Document:

<PAGE>

                                                                Exhibit 10.5
                                                                ------------

                               KRAFT FOODS INC.

            2001 STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

SECTION 1.  Purpose; Definitions.

The purposes of the Plan are (i) to assist the Company in promoting a greater
identity of interest between the Company's Non-Employee Directors and the
Company's shareholders; and (ii) to assist the Company in attracting and
retaining Non-Employee Directors by affording them an opportunity to share in
the future successes of the Company.

For purposes of the Plan, the following terms are defined as set forth below:

      a.    "Award" means the grant under the Plan of Stock and Stock Options.

      b.    "Black-Scholes Value" means the value of a Stock Option determined
      pursuant to the option pricing model commonly known as the Black-Scholes
      method. The Black-Scholes Value shall be calculated as of the first day of
      the Plan Year, based on the applicable assumptions used in calculating
      values of stock options in the Company's then current annual meeting proxy
      statement and/or annual report with such adjustments as may be necessary
      to reflect different grant dates and terms.

      c.    "Board" means the Board of Directors of the Company.

      d.    "Committee" means the Compensation and Governance Committee of the
      Board or a subcommittee thereof, any successor thereto or such other
      committee or subcommittee as may be designated by the Board to administer
      the Plan.

      e.    "Common Stock" or "Stock" means the Class A Common Stock of the
      Company.

      f.    "Company" means Kraft Foods Inc., a corporation organized under the
      laws of the Commonwealth of Virginia, or any successor thereto.

      g.    "Deferred Stock" means an entry on the books and records of the
      Company in an amount equal to the value of one notional unit in the Kraft
      Stock Fund.

      h.    "Deferred Stock Account" means the unfunded deferred compensation
      account established by the Company with respect to each participant who
      elects to participate in the Deferred Stock Program in accordance with
      Section 7 of the Plan.

      i.    "Deferred Stock Program" means the provisions of Section 7 of the
      Plan that permit participants to defer all or part of any Award of Stock
      pursuant to Section 5(a)(i) of the Plan.

      j.    "Fair Market Value" means, as of any given date, the mean between
      the highest and lowest reported sales prices of the Common Stock on the
      New York Stock Exchange-
<PAGE>

         Composite Transactions or, if no such sale of Common Stock is reported
         on such date, the fair market value of the Stock as determined by the
         Committee in good faith; provided, however, that the Committee may in
         its discretion designate the actual sales price as Fair Market Value in
         the case of dispositions of Common Stock under the Plan.

      k.    "Kraft Stock Fund" means the Kraft Stock Fund of the Kraft Foods
      Thrift Plan, as amended from time to time. If the Kraft Foods Thrift Plan
      does not have a Kraft Foods Stock Fund in effect on any relevant date,
      earnings, losses and other adjustments required under the Deferred Stock
      Program shall be determined in the same manner as under the Philip Morris
      Companies Inc. stock fund under the Kraft Foods Thrift Plan except that
      Common Stock shall be used as the investment measure.

      l.    "Non-Employee Director" means each member of the Board who is not a
      full-time employee of the Company or Philip Morris Companies Inc. or of
      any corporation in which the Company or Philip Morris Companies Inc. owns,
      directly or indirectly, stock possessing at least 50% of the total
      combined voting power of all classes of stock entitled to vote in the
      election of directors in such corporation.

      m.    "Plan" means this 2001 Stock Compensation Plan for Non-Employee
      Directors, as amended from time to time.

      n.    "Plan Year" means the period commencing at the opening of business
      on the day on which the Company's annual meeting of stockholders is held
      and ending on the day immediately preceding the day on which the Company's
      next annual meeting of stockholders is held.

      o.    "Stock Option" means the right to purchase a share of Stock at a
      price equal to Fair Market Value on the date of grant. All Stock Options
      granted under the Plan shall be nonqualified stock options.

SECTION 2.  Administration.

The Plan shall be administered by the Committee, which shall have the power to
interpret the Plan and to adopt such rules and guidelines for carrying out the
Plan as it may deem appropriate. The Committee shall have the authority to adopt
such modifications, procedures and subplans as may be necessary or desirable to
comply with the laws, regulations, compensation practices and tax and accounting
principles of the countries in which Non-Employee Directors reside or are
citizens of and to meet the objectives of the Plan.

Any determination made by the Committee in accordance with the provisions of the
Plan with respect to any Award shall be made in the sole discretion of the
Committee, and all decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.

                                       2
<PAGE>

SECTION 3.  Eligibility.

Only Non-Employee Directors shall be granted Awards under the Plan.

SECTION 4.  Common Stock Subject to the Plan.

The total number of shares of Common Stock reserved and available for
distribution pursuant to the Plan shall be 500,000 shares. If any Stock Option
is forfeited or expires without the delivery of Common Stock to a participant,
the shares subject to such Stock Option shall again be available for
distribution in connection with other Awards under the Plan. Any shares of
Common Stock that are used by a participant as full or partial payment of
withholding or other taxes or as payment for the exercise price of a Stock
Option shall be available for distribution in connection with other Awards under
the Plan.

In the event of any merger, share exchange, reorganization, consolidation,
recapitalization, reclassification, distribution, stock dividend, stock split,
reverse stock split, split-up, spin-off, issuance of rights or warrants or other
similar transaction or event affecting the Common Stock after the initial public
offering of the Common Stock, the Board is authorized, to the extent it deems
appropriate, to make substitutions or adjustments in the aggregate number and
kind of shares of Common Stock reserved for issuance under the Plan, in the
number, kind and price of shares of Common Stock subject to outstanding Awards
and in the Award limits set forth in Section 5 (or to make provision for cash
payments to the holders of Awards).

SECTION 5.  Awards.

(a)   Award Dates. Effective upon an individual's initial election or
appointment as a Non-Employee Director and on the first day of each Plan Year
thereafter, each Non-Employee Director serving as such immediately after the
annual meeting held on such day shall be awarded the following:

      (i)      a grant of that number of shares of Stock having an aggregate
      Fair Market Value on the date of grant equal to $30,000 (with any
      fractional share being rounded up to the next whole share); and

      (ii)     a grant of Stock Options to purchase that number of shares of
      Stock equal to the number derived from dividing $30,000 by the Black-
      Scholes Value of each such Stock Option (with any fractional share being
      rounded up to the next whole share).

(b)   Terms of Awards.

      (i)      Awards pursuant to Section 5(a)(i) are eligible for participation
      in the Deferred Stock Program described in Section 7. Subject to the
      limitations of applicable securities laws, shares of Common Stock awarded
      pursuant to Section 5(a)(i) shall be immediately transferable and vested
      and nonforfeitable.

                                       3
<PAGE>

      (ii)     The term of each Stock Option shall be ten years. Subject to the
      applicable Award agreement, Stock Options may be exercised, in whole or in
      part, by giving written notice of exercise specifying the number of shares
      to be purchased. Such notice shall be accompanied by payment in full of
      the purchase price by certified or bank check or such other instrument as
      the Company may accept (including a copy of instructions to a broker or
      bank acceptable to the Company to deliver promptly to the Company an
      amount of sale or loan proceeds sufficient to pay the purchase price). As
      determined by the Committee, payment in full or in part may also be made
      in the form of Common Stock already owned by the Non-Employee Director
      valued at Fair Market Value; provided, however, that such Common Stock
      shall not have been acquired by the optionee within the preceding six
      months.

SECTION 6.  Plan Amendment and Termination.

The Board may amend or terminate the Plan at any time, provided that no such
amendment shall be made without stockholder approval if such approval is
required under applicable law, or if such amendment would: (i) decrease the
grant or exercise price of any Stock Option to less than the Fair Market Value
on the date of grant or (ii) increase the total number of shares of Common Stock
that may be distributed under the Plan. Except as may be necessary to comply
with a change in the laws, regulations or accounting principles of a foreign
country applicable to participants subject to the laws of such foreign country,
the Committee may not, without stockholder approval, cancel any option and
substitute therefor a new Stock Option with a lower option price. Except as set
forth in any Award agreement, no amendment or termination of the Plan may
materially and adversely affect any outstanding Award under the Plan without the
Award recipient's consent.

SECTION 7.  Payments and Payment Deferrals.

The Committee, either at the time of grant or by subsequent amendment, may
require or permit deferral of the payment of Awards under such rules and
procedures as it may establish. It also may provide that deferred settlements
include the payment or crediting of interest or other earnings on the deferred
amounts, or the payment or crediting of dividend equivalents where the deferred
amounts are denominated in Common Stock equivalents.

Each participant may elect to participate in a Deferred Stock Program with
respect to Awards granted under Section 5(a)(i). Any election to have the
Company establish a Deferred Stock Account shall be made in terms of integral
multiples of 25% of the value of the Common Stock that the participant otherwise
would have received on each date of grant and any such election shall remain in
effect for purposes of the Plan until the participant executes a new election
not to participate in the Deferred Stock Program for any future grants of Common
Stock. The Deferred Stock Account of a participant who elects to participate in
the Deferred Stock Program shall be credited with that number of shares of
Deferred Stock that is equal to the number of shares in the Stock Award that the
participant elected to receive as Deferred Stock. The Deferred Stock Account
shall be credited with earnings and charged with losses, if any, and shall be
subject to other adjustments on the same basis as the Kraft Stock Fund. The
Deferred Stock Program shall

                                       4
<PAGE>

otherwise be administered under such rules and procedures as the Committee may,
from time to time establish, including rules with respect to elections to defer,
beneficiary designations and distributions under the Deferred Stock Program.

SECTION 8.  Transferability.

Unless otherwise required by law, Awards shall not be transferable or assignable
other than by will or the laws of descent and distribution.

SECTION 9.  Award Agreements.

Each Award of a Stock Option under the Plan shall be evidenced by a written
agreement (which need not be signed by the Award recipient unless otherwise
specified by the Committee) that sets forth the terms, conditions and
limitations for each such Award. Each Stock Option shall vest i.e., become
                                                              ---
exercisable, in not less than six months (or such longer period set forth in the
Award agreement) and shall be forfeited if the participant does not continue to
be a Non-Employee Director for the duration of the vesting period. The Committee
may amend an Award agreement, provided that no such amendment may materially and
adversely affect an Award without the Award recipient's consent.

SECTION 10. Unfunded Status Plan.

It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

SECTION 11. General Provisions.

(a)   The Committee may require each person acquiring shares of Common Stock
pursuant to an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to the distribution thereof.
The certificates for such shares may include any legend that the Committee deems
appropriate to reflect any restrictions on transfer.

All certificates for shares of Common Stock or other securities delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission (or any successor
agency), any stock exchange upon which the Common Stock is then listed, and any
applicable Federal, state or foreign securities law, and the Committee may cause
a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

(b)   Nothing contained in the Plan shall prevent the Company from adopting
other or additional compensation arrangements for Non-Employee Directors.

                                       5
<PAGE>

(c)   No later than the date as of which an amount first becomes includible in
the gross income of the participant for income tax purposes with respect to any
Award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any Federal,
state, local or foreign taxes of any kind which are required by law or
applicable regulation to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations arising from an
Award may be settled with Common Stock, including Common Stock that is part of,
or is received upon exercise of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the participant. The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for the settling of
withholding obligations with Common Stock.

(d)   The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia.

(e)   If any provision of the Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of the Plan,
and the Plan shall be enforced and construed as if such provision had not been
included.

(f)   The Plan shall be effective upon approval by Philip Morris Companies Inc.
in its capacity as the Company's sole shareholder. Except as otherwise provided
by the Board, no Awards shall be made after the Awards made immediately
following the 2006 Annual Meeting of Stockholders, provided that any Awards
granted prior to that date may extend beyond it.

                                       6<PAGE>

                                                                 Exhibit 10.6.1
                                                                 --------------

                              EMPLOYMENT AGREEMENT
                              --------------------

      AGREEMENT by and between Philip Morris Companies Inc., a Virginia
corporation (the "Company") and ________________ (the "Executive"), dated as of
the ___ day of _____, ______.

      The Board of Directors of the Company (the "Board"), has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

      NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

      1.   Certain Definitions. (a)   The "Effective Date" shall mean the first
           -------------------
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated or the Executive ceases to
be [state position] prior to the date on which the Change of Control occurs, and
if it is reasonably demonstrated by the Executive that such termination of
employment or cessation of status as [state position] (i) was at the request of
a third party who has taken steps reasonably calculated to effect a Change of
Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control (an event described in (i) or (ii) above being hereinafter referred
to as a "Potential Change of Control"), then for all purposes of this Agreement
the "Effective Date" shall mean the date immediately prior to the date of such
termination of employment or cessation of status as [state position].

         (b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the earliest to occur of (x) any date prior to the
Effective Date on which the Executive ceases to hold the position [state
position], (y) the third anniversary of the date hereof, and (z) the Executive's
normal retirement date (the "Normal Retirement Date") under the Kraft Retirement
Plan (the "Retirement Plan"); provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), unless previously terminated, the Change of Control Period
shall be automatically extended so as to terminate three years from such Renewal
Date, unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change of Control Period shall not be so
extended.

      2.   Change of Control. For the purpose of this Agreement, a "Change of
           -----------------
Control" shall mean:

                                       1
<PAGE>

         (a)   The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or

         (b)   Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

         (c)   Approval by the shareholders of the Company of a reorganization,
merger, share exchange or consolidation (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 80% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

          (d)  Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
more than 80% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in

                                       2
<PAGE>

substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) less than 20% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities prior to the sale
or disposition and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board, providing
for such sale or other disposition of assets of the Company or were elected,
appointed or nominated by the Board.

      3.  Employment Period. The Company hereby agrees to continue the Executive
          -----------------
in its employ, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the earlier to occur of (x) the
third anniversary of such date and (y) the Executive's Normal Retirement Date
(the "Employment Period").

      4.  Terms of Employment. (a) Position and Duties.
          -------------------      -------------------

               (i)    During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.

               (ii)   During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.

          (b)  Compensation.    (i) Base  Salary.   During the
               -------------        -------------
Employment Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary
which has been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the Employment Period, the
Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually and shall be first increased no more than 12 months
after the last salary increase awarded to the

                                       3
<PAGE>

Executive prior to the Effective Date and thereafter at least annually by the
highest of (x) 7%, (y) the average increase (excluding promotional increases) in
base salary awarded to the Executive for each of the three full fiscal years
(annualized in the case of any fiscal year consisting of less than twelve full
months or during which the Executive was employed for less than twelve months)
prior to the Effective Date, and (z) the percentage increase (excluding
promotional increases) in base salary generally awarded to peer executives of
the Company and its affiliated companies for the year of determination. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.

          (ii)   Annual Bonus. In addition to Annual Base Salary, the Executive
                 ------------
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus"), in cash at least equal to the higher of (x)
the average of the three highest bonuses paid or payable, including any bonus or
portion thereof which has been earned but deferred, to the Executive by the
Company and its affiliated companies in respect of the five fiscal years
immediately preceding the fiscal year in which the Effective Date occurs
(annualized for any fiscal year during such period consisting of less than
twelve full months or with respect to which the Executive has been employed by
the Company for less than twelve full months) and (y) the bonus paid or payable
(annualized as described above), including any bonus or portion thereof which
has been earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the most recently completed fiscal year prior to the
Effective Date (such higher amount being referred to as the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the receipt of such
Annual Bonus.

          (iii)  Incentive, Savings and Retirement Plans. During the Employment
                 ---------------------------------------
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.

          (iv)   Welfare Benefit Plans. During the Employment Period, the
                 ---------------------
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.

                                       4
<PAGE>

               (v)      Expenses. During the Employment Period, the Executive
                        --------
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.

               (vi)     Fringe Benefits. During the Employment Period, the
                        ---------------
Executive shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if applicable,
use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.

               (vii)    Office and Support Staff. During the Employment Period,
                        ------------------------
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.

               (viii)   Vacation. During the Employment Period, the Executive
                        --------
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.

      5.   Termination of Employment. (a) Death or Disability. The Executive's
           -------------------------      -------------------
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to full-
time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).

           (b)   Cause. The Company may terminate the Executive's employment
                 -----
during the Employment Period for Cause. For the sole and exclusive purposes of
this Agreement, "Cause" shall mean:

                                       5
<PAGE>

               (i)    the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially performed
the Executive's duties, or

               (ii)   the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company.

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.

          (c)  Good Reason. The Executive's employment may be terminated by the
               -----------
Executive for Good Reason. For the sole and exclusive purposes of this
Agreement, "Good Reason" shall mean:

               (i)    the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;

               (ii)   any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

               (iii)  the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof or the
Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;

               (iv)   any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or

               (v)    any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.

                                       6
<PAGE>

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all purposes of
this Agreement.

          (d)  Notice of Termination. Any termination by the Company for Cause,
               ---------------------
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.

          (e)  Date of Termination. "Date of Termination" means (i) if the
               -------------------
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.

      6.  Obligations of the Company upon Termination. (a) Good Reason; Other
          -------------------------------------------      ------------------
Than for Cause, Death or Disability. If, during the Employment Period, the
-----------------------------------
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:

                    (i)  the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:

                              A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not theretofore paid, (2)
the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual
Bonus paid or payable, including any bonus or portion thereof which has been
earned but deferred (and annualized for any fiscal year consisting of less than
twelve full months or during which the Executive was employed for less than
twelve full months), for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred to as the "Highest
Annual Bonus") and (y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and the denominator
of which is 365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and

                                       7
<PAGE>

                              B. the amount equal to the product of (1) two and
one-half and (2) the sum of (x) the Executive's Annual Base Salary and (y) the
Highest Annual Bonus and (3) a fraction, the numerator of which is the number of
full months from the Date of Termination until the Executive's Normal Retirement
Date but which shall be no greater than thirty (30), and the denominator of
which is thirty (30); and

                              C. an amount equal to the difference between (a)
the actuarial equivalent of the benefit (utilizing actuarial assumptions no less
favorable to the Executive than those in effect under the Retirement Plan
immediately prior to the Effective Date, except as specified below with respect
to increases in base salary and annual bonus) under the Retirement Plan and any
excess or supplemental retirement plan in which the Executive participates
(together, the "SERP") which the Executive would receive if the Executive's
employment continued for two and one-half years after the Date of Termination
assuming for this purpose that all accrued benefits are fully vested, and,
assuming that (1) the Executive's base salary increased on an annualized basis
during the two and one-half year period by the amount required by Section
4(b)(i) (in the case of Section 4(b)(i)(z) based on increases (excluding
promotional increases) in base salary for the most recently completed fiscal
year prior to the Date of Termination) had the Executive remained employed, and
(2) the Executive's annual bonus (annualized for any fiscal year consisting of
less than twelve full months or during which the Executive was employed for less
than twelve full months) in each of the two and one-half years (on an annualized
basis) bears the same proportion to the Executive's base salary in such year or
fraction thereof as it did for the last full year prior to the Date of
Termination, and (b) the actuarial equivalent of the Executive's actual benefit
(paid or payable), if any, under the Retirement Plan and the SERP as of the Date
of Termination;

                       (ii)   for two and one-half years after the Executive's
Date of Termination, or such longer period as may be provided by Section
6(a)(iii) with respect to the benefits covered thereby or by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) and Section 4(b)(vi) of
this Agreement if the Executive's employment had not been terminated in
accordance with the most favorable plans, practices, programs or policies of the
Company and its affiliated companies applicable generally to other peer
executives and their families during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families, provided, however, that
if the Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer provided plan,
the medical and other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to
have remained employed until two and one-half years after the Date of
Termination and to have retired on the last day of such period;

                       (iii)  if two and one-half years after the Executive's
Date of Termination, the Executive would be at least 55 years old and eligible
for retirement benefits (including, without limitation, early retirement
benefits) under the Retirement Plan (assuming continuous service with the
Company during such two and one-half year period), the Company shall continue
lifetime medical, dental and life insurance benefits (including supplemental
benefits) to the Executive and/or the Executive's family at least equal to those
that would have been provided to them in accordance with the plans, programs and
policies described in Section 4(b)(iv) of this Agreement (except the Company's
business travel accident plans) if the Executive's employment had not been
terminated, if and as in effect at any time during the 120-

                                       8
<PAGE>

day period immediately preceding the Effective Date with respect to other peer
executives and their families or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other peer executives and their
families; provided, however, that, in the event that the Executive becomes
reemployed with another employer, whether or not such employer is related to the
Corporation or any of its affiliates, and is eligible to receive medical or
other welfare benefits under any employer-sponsored plan, the medical and other
welfare benefits described herein shall be the secondary coverage for such
applicable period of eligibility;

               (iv)    the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and provider of which
shall be selected by the Executive in his sole discretion; and

               (v)     to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies, including, without limitation, any
amounts payable pursuant to Section 4(b)(iii) (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits").

          (b)  Death. If the Executive's employment is terminated by reason of
               -----
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.

          (c)  Disability. If the Executive's employment is terminated by reason
               ----------
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of the Company
and its affiliated companies and their families.

          (d)  Cause: Other than for Good Reason. If the Executive's employment
               ---------------------------------
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation

                                       9
<PAGE>

previously deferred by the Executive, and (z) Other Benefits, in each case to
the extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination.

      7.    Non-exclusivity of Rights. Nothing in this Agreement shall prevent
            -------------------------
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

      8.    Full Settlement. The Company's obligation to make the payments
            ---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").

      9.    Certain Additional Payments by the Company.
            ------------------------------------------

            (a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

            (b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by
PricewaterhouseCoopers or such other certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall

                                       10
<PAGE>

provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company to the Executive within five days
of the Accounting Firm's determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

         (c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

              (i)    give the Company any information reasonably requested by
the Company relating to such claim,

              (ii)   take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

              (iii)  cooperate with the Company in good faith in order
effectively to contest such claim, and

              (iv)   permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or

                                       11
<PAGE>

contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

     10.  Confidential Information. The Executive shall hold in a fiduciary
          ------------------------
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

     11.  Successors. (a) This Agreement is personal to the Executive and
          ----------
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

                                       12
<PAGE>

          (c)  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

     12.  Miscellaneous. (a) This Agreement shall be governed by and construed
          -------------
in accordance with the laws of the Commonwealth of Virginia, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

          (b)  All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

          If to the Executive:
          -------------------

          If to the Company:
          -----------------

          Philip Morris Companies Inc.
          120 Park Avenue
          New York, N.Y. 10017
          Attention:  General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

          (c)  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          (d)  The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

          (e)  The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i) - (v) of this Agreement,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

                                       13
<PAGE>

          (f)  The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, prior to the Effective Date, may be terminated by either the Executive or
the Company at any time. Moreover, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates or (ii) the Executive ceases
to be [state position], except, in each case in connection with a Potential
Change of Control then the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall supersede any
other agreement between the parties with respect to the subject matter hereof.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.

                                                 ______________________________
                                                           [Executive]

                                                 PHILIP MORRIS COMPANIES INC.

                                                 By____________________________

                                       14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}]]