Document:

<PAGE>   1

                                                                     Exhibit 4.2

                              KRAFT FOODS TIP PLAN

                        (Second Amendment and Restatement
                          Effective As of May 12, 1997)

                              Mayer, Brown & Platt
                                     Chicago
<PAGE>   2
      I, Jill Youman, Secretary of the Management Committee for Employee
Benefits ("MCEB"), hereby certify that I have approved the form of the document
attached hereto and that such document is a full, true and complete copy of the
Kraft Foods TIP Plan, as amended through the date hereof. I hereby further
certify that Supplement C to the Kraft Foods TIP Plan was adopted by unanimous
written consent of MCEB dated August 27, 2001.

      Dated this 24th day of September, 2001.

                                                       /s/ Jill Youman
                                                   ----------------------
                                                   Secretary as Aforesaid
<PAGE>   3
<TABLE>
<CAPTION>
                                          TABLE OF CONTENTS

                                                                                          Page
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<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 Responsibility..................     1
               Plan Year................................................................     2
               Accounting Dates.........................................................     2
               Applicable Laws..........................................................     2
               Gender and Number........................................................     2
               Notices..................................................................     2
               Form of Election and Signature...........................................     2
               Evidence.................................................................     3
               Action by Employers......................................................     3
               Plan Supplements.........................................................     3
               Defined Terms............................................................     3
               Compliance With USERRA...................................................     3

SECTION 2      Participation in Plan....................................................     3
               Eligibility for Participation............................................     3
               Commencement of Participation............................................     4
               Inactive Participation...................................................     4
               Plan Not Contract of Employment..........................................     4

SECTION 3      Service..................................................................     4
               Years of Service.........................................................     4
               Hour of Service..........................................................     5
               One Year Break in Service................................................     6
               Service With Philip Morris Affiliates and Predecessor Employers..........     7
               Qualified Military Service...............................................     7

SECTION 4      Before-Tax, After-Tax and Rollover Contributions.........................     7
               Before-Tax Contributions.................................................     7
               After-Tax Contributions..................................................     7
               Total Before-Tax and After-Tax Contributions.............................     7
               Payment of Before-Tax and After-Tax Contributions........................     7
               Modification, Discontinuance and Resumption of Before-Tax or After-Tax
               Contributions............................................................     8
               Eligible Compensation....................................................     8
               Limitation on Compensation Taken Into Account For Any Plan Year..........     8
               Rollover Contributions...................................................     8
</TABLE>
<PAGE>   4

<TABLE>
<S>                                                                                       <C>
SECTION 5      Matching Contributions...................................................     9
               Matching Contributions...................................................     9
               Limitations on Amount of Employer Contributions..........................     9
               Payment of Employer Contributions........................................     9

SECTION 6      Investment of the Trust Fund.............................................     9
               Investment Funds and Loan Account........................................     9
               Loan Account and Investment Fund Accounting..............................     9
               Investment Fund Elections................................................     9
               Transfers Between Investment Funds.......................................    10

SECTION 7      Plan Accounting..........................................................    10
               Participants' Accounts...................................................    10
               Allocation of Fund Earnings and Changes in Value.........................    11
               Allocation and Crediting of Contributions................................    11
               Correction of Error......................................................    11
               Statement of Plan Interest...............................................    12

SECTION 8      Limitations on Compensation, Contributions and Allocations...............    12
               Reduction of Contribution Rates..........................................    12
               Compensation for Limitation/Testing Purposes.............................    12
               Limitations on Annual Additions..........................................    12
               Excess Annual Additions..................................................    13
               Combined Plan Limitation.................................................    13
               Annual Dollar Limitation.................................................    14
               Section 401(k)(3) Testing................................................    14
               Correction Under Section 401(k) Test.....................................    15
               Highly Compensated.......................................................    16
               Forfeiture of "Orphaned" Matching Contributions..........................    16

SECTION 9      Vesting Service, Vesting and Termination Dates...........................    16
               Determination of Vesting Service and Vested Interest.....................    16
               Accelerated Vesting......................................................    17
               Termination Date.........................................................    17
               Distribution of Before-Tax Account Only Upon Separation From Service.....    17

SECTION 10     Loans and Withdrawals of Contributions While Employed....................    18
               Loans to Participants....................................................    18
               Hardship Withdrawals.....................................................    20
               Determination of Hardship................................................    20
               Age 59 1/2 Withdrawals...................................................    22
               Withdrawals From 3/31/97 After-Tax and Matching Account Balances.........    22
               Form of Withdrawals......................................................    22

SECTION 11     Distributions............................................................    22
               Distributions to Participants After Termination of Employment............    22
               Distributions to Beneficiaries...........................................    24
</TABLE>

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<TABLE>
<S>                                                                                       <C>
               Special Rules Governing Annuity Elections................................    25
               Forfeitures and Restorations of Non-Vested Contributions.................    26
               Limits on Commencement and Duration of Distributions.....................    27
               Beneficiary Designations.................................................    28
               Form of Payment..........................................................    29
               Facility of Payment......................................................    29
               Interests Not Transferable...............................................    29
               Absence of Guaranty......................................................    30
               Missing Participants or Beneficiaries....................................    30
               Direct Rollover Option...................................................    30
               Distributions on Account of Permanent and Total Disability...............    30

SECTION 12     No Reversion to Employers................................................    30

SECTION 13     Administration...........................................................    31
               Committee Membership and Authority.......................................    31
               Allocation and Delegation of Committee Responsibilities and Powers.......    32
               Uniform Rules............................................................    32
               Information to be Furnished to Committee.................................    32
               Committee's Decision Final...............................................    32
               Exercise of Committees' Duties...........................................    32
               Remuneration and Expenses................................................    33
               Indemnification of the Committees........................................    33
               Resignation or Removal of Committee Member...............................    33
               Appointment of Successor Committee Members...............................    33

SECTION 14     Amendment and Termination................................................    33
               Amendment................................................................    33
               Termination..............................................................    34
               Merger and Consolidation of the Plan, Transfer of Plan Assets............    34
               Distribution on Termination and Partial Termination......................    34
               Notice of Amendment, Termination or Partial Termination..................    34

SECTION 15     Change of Control Provisions.............................................    35
               Application..............................................................    35
               Definition of Change of Control..........................................    35
               Contribution Requirement.................................................    36
               Vesting..................................................................    37
               Enforcement Rights; Amendment Restrictions...............................    37
               Construction.............................................................    37

SUPPLEMENT A   California Vegetable Concentrates Division                                  A-1
SUPPLEMENT B   Naperville Hourly Employees                                                 B-1
SUPPLEMENT C   Kraft Foods Inc. Common Stock                                               C-1
</TABLE>

                                    - iii -
<PAGE>   6
<TABLE>
<CAPTION>
                             INDEX OF DEFINED TERMS

<S>            <C>    <C>
1.9            -      Access System
1.5            -      Accounting Date
7.1            -      Accounts
7.1(c)         -      After-Tax Account
4.2            -      After-Tax Contribution
8.3            -      Annual Additions
7.1(b)         -      Before-Tax Account
4.1            -      Before-Tax Contribution
11.6           -      Beneficiary
15.2(c)        -      Business Combination
15.2           -      Change of Control
1.1            -      Code
1.2            -      Committee
1.3            -      Committees
6.1            -      Common Stock
1.1            -      Company
8.2            -      Compensation
15.5(b)        -      Control Date
15.3           -      Control Period
8.7            -      Deferral Percentage
11.1(c)        -      Distribution Date
1.1            -      Effective Date
4.6            -      Eligible Compensation
1.2            -      Employer
1.3            -      ERISA
8.8            -      Excess Contributions
10.3           -      Hardship
8.9            -      Highly Compensated
8.7            -      Highly Compensated Group
                      Deferral Percentage
3.2            -      Hour of Service
15.2(b)        -      Incumbent Board
1.3            -      Investment Committee
6.1            -      Investment Funds
11.3(a)        -      Joint and Survivor Annuity
6.1            -      Loan Account
7.1(a)         -      Matching Account
5.1            -      Matching Contribution
3.3            -      Maternity or Paternity Absence
8.7            -      Non-highly Compensated Group
                      Deferral Percentage
3.3            -      One Year Break in Service
15.2(a)        -      Outstanding Parent Common Stock
15.2(a)        -      Outstanding Parent Voting Securities
</TABLE>

                                     - iv -
<PAGE>   7
<TABLE>
<S>            <C>    <C>
2.1            -      Participant
6.1            -      Philip Morris Stock Fund
1.9            -      PIN
1.1            -      Plan
1.4            -      Plan Year
3.4            -      Predecessor Employer
1.2            -      Related Company
11.5(b)        -      Required Beginning Date
7.1(d)         -      Rollover Account
4.8            -      Rollover Contribution
8.3            -      Section 415 Affiliate
11.6           -      Spouse
3.4            -      Subsidiary
9.3            -      Termination Date
1.3            -      Trust
1.3            -      Trust Agreement
1.3            -      Trustee
3.1, 9.1       -      Year of Service
</TABLE>

                                     - v -
<PAGE>   8
                              KRAFT FOODS TIP PLAN

                        (Second Amendment and Restatement
                          Effective As of May 12, 1997)

                                    SECTION 1

                                     General

      1.1   History, Purpose and Effective Date. Kraft Foods, Inc., a Delaware
corporation (the "Company"), maintains the Kraft Foods TIP Plan (the "Plan"),
formerly known as the General Foods Employee Thrift-Investment 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. The Plan was
amended and restated effective May 12, 1997. The following provisions constitute
a second amendment, restatement and continuation of the Plan as in effect
immediately prior to May 12, 1997, the "Effective Date" of the Plan as set forth
herein. To the extent that any provision of the Plan as set forth herein
specifically provides for an effective date other than May 12, 1997, such
provision will constitute an amendment of the Plan as in effect on such date
and, if such special effective date is later than the general Effective Date,
the applicable provision of the Plan as in effect immediately prior to the
Effective Date will continue to govern until such special effective date. 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 13.1. 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 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
<PAGE>   9
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 Kraft General Foods Master Defined Contribution
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, as the same may be amended from time to time.

      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 each business day
as determined by the Committee in its sole discretion.

      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 (or its delegate), 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 and Signature. Unless otherwise specified herein,
any election or consent permitted or required to be made or given by any
Participant or other person entitled to benefits under the Plan, and any
permitted modification or revocation thereof, shall be made in writing or shall
be given by means of such telephone voice response system as the Committee may
designate from time to time as the vehicle(s) for executing regular transactions
under the Plan (referred to generally herein as the "Access System"). Each
Participant shall have a personal identification number or "PIN" for purposes of
executing transactions through the Access System and shall be required to
complete a signature authorization form, and entry by a Participant of his PIN
shall constitute his valid signature for purposes of any transaction the
Committee determines should be executed by means of the Access System, including
but not limited to enrolling in the Plan, electing contribution rates, making
investment choices, executing loan documents, and consenting to a withdrawal or
distribution. Any election made through the Access System shall be considered
submitted to the Committee on the date it is electronically transmitted.

                                     - 2 -
<PAGE>   10
      1.10  Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information 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 authorized 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 Committee 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
defined throughout the Plan in boldface. The Index of Defined Terms contains an
alphabetical listing of all such terms and the subsections in which they are
defined.

      1.14  Compliance With USERRA. Notwithstanding any provisions of the Plan
to the contrary, contributions and benefits with respect to qualified military
service will be provided in accordance with section 414(u) of the Code.

                                    SECTION 2

                              Participation in Plan

      2.1   Eligibility for Participation. Participation in the Plan is entirely
voluntary. An eligible employee who elects to participate (a "Participant")
shall commence participation on the date determined under subsection 2.2.
Subject to the conditions and limitations of the Plan, each individual who was a
Participant in the Plan immediately prior to the Effective Date will continue as
such on and after that date, and each other employee of an Employer who was not
a Participant immediately prior to the Effective Date will be eligible to
participate in the Plan upon meeting the following eligibility requirements:

      (a)   he has completed one Year of Service (as defined in subsection 3.1);

      (b)   contributions are not being made on his behalf to another defined
            contribution plan intended to be qualified under section 401(a) of
            the Code that is sponsored by an Employer or a Related Company;

      (c)   he is a member of a collective bargaining unit as to which
            retirement benefits have been the subject of good faith bargaining,
            and the Plan has been extended to the collective bargaining unit
            under a currently effective collective bargaining agreement; and

                                     - 3 -
<PAGE>   11
      (d)   he does not perform services for an Employer under a contract,
            agreement or arrangement that purports to treat him as either an
            independent contractor or the employee of a leasing organization,
            agency, vendor or any other third-party, even if he is subsequently
            determined (by judicial action or otherwise) to have instead been a
            common law employee of such Employer.

Notwithstanding the foregoing provisions of this subsection 2.1, if an
individual is employed or reemployed by an Employer on or after the date on
which he first completes one Year of Service, he shall be eligible to become a
Participant in the Plan on the first day on which he meets the requirements of
paragraphs (b) and (c) of this subsection 2.1.

      2.2   Commencement of Participation. Each employee eligible to participate
in the Plan is required to make an election to participate prior to his
commencement of participation in the Plan. Employees who first satisfy the
Plan's eligibility requirements on any day during the calendar month of April
1997 may elect to commence participation in the Plan effective as of April 1,
1997. Any eligible employee who does not properly elect to commence
participation in the Plan effective on or before April 1, 1997, under the
enrollment procedures established by the Committee, may not later elect to
commence participation in the Plan until May 12, 1997 or any day thereafter.
Employees who first satisfy the Plan's eligibility requirements on or after May
1, 1997, and prior to May 12, 1997, may elect to commence participation in the
Plan on May 12, 1997 or any day thereafter. Effective May 12, 1997, an employee
may elect to commence participation in the Plan on the first day following the
date he has satisfied the eligibility requirements set forth in subsection 2.1,
and if an eligible employee does not properly elect to commence participation on
such date, he may commence his participation on any day thereafter.

      2.3   Inactive Participation. If an individual ceases to meet the
eligibility requirements of subsection 2.1, such individual shall be considered
an inactive Participant in the Plan as long as any amount is credited to his
Account under the Plan, and:

      (a)   no contributions shall be made by or for him under Section 4 or
            Section 5;

      (b)   he may not make a withdrawal under Section 10 after he ceases to be
            an employee of an Employer or a Related Company.

      2.4   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 under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.

                                    SECTION 3

                                     Service

      3.1   Years of Service. For purposes of Section 2, an employee's "Years of
Service" means:

                                     - 4 -
<PAGE>   12
      (a)   With respect to any full-time employee, 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 3.3). An employee's first day of
            employment or reemployment is the first day for which he is credited
            with an Hour of Service (as defined in subsection 3.2).

      (b)   With respect to any part-time or seasonal employee, each Computation
            Period (as defined in the next sentence) during which he completes
            at least 1,000 Hours of Service. A "Computation Period" is the
            initial 12-consecutive-month period commencing on the date an
            employee is first credited with an Hour of Service, and each Plan
            Year commencing with the first Plan Year which begins on or after
            the date he is first credited with an Hour of Service. An individual
            who completes at least 1,000 Hours of Service during his first
            Computation Period will be eligible to begin participating in the
            Plan on the day following the end of such Computation Period; an
            individual who first completes 1,000 Hours of Service in a
            subsequent Computation Period will be eligible to begin
            participating in the Plan on the day following the day in which he
            worked his 1,000th Hour of Service.

For purposes of this Section 3, a "full-time employee" is an employee who is
regularly scheduled to work at least 1,000 hours in a calendar year, and a
"part-time or seasonal employee" is an employee who is scheduled to work for
fewer than 1,000 hours in a calendar year.

      3.2   Hour of Service. The term "Hour of Service" means, with respect to
any employee, each hour for which he is paid or entitled to payment for the
performance of duties for an Employer or a Related Company or for which back
pay, irrespective of mitigation of damages, has been awarded to the employee or
agreed to by an Employer or a Related Company, subject to the following:

      (a)   An employee or Participant shall be credited with the number of
            regularly scheduled working hours included in the time period on the
            basis of which payment to the Employee is calculated (or, if the
            number of such hours is not determinable, 8 Hours of Service per day
            (to a maximum of 40 Hours of Service per week)) for any period
            during which he performs no duties for an Employer or a Related
            Company (irrespective of whether the employment relationship has
            terminated) by reason of a vacation, holiday, illness, incapacity
            (including disability), layoff, jury duty, military duty, or leave
            of absence but for which he is directly or indirectly paid or
            entitled to payment by an Employer or a Related Company. Payments
            considered for purposes of the foregoing sentence shall include
            payments unrelated to the length of the period during which no
            duties are performed but shall not include payments made solely as
            reimbursement for medically related expenses or solely for the
            purpose of complying with applicable workmen's compensation,
            unemployment compensation or disability insurance laws.

                                     - 5 -
<PAGE>   13
      (b)   Hours of Service shall be calculated and credited pursuant to
            Department of Labor Regulation section 2530.200b-2, which is
            incorporated herein by reference.

      3.3   One Year Break in Service. Except with respect to an employee whose
absence from employment constitutes a Maternity or Paternity Absence, an
approved leave of absence, qualified military service, or compensable physical
disability incurred during employment service, 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

      (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 first anniversary of the first
            day of 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. An employee or
            Participant who is absent on an approved leave of absence for a
            period shorter than 12 months will commence a One Year Break in
            Service on the date of his scheduled return to work if he does not
            in fact return to work at the expiration of such leave. An employee
            or Participant who is absent on an approved leave of absence for a
            period of 12 months or more will commence a One Year Break in
            Service on the first anniversary of the first day of such leave if
            he does not return to work at the scheduled expiration of such
            leave. An individual who is absent because of service in the U.S.
            Armed Forces will begin a One Year Break in Service on the 91st day
            following his discharge from military service, if he does not return
            to work within 90 days of such discharge. With respect to an
            individual whose absence from employment constitutes a Maternity or
            Paternity Absence, a One Year Break in Service will commence on the
            second anniversary of the first day of such absence, and 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 active employment with an
            Employer or Related Company by reason of the employee's pregnancy,
            the birth of a child of the employee, the placement of a child with
            the employee in connection with the employee's adoption of such
            child, or for purposes of caring for such child immediately after
            its birth or placement. The Committee may require the employee or
            Participant to furnish such information as it considers necessary to
            establish that such individual's absence was a Maternity or
            Paternity Absence. With respect to an individual whose absence from
            employment is on account of a compensable physical disability
            incurred during employment service, each year of such absence shall
            not constitute a One Year Break in Service if such individual
            recommences employment service within 30 days after the termination
            of the period for which statutory compensation for such disability
            was payable, or if such individual attains age 65 while on paid
            disability leave.

                                     - 6 -
<PAGE>   14
      3.4   Service With Philip Morris Affiliates and Predecessor Employers. For
purposes of Section 3 and subsection 9.1, service with a Subsidiary or a
Predecessor Employer shall be counted in the same manner as if such entity were
a Related Company. A "Subsidiary" is any corporation in which Philip Morris
Companies Inc. owns (directly or indirectly) more than 50% of the outstanding
voting stock. "Predecessor Employer" means a corporation or business which has
been merged into or consolidated with, or all or substantially all of its assets
acquired by, a Related Company or a Subsidiary.

      3.5   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

                Before-Tax, After-Tax and Rollover Contributions

      4.1   Before-Tax Contributions. Subject to the limitations set forth in
subsections 4.3 and 4.7 and Section 8 and such additional rules as the Committee
may establish on a uniform and nondiscriminatory basis, for any payroll period a
Participant may elect to have his salary or wages from his Employer reduced by a
whole percentage, and a corresponding amount contributed on his behalf to the
Plan by his Employer as a "Before-Tax Contribution." Such amount shall not be
less than 1 percent nor more than 10 percent of his Eligible Compensation (as
defined in subsection 4.6), but shall be limited to 6% with respect to Eligible
Compensation in excess of $15,000. Any election made pursuant to this subsection
4.1 shall be effective as soon as practicable after the Participant has made his
election in accordance with applicable Access System procedures.

      4.2   After-Tax Contributions. Subject to the limitations set forth in
subsections 4.3 and 4.7 and Section 8 and such additional rules as the Committee
may establish on a uniform and nondiscriminatory basis, for any payroll period a
Participant may elect to make "After-Tax Contributions" to the Plan through
payroll deduction in a whole percentage that is not less than 1 percent nor more
than 10 percent of his Eligible Compensation (as defined in subsection 4.6), but
shall be limited to 6% with respect to Eligible Compensation in excess of
$15,000. Any election made pursuant to this subsection 4.2 shall be effective as
soon as practicable after the Participant has made his election in accordance
with applicable Access System procedures.

      4.3   Total Before-Tax and After-Tax Contributions. Notwithstanding the
foregoing provisions of this Section 4, Before-Tax Contributions made on behalf
of a Participant pursuant to subsection 4.1 and After-Tax Contributions made by
such Participant pursuant to subsection 4.2 may not together exceed the maximum
amount permitted under either such subsection.

      4.4   Payment of Before-Tax and After-Tax Contributions. Before-Tax
Contributions and After-Tax Contributions shall be made through periodic payroll
deductions 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 business day of the month following
the month in which such amounts would otherwise have been payable to the

                                     - 7 -
<PAGE>   15
Participant. For Participants on a semi-monthly payroll, deductions shall be
made from each payroll payment and for Participants on a weekly payroll,
deductions shall be made 48 times during the Plan Year, but not more than 4
times during any calendar month.

      4.5   Modification, Discontinuance and Resumption of Before-Tax or
After-Tax Contributions. Subject to such rules and restrictions as the Committee
may establish on a uniform and nondiscriminatory basis, a Participant may adjust
his Before-Tax and/or After-Tax Contributions prospectively by entering into the
Access System, prior to the time such change is to be effective, an election to
make any of the changes listed below:

      (a)   Change his Before-Tax and/or After-Tax Contribution rates within the
            limits specified above.

      (b)   Discontinue making Before-Tax and/or After-Tax Contributions.

      (c)   Resume making Before-Tax and/or After-Tax Contributions.

      4.6   Eligible Compensation. A Participant's "Eligible Compensation" for
any Plan Year shall mean his annual base wage or salary rate of pay as in effect
on September 30 of the preceding Plan Year, plus any amounts contributed by an
Employer pursuant to a salary reduction agreement and which is not includable in
gross income under section 125, 402(e)(3), 402(h) or 403(b) of the Code, but it
shall not include shift differentials, overtime or other premium pay, or bonus,
incentive or other extra compensation.

      4.7   Limitation on Compensation Taken Into Account For Any Plan Year.
Notwithstanding any other provision of the Plan to the contrary, the amount of
Eligible Compensation that may be taken into account under the Plan for any Plan
Year for purposes of applying the limitations of this Section 4 and Section 5
shall not exceed the maximum amount permitted for the Plan Year under section
401(a)(17) of the Code.

      4.8 Rollover Contributions. A Participant or an employee who meets the
eligibility requirements of subsection 2.1 (without regard to paragraph (a)
thereof) may make a Rollover Contribution (as defined below) to the Plan,
subject to the determination of the Committee that such rollover satisfies the
requirements of this subsection 4.8.  Before approving a rollover, the Committee
may request from the Participant or employee any documents or opinion of counsel
which the Committee, in its discretion, deems necessary. The term "Rollover
Contribution" means a rollover contribution of all or part of a distribution
which, under applicable provisions of the Code, is permitted to be rolled over
to a qualified plan. In no event shall a Participant or employee be permitted to
make a rollover contribution of any amounts previously contributed to another
plan by the Participant on an after-tax basis. If an employee who is not
otherwise a Participant makes a Rollover Contribution to the Plan, he shall be
treated as a Participant only with respect to his Rollover Account (defined in
subsection 7.1) until he has met all of the requirements for Plan participation
set forth in subsections 2.1 and 2.2.

                                     - 8 -
<PAGE>   16
                                    SECTION 5

                             Matching Contributions

      5.1   Matching Contributions. Subject to the conditions and limitations of
subsection 4.7 and Section 8, for each payroll period during a Plan Year an
Employer shall contribute to the Plan on behalf of each Participant employed by
such Employer an amount equal to 45 percent of the Before-Tax and After-Tax
Contributions made by and on behalf of the Participant. Any contribution made
pursuant to this subsection 5.1 shall be referred to hereinafter as a "Matching
Contribution".

      5.2   Limitations on Amount of Employer Contributions. In no event shall
the sum of any 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. 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.

                                    SECTION 6

                          Investment of the Trust Fund

      6.1   Investment Funds and Loan Account. The Investment Committee shall
establish and cause the Trustee to maintain one or more "Investment Funds" for
the investment of Participants' Accounts, which may include an Investment Fund
(the "Philip Morris Stock Fund") which is intended to be invested primarily in
the common stock of Philip Morris Companies Inc. (the "Common Stock"). The
Investment Committee shall also cause the Trustee to maintain a "Loan Account"
to reflect any loans to Participants pursuant to subsection 10.1. 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.

      6.2   Loan Account and Investment Fund Accounting. The Committee shall
maintain or cause to be maintained a separate subaccount for each Participant in
each of the Investment Funds and in the Loan Account to separately reflect his
interests in each such Fund or in the Loan Account and the portion thereof that
is attributable to each of his Accounts.

      6.3   Investment Fund Elections. At the time that a Participant enrolls in
the Plan or makes a Rollover Contribution he may specify the percentage 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 such
direction has been given in accordance with rules established by the Investment
Committee, contributions credited to a Participant shall be invested in the
Investment Funds as determined by the Investment Committee. A Participant may
modify his investment direction prospectively by entering into the Access System
his election to do so prior to the

                                     - 9 -
<PAGE>   17
effective time of the change in accordance with uniform rules established by the
Committee. 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, After-Tax and Rollover Accounts, and
a separate investment fund election with respect to future contributions
allocated to his Matching Account.

      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. Any such election shall be made by entering it into the Access
System prior to the time it is to be effective in accordance with uniform rules
established by the Committee. One investment fund re-allocation election may be
made with respect to a Participant's Before-Tax, After-Tax and Rollover
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 the following
"Accounts" in the name of each Participant:

      (a)   a "Matching Account," which shall reflect:

            (i)   Matching Contributions, if any, made on his behalf and the
                  income, losses, appreciation and depreciation attributable
                  thereto; and

            (ii)  any amounts transferred to the Plan from the General Foods
                  Employee Stock Ownership Plan (the ESOP) upon termination of
                  the ESOP in September 1988 and the income, losses,
                  appreciation and depreciation attributable thereto;

      (b)   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;

      (c)   an "After-Tax Account," which shall reflect After-Tax contributions,
            if any, made by the Participant and the income, losses, appreciation
            and depreciation attributable thereto; and

      (d)   a "Rollover Account," which shall reflect Rollover Contributions, if
            any, made by him and the income, losses, appreciation and
            depreciation attributable thereto.

                                     - 10 -
<PAGE>   18
In addition, the Committee may maintain subaccounts within any of a
Participant's Accounts to reflect portions of the Account that are subject to
special withdrawal or distribution rights or are otherwise subject to special
rules. The Accounts and subaccounts provided for in this subsection 7.1 shall be
for accounting purposes only, and there shall be no segregation of assets within
the Investment Funds or the Loan Account among the separate Accounts. Reference
to the "balance" in a Participant's Accounts means the aggregate of the balances
in the subaccount maintained in the Investment Funds and Loan Account
attributable to those Accounts.

      7.2   Allocation of Fund Earnings and Changes in Value. Subject to the
last sentence of this subsection, as of each Accounting Date, interest,
dividends and changes in value in each Investment Fund since the preceding
Account Date shall be allocated to each Participant's subaccount invested in
such Investment Fund by adjusting upward or downward the balance of his
subaccount invested in such Investment Fund in the ratio which the subaccount of
such Participant invested in such Investment Fund bears to the total of the
subaccount 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, Matching and Rollover Contributions received since the
preceding Accounting Date, so that the total of the subaccount of all
Participants in each Investment Fund shall equal the total value of such fund
(exclusive of such contributions) in accordance with uniform procedures
consistently applied. Notwithstanding the fact that the Plan shall use a daily
valuation system, which generally means that Participants' Accounts will be
updated each Accounting Date to reflect activity for that day, such as new
contributions received by the Trustee, changes in Participants' investment
elections, and changes in the unit value of the Investments Funds, events may
occur that cause an interruption in the process affecting a single Participant
or a group of Participants. Neither the Employers, the Trustee nor the Plan
guarantee that any given transaction will be processed on the anticipated day.

The Investment Committee, in its discretion, may establish special rules for
valuing any Investment Fund invested primarily in stock of the Company or a
Related Company, to address the possibility of unusually high trading volume or
a temporary suspension of trading in such stock. Such rules may set forth the
circumstances under which transfers out of such Investment Fund will be valued
using either the closing price on the applicable day on the New York Stock
Exchange, a composite price listed in the Wall Street Journal, or a weighted
average selling price.

      7.3   Allocation and Crediting of Contributions. Subject to the provisions
of Section 8, Before-Tax, After-Tax, Matching and Rollover Contributions made on
behalf of a Participant for any payroll period shall be credited to that
Participant's appropriate Accounts as of the Accounting Date coinciding with or
immediately following the last day of such payroll period. 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

                                     - 11 -
<PAGE>   19
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.

                                    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), 402(g) and 415(c) of the Code, the
Committee may establish limits on the Before-Tax and After-Tax Contribution
rates that may be elected by Participants, may unilaterally modify or revoke any
Before-Tax or After-Tax Contribution election made by a Participant pursuant to
subsections 4.1 and 4.2, and may reduce the level of Matching Contributions
(even to zero) allocable to any Participant pursuant to subsection 5.l.

      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 and welfare benefits, non-qualified 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 non-qualified), amounts realized from the exercise of
            (or disposition of stock acquired under) any non-qualified stock
            option or other benefits given special tax treatment and lump sum
            severance pay, all as defined in Treas. Reg. Section 1.415-2(d)(2),
            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 includable in gross
            income under sections 125, 402(e)(3), 402(h) or 403(b) of the Code,

up to the maximum limit for that Plan Year under Code section 401(a)(17).

      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:

                                     - 12 -
<PAGE>   20
      (a)   $30,000; or

      (b)   25 percent of the Participant's Compensation for that Plan Year,
            determined without regard to clause (b) of subsection 8.2 for Plan
            Years beginning prior to January 1, 1998, 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. Section 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 Participant to reduce the excess amount.

      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,
to the extent then applicable. 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.

                                     - 13 -
<PAGE>   21
      8.6   Annual Dollar 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 other 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 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 beginning after
December 31, 1996, the amount by which the average of the Deferral Percentages
(as defined below) for the Plan Year for the group of eligible employees who are
Highly Compensated (the "Highly Compensated Group Deferral Percentage") exceeds
the average of the Deferral Percentages for the same Plan Year for the group of
eligible employees who are not Highly Compensated (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 (without regard to any
            suspension imposed by any other provision hereunder) shall be
            counted, whether or not any Before-Tax Contributions are made on his
            behalf for the year;

                                     - 14 -
<PAGE>   22
      (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
            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 collective bargaining units shall be treated as a single
            collective bargaining unit, and separate testing of each collective
            bargaining unit shall not be required under this subsection 8.7.

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 the Excess Contributions (as defined below) for
such year, 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. Distribution of the Excess Contributions for a Plan Year shall
be made to Highly Compensated Participants on the basis of the amount of
contributions made on behalf of each such Participant for such year beginning
with those Highly Compensated Participants making the largest dollar amount of
contributions, in the manner required under section 401(k)(8)(B) of the Code.
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 subsections 8.6, 8.10 and 8.11 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.

                                     - 15 -
<PAGE>   23
      8.9   Highly Compensated. For years beginning after December 31, 1996, 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)   he received Compensation for the preceding Plan Year 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 Companies during the 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 Service, Vesting and Termination Dates

      9.1   Determination of Vesting Service and Vested Interest. A Participant
at all times shall have a fully vested, nonforfeitable interest in his
Before-Tax Account, After-Tax Account and Rollover Account. A Participant shall
become vested in his Matching Account in accordance with the following schedule:

<TABLE>
<CAPTION>
        Completed Years of Service                 Percent Vested
        --------------------------                 --------------
<S>                                                <C>
               Less than 2                                0%
                    2                                    25%
                    3                                    50%
                    4                                    75%
                    5                                   100%
</TABLE>

For purposes of this subsection 9.1, a Participant's "Years of Service" will be
computed in accordance with paragraph 3.1(a) and subsection 3.4 regardless of
whether he is a full-time employee or a part-time or seasonal employee, provided
that no part-time or seasonal employee shall have fewer Years of Service for
purposes of this subsection 9.1 as of December 31, 1997

                                     - 16 -
<PAGE>   24
than he would have had under the method of computing vesting service applicable
to him under the terms of the Plan as in effect on May 11, 1997. Notwithstanding
the foregoing provisions of this subsection 9.1, if an employee or Participant
terminates employment with the Employers and Related Companies when he does not
have a vested right to any portion of his Matching Account under this subsection
9.1, and if the number of his consecutive One Year Breaks in Service equals or
exceeds the greater of five (5) or the aggregate number of his Years of Service
prior to the first such One Year Break in Service, then his Years of Service
prior to such break shall be disregarded and, if he is later employed or
reemployed by an Employer or a Related Company, he shall be considered a new
employee for purposes of this subsection 9.1.

      9.2   Accelerated Vesting. Notwithstanding the foregoing provisions of
this Section 9, a Participant shall have a fully vested, nonforfeitable interest
in all his Accounts when he attains age 55, dies or becomes permanently and
totally disabled (as defined below) while employed by an Employer or a Related
Company. In addition, in the event of the Plan's termination (in accordance with
subsection 14.2) or partial termination (as determined under applicable law and
regulations), or the complete discontinuance of Employer contributions to the
Plan, each affected Participant shall be fully vested in all his Accounts. For
purposes of this subsection 9.2, a Participant will be considered "permanently
and totally disabled" if, on account of physical or mental disability, he no
longer is capable of performing any job or position with his employer for which
he is otherwise eligible or qualified, such disability continues for at least
six (6) months, and it is demonstrated to the satisfaction of the Committee that
such disability will be permanent and continuous for the remainder of his life.
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. If a Participant is terminated for any reason, his
"Termination Date" generally will be the last day for which he is paid wages or
salary for services performed for an Employer, unless he is terminated while on
an unpaid leave of absence, in which case his Termination Date will be the day
as of which he is notified of his termination or resigns (whichever is
applicable).

      9.4   Distribution of Before-Tax Account Only Upon Separation From
Service. Notwithstanding any other provision of the Plan to the contrary, a
Participant may not commence distribution of the portion of his Account
attributable to his Before-Tax Contributions prior to the date he attains age
59-1/2, even though his employment with the Employers and Related Companies has
terminated and he is otherwise eligible for a distribution under Section 11,
unless or until he also has a "separation from service" within the meaning of
section 401(k)(2)(B) of the 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 disposition of its
interest in a subsidiary to an unrelated entity that meets the requirements for
distribution under applicable Treasury regulations.

                                     - 17 -
<PAGE>   25
                                   SECTION 10

              Loans and Withdrawals of Contributions While Employed

      10.1  Loans to Participants. The Committee, upon request by a Participant
who is an employee of an Employer or a Related Company (excluding any employee
on layoff or a leave of absence without pay) or who is a "party in interest"
with respect to the Plan (as such term is defined in section 3(14) of ERISA) may
authorize a loan to be made to the Participant from his vested interest in the
Trust Fund, subject to the following:

      (a)   The minimum loan amount is $1,000. No loan shall be made to a
            Participant if, immediately after such loan, the sum of the
            outstanding balances (including principal and interest) of all loans
            made to him under this Plan and under any other qualified retirement
            plans maintained by the Related Companies would exceed the lesser
            of:

            (i)   $50,000, reduced by the excess, if any, of:

                  (A)   the highest outstanding balance of all loans to the
                        Participant from the plans during the one-year period
                        ending on the day immediately before the date on which
                        the loan is made; over

                  (B)   the outstanding balance of loans from the plans to the
                        Participant on the date on which such loan is made; or

            (ii)  the combined values of the Participant's After-Tax, Before-Tax
                  and Rollover Accounts;

            and no loan shall be made to a Participant from the Plan in an
            amount that would exceed one-half of the total vested balance of the
            Participant's Accounts under the Plan as of the date the loan is
            made. Notwithstanding the foregoing, if the amount described in
            clause (ii) above declines because of investment losses between the
            date the loan is requested and the Accounting Date as of which it is
            made, the difference may be taken from the vested portion of his
            Matching Account (so long as the loan does not exceed one-half of
            the total vested balance of his Accounts).

      (b)   Each loan to a Participant shall be charged against the
            Participant's Accounts in the order and manner determined by the
            Committee, and shall be charged pro rata against each Investment
            Fund in which such Accounts are invested.

      (c)   Each loan shall be evidenced by a written note providing for:

            (i)   a repayment period of 12 through 60 months, inclusive;

            (ii)  a reasonable rate of interest (as determined below);

            (iii) substantially equal payments of principal and interest over
                  the term of the loan no less frequently than quarterly; and

                                     - 18 -
<PAGE>   26
            (iv)  such other terms and conditions as the Committee shall
                  determine.

            The interest rate shall provide the Plan with a return commensurate
            with the interest rates charged by persons in the business of
            lending money for loans which would be made under similar
            circumstances and shall be a fixed rate for the life of the loan.
            The interest rate which applies to a loan shall be the rate in
            effect on the date that the loan application is made by the
            Participant.

      (d)   A loan shall be the borrowing Participant's individual investment
            within the Loan Account.

      (e)   Payments of principal and interest to the Trustee with respect to
            any loan to a Participant:

            (i)   shall reduce the outstanding balance with respect to that
                  loan;

            (ii)  shall reduce the balance of the Loan Account holding the
                  promissory note reflecting that loan;

            (iii) shall be credited to the Participant's Accounts in the reverse
                  order in which they were charged; and

            (iv)  shall be invested in the Investment Funds in accordance with
                  his current investment directions with respect to such
                  Accounts.

      (f)   A Participant's obligation to repay a loan (or loans) from the Plan
            shall be secured by the Participant's vested interest in the Plan.
            The note evidencing the loan, the security agreement and the payroll
            deduction authorization shall each be executed by the Participant by
            entry of his PIN into the Access System. Endorsement of the loan
            check shall constitute the Participant's affirmation of the note,
            security agreement and payroll deduction authorization set forth in
            the written confirmation sent to the Participant after he made his
            loan request.

      (g)   Generally, loan repayments will be made by automatic payroll
            deductions. However, during any period when payroll deduction is not
            possible or is not permitted under applicable law, repayment will be
            made by check or money order and shall be sent to the Plan's service
            center. Loan repayments will be suspended under this Plan as
            permitted under section 414(u)(4) of the Code.

      (h)   The loan may be prepaid in full, without penalty, at any time after
            it has been outstanding for 12 months. In the event of early
            repayment of the loan, the Participant may not apply for a new loan
            until at least 30 days after the prior loan's repayment.

      (i)   Effective January 1, 1999, a loan to a Participant shall become
            immediately due and payable without notice of any kind upon his
            permanent and total disability or his termination of employment with
            the Employers and Related Companies. Notwithstanding any other
            provision of the Plan to the contrary, if the outstanding

                                     - 19 -
<PAGE>   27
            balance of principal and interest on any loan is not paid within the
            grace period established by the Committee for a delinquent payment
            (not later than the end of the calendar quarter following the
            quarter in which it is due) or within 90 days after acceleration in
            accordance with the preceding sentence, a default shall occur and
            the Trustee shall apply all or a portion of the Participant's vested
            interest in the Plan in satisfaction of such outstanding obligation,
            but only to the extent such vested interest (or portion thereof) is
            then distributable under applicable provisions of the Code. If
            necessary to satisfy the entire outstanding obligation, such
            application of the Participant's vested interest may be executed in
            a series of actions as amounts credited to the Participant's
            Accounts become distributable. Any partial payments shall be applied
            first to the payment of accrued interest and thereafter to the
            payment of outstanding principal.

      (j)   If distribution is to be made to a Beneficiary in accordance with
            subsection 11.2, any outstanding promissory note of the Participant
            shall be canceled and the unpaid balance of the loan, together with
            any accrued interest thereon, shall be treated as a distribution to
            or on behalf of the Participant immediately prior to commencement of
            distribution to the Beneficiary.

      (k)   The Committee shall establish uniform procedures for applying for a
            loan, evaluating loan applications, and setting reasonable rates of
            interest, which shall be communicated to Participants in writing. A
            Participant may have only one loan outstanding at any time, and any
            prior loan must be repaid and credited to a Participant's Accounts
            before the Participant may apply for a new loan.

      10.2  Hardship Withdrawals. Subject to the provisions of this subsection
10.2 and of paragraph 10.3(c), a Participant who has not attained age 59-1/2,
whose Termination Date has not yet occurred, and who incurs a Hardship (as
defined in subsection 10.3) may elect to withdraw all or part of his interest in
the following Accounts, as provided and in the order set forth below:

      (a)   up to 100% of his After-Tax Account, and the earnings thereon;

      (b)   up to 100% of his Rollover Account; and

      (c)   up to 100% of the Before-Tax Contributions credited to his
            Before-Tax Account and any earnings credited to such account as of
            December 31, 1988.

Any such Hardship withdrawal is subject to a minimum amount of $500. A
Participant who does not have at least $500 in the Accounts listed above is
ineligible for a Hardship withdrawal. A Participant who is eligible to make a
withdrawal under subsection 10.5 and/or subsection 10.6 must withdraw the full
amount available to him under both such subsections before he makes a Hardship
withdrawal under this subsection 10.2.

      10.3  Determination of Hardship. A withdrawal will not be considered to be
made on account of "Hardship" unless the following requirements are met:

                                     - 20 -
<PAGE>   28
      (a)   The withdrawal is requested because of an immediate and heavy
            financial need of the Participant, and will be so deemed if the
            Participant represents that the withdrawal is made on account of:

            (i)   uninsured expenses for medical care described in section
                  213(d) of the Code incurred by the Participant, a parent of
                  the Participant, the Participant's spouse or any dependent of
                  the Participant (as defined in section 152 of the Code) or
                  necessary for such persons to obtain such medical care;

            (ii)  the purchase (excluding mortgage payments) of a principal
                  residence of the Participant;

            (iii) payment of tuition and related educational fees for the next
                  12 months of post-secondary education for the Participant, or
                  his spouse, children or dependents;

            (iv)  the need to prevent the eviction of the Participant from his
                  principal residence or foreclosure on the mortgage of the
                  Participant's principal residence;

            (v)   funeral expenses of a family member, past due taxes, past due
                  child support, other past due obligations, cash settlements
                  due in a divorce, the cost of repairs to the Participant's
                  home as a result of major damage or to a major appliance, or
                  repairs to or purchase of a car needed to commute to work; or

            (vi)  any other circumstances of immediate and heavy financial need
                  identified as such in revenue rulings, notices or other
                  documents of the Internal Revenue Service of general
                  applicability or other unusual or unexpected expenses meeting
                  such criteria as are determined by the Committee to constitute
                  an immediate and heavy financial need.

      (b)   The withdrawal must also be necessary to satisfy an immediate and
            heavy financial need of the Participant. It will be considered
            necessary if the Committee determines that the amount of the
            withdrawal does not exceed the amount required to relieve the
            financial need (taking into account any applicable income or penalty
            taxes resulting from the withdrawal) and if the need cannot be
            satisfied from other resources that are reasonably available to the
            Participant. In making this determination, the Committee may
            reasonably rely on the Participant's written representation that the
            need cannot be relieved:

            (i)   through reimbursement or compensation by insurance or
                  otherwise;

            (ii)  by reasonable liquidation of the Participant's assets, to the
                  extent such liquidation would not itself give rise to an
                  immediate and heavy financial need;

                                     - 21 -
<PAGE>   29
            (iii) by ceasing to make Before-Tax or After-Tax Contributions to
                  the Plan (or any other plan of the Employer permitting
                  deferral of compensation); or

            (iv)  by a loan pursuant to subsection 10.1 or by borrowing from
                  commercial sources on reasonable commercial terms.

      (c)   The withdrawal must be made pursuant to a written request to the
            Committee, which request shall include any representation required
            by this subsection 10.3 and adequate proof thereof, as determined by
            the Committee in its sole discretion.

      10.4  Age 59 1/2 Withdrawals. Once a Participant attains age 59-1/2 he may
withdraw all or any portion of his entire vested Account balance regardless of
whether he has a Hardship.

      10.5  Withdrawals From 3/31/97 After-Tax and Matching Account Balances. A
Participant who was participating in the Plan prior to April 1, 1997 and whose
Termination Date has not yet occurred may elect to withdraw all or a portion of
his March 31, 1997 After-Tax Account and Matching Account balances, as provided
and in the order set forth below:

      (a)   that portion of his After-Tax Account attributable to After-Tax
            Contributions made prior to April 1, 1997, and any earnings thereon;
            and

      (b)   that portion of his Matching Account attributable to Matching
            contributions made prior to April 1, 1997, and any earnings thereon.

Until November 1, 1999 any withdrawal under this subsection 10.5 is subject to a
minimum amount of $500 or the total amount that may be withdrawn pursuant to
this subsection, whichever is less.

      10.6  Form of Withdrawals. Any loan or withdrawal from any Account
pursuant to this Section 10 shall be made proportionately from each of the
Investment Funds in which such Account is invested. All loan proceeds shall be
paid solely in cash. All Hardship withdrawals and, except as provided in the
following sentence, all withdrawals under subsections 10.4 and 10.5, shall be
made solely in cash. Withdrawals under subsections 10.4 and 10.5 from the
portion of a Participant's Accounts that is invested in the Philip Morris Stock
Fund shall be made in cash, except to the extent the Participant elects to
receive whole shares of Common Stock (with cash in lieu of any fractional
share).

                                   SECTION 11

                                  Distributions

      11.1  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 11.1, subject to the rules of
subsections 11.5 and 9.4:

                                     - 22 -
<PAGE>   30
      (a)   Effective January 1, 1998, if the value of the vested portions of
            such Participant's Accounts (including any loans outstanding on his
            Termination Date) does not exceed $5,000 or such larger amount as
            may be permitted for involuntary cash-outs under applicable
            provisions of the Code, (and for determinations made prior to
            September 1, 1999 did not exceed such amount at the time of any
            earlier withdrawal), determined as soon as practicable following his
            Termination Date, such vested portions, less any outstanding loan
            balance distributable in accordance with paragraph 10.1(i), shall be
            distributed to him as soon as practicable following notification, in
            a lump sum payment; provided, however, that the distribution shall
            not commence earlier than 30 days after the Participant is given the
            direct rollover notice required under section 402(f) of the Code
            unless the Participant has been informed of his right to a period of
            at least 30 days to consider the decision of whether or not to elect
            a direct rollover, and the Participant, after receiving such notice,
            affirmatively elects the distribution.

      (b)   If a Participant is not cashed out under the provisions of the
            foregoing paragraph (a), the vested portions of the Participant's
            Account, less any outstanding loan balance distributable in
            accordance with subsection 10.1(i), shall be distributed (or shall
            begin to be distributed) to the Participant on (or as soon as
            practicable after) the Distribution Date (as defined in paragraph
            (c) below) he elects, by one of the following methods chosen by the
            Participant:

            (i)   by payment in a lump sum; or

            (ii)  by payment in a series of monthly, quarterly, semi-annual or
                  annual installments for a period selected by the Participant
                  that complies with subsection 11.5 (the amount of each
                  installment as of each applicable Accounting Date shall be
                  equal to the product of the Participant's then Account
                  balances 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 a Participant may
                  elect payments in the form of a fixed amount option under
                  which the Participant will receive a specified dollar amount
                  payable at specified intervals (monthly, quarterly,
                  semiannually or annually) until his account is completely
                  liquidated, and a Participant may elect to change the fixed
                  amount (without changing the frequency of the payments)
                  subject to uniform rules established by the Committee; and
                  provided further that the Participant may elect to accelerate
                  any installment payments and to have his remaining vested
                  Account balance distributed to him in a lump sum payment as
                  soon as practicable after the Accounting Date coincident with
                  or next following the date his acceleration election is
                  submitted to the Committee; or

            (iii) by purchase from an insurance company and distribution to him
                  of an annuity contract providing for periodic distributions to
                  him for his life (with or without a period certain) or to him
                  and his beneficiary for their joint lives, subject to the
                  provisions of subsection 11.3.

                                     - 23 -
<PAGE>   31
      (c)   A Participant's "Distribution Date" shall mean the Accounting Date
            as of which a payment in any form is made to him pursuant to this
            Section 11, without regard to any reasonable administrative delay;
            provided, however, that in the event of an election of an annuity
            under clause (b)(iii) above, the Distribution Date shall be no later
            than the date payment is irrevocably made on behalf of the
            Participant to the insurance company issuing the annuity contract. A
            Participant may elect that his Distribution Date occur 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), provided that
            no election of a Distribution Date will be valid if it is made more
            than 90 days prior to such date and further provided that the
            distribution shall not commence earlier than 30 days after the
            Participant is given the direct rollover notice required under
            section 402(f) of the Code and the notice required under Treasury
            regulation section 1.411(a)-11(c) unless the Participant has been
            informed of his right to a period of at least 30 days to consider
            the decision of whether or not to elect a direct rollover and
            whether or not to elect a distribution, and the Participant, after
            receiving such notices, affirmatively elects the distribution.

      11.2  Distributions to Beneficiaries. Subject to subsection 11.5, the
following rules shall apply if a Participant dies while any vested portion of
his Accounts remains undistributed:

      (a)   If the Participant dies before benefit payments to him have
            commenced, the vested balance of his Accounts, less any outstanding
            loan balance distributable in accordance with paragraph 10.1(j),
            shall be distributed as follows:

            (i)   If the value of the vested portion of the Participant's
                  Accounts (less the outstanding loan balance) does not exceed
                  $5,000 (or the applicable cash-out limit), determined as soon
                  as practicable following his date of death, or, effective
                  September 1, 1999, if the Beneficiary is not the Participant's
                  surviving spouse, such vested portion (less the outstanding
                  loan balance) shall be distributed to his Beneficiary as soon
                  as practicable after his death, in a lump sum payment.

            (ii)  If the value of the vested portion of the Participant's
                  Accounts (less the outstanding loan balance) exceeds $5,000
                  (or the applicable cash-out limit), determined as soon as
                  practicable following his date of death and effective
                  September 1, 1999 the Beneficiary is the Participant's
                  surviving spouse, such vested portion (less the outstanding
                  loan balance) shall be distributed to his Beneficiary as of
                  any Accounting Date following the date of his death selected
                  by the Beneficiary (in accordance with subsection 11.5), in
                  one of the methods described at paragraph 11.1(b) as chosen by
                  the Beneficiary.

      (b)   If a Participant dies after benefit payments to him have commenced,
            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

                                     - 24 -
<PAGE>   32
            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.

      11.3  Special Rules Governing Annuity Elections. If a married Participant
elects distribution in the form of an annuity pursuant to clause 11.1(b)(iii),
the following rules shall apply and shall supersede any other provision of the
Plan to the contrary:

      (a)   The vested portions of the Participant's Accounts, less any
            outstanding loan balance distributable in accordance with paragraph
            10.1(i), shall be used to purchase a nontransferable "Joint and
            Survivor Annuity" (that is, an annuity payable for the life of the
            Participant with a survivor annuity payable for the life of his
            spouse which is not less than 50% of the amount of the annuity
            payable during the joint lives of the Participant and spouse),
            unless he elects another form of annuity and, if applicable, a
            Beneficiary other than his spouse, with the consent of his spouse to
            such form and Beneficiary, during the 90-day period immediately
            preceding his Distribution Date. The Participant's Distribution Date
            shall be no earlier than 30 days after the Participant is given the
            notice required under Treasury regulation section
            1.411(a)-11(c), (including a written explanation of the terms and
            conditions of the Joint and Survivor Annuity and the effect of an
            election of a different annuity form), unless the Participant has
            been informed of his right to a period of at least 30 days to
            consider the decision of whether or not to elect a distribution and
            a particular distribution option, and the Participant, after
            receiving such notice, affirmatively elects the distribution.

      (b)   No consent by the spouse to the election of a form of annuity other
            than the Joint and Survivor Annuity and, if applicable, Beneficiary
            other than the spouse shall be effective unless it is in writing,
            acknowledges the effect of such consent and is witnessed by a Plan
            representative or a notary public (unless the Committee determines
            that there is no spouse, that the spouse cannot be located, that the
            Participant and his spouse are legally separated, that the
            Participant has been abandoned (under applicable state law) and the
            Participant has a court order to that effect, or that consent may be
            waived because of such other circumstances as regulations or rulings
            under Code section 417 set forth).

      (c)   During the period between his election of an annuity and his
            Distribution Date, no loan may be made to a Participant pursuant to
            subsection 10.1, no amount may be withdrawn by the Participant
            pursuant to Section 10 and no amount may be distributed to the
            Participant pursuant to subsection 11.1, in any form other than a
            Joint and Survivor Annuity, without the written consent of the
            spouse as provided in paragraph (b) of this subsection 11.3.

      (d)   Subject to paragraph (e) below, if the Participant dies during the
            period between his election of an annuity and his Distribution Date,
            the vested portions of his Accounts (less any amounts credited to
            the Loan Fund, which shall be distributed in accordance with
            paragraph 10.1(j)) shall be paid to his spouse in the form of a life
            annuity as of the Accounting Date next following the date the
            Participant

                                     - 25 -
<PAGE>   33
            would have attained age 65 or, if the spouse so elects, as soon as
            practicable after any earlier Accounting Date next following his
            death; provided, however, that a spouse to whom payment is due under
            this paragraph (d) may elect to have such vested portions, if any,
            distributed in the form of a lump sum payment.

      (e)   The provisions of paragraph (d) above shall not apply, and
            distribution upon the death of the Participant shall be made in
            accordance with subsection 11.2, if the spouse consents to the
            designation of a Beneficiary other than the spouse in accordance
            with subsection 11.6 during the period between the Participant's
            election of an annuity and his death, and acknowledges that such
            consent to the Participant's designation of such Beneficiary
            constitutes the spouse's consent to the Participant's waiver of a
            qualified pre-retirement survivor annuity payable to the spouse in
            accordance with section 417 of the Code.

      (f)   A Participant may revoke his election pursuant to this subsection
            11.3, and may make a new election of any form of distribution
            permitted under paragraph 11.1(b), at any time during the 90-day
            period immediately preceding his Distribution Date; provided,
            however, that if the effect of such revocation is to select a
            distribution form other than a Joint and Survivor Annuity, it shall
            be ineffective without the written consent of his spouse in
            accordance with paragraph (b) of this subsection 11.3 to the new
            form of distribution and, if applicable, a Beneficiary other than
            the spouse.

      11.4  Forfeitures and Restorations of Non-Vested Contributions. If a
Termination Date occurs with respect to a Participant who is not fully vested in
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.

      (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 amount forfeited under paragraph (a)
            above shall be restored, as adjusted for earnings in accordance with
            uniform rules established by the Committee, 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.

                                     - 26 -
<PAGE>   34
      (e)   A restoration pursuant to paragraph (b) above shall not be
            considered an annual addition for purposes of subsection 8.3.

      (f)   If a Participant who is reemployed by an Employer or Related Company
            prior to incurring five consecutive One Year Breaks in Service
            received a distribution of the vested portion of his Matching
            Account, the amount restored under paragraph (b) above shall be
            maintained in a separate subaccount within the Participant's
            Matching Account and his vested interest in each subaccount shall be
            determined in accordance with the rules set forth in Treas. Reg.
            Section 411(a)-7(d)(5)(iii)(A).

      (g)   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, and shall not be subject to the
            investment direction of the Participant.

      (h)   All forfeitures under this subsection 11.4 shall be used to reduce
            Matching Contributions under Section 5, except to the extent needed
            to restore prior forfeitures under paragraph (b) above.

      11.5  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. Section
1.401(a)(9)-2, and shall supersede any other provision of the Plan to the
contrary:

      (a)   Unless the Participant elects otherwise, 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) once he has attained age 70-1/2 in the
            form of a lump sum distribution or, if elected by the Participant,
            in any other form permitted by paragraph 11.1(b), on or before his
            Required Beginning Date (as defined below) and each December 31
            thereafter. (In the event an annuity or lump sum has been elected,
            each additional payment shall consist of a lump sum payment of all
            amounts then credited to his Accounts.) For years beginning after
            December 31, 1998, a Participant's "Required Beginning Date" shall
            mean April 1 of the calendar year following the later of (i) the
            calendar year in which he attains age 70 1/2, or (ii) the calendar
            year in which the Participant's Termination Date occurs; provided,
            however, that

                                     - 27 -
<PAGE>   35
            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 made in the form of an annuity shall be made
            over the life of the Participant or, if the Participant provides
            accurate and timely Beneficiary information, 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 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;
            provided, however, that this five-year rule shall not apply to a
            natural person designated as Beneficiary by the Participant or under
            the specific terms of the Plan, if

            (i)   such vested interest will be distributed over the life of such
                  designated Beneficiary (or over a period not extending beyond
                  the life expectancy of such Beneficiary), and

            (ii)  such distribution to the Beneficiary begins not later than
                  December 31 of the calendar year following the calendar year
                  in which the Participant died or, if such Beneficiary is the
                  Participant's surviving spouse, not later than December 31 of
                  the calendar year following the calendar year in which the
                  Participant would have attained age 70 1/2.

      (f)   If the Participant's surviving spouse is his Beneficiary and such
            spouse dies before the distributions to such spouse begins,
            paragraph (e) shall be applied as if the surviving spouse were the
            Participant.

      (g)   For purposes of paragraph (d) and (e), distribution of a
            Participant's vested interest in the Plan is considered to begin on
            his Required Beginning Date; provided, however, that distribution
            irrevocably begun in the form of an annuity shall be considered to
            begin on the date it actually commences.

      (h)   For purposes of this subsection 11.5, the life expectancy of a
            Participant or a Beneficiary will be determined in accordance with
            Tables V and VI of Treas. Reg. Section 1.72-9 (provided that the
            Participant gives the Committee or its delegate timely and accurate
            Beneficiary information), and shall not be recalculated.

      11.6  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

                                     - 28 -
<PAGE>   36
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
(in equal shares) or, if he has no living child, his living parents (in equal
shares) or, if he has no living parent, his living brothers and sisters (in
equal shares) or, if he has no living brother or sister, his legal
representative. 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 11.6, no spouse's 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 Treasury
regulations.

      11.7  Form of Payment. Distributions to or on behalf of a Participant or
Beneficiary shall be made proportionately from each of the Investment Funds in
which the Participant's Accounts are invested and, except as provided otherwise
in the following sentence, shall be paid solely in cash. Distributions from the
portion of a Participant's Accounts, if any, that is invested in the Philip
Morris Stock Fund shall be made in cash, except to the extent the Participant or
Beneficiary elects, solely with respect to distributions to be made in the form
of a lump sum or installments (and not with respect to any distribution to be
made in the form of an annuity), to receive whole shares of Common Stock (with
cash distributed in lieu of any fractional share).

      11.8  Facility of Payment. Notwithstanding the provisions of subsections
11.1 and 11.2, 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 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.

      11.9  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 balance 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

                                     - 29 -
<PAGE>   37
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.

      11.10 Absence of Guaranty. None of the Committee, 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 the Trust.

      11.11 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.

      11.12 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. 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.

      11.13 Distributions on Account of Permanent and Total Disability. For
purposes of this Section 11, a Participant will be considered to have terminated
employment and will be entitled to a distribution of his vested Account balances
when he is determined by the Committee to be permanently and totally disabled
(as defined in subsection 9.2).

                                   SECTION 12

                            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.

                                     - 30 -
<PAGE>   38
      (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. Section
            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 13

                                 Administration

      13.1  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 13, 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:

      (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;

                                     - 31 -
<PAGE>   39
      (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.

      13.2  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 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.

      13.3  Uniform Rules. In managing the Plan, the Committee shall uniformly
apply rules and regulations adopted by it to all persons similarly situated.

      13.4  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.

      13.5  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.

      13.6  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

                                     - 32 -
<PAGE>   40
      (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.

      13.7  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, 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.

      13.8  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.

      13.9  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.

      13.10 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 14

                            Amendment and Termination

      14.1  Amendment. While it is expected that the Plan will be continued,
either the Company or the Committee nevertheless may terminate the Plan or 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.

                                     - 33 -
<PAGE>   41
      14.2  Termination. The Plan will terminate as to all of the Employers on
any day specified by the Company upon advance written notice of the termination
given to the Employers. Employees of an Employer shall cease active
participation in the Plan (and will be treated as inactive Participants in
accordance with subsection 2.3) on the first to occur of the following:

      (a)   the date on which that Employer ceases to be a contributing sponsor
            of the Plan, by appropriate action taken by the Company or by such
            Employer;

      (b)   the date that Employer is judicially declared bankrupt or insolvent;
            or

      (c)   the dissolution, merger, consolidation, reorganization or sale of
            that Employer, or the sale of all or substantially all of the assets
            of an Employer, except that, subject to the provisions of subsection
            14.3, with the consent of the Company or the Committee, 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.

      14.3  Merger and Consolidation of the Plan, Transfer of Plan Assets. The
Committee 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, or to accept a transfer of assets and liabilities to this Plan from
another defined contribution plan that is qualified under section 401(a) of the
Code. In the case of any such merger, or transfer of assets and liabilities,
provision shall be made so that each affected Participant in the Plan on the
date thereof would receive a benefit immediately after the merger, consolidation
or transfer which is equal to the benefit he would have been entitled to receive
immediately prior to the merger or transfer. The Committee may adopt such
amendment or Supplement to the Plan as may be necessary to preserve the
protected rights that may not be changed or eliminated by reason of such
transfer or merger under section 411 of the Code; pending such amendment or
adoption of such Supplement, the applicable provisions of the merged or
transferee plan describing such section 411 protected rights shall be
incorporated herein by reference.

      14.4  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 Sections 10 and 11 as those
sections may be amended from time to time.

      14.5  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.

                                     - 34 -
<PAGE>   42
                                   SECTION 15

                          Change of Control Provisions

      15.1  Application. In the event of a Change of Control (as defined in
subsection 15.2), the provisions of this Section 15 shall apply, notwithstanding
any other provision in the Plan to the contrary.

      15.2  Definition of Change of Control. For purposes of the Plan, a "Change
of Control" means the happening of any of the following events:

      (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 Philip Morris Companies Inc.
            (the "Parent") (such stock hereinafter referred to as the
            "Outstanding Parent Common Stock") or (ii) the combined voting power
            of the then outstanding voting securities of the Parent entitled to
            vote generally in the election of directors (the "Outstanding Parent
            Voting Securities"); provided, however, that the following
            acquisitions shall not constitute a Change of Control: (i) any
            acquisition directly from the Parent, (ii) any acquisition by the
            Parent, (iii) any acquisition by any employee benefit plan (or
            related trust) sponsored or maintained by the Parent or any
            corporation controlled by the Parent or (iv) any acquisition by any
            corporation pursuant to a transaction described in clauses (i), (ii)
            and (iii) of paragraph (c) of this subsection 15.2; or

      (b)   Individuals who, as of November 1, 1989, constitute the Board of
            Directors of the Parent (the "Incumbent Board") cease for any reason
            to constitute at least a majority of such Board; provided, however,
            that any individual becoming a director subsequent to November 1,
            1989 whose election, or nomination for election by the Parent'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 Incumbent Board;
            or

      (c)   Approval by the shareholders of the Parent 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 Parent Common
            Stock and Outstanding Parent 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

                                     - 35 -
<PAGE>   43
            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 Parent through one or more subsidiaries)
            in substantially the same proportions as their ownership,
            immediately prior to such Business Combination, of the Outstanding
            Parent Common Stock and Outstanding Parent Voting Securities, as the
            case may be, (ii) no Person (excluding any employee benefit plan (or
            related trust) of the Parent 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 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 Incumbent Board, providing for
            such Business Combination; or

      (d)   Approval by the shareholders of the Parent of (i) a complete
            liquidation or dissolution of the Parent or (ii) the sale or other
            disposition of all or substantially all of the assets of the Parent,
            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 Parent Common
            Stock and Outstanding Parent Voting Securities immediately prior to
            such sale or other disposition in substantially the same proportion
            as their ownership, immediately prior to such sale or other
            disposition, of the Outstanding Parent Common Stock and Outstanding
            Parent 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 Parent or such corporation), except to the
            extent that such Person owned 20% or more of the Outstanding Parent
            Common Stock or Outstanding Parent 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 Incumbent Board, providing for
            such sale or other disposition of assets of the Parent or were
            elected, appointed or nominated by the Incumbent Board.

      15.3  Contribution Requirement. Subject to the conditions and limitations
of Section 8 (after taking into account the affect thereon of the last sentence
of this subsection 15.3) and of the next sentence, upon the occurrence of a
Change of Control, for the year in which the Change

                                     - 36 -
<PAGE>   44
of Control occurs and for each of the two years following the year in which the
Change of Control occurs the "Control Period", each Employer shall make a
"Matching Contribution" to the Plan on behalf of each Participant employed by
such Employer who has made Before-Tax or After-Tax Contributions to the Plan for
that year in an amount equal to the greater of:

      (a)   $.30 for each $1.00 contributed to the Plan by the Participants for
            each year in the Control Period, or

      (b)   the average rate of the Matching Contributions for the two Plan
            Years prior to the Plan Year in which the Change of Control occurs.

In no event shall the sum of the Before-Tax Contributions and any 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. Each Employer's Matching Contributions
for any Plan Year shall be paid to the Trustee, without interest, no later than
the time prescribed by law for filing the Federal corporate income tax return of
Philip Morris Companies Inc., or its successors, as applicable, including any
extensions thereof. The Matching Contributions made on behalf of a Participant
pursuant to this Section 14 shall be allocated to the Participant's Matching
Account.

      15.4  Vesting. Upon and after a Change of Control, a Participant's vested
percentage in all his Accounts under the Plan shall be 100%.

      15.5  Enforcement Rights; Amendment Restrictions.

      (a)   In addition to all other rights under the Plan and applicable law,
            any individual who shall be a Participant or Beneficiary at the date
            on which the Change of Control occurs (the "Control Date") shall
            from and after such date have the right to bring an action, either
            individually or on behalf of all Participants and Beneficiaries, to
            enforce the provisions of this Section 15 by seeking injunctive
            relief or damages, or both, and the Company shall be obligated to
            pay or reimburse such Participant or Beneficiary who shall prevail,
            in whole or in substantial part, for all reasonable expenses,
            including attorney's fees, in connection with such action.

      (b)   Anything in the Plan to the contrary notwithstanding, on and after
            the Control Date none of the provisions of this Section 15 shall be
            amended unless within sixty days after the date of the action taken
            to amend such provisions at least two-thirds of the individuals who
            were Participants at the date of such action shall have given their
            written approval of such action based on full and complete
            information provided to them regarding the actual and potential
            effects of such action on them.

      15.6  Construction. The foregoing provisions of this Section 15 shall be
construed liberally to the end that its purposes shall be fully implemented.

                                     - 37 -
<PAGE>   45
                                  SUPPLEMENT A

                              KRAFT FOODS TIP PLAN

                   California Vegetable Concentrates Division

      This Supplement A to the Kraft Foods TIP Plan sets forth special
provisions that first became effective February 16, 1993 and continue to be
applicable to the Participating Group described below on and after May 12, 1997
and supersedes any provisions of the Plan which are not consistent with this
Supplement A.

1.    Participating Group: This Supplement A is applicable to those Participants
      in the Plan who were employees of the California Vegetable Concentrates
      division of Kraft Food Ingredients Corp. and who became employees of Basic
      Vegetable Products, L.P., pursuant to that certain Asset Purchase
      Agreement entered into as of February 16, 1993 by and between Basic
      Vegetable Products, L.P., and Kraft Food Ingredients Corp.

2.    Special Vesting Provisions: On and after February 16, 1993, a Participant
      in this Participating Group shall be 100% vested in his Matching Account.

3.    Special Withdrawal Provisions:

      Notwithstanding any provisions of the Plan to the contrary, the provisions
      of Section 10 relating to hardship withdrawals and in-service withdrawals
      of After-Tax and Matching Contributions shall continue to apply to a
      Participant in the Participating Group for such time as said Participant
      remains an employee of Basic Vegetable Products, L.P., or its successors
      or affiliates (collectively referred to as the "Successor Employer").
      Notwithstanding any provisions of the Plan to the contrary, for purposes
      of applying the post-employment termination distribution provisions of
      Section 11 of the Plan to a Participant in the Participating Group, such
      Participant's employment shall not be considered to have terminated
      (whether on account of retirement, permanent and total disability, or for
      any other reason) until such time as said Participant has terminated
      employment with the Successor Employer.

                                      A-1
<PAGE>   46
                                  SUPPLEMENT B

                              KRAFT FOODS TIP PLAN

                           Naperville Hourly Employees

      This Supplement B to Kraft Foods TIP Plan sets forth special provisions
that first became effective January 4, 1993 and that continue to be applicable
on and after May 12, 1997 with respect to the Participating Group described
below and supersedes any provisions of the Plan which are not consistent with
this Supplement B.

1.    Participating Group: This Supplement B is applicable to hourly employees
      covered by a collective bargaining contract at the Kraft Foods facility
      (formerly a Nabisco cereal plant) in Naperville, Illinois.

2.    Special Service Provisions: For purposes of Section 3 and subsection 9.1
      of the Plan, service with Nabisco Brands, Inc. and those companies treated
      as a single employer under sections 414(b) and (c) of the Code prior to
      January 4, 1993, shall be treated as service under the Plan for this
      Participating Group.

3.    Special Contribution Provisions. The following provisions shall apply in
      lieu of subsections 4.1, 4.2, 4.3, 4.6 and 5.1 of the Plan:

      (a)   Before-Tax Contributions. Subject to the limitations set forth in
            paragraph (c) below and subsection 4.7 and Section 8 of the Plan,
            and such additional rules as the Committee may establish on a
            uniform and nondiscriminatory basis, for any payroll period a
            Participant in this Participating Group may elect to have his salary
            or wages from his Employer reduced by a whole percentage, and a
            corresponding amount contributed on his behalf to the Plan by his
            Employer as a "Before-Tax Contribution", which amount shall not be
            less than 1 percent nor more than 16 percent of his Eligible
            Compensation (as defined in paragraph (d) below), for that payroll
            period. Any election made pursuant to this paragraph (a) shall be
            effective as soon as practicable after the Participant has made his
            election in accordance with applicable Access System procedures.

      (b)   After-Tax Contributions. Subject to the limitations set forth in
            paragraph (c) below and subsection 4.7 and Section 8 of the Plan,
            and such additional rules as the Committee may establish on a
            uniform and nondiscriminatory basis, for any payroll period a
            Participant in this Participating Group may elect to make "After-Tax
            Contributions" to the Plan through payroll deduction in a whole
            percentage that is not less than 1 percent nor more than 16 percent
            of his Eligible Compensation (as defined in paragraph (d) below) for
            that payroll period. Any election made pursuant to this paragraph
            (b) shall be effective as soon as practicable after the Participant
            has made his election in accordance with applicable Access System
            procedures.

                                      B-1
<PAGE>   47
      (c)   Total Before-Tax and After-Tax Contributions. Notwithstanding the
            foregoing provisions of this paragraph 4 of Supplement B to the
            Kraft Foods TIP Plan, for any payroll period the Before-Tax
            Contributions made on behalf of a Participant in this Participating
            Group and After-Tax Contributions made by such Participant may not
            together exceed 16 percent of the Participant's Eligible
            Compensation (as defined in paragraph (d) below) for such payroll
            period.

      (d)   Eligible Compensation. With respect to Participants in this
            Participating Group, "Eligible Compensation" means wages, overtime,
            shift differential pay, vacation pay, sick pay, holiday pay and
            other forms of cash compensation that are includible on the
            Participant's Federal income tax form W-2 with respect to the
            Participant's periods of active participation in the Plan, plus any
            amounts contributed by an Employer pursuant to a salary reduction
            agreement and which is not includable in gross income under sections
            125, 402(e)(3), 402(h) or 403(b) of the Code, and excluding any
            bonus payments.

      (e)   Matching Contributions. Subject to the conditions and limitations of
            subsection 4.7 and Section 8 of the Plan, for each payroll period
            during a Plan Year an Employer shall contribute to the Plan on
            behalf of each Participant in this Participating Group employed by
            such Employer a Matching Contribution amount equal to 25 percent of
            the Before-Tax and After-Tax Contributions made by and on behalf of
            the Participant that do not exceed 6 percent of such Participant's
            Eligible Compensation for such payroll period. Match-eligible
            Before-Tax and After-Tax Contributions from the first 6 percent of a
            Participant's Eligible Compensation are sometimes referred to as
            "Basic Contributions", and unmatched contributions in excess of the
            first 6 percent of Eligible Compensation are sometimes referred to
            as "Supplemental Contributions".

4.    Special Accounting Provisions. The After-Tax Account maintained under the
      Plan for each Participant in the Participating Group shall include the
      after-tax contribution balances for such Participant, if any, that were
      transferred to the Plan from the Nabisco Brands Employee Savings Plan. The
      Matching Account maintained under the Plan for each Participant in the
      Participating Group shall include the company contribution account
      balances for such Participant, if any, that were transferred to the Plan
      from the Nabisco Brands Employee Savings Plan, and all of such transferred
      balances shall be 100% vested.

5.    Special Vesting Provisions. In addition to the vesting provisions of
      subsections 9.1 and 9.2 of the Plan, each individual who is a Participant
      in this Participating Group on March 31, 1997 will have a fully vested,
      nonforfeitable interest in his Matching Account upon the completion of 24
      months of employment after his initial enrollment date in the Plan.

6.    Special In-Service Withdrawal Provisions. The last sentence of subsection
      10.5 of the Plan shall not apply to the Participants in this Participating
      Group and accordingly no minimum withdrawal amount shall apply to such
      Participants.

                                      B-2
<PAGE>   48
                                  SUPPLEMENT C

                              KRAFT FOODS TIP PLAN

                          Kraft Foods Inc. Common Stock

      This Supplement C has an effective date of October 3, 2001 (or such other
date as approved by the Vice President Benefits of the Company). All references
in the Plan to "Kraft Foods, Inc." or the "Company" shall be a reference to
"Kraft Foods North America, Inc." In addition, Section 6.1 of the Plan is
amended and restated to read as follows:

      6.1   Investment Funds and Loan Account. The Investment Committee shall
establish and cause the Trustee to maintain one or more "Investment Funds" for
the investment of Participants' Accounts, including one or more Investment Funds
that invest in the common stock of a corporation that is a member of the
controlled group of corporations (as defined under Section 414(b) of the Code)
that includes the Company. The Investment Committee shall also cause the Trustee
to maintain a "Loan Account" to reflect any loans to Participants pursuant to
subsection 10.1. The Investment Committee in its discretion may change the
Investment Strategy of any Investment Fund without prior notice to Participants.

                                      C-1<PAGE>   1
                      NABISCO, INC. CAPITAL INVESTMENT PLAN
                  (Restated Effective as of December 31, 2000)
<PAGE>   2
                                  NABISCO, INC.
                             CAPITAL INVESTMENT PLAN
                                      INDEX

<TABLE>
<CAPTION>
Article                                                                     Page
-------                                                                     ----

<S>                                                                         <C>
I.    DEFINITIONS......................................................       1

      1.01  Account....................................................       2
      1.02  Administrative Committee...................................       2
      1.03  Affiliated Company.........................................       2
      1.04  Affiliated Plan............................................       2
      1.05  Automatic Enrollment Date..................................       2
      1.06  Basic Contributions........................................       2
      1.07  Basic Contribution Account.................................       2
      1.08  Beneficiary................................................       3
      1.09  Board of Directors.........................................       3
      1.10  Break in Service...........................................       3
      1.11  Code.......................................................       3
      1.12  Committee..................................................       4
      1.13  Company....................................................       4
      1.14  Company Contribution Account...............................       4
      1.15  Compensation...............................................       4
      1.16  Disability.................................................       4
      1.17  Effective Date.............................................       4
      1.18  Eligible Employee..........................................       4
      1.19  Employee...................................................       5
      1.20  Entry Dates................................................       5
      1.21  ERISA......................................................       5
      1.22  Investment Fund............................................       5
      1.23  Job Elimination............................................       5
      1.24  Participant................................................       6
</TABLE>

                                       -i-
<PAGE>   3
                                  NABISCO, INC.
                             CAPITAL INVESTMENT PLAN
                                      INDEX

<TABLE>
<CAPTION>
Article                                                                     Page
-------                                                                     ----

<S>                                                                         <C>
      1.25  Participant Company........................................       6
      1.26  Plan.......................................................       6
      1.27  Plan Year..................................................       6
      1.28  Prior Plan.................................................       6
      1.29  Retirement.................................................       6
      1.30  RJR Plan...................................................       6
      1.31  Rollover Contributions.....................................       6
      1.32  Rollover Contribution Account..............................       6
      1.33  Service....................................................       7
      1.34  Severance Date.............................................       7
      1.35  Supplemental After-Tax Contributions.......................       8
      1.36  Supplemental After-Tax Contribution Account................       8
      1.37  Supplemental Pre-Tax Contribution .........................       8
      1.38  Supplemental After-Tax Contribution Account................       8
      1.39  Surviving Spouse...........................................       8
      1.40  Termination of Employment..................................       9
      1.41  Trustee....................................................       9
      1.42  Trust Fund.................................................       9
      1.43  Valuation Date.............................................       9

II.   PARTICIPATION....................................................      10

      2.01  Eligibility................................................      10
      2.02  Participation..............................................      10
      2.03  Participant Status.........................................      11

III.  CONTRIBUTIONS....................................................      12

      3.01  Participant Basic Contributions............................      12
      3.02  Supplemental Pre-Tax Contributions.........................      12
      3.03  Supplemental After-Tax Contributions.......................      12
      3.04  Company Contributions......................................      12
      3.05  Change in Participant Contributions........................      14

</Table>

                                    - ii -

<PAGE>   4
                                 NABISCO, INC.
                            CAPITAL INVESTMENT PLAN

                                     INDEX
                                    (cont'd)

<TABLE>
<CAPTION>
Article                                                                     Page
-------                                                                     ----

<S>                                                                         <C>
      3.06  Suspension of Participant Contributions....................      14
      3.07  Restrictions on Pre-Tax Contributions......................      14
      3.08  Restrictions on Pre-Tax Contributions......................      16
      3.09  Qualified Military Service.................................      16

IV.   TRUST FUND AND INVESTMENT FUNDS..................................      18

      4.01  The Trust Agreement........................................      18
      4.02  The Trustee................................................      18
      4.03  Separate Funds.............................................      18
      4.04  Investment Funds...........................................      18
      4.05  Temporary Investment.......................................      18
      4.06  Investment of Contributions................................      18
      4.07  Voting by Participants.....................................      19
      4.08  Investment Managers........................................      20
      4.09  Participant Responsibility For Selection of Funds..........      20

V.    ACCOUNT STATEMENTS AND VALUATION.................................      21

      5.01  Valuation of Accounts......................................      21
      5.02  Valuation Upon Withdrawal or Distribution..................      21
      5.03  Statement of Accounts......................................      21

VI.   VESTING AND FORFEITURES..........................................      22

      6.01  Vesting of Participant's Contributions.....................      22
      6.02  Vesting of Company Contributions...........................      22
      6.03  Forfeiture on Termination of Employment....................      23
      6.04  Disposition of Forfeitures.................................      23
      6.05  Restoration of Forfeitures.................................      23

VII.  DISTRIBUTIONS....................................................      24

      7.01  Distribution of Benefits...................................      24
      7.02  Installment Option.........................................      26
      7.03  Proof of Death and Right of Beneficiary....................      26
      7.04  Completion of Appropriate Forms and Procedures.............      26
      7.05  Investment Pending Distribution............................      26
      7.06  Direct Rollovers...........................................      26

</TABLE>

                                    -iii-

<PAGE>   5
                                 NABISCO, INC.
                            CAPITAL INVESTMENT PLAN

                                     INDEX
                                    (cont'd)

<TABLE>
<CAPTION>
Article                                                                     Page
-------                                                                     ----

<S>                                                                         <C>

VIII. WITHDRAWAL PRIOR TO TERMINATION OF EMPLOYMENT
      AND SPECIAL PRE-TAX CONTRIBUTION RULES...........................      28

      8.01  Election to Withdraw from Accounts.........................      28
      8.02  Withdrawal of After-Tax and Company Contributions..........      28
      8.03  Rules Applicable to Withdrawals Prior to Termination
            of Employment..............................................      29
      8.04  Hardship Withdrawals.......................................      29
      8.05  Restrictions on Pre-Tax Contribution Distributions.........      30

IX.   LOANS ...........................................................      31

      9.01  Loan Provisions............................................      31

X.    ADMINISTRATION OF THE PLAN.......................................      33

      10.01 Nabisco Employee Benefits Committee........................      33
      10.02 Administrative Committee...................................      33
      10.03 Authority and Duties of Various Fiduciaries................      34
      10.04 Named Fiduciaries..........................................      36
      10.05 Delegation.................................................      36
      10.06 Multiple Capacities........................................      36

XI.   AMENDMENTS, TERMINATION, PERMANENT
      DISCONTINUANCE OF CONTRIBUTIONS,
      MERGER OR CONSOLIDATION..........................................      37

      11.01 Amendments.................................................      37
      11.02 Termination or Permanent Discontinuance of Contributions...      37
      11.03 Partial Termination........................................      37
      11.04 Benefits in Case of Merger or Consolidation................      37

</TABLE>

                                     -iv-
<PAGE>   6
                                 NABISCO, INC.
                            CAPITAL INVESTMENT PLAN

                                     INDEX
                                    (cont'd)

<TABLE>
<CAPTION>
Article                                                                     Page
-------                                                                     ----
<S>                                                                         <C>
XII. MISCELLANEOUS.....................................................      39

      12.01 Benefits Payable from Trust Fund...........................      39
      12.02 Elections..................................................      39
      12.03 No Right to Continued Employment...........................      39
      12.04 Inalienability of Benefits and Interests...................      39
      12.05 Qualified Domestic Relations Orders........................      39
      12.06 Payments for Exclusive Benefit of Participants.............      39
      12.07 New Jersey Law to Govern...................................      40
      12.08 No Guarantee...............................................      40
      12.09 Address of Record..........................................      40
      12.10 Unlocated Spouse...........................................      40
      12.11 Agent for Process..........................................      40
      12.12 Payments in the Event of Incompetency......................      40
      12.13 Transfer of Accounts to This Plan..........................      40
      12.14 Transfer of Accounts From This Plan to an Affiliated Plan..      43
      12.15 Direct or Indirect Transfer................................      43
      12.16 Payment of Expenses........................................      43
      12.17 Transfer of Accounts to the R. J. Reynolds Tobacco
            Company Capital Investment Plan............................      44
      12.18 Headings...................................................      44

XIII. CLAIM PROCEDURE..................................................      45

      13.01 Initial Determination......................................      45
      13.02 Review.....................................................      45

XIV.  LIMITATION ON BENEFITS...........................................      47

      14.01 Code Section 415 Limits....................................      47
      14.02 Code Section 416 Limits....................................      50
</TABLE>

                                      -v-

<PAGE>   7
                                 NABISCO, INC.
                            CAPITAL INVESTMENT PLAN

                                     INDEX
                                    (cont'd)

<TABLE>
<CAPTION>
Article                                                                     Page
-------                                                                     ----
<S>                                                                         <C>
XV.   SPECIAL PROVISIONS PERTAINING TO TRANSFERS
      FROM RJR NABISCO CAPITAL INVESTMENT PLAN.........................      55

SCHEDULE

Schedule A-- Compensation..............................................      57
</TABLE>

                                     -v-

<PAGE>   8
                      NABISCO, INC. CAPITAL INVESTMENT PLAN

                                  INTRODUCTION

                  WHEREAS, prior to June 14, 1999, RJR Nabisco, Inc. ("RJR")
maintained the RJR Nabisco Capital Investment Plan (the "RJR Plan") for the
benefit of its eligible employees, including those employed by Nabisco, Inc.
(the "Company") and its affiliates ("Eligible Nabisco Employees"); and

                  WHEREAS, on June 14, 1999, RJR was spun-off from its parent
company, RJR Nabisco Holdings Corp. through a distribution to its shareholders
of all of the outstanding shares of the common stock of RJR, and, as a result of
such spin-off, RJR is no longer related to Nabisco, Inc. and its affiliates; and

                  WHEREAS, in connection with such spin-off, effective June 14,
1999, the RJR Plan is maintained by R. J. Reynolds Tobacco Company for the
benefit of its eligible employees and the eligible employees of its affiliates;
and

                  WHEREAS, in light of the foregoing, effective June 14, 1999,
the Eligible Nabisco Employees are no longer eligible to participate in the RJR
Plan; and

                  WHEREAS, effective as of June 14, 1999, the Company desires to
establish the Nabisco, Inc. Capital Investment Plan (the "Plan"), a profit
sharing plan containing Section 401(k) cash or deferred features for the benefit
of the Eligible Nabisco Employees and newly eligible employees of the Company
and its affiliates; and

                  WHEREAS, effective June 14, 1999, the account balances held
under the RJR Plan attributable to the Eligible Nabisco Employees and
forfeitures attributable to individuals who terminated employment prior to June
14, 1999 but would have been employees of the Company or its affiliates on June
14, 1999 but for such termination of employment are being transferred to the
Plan; and

                  WHEREAS, as a result of the acquisition of the common stock of
Nabisco Holdings Corp. by Philip Morris Companies Inc. and the subsequent merger
of Nabisco, Inc. into Kraft Foods North America, Inc., the Plan is hereby
restated and amended effective as of December 31, 2000.

                                       1
<PAGE>   9
                                    ARTICLE I

                                   DEFINITIONS

1.01     Accounts, unless otherwise indicated, means a Participant's Basic,
         Supplemental Pre-Tax, Supplemental After-Tax, and Company Contribution
         Accounts and any subaccounts thereunder. Some Participants may also
         have Rollover Contribution Accounts and After-Tax Basic Contribution
         Accounts.

1.02     Administrative Committee means the Administrative Committee(s) that is
         appointed by the Committee to handle the day-to-day administration of
         the Plan. (See Section 10.02).

1.03     Affiliated Company means the Company and any corporation which is a
         member of a controlled group of corporations (as defined in Section
         414(b) of the Code) which includes the Company; any trade or business
         (whether or not incorporated) which is under control (as defined in
         Section 414(c) of the Code) with the Company; any organization (whether
         or not incorporated) which is a member of an affiliated service group
         (as defined in Section 414(m) of the Code) which includes the Company;
         and any other entity required to be aggregated with the Company
         pursuant to regulations under Section 414(o) of the Code. For purposes
         of Article XIV, the definition of Affiliated Company shall be modified
         in accordance with Code Section 415(h).

1.04     Affiliated Plan means a defined contribution plan sponsored by an
         Affiliated Company.

1.05     Automatic Enrollment Date means, for each Eligible Employee, a date
         determined by the Committee, which date is no earlier than three weeks
         following the date the Eligible Employee first becomes eligible to
         participate in the Plan in accordance with Section 2.01(b).

1.06     Basic Contributions means the contributions of a Participant which are
         credited to his Basic Contribution Account in accordance with Section
         3.01.

1.07     Basic Contribution Account means that portion of the Trust Fund which,
         with respect to any Participant, is attributable to his Basic
         Contributions and any investment earnings or losses thereon, and
         excluding amounts, if any, distributed to the Participant in accordance
         with Section 3.07(c). An After-Tax Basic Contribution Account includes
         that portion of the Trust Fund which, with respect to any Participant,
         is attributable to any After-Tax Basic Contributions which were

                                       2
<PAGE>   10
         transferred to this Plan pursuant to ARTICLE XV, and any investment
         earnings or losses thereon.

1.08     Beneficiary means the beneficiary designated by the Participant under
         the Company's group term life insurance plan, unless the Participant
         has designated any other person or persons (who may be designated
         contingently or successively and which may be an entity other than a
         natural person) on a form supplied by the Administrative Committee to
         receive benefits payable in the event of the death of the Participant;
         provided, however that if the Participant is married at the date of his
         death, the Beneficiary shall be the Participant's Surviving Spouse, and
         any Beneficiary designation that does not name the Participant's
         Surviving Spouse as the Beneficiary shall be void unless it has been
         consented thereto on a form supplied by the Administrative Committee in
         writing by the Participant's Surviving Spouse and such consent (i)
         designated the alternative Beneficiary and/or form of benefit which may
         not be changed without spousal consent, (ii) acknowledges the effect of
         such election, and (iii) is witnessed by a notary public. The
         Participant may, however, revoke his alternate Beneficiary at any time,
         thereby reinstating his Surviving Spouse as sole Beneficiary. In the
         event of the Participant's death without an effective Beneficiary
         designation, any Plan benefits payable shall be paid in equal parts to
         the Participant's surviving children or, if the Participant has no
         surviving children, to the Participant's surviving parents or, if the
         Participant has no surviving parents, to the Participant's surviving
         siblings or, if the Participant has no surviving siblings, to the
         Participant's estate. Section 9.01 (a) should be referred to in the
         event of the death of a Participant with an outstanding loan balance,
         Section 12.05 should be referred to in the event of a Qualified
         Domestic Relations Order and Section 12.12 should be referred to for
         payment in the event of incompetency of a Beneficiary.

1.09     Board of Directors means, prior to August 2001, the Board of Directors
         of Nabisco, Inc. and after July 2001, the Board of Directors of Kraft
         Foods North America, Inc., and any committee authorized by such Board
         to act in its behalf with reference to the Plan.

1.10     Break in Service means any twelve-consecutive-month period beginning on
         a Severance Date during which an Employee does not complete an Hour of
         Service.

1.11     Code means the Internal Revenue Code of 1986 as amended from time to
         time. Reference to any Section or subsection of the Code includes
         reference to any comparable or succeeding provisions of any legislation
         which amends, supplements or replaces such Section or subsection.

                                       3
<PAGE>   11
1.12     Committee means the Nabisco Employee Benefits Committee which shall act
         as the Plan Administrator for the Plan. The Committee shall have the
         duties and powers described in Article X.

1.13     Company means, prior to August 2001, Nabisco, Inc. Subsequent to July
         2001, Company means the Nabisco Biscuit & Snacks Group of Kraft Foods
         North America, Inc. With respect to any corporate act after July 2001,
         Company means Kraft Foods North America, Inc.

1.14     Company Contribution Account means that portion of the Trust Fund
         which, with respect to any Participant, is attributable to any
         contributions made on his behalf by the Company, and any investment
         earnings and gains or losses thereon.

1.15     Compensation means, with respect to any Plan Year, the basic
         compensation and such other forms of compensation paid for employment
         as are listed in Schedule A hereto for the calendar year beginning in
         such Plan Year. Compensation in excess of the limit described in
         Section 401(a)(17) of the Code (subject to cost of living adjustments)
         shall not count for purposes of this Plan.

1.16     Disability means being disabled as determined by the Federal Social
         Security Administration and receiving the Social Security Award.

1.17     Effective Date of this Plan means June 14, 1999.

1.18     Eligible Employee means any person employed by a Participating Company
         in an "eligible category", who is paid from a United States dollar
         payroll maintained in the United States; provided, that except as the
         Board of Directors or the Committee, pursuant to authority delegated to
         it by the Board of Directors, may otherwise provide on a basis
         uniformly applicable to all persons similarly situated, no person shall
         be an "Eligible Employee" for purposes of the Plan:

         (a)      who is excepted by the Committee,

         (b)      whose terms and conditions of employment are determined by a
                  collective bargaining agreement with the Company or a
                  Participating Company which does not make this Plan applicable
                  to him, provided that employee retirement benefits were
                  negotiated thereunder, or

         (c)      who is a "leased employee" as defined in Section 414(n) of the
                  Code and who is required by such Section to be considered an
                  employee of the Company or an Affiliated Company.
                  Notwithstanding the foregoing, if a

                                       4
<PAGE>   12
                  "leased employee" is reclassified as an Employee, years of
                  service as a "leased employee" of the Company or an Affiliated
                  Company shall be considered in computing Service for vesting.

                  Notwithstanding any provision of the Plan to the contrary,
Eligible Employee shall not include any person who becomes an Employee pursuant
to the Asset Purchase Agreement entered into on November 19, 1999 among Favorite
Brands International Holding Corp., Favorite Brands International, Inc., Sather
Trucking Corporation, Trolli, Inc., Nabisco, Inc., Nabisco Brands Company, and
Nabisco Technology Company and who works at a facility in the following
locations.

Favorite Brands International, Inc., and Trolli, Inc. Locations

1.  Bannockburn, Illinois          8.  Pittston, Pennsylvania

2.  Chicago, Illinois              9.  Round Lake, Minnesota

3.  DesPlaines, Nevada             10. New Orleans, Louisiana

4.  Henderson, Nevada              11. Oklahoma City, Oklahoma

5.  Kendallville, Indiana          12. San Bernadino, California

6.  Ligonier, Indiana              13. Creston, Iowa

7.  Chattanooga, Tennessee         14. Plantation, Florida

The exclusion from participation of those Employees covered by the Asset
Purchase Agreement shall not apply beginning as of the date the Nabisco
Retirement Savings Plan and the Nabisco Retirement Plan are merged with the
Plan.

1.19     Employee means any person employed by (or, after July 2001, working at)
         the Company or an Affiliated Company.

1.20     Entry Dates are any business day.

1.21     ERISA means the Employee Retirement Income Security Act of 1974, and as
         is amended from time to time.

1.22     Investment Fund or Funds means the separate funds in which Participant
         and Company Contributions to the Plan are invested in accordance with
         Article IV.

1.23     Job Elimination means the elimination of an existing position at the
         sole discretion of the Company when, because of changing needs or
         circumstances, (i) the job is no longer performed, or (ii) the job is
         still performed, but fewer employees are needed to perform it.

                                       5
<PAGE>   13
1.24     Participant means any person participating in the Plan as provided in
         Article II. Except for purposes of Sections 2.01, 2.02 and 6.02 (ii)
         and Article 3, an Eligible Employee who has made a rollover or transfer
         to the Plan which meets the requirements of Section 12.13 or 12.15 and
         for whom a Rollover Contribution Account is maintained shall be treated
         as a Participant and such Eligible Employee shall become a Participant
         for all purposes after meeting the requirements of Sections 2.01 and
         2.02. In addition, in any Plan Year in which the Plan is top-heavy (as
         defined in Section 14.02) and for purposes of Section 14.02(f),
         "participant" shall include an Eligible Employee not otherwise
         described in the preceding two sentences who shall, pursuant to
         Treasury Regulation Section 1.416-1, Q&A M-10, receive the contribution
         described in Section 14.02(f), and such Eligible Employee shall become
         a Participant for all purposes after meeting the requirements of
         Sections 2.01 and 2.02.

1.25     Participating Company means the Company and any United States
         subsidiary of the Company which is approved by the Committee to
         participate in the Plan. The term shall not include any foreign
         corporations, or units thereof.

1.26     Plan means the Nabisco, Inc. Capital Investment Plan.

1.27     Plan Year means the period from each December 31 through the next
         December 30. The Limitation Year shall be the calendar year.

1.28     Prior Plan means any U.S. qualified plan (or an individual retirement
         account, annuity or bond in which a qualified plan distribution was
         separately invested pursuant to Code Sections 408(d)(3)(A)(ii) and
         (D)(i)).

1.29     Retirement means the normal retirement of a Participant who has
         attained age 65, or the early retirement of a Participant who has
         attained age 55 and who has completed 10 years of service.

1.30     RJR Plan means the RJR Nabisco Capital Investment Plan.

1.31     Rollover Contributions means the amount contributed to the Plan as a
         rollover contribution from a Prior Plan, in accordance with Section
         12.13(b).

1.32     Rollover Contribution Account means that portion of the Trust Fund
         which, with respect to any Eligible Employee, is attributable to his
         Rollover Contributions, and any investment earnings or losses thereon.

                                       6
<PAGE>   14
1.33     Service means all periods during which an Employee is employed by (or,
         after July 2001, working at) the Company, a Participating Company or
         any Affiliated Company commencing with the first day of employment or
         the first day of reemployment and ending with his Severance Date which
         next follows the first day of employment or the first day of
         reemployment, as the case may be. The first day of employment or the
         first day of reemployment shall be deemed to be the first day in which
         the Employee performs an "Hour of Service" (as defined in Department of
         Labor Reg. Section 2530.200b-2) as an Employee. Periods of Service
         commencing on the first day of employment and ending on the first
         Severance Date and commencing on each reemployment date and ending on
         the Severance Date which next follows shall be aggregated on a day by
         day basis and 365 days of aggregate Service shall constitute one year
         of Service. Service shall include any period of authorized part-time
         employment, periods of authorized leave of absence up to a maximum of
         one year, periods of absence due to service in the Armed Forces of the
         United States as required pursuant to Section 414(u) of the Code,
         periods of absence due to unpaid leave taken pursuant to the Family and
         Medical Leave Act of 1993 or similar state laws (to the extent required
         by such laws, but only to the extent such leave is not otherwise
         credited under this Section 1.33), and periods of absence due to
         illness or disability up to a maximum of 12-consecutive months. Service
         shall also include all service credited to an Eligible Employee under
         the RJR Plan prior to June 14, 1999. If an individual who is a
         participant in the RJR Plan on or after June 14, 1999 becomes an
         Eligible Employee on or before June 14, 2000, Service shall also
         include the service credited to such Eligible Employee under the RJR
         Plan in respect of the period commencing on June 14, 1999 and ending on
         June 14, 2000.

         Notwithstanding the preceding paragraph and unless otherwise determined
         by the Committee, Service with an Affiliated Company that was not a
         member of the Nabisco Controlled Group as of December 10, 2000 shall
         only be taken into account subsequent to the time that such corporation
         became an Affiliated Company. Nabisco Controlled Group means Nabisco,
         Inc. and any other corporation that was a member of the controlled
         group of corporations (as defined in Section 1563(a) of the Code) that
         included Nabisco, Inc. as of December 10, 2000.

1.34     Severance Date means the following:

         (a)      the date on which an Employee quits, retires, is discharged,
                  dies or terminates employment following a period of salary and
                  benefit continuation; or

                                       7
<PAGE>   15
         (b)      the first anniversary of the first date of a period in which
                  an Employee remains absent from Service (with or without pay)
                  with the Company or an Affiliated Company for any reason other
                  than quit, retirement, discharge, or death; provided, however,
                  the absence from Service of an Employee receiving benefits
                  under one or more long-term disability plans of the Company or
                  an Affiliated Company is not a severance until the earlier of
                  normal retirement age, the cessation of such disability
                  payments or two consecutive years on long-term disability;
                  provided further that if such an Employee in active employment
                  after his normal retirement age becomes disabled, his
                  Severance Date is the date such long-term disability plan
                  benefits commence or would commence.

                  In the case of an Employee who is absent from work by virtue
                  of (i) the Employee's pregnancy, (ii) birth of the Employee's
                  child, (iii) placement of a child with the Employee by
                  adoption, or (iv) caring for any such child for a period of up
                  to a year immediately following such birth or placement, the
                  Severance Date is the second anniversary of the first day of
                  absence from Service provided that the period between the
                  first and second anniversary of such first day of absence is
                  neither counted as Service nor a Break in Service.

1.35     Supplemental After-Tax Contributions means the contributions which a
         Participant elects to make to the Plan in accordance with Section 3.03.

1.36     Supplemental After-Tax Contribution Account means that portion of the
         Trust Fund which, with respect to any Participant, is attributable to
         his own Supplemental After-Tax Contributions and any investment
         earnings or losses thereon and any subaccounts as may be necessary to
         reflect the provisions of Section 3.07.

1.37     Supplemental Pre-Tax Contributions means the contributions which a
         Participant elects to have the Company make directly to the Plan on
         behalf of the Participant in accordance with Section 3.02.

1.38     Supplemental Pre-Tax Contribution Account means that portion of the
         Trust Fund which, with respect to any Participant, is attributable to
         his own Supplemental Pre-Tax Contributions and any investment earnings
         or losses thereon.

1.39     Surviving Spouse means the person to whom the Participant is married,
         under applicable state law, at the time of the Participant's death and
         to whom the benefits under the Plan shall be payable in the event of
         the Participant's death unless a valid Beneficiary designation and
         consent thereto by the Participant's spouse has been

                                       8
<PAGE>   16
         made and received by the Committee, or unless such benefits are subject
         to a qualified domestic relations order as defined in Section 414(p) of
         the Code.

1.40     Termination of Employment means separation from the employment of the
         Company or an Affiliated Company for any reason, including, but not
         limited to, Retirement, death, Disability, resignation or dismissal;
         provided, however, that transfer in employment between the Company and
         an Affiliated Company shall not be deemed to be a "Termination of
         Employment" and provided further, that if an Employee is rehired by the
         Company or an Affiliated Company within 30 days of his or her
         separation from the employment of the Company or an Affiliated Company,
         such separation shall not be considered to be a "Termination of
         Employment."

1.41     Trustee means a trustee or trustees at any time acting as such under a
         trust agreement or agreements established for purposes of this Plan.

1.42     Trust Fund means the cash and other properties arising from (i)
         contributions made by Participants and by the Participating Companies
         in accordance with the provisions of this Plan, (ii) funds transferred
         from the RJR Plan or Affiliated Plans, and (iii) any investment
         earnings and gains or losses thereon. The Trust Fund is held and
         administered by the Trustee pursuant to Article IV.

1.43     Valuation Date means each business day and any other date the Committee
         deems desirable or necessary to value the Trust Fund in accordance with
         Article V.

When used herein, the masculine shall include the feminine, and the singular
shall include the plural, unless the context clearly indicates a different
meaning.

                                       9
<PAGE>   17

                                   ARTICLE II

                                  PARTICIPATION

2.01     Eligibility.

         (a)      An Eligible Employee who was eligible to participate in the
                  RJR Plan immediately prior to the Effective Date shall be
                  eligible to participate in the Plan on the Effective Date.

         (b)      Any Employee shall be eligible to become a Participant in the
                  Plan as of the first Entry Date coincident with or next
                  following the date he becomes an Eligible Employee.

         (c)      All Eligible Employees of a Participating Company who
                  participate in this Plan shall participate under the terms and
                  conditions herein stated.

         (d)      An Employee who was a participant in the Nabisco Retirement
                  Savings Plan or the Nabisco Retirement Plan on the date that
                  such plan merged with the Plan shall become a Participant as
                  of the Entry Date coinciding with or next following the merger
                  date. All service under any such plan shall be taken into
                  account for determining participation under the Plan.

2.02     Participation.

         (a)      An Eligible Employee may become a Participant on any Entry
                  Date by making application in a manner prescribed by the
                  Committee in which he:

                  (i)      designates the percentage of Compensation to be
                           contributed as Basic Contributions in accordance with
                           Section 3.01;

                  (ii)     designates the percentage of Compensation, if any, to
                           be contributed as Supplemental Pre-Tax and/or
                           Supplemental After-Tax Contributions in accordance
                           with Sections 3.02 and 3.03;

                  (iii)    authorizes applicable payroll deductions; and

                  (iv)     chooses one or more Investment Fund(s).

         (b)      If the Eligible Employee does not make the application
                  contemplated in Section 2.02(a) prior to his Automatic
                  Enrollment Date, such Eligible

                                       10
<PAGE>   18
                  Employee shall become a Participant effective as of his
                  Automatic Enrollment Date and shall be deemed to have (i)
                  authorized payroll deductions for Basic Contributions in
                  accordance with Section 3.01, equal to 3% of his Compensation
                  and (ii) elected to invest such contributions in the Fidelity
                  Asset Manager: Income. Notwithstanding the foregoing, the
                  Eligible Employee may at any time elect a different
                  contribution percentage (including 0%) in accordance with
                  Section 3.05 and/or different Investment Funds in accordance
                  with Section 4.06.

2.03     Participant Status. An Employee who has become a Participant shall
         remain a Participant so long as he remains in the service of the
         Company or an Affiliated Company, and shall cease to be a Participant
         upon his Termination of Employment, except that he shall remain a
         Participant so long as he has an Account balance. Active participation,
         however, including contributions to the Plan by or for a Participant,
         shall automatically be suspended effective as of the Participant's
         Severance Date. Participation in the Plan shall cease as of the date
         Accounts are transferred to an Affiliated Plan pursuant to Section
         12.14.

                                       11
<PAGE>   19
                                   ARTICLE III

                                  CONTRIBUTIONS

3.01     Participant Basic Contributions. Subject to the provisions of Section
         3.07, each Participant may elect that the Participating Company
         contribute from 1% to 6% of his Compensation to the Plan (in 1%
         increments) as Pre-Tax Contributions in lieu of an equal amount being
         paid to him as current cash Compensation. Basic Contributions are
         matched with Company Contributions in accordance with Section 3.04.
         Basic Contributions are made through payroll deductions and are
         credited to Participants' Accounts as soon as reasonably possible
         following the date of payment of the Compensation from which the
         contribution is taken.

3.02     Supplemental Pre-Tax Contributions. Subject to the provisions of
         Section 3.07, a Participant who has authorized the maximum Basic
         Contribution rate of 6% may also make additional pre-tax contributions
         to the Plan by authorizing Supplemental Pre-Tax Contributions of 1% to
         10% of his Compensation (in 1% increments) in lieu of an equal amount
         being paid to him as current cash Compensation. Supplemental Pre-Tax
         Contributions are made through payroll deductions and are credited to
         Participants' Accounts as soon as reasonably possible following the
         date of payment of the Compensation from which the contribution is
         taken.

3.03     Supplemental After-Tax Contributions. A Participant may make
         contributions to the Plan on an after-tax basis, either in lieu of or
         in combination with Pre-Tax Contributions by authorizing Supplemental
         After-Tax Contributions of 1% to 16% of his Compensation (in 1%
         increments); provided that the combined percentage of Compensation for
         Basic and Supplemental Contributions is a minimum of 1% and a maximum
         of 16%. (After-Tax Contributions are referred to as "supplemental" even
         though a Participant may elect to make them prior to authorizing any or
         the full amount of Pre-Tax Basic Contributions). Supplemental After-Tax
         Contributions are made through payroll deductions and are credited to
         Participants' Accounts as soon as reasonably possible following the
         date of payment of the Compensation from which the contribution is
         taken.

3.04     Company Contributions.

         (a)      All Company Contributions shall be made subject to the terms
                  and conditions of this Section 3.04. Prior to August 2001,
                  Company Contributions are made by Nabisco, Inc. After July
                  2001, Company Contributions are made with respect to the
                  Nabisco Biscuit & Snacks Group of Kraft Foods North America,
                  Inc.

                                       12
<PAGE>   20
         (b)      For each Plan Year, the Participating Companies shall
                  contribute an amount which, together with any forfeitures
                  under Article VI, shall produce an allocation to each
                  Participant's Company Contribution Account equal to 50% of
                  such Participant's Basic Contributions for such Plan Year.

         (c)      Each Participating Company's share of Company Contributions
                  for any Plan Year shall be that proportion of the amount of
                  Company Contributions for that year which the Basic
                  Contributions withheld by that Participating Company bears to
                  the total Basic Contributions withheld by all Participating
                  Companies for the Plan Year.

         (d)      In any Plan Year in which the Plan is top-heavy (as defined in
                  Section 14.02) the Participating Companies shall make
                  additional Company Contributions to the extent necessary to
                  comply with the minimum top-heavy contribution requirement as
                  set forth in Section 14.02(f).

         (e)      Each Company Contribution to the Plan is conditioned on its
                  deductibility.

                  In the event that the Commissioner of Internal Revenue,
                  determines that the Plan does not qualify for tax-exempt
                  status under Section 401 of the Code and issues an adverse
                  determination with respect to its initial qualification, the
                  Company Contributions made on or after the date on which such
                  determination is applicable shall be returned to the Company
                  without interest within one year after such determination, but
                  only if the application for determination is made by the time
                  prescribed by law for filing the Company's return for the
                  taxable year in which the Plan was adopted, or such later date
                  as the Secretary of the Treasury may prescribe.

                  In the event that a Company Contribution to the Plan is made
                  by a mistake of fact or all or part of the Company's
                  deductions under Section 404 of the Code for contributions to
                  the Plan are disallowed by the Internal Revenue Service, the
                  portion of the contributions attributable to such mistake of
                  fact or to which such disallowance applies shall be returned
                  to the Company without interest. Any such return shall be made
                  within one year after the making of such contribution by
                  mistake of fact or disallowance of deductions, as the case may
                  be.

                                       13
<PAGE>   21
3.05     Change in Participant Contributions. Subject to the provisions of this
         Article, a Participant may elect to change the percentage of his
         authorized payroll deduction by giving notice to the Committee in such
         manner as the Committee may prescribe. Such changed percentage shall
         become effective beginning with the first payroll period commencing
         after processing such notice. If the Committee makes a mistake-of-fact
         with regard to any contribution, it shall, depending on the
         mistake-of-fact, either (i) cause said contribution to be returned to
         the Participant without restriction or (ii) accept additional
         contributions for the affected period.

3.06     Suspension of Participant Contributions.

         (a)      A Participant may elect to suspend his Basic, Supplemental
                  Pre-Tax or Supplemental After-Tax Contributions by notifying
                  the Committee in advance in the manner prescribed by the
                  Committee. The suspension shall become effective on the first
                  day of the first payroll period commencing on or after
                  processing such request. No Company Contributions shall be
                  made on behalf of a Participant during a period of suspension
                  of Basic Contributions.

         (b)      A Participant who has suspended his Basic, Supplemental
                  Pre-Tax or Supplemental After-Tax Contributions may elect to
                  apply to the Committee to resume his contributions in the
                  manner prescribed by the Committee. The resumption shall
                  become effective as of the first payroll period commencing on
                  or after processing his request.

         (c)      No contributions may be made by a Participant for any period
                  of unpaid absence from Service. A Participant who has ceased
                  to make contributions under the Plan in accordance with this
                  subsection (c) shall again be eligible to resume making
                  contributions on the date he returns to Service as an Eligible
                  Employee.

         (d)      A Participant who has ceased to make contributions under the
                  Plan because he has ceased to be an Eligible Employee but,
                  nevertheless, continues to be an Employee shall again be
                  eligible to resume making contributions on the date he again
                  becomes an Eligible Employee and gives notice to the Committee
                  in the prescribed manner.

3.07     Restrictions on Pre-Tax Contributions.

         (a)      In no event may the sum of the Basic and Supplemental Pre-Tax
                  Contributions made by the Company on behalf of any Participant
                  exceed

                                       14
<PAGE>   22
                  $10,000 (as adjusted in accordance with Code Section
                  402(g)(5)). In the event the dollar limit for pre-tax
                  contributions is reached with respect to a Participant during
                  a calendar year, all additional contributions made on behalf
                  of the Participant for that calendar year will be made on an
                  after-tax basis, including, if necessary, a portion of the
                  contributions that the Participant had designated as Basic
                  Contributions.

         (b)      The Committee shall have the right to establish rules with
                  respect to the making of elections of Pre-Tax Contributions,
                  including, without limitation, the right to require that any
                  such election be made at such time prior to its becoming
                  effective as the Committee shall determine and the right to
                  restrict the Participant's right to change such election. Such
                  contributions are intended to be treated for federal income
                  tax purposes as contributions made by the Company under a
                  qualified cash or deferred arrangement (as defined in Section
                  401(k) of the Code) but shall be treated as if they were
                  contributions by a Participant for the purpose of the Plan
                  except where the Plan expressly indicates otherwise.

         (c)      Notwithstanding any other provision of the Plan, Allocable
                  Excess Pre-Tax Contributions and income allocable thereto
                  shall be distributed no later than April 15 to Participants
                  who claim Allocable Excess Pre-Tax Contributions for the
                  preceding calendar year. "Allocable Excess Pre-Tax
                  Contributions" shall mean the amount of Pre-Tax Contributions
                  for a calendar year that the Participant allocates to this
                  Plan that exceed the limits of Code Section 402(g).

         (d)      The Participant's claim shall be in writing, shall be
                  submitted to the Committee no later than March 1; shall
                  specify the Participant's Allocable Excess Pre-Tax
                  Contributions for the preceding calendar year; and shall be
                  accompanied by the Participant's written statement that if
                  such amounts are not distributed, such Allocable Excess
                  Pre-Tax Contributions, when added to amounts deferred under
                  other plans or arrangements described in Sections 401(k),
                  402(h), 408(k) or 403(b) of the Code, exceed the limit imposed
                  on the Participant by Section 402(g) of the Code for the year
                  in which the deferral occurred. A Participant is deemed to
                  notify the Committee of any Allocable Excess Pre-Tax
                  Contributions that arise by taking into account only those
                  amounts deferred pursuant to this Plan and any other Plans of
                  a Participating Company.

         (e)      The Allocable Excess Pre-Tax Contributions distributed to a
                  Participant with respect to a calendar year shall be adjusted
                  for income and, if there is

                                      15

<PAGE>   23
                  a loss allocable to the Excess Pre-Tax Contributions, shall in
                  no event be less than the lesser of the Participant's Pre-Tax
                  Account under the Plan or the Participant's Pre-Tax
                  Contributions for the Plan Year.

3.08     Code Section 401(k) and 401(m) Nondiscrimination Tests. The Plan is
         subject to the following nondiscrimination tests.

         (a)      Definitions. For purposes of this Section, the following
                  additional definitions shall be used for Plan Years beginning
                  after 1996:

                  (i)      Highly Compensated Employee means an individual who
                           performs service during the determination year and is
                           an Employee who is a 5-percent owner (as defined in
                           Section 416(i)(1) of the Code) at any time during the
                           Plan Year or the preceding Plan Year, or an Employee
                           who received compensation in excess of $80,000
                           (adjusted for changes in the cost of living) and is a
                           member of the "Top-Paid Group" for the preceding Plan
                           Year.

                  (ii)     "Top-Paid Group" means those Employees who are in the
                           top 20-percent of all Employees based on compensation
                           paid by the Company.

         (b)      Average Actual Deferral Percentage Test ("ADP"). For each Plan
                  Year, Participants' Pre-Tax Contributions shall satisfy the
                  requirements described under Section 401(k)(3)(A)(ii) of the
                  Code. The Committee shall have the right to limit Pre-Tax
                  Contributions of Highly Compensated Employees as it deems
                  necessary to satisfy such requirements.

         (c)      Average Actual Contribution Percentage Test ("ACP"). For each
                  Plan Year, matching Company Contributions and Participant
                  After-Tax Contributions shall satisfy the requirements under
                  Section 401(m)(2) of the Code. The Committee shall have the
                  right to limit matching Company Contributions and Participant
                  After-Tax Contributions of Highly Compensated Employees as it
                  deems necessary to satisfy such requirements.

3.09     Qualified Military Service. Any Participant who resumes participation
         in the Plan following a period of qualified military service shall have
         the right to make-up the contributions described in Section 3.01,
         Section 3.02 and Section 3.03 that were not made on account of
         qualified military service as provided under Section 414(u) of the
         Code. The Company will make contributions as described in Section 3.04
         in

                                       16
<PAGE>   24
         the same manner and in the same amount as if the Participant's
         contributions were made during qualified military service.

                                      17
<PAGE>   25
                                   ARTICLE IV

                         TRUST FUND AND INVESTMENT FUNDS

4.01     The Trust Agreement. The Company shall enter into a trust agreement
         which shall contain such provisions as shall render it impossible for
         any part of the corpus of the Trust or income therefrom to be at any
         time used for, or diverted to, purposes other than for the exclusive
         benefit of Participants. Any or all rights or benefits accruing to any
         person under the Plan with respect to any Company Contributions
         deposited under the Trust Agreement shall be subject to all the terms
         and provisions of the Trust which shall specifically incorporate and be
         subject to the provisions of the Plan.

4.02     The Trustee. The Trustee shall be a corporate trustee appointed by the
         Corporate Employee Plans Investment Committee of Philip Morris
         Companies Inc. (the "Philip Morris Committee"), unless such authority
         is transferred to the Compensation and Governance Committee of Kraft
         Foods Inc. (the "Kraft Committee").

4.03     Separate Funds. Subject to Section 4.04, the Trustee shall maintain
         separate Investment Funds within the Fund as are designated by the
         Company.

4.04     Investment Funds. The Philip Morris Committee, unless such authority is
         transferred to the Kraft Committee, shall select the Investment Funds
         offered under the Plan and reserves the right to eliminate or add Funds
         from time to time, including Funds that invest in the common stock of
         an Affiliated Company.

4.05     Temporary Investment. Pending permanent investment of the assets of any
         Investment Fund, the Trustee may temporarily hold cash or make
         short-term investments in obligations of the United States Government,
         commercial paper, an interim investment fund for tax qualified employee
         benefit plans established by the Trustee unless otherwise provided by
         applicable law, or other investments of a short-term nature.

4.06     Investment of Contributions.

         (a)      Election. All Basic Contributions, Supplemental Pre-Tax
                  Contributions, Supplemental After-Tax Contributions and
                  Company Contributions will be invested at the election of the
                  Participant in multiples of 1% in any one or

                                       18
<PAGE>   26
                  combination of the Investment Funds under the Plan, subject to
                  any restrictions imposed on investing in any stock fund. A
                  Participant may make or change an election on any day by
                  giving notice to the Committee in the prescribed manner. Any
                  such election or change of election shall be effective as of
                  the first payroll period after it is processed.

         (b)      Reallocation of Investments. A Participant may elect on any
                  day to reallocate the investment of his Accounts to any one or
                  combination of the Investment Funds in multiples of 1% by
                  giving notice to the Committee in such manner as the Committee
                  may prescribe. The amounts reallocated will be based upon
                  values as of the Valuation Date applicable to the processing
                  of the request.

4.07     Voting by Participants.

         (a)      Voting of Stock Generally. Each Participant shall have the
                  right and shall be afforded the opportunity to instruct the
                  Trustee how to vote that proportionate number of the total
                  number of shares of stock held in any Fund that consists of
                  the common stock of the Company or an Affiliated Company that
                  is the same proportion that the value of his interest bears to
                  the total value of such Fund. Instructions by Participants to
                  the Trustee shall be in such form and pursuant to such
                  regulations as the Committee may prescribe. Any such
                  instructions shall remain in the strict confidence of the
                  Trustee.

         (b)      Tender or Exchange Offers. In the event of a tender or
                  exchange offer for any or all shares of Stock, the Committee
                  shall notify each Participant or Beneficiary and utilize its
                  best efforts to timely distribute or cause to be distributed
                  to him such information as will be distributed to other
                  shareholders of such Stock in connection with any such tender
                  or exchange offer. Each Participant or his Beneficiary shall
                  have the right to instruct the Trustee in writing not to
                  tender or exchange shares of Stock credited to his Account
                  under the Trust Fund. Unless the Trustee determines that ERISA
                  requires it to act otherwise, the Trustee shall not tender or
                  exchange any shares of Stock credited to a Participant's
                  Account under the Trust Fund unless specific instructions to
                  tender or exchange such shares have been received. For
                  purposes of this Section 4.07(b), "Stock" shall mean the stock
                  held in any Fund that consists of the common stock of the
                  Company or an Affiliated Company.

                                       19
<PAGE>   27
4.08     Investment Managers. The Philip Morris Committee may enter into a
         written agreement with or direct the Trustee to enter into an agreement
         with one or more investment managers to manage the investments of one
         or more of the Investment Funds. Such investment managers may include
         legal reserve life insurance companies which enter into group annuity
         contracts with the Trustee. The Philip Morris Committee may remove any
         such investment manager or any successor investment manager, or direct
         the Trustee to do so, and any such investment manager may resign. In
         addition, the Philip Morris Committee may, upon removal or resignation
         of an investment manager, provide for the appointment of a successor
         investment manager. The Kraft Committee shall exercise the duties
         described in this Section 4.08 if such authority is transferred to the
         Kraft Committee from the Philip Morris Committee.

4.09     Participant Responsibility For Selection of Funds. Each Participant is
         solely responsible for the selection of his Investment Funds. Neither
         the Trustee, the Committee, any Administrative Committee, the Company
         nor any of the directors, officers or employees of the Company or any
         Affiliated Company is required to advise a Participant as to the manner
         in which his Accounts should be invested. The fact that a security is
         available to Participants for investment under the Plan shall not be
         construed as a recommendation for the purchase of that security, nor
         shall the designation of any Investment Fund impose any liability on
         the Company, any Affiliated Company, their directors, officers or
         employees, the Trustee, the Committee, or any Administrative Committee.

                                      20
<PAGE>   28
                                    ARTICLE V

                        ACCOUNT STATEMENTS AND VALUATION

5.01     Valuation Of Accounts. As of each Valuation Date, the Accounts of each
         Participant shall be adjusted to reflect any appreciation or
         depreciation in the fair market value and any income earned by each
         Investment Fund in which the Participant's Accounts are invested since
         the prior Valuation Date. Such fair market value shall be the aggregate
         fair market value of all securities or other property held for each
         Investment Fund, plus cash and accrued earnings, less accrued expenses
         and proper charges against each Investment Fund.

         When determining the value of Participant Accounts, any deposits due
         which have not been deposited in the Trust Fund on behalf of the
         Participant shall be added to his Accounts. Similarly, adjustments of
         Accounts for appreciation or depreciation of an Investment Fund shall
         be deemed to have been made as of the Valuation Date to which the
         adjustment relates, even though they are actually made as of a later
         date.

5.02     Valuation Upon Transfer Withdrawal or Distribution. The valuation of
         Accounts for purposes of an in-service withdrawal, a transfer of
         Accounts to another Investment Fund, or a cash distribution shall be as
         described in Section 5.01.

5.03     Statement of Accounts. Each Participant shall be furnished at least
         annually a statement setting forth the value of his Accounts.

                                       21
<PAGE>   29
                                   ARTICLE VI

                             VESTING AND FORFEITURES

6.01     Vesting Of Participant's Contributions. Each Participant's Basic
         Contribution Account, Supplemental Pre-Tax Contribution Account and
         Supplemental After Tax Contribution Account shall at all times be fully
         vested.

6.02     Vesting of Company Contributions. A Participant shall become fully
         vested in his Company Contribution Account upon the earlier of (i)
         completion of 60 months of Service, (ii) 24 months of employment after
         his initial Entry Date, or (iii) the occurrence of any one of the
         following:

         (a)      attainment of age 65,

         (b)      Retirement,

         (c)      Disability,

         (d)      death,

         (e)      termination of employment as a result of Job Elimination,

         (f)      termination of the Plan, or

         (g)      complete discontinuance of Company Contributions.

         With respect to an Employee who becomes a Participant following the
         merger of the Nabisco Retirement Savings Plan (the "Savings Plan") or
         the Nabisco Retirement Plan (the "Retirement Plan") with the Plan, the
         following additional conditions shall apply regarding any amount
         credited to his Company Contribution Account:

         (a)      The vested percentage shall not be less than the vested
                  percentage, determined as of the merger date, of the
                  Employee's (i) matching contributions account and supplemental
                  contribution account under the Savings Plan or (ii) the amount
                  attributable to employer contributions under the Retirement
                  Plan.

         (b)      A "Year of Service" under the Savings Plan shall be equivalent
                  to 12 months of Service under the Plan.

         (c)      The Employee's Entry Date shall be the later of November 19,
                  1999 or the date of hire by the Company.

         (d)      The Employee shall be credited with 12 months of Service for
                  the period beginning July 1, 2000 and ending June 30,

                                       22
<PAGE>   30
                  2001 if he would have been credited with a "Year of
                  Service" shall have the meaning described in Section 8.2 of
                  the Savings Plan.

         (e)      All service under the Savings Plan and the Retirement Plan as
                  of the merger date will be taken into account under the Plan.

         (f)      With respect to a former participant in the Retirement Plan,
                  any such Employee will have a 100% vested interest upon
                  attaining age 55 while employed by the Company.

6.03     Forfeiture on Termination of Employment. If a Participant's employment
         is terminated prior to attainment of age 65 for reasons other than
         Retirement, Disability, death, or Job Elimination the portion, if any,
         of his Company Contribution Account in which he is not vested shall be
         forfeited upon the earlier of (i) the accrual of five (5) consecutive
         Break in Service years, or (ii) the receipt of a cash-out and, under
         circumstances where all Participant Contributions were distributed
         prior to Termination of Employment or there are no Participant
         Contributions, a cash-out will be deemed to have been made on the date
         the Termination of Employment occurred. All forfeitures pursuant to
         (ii) above are subject to the provisions of Section 6.05.

6.04     Disposition of Forfeitures. All forfeitures shall be used to reduce
         Company Contributions otherwise payable to the Plan.

6.05     Restoration of Forfeitures. Any amount forfeited pursuant to the
         provisions of clause (ii) of Section 6.03 shall be restored to the
         Account of a Participant if the Participant is re-employed before he
         accrues five consecutive Break in Service years. The restoration will
         occur without the requirement that the Participant repay to the Plan
         any amounts previously distributed to him.

                                       23
<PAGE>   31
                                   ARTICLE VII

                                  DISTRIBUTIONS

7.01     Distribution Of Benefits.

         (a)      Termination of Employment. A Participant who has a Termination
                  of Employment for reasons other than Retirement, Disability or
                  death shall receive a lump sum distribution of the value of
                  his vested Accounts, subject to the provisions of Section
                  7.01(e). Distribution shall be made as soon as
                  administratively feasible following the valuation of the
                  Participant's Accounts. If the Committee has not received an
                  application for distribution by the time specified in
                  subsection (d) below, a distribution shall automatically be
                  made at such time.

         (b)      Retirement or Disability. A Participant who has a Termination
                  of Employment due to Retirement or Disability shall receive a
                  lump sum distribution of the value of his Accounts.
                  Distribution shall be made as soon as administratively
                  feasible following the valuation of the Participant's
                  Accounts. However, and notwithstanding anything in this Plan
                  to the contrary, a Participant may not postpone payment beyond
                  April 1 of the calendar year following the calendar year in
                  which he attains age 70 1/2. Participants who are not 5%
                  owners (as defined in Code Section 416(i)(1)(B)) and who
                  attained age 70 1/2 prior to January 1, 1988, are not required
                  to have their distribution commence prior to April 1 of the
                  calendar year following the calendar year in which they
                  retire, regardless of their age.

         (c)      Death. The Accounts of a Participant who has died shall be
                  distributed to his Beneficiary in a single lump sum payment.
                  Payment will be made after notification and verification of
                  the Participant's death; provided however, that if the
                  Beneficiary is the Participant's Surviving Spouse, a
                  distribution shall not be made until after a written
                  application for distribution from the Surviving Spouse has
                  been received by the Committee. The Accounts shall be valued
                  as soon as administratively feasible after receipt of the
                  written application for distribution, and distribution shall
                  be made as soon as administratively feasible following the
                  valuation of the Participants Accounts. If the Committee has
                  not received an application for distribution by the time the
                  Participant would have attained age 65, the distribution shall
                  automatically be made at such time.

                                       24
<PAGE>   32
         (d)      Latest Date for Distribution. Distributions to a Participant
                  shall commence no later than the April 1 following the
                  calendar year in which the Participant attains age 70 1/2.

         (e)      Small Lump Sum Cash-Outs. The foregoing notwithstanding, if
                  the value of the Participant's vested Account does not exceed
                  $5,000, a distribution shall be made to the Participant as
                  soon as administratively feasible after a written application
                  for distribution has been received by the Committee, valued as
                  soon as administratively feasible after receipt of such
                  application; provided; however, that if the Committee does not
                  receive a written application for distribution within 90 days
                  after the Participant's Termination of Employment, the Account
                  shall be valued and distribution shall be made as soon as
                  administratively feasible after the expiration of such 90-day
                  period. In no event shall the Account of a Participant which
                  is in excess of the amount of $5,000 be distributed to him or
                  on his behalf prior to the time specified in (d) above without
                  the written consent to the Participant or, if applicable, his
                  Surviving Spouse.

         (f)      QDRO. Notwithstanding subsections (a)-(e) above and Section
                  8.05, if a qualified domestic relations order, as described in
                  Section 12.05, requires the distribution of all or part of a
                  Participant's benefits under the Plan, the establishment or
                  acknowledgment of the alternate payee's rights to benefits
                  under the Plan in accordance with the qualified domestic
                  relations order shall in all events be applied in a manner
                  consistent with the terms of the Plan. Notwithstanding the
                  foregoing, (i) the Committee is authorized, pursuant to such
                  uniform and nondiscriminatory rules as it shall establish
                  which shall be consistent with applicable law and the terms of
                  the applicable qualified domestic relations order, to cash out
                  benefits to which alternate payees may be entitled prior to
                  the date such benefits would otherwise become payable in
                  accordance with the applicable provisions of the Plan, and
                  (ii) in no event shall the recognition of an alternate payee's
                  rights in accordance with this Section 7.01 (f) be deemed to
                  include the right to make a withdrawal pursuant to the
                  provisions of Article VIII or to receive any benefits in the
                  form of a partial payment.

         (g)      Company/Affiliated Company Stock Fund Distributions. With
                  respect to any Investment Fund that consists of the common
                  stock of the Company or an Affiliated Company, a Participant
                  or his Beneficiary may elect that the distribution from any
                  such Investment Fund be made in the form of cash or shares of
                  stock, except that any fractional portion of a share shall be
                  paid in

                                       25
<PAGE>   33
         cash. If a Participant does not make an election in connection with the
         distribution, all amounts shall be paid in cash.

7.02     Installment Option. A Participant or Beneficiary may elect to receive
         the value of his Accounts in monthly or annual installment payments;
         provided, however, such Participant may elect at any time to receive
         the remaining amount credited to his Accounts in a lump-sum
         distribution.

7.03     Proof of Death and Right of Beneficiary. The Committee may require and
         rely upon such proof of death and such evidence of the right of any
         Beneficiary to receive the undistributed value of the Account of a
         deceased Participant as the Committee may deem proper, and its
         determination of death and of the right of such Beneficiary or other
         person to receive payments shall be conclusive.

7.04     Completion of Appropriate Forms and Procedures. The Committee has
         prescribed forms/procedures providing notice to it in order for a
         distribution to be made under the Plan. In the event a Participant or
         Beneficiary does not comply with such procedures before the date a
         distribution becomes payable under the terms of the Plan, distribution
         from such Participant's or Beneficiary's Account may, at the option of
         the Committee (taking into account Section 12.12), be mailed to the
         Address of Record as provided in Section 12.09.

7.05     Investment Pending Distribution.

         (a)      The provisions of Section 4.06 shall continue to apply to the
                  Accounts of inactive Participants, including Participants who
                  have elected the installment option as provided in Section
                  7.02(a).

         (b)      A Participant is not entitled to any interest, dividends or
                  any other form of investment proceeds on his Account for the
                  period between the Valuation Date on which his Account is
                  valued for payment and the date payment is made.

7.06     Direct Rollovers.

         Notwithstanding any provision of the Plan to the contrary that would
         otherwise limit a distributee's election under this Article, a
         distributee may elect, at the time and in the manner prescribed by the
         Plan Administrator, to have any portion of an eligible rollover
         distribution paid directly to an eligible retirement plan specified by
         the distributee in a direct rollover.

                                       26

<PAGE>   34
         (a)      Eligible Rollover Distribution. An eligible rollover
                  distribution is any distribution of all or any portion of the
                  balance to the credit of the distributee, except that an
                  eligible rollover distribution does not include: any
                  distribution that is one of a series of substantially equal
                  periodic payments (not less frequently than annually) made for
                  the life (or life expectancy) of the distributee or the joint
                  lives (or joint life expectancies) of the distributee and the
                  distributee's designated beneficiary, or for a specified
                  period of ten years or more; any distribution to the extent
                  such distribution is required under Section 401(a)(9) of the
                  Code; the portion of any distribution that is not includible
                  in gross income (determined without regard to the exclusion
                  for net unrealized appreciation with respect to employer
                  securities); and any hardship distribution described in
                  Section 401(k)(2)(B) of the Code made after 1998.

         (b)      Eligible Retirement Plan. An eligible retirement plan is an
                  individual retirement account described in Section 408(a) of
                  the Code, and individual retirement annuity described in
                  Section 408(b) of the Code, and annuity plan described in
                  Section 403(b) of the Code, or a qualified trust described in
                  Section 401(a) of the Code, that accepts the distributee's
                  eligible rollover distribution. However, in the case of an
                  eligible rollover distribution to the surviving spouse, an
                  eligible retirement plan is an individual retirement account
                  or individual retirement annuity.

         (c)      Distributee. A distributee includes an employee or former
                  employee. In addition, the employee's or former employee's
                  surviving spouse and the employee's or former employee's
                  spouse or former spouse who is the alternate payee under a
                  qualified domestic relations order, as defined in Section
                  414(p) of the Code, are distributees with regard to the
                  interest of the spouse or former spouse.

         (d)      Direct Rollover. A direct rollover is a payment by the plan to
                  the eligible retirement plan specified by the distributee.

                                       27
<PAGE>   35
                                  ARTICLE VIII

                       WITHDRAWAL PRIOR TO TERMINATION OF
                EMPLOYMENT AND SPECIAL PRE-TAX CONTRIBUTION RULES

8.01     Election to Withdraw from Accounts. As of any Valuation Date and
         subject to Sections 8.02, 8.03 and 8.04, a Participant may elect to
         withdraw, in cash only and in a stated amount, all or a portion of the
         value of vested amounts in his Accounts from which withdrawals are
         allowed.

8.02     Withdrawal of After-Tax and Company Contributions. Withdrawals as
         described in Section 8.01 and subject to the rules of Section 8.03
         shall be applied by the Committee against a Participant's Accounts in
         the order and classification as follows:

         Tax-Free Withdrawal: If applicable, the amount in his Supplemental
         After-Tax Account that may be withdrawn on a tax-free basis.

         Regular Withdrawal: The remaining value in his Supplemental After-Tax
         Account, the value in his Rollover Contribution Account, and the vested
         value in his Company Contribution Account.

         Participants with less than 60 months of Plan participation may not
         withdraw (i) after-tax contributions that were matched and have been in
         the Plan for less than 24 months, and (ii) Company Contributions that
         have been in the Plan for less than 24 months.

         Hardship Withdrawal: A Participant who qualifies for a financial
         hardship as defined in Section 8.04 may withdraw up to 100% of the
         amount available under a Regular Withdrawal plus the remaining value of
         his After-Tax Supplemental Account, the remaining vested value of his
         Company Contribution Account, and any dollar amount from his Basic and
         Supplemental Pre-Tax Contribution Accounts, excluding earnings to Basic
         Pre-Tax Contributions and Supplemental Pre-Tax Contributions made under
         this Plan and earnings credited after December 31, 1988 to Pre-Tax
         Contributions made under the RJR Plan.

         Withdrawal Upon Attainment of Age 59 1/2 or Disability: A Participant
         who has attained age 59 1/2 or is totally Disabled may withdraw the
         maximum available under a Regular Withdrawal plus any dollar amount up
         to the remaining vested value of his After-Tax Supplemental Account,
         Company Contributions Account and his Basic and Supplemental Pre-Tax
         Accounts.

                                       28
<PAGE>   36
8.03     Rules Applicable to Withdrawals Prior to Termination of Employment. The
         following rules shall, except as noted in Section 8.04, apply to
         withdrawals under this Article VIII:

         (a)      Withdrawals may only be made by prior notice to the Committee
                  in the manner prescribed by the Committee.

         (b)      Excluding Hardship withdrawals, no more than one withdrawal
                  may be made in any six-month period.

         (c)      Excluding Hardship withdrawals, in no event may a Participant
                  make a withdrawal in an amount less than $1000, or the maximum
                  amount available for withdrawal as a Tax-Free Withdrawal or a
                  Regular Withdrawal, if less.

         (d)      In no event may a Participant elect an order of withdrawal
                  other than set forth in Section 8.02, nor may a Participant
                  select the classification or Investment Fund from which his
                  stated amount of withdrawal will be withdrawn.

         (e)      Payments of withdrawal amounts will be made as soon as
                  practicable after a Participant's election to withdraw.

         (f)      Amounts received from any plan in a trust-to-trust transfer
                  which were subject to Code Section 401 (k) under such plan
                  shall be subject to Code Section 401 (k) requirements under
                  this Plan.

8.04     Hardship Withdrawals. Financial hardship for purposes of Section 8.02
         shall mean that a Participant requires a withdrawal of money for an
         immediate and heavy financial need. Such withdrawal cannot exceed the
         sum of (i) the amount required to meet such need and (ii) any amounts
         necessary to pay any federal, state or local income taxes or penalties
         reasonably anticipated as a result of the distribution. No withdrawal
         shall be permitted unless the hardship cannot reasonably be relieved
         from other sources including distributions (other than hardship
         withdrawals) and nontaxable loans available under this Plan or any
         other plan, through reimbursement or compensation by insurance or
         otherwise, by liquidation of assets to the extent such liquidation
         would not itself cause an immediate and heavy financial need, by
         cessation of all Basic and Supplemental Pre-Tax Contributions or
         Supplemental After-Tax Contributions under the Plan, or by borrowing
         from commercial sources on reasonable commercial terms. Purchase by a
         Participant of a primary residence, the need to prevent eviction or
         foreclosure on the primary

                                       29
<PAGE>   37
         residence of a Participant, post-secondary education tuition, related
         fees, or room and board for a Participant or his dependents and any
         non-reimbursed medical expense of a Participant or his dependents may
         generally be considered situations of heavy financial need, unless
         otherwise governed by law or regulation. The Committee may, under rules
         established by it which are uniformly applicable to all similarly
         situated Participants, determine other circumstances where a
         Participant has a heavy financial need and the decision of the
         Committee as to whether a Participant satisfies the financial hardship
         rule shall be conclusive, unless otherwise governed by law or
         regulation.

8.05     Restrictions on Pre-Tax Contribution Distributions. Notwithstanding any
         other provision in this Plan to the contrary, a Participant's Pre-Tax
         Contribution Account may not be distributed earlier than upon one of
         the following events:

         (a)      The Participant's Retirement, death, Disability or Termination
                  of Employment;

         (b)      The termination of the Plan without the establishment of a
                  successor plan;

         (c)      A Participant's attainment of age 59 1/2;

         (d)      A Participant's hardship, restricted as set forth in Section
                  8.04;

         (e)      The sale or other disposition of the Company or any Affiliated
                  Company to an unrelated corporation, which does not maintain
                  the Plan, of substantially all of the assets used in a trade
                  or business, but only with respect to Employees who continue
                  with the acquiring corporation; or

         (f)      The sale or disposition by the Company or any Affiliated
                  Company of its interest in a subsidiary to an unrelated entity
                  which does not maintain the Plan, but only with respect to
                  Employees who continue employment with the subsidiary.

                  This Section is intended to comply with the earliest
                  distribution requirements of Treasury Reg. 1.401 (k)-1(d) and
                  is not intended to add any forms of distribution not otherwise
                  allowed under the Plan.

                                       30
<PAGE>   38
                                   ARTICLE IX

                                      LOANS

9.01     Loan Provisions. An active Participant may make application to the
         Committee to borrow from the Trust Fund and the Committee may permit
         such a loan upon the conditions hereinafter specified and any other
         rules promulgated by the Committee.

         (a)      Loans shall be made available to all eligible Participants on
                  a reasonably equivalent basis and (i) shall not be made
                  available to highly compensated employees (as defined in
                  Section 414(q) of the Code) in an amount greater than the
                  amount made available to other Participants, and (ii) shall
                  not be permitted for purchasing securities or in any way
                  financing a securities investment.

         (b)      The maximum amount of a loan to a Participant shall not exceed
                  the lesser of (i) 50% of the vested interest in his Account,
                  or (ii) $50,000, reduced by the highest outstanding loan
                  balance during the preceding twelve months. The minimum loan
                  amount is $1,000. Notwithstanding the foregoing, no amount of
                  a Participant's Account shall be considered available for a
                  loan if it is subject to a qualified domestic relations order
                  as such term is defined under Section 414(p)(1)(A) of the
                  Code.

         (c)      The Committee shall have complete discretion in determining
                  lien priorities among the various investments in the Account.
                  The Committee shall determine the interest rate for each loan,
                  consistent with the rate being charged by other lending
                  institutions for a similar loan to an unrelated borrower on
                  the same date. A loan shall be deemed to be an investment of a
                  Participant's individual Account and all interest payments and
                  repayments of principal shall be credited to the Account of
                  the Participant.

         (d)      The Participant shall be required to authorize payroll
                  deductions from his Compensation in an amount sufficient to
                  repay the loan over its term. Loan repayment amounts shall be
                  credited to a Participant's Account as of the date of payment
                  of the Compensation from which the repayment is taken. In the
                  event of default of the Participant before the loan is repaid
                  in full, the unpaid balance shall become due and payable and,
                  to the extent that the outstanding amount is not repaid within
                  60 days after demand for payment is

                                         31
<PAGE>   39
                  sent, such amount shall be deemed to have been distributed and
                  the Trustee shall first satisfy the indebtedness from the
                  amount payable to the Participant before making any payment to
                  the Participant. In the event of a Participant's death before
                  the loan is repaid in full, the Participant's estate shall be
                  the Beneficiary with respect to the outstanding loan
                  notwithstanding any other deemed or actual Beneficiary
                  designation and the unpaid loan balance shall be deemed to
                  have been distributed to the Participant's estate.

                  Upon a Participant's Termination of Employment, the
                  Participant can repay any outstanding loan balance in full or
                  continue to repay the outstanding balance in the same amount
                  and at the same rate as prior to the Termination of
                  Employment. Repayments after a Participant's Termination of
                  Employment shall be effected as determined by the Committee.

         (e)      During the repayment period for the loan, the Participant
                  shall be permitted to fully participate in the Plan.

         (f)      The Participant shall execute such other documents as the
                  Committee shall request.

         (g)      Only one loan for each Participant may be outstanding at one
                  time.

         (h)      The Committee may make additional rules for loans under the
                  Plan, provided that such rules are administered in a
                  nondiscriminatory manner.

                                       32
<PAGE>   40
                                    ARTICLE X

                           ADMINISTRATION OF THE PLAN

10.01 Nabisco Employee Benefits Committee.

      (a)   The general administration of the Plan and the responsibility for
            carrying out the provisions of the Plan shall be placed in the
            Committee, consisting of not less than three persons.

      (b)   Any member of the Committee may resign by delivering his written
            resignation to the Secretary of the Committee and such resignation
            shall become effective upon the date specified therein. A member
            shall be deemed to have resigned if he leaves the active employment
            of the Company and all Affiliated Companies.

      (c)   The Committee shall elect from its members a Chairman, and shall
            also elect a Secretary who may, but need not, be one of the members
            of the Committee. The Committee may appoint from its members such
            committees with such powers as it shall determine, and may authorize
            one or more of its members, or any agent, to execute or deliver any
            instrument or make any payment in its behalf.

      (d)   The Committee shall hold meetings upon such notice, at such place or
            places, and at such time or times as it may from time to time
            determine.

      (e)   A majority of the members of the Committee shall constitute a quorum
            for the transaction of business. All resolutions or other action
            taken by the Committee shall be by the vote of a majority of the
            members of the Committee present at any meeting or without a meeting
            by an instrument in writing signed by a majority of the members of
            the Committee.

      (f)   No member of the Committee shall receive any compensation for his
            service as such, and, except as may be required by applicable law,
            no bond or other security is required of him in such capacity in any
            jurisdiction.

10.02 Administrative Committee.

      (a)   The Committee, in its discretion, may delegate its administrative
            duties and responsibilities to one or more Administrative
            Committees each consisting of three or more persons, who shall be
            appointed by and serve at the

                                       33
<PAGE>   41
            pleasure of the Committee and one or more of whom may also be
            members of such Committee. Vacancies in the Administrative Committee
            shall be filled by the Committee but the Administrative Committee
            may act, notwithstanding any vacancies, so long as there are at
            least two members of such Committee. The members of an
            Administrative Committee shall serve without compensation for their
            services as such, but shall be reimbursed by the Company for all
            necessary expenses incurred in the discharge of their duties.

      (b)   Subject to restrictions imposed by the Committee, an Administrative
            Committee's powers shall include the following powers:

            (i)   to interpret Plan provisions with respect to eligibility,
                  service, vesting and determination of benefits,

            (ii)  to calculate benefits and authorize the payment of benefits by
                  the Plan trustees through disbursement accounts as directed by
                  the Administrative Committee,

            (iii) to authorize the payment of routine plan expenses exclusive of
                  trustee, investment manager, or actuary fees,

            (iv)  to prepare and/or approve the filing of required governmental
                  reports,

            (v)   to maintain Plan and Account records,

            (vi)  to prepare employee announcements, forms and procedures, and

            (vii) to review denials of benefit claims made by Participants or
                  Beneficiaries.

            The Administrative Committee, at its discretion, may delegate to
            assistants, including employees in the Company's Employee Benefits
            Department, ministerial and clerical duties.

10.03 Authority and Duties of Various Fiduciaries.

      (a)   The Committee (or the Administrative Committee acting on behalf
            of the Committee) shall have the exclusive right to interpret the
            Plan and to decide

                                       34
<PAGE>   42
            any and all matters arising under the Plan or in connection with its
            administration, including determination of and eligibility for the
            amount of distributions and withdrawals. The Company shall have no
            power to direct or modify any interpretations, determinations, or
            decisions of the Committee. The Committee may amend the Plan,
            subject to the provisions of Section 11.01. The Committee may adopt
            rules for the administration of the Plan and the conduct of its
            business and such rules shall be consistent with the provisions of
            the Plan.

      (b)   The Committee and any other named fiduciary may each employ counsel,
            agents, and such clerical and accounting services as it may require
            in carrying out its responsibilities under the Plan. All fiduciaries
            shall be entitled to rely upon tables, valuations, certificates,
            opinions, and reports furnished by any actuary, accountant, or legal
            counsel appointed under the provisions of the Plan.

      (c)   The Committee shall keep in convenient form such personnel data as
            may be necessary for the Plan. The Committee shall prepare,
            distribute, and file such reports and notices as may be required by
            applicable law or regulation.

      (d)   The members of the Committee shall use that degree of care,
            skill, prudence and diligence that a prudent man acting in a like
            capacity and familiar with such matters would use in his conduct
            of a similar situation. A member of the Committee shall not be
            liable for the breach of fiduciary responsibility of another
            fiduciary unless (i) he participates knowingly in, or knowingly
            undertakes to conceal, an act or omission of such other
            fiduciary, knowing such act or omission is a breach; or (ii) by
            his failure to discharge his duties solely in the interest of the
            Participants, Surviving Spouses and Beneficiaries for the
            exclusive purpose of providing their benefits and defraying
            reasonable expenses of administering the Plan not met by the
            Company, he has enabled such other fiduciary to commit a breach;
            or (iii) he has knowledge of a breach by such other fiduciary and
            does not make reasonable efforts to remedy the breach; or (iv)
            the Committee improperly allocates duties among its members or
            delegates duties to others and fails to properly review such
            allocation or delegation of fiduciary responsibilities.

      (e)   The Company will indemnify and hold harmless the members of the
            Committee and any person to whom fiduciary responsibilities are
            delegated under this Plan against any cost or expense (including
            attorney's fees) or liability (including any sum paid in settlement
            of a claim with the approval

                                       35
<PAGE>   43
            of the Company) arising out of any act or omission to act, except
            in the case of willful misconduct.

       (f)  Whenever, in the administration of the Plan, any discretionary
            action is required, the authorized party shall exercise his
            authority in a nondiscriminatory manner so that all persons
            similarly situated will receive substantially the same treatment.

10.04 Named Fiduciaries.

      (a)   The Committee and any Administrative Committee shall each constitute
            named fiduciaries as such term is defined in ERISA.

      (b)   Any fiduciary appointed as a named fiduciary by the Company by
            resolution or appointed by an appropriate instrument executed by an
            officer of the Company thereunto authorized shall also constitute a
            named fiduciary in respect of the duties delegated to him or it in
            such resolution or instrument.

10.05 Delegation. Any named fiduciary designated herein or appointed as provided
      herein, unless precluded from doing so by the terms of such appointment,
      may by appropriate instrument designate any person (including any firm or
      corporation) to carry out part or all of such fiduciary's responsibilities
      and upon such designation the named fiduciary shall have no liability,
      except as imposed by applicable law, for any act or omission of such
      person. The foregoing does not preclude any other fiduciary to the extent
      allowed by ERISA and the terms of his appointment from delegating part or
      all of such fiduciary's responsibilities with respect to the Plan.

10.06 Multiple Capacities.  Any fiduciary may serve in more than one
      fiduciary capacity with respect to the Plan.

                                       36
<PAGE>   44
                                   ARTICLE XI

              AMENDMENTS, TERMINATION, PERMANENT DISCONTINUANCE
                       OF CONTRIBUTIONS, MERGER OR CONSOLIDATION

11.01 Amendments. Subject to the provisions hereinafter set forth, the Company
      reserves the right at any time and from time to time by action of the
      Committee in writing, both retroactively and prospectively, to modify or
      amend, in whole or in part, any or all of the provisions of the Plan;
      provided, however, that (a) no such modification or amendment shall make
      it possible for any part of the funds of the Plan to be used for, or
      diverted to, purposes other than for the exclusive benefit of
      Participants, Surviving Spouses or Beneficiaries under the Plan; and (b)
      no modification or amendment shall be made which has the effect of
      decreasing retroactively the Accounts of any Participant or of reducing
      the nonforfeitable percentage of the Company Contribution Account of a
      Participant below the nonforfeitable percentage thereof computed under the
      Plan as in effect on the later of the date on which the amendment is
      adopted or becomes effective; and provided further, that any amendment of
      the Plan that involves a material increase in benefits for officers of the
      Company, a material increase in cost or a material change in design, other
      than technical amendments required by law or regulations, must be approved
      by the Board of Directors. No amendment shall eliminate or reduce an early
      retirement benefit or eliminate an optional form of benefit except as
      permitted by law.

11.02 Termination or Permanent Discontinuance of Contributions. The Company may
      by action of the Committee terminate the Plan with respect to all
      participating locations or any of them or direct complete discontinuance
      of contributions hereunder by all or any of the participating location for
      any reason at any time. In case of such termination or complete
      discontinuance of contributions hereunder, there shall automatically vest
      in the appropriate Participants nonforfeitable rights to the Company
      Contributions credited to their Accounts, and the total amount in each
      Participant's Accounts shall be distributed, as the Committee shall
      direct, to him or for his benefit.

11.03 Partial Termination. In the event of a partial termination of the Plan,
      the provisions of Section 11.02 shall be applicable only to the
      Participants affected by such partial termination.

11.04 Benefits in Case of Merger or Consolidation. The Plan may not be merged or
      consolidated with, nor may its assets or liabilities be transferred to,
      any other plan unless each Participant, spouse or Surviving Spouse, former
      Participant, retired

                                       37
<PAGE>   45
      Participant or Beneficiary under the Plan would, if the resulting plan
      were then terminated, 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 before the merger,
      consolidation, or transfer if the Plan had then terminated.

                                       38
<PAGE>   46
                                   ARTICLE XII

                                  MISCELLANEOUS

12.01 Benefits Payable from Trust Fund. All persons with any interest in the
      Trust Fund shall look solely to the Trust Fund for any payments with
      respect to such interest.

12.02 Elections. Elections for benefits or Beneficiaries hereunder shall be made
      by a Participant in the manner prescribed by the Committee for such
      purposes, within the prescribed time limits.

12.03 No Right to Continued Employment. Neither the establishment of the Plan
      nor the payment of any benefits thereunder nor any action of the Company,
      the Board of Directors, the Committee or the Trustee shall be held or
      construed to confer upon any person any legal right to be continued in the
      employ of the Company.

12.04 Inalienability of Benefits and Interests. No benefit payable under the
      Plan or interest in the Trust Fund shall be subject in any manner to
      anticipation, alienation, sale, transfer, assignment, pledge, encumbrance
      or charge, and any such attempted action shall be void and no such benefit
      or interest shall be in any manner liable for or subject to debts,
      contracts, liabilities, engagements or torts of any Participant, Surviving
      Spouse or Beneficiary.

12.05 Qualified Domestic Relations Orders.

      (a)   The provisions in Section 12.04 shall also apply to the creation,
            assignment or recognition of aright to any benefit payable with
            respect to a Participant pursuant to a domestic relations order,
            unless such order: (i) is determined to be a qualified domestic
            relations order, as defined in Section 414(p) of the Code, or (ii)
            was entered before January 1, 1985.

      (b)   If the Committee is in receipt of a domestic relations order, or
            the Committee is otherwise aware that a qualified domestic
            relations order affecting a Participant's account is being
            sought, the Committee may take such action as necessary
            (including, without limitation, restricting the participant's
            ability to withdraw or borrow funds in his or her Accounts) in
            order to administer the Plan consistently with the terms of any
            such qualified domestic relations order.

12.06 Payments for Exclusive Benefit of Participants. Payments of benefits in
      respect of the interest of a Participant  under the Plan to any person
      other than such Participant

                                       39
<PAGE>   47
      in accordance with the provisions of the Plan shall be deemed to be for
      the exclusive benefit of such Participant.

12.07 New Jersey Law to Govern. All questions pertaining to the construction,
      regulation, validity and effect of the provisions of the Plan shall be
      determined in accordance with the laws of the State of New Jersey, except
      to the extent such laws are pre-empted by ERISA.

12.08 No Guarantee.  Neither the Company nor the Trustee guarantee the Trust
      Fund in any manner against loss or depreciation.

12.09 Address of Record. Each individual or entity with an actual or potential
      interest in the Plan shall file and maintain a current record address with
      the Plan. Communications mailed by the Company, Trustee, or Committee to
      such record address fulfills all obligations to provide required
      information to Participants, including former employees, Surviving Spouses
      and Beneficiaries, in regard to the Plan. If no record address is filed,
      it may be presumed that the address used by the Company in forwarding
      statements of a Participant's Account is the record address.

12.10 Unlocated Spouse. Notwithstanding the consent requirement in Section 1.08,
      if the Participant establishes to the satisfaction of the Committee that
      such written consent cannot be obtained because there is no spouse or the
      spouse cannot be located, a waiver shall be deemed to be valid. Any
      consent necessary under Section 1.08 will be valid only with respect to
      the spouse who signs the consent, or in the event of a deemed election,
      the designated spouse.

12.11 Agent for Process.  The Secretary of Kraft Foods North America, Inc.
      shall be the designated agent for the service of legal process.

12.12 Payment in the Event of Incompetency. If the Committee finds that a
      Participant or other person entitled to a benefit is unable to care for
      his affairs because of illness or accident or is a minor, the Committee
      may direct that any benefit payment due the Participant, unless claim
      shall have been made therefor by a duly appointed legal representative, be
      paid to his spouse, a child, or a parent for the benefit of such
      Participant, and any such payment so made shall be a complete discharge of
      the liabilities of the Plan therefor.

12.13 Transfer of Accounts to This Plan.

      (a)   Affiliated Plans.  If a participant of a U.S. qualified
            Affiliated Plan becomes eligible to be a Participant of this Plan
            before receiving a distribution from

                                       40
<PAGE>   48
            the Affiliated Plan, his Account under the Affiliated Plan shall be
            transferred to this Plan by way of a trustee-to-trustee transfer.
            This Plan shall be considered as a successor plan with regard to
            such employee and all Affiliated Plan contributions transferred
            shall be treated as though they were made under this Plan for
            purposes of vesting, withdrawals and distributions. In the absence
            of an applicable Participant election, assets transferred from an
            Affiliated Plan shall be invested in the equivalent investment funds
            under this Plan or, if an equivalent investment fund does not exist,
            then the assets from the Affiliated Plan shall be invested in the
            Interest Income Fund; and the accounts of participants and
            beneficiaries under the Affiliated Plan will become their Accounts
            as Participants and Beneficiaries under this Plan, effective as of
            the transfer date. Once a Participant has received a distribution
            from the Affiliated Plan, it shall be treated as a Prior Plan for
            purposes of this Section 12.13.

      (b)   Prior Plans.  This Plan does not accept trustee-to-trustee
            transfers from a Prior Plan. However, the Trustee is authorized
            to accept as a Rollover Contribution any contribution that meets
            the following criteria:

            (i)   the contribution is made by, or on behalf of, an
                  Eligible Employee;

            (ii)  the contributed amounts were distributed from the Prior Plan
                  as an "eligible rollover distribution"(as defined in Section
                  7.06);

            (iii) the contribution is made either (a) as a direct rollover from
                  the Prior Plan to this Plan, or (b) by the Eligible Employee,
                  within 60 days after the date such distribution is received by
                  the Eligible Employee;

            (iv)  if applicable, the spousal consent requirements of
                  Code Section 417(x)(2) were complied with; and

            (v)   such Rollover Contribution meets any other conditions as
                  determined necessary by the Trustee or Committee to comply
                  with Code Section 408(d)(3).

            Rollover Contributions shall be held in the Eligible Employee's
            Rollover Contribution Account. The Eligible Employee is at all

                                       41
<PAGE>   49
            times fully vested with respect to his Rollover Contribution
            Account.

      (c)   RJR Plan.  In connection with the spin-off of RJR Nabisco, Inc.
            by RJR Nabisco Holdings Corp. effective as of June 14, 1999,
            certain individuals who were participating in the RJR Plan
            immediately prior to the spin-off, ceased to participate in the
            RJR Plan effective as of such date and, as of such date,
            commenced participation in this Plan (such individuals being
            hereinafter referred to as "Transferred Nabisco Employees". In
            connection with such commencement of participation in the Plan,
            this Plan shall accept a transfer of such Transferred Nabisco
            Employees' accounts (including any outstanding participant loans)
            under the RJR Plan in accordance with the provisions of ARTICLE
            XV. In addition, this Plan shall accept a transfer of the
            Accounts and any unused forfeiture amounts that are attributable
            to the Accounts of any individual who terminated employment with
            Nabisco, Inc. or an affiliate (other than an affiliate that is a
            participating company under the RJR Plan) prior to June 14, 1999,
            in accordance with the provisions of ARTICLE XV. If an individual
            who is a participant in the RJR Plan becomes an Employee after
            June 14, 1999 and elects to transfer amounts from the RJR Plan to
            this Plan, this Plan shall accept a transfer of such Employee's
            accounts (including any outstanding participant loans) under the
            RJR Plan in accordance with the provisions of ARTICLE XV.

      (d)   Certain 401(k) Plans.  With respect to an Eligible Employee who,
            pursuant to an Asset Purchase Agreement entered into on November
            19, 1999, has an accrued benefit from a qualified plan maintained
            by Favorite Brands International, Inc. transferred to the Nabisco
            Retirement Savings Plan (the "Savings Plan") or an accrued
            benefit from a qualified plan maintained by Trolli, Inc.
            transferred to the Nabisco Retirement Plan (the "Retirement
            Plan") and who becomes a Participant before receiving a
            distribution from the Savings Plan, as applicable, including any
            outstanding loan balances, shall be transferred to this Plan by
            way of a trustee-to-trustee transfer.

            With respect to an Eligible Employee  who previously was a
            participant in the Stella D'Oro Biscuit Co., Inc. Salary
            Reduction Plan (For Employees Who are Members of B.C. & T.C.W.
            Local 50) (the "Local 50 Plan") or the Stella D'Oro Biscuit Co.,
            Inc. Salary Reduction Plan for Employees of Local 550 (the "Local
            550 Plan") and who becomes a Participant before receiving a
            distribution from the Local 50 Plan, his account balance in the
            Local 50 Plan or the Local 550 Plan, as applicable, including any

                                       42
<PAGE>   50
            outstanding loan balances, shall be transferred to this Plan by way
            of a trustee-to-trustee transfer.

            All service credited under the Savings Plan, the Retirement Plan,
            the Local 50 Plan and the Local 550 Plan shall be taken into account
            for all purposes under the Plan. In the absence of an applicable
            Participant election, assets transferred from the Savings Plan, the
            Retirement Plan, the Local 50 Plan or the Local 550 Plan shall be
            invested in the equivalent investment funds under this Plan or, if
            an equivalent investment funds does not exist, then the assets from
            the Savings Plan, the Retirement Plan, the Local 50 Plan or the
            Local 550 Plan shall be invested in the Interest Income Fund. Once a
            Participant has received a distribution from the Savings Plan, the
            Retirement Plan, the Local 50 Plan or the Local 550 Plan, it shall
            be treated as a Prior Plan for purposes of this Section 12.13.

12.14 Transfer Of Accounts from this Plan to an Affiliated Plan. If a
      Participant transfers employment from the Company to an Affiliated Company
      and thereafter becomes eligible to participate in an Affiliated Plan, the
      assets in his Accounts in the Plan shall be transferred to such Affiliated
      Plan in accordance with the terms thereof.

12.15 Direct or Indirect Transfer. With respect to any Eligible Employee who is
      actively employed, the Plan shall accept any "eligible rollover
      distribution"(as defined in Section 7.06) from a defined benefit plan,
      money purchase pension plan (including a target benefit plan), stock bonus
      plan, or profit sharing plan or a conduit individual retirement account.

12.16 Payment of Expenses.

      (a)   Direct charges and expenses arising out of the purchase or sale of
            securities, and taxes levied on or measured by such transactions may
            be charged against the Account(s) or Investment Fund for which the
            transactions took place.

      (b)   Direct charges or expenses arising out of the establishment and
            maintenance of any funding account with an insurance company or
            other financial institution may be charged against the Account(s) or
            Investment Fund(s) for which the funding account is established.

      (c)   Investment Manager fees arising out of the establishment and
            maintenance of any investment Fund may be charged against the
            Investment Fund for which the Investment Manager fees are incurred.

                                       43
<PAGE>   51
      (d)   Trustee fees attributable to the Trust, auditor fees for the plan,
            and IRS user fees may be paid directly from the Trust. The Committee
            shall determine the manner in which these fees shall be charged
            against the Accounts or Investment Funds held in the Trust.

      (e)   Any other charges or expenses relating to the maintenance or
            administration of the Plan that are permitted under applicable law
            to be paid from the Trust including, but not limited to,
            recordkeeping fees, may be paid directly from the Trust. The
            Committee shall determine the manner in which these charges and
            expenses shall be charged against the Accounts or Investment Funds
            held in the Trust.

      (f)   Any of the expenses in (a)-(e) above may, at the option of the
            Company, be paid wholly or partly directly by the Company.

      (g)   The Company shall pay all other expenses reasonably incurred to
            administering the Plan.

      (h)   The Committee may authorize additional expenses to be charged
            directly from the Trust; provided that payment of such additional
            expenses from the Trust is permitted under applicable law, such fees
            are reasonable, and that any change in fee policy is communicated to
            Participants in a timely manner.

12.17 Transfer of Accounts to the R. J. Reynolds Tobacco Company Capital
      Investment Plan. The assets in the Accounts (including any outstanding
      Participant loans) of any individual who terminates employment with the
      Company or an Affiliated Company and commences employment with R. J.
      Reynolds Tobacco Company (or its affiliates) may (upon the election of
      such individual) be transferred to the corresponding accounts under the
      RJR Plan.

12.18 Headings. Headings of Articles and Sections of the Plan are inserted
      for convenience of reference. They constitute no part of the Plan.

                                       44
<PAGE>   52
                                  ARTICLE XIII

                                CLAIMS PROCEDURE

13.01 Initial Determination. The initial determination of a Participant's,
      Surviving Spouse's or Beneficiary's eligibility for, and the amount of, a
      benefit shall be made by the Administrative Committee, or in its absence,
      the Committee, which shall mail or deliver to each covered individual who
      has filed an effective claim for a benefit a written statement of the
      amount of his benefit or a notice of denial of his claim on or before the
      90th day following the Committee's receipt of such claim. If special
      circumstances require additional time for processing the claim, the
      Administrative Committee, or in its absence, the Committee, may delay
      issuing its statement or notice for an additional 90 days provided that
      the Participant, Surviving Spouse or Beneficiary is notified of the
      circumstances necessitating the delay and the date the Committee expects
      to render its final opinion. A claim for benefits is not effective unless
      filed in the manner prescribed by the Committee. Each notice of whole or
      partial denial of claimed benefits shall set forth the specific reasons
      for the denial, the time within which an appeal must be made by the
      Participant, Surviving Spouse or Beneficiary or his duly authorized
      representative, and shall contain such other information as may be
      required by applicable law. If a statement or notice is not issued within
      the prescribed period, the claim shall be deemed denied.

13.02 Review. Each Participant, Surviving Spouse or Beneficiary whose claim for
      benefits has been wholly or partially denied shall have such rights to
      review documents and submit comments as applicable law and regulations of
      the Committee may provide, and shall also have the right to request the
      Committee to review such denial; such request to be made on forms
      prescribed by the Committee. A request for review shall be filed by the
      Participant, Surviving Spouse or Beneficiary or his duly authorized
      representative on or before the 60th day following the earlier of the
      Participant's, Surviving Spouse's or Beneficiary's receipt of notice of
      denial of his claim or the expiration of the prescribed period for issuing
      a statement of benefits or notice of denial. The Committee shall issue a
      written statement on or before the 60th day following its receipt of such
      request stating the Committee's decision on review and the reasons
      therefore, including specific references to pertinent Plan provisions on
      which the decision is based, and any other information required by
      applicable law. If special circumstances require additional time for
      processing such review, the Committee may delay issuing its decision for
      an additional 60 days provided that the Participant, Surviving Spouse or
      Beneficiary is notified of such circumstances and the date the Committee

                                       45
<PAGE>   53
      expects to render its final decision. If the decision is not issued within
      the prescribed period, the appeal shall be deemed denied.

                                      46
<PAGE>   54

                                   ARTICLE XIV

                             LIMITATION ON BENEFITS

14.01 Code Section 415 Limits.

      (a)   The following definitions shall be applied in construing this
            Section.

            (1)   Defined Benefit Plan means any defined benefit plan (as
                  defined in Section 415(k) of the Code) maintained by any
                  Affiliated Company.

            (2)   Related Plan means any Defined Contribution Plan (as defined
                  in Section 415(k) of the Code), other than the Plan,
                  maintained by any Affiliated Company or any individual account
                  maintained for voluntary contributions made by a Participant
                  under a Defined Benefit Plan.

            (3)   Total Compensation means all remuneration paid to an Employee
                  by any Affiliated Company, as determined pursuant to the
                  provisions of Treasury Regulation Section 1.415-2(d)(11)(i).

            (4)   Annual Addition means the sum of the following amounts
                  credited to a Participant's account for the limitation year:

                  (A)   employer contributions;

                  (B)   employee contributions;

                  (C)   forfeitures; and

                  (D)   amounts allocated to an individual medical account, as
                        defined in Section 415(1)(2) of the Code, which is part
                        of a pension or annuity plan maintained by the employer
                        and amounts derived from contributions paid or accrued
                        after December 31, 1985, in taxable years ending after
                        such date, which are attributable to post-retirement
                        medical benefits allocated to the separate account of a
                        key employee, as defined in Section 419A(d)(3) of the
                        Code, under a welfare

                                       47
<PAGE>   55
                        benefit fund, as defined in Section 419(e) of the Code,
                        maintained by the employer.

      (b)   Limitations Applicable to Participants in Defined Contribution
            Plans Only

            (i)   The Annual Addition credited to a Participant under the Plan
                  or any Related Plan for any Limitation Year must not exceed
                  the lesser of (1) $30,000 (or, if greater, 25% of the defined
                  benefit dollar limitation set forth in Section 415(b)(1) of
                  the Code as in effect for the Plan Year) or (2) 25% of the
                  Participant's Total Compensation for such Limitation Year.

            (ii)  Excess Annual Additions. If the amount of Annual Additions
                  which are credited to a Participant under this Plan for any
                  Limitation Year exceeds the maximum amount permitted under
                  this Section ("Excess Annual Additions", and if such excess
                  was caused by the allocation of forfeitures, a reasonable
                  error in estimating a Participant's annual compensation, a
                  reasonable error in determining the amount of Basic
                  Contributions and Supplemental Pre-Tax Contributions that may
                  be made with respect to the Participant under the limitations
                  of this Section, or other limited facts and circumstances
                  which the Commissioner of Internal Revenue finds justified,
                  the Excess Annual Additions may be reduced for such Limitation
                  Year in the following manner:

                  (A)   Supplemental After-Tax Contributions (and any income
                        attributable thereto ) made by the Participant shall be
                        distributed to the Participant to the extent such
                        distributions reduce the Excess Annual Additions. Any
                        Supplemental After-Tax Contributions that are so
                        distributed shall not be considered as an Annual
                        Addition for the Limitation Year and shall be
                        disregarded for purposes of Section 3.08.

                  (B)   If there remains any Excess Annual Additions after the
                        application of subparagraph (i) of this paragraph,
                        Supplemental Pre-Tax Contributions (and any income
                        attributable thereto) made by the Participant shall be
                        distributed to the Participant to the extent that such
                        distributions reduce the Excess Annual

                                       48
<PAGE>   56
                        Additions. Any Supplemental Pre-Tax Contributions
                        that are so distributed shall not be considered as an
                        Annual Addition for the Limitation Year and shall be
                        disregarded for purposes of Sections 3.07 and 3.08.

                  (C)   If there remains any Excess Annual Additions after the
                        application of subparagraphs (i) and (ii) of this
                        paragraph, Basic Contributions (and any income
                        attributable thereto) made by the Participant shall be
                        distributed to the Participant to the extent that such
                        distributions reduce the Excess Annual Additions. Any
                        Basic Contributions that are so distributed shall not be
                        considered as an Annual Addition for the Limitation Year
                        and shall be disregarded for purposes of Sections 3.07
                        and 3.08.

                  (D)   If there remains any Excess Annual Additions after the
                        application of subparagraphs (i), and (ii) and (iii) of
                        this paragraph, such Excess Annual Additions shall be
                        used to reduce Company Contributions for the next
                        Limitation Year (and succeeding Limitation Years, as
                        necessary) for the Participant. However, if the
                        Participant is not participating in the Plan for the
                        applicable Limitation Year, the Excess Annual Additions
                        shall be held in a suspense account for that Limitation
                        Year and allocated in the next Limitation Year to all
                        remaining Participants in the same proportion as the
                        Compensation paid to such Participants during such
                        Limitation Year. Furthermore, the Excess Annual
                        Additions shall be used to reduce Company Contributions
                        for the next Limitation Year (and succeeding Limitation
                        Years, as necessary) for all of such Participants. Any
                        Excess Annual Additions that are treated in accordance
                        with this subparagraph (iv) for the Limitation Year
                        shall not be considered as Annual Additions for such
                        Limitation Year.

                  (E)   If the suspense account is in existence at any time
                        during the Limitation Year in accordance with this
                        Section, investment gains and losses and other

                                       49
<PAGE>   57
                        income and expenses shall not be allocated to the
                        suspense account.

                  (F)   If this Plan is terminated and at the time of such
                        termination a balance remains in the suspense account
                        which, because of the limitations imposed by this
                        Section, cannot be credited to any Participant, such
                        balance shall revert to the Company.

      (c)   Adjustments on Account of Excess Credits. If it is determined at any
            time that the Defined Contribution Fraction and the Defined Benefit
            Fraction exceed 1.0, the maximum benefit under any applicable
            Defined Benefit Plan will be adjusted to the extent necessary to
            satisfy the combined fraction limitation.

      (d)   In addition to other limitations set forth in the Plan and
            notwithstanding any other provisions of the Plan, contributions (and
            contributions to all other Defined Contribution Plans required to be
            aggregated under this Plan under the provisions of Section 415 of
            the Code), shall not be made in an amount in excess of the amount
            permitted under Section 415 of the Code.

14.02 Code Section 416 Limits. This Section is intended to ensure the Plan's
      compliance with Section 416 of the Code. It shall be applicable to
      Participants for any Plan Year with respect to which the Plan is
      top-heavy.

      (a)   Definitions.  The following definitions shall be applied in
            construing this Section.

            (i)   Top-Heavy Plan means any plan maintained by the Company or
                  an Affiliated Company if, as of the Determination Date, the
                  Top-Heavy Ratio for the plan and all other plans in the
                  Aggregation Group exceeds 60%. The plan will be deemed a
                  "super top-heavy plan" if, as of the Determination Date,
                  the Plan would meet the test specified above for being a
                  Top-Heavy Plan if 90% were substituted for 60% in each
                  place it appears in this subsection(i).

            (ii)  Determination Date means the last day of the preceding Plan
                  Year (or, in the case of the first plan year of a plan, the
                  last day of such Plan Year). When plan aggregation is
                  required, calculation of accrued benefits as of the
                  Determination Date which fall within the same calendar year
                  will be used.

                                       50
<PAGE>   58
            (iii) Valuation Date means the same date as the Determination
                  Date.

            (iv)  Key Employee means each Employee or former Employee who is, at
                  any time during the Plan Year ending on the Determination
                  Date, or was, during any one of the four Plan Years preceding
                  the Plan Year ending on the Determination Date, any one or
                  more of the following:

                  (1)   An officer of the Company or an Affiliated Company
                        having an annual compensation greater than 50% of the
                        dollar limitation in effect under Code Section
                        415(b)(I)(A) for any Plan Year;

                  (2)   One of 10 Employees having annual compensation from the
                        Company or an Affiliated Company of more than the dollar
                        limitation in effect under Code Section 415(c)(1)(A) and
                        owning (or considered as owning within the meaning of
                        Code Section 318) both the largest interests in the
                        Company or an Affiliated Company and a 1/2% ownership
                        interest;

                  (3)   Any person owning (or considered as owning within the
                        meaning of Code Section 318) more than 5% of the
                        outstanding stock of the Company (or stock having more
                        than 5% of the total combined voting power of all stock
                        of the Company); or

                  (4)   Any person who has annual compensation of more than
                        $150,000 and would be described in subsection (3) above,
                        if "1%" was substituted for "5%"

                  For purposes of determining whether a person is an officer in
                  subsection (1) above, in no event will more than 50 Employees
                  be considered Key Employees solely by reason of officer
                  status. In addition, persons who are merely nominal officers
                  will not be treated as Key Employees solely by reason of their
                  titles as officers. For purposes hereof, compensation is as
                  defined in Section 1.415-2(d) of the Income Tax Regulations.

                                       51
<PAGE>   59
            (v)   Non-Key Employee means any Participant in the Plan (including
                  a beneficiary of such Participant) who is not a Key Employee.

            (vi)  Aggregation Group means all plans that are subject to Required
                  Aggregation (in accordance with subsection 14.02(b)). The
                  Aggregation Group may also include plans subject to Permissive
                  Aggregation (in accordance with subsection 14.02(c)), if such
                  aggregation would eliminate the status of plans in the
                  Aggregation Group as Top-Heavy Plans.

      (b)   Required Aggregation.  This Plan and all other qualified plans,
            including any terminated plans, maintained by the Company or an
            Affiliated Company which include a Key Employee must be
            aggregated to determine if the group as a whole is top-heavy. In
            addition, each other qualified plan maintained by the Company or
            an Affiliated Company which enables any plan in which a Key
            Employee is a Participant to meet the requirements of Sections
            410(a)(4) and 410 of the Code must be aggregated.

      (c)   Permissive Aggregation. The Company may include other plans
            maintained by the Company or an Affiliated Company which when
            considered as a group with the required aggregation group, would
            continue to satisfy the requirements of Sections 401(a)(4) and 410
            of the Code, to determine if the group as a whole is top-heavy,
            provided such plans are comparable in benefits or contributions.

      (d)   Top-Heavy Ratio.

            (i)   The top-heavy ratio is a fraction, the numerator of which
                  is the sum of account balances under the defined
                  contribution plans in the Aggregation Group for all Key
                  Employees and the present value of accrued benefits under
                  the defined benefit plans for all Key Employees, and the
                  denominator of which is the sum of the account balances
                  under the defined contribution plans in the Aggregation
                  Group for all Participants and the present value of accrued
                  benefits under the defined benefit plans in the Aggregation
                  Group for all Participants. Both the numerator and
                  denominator are adjusted to include any distributions made
                  in the five-year period ending on the "Determination Date"
                  and any contributions due but unpaid as of the
                  Determination Date.

                                       52
<PAGE>   60
            (ii)  The value of account balances and the present value of accrued
                  benefits will be determined as of the most recent Valuation
                  Date. The account balances and accrued benefits of a
                  Participant who is not a Key Employee but who was a Key
                  Employee in a prior year will be disregarded. The calculation
                  of the top-heavy ratio, and the extent to which distributions,
                  rollovers and transfers are taken into account will be made in
                  accordance with Section 416 of the Code and the regulations
                  thereunder.

            (iii) If any Participant has not performed an Hour of Service for
                  the Company at any time during the five-year period ending on
                  the Determination Date, the account of such Participant shall
                  not be taken into account.

      (e)   Minimum Vesting. For any Plan Year in which the Plan is a top-heavy
            plan as determined pursuant to Section 416 of the Code, a
            Participant will have a nonforfeitable right to a percentage of the
            Participant's Accounts derived from Company Contributions as set
            forth below if such schedule is more favorable to the Participant
            than the vesting schedule under Section 7.02.

<TABLE>
<CAPTION>
            Years of Service Completed
            For Vesting Purposes                      Vested Interest
            --------------------                      ---------------

<S>                                                   <C>
            Less than two                                     0%
            Two but less than three                          20%
            Three but less than four                         40%
            Four but less than five                          60%
            Five or more                                    100%
</TABLE>

            The above vesting schedule applies to all benefits the meaning of
            Section 411(a)(7) of the Code, including benefits accrued before the
            effective date of Section 416 of the Code and benefits accrued
            before the Plan became top-heavy. However, any Participants who have
            completed at least three (3) years of service for vesting purposes
            as of the last day of the last Plan Year (a) before the Plan became
            top-heavy or (b) in which the Plan is top-heavy, shall have the
            right to elect to continue to have the vesting schedule in effect on
            the last day of such Plan Year applied to all of his benefits under
            the Plan. Further, no reduction in vested benefits may occur in the
            event the Plan's status as top-heavy changes for any Plan Year.

                                       53
<PAGE>   61
      (f)   Minimum Required Contribution.  It is intended that the Company or
            an Affiliated Company will meet the minimum contribution
            requirements of Section 416(c) of the Code by providing a minimum
            contribution (which may include forfeitures otherwise allocable)
            without regard to any Social Security contributions for such Plan
            Year for each Participant who is a non-key employee in an amount
            equal to at least 3% of such Participant's compensation (as defined
            in Section 1.415-2(d) of the Income Tax Regulations) for such Plan
            Year, Such 3% minimum contribution requirement shall be increased to
            4% for any year in which the Company or an Affiliated Company also
            maintains a defined benefit pension plan if necessary to avoid the
            application of Section 416(h)(1) of the Code, relating to the
            special adjustments to Section 415 limits of the Code for top-heavy
            plans, if the adjusted limitations of Section 416(h)(1) would
            otherwise be exceeded if such minimum contribution were not so
            increased. The minimum contribution required shall be made to any
            non-key employee who is still employed on the last day of the plan
            year regardless as to the number of hours of Service performed
            during the year and regardless of the employee's level of
            compensation.

            A Non-Key Employee who is also covered under a defined benefit plan
            that is part of the same Aggregation Group shall receive his minimum
            benefit under the defined benefit plan, offset by the actuarially
            determined value of the minimum contribution made under this Plan.

            If for the Plan Year the Plan becomes a super top-heavy plan, then
            the denominator of both the defined contribution plan fraction and
            the defined benefit plan fraction shall be calculated as set forth
            in Section 14.01 (b) for the limitation year ending in such Plan
            Year by substituting "1.0" for "1.25" in each place such figure
            appears.

            The percentage minimum contribution required hereunder shall in no
            event exceed the percentage contribution made for the Key Employee
            for whom such percentage is the highest for the Plan Year after
            taking into account contributions or benefits under other qualified
            plans in this Plan's aggregation group providing no other defined
            benefit plan uses the defined contribution plan to satisfy Code
            Section 401 (a) as provided in Section 416(c)(2)(B)(ii) of the Code.

                                       54
<PAGE>   62
                                   ARTICLE XV

                  SPECIAL PROVISIONS PERTAINING TO TRANSFERS
                 FROM THE RJR NABISCO CAPITAL INVESTMENT PLAN

      Amounts transferred from accounts of the RJR Plan shall be accounted for
in accordance with the following rules:

15.01 Amounts transferred from the RJR Plan to this Plan consisting of
      Participant's "Basic Contribution Account" (as such term was defined in
      the RJR Plan) attributable to elective deferrals made pursuant to Section
      401 (k) of the Code and any earnings attributable to such elective
      deferrals, shall be credited to such Participant's Basic Contribution
      Account under this Plan.

15.02 Amounts transferred from the RJR Plan to this Plan consisting of
      Participant's "Supplemental Pre-Tax Contribution Account" (as such term
      was defined in the RJR Plan) attributable to elective deferrals made
      pursuant to Section 401 (k) of the Code and any earnings attributable to
      such elective deferrals, shall be credited to such Participant's
      Supplemental Pre-Tax Contribution Account under this Plan.

15.03 Amounts transferred from the RJR Plan to this Plan consisting of a
      Participant's "Supplemental After-Tax Contribution Account"(as such term
      was defined in the RJR Plan), shall be credited to such Participant's
      Supplemental After-Tax Contribution Account under this Plan.

15.04 Amounts transferred from the RJR Plan consisting of a Participant's
      "Company Contribution Account" as such term was defined in the RJR Plan)
      attributable to "matching contributions" (as defined under Code Section
      401(m)(4)(A)) and any earnings attributable to such matching
      contributions, shall be credited to such Participant's Company
      Contribution Account under this Plan.

15.05 Amounts transferred from the RJR Plan consisting of a Participant's
      "Rollover Account" (as such term was defined in the RJR Plan), shall be
      credited to such Participant's Rollover Account under this Plan.

15.06 Amounts transferred from the RJR Plan consisting of a Participant's
      "After-Tax Basic Contribution Account" (as such term was defined in the
      RJR Plan), shall be credited to such Participant's After-Tax Basic
      Contribution Account under this Plan.

                                       55
<PAGE>   63
15.07 All applicable "benefit options" (within the meaning of Section
      411(d)(6)(B)(ii) of the Code and the Treasury Regulations thereunder) that
      are attributable to any amounts transferred from the RJR Plan shall
      continue to apply with respect to such transferred amounts held under this
      Plan.

15.08 Any outstanding loan transferred to the Plan from the RJR Plan will
      continue to be held on the same terms as those contained in the loan
      agreement between the Participant and the RJR Plan, except that the Plan
      will be substituted as the obligee of the loan.

15.09 Any unused forfeiture amounts that are attributable to the account of any
      individual who terminated employment with the Company prior to June 14,
      1999 shall be transferred to this Plan and held as unused forfeitures
      under this Plan.

15.10 The provisions of Section 6.05, relating to the restoration of
      forfeitures, shall apply to any individual who: (i) was a participant in
      the RJR Plan, (ii) terminated employment with the Company prior to June
      14, 1999, (iii) received a distribution of his vested interest under the
      RJR Plan, (iv) was re-employed by the Company or any Affiliated Company on
      or after June 14, 1999 prior to completing five (5) consecutive Breaks in
      Service (including, for this purpose, any breaks in service that might
      have occurred under the RJR Plan), and (v) repays the full amount
      previously distributed to him within five (5) years of the date he is
      re-employed by the Company or any Affiliated Company.

15.11 All applicable "benefit options" (within the meaning of Section
      411(d)(6)(B)(ii) of the Code and the Treasury Regulations thereunder)
      that are attributable to amounts transferred from the Stella D'Oro
      Biscuit Co., Inc. 401 (k) Profit Sharing Plan, the Stella D'Oro Biscuit
      Co., Inc. Profit Sharing Plan, the Cornnuts, Inc. Profit Sharing and
      Retirement Plan or any other qualified plan from which amounts were
      transferred to the RJR Plan and subsequently transferred to this Plan
      pursuant to this ARTICLE XV, shall continue to apply with respect to
      such transferred amounts held under this Plan.

                                       56
<PAGE>   64
                               CIP -- COMPENSATION

                            SCHEDULE A - COMPENSATION

I.    The following payments are included as Compensation for all
      Participants:

      -   Basic Salary

      -   Overtime

      -   Shift Premium Pay

      -   Commissions

      -   Sales incentive payments paid in cash

      -   Vacation Pay (except as noted in II)

      -   Management Incentive Plan bonus or any similar management bonus if (i)
          payment is made on a non-deferred basis and (ii), the total aggregate
          amount of such bonuses do not exceed the regular AIAP award for the
          plan year and/or the maximum award payable under the AIAP.

      -   Compensation deferred pursuant to salary reduction arrangement under
          Code Sections 401 (k), 125 or, effective as of December 31, 2001,
          132(f)(4) to which the Company makes contributions.

      -   Lump Sum payments in lieu of an increase in basic salary.

      -   Payments under the Kraft Incentive Plan

      -   Amounts paid under the Field Operation Incentive Plan

      -   Cash denominated awards under the LTIP which are granted in lieu of
          regular AIAP awards or on a contractually required annual basis.

      -   Salary continuation payments paid in semi-monthly installments

      -   All U.S. based payroll amounts whether or not the employee is U.S.
          based.

                                       57
<PAGE>   65
II.   The following payments are not included as Compensation for
      Participants:

      Any form of compensation not listed in Part I, and specifically excluding
      the following:

      -   Vacation Pay taken in lieu of vacation

      -   Moving expenses

      -   Housing differential

      -   Bonus or other award payment which have been previously deferred

      -   Change of control bonus

      -   Stay-on/completion bonus

      -   Special incentive or bonus payments paid on an irregular or one-time
          basis unless designated for inclusion by the CEO

      -   Commendation Awards, Contest Awards or any other bonus paid on an
          irregular or one time basis (Nabisco, Inc.)

      -   Company contributions under any employee benefit plan (except
          contributions on account of employee elections to defer salary under
          Code Sections 401(k), 125 or, effective as of December 31, 2001,
          132(f)(4).

      -   Amounts deferred pursuant to the Nabisco Scholastic Savings Plan.

                                       58

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