AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT by and between Philip Morris Companies Inc., a Virginia
corporation (the 'Company') and Murray H. Bring (the 'Executive'), dated as of
the 30th day of July, 1998.
WHEREAS, the Company and the Executive previously entered into an initial
employment agreement dated October 12, 1987, which was amended by a letter
agreement dated October 5, 1993, and also entered into a supplemental employment
agreement dated March 24, 1997, which supplemental agreement set forth terms and
conditions that would become applicable in the event of a change of control of
the Company; and
WHEREAS, such prior agreements provide for certain incentives to continued
employment, including certain supplemental retirement benefits, and recognize
the importance of ensuring that the compensation and benefits expectations of
the Executive will be satisfied in the event of a change of control or other
contingencies; and
WHEREAS, the Company wishes to ensure to itself the continued benefit of
the Executive's services for the period extending at least until his Normal
Retirement Date following Executive's attaining age 65; and
WHEREAS, the Executive has agreed to provide such continued services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth in this Amended and Restated Employment Agreement, which replaces the
prior supplemental employment agreement dated March 24, 1997, the Company and
the Executive agree as follows:
1. Certain Definitions. (a) The 'Effective Date' shall mean the first date
during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated or the Executive ceases to
be Vice Chairman, External Affairs and General Counsel of Philip Morris
Companies Inc. prior to the date on which the Change of Control occurs, and if
it is reasonably demonstrated by the Executive that such termination of
employment or cessation of status as Vice Chairman, External Affairs and General
Counsel of Philip Morris Companies Inc. (i) was at the request of a third party
who has taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control (an
event described in (i) or (ii) above being hereinafter referred to as a
'Potential Change of Control'), then for all purposes of this Agreement the
'Effective Date' shall mean the date immediately prior to the date of such
termination of employment or cessation of status as Vice Chairman, External
Affairs and General Counsel of Philip Morris Companies Inc.
(b) The 'Change of Control Period' shall mean the period commencing on
the date hereof and ending on the earliest to occur of (x) any date prior to the
Effective Date on which the Executive ceases to hold the position Vice Chairman,
External Affairs and General Counsel of Philip Morris Companies Inc., (y) the
third anniversary of the date hereof, and (z) the Executive's normal retirement
date (the 'Normal Retirement Date') under the Philip Morris Salaried Employees'
Retirement Plan (the 'Retirement Plan'); provided, however, that commencing on
the date one year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be hereinafter
referred to as the 'Renewal Date'), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of Control Period
shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a 'Change of
Control' shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the 'Exchange Act')) (a 'Person') of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
'Outstanding Company Common Stock') or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the 'Outstanding Company Voting Securities');
provided, however, that the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
'Incumbent Board') cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a reorganization,
merger, share exchange or consolidation (a 'Business Combination'), in each
case, unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the
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Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 80% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
more than 80% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) less than 20% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities prior to the sale
or disposition and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board, providing
for such sale or other disposition of assets of the Company or were elected,
appointed or nominated by the Board.
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3. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the earlier to occur of (x) the
third anniversary of such date and (y) the Executive's Normal Retirement Date
(the 'Employment Period').
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ('Annual Base Salary'), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter at
least annually and shall be first increased no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date and
thereafter at least annually by the highest of (x) 7%, (y) the average increase
(excluding promotional increases) in base salary awarded to the Executive for
each of the three full fiscal years
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(annualized in the case of any fiscal year consisting of less than twelve full
months or during which the Executive was employed for less than twelve months)
prior to the Effective Date, and (z) the percentage increase (excluding
promotional increases) in base salary generally awarded to peer executives of
the Company and its affiliated companies for the year of determination. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term 'affiliated companies' shall include any company
controlled by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the 'Annual Bonus'), in cash at least equal to the
higher of (x) the average of the three highest bonuses paid or payable,
including any bonus or portion thereof which has been earned but deferred, to
the Executive by the Company and its affiliated companies in respect of the five
fiscal years immediately preceding the fiscal year in which the Effective Date
occurs (annualized for any fiscal year during such period consisting of less
than twelve full months or with respect to which the Executive has been employed
by the Company for less than twelve full months) and (y) the bonus paid or
payable (annualized as described above), including any bonus or portion thereof
which has been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the most recently completed fiscal year prior
to the Effective Date (such higher amount being referred to as the 'Recent
Annual Bonus'). Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans.
A. During the Employment Period, the Executive shall be
entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
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B. Notwithstanding any other provision of this Agreement,
upon the filing at any time (whether before, during or after the Employment
Period) of a voluntary or an involuntary petition for relief commencing a case
under Title 11, United States Code (including, without limitation, any petition
filed under chapter 7, chapter 11 or any other chapter thereof or a case under
any successor federal statute) by or against the Company (an 'Other Contingent
Event'), the Executive shall immediately become entitled to a single sum payment
equal to the present value of the retirement benefits to which he would be
entitled under all Retirement Arrangements if he continued in employment with
the Company until his Normal Retirement Date, less the present value of the
amounts then accrued and payable at Normal Retirement Date to the Executive
under the Qualified Retirement Arrangements. The 'Retirement Arrangements'
consist of the Philip Morris Salaried Employees' Retirement Plan and the Philip
Morris Deferred Profit-Sharing Plan (the two 'Qualified Retirement
Arrangements'), and the Philip Morris Benefit Equalization Plan and the
Supplemental Management Employees' Retirement Plan of Philip Morris Companies
Inc. (the two 'Nonqualified Retirement Arrangements'). For purposes of
calculating the amount of such single sum payment (before its reduction by
amounts payable under the Qualified Arrangements),
(1) the Executive's compensation taken into account in the computation
of benefits under the Retirement Arrangements shall be determined by
assuming that base compensation increases to $87,500 per month
effective May 1, 1999 and remains constant until the Executive's
Normal Retirement Date and that Incentive Compensation paid in 1999
for 1998 is $1,134,000 and in 2000 for 1999 is $1,253,363 (provided,
however, that to the extent base compensation or Incentive
Compensation has been paid for a portion of the period taken into
account in the determination, the amounts actually paid shall be
utilized for that portion of the period in such determination),
(2) years of accredited service (to a maximum of 35 years) shall be
determined by crediting the Executive with two years of accredited
service for each year of service to age 60, with three years of
accredited service for each year of service from age 60 to age 65,
and with six additional years of accredited service reflecting the
intention of the Executive to continue his employment with the
Company until his Normal Retirement Date,
(3) the periodic annuity amount determined under the Philip Morris
Salaried Employees' Retirement Plan, the Philip Morris Benefit
Equalization Plan, and the Supplemental Management Employees'
Retirement Plan of Philip Morris Companies Inc. shall be calculated
as an amount payable commencing at the Executive's Normal Retirement
Date for the remainder of his life only,
(4) the single sum actuarial equivalent payment of the annuity benefit
determined under (3) immediately above shall be calculated as the
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present value as of the date of the occurrence of the Other
Contingent Event (using the average of the interest rates
established by the Pension Benefit Guaranty Corporation ('PBGC') to
value immediate annuities in the case of a plan termination for the
24 months preceding the date on which such single sum amount becomes
payable, less one-half of one percent, and the UP-1984 Unisex
Mortality Table or the average of the 30-year Treasury rates for the
24 months preceding the date of the occurrence of the Other
Contingent Event, less one-half of one percent, and the GAM83 Unisex
Mortality Table, whichever assumptions produce the greater single
sum actuarial equivalent value, provided that if the PBGC rates are
no longer published the most recently published PBGC rate shall be
used in computing the PBGC rate average for that portion of the 24
month period during which PBGC rates were no longer published) of
the periodic amounts payable commencing at the Executive's Normal
Retirement Date as computed based on the assumptions set forth in
this Section 4(b)(iii)(B), and
(5) the statutory Internal Revenue Code of 1986 limits on tax-qualified
plan benefits shall be assumed to increase at the rate of 4 percent
per year during the period from the date of the calculation until
the Executive's Normal Retirement Date.
In addition, the portion of the retirement benefit to which the Executive would
be entitled if he continued employment until his Normal Retirement Date that is
attributable to the Philip Morris Deferred Profit-Sharing Plan and the Deferred
Profit-Sharing portion of the Philip Morris Benefit Equalization Plan shall be
computed based on the compensation assumptions specified in (1) of the
immediately preceding sentence; by crediting the account balance existing as of
the date of the Other Contingent Event and the assumed future annual
profit-sharing amounts (which future amounts shall total 10 percent of base
compensation, with such crediting assumed to occur as of February 28 of the year
immediately following the year in which such compensation was earned) with
interest at 6 percent per year from the later of the date of the Other
Contingent Event or, with respect to future amounts, the date assumed credited,
to the Executive's Normal Retirement Date; and by discounting the amounts that
would be credited as of the Executive's Normal Retirement Date based on these
assumptions back to the date of the Other Contingent Event at the rate of 6
percent per year.
The amount computed on the assumptions described above shall be computed for all
Retirement Arrangements and then reduced by the present value (computed on the
basis of the same assumptions) at the date of the Other Contingent Event of the
amounts that would be payable under the Qualified Retirement Arrangements to the
Executive at his Normal Retirement Date if the Executive terminated employment
with the Company on the date of the Other Contingent Event. If actual payment of
the single sum payment is not made within 15 days of the date of the Other
Contingent Event, the amount of the payment shall be increased to reflect the
delay in payment using the actuarial assumptions specified above.
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If the Executive dies prior to retirement and an Other Contingent Event occurs
before receipt by the Executive or his beneficiary of retirement benefits under
the Nonqualified Retirement Arrangements having a present value (determined as
of the date of the Other Contingent Event and on the basis of the actuarial
assumptions described previously in this Section 4(b)(iii)(B)) equal to the
single sum payment computed on the basis of such assumptions and as of such
date, the beneficiary shall be entitled to immediate payment of an amount equal
to the difference between the single sum payment so computed and the present
value at that time of any such retirement benefits previously received. If an
Other Contingent Event occurs after the Executive has retired, the Executive
(or, if the Executive is then deceased, his beneficiary) shall immediately
become entitled to payment of a single sum amount equal to the present value
(determined on the basis of the actuarial assumptions previously set forth in
this Section 4(b)(iii)(B)) on the date of the Other Contingent Event of all
remaining payments projected to be made to the Executive or his beneficiary
under the Nonqualified Retirement Arrangements. The beneficiary of the Executive
shall be the Executive's beneficiary or beneficiaries designated under the
Nonqualified Retirement Arrangements (or in any written designation accepted by
the Company that supercedes such designation), or in the absence of such a
designated beneficiary the Executive's estate.
The single sum amounts determined under the preceding provisions of this Section
4(b)(iii)(B) shall be determined without regard to any amounts previously paid
at the direction of the Executive to the trust established by the Executive
pursuant to the Employee Grantor Trust Agreement between the Executive as
grantor and Morgan Guaranty Trust Company of New York as trustee dated December
13, 1995, or any successor trust (the 'Executive's Secular Trust'). After any
such single sum amount is so determined, it shall then be reduced by subtracting
from it the Pre-Tax Secular Trust Equivalent; the result shall be the net amount
actually payable to the Executive or his beneficiary with respect to the
Nonqualified Retirement Arrangements. The Pre-Tax Secular Trust Equivalent shall
be determined by taking the fair market value of the assets held in the
Executive's Secular Trust on the date of the Other Contingent Event, reducing
the value of such assets by the amount of any unpaid taxes on earnings or on
unrealized appreciation that would be realized were the assets immediately sold,
and then converting the resulting after-tax amount to its pre-tax equivalent
based on the tax assumptions set forth in Exhibit B of the Employee Grantor
Trust Enrollment Agreement between the Executive and the Company dated December
13, 1995.
If the Executive should voluntarily terminate employment with the Company prior
to his Normal Retirement Date for reasons other than disability or Good Reason,
the Executive shall promptly pay to the Company an amount equal to the amount,
if any, by which (x) the present value (as of the date of such termination) of
the sum of the Pre-Tax Secular Trust Equivalent and any other payments
previously received under the Nonqualified Retirement Arrangements exceeds (y)
the present value (as of such date) of the amount to which the Executive would
be entitled under this Section 4(b)(iii)(B), determined without regard to any
reduction by the Pre-Tax Secular Trust Equivalent, if his years of accredited
service were reduced by three years for each year of service prior to his Normal
Retirement Date not completed by the Executive and then by six additional years
and if his compensation taken into account in the computation of benefits were
8
determined without regard to any compensation assumed for the period from his
date of termination to his Normal Retirement Date. Present value for this
purpose shall be determined on the basis of the actuarial assumptions specified
above; and Good Reason shall have the meaning specified in Section 5(c) hereof,
except that any failure by the Company to make payments under this Section
4(b)(iii)(B) shall not constitute Good Reason to the extent that the Company is
precluded by applicable law from making such payment.
This Section 4(b)(iii)(B) shall become operative upon the occurrence of an Other
Contingent Event, whether before or after the Executive's termination of
employment or death and irrespective of whether the Effective Date described in
Section 1 or any of the events described in Section 2 of this Agreement have
occurred. In the event of any conflict between the applicable provisions of this
Section and any other provisions of this Agreement or of other agreements
previously entered into between the Company and the Executive, the provisions of
this Section 4(b)(iii)(B) shall govern the determination and payment of benefits
to the Executive or his beneficiaries under the Nonqualified Retirement
Arrangements.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies
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in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the 'Disability Effective Date'), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
'Disability' shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For the sole and exclusive purposes of this
Agreement, 'Cause' shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental
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illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered 'willful' unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For the sole and exclusive purposes of this
Agreement, 'Good Reason' shall mean:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
or in the compensation payable to the Executive, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof or the
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Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of 'Good Reason'
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all purposes of
this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a 'Notice of Termination' means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. 'Date of Termination' means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
12
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the product of
(x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has been earned but
deferred (and annualized for any fiscal year consisting of less than twelve full
months or during which the Executive was employed for less than twelve full
months), for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the 'Highest Annual
Bonus') and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter referred to
as the 'Accrued Obligations'); and
B. the amount equal to the product of (1) two and one-half
and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest
Annual Bonus and (3) a fraction, the numerator of which is the number of full
months from the Date of Termination until the Executive's Normal Retirement Date
but which shall be no greater than thirty (30), and the denominator of which is
thirty (30); and
C. an amount equal to the difference between (a) the
actuarial equivalent of the benefit (utilizing actuarial assumptions no less
favorable to the Executive than those in effect under the Retirement Plan
immediately prior to the Effective Date, except as specified below with respect
to increases in base salary and annual bonus) under the Retirement Plan and any
excess or supplemental retirement plan in which the Executive participates
(together, the 'SERP') which the Executive would receive if the Executive's
employment continued for two and one-half years after the Date of Termination
assuming for this purpose that all accrued benefits are fully vested, and,
assuming that (1) the Executive's base salary increased on an annualized basis
during the two and one-half year period by the amount required by Section
4(b)(ii) (in the case of Section 4(b)(ii)(z) based on increases (excluding
promotional increases) in base salary for the most recently completed fiscal
year prior to the Date of Termination) had the Executive remained employed, and
(2) the Executive's annual bonus (annualized for any fiscal year consisting of
less than twelve full months or during which the Executive was employed for less
than twelve full months) in each of the two and one-half years (on an annualized
basis) bears the same proportion to the Executive's base salary in such year or
fraction thereof as it did for the last full year prior to the Date of
Termination, and (b) the actuarial equivalent of the Executive's actual benefit
(paid or payable), if any, under the Retirement Plan and the SERP as of the Date
of Termination;
13
(ii) for two and one-half years after the Executive's Date of
Termination, or such longer period as may be provided by Section 6(a)(iii) with
respect to the benefits covered thereby or by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) and Section 4(b)(vi) of this Agreement if
the Executive's employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives and their
families during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until two and one-half years after the Date of Termination and
to have retired on the last day of such period;
(iii) if two and one-half years after the Executive's Date of
Termination, the Executive would be at least 55 years old and eligible for
retirement benefits (including, without limitation, early retirement benefits)
under the Retirement Plan (assuming continuous service with the Company during
such two and one-half year period), the Company shall continue lifetime medical,
dental and life insurance benefits (including supplemental benefits) to the
Executive and/or the Executive's family at least equal to those that would have
been provided to them in accordance with the plans, programs and policies
described in Section 4(b)(iv) of this Agreement (except the Company's business
travel accident plans) if the Executive's employment had not been terminated, if
and as in effect at any time during the 120-day period immediately preceding the
Effective Date with respect to other peer executives and their families or, if
more favorable to the Executive, as in effect at any time thereafter with
respect to other peer executives and their families; provided, however, that, in
the event that the Executive becomes reemployed with another employer, whether
or not such employer is related to the Corporation or any of its affiliates, and
is eligible to receive medical or other welfare benefits under any
employer-sponsored plan, the medical and other welfare benefits described herein
shall be the secondary coverage for such applicable period of eligibility;
(iv) the Company shall, at its sole expense as incurred, provide
the Executive with outplacement services the scope and provider of which shall
be selected by the Executive in his sole discretion; and
14
(v) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies, including, without limitation, any amounts
payable pursuant to Section 4(b)(iii) (such other amounts and benefits shall be
hereinafter referred to as the 'Other Benefits').
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations, the timely
payment or provision of Other Benefits, and the payment of any amounts payable
to the Executive's beneficiary pursuant to Section 4(b)(iii)(B) hereof. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by the Company and
affiliated companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect to other
peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations, the timely payment or provision of Other Benefits, and
the payment of any amounts payable to the Executive or his beneficiary pursuant
to Section 4(b)(iii)(B) hereof. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(c) shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
15
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
8. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the 'Code').
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
16
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a 'Payment') would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the 'Excise Tax'), then
the Executive shall be entitled to receive an additional payment (a 'Gross-Up
Payment') in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Coopers & Lybrand or such other certified public accounting firm as may be designated by
the Executive (the 'Accounting Firm') which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ('Underpayment'), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in
17
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to
18
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, 'Company' shall mean the Company as
hereinbefore defined and any
19
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Murray H. Bring
[Address Intentionally Omitted]
If to the Company:
Philip Morris Companies Inc.
120 Park Avenue
New York, N.Y. 10017
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement,
shall not be deemed
20
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is 'at will'
and, prior to the Effective Date, may be terminated by either the Executive or
the Company at any time. Moreover, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates or (ii) the Executive ceases
to be Vice Chairman, External Affairs and General Counsel of Philip Morris
Companies Inc., except, in each case in connection with a Potential Change of
Control then the Executive shall have no further rights under this Agreement
except for those rights provided under Section 4(b)(iii)(B) of this Agreement.
(g) This Agreement is supplemental to the employment agreement between
the Executive and the Company dated October 12, 1987, which was amended by a
letter agreement dated October 5, 1993, and shall not be construed to reduce or
otherwise limit any rights or benefits to which the Executive is or may become
entitled under such prior 1987 agreement or the 1993 amendment thereto. From and
after the Effective Date this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof; provided,
however, that in no event (whether before or after the Effective Date) shall
this Agreement be construed to provide rights or benefits less favorable to the
Executive than those accorded under the prior 1987 agreement or the 1993
amendment thereto.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ MURRAY H. BRING
------------------------------
MURRAY H. BRING
PHILIP MORRIS COMPANIES INC.
By /s/ Timothy A. Sompolski
---------------------------
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Employment Agreement - Murray H. Bring
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