Employment Agreement - Philip Morris Cos. Inc. and Robert S. Morrison


                      [Philip Morris Companies Inc. letterhead]


                                                                   March 8, 1989


Mr. Robert S. Morrison
1193 Scott Avenue
Winnetka, IL  60093

Dear Bob:

On behalf of Philip Morris Companies Inc., I would like to thank you for your
efforts in connection with the integration of the management of our food
operations.  Your continued participation in this integration is essential to
enable us to build an effective food operations management team that will assure
future growth and continued success.  The purpose of this letter is to confirm
our recent understandings regarding your Deferred Incentive Payment.

In recognition of your importance to management of the food operations, we have
agreed that you will be paid a Deferred Incentive Payment designed to provide
you with a special incentive to remain with us during the integration of Kraft
and General Foods.  Your Deferred Incentive Payment award will be computed and
paid to you at the time and in the form described in Appendix A.

If your employment terminates for any reason (including death), you will be
entitled, subject to the following provisions, to the amount of any Deferred
Incentive Payment, including any interest, dividends and appreciation thereon,
and also entitled to any unpaid compensation.  Generally, any payment to which
you are entitled on termination of employment will be paid to you within 30 days
of your date of termination.  However, if you retire or otherwise voluntarily
terminate employment prior to February 15, 1991, your Deferred Incentive Payment
will be paid in accordance with Appendix A.  If your employment is terminated
prior to February 15, 1991, for any reason you will not be entitled to other
payments under any severance plan or policy.

Although our discussions have focused on your employment during the next two
years, we recognize the need to provide a level of 



continuing financial assurance after the expiration of the two-year business
integration period.  In the event your employment is involuntarily terminated
without cause after February 15, 1991, you will receive an amount equal to the
greater of (1) the sum of your annual base salary at the rate in effect at the
time your employment is terminated and the annual incentive payment (excluding
amounts attributable to the Deferred Incentive Payment) which you received for
the most recent calendar year for which the computation of such award has been
made at the time of your termination of employment, or (2) the amount to which
you would be entitled under the terms of the normal severance plans or policies
of Philip Morris Companies Inc. or its subsidiaries then applicable to you.

Whenever your employment terminates, you and your family will be covered by
lifetime medical, dental and life insurance benefits on terms at least as
favorable as those currently available to other peer executives retiring from
service with Kraft, Inc., but not less favorable than those available to you and
your family,  in the aggregate, under the medical, dental and life insurance
plans of Kraft, Inc. as of December 1, 1988 (for this purpose the Kraft, Inc.
life insurance plan for active employees shall be applicable until age 65 and
thereafter the Kraft, Inc. life insurance plan for retire employees shall be
applicable).  If you are reemployed and are eligible to receive any medical or
dental benefits under your new employer's plans, the medical and dental plans of
Philip Morris Companies Inc. or its subsidiaries will only provide secondary
coverage to you and your family during such applicable period of eligibility
under the new employer's plans.

This letter is intended to summarize our previous understanding relating to your
employment with Philip Morris Companies Inc. and its subsidiaries.  It replaces
any prior employment agreements you had with Kraft or Philip Morris Companies
Inc. or its subsidiaries, and any such agreements are to be of no effect. 
However, nothing in this letter precludes you from participating in any
compensation plan, benefit plan or other executive benefit which is generally
available to similarly situated executives of Kraft Inc. or its successors and
which has not been expressly addressed by this letter.  Nothing in this letter
replaces or otherwise changes the obligations of Philip Morris Companies Inc.
under its indemnification agreement with you dated December 16, 1988.

The payments referred to in this letter are obligations of your employer. 
Philip Morris Companies Inc. will cause your employer to comply with the terms
of this letter and to assume its obligations and will also serve as a guarantor
with respect to the payments.  In the event of any merger, reorganization or
similar event, Philip Morris Companies Inc. will cause any successor entity to
assume the obligations evidenced by this 

                                - 2 -

letter.  In addition, if payment of any of the amounts provided for in Appendix
A subjects you to federal excise tax, on those amounts or any other amounts you
have received, you will receive additional payments sufficient to place you in
the position that would have existed had no such excise tax been payable.

If this letter accurately describes the matters set forth above, please sign the
enclosed copy of this letter and Appendix A which should be returned to us, and
will then constitute our entire agreement on this subject.


                             Sincerely,

                             PHILIP MORRIS COMPANIES INC.



                             By   /s/ Richard L. Snyder
                                  ---------------------------------------------
                             Richard L. Snyder
                             Senior Vice President, Human Resources
                             Administration


Agreed to this 11th day of

March, 1989

By  /s/ Robert S. Morrison
    ------------------------------
    Robert S. Morrison
    President, Kraft General Foods Canada

                                - 3 -
                                      APPENDIX A
                              DEFERRED INCENTIVE PAYMENT



On the terms and conditions set forth in the attached letter agreement and this
Appendix, your employer and Philip Morris Companies Inc. promise to make the
Deferred Incentive Payment as follows:

    (a)  a 'shadow stock account' will be credited as of February 15, 1989,
         with 12,335 shadow shares.  Each shadow share will have a value equal
         to that of one share of the common stock of Philip Morris Companies
         Inc.

    (b)  When dividends are paid on the common stock, additional shadow shares
         will be credited to the account in an amount determined by multiplying
         the number of shadow shares by the dividend per share paid on the
         common stock and dividing this product by the closing price of the
         common stock on the New York Stock Exchange on the date the dividend
         is paid.

    (c)  The number and value of shadow shares will be appropriately adjusted
         in the event of any stock dividend, stock split, subdivision or
         combination of shares, reclassification or conversion of stock in the
         event of a merger or consolidation, or similar event with respect to
         the common stock so that the aggregate value of shadow shares credited
         will be at least as great immediately after as immediately before any
         such event.  In the event of any dissolution or liquidation of Philip
         Morris Companies Inc., or if trading in the common stock on the New
         York Stock Exchange ceases for five or more consecutive days during
         which such Exchange is open for trading, then regardless of any other
         provision of this Appendix you will receive an immediate cash payment
         of an amount equal to the value of the shadow stock account computed
         on the basis of the average closing prices for the common stock on the
         New York Stock Exchange on the last five days on which such stock was
         traded.

    (d)  The number of shadow shares shall also be adjusted in the following
         circumstances:

           (i)     In the event that on or before February 15, 1991, you die,
                   become disabled for six consecutive months, have your
                   employment involuntarily terminated, or take normal or
                   employer approved early retirement, the 



                   number of shadow shares credited to your shadow stock
                   account will be increased by the amount, if any, necessary
                   to bring the aggregate value of the shadow shares credited,
                   determined as of the date of any such event, to the amount
                   determined by crediting $1,233,403 with interest from
                   December 6, 1988 to the date of such event at a rate equal
                   to (A) the annual rate on 12 month obligations of the United
                   States Treasury on February 15, 1989 for the portion of the
                   period prior to February 15, 1990, and (B) the annual rate
                   on such obligations on February 15, 1990 (applied to the
                   balance of both principal and interest on that date) for any
                   portion of the period on or after February 15, 1990.

          (ii)     If you continue your employment with Philip Morris Companies
                   Inc. or any of its subsidiaries until February 15, 1991, the
                   number of shadow shares credited to your shadow stock
                   account shall be increased in the amount, if any, necessary
                   to bring the aggregate value of the shadow shares credited
                   to your account on February 15, 1991 to the amount
                   determined by crediting the dollar amount specified in (i)
                   above with interest at the rates and in the manner described
                   therein to February 15, 1991.

For purposes of this Appendix, other than for purposes of the last sentence of
paragraph (c), the value of each shadow share will be the closing price of a
share of the common stock on the most recent New York Stock Exchange trading day
preceding the date of the determination of value.

    (e)  The amount of the Deferred Incentive Payment payable to you will be
         determined by multiplying the number of shadow shares credited to you
         on the most recent New York Stock Exchange trading preceding payment
         by the closing price of the common stock on such day.  Such amount
         shall be paid to you in cash, or at the discretion of Philip Morris
         Companies Inc. in shares of common stock equal in number to your
         shadow shares, at the time you select by initialing one of the
         following alternative payment schedules:

         [    ]    The Deferred Incentive Payment will be paid within 30 days
                   after the earliest to occur of your death, disability for
                   six consecutive months, or other termination of employment; 


                   except in the event of your voluntary termination of
                   employment for reasons other than normal or employer
                   approved early retirement, the Deferred Incentive Payment
                   will be paid no earlier than February 15, 1991.

                                          OR

         [ X  ]    The Deferred Incentive Payment will be paid within 30 days
                   after the earliest to occur of your death, disability for
                   six consecutive months, other termination of employment, or
                   February 16, 1991; except in the event of your voluntary
                   termination of employment for reasons other than normal or
                   employer approved early retirement, the Deferred Incentive
                   Payment will be paid no earlier than February 15, 1991.

Your entitlement to the Deferred Incentive Payment does not constitute an
interest in specific assets of your employment or Philip Morris Companies Inc. 
Your status with respect to such payment shall be that of an unsecured general
creditor.

The Deferred Incentive Payment may not be assigned or otherwise transferred by
you (other than by your will or by operation of law in the event of your death)
prior to the date you actually receive such payment or payments.


                             PHILIP MORRIS COMPANIES INC.



                             By   /s/ Richard L. Snyder
                                  ----------------------------------
                             Richard L. Snyder
                             Senior Vice President, Human Resources
                             Administration


Agreed to this 11th day of

March, 1989

By  /s/ Robert S. Morrison
    -------------------------------------
    Robert S. Morrison
    President, Kraft General Foods Canada