 5
[LETTERHEAD OF HUNTON & WILLIAMS]
January 30, 1997
The Board of Directors
Philip Morris Companies Inc.
120 Park Avenue
New York, New York 10017-5592
PHILIP MORRIS COMPANIES INC.
REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Philip Morris Companies Inc., a Virginia
corporation (the "Company"), in connection with the preparation and filing of a
registration statement on Form S-8 under the Securities Act of 1933, as amended,
with respect to 400,000 shares of the Company's Common Stock, $1.00 par value
(the "Shares"), to be offered pursuant to the Oscar Mayer Foods Corporation Long
Term Savings Plan for Union Employees (the "Plan"), together with an
indeterminate amount of interests in the Plan (the "Interests").
In rendering this opinion, we have relied upon, among other things,
our examination of the Plan and such records of the Company and certificates of
its officers and of public officials as we have deemed necessary.
Based upon the foregoing and the further qualifications stated below,
we are of the opinion that:
1. the Company is duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Virginia; and
2. the Shares have been duly authorized and, when distributed in
accordance with the terms of the Plan, will be legally issued, fully paid and
non-assessable, and the Interests, when issued in accordance with the terms of
the Plan, will be legally issued, fully paid and non-assessable and will
constitute the binding obligations of the Company.
<PAGE>
January 30, 1997
Page 2
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to such registration statement.
Very truly yours,
/s/ Hunton & Williams
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Philip Morris Companies Inc. (the "Company") on Form S-8 of our report, dated
January 27, 1997, on our audits of the consolidated financial statements of the
Company as of December 31, 1996 and 1995, and for each of the three years in the
period ended December 31, 1996, which report is included in the Company's
Current Report on Form 8-K, dated January 30, 1997. We also consent to the
incorporation by reference of our reports, dated January 29, 1996, on our audits
of the consolidated financial statements and financial statement schedule of the
Company as of December 31, 1995 and 1994, and for each of the three years in the
period ended December 31, 1995, which reports are included or incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
/s/ COOPERS & LYBRAND L.L.P.
New York, New York
January 30, 1997
