Services Agreement - Philip Morris Management Corp. and Kraft Foods Inc.


                               SERVICES AGREEMENT
                               ------------------

          This Services Agreement, dated as of January 1, 2001 by and between
Philip Morris Management Corp., a New York corporation ("PMMC"), and Kraft
Foods Inc., a Virginia corporation ("Kraft"), recites and provides:

          WHEREAS, PMMC currently provides certain services to the wholly-owned
subsidiaries of Kraft (the "Kraft Subsidiaries"); and

          WHEREAS, it is contemplated that an initial public offering will be
made of a portion of the capital stock of Kraft, resulting in partial public
ownership of Kraft, and that PMMC and Kraft both desire for PMMC to continue to
provide certain services to Kraft and the Kraft Subsidiaries following the
initial public offering; and

          WHEREAS, PMMC and Kraft desire to enter into this Agreement to set
forth the roles and responsibilities with regard to services to be provided by
PMMC to Kraft.

          NOW, THEREFORE, the parties agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     1.1. Affiliate
          ---------

          of a Person shall mean a Person that directly or indirectly controls,
is controlled by, or is under common control with, the first Person. For
purposes of this definition, "Control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "Controlling" and "Controlled" have meanings
correlative to the foregoing.

     1.2. AOP
          ---

          shall have the meaning specified in Section 5.1.
                                              -----------

     1.3. Confidential Information
          ------------------------

          shall have the meaning specified in Section 9.1.
                                              -----------

     1.4. Governmental Authority
          ----------------------

          shall mean any federal, state, local, or foreign government or
governmental, quasi-governmental, administrative or regulatory authority,
agency, body, or entity, including any court or other tribunal.

     1.5. Kraft Subsidiaries
          ------------------

          shall have the meaning specified in the Recitals to this Agreement.

 
     1.6.  Parties
           -------

           shall mean PMMC and Kraft (Party means either PMMC or Kraft).

     1.7.  Person
           ------

           shall mean an individual, corporation, partnership, trust,
association, or entity of any kind or nature; or a Governmental Authority.

     1.8.  Records
           -------

           shall have the meaning specified in Section 2.4.
                                               -----------

     1.9.  Representative
           --------------

           shall have the meaning specified in Section 4.1.
                                               -----------

     1.10. Services
           --------

           shall have the meaning specified in Section 2.1.
                                               -----------

                                   ARTICLE II
                             SERVICES TO BE PROVIDED

     2.1.  Exhibits.
           --------

           (a) Exhibits 1 through 13 attached to and made a part of this
Agreement describe the services to be provided by PMMC to Kraft and one or more
of the Kraft Subsidiaries, as designated from time to time by Kraft (the
"Services"). The Parties have made a good faith effort as of the date hereof to
identify each Service and to complete the content of the Exhibits accurately. It
is anticipated that the Parties will modify the Services from time to time. In
that case or to the extent that any Exhibit is incomplete, the Parties will use
good faith efforts to modify the Exhibits. There are certain terms that are
specifically addressed in the Exhibits attached hereto that may differ from the
terms provided hereunder. In those cases, the specific terms described in the
Exhibits shall govern that Service.

           (b) The Parties may also identify additional Services that they wish
to incorporate into this Agreement. The Parties will create additional Exhibits
setting forth the description of such Services, the Fees for such Services and
any other applicable terms.

     2.2.  Independent Contractors.
           -----------------------

           PMMC will provide the Services either through its own resources, the
resources of its subsidiaries or Affiliates, or by contracting with independent
contractors as agreed hereunder. To the extent that PMMC decides to provide a
Service through an independent contractor in the future, PMMC shall consult with
and obtain the prior approval of Kraft, which approval shall not be unreasonably
withheld.

                                      -2-

 
     2.3.  Standard of Care.
           ----------------

           In providing the Services hereunder PMMC will exercise the same
degree of care as it has historically exercised in providing such Services to
its Affiliates prior to the date hereof, including at least the same level of
quality, responsiveness and timeliness as has been exercised by PMMC with
respect to such Services.

     2.4.  Records.
           -------

           PMMC shall keep full and detailed records dealing with all aspects of
the Services performed by it hereunder (the "Records") and:

           (a) shall provide access to the Records to Kraft at all reasonable
times; and

           (b) shall maintain the Records in accordance with good record
management practices and with at least the same degree of completeness and care
as it maintains for its other similar business interests.

                                   ARTICLE III
                                      FEES

     3.1.  General.
           -------

           Kraft will pay to PMMC a fixed annual fee for each Service as set
forth in the attached Exhibits (collectively, the "Fees"). The Fees constitute
full compensation to PMMC for all charges, costs and expenses incurred by PMMC
on behalf of Kraft in providing the Services, unless otherwise specifically
provided in the Exhibits or agreed in an AOP (as defined below). Except as
specifically provided herein or in the Exhibits, or as subsequently agreed in an
AOP or otherwise by Kraft, Kraft will not be responsible to PMMC or to any
independent contractor retained by PMMC, for any additional fees, charges, costs
or expenses relating to the Services, unless such additional fees, charges,
costs or expenses are a direct result of Kraft's unilateral deviation from the
scope of the services defined in the Exhibits.

     3.2.  Payments.
           --------

           PMMC will deliver to Kraft, no later than the last day of each month,
an invoice for the aggregate Fees incurred for that month. Kraft will pay to
PMMC, through inter-company cash transfer monthly no later than the third
Wednesday of the following month, the aggregate Fees incurred during the
previous month.

     3.3.  Review of Fees.
           --------------

           (a) At the end of each six months during the term of the Agreement,
commencing as of the date of the Agreement, PMMC will review the charges, costs
and expenses actually incurred by PMMC in providing any Service, as well as the
calculation of any related Fee (collectively, "Actual Cost") during the previous
six months. In the event that PMMC determines that the Actual Cost for any
Service differs from the aggregate Fees for that Service 

                                      -3-

 
for that period by more than 2%, PMMC will deliver to Kraft documentation for
such Actual Cost and the Parties will renegotiate in good faith to adjust the
appropriate Fees accordingly, retroactively or prospectively.

           (b) As a part of the AOP process referred to in Section 5.1, the
                                                           ----------- 
Parties will set Fees or new budgets for each ensuing year, and may make other
changes to the Fees with respect to each Service, based upon an increase or
reduction to such Service. Once an AOP has been finalized (whether by agreement
or pursuant to the provisions of Section 5.1), the Fee for each Service set out
                                 ----------- 
in that AOP will apply for the ensuing year, subject to any subsequent written
agreements between Parties.

                                   ARTICLE IV
                                 REPRESENTATIVES

     4.1.  Representatives.
           ---------------

           (a) The Controller of Philip Morris Companies Inc. and the Controller
of Kraft will serve as administrative representatives ("Representative(s)") of
PMMC and Kraft, respectively, to facilitate day-to-day communications and
performance under this Agreement. Each Party may treat an act of a
Representative of the other Party as being authorized by such other Party. Each
Party may replace its Representative by giving written notice of the replacement
to the other Party.

           (b) No additional Exhibits, modifications to existing Exhibits,
modifications to an AOP approved pursuant to Section 5.1, or amendments to this
                                             ----------- 
Agreement shall be effective unless and until executed by the Representatives of
each of PMMC and Kraft.

                                    ARTICLE V
                                PLANNING PROCESS

     5.1.  Annual Operating Plan.
           ---------------------

           The Representative of each Party will coordinate the development of
an annual operating plan ("AOP") setting forth the specific objectives, Service
standards, performance measures, activity levels and a detailed budget for each
of the Services. In the AOP process, the Parties agree to use their best efforts
to harmonize the interests of Kraft to have quality services at affordable cost
and the interest of PMMC to recover its costs of performing the Services. On or
before November 15 of each calendar year, an AOP for each Service for the next
calendar year will be submitted to the Controller and Chief Financial Officer
("CFO") of Kraft by the Treasurer and Controller of Philip Morris Companies Inc.
on behalf of PMMC, for review and approval. Approval by the CFO of Kraft and the
CFO of Philip Morris Companies Inc. will constitute approval by the Parties of
the AOP.

     5.2.  Performance Review.
           ------------------

           The Parties will meet annually on or about September 30 to review
progress against the AOP objectives, Service standards, performance measures and
activity levels. The 

                                      -4-

 
Parties will use their good faith efforts to resolve any issues concerning
Service standards, performance measures or changes in Fees from the AOP during
these meetings. If the Parties are unable to resolve those issues, they will
refer the disputed issues to the CFO of Kraft and the CFO of Philip Morris
Companies Inc. on behalf of PMMC, pursuant to Article VII.
                                              -----------

                                   ARTICLE VI
                             THIRD PARTY AGREEMENTS

           To the extent that it is not practicable to have Kraft as the
contracting Party for a third party obligation, PMMC, with respect to all
Services supplied by PMMC or contracted for by PMMC on behalf of Kraft, shall
use commercially reasonable efforts to cause all such third party contracts to
extend to and be enforceable by Kraft, or to assign such contracts to Kraft. In
the event that such contracts are not extendable or assignable, PMMC shall act
as agent for Kraft in the pursuit of any claims, issues, demands or actions
against such third party provider at Kraft's expense. Kraft will indemnify PMMC
for any liability under third party contracts arising directly out of the acts
or omissions of Kraft.

                                   ARTICLE VII
                 AUTHORITY; INFORMATION; COOPERATION; CONSENTS

     7.1.  Authority.
           ---------

           Each Party warrants to the other Party that:

           (a) it has the requisite corporate authority to enter into and
perform this Agreement;

           (b) its execution, delivery, and performance of this Agreement have
been duly authorized by all requisite corporate action on its behalf;

           (c) this Agreement is enforceable against it; and

           (d) it has obtained all consents or approvals of Governmental
Authorities and other Persons that are conditions to its entering into this
Agreement. 

     7.2. Information Regarding Services.
          ------------------------------

           Each Party shall make available to the other Party any information
required or reasonably requested by that other Party regarding the performance
of any Service and shall be responsible for timely providing that information
and for the accuracy and completeness of that information; provided, however,
                                                           --------  -------
that a Party shall not be liable for not providing any information that is
subject to a confidentiality obligation owed by it to a Person other than an
Affiliate of it or the other Party. PMMC shall not be liable for any impairment
of any Service caused by its not receiving information, either timely or at all,
or by its receiving inaccurate or incomplete information from Kraft that is
required or reasonably requested regarding that Service.

                                      -5-

 
     7.3.  Cooperation.
           -----------

           The Parties will use good faith efforts to cooperate with each other
in all matters relating to the provision and receipt of Services. Such good
faith cooperation will include providing electronic access to systems used in
connection with Services and using commercially reasonable efforts to obtain all
consents, licenses, sublicenses or approvals necessary to permit each Party to
perform its obligations. The Parties will cooperate with each other in making
such information available as needed in the event of any and all internal or
external audits, whether in the United States or any other country. If this
Agreement is terminated in whole or in part, the Parties will cooperate with
each other in all reasonable respects in order to effect an efficient transition
and to minimize the disruption to the business of both Parties, including the
assignment or transfer of the rights and obligations under any contracts.

     7.4.  Further Assurances.
           ------------------

          Each Party shall take such actions, upon request of the other Party
and in addition to the actions specified in this Agreement, as may be necessary
or reasonably appropriate to implement or give effect to this Agreement.

                                  ARTICLE VIII
                               AUTHORITY AS AGENT

           PMMC is hereby authorized to act as agent for Kraft for the purpose
of performing Services hereunder and as is necessary or desirable to perform
such Services. Kraft will execute and deliver or cause the appropriate Kraft
Subsidiary to execute and deliver to PMMC any document or other evidence which
may be reasonably required by PMMC to demonstrate to third parties the authority
of PMMC described in this Article VIII.
                          ------------

                                   ARTICLE IX
                            CONFIDENTIAL INFORMATION

     9.1.  Definition.
           ----------

           For the purposes of this Agreement, "Confidential Information" means
non-public information about the disclosing Party's or any of its Affiliates'
business or activities that is proprietary and confidential, which shall
include, without limitation, all business, financial, technical and other
information, including software (source and object code) and programming code,
of a Party or its Affiliates marked or designated "confidential" or
"proprietary" or by its nature or the circumstances surrounding its disclosure
should reasonably be regarded as confidential. Confidential Information includes
not only written or other tangible information, but also information transferred
orally, visually, electronically or by any other means. Confidential Information
will not include information that (i) is in or enters the public domain without
breach of this Agreement, or (ii) the receiving Party lawfully receives from a
third party without restriction on disclosure and to the receiving Party's
knowledge without breach of a nondisclosure obligation.

                                      -6-

 
     9.2.  Nondisclosure.
           -------------

           Each of PMMC and Kraft agree that (i) it will not disclose to any
third party or use any Confidential Information disclosed to it by the other
except as expressly permitted in this Agreement, and (ii) it will take all
reasonable measures to maintain the confidentiality of all Confidential
Information of the other Party in its possession or control, which will in no
event be less than the measures it uses to maintain the confidentiality of its
own information of similar type and importance.

     9.3.  Permitted Disclosure.
           --------------------

           Notwithstanding the foregoing, each Party may disclose Confidential
Information (i) to the extent required by a court of competent jurisdiction or
other governmental authority or otherwise as required by law, including without
limitation disclosure obligations imposed under the federal securities laws,
provided that such Party has given the other Party prior notice of such
requirement when legally permissible to permit the other Party to take such
legal action to prevent the disclosure as it deems reasonable, appropriate or
necessary, or (ii) on a "need-to-know" basis under an obligation of
confidentiality to its consultants, legal counsel, Affiliates, accountants,
banks and other financing sources and their advisors.

     9.4.  Ownership of Confidential Information.
           -------------------------------------

           All Confidential Information supplied or developed by either Party
shall be and remain the sole and exclusive property of the Party who supplied or
developed it.

                                    ARTICLE X
                              TERM AND TERMINATION

     10.1. Term.
           ----

           This Agreement shall remain in effect until such time as it has been
terminated as to all Services in accordance with Section 10.2 below.
                                                 ------------

     10.2. Termination.
           -----------

           Either Party may terminate this Agreement without cause with respect
to one or more Services under this Agreement by providing twelve months' written
notice to the other Party or as otherwise agreed between the Parties hereto.

     10.3. Termination Assistance Services.
           -------------------------------

           PMMC agrees that, upon termination of this Agreement or any of the
Exhibits, PMMC will cooperate in good faith with Kraft to provide Kraft (or its
designee) with reasonable assistance to make an orderly transition from PMMC to
another supplier of the Services. Transition assistance services shall include
the following:

           (a) developing a transition plan with assistance from Kraft or its
designee;

                                      -7-

 
            (b) providing training to Kraft personnel or its designee's
personnel to perform Services; and

            (c) organizing and delivering to Kraft records and documents
necessary to allow continuation of the Services, including delivering such
materials in electronic forms and versions as requested by Kraft.

                                   ARTICLE XI
                    LIMITATION OF LIABILITY; INDEMNIFICATION

     11.1.  Limitation of Liability.
            -----------------------

            Except as may be provided in Section 11.2 below, PMMC, its
                                         ------------
controlling persons, if any, directors, officers, employees, agents and
permitted assigns (each, a "PMMC Party") shall not be liable to Kraft, the Kraft
Subsidiaries and their respective directors, officers, employees, agents or
permitted assigns (each, a "Kraft Party") and each Kraft Party shall not be
liable to any PMMC Party, in each case, for any liabilities, claims, damages,
losses or expenses, including, but not limited to, any special, indirect,
incidental or consequential damages, of a Kraft Party or a PMMC Party arising in
connection with this Agreement and the Services provided hereunder.

     11.2.  Indemnification.
            ---------------

            (a) PMMC shall indemnify, defend and hold harmless each of the Kraft
Parties from and against all liabilities, claims, damages, losses and expenses
(including, but not limited to, court costs and reasonable attorneys' fees)
(collectively referred to as "Damages") of any kind or nature, of third parties
unrelated to any Kraft Party caused by or arising in connection with the gross
negligence or willful misconduct of any employee of PMMC in connection with the
performance of the Services, except to the extent that Damages were caused
directly or indirectly by acts or omissions of any Kraft Party. Notwithstanding
the foregoing, PMMC shall not be liable for any special, indirect, incidental,
or consequential damages relating to such third party claims.

            (b) Kraft shall indemnify, defend and hold harmless each of the PMMC
Parties from and against all Damages of any kind or nature, of third parties
unrelated to any PMMC Party caused by or arising in connection with the gross
negligence or willful misconduct of any employee of Kraft in connection with
Kraft's performance under this Agreement, except to the extent that Damages were
caused directly or indirectly by acts or omissions of any PMMC Party.
Notwithstanding the foregoing, Kraft shall not be liable for any special,
indirect, incidental, or consequential damages relating to such third party
claims.

     11.3.  Indemnification Procedures.
            --------------------------

            (a) A party entitled to indemnification pursuant to this Agreement
(an "Indemnified Party") shall, with respect to any claim made against such
Indemnified Party for which indemnification is available, notify the other party
(the "Indemnifying Party") in writing of the nature of the claim as soon as
practicable but not more than ten days after the Indemnified Party receives
notice of the assertion of the claim. (The failure by an Indemnified Party to
give 

                                      -8-

 
notice as provided above, shall not relieve the Indemnifying Party of its
obligations under this Section 11.3, except to the extent that the failure
                       ------------
results in the failure of actual notice and the Indemnifying Party is damaged as
a result of the failure to give notice.) Upon receipt of notice of the assertion
of a claim, the Indemnifying Party may, at its option, assume the defense of the
claim, and if so, the Indemnifying Party shall employ counsel reasonably
acceptable to the Indemnified Party. If the Indemnifying Party assumes the
defense, the Indemnified Party shall have the right to employ separate counsel
and to participate in (but not control) any such action, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(a) the employment of counsel by the Indemnified Party has been authorized by
the Indemnifying Party, or (b) the Indemnified Party has been advised by its
counsel in writing that there is a conflict of interest between the Indemnifying
Party and the Indemnified Party in the conduct of the defense of the action (in
which case the Indemnifying Party shall not have the right to direct the defense
of the action on behalf of the Indemnified Party), in each of which cases the
reasonable fees and expenses of such counsel shall be at the expense of the
Indemnifying Party. If the Indemnifying Party does not assume the defense, the
Indemnified Party shall have the right to employ counsel and to control any such
action, and the reasonable fees and expenses of such counsel shall be at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable for
any settlement of an action effected without its written consent (which consent
shall not be unreasonably withheld), nor shall an Indemnifying Party settle any
such action without the written consent of the Indemnified Party (which consent
shall not be unreasonably withheld). No Indemnifying Party will consent to the
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party a release from all liability with respect to the claim. Each
of the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any claim for which indemnification is available and shall furnish
such records, information, testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may reasonably be requested.

                                   ARTICLE XII
                               DISPUTE RESOLUTION

            If any AOP is not submitted or is not approved by the Parties, or if
the Parties are unable to resolve any service, performance or budget issues or
if there is a material breach of this Agreement that has not been corrected
within thirty (30) days of receipt of notice of such breach, the Controller and
CFO of Kraft and the Treasurer and Controller of Philip Morris Companies Inc.,
on behalf of PMMC, will meet promptly to review and resolve those issues in good
faith.

                                      -9-

 
                                  ARTICLE XIII
                                  MISCELLANEOUS

     13.1.  Governing Law.
            -------------

            This Agreement and performance hereunder will be governed by and
construed in accordance with the laws of the Commonwealth of Virginia without
regard to the principles of conflict of laws.

     13.2.  Assignment.
            ----------

            This Agreement is not assignable in whole or in part by either Party
without the prior written consent of the other; provided that either Party may
                                                -------- ----
assign this Agreement in whole or in part to a parent, a direct or indirect
wholly-owned subsidiary, an Affiliate or a successor thereto.

     13.3.  Entire Agreement.
            ----------------

            This Agreement, including the attached Exhibits, is the complete and
exclusive statement of the agreement between the Parties and supersedes all
prior proposals, understandings and all other agreements, oral and written,
between the Parties relating to the subject matter of this Agreement. This
Agreement may not be modified or altered except by written instrument duly
executed by both Parties.

     13.4.  Force Majeure.
            -------------

            Any delay or failure by either Party in the performance of this
Agreement will be excused to the extent that the delay or failure are due solely
to causes or contingencies beyond the reasonable control of such Party.

     13.5.  Severability.
            ------------

            If any provision, clause or part of this Agreement, or the
application thereof under certain circumstances is held invalid or unenforceable
for any reason, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances shall not be affected
thereby.

     13.6.  Notices.
            -------

            All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given one
day after being delivered personally or by messenger or being received via
telecopy, telex or other electronic transmission, or two days after being sent
by overnight delivery service, in all cases addressed to the person for whom it
is intended at the addresses as follows:

            If to PMMC:

                                      -10-

 
            Joseph A. Tiesi
            Vice President and Controller
            Philip Morris Companies Inc.
            120 Park Avenue
            New York, New York  10017
            (917) 663-5000
     
            If to Kraft:
     
            John F. Mowrer III
            Vice President and Controller
            Kraft Foods Inc.
            Three Lakes Drive
            Northfield, IL  60093-2753
            (847) 646-2000
   
            or to such other address as a Party shall have designated by notice
in writing to the other Party in the manner provided by this Section 13.6.
                                                             ------------

     13.7.  Counterparts; Headings.
            ----------------------

            This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. The Article and Section headings in this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.

                                      -11-

 
            IN WITNESS WHEREOF, the Parties have signed this Agreement on the
date first set forth above.

                                 PHILIP MORRIS MANAGEMENT CORP.


                                 By:_____________________________

                                    Name:________________________

                                    Title:_______________________

                                 KRAFT FOODS INC.

                                 By:_____________________________

                                    Name:________________________

                                    Title:_______________________

                                      -12-

 
                                                                       EXHIBIT 1
                                                                       ---------

                   GOVERNMENT AND CORPORATE AFFAIRS SERVICES
                   -----------------------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide government
              and corporate affairs services to Kraft Foods Inc. ("Kraft") in
              all states and local jurisdictions where it does business, on the
              federal level and internationally, either through PMMC's own
              resources, the resources of its subsidiaries or Affiliates, as
              defined in the Services Agreement (the "Services Agreement"),
              dated as of January 1, 2001, by and between PMMC and Kraft, or by
              contracting with other independent contractors, all in accordance
              with Section 2.2 of the Services Agreement.
                   -----------

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:

              1.    Provide coverage and advocacy on international, federal,
                    state and local governmental issues affecting Kraft's
                    business and products.

              2.    Represent the business, political and local interests of
                    Kraft in international, federal and state industry business
                    coalitions and trade associations.

              3.    Administer charitable donations and corporate giving
                    programs.

              4.    Oversee media relations and corporate image campaigns.

              5.    Oversee community relations and community service programs.

              Additional services may be included upon agreement of both
              parties.

II       SERVICE FEES

         The Fee payable for Government and Corporate Affairs Services shall be
         $89,831,660. The Fee is based on the following:

         Federal, State and Local Government Affairs, External Affairs, Public
         Policy, Corporate Reputation. The Fee will include: (i) for each
         employee performing the Services the salaries, fringe benefits,
         executive compensation benefits (if applicable) and
         depreciation/amortization of office equipment and software attributed
         to the employee in the group (the "Employee Costs"), based upon the
         ratio of PMMC's estimate of the time spent by the employee on behalf of
         Kraft divided by the total time spent by the employee multiplied by the
         Employee Costs; (ii) a management fee equal to 5% of the aggregate


                                      1.1

         amount calculated pursuant to (i); and (iii) third-party expenses,
         including travel and entertainment, consulting fees and printing costs,
         incurred on behalf of Kraft by PMMC.
 
         Corporate Contributions and Matching Gifts. The Fee will include: (i)
         corporate contributions and matching gifts to be paid by Kraft based
         upon Kraft's annual approved level of spending; (ii) the Employee Costs
         for employees administering these programs based upon the ratio of
         Kraft's charge for corporate contributions and matching gifts divided
         by total Philip Morris contributions and matching gifts multiplied by
         the Employee Costs; (iii) a management fee equal to 5% of the aggregate
         amount calculated pursuant to (i) and (ii); and (iv) third-party
         expenses, including travel and entertainment, consulting fees and
         printing costs, incurred on behalf of Kraft by PMMC.

         Corporate Image Campaign and Corporate Communications. The Fee will
         include: (i) expenditures for the Corporate Image Campaign and
         Corporate Communications based upon the number of commercials featuring
         Kraft divided by the total number of commercials multiplied by the
         total cost of the commercials; (ii) the Employee Costs attributed to
         Corporate Communications employees administering the Corporate Image
         Campaign in the same proportion as the Corporate Image Campaign; (iii)
         a management fee equal to 5% of the aggregate amount calculated
         pursuant to (ii); and (iv) third-party expenses, including travel and
         entertainment and printing costs incurred on behalf of Kraft by PMMC.

         Issues Management, Societal Alignment, and PM Invitational Costs. PMMC
         will perform issues management and societal alignment studies for Kraft
         at Kraft's request and will bill Kraft for those Services on a
         project-by-project basis. With respect to the PM Invitational the Fee
         will include an agreed-upon amount of participation determined between
         Kraft and PMMC in July of each year. The Fee will also include: (i)
         Employee Costs attributable to employees administering this group based
         upon the ratio of Kraft's issues management, societal alignment and PM
         Invitational charges divided by total charges for these functions
         multiplied by the Employee Costs attributable to such employees; (ii) a
         management fee equal to 5% of the aggregate amount calculated pursuant
         to (i); and (ii) third-party expenses, including travel and
         entertainment and printing costs, incurred on behalf of Kraft by PMMC.

III      ADDITIONAL TERMS

         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.

                                      1.2

 
                                                                       EXHIBIT 2
                                                                       ---------

                           HUMAN RESOURCES SERVICES
                           ------------------------
                       
I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide employee
              benefit administration, training, staffing, health and welfare
              planning, delivery services, financial plan administration
              services, benefit communication services and compensation planning
              and administrative services to Kraft Foods Inc. ("Kraft"), either
              through PMMC's own resources, the resources of its subsidiaries or
              Affiliates, as defined in the Services Agreement (the "Services
              Agreement"), dated as of January 1, 2001, by and between PMMC and
              Kraft, or by contracting with other independent contractors, all
              in accordance with Section 2.2 of the Services Agreement.
                                 -----------

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:

              1.     CORPORATE BENEFITS

                     -     Preparation, assistance and review of matters to be
                           presented to the PM and Kraft Boards involving
                           benefit program changes above certain dollar
                           thresholds.

                     -     Development of company-wide benefit strategy for
                           Kraft.

                     -     Internal Revenue Compliance for company-wide
                           controlled group issues (i.e. Discrimination testing;
                           5500 review; FAS 87/88 compliance; Voluntary
                           Compliance Reviews, etc.).

                     -     Secular Trust and Executive Trust Agreement design,
                           administrative oversight and vendor/banking
                           management.

                     -     Management of certain executive benefits issues
                           particularly related to transfers, promotions and
                           terminations.

                     -     Coordination of company-wide benefit projects for
                           Kraft.

                     -     Health care/benefit cost surveys, analysis and
                           reporting to Senior Management of Kraft.

                     -     Business Travel Accident Plan design and
                           negotiations.


                                      2.1

                     -     International Insurance Pooling.
 
                     -     All benefit issues related to Kraft employee
                           participation in Kraft and PM stock programs.

                     -     Management of the International Mercer Database.

            2.       EMPLOYEE RELATIONS

                     -     Manage compensation program including competitive
                           survey process, range setting and increase approvals
                           (annual, ad hoc and promotions).

                     -     Support on benefit issues (including education
                           reimbursement, services awards, etc.) or employee
                           questions.

                     -     Provide staffing and training.

                     -     Provide health programs and guidance.

                     -     Drafting, design, production and distribution of
                           communications to employees.

            3.       HR SERVICES

                     -     Employee benefits data and vendor feeds.

                     -     Arrangement for pension and retiree health and
                           welfare calculations, processing and set-ups.

                     -     Arrangement for pension payments.

                     -     Management of the HR Services Delivery Project.

            4.       COMPENSATION PLANING AND ADMINISTRATION

                     -     Manage executive base program including competitive
                           survey process, range setting and increase approvals
                           (annual, ad hoc and promotions).

                     -     Manage all aspects of shareholder-approved
                           performance incentive plan.

                     -     Design executive compensation programs including cash
                           incentives (short and long-term) and equity. Ensure
                           programs are appropriate and competitive.


                                      2.2

 
                     -     Administer executive and management cash incentive
                           (annual incentive and long-term incentive) and equity
                           incentive (stock options, restricted stock, stock
                           appreciation rights and deferred 

                           stock) program funding, award roll-up, senior
                           executive approval process and Compensation Committee
                           approval.

                     -     Create compensation section of proxy statement for
                           the annual meeting of shareholders and related
                           materials including shareholder meeting briefing
                           books and media Q&As.

                     -     Develop and produce all materials for Board
                           Compensation Committee meetings.

                     -     Provide appropriate communication materials to
                           compensation program participants.

                     -     Ensure compensation programs respond to worldwide
                           changes to tax laws and other regulatory
                           requirements.

            5.       HR INFORMATION SERVICES

                     -     Responsible for the design, support and maintenance
                           of the global HR system.

            6.       DIVERSITY MANAGEMENT

                     -     Direct and consult on the execution of Kraft's
                           diversity strategy.

                     -     Provide coaching and counseling to support the
                           continued growth and development of local diversity,
                           compliance and work life staff.

                     -     Conduct annual on-site diversity reviews to ensure
                           progress and resolution of barriers within the
                           operating unit's local environment.

                     -     Conduct compliance checks and interpretation of
                           existing and new federal regulation requirements.

                     -     Participate in formal presentations related to the
                           guiding principles of diversity and work of life at
                           Kraft employee council meetings, divisional
                           leadership development meetings, etc.

                     -     Act as liaison between operating unit and Board of
                           Directors' Affirmative Action and Diversity Committee
                           (twice a year).

II       SERVICE FEES


                                      2.3


         The Fee payable for human resources services shall be $4,405,097. The
         Fee is based on the following:

         Human Resources Support for Financial Services and the Information
         Technology Service Center ("ITSC"). The Fee will include: (i) with
         respect to human resources 
 
         support for employees in Financial Services functions in San Antonio
         and Wilkes Barre, the proportion of San Antonio and Wilkes Barre
         employees supported, divided by the total number of employees
         supported, multiplied by the salaries, fringe benefits, executive
         compensation benefits (if applicable) and depreciation/amortization of
         office equipment and software (the "Employee Costs") attributed to the
         Philip Morris Human Resources Group multiplied by the ratio of annual
         Financial Services costs payable to Kraft (as determined under the
         terms of Exhibit 4 of this Agreement) divided by total Financial
                  ---------
         Services costs; (ii) with respect to human resources support for
         employees of the ITSC, based upon the number of ITSC employees
         supported divided by the total number of employees supported multiplied
         by the Employee Costs of the Philip Morris Human Resources Group
         multiplied by the ratio of annual ITSC charges allocated to Kraft under
         the ITSC agreement [(contained in the Addendum to Exhibit 6 of this
                                                           ---------
         Agreement)] divided by total annual charges of the ITSC; (iii) a
         management fee equal to 5% of the aggregate amount calculated pursuant
         to (i) and (ii); and (iv) third-party expenses, including travel and
         entertainment and printing costs incurred on behalf of Kraft by PMMC.

         Executive Compensation. The Fee will include: (i) the Employee Costs
         attributed to each employee who manages executive compensation based
         upon the ratio of PMMC's estimate of the spent by each employee on
         behalf of Kraft divided by the total time spent by such employee
         multiplied by the Employee Costs of such employee; (ii) a management
         fee equal to 5% of the aggregate amount calculated pursuant to (i); and
         (iii) third-party expenses, including travel and entertainment,
         consultants fees and printing costs, incurred on behalf of Kraft by
         PMMC.

         Consulting Contracts. From time to time the Philip Morris Human
         Resources Group engages consultants to perform work regarding the
         benefits across the family of Philip Morris Companies (PM USA, PM
         International, Kraft Foods North America, Kraft Foods International and
         Miller) ("Group Contracts"). The Fee will include 40% of each Group
         Contract. From time to time, the Philip Morris Human Resources Group
         also engages consultants solely for the benefit of Kraft ("Kraft
         Contracts" and, together with the Group Contracts, "Consulting
         Contracts"). The Fee will include: (i) the total cost of each Kraft
         Contract; (ii) the Employee Costs attributed to employees who engage
         and work with these consultants based upon Kraft's allocated share of
         the Consulting Contracts as determined above divided by the total value
         of consulting services managed by such employees, multiplied by the
         Employee Costs of these employees; (iii) a management fee equal to 5%
         of the aggregate amount calculated pursuant to (i) and (ii); and (iv)
         third-party expenses, including travel and entertainment and printing
         costs, incurred on behalf of Kraft by PMMC.


                                      2.4


         Diversity Management, Management Development, Human Resources Services
         Delivery and Human Resources Technical Support Groups. The Fee will
         include: (i) the Employee Costs attributed to employees in these groups
         based upon PMMC's estimate of annual time spent by employees of these
         groups on behalf of Kraft divided by the total annual time spent by
         these groups multiplied by Employee Costs of the employees of these
         groups; (ii) a management fee equal to 5% of the aggregate amount
         calculated pursuant to (i); (iii) 40% of the consultant costs for
         projects undertaken on behalf of all 
 
         Philip Morris Companies; (iv) 100% of the cost of consultants used in
         projects specifically for the benefit of Kraft; and (v) third-party
         expenses, including travel and entertainment and printing costs,
         incurred on behalf of Kraft by PMMC.

III      ADDITIONAL TERMS

         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.


                                      2.5

 
                                                                       EXHIBIT 3
                                                                       ---------

                                TREASURY SERVICES
                                -----------------
I        DESCRIPTION OF SERVICES

         A.       SCOPE

                  Philip Morris Management Corp. ("PMMC") will provide treasury
                  services to Kraft, including cash management, risk management,
                  short and long-term borrowings, investment of benefit trusts,
                  arrangement of credit facilities and coordination with credit
                  rating agencies, either through PMMC's own resources, the
                  resources of its subsidiaries or Affiliates, as defined in the
                  Services Agreement (the "Services Agreement"), dated as of
                  January 1, 2001, by and between PMMC and Kraft, or by
                  contracting with other independent contractors, all in
                  accordance with Section 2.2 of the Services Agreement.
                                  -----------

         B.       SPECIFIC SERVICES

                  The specific services that PMMC will provide are as follows:

                  1.   CASH MANAGEMENT

                       -    Calculate, document and initiate disbursement
                            requests for the payment of certain Kraft Treasury
                            items related to short-term and long-term debt,
                            common dividends, credit facility fees, Kraft share
                            repurchases and interest rate swap agreements.

                       -    Poll daily bank account balances for Kraft's banks
                            and perform cash position.

                       -    Post Kraft's cash desk activity to Kraft's general
                            ledger.

                       -    Provide reporting on short-term borrowings and
                            investments and interface with Kraft's general
                            ledger.

                       -    Support Kraft's bank accounts, including opening,
                            closing and modifying accounts at the request and
                            approval of Kraft.

                       -    Pay Kraft bank fees.

                       -    Obtain bank credit lines for Kraft's letter of
                            credit needs.

                       -    Structure/maintain efficient bank network with banks
                            and analyze bank service needs.

                       -    Execute foreign exchange trades as required and the
                            purchase and sale of foreign exchange forwards,
                            futures and options in accordance with hedging
                            strategies developed jointly between Kraft and PMMC.

                       -    Planning, designing and implementing commercial
                            paper programs, including selection of and
                            negotiations with underwriters, financial advisors
                            and counsel.


                                      3.1

 
            2.       RISK MANAGEMENT
                                    
                     -     Administering risk management, safety and claim
                           services.

                     -     Monitoring and planning of effective treasury risk
                           management strategies, particularly in emerging
                           markets.

                     -     Monitoring and managing counter party risk.
                                                                      
                     -     Negotiation and acquisition of insurance coverage,
                           including, but not limited to, property and business
                           interruption casualty (including worker's
                           compensation), directors', officers' and other
                           liability coverages. 

                     -     Risk, safety and claim vendor selection and
                           oversight.
                           
                     -     Risk, safety and claim processes and measurements.
                           
            3.       CAPITAL MARKETS
                                    
                     -     Planning, designing and implementing public debt
                           offerings, including selection of, and negotiation
                           with, underwriters, financial advisors and counsel.

                     -     Planning, negotiating and implementing all credit
                           facilities.                           

                     -     Planning, negotiating and implementing reporting
                           covenants contained within applicable borrowing
                           arrangements.

                     -     Planning, negotiating and executing fixed/floating
                           and cross currency swaps to manage the portfolio.
                           
                     -     Coordinating all interactions with credit rating
                           agencies.

            4.       BENEFIT INVESTMENTS

                     -     Provide administrative oversight for all Kraft
                           benefit trusts.

                     -     Design and implement asset allocation strategies for
                           all Kraft defined benefit plan assets.

                     -     Identify, select and monitor investment advisors for
                           Kraft's pension, 401(k) and other benefit plans.
                           
                     -     Provide information for reporting to the Pension
                           Benefit Guarantee Corp. and other government agencies
                           regarding Kraft's benefit plans and investments.

                     -     Preparation of presentations to Kraft's Board of
                           Directors regarding benefit plan investments.

            Additional services may be included upon agreement of both parties.

                                      3.2

 
II       SERVICE FEES

         The Fee payable for the treasury services shall be $6,389,739. The Fee
         is based on the following:

         Cash Management - [Zug.] The Fee will include: (i) salaries, fringe
         benefits, executive compensation benefits (if applicable) and
         depreciation/amortization of office equipment and software (the
         "Employee Costs") based upon the number of Kraft entities in the cash
         pooling system divided by the total number of entities in the cash
         pooling system multiplied by the total cost to manage the cash pools;
         (ii) a management fee equal to 5% of the aggregate amount calculated
         pursuant to (i); and (iii) third-party expenses, including travel and
         entertainment, consulting fees, and costs to bring Nabisco entities
         into the cash pool system, incurred on behalf of Kraft by PMMC.

         Cash Management - New York. The Fee will include: (i) with respect to
         each non-Kraft employee performing the Services, the Employee Costs
         attributed to such employee based upon the ratio of PMMC's estimate of
         the time spent on providing such Services for Kraft divided by the
         total time spent by such employee multiplied by the total Employee Cost
         attributed to such employee; (ii) a management fee equal to the
         aggregate amount calculated pursuant to (i); and (iii) third-party
         expenses, including travel and entertainment, consulting fees and costs
         to bring Nabisco entities into the cash pool system, incurred on behalf
         of Kraft by PMMC.

         Risk Management. The Fee will include: (i) the costs of property
         insurance based upon a calculation that reflects property values and
         loss histories; (ii) workers' compensation based upon an actuarial
         calculation that reflects Kraft's historical experience; (iii) the cost
         of directors' and officers' insurance reflecting the insurance
         carrier's premium for Kraft's separate coverage, if applicable; (iv)
         the cost of liability insurance based upon an actuarial calculation
         taking into consideration Kraft's historical liability experience; (v)
         third-party expenses to bring Nabisco into Philip Morris' group
         coverage; (vi) the cost of other insurance lines allocated as in the
         past under previously agreed formulas; (vii) with respect to each type
         of insurance, the Employee Costs attributed to each Philip Morris
         employee working on the respective type of insurance coverage based
         upon Kraft's percentage of the respective insurance coverage (as
         determined above) multiplied by the Employee Costs of such employee;
         (viii) a management fee equal to 5% of the aggregate amounts calculated
         pursuant to (vii); and (ix) third-party expenses, including travel and
         entertainment, consulting fees, insurance premiums and incurred losses
         specific to Kraft.

         Risk Management & Reporting. The Fee will include: (i) the Employee
         Costs attributed to employees providing this Service based upon the
         number of Kraft International entities outside the cash pooling system
         that participate in the Annual Financial Policy ("AFP") process, plus
         one-third of the number of Kraft International entities in the cash
         pooling system that participate in the AFP process, divided by the
         total number of international entities outside the cash pooling system
         that participate in the AFP process, plus one-third of the number of
         international entities in the cash pooling system that participate in
         the AFP process, multiplied by the total cost to manage all treasury
         risk management activities; (ii) a management fee equal to 5% of the
         aggregate amounts calculated pursuant to (i); and (iii) third-party
         expenses, including travel and entertainment, 

                                      3.3

 
         consulting fees, and costs to bring Nabisco entities into the treasury
         risk management framework.

         Capital Markets. The Fee will include: (i) the Employee Costs
         attributed to each Philip Morris employee in the Capital Markets group
         based upon the ratio of the number of Kraft's revolving credit
         agreements, rating agency presentations and debt issuances divided by
         the total number of revolving credit agreements, rating agency
         presentations and debt issuances performed by the Philip Morris Capital
         Markets Group multiplied by the Employee Costs of such employee; (ii) a
         management fee equal to 5% of the aggregate amounts calculated pursuant
         to (i); and (iii) third-party expenses, such as bank commitment fees on
         revolving credit arrangements, rating agency fees, road-show costs and
         travel and entertainment costs, incurred on behalf of Kraft by PMMC.

         Benefit Investments. The Fee will include: (i) the Employee Costs
         attributed to each employee in the group based upon the ratio of PMMC's
         estimate of the time spent by that employee on behalf of Kraft for the
         investment of Kraft's pension and thrift plan funds, preparation of
         reports to the Pension Benefits Guarantee Corp. and other government
         agencies, preparation of presentations to Kraft's Board of Directors
         and the integration of Nabisco divided by the total time spent by such
         employee multiplied by the Employee Costs of such employee; (ii) a
         management fee equal to 5% of the aggregate amounts calculated pursuant
         to (i); and (iii) third-party expenses, including travel and
         entertainment, consulting fees, investment advisor fees and actuarial
         fees not qualifying for deduction from benefit fund assets in
         accordance with ERISA regulations.

III      ADDITIONAL TERMS


         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.

                                      3.4

 
                                                                       EXHIBIT 4
                                                                       ---------
              
              FINANCIAL SERVICES, REPORTING, RESEARCH AND LEDGER
              --------------------------------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide financial
              reporting, advising and auditing services to Kraft Foods Inc.
              ("Kraft"), either through PMMC's own resources, the resources of
              its subsidiaries or Affiliates, as defined in the Services
              Agreement (the "Services Agreement"), dated as of January 1, 2001,
              by and between PMMC and Kraft, or by contracting with other
              independent contractors, all in accordance with Section 2.2 of the
                                                              -----------
              Services Agreement. These services will include payroll, accounts
              payable, external audit coordination, Securities and Exchange
              Commission ("SEC") and other governmental reporting, financial
              research and stock option plan administration.

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:

              1.    FINANCIAL SERVICES

                    -     Preparation and distribution of weekly and bi-weekly
                          employee checks.

                    -     Payment of related taxes, garnishment and other
                          deductions to appropriate parties.

                    -     Preparation and filing of employer tax returns.

                    -     Preparation of annual W-2's for employees.

                    -     Response to employee questions through 1-800 telephone
                          line.

                    -     Processing and paying invoices and purchase orders,
                          including input into the accounts payable system.

                    -     Processing travel vouchers and balancing travel
                          advance accounts.

                    -     Recording all payments and maintaining all related
                          files.

                    -     Preparing all checks for vendor payment and employee
                          reimbursement.

                    -     Preparation of Form 1099s and other governmental
                          reports.

                                      4.1

 
                    -     Processing and paying employee travel and
                          entertainment expense reports.

                    -     Preparing and circulating weekly and monthly standard
                          reports.

                    -     Preparing special reports on a timely basis and
                          responding to all inquiries for research and analysis.

                    -     Preparing documentation for intercompany billing.

             2.     FINANCIAL CONSOLIDATIONS AND REPORTING

                    -     Preparing quarterly, annual and any other required SEC
                          reports.

                    -     Monthly consolidation of Kraft's financial statements.

                    -     Assist in the preparation of Kraft's annual report and
                          earnings releases.

                    -     Preparing monthly reporting of results of operations
                          for distribution to Kraft's Board of Directors.

                    -     Assisting Kraft in the preparation of reports to
                          committees of its Board of Directors (e.g., Audit
                                                                ----
                          Committee and Compensation Committee).

             3.     FINANCIAL RESEARCH

                    -     Responding to requests for financial research from any
                          Kraft business unit.

                    -     Evaluating and coordinating Kraft's compliance with
                          new regulatory requirements (SEC, FASB, EITF, etc.)

                    -     Assisting Kraft in responding to accounting regulatory
                          bodies (SEC, FASB, EITF, etc.) regarding their
                          solicitation of comments on proposed regulation.

                    -     Preparing other governmental reports.

                    -     Preparing all required Form 11K and ERISA reports.

                    -     Coordinating external audit services.

             4.     HEADQUARTERS LEDGER SERVICES

                                      4.2

 
                    -     Administering Kraft stock options granted under the
                          ______ Plan, as well as Philip Morris stock awards to
                          Kraft employees under Philip Morris plans.

                    -     Preparing all necessary reports related to stock
                          option exercises.

                    -     Maintaining a general ledger for holding company and
                          accounting for debt, stock and intercompany
                          transactions at the holding company level.

     Additional services may be included upon agreement of both parties.

II       SERVICE FEES

         The Fee payable for the financial services, financial consolidations
         and reporting and financial research shall be $2,677,196. The Fee is
         based on the following:

         Financial Services. The Fee will include: (i) the cost of financial
         services determined as per the separate Shared Service Center Agreement
         already approved by Kraft; (ii) the total cost of financial services
         (accounts payable, travel and entertainment, and payroll processing) as
         defined above, performed at San Antonio and Wilkes Barre facilities
         less specific one-time costs associated with the integration of
         non-Kraft entities, specific one-time costs for assisting Kraft in
         systems enhancements, conversions or upgrades; (iii) the cost of the
         Leadership Team multiplied by the ratio of the number of Kraft
         transactions processed annually divided by the total number of
         transactions processed annually; (iv) the salaries, fringe benefits,
         executive compensation benefits (if applicable) and
         depreciation/amortization of office equipment and software (the
         "Employee Costs") attributed to each member of the Leadership Team
         based on the percentage of PMMC's estimate of the time spent by that
         employee on Kraft projects and daily maintenance of operations divided
         by the total time spent by each member of the Leadership Team; (v) a
         management fee equal to 5% of the aggregate amounts calculated pursuant
         to (i) and (iv); (vi) the cost of assisting Kraft in systems
         enhancements, conversions or upgrades in an amount to be negotiated
         between Kraft and PMMC prior to the commencement of the project, plus
         or minus cost overruns or shortfalls, approved in advance by Kraft; and
         (vii) third-party costs paid on behalf of Kraft, such as consultant
         fees. The capitalized cost of systems enhancements, conversions or
         upgrades that pertain or are planned to pertain to the entire Philip
         Morris organization will be paid for by Philip Morris Companies Inc.
         The Fee will also include the depreciation/amortization of such costs
         each year based upon the proportion of transactions processed for Kraft
         as described above, plus a management fee equal to 5% of such aggregate
         amounts.

         Financial Consolidations and Reporting. The Fee will include: (i) the
         Employee Costs attributed to each employee in the group based upon the
         ratio of PMMC's estimate of the time spent by that employee on behalf
         of Kraft for the preparation of reports for Kraft's Board of Directors,
         the preparation and review of Form S-1 and related road-show

                                      4.3

         presentations, the preparation of quarterly and annual Kraft Forms 10-Q
         and 10-K filed with the SEC, the preparation of quarterly and annual
         Nabisco Forms 10-Q and 10-K filed with the SEC, the monthly
         consolidations of Kraft financial statement data, the acquisition and
         integration of Nabisco and the preparation and validation of Kraft
         annual report disclosures and press releases divided by the total time
         spent by the employee multiplied by the total Employee Costs of such
         employee; (ii) a management fee equal to 5% of the aggregate amount
         calculated pursuant to (i); and (iii) third-party expenses, including
         travel and entertainment, consulting fees and printing costs incurred
         on behalf of Kraft by PMMC.

         Financial Research. The Fee will include: (i) the Employee Costs
         attributed to each employee in the group based upon the ratio of PMMC's
         estimate of the time spent by that employee on behalf of Kraft for the
         preparation and review of Kraft's Form S-1 and related road-show
         presentations, Kraft's Forms 8-K, Kraft's debt filings and related
         documentation, Kraft's and Nabisco's Forms 11-K, ERISA and other
         governmental filings, the adoption of new accounting pronouncements
         applicable to Kraft, the review and coordination of FASB and SEC
         activities on behalf of Kraft, the acquisition and integration of
         Nabisco and specific research projects applicable to Kraft divided by
         the total time spent by the employee multiplied by the Employee Costs
         of such employee; (ii) a management fee equal to 5% of the aggregate
         amount calculated pursuant to (i); and (iii) third-party expenses,
         including travel and entertainment, consulting fees and printing costs
         incurred on behalf of Kraft by PMMC.

         Headquarters Ledger Services. The Fee will include: (i) Employee Costs
         attributed to each employee in this group based upon the ratio of
         PMMC's estimate of the time spent by each employee on projects
         applicable to Kraft in the maintenance of Kraft stock options, the
         maintenance of Philip Morris stock options, stock awards, incentive
         compensation, long-term incentive compensation and executive trusts in
         the name of Kraft employees, and the maintenance of a holding company
         general ledger for Kraft divided by the total time spent by such
         employee multiplied by the Employee Costs of such employee; (ii) a
         management fee equal to 5% of the aggregate amount calculated pursuant
         to (i); and (iii) third-party expenses incurred on behalf of Kraft to
         vendors for stock option maintenance, consultants and travel and
         entertainment.

III      ADDITIONAL TERMS

         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.

                                      4.4

 
                                                                       EXHIBIT 5
                                                                       ---------

                          INTERNAL AUDITING SERVICES
                          --------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide independent
              and objective internal audit services for Kraft Foods Inc.
              ("Kraft"), either through PMMC's own resources, the resources of
              its subsidiaries or Affiliates, as defined in the Services
              Agreement (the "Services Agreement"), dated as of January 1, 2001,
              by and between PMMC and Kraft, or by contracting with other
              independent contractors, all in accordance with Section 2.2 of the
                                                              -----------
              Services Agreement.

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:

                     -    Conducting routine internal audits in accordance with
                          mutually agreed annual coverage plans.

                     -    Processing compliance with Company policies relating
                          to matters such as facilitating payments, gifts,
                          contributions and business conduct.

                     -    Conducting pre- and post-implementation reviews of
                          major computer system applications or upgrades, as
                          well as pre-and post-completion reviews of major
                          construction projects.

                     -    Investigating instances of actual or potential
                          misconduct, including fraud and defalcations.

                     -    Assisting Kraft, as requested, with internal control
                          reviews and development of suggestions to strengthen
                          the internal control environment.

              Additional services may be included upon agreement of both
              parties.

II       SERVICE FEES

         The Fee payable for the internal auditing services shall be
         $13,235,455. The Fee is based on the following:

         The Fee will include: (i) salaries, fringe benefits and executive
         compensation benefits (if any) attributed to Philip Morris Internal
         Audit Department employees at Kraft locations; and (ii) a management
         fee equal to 5% of the aggregate amount calculated pursuant to (i).

                                      5.1

         Charges from Kraft for the use of office space at Kraft Foods
         International's London office will be calculated in accordance with the
         agreement attached as an addendum to this Exhibit.
                                                   -------
         In addition to the Fee for Kraft Foods International's London office,
         calculated under a separate agreement as described above, the Fee will
         also include: (i) salaries, fringe benefits, executive compensation
         benefits (if any) and depreciation/amortization of office equipment and
         software (the "Employee Costs") attributed to Philip Morris Audit
         Department employees at Philip Morris locations based upon the annual
         time spent by each auditor in the performance of audits of Kraft
         operations, divided by the total annual time spent by such auditor
         multiplied by the Employee Costs attributed to the auditor; and (ii) a
         management fee equal to the aggregate amount calculated pursuant to
         (i).

         The Fee will also include: (i) the Employee Costs attributed to
         employees at Philip Morris locations who supervise the audit function
         based upon PMMC's estimate of the annual time spent by each employee in
         the supervision and administration of audits of Kraft operations,
         divided by the total annual time spent by such employee multiplied by
         the Employee Costs of such employee; (ii) a management fee equal to 5%
         of the aggregate amount calculated pursuant to (i); and (iii)
         third-party expenses incurred, including travel and entertainment,
         incurred on behalf of Kraft by PMMC.

III      ADDITIONAL TERMS

         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.

                                      5.2

 
                                                                       EXHIBIT 6
                                                                       ---------

                        INFORMATION TECHNOLOGY SERVICES
                        -------------------------------


I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide Information
              Technology services to Kraft Foods Inc. ("Kraft") to enable Kraft
              to attain its business objectives of developing, implementing,
              operating and supporting Information Technology requirements,
              either through PMMC's own resources, the resources of its
              subsidiaries or Affiliates, as defined in the Services Agreement
              (the "Services Agreement"), dated as of January 1, 2001, by and
              between PMMC and Kraft, or by contracting with other independent
              contractors, all in accordance with Section 2.2 of the Services
                                                  -----------
              Agreement.
                        

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:
              (definitions are included as an Addendum):

              1.   Basic Maintenance.

              2.   Operational Continuity.

                   -      Each year an Annual Operating Plan (AOP) will be
                          prepared by PMMC's Information Technology services
                          working with Kraft's functional leaders.

                   -      At least once a quarter, PMMC's Information Technology
                          services will provide an update on the status of work,
                          activity levels, development work and overall
                          spending. In addition, certain investment projects
                          identified by Kraft will be subject to Capital
                          Expenditure review and approval policies, which will
                          include scope, rate of return, functionality
                          milestones reviews, etc.

              3.   Chief technical office services, including:

                   -      Enterprise architecture and design.

                   -      Application technology, security and enterprise
                          programs.

                   -      Information technology research and development.

                   -      Project management.


                                      6.1

                   -      Network design, procurement and implementation.
 
                   -      Enterprise and other information technology services
                          previously provided by the Nabisco Enterprise Group,
                          which includes the Nabisco employees assumed by PMMC.

          4.       Enhancements.

          5.       Investment Projects.

          6.       Support of PMMC systems used in the performance of financial
                   services and treasury services on behalf of Kraft.

          7.       Negotiation of contracts with major information technology
                   vendors, including AT&T, IBM, Oracle, Microsoft and SAP.

          Additional services may be included upon agreement of both parties.

II   SERVICE FEES

     The Fee payable for the information technology services shall be
     $7,803,998, which amount excludes ITSC charges that are calculated and
     billed under a separate agreement that is attached hereto. The Fee is based
     on the following:

     Information Technology Services Centers ("ITSC"). ITSC charges will be
     billed to Kraft in accordance with the Philip Morris ITSC agreement
     attached hereto.

     Global Information and Shared Service. The Fee will include: (i) certain
     costs of the Global Information and Shared Services group, which supports
     the Information Technology application used at PMMC, based upon the
     percentage of costs incurred in each function (such as Insurance, Financial
     Consolidations and Reporting, etc. contained in Exhibits 1 through 13
                                                     ----------         --
     attached to the Agreement) divided by total expenses incurred by the Global
     Information and Shared Services group multiplied by the salaries, fringe
     benefits, executive compensation benefits (if applicable) and
     depreciation/amortization of office equipment and software attributed to
     the respective employees in the group (the "Employee Costs"); (ii) a
     management fee equal to 5% of the aggregate amount calculated pursuant to
     (i); and (iii) third-party expenses, including travel and entertainment and
     printing costs, incurred on behalf of Kraft by PMMC.

     Global Information Technologies Group. The Fee will include: (i) the
     Employee Costs attributed to each employee in the group based upon the
     ratio of PMMC's estimate of the time spent by such employee divided by the
     total time spent by such employee multiplied by the Employee Costs for such
     employee; (ii) a management fee equal to 5% of the aggregate amount
     calculated pursuant to (i); and (iii) third-party expenses, including
     travel and entertainment and printing costs, incurred on behalf of Kraft by
     PMMC.


                                      6.2

     Information Technology Treasury Support Group. The Fee will include: (i)
     the Employee Costs attributed to one international employee and two
     domestic employees who support treasury functions for Kraft; (ii) a
     management fee equal to 5% of the aggregate amount calculated pursuant to
     (i); (iii) building services costs at Kraft locations 
 
     determined as the ratio of square footage occupied by such employees
     divided by the total square footage of the location multiplied by the total
     building costs at that location; and (iv) third-party expenses, including
     travel and entertainment and printing costs, incurred on behalf of Kraft by
     PMMC.

     Information Technology Contracts. The Fee will include: (i) Kraft's charges
     under each information technology contract (primarily AT&T, IBM, Oracle,
     Microsoft and SAP contracts), (collectively, the "IT Contracts"), allocated
     by usage under the IT Contracts as provided by the service provider; (ii)
     the Employee Costs attributed to employees who maintain the IT Contracts
     based upon the ratio of Kraft's annual spending under the IT Contracts
     divided by total annual spending under the IT Contracts; (iii) a management
     fee of 5% of the aggregate amount calculated pursuant to (ii); and (iv)
     third-party expenses, including travel and entertainment and printing
     costs, incurred on behalf of Kraft by PMMC.

     Information Technology Administration. The Fee will include: (i) the
     Employee Costs attributed to each employee in this group based upon the
     ratio of PMMC's estimate of time spent supporting Kraft divided by total
     time spent by such employee multiplied by the Employee Costs for such
     employee; (ii) a management fee of 5% of the aggregate amount calculated
     pursuant to (i); and (iii) third-party expenses, including travel and
     entertainment and printing costs, incurred on behalf of Kraft by PMMC.

III  ADDITIONAL TERMS

     Period of coverage will be ongoing subject to yearly reviews during the
     annual budgeting process.

                                      6.3

 
                                                                       EXHIBIT 7
                                                                       ---------

                    LEGAL AND CORPORATE SECRETARY SERVICES
                    --------------------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide legal and
              corporate secretary services, including Securities and Exchange
              Commission ("SEC") reporting services, to Kraft Foods Inc.
              ("Kraft"), either through PMMC's own resources, the resources of
              its subsidiaries or Affiliates, as defined in the Services
              Agreement (the "Services Agreement"), dated as of January 1, 2001,
              by and between PMMC and Kraft, or by contracting with other
              independent contractors, all in accordance with Section 2.2 of the
                                                              -----------
              Services Agreement. The services will include legal support to all
              business units of Kraft.

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:

                      -    Providing general legal advice.

                      -    Providing Corporate Secretary services for Kraft and
                           the Kraft Subsidiaries, including preparations for
                           the annual meeting of shareholders, assistance with
                           respect to shareholder resolutions and services
                           relating to corporate governance matters.

                      -    Preparing and reviewing all filings with the SEC,
                           including Forms 10-K and 10-Q and proxy statements
                           for shareholders' meetings.

                      -    Providing legal advice related to executive
                           compensation plans.

                      -    Providing intellectual property law support for Kraft
                           and the Kraft Subsidiaries.

                      -    Overseeing and articulating legal policy regarding
                           litigation and regulatory compliance.

              Additional services may be included upon agreement of both
              parties.

                                      7.1

 
II   SERVICE FEES

     The Fee payable for the legal and corporate secretary services shall be
     $2,903,039. The Fee is based on the following:

     The Fee will include: (i) the cost of legal services, which pertain
     primarily to trademarks in the case of Kraft, based upon the number of
     Kraft trademarks supported by the group divided by total trademarks
     supported by the group multiplied by the salaries, fringe benefits,
     executive compensation benefits (if applicable) and
     depreciation/amortization of office equipment and software (collectively,
     the "Employee Costs"), attributed to employees engaged in trademark
     matters; (ii) the cost of corporate secretary services based upon PMMC's
     estimate of the annual time spent by such employees in preparing and
     reviewing SEC filings, the preparation of proxy statement and annual
     meeting materials, supervision of corporate governance and reporting to the
     Kraft Board of Directors divided by total annual time of such employees
     multiplied by the Employee Costs of such employees; (iii) a management fee
     equal to 5% of the aggregate amount calculated pursuant to (ii); and (iv)
     third-party expenses, including SEC filing fees, travel and entertainment
     and printing costs, incurred on behalf of Kraft by PMMC.

III  ADDITIONAL TERMS

     Period of coverage will be ongoing subject to yearly reviews during the
     annual budgeting process.

     It is understood that the PMMC attorneys providing legal services pursuant
     to this Agreement have been retained by Kraft for the express purpose of
     providing legal advice to Kraft and that their communication with Kraft
     will be subject to the attorney-client privilege to the extent permitted by
     law and by applicable ethical requirements. The parties agree that no
     conflict of interest between PMMC and Kraft currently exists with respect
     to the services being provided. To the extent a conflict of interest arises
     PMMC and Kraft will discuss and resolve such conflict consistent with the
     principles and obligations of professional responsibility.

                                      7.2
        

 
                                                                       EXHIBIT 8
                                                                       ---------


         AVIATION SERVICES, BUILDINGS SERVICES AND CONFERENCE SERVICES
         -------------------------------------------------------------

   I        DESCRIPTION OF SERVICES

            A.   SCOPE

                 Philip Morris Management Corp. ("PMMC") will provide aviation
                 services, in addition to other services as listed below, to
                 Kraft Foods Inc. ("Kraft"), either through PMMC's own
                 resources, the resources of its subsidiaries or Affiliates, as
                 defined in the Services Agreement (the "Services Agreement"),
                 dated as of January 1, 2001, by and between PMMC and Kraft, or
                 by contracting with other independent contractors, all in
                 accordance with Section 2.2 of the Services Agreement.
                                 -----------
            B.   SPECIFIC SERVICES

                 1.    Provide air travel for Kraft employees.

                 2.    Provide office space for Kraft Foods International
                       headquarters.

                 3.    Provide office space for PMMC employees providing
                       services to Kraft.

                 4.    Make available the PM Conference Center for Kraft's use
                       as requested.            

                 5.    Additional services may be included upon agreement of
                       both parties.

   II       SERVICE FEES

            The Fee payable for the aviation services, building services and
            conference services shall be $22,353,563, which amount excludes the
            Rye Brook facility Building and Security Services charges that are
            calculated and billed as per the separate Building Services
            Agreement that is attached hereto. The Fee is based on the
            following:

            Aviation and Conference Services. The Fee will include: (i)
            salaries, fringe benefits, executive compensation benefits (if
            applicable), depreciation/amortization and other fixed and operating
            costs (the "Employee Costs") attributed to Philip Morris Aviation
            Services employees based upon the total annual flight hours flown
            for Kraft by Philip Morris aircraft divided by the total annual
            flight hours flown by all Philip Morris aircraft and multiplied by
            the total Employee Costs of the Aviation and Travel Services
            Department employees; (ii) a management fee equal to 5% of the
            aggregate amount calculated pursuant to (i); and (iii) the cost of
            the PM Conference Center at each usage, calculated at a rate agreed
            upon at the time Kraft reserves the conference center.

            Rye Brook Building. The Fee will include Kraft's allocable share of
            the Rye Brook facility at 800 Westchester Avenue, Rye Brook, NY
            based upon the total square footage 
                                      8.1

            of space utilized by Kraft Foods North America and Kraft Foods
            International divided by the total square footage of the location
            multiplied by the total costs of the Rye Brook facility.

            Manhattan Building. The Fee will include 30% of the total building
            services costs of the portion of the facility at 120 Park Avenue,
            New York, NY occupied by Philip Morris Management Corp.

III         ADDITIONAL TERMS

            Period of coverage will be ongoing subject to yearly reviews during
            the annual budgeting process.

                                      8.2

 
                                                                       EXHIBIT 9
                                                                       ---------

                                 TAX SERVICES
                                 ------------

I        DESCRIPTION OF TAX SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide comprehensive
              income and franchise tax services ("Tax Services") to Kraft Foods
              Inc. ("Kraft"), as described herein, either through PMMC's own
              resources, the resources of its subsidiaries or Affiliates, as
              defined in the Services Agreement (the "Services Agreement"),
              dated as of January 1, 2001, by and between PMMC and Kraft, or by
              contracting with other independent contractors, all in accordance
              with Section 2.2 of the Services Agreement.

         B.   TAX SERVICES

              The Tax Services that PMMC will provide to Kraft are as follows:

                  1.  TAX RETURNS

                         -  Prepare in accordance with all applicable laws and
                            file on a timely basis all Kraft Returns ("Returns"
                            is defined for the purpose of this Exhibit 9 to mean
                                                               ---------
                            all federal and state income and franchise returns,
                            reports and forms required to be filed by Kraft with
                            any governmental authority).

                  2.  TAX AUDITS

                         -  Respond to any audit or other similar proceeding
                            with respect to a Return of Kraft or any audit or
                            other similar proceeding in which Kraft is included
                            as a party.

                  3.  TAX ACCOUNTING

                         -  Provide all tax information necessary (i) to comply
                            with the Tax Sharing Agreement dated as of 
                            ---------------- between Philip Morris Companies
                            Inc. and Kraft Holdings Inc. and (ii) to complete
                            all of Kraft's financial statements including
                            calculating the tax provision, reconciling tax
                            accruals to Returns as filed, and identifying tax
                            exposures for positions taken on Returns.

                  4.  TAX PLANNING


                                      9.1

                        -   Identify federal, state and international tax
                            planning opportunities and implement tax strategies,
                            as appropriate, including integrating 
 
                            Nabisco into Kraft for all tax purposes and
                            reviewing the tax implications of business
                            operations and proposals.

                        -   Advise on various tax planning opportunities
                            including dividend repatriation, financial
                            transactions, business operations and proposals.

      -      PMMC will interpret the meaning of "Tax Services" so as to insure
             that Kraft complies fully with all applicable tax laws. PMMC will
             perform each Tax Service for the purpose of minimizing, to the
             extent possible, Kraft's tax liabilities. Additional services may
             be included upon agreement of both parties.

II    SERVICE FEES

      The Fee payable for the tax services shall be $11,858,498. The Fee is
      based on the following:

      The Fee will include: (i) the total cost, including salaries, fringe
      benefits, executive compensation benefits (if any) and depreciation and
      amortization of office equipment and software (the "Employee Costs")
      attributed to Philip Morris Tax Department employees (including employees
      of Philip Morris Corporate Services) at Philip Morris locations
      (including, but not limited to, Northfield, IL, Parsippany, NJ, Rye Brook,
      NY, New York, NY, Middlesex, England and Hong Kong) incurred on behalf of
      Kraft by PMMC in an amount equal to: (A) the time spent by each such
      employee in the performance of Tax Services to Kraft, divided by (B) the
      total time spent by such employee in all activities, multiplied by (C) the
      Employee Costs attributable to such employee; and (ii) a management fee
      equal to 5% of the aggregate amount calculated pursuant to (i); and (iii)
      third-party expenses, including the cost of consultants and their travel,
      incurred on behalf of Kraft by PMMC and the Philip Morris Tax Department
      in the performance of Tax Services.

III   ADDITIONAL TERMS

      PMMC and Kraft will review the terms of this Tax Services agreement each
      year during the annual budgeting process.

                                      9.2

 
                                                                      EXHIBIT 10
                                                                      ----------

                   CORPORATE PLANNING AND ANALYSIS SERVICES
                   ----------------------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide corporate
              planning and analysis services to Kraft Foods Inc. ("Kraft"),
              either through PMMC's own resources, the resources of its
              subsidiaries or Affiliates, as defined in the Services Agreement
              (the "Services Agreement"), dated as of January 1, 2001, by and
              between PMMC and Kraft, or by contracting with other independent
              contractors, all in accordance with Section 2.2 of the Services
                                                  -----------
              Agreement.

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:
              
                     -       Budgeting for all Kraft business units.
              
                     -       Financial forecasting and projections for all
                             Kraft business units.
              
                     -       Review of capital expenditure proposals.

         Additional services may be included upon agreement of both parties.

II       SERVICE FEES

         The Fee payable for corporate planning and analysis services shall be
         $725,224. The Fee is based on the following:

         The Fee will include: (i) salaries, fringe benefits, executive
         compensation benefits (if applicable) and depreciation/amortization of
         office equipment and software (the "Employee Costs") attributed to each
         employee in the group based upon the ratio of PMMC's estimate of the
         time spent by such employee on behalf of Kraft for the review of
         Kraft's capital appropriation projects, the preparation of reports to
         Kraft's Board of Directors, assistance provided to Kraft in preparing
         its annual budget, strategic plan and financial forecasts,
         participation in the preparation of Kraft's Form S-1 and the
         acquisition and subsequent integration of Nabisco divided by the total
         time spent by such employee multiplied by the Employee Costs for each
         such employee; (ii) a management fee equal to 5% of the aggregate
         amount calculated pursuant to (i); and (iii) third-party expenses,
         including travel and entertainment, consulting fees and printing costs,
         incurred on behalf of Kraft by PMMC.

III      ADDITIONAL TERMS

                                     10.1


         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.
 
                                     10.2


                                                                      EXHIBIT 11
                                                                      ----------

                    CORPORATE BUSINESS DEVELOPMENT SERVICES
                    ---------------------------------------

I      DESCRIPTION OF SERVICES

       A.   SCOPE

            Philip Morris Management Corp. ("PMMC") will provide corporate
            business development services to Kraft Foods Inc. ("Kraft"), either
            through PMMC's own resources, the resources of its subsidiaries or
            Affiliates, as defined in the Services Agreement (the "Services
            Agreement"), dated as of January 1, 2001, by and between PMMC and
            Kraft, or by contracting with other independent contractors, all in
            accordance with Section 2.2 of the Services Agreement.
                            -----------

       B.   SPECIFIC SERVICES

            The specific services that PMMC will provide are as follows:

                   -     Strategic planning and special projects for all Kraft
                         business units.

                   -     Planning and implementation of acquisitions,
                         dispositions and strategic alliances for all Kraft
                         business units, including selection of financial
                         advisors and counsel.

       Additional services may be included upon agreement of both parties.

II     SERVICE FEES

       The Fee payable for corporate business development services shall be
       $459,273. The Fee is based on the following:

       The Fee will include: (i) the salaries, fringe benefits, executive
       compensation benefits (if applicable) and depreciation/amortization of
       office equipment and software (the "Employee Costs") attributed to each
       employee in the group based upon the ratio of PMMC's estimate of the time
       spent by such employee for the review of Kraft's acquisitions and
       divestitures, preparation of presentations to Kraft's Board of Directors,
       preparation of Kraft's Form S-1 and accompanying road-show presentations,
       administration of the Kraft IPO and the integration of Nabisco divided by
       the total time spent by the employee multiplied by the Employee Costs of
       such employee; (ii) a management fee equal to 5% of the aggregate amount
       calculated pursuant to (i); and (iii) third-party expenses, including
       travel and entertainment, consulting fees, investment banking fees and
       printing costs, incurred on behalf of Kraft by PMMC.

III    ADDITIONAL TERMS

       Period of coverage will be ongoing subject to yearly reviews during the
       annual budgeting process.

                                     11.1
 



                                                                      EXHIBIT 12
                                                                      ----------


                           FINANCIAL COMMUNICATIONS
                        AND INVESTOR RELATIONS SERVICES
                        -------------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will provide investor
              relations and financial communications services to Kraft Foods
              Inc. ("Kraft"), either through PMMC's own resources, the resources
              of its subsidiaries or Affiliates, as defined in the Services
              Agreement (the "Services Agreement"), dated as of January 1, 2001,
              by and between PMMC and Kraft, or by contracting with other
              independent contractors, all in accordance with Section 2.2 of the
                                                              -----------
              Services Agreement.

         B.   SPECIFIC SERVICES

              The specific services that PMMC will provide are as follows:

                     -       Preparation and dissemination of press releases,
                             earnings releases, quarterly conference calls and
                             analysts' communications.

                     -       Coordination of all responses to written and oral
                             investor inquiries.

                     -       Oversight of financial media relations.

                     -       Participation in and coordination of Food
                             conferences.

                     -       Responsible for market intelligence on food stocks
                             and peer companies, targeting investors,
                             distribution of analyst reports to food executives
                             and maintaining the Investor Relations web site.

                     -       Preparation, printing and distribution of Kraft's
                             annual report to shareholders.

                     -       Coordination and planning for Kraft's annual
                             meeting.

         Additional services may be included upon agreement of both parties.

II       SERVICE FEES

         The Fee payable for corporate communications and investor relations
         services shall be $754,496. The Fee is based on the following:

         The Fee will include: (i) salaries, fringe benefits, executive
         compensation benefits (if applicable) and depreciation/amortization of
         office equipment and software (the "Employee Costs") attributed to one
         full-time Kraft investor relations employee and an assistant; (ii) the
         Employee Costs attributed to other employees based upon the ratio of

                                     12.1


         PMMC's estimate of time spent by each employee on projects applicable
         to Kraft (press releases, road shows, analyst presentations, annual
         meeting preparation, commissioning stock surveys, teleconferences and
         web-site maintenance and video creation) divided by the total time
         spent by such employee multiplied by the total Employee Costs of such
         employee; (iii) a management fee equal to the aggregate amount
         calculated pursuant to (i) and (ii); and (iv) third-party expenses
         incurred for annual meetings, annual report design and printing,
         shareholder fulfillment programs, investor booths and investor
         conferences, investor relations and public image consulting, web-site
         creation, earnings release conference calls and web-site telecasts,
         video creation, road-show presentations and travel and entertainment
         incurred on behalf of Kraft by PMMC.

III      ADDITIONAL TERMS

         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.

                                     12.2

 


                                                                      EXHIBIT 13
                                                                      ----------

                           GENERAL EXPENSES PAYMENT
                           ------------------------

I        DESCRIPTION OF SERVICES

         A.   SCOPE

              Philip Morris Management Corp. ("PMMC") will calculate and arrange
              for payment of the amounts listed in subparagraph B below, on
              behalf of Kraft Foods Inc. ("Kraft"), either through PMMC's own
              resources, the resources of its subsidiaries or Affiliates, as
              defined in the Services Agreement (the "Services Agreement"),
              dated as of January 1, 2001, by and between PMMC and Kraft, or by
              contracting with other independent contractors, all in accordance
              with Section 2.2 of the Services Agreement.
                   -----------

         B.   SPECIFIC SERVICES

                -    Stock Dividend Equivalents for Kraft Employees
                -    Kraft Foods Special Incentive Bonus
                -    IPO Road Show
                -    Secular/Executive Trust Administration
                -    Grocery Manufacturers Association Dues
                -    Maintenance of investments in TRANSORA and RMX
                -    PMMC Incentive Compensation
                -    PMMC Long-Term Incentive Compensation
                -    Pilot Severance Plan
                -    Benefit Equalization Expense
                -    PMMC Special Incentive Bonus
                -    Insurance Expenses
                -    Audit Fees

II       SERVICE FEES

         The reimbursement for the General Expenses shall be $37,253,000. The
         reimbursement is based upon the following:

         Kraft will reimburse PMMC for all amounts spent with respect to: (i)
         Kraft Employee Stock Dividend Equivalents, Special Bonus and
         Secular/Executive Trust Administration fees, IPO Road Show, Grocery
         Manufacturers Association Dues, Insurance Expense and Audit Fees; (ii)
         PMMC Executive Compensation based upon the ratio of annual salary and
         fringe benefits as determined in Exhibits 1 through 13 of this         
                                          ----------         --
         Agreement; and (iii) a management fee equal to 5% of the aggregate
         amount calculated pursuant to (ii).

                                     13.1


 
III      ADDITIONAL TERMS

         Period of coverage will be ongoing subject to yearly reviews during the
         annual budgeting process.

                                     13.2