Exhibit 1
PHILIP MORRIS COMPANIES INC.
DEBT SECURITIES, WARRANTS TO PURCHASE DEBT SECURITIES
AND CURRENCY WARRANTS
UNDERWRITING AGREEMENT
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DATED AS OF FEBRUARY 1, 1996
1. Introductory. Philip Morris Companies Inc., a Virginia corporation
("Company"), proposes to issue and sell from time to time certain of its debt
securities and warrants to purchase certain of its debt securities in an
aggregate principal amount expressed in U.S. dollars or in such foreign
currencies or currency units as the Company shall designate at the time of
offering, and currency warrants representing the right to receive from the
Company the cash value in U.S. dollars of the right to purchase and/or sell a
designated amount of U.S. dollars for a designated amount (the "Base Currency
Amount") of a specified foreign currency or currency unit (a "Base Currency")
as shall be determined by the Company at the time of offering. Such debt
securities, warrants, debt securities subject to such warrants and currency
warrants, registered under the registration statement referred to in Section
2(a), are hereinafter collectively referred to as "Registered Securities".
Registered Securities involved in any offering referred to below are
hereinafter collectively referred to as "Securities", such debt securities that
are Securities are hereinafter referred to as "Purchased Debt Securities",
warrants to purchase debt securities that are Securities are hereinafter
referred to as "Debt Warrants", debt securities subject to warrants that are
Securities are hereinafter referred to as "Warrant Debt Securities", currency
warrants are hereinafter collectively referred to as "Currency Warrants",
Purchased Debt Securities and Warrant Debt Securities are hereinafter
collectively referred to as "Debt Securities" and Purchased Debt Securities,
Debt Warrants and Currency Warrants are hereinafter collectively referred to as
"Purchased Securities". The Debt Securities will be issued under an Indenture,
dated as of August 1, 1990, as supplemented and amended by a First Supplemental
Indenture dated as of February 1, 1991 and a Second Supplemental Indenture
dated as of January 21, 1992 ("Indenture"), between the Company and Chemical
Bank, as Trustee, the Debt Warrants will be issued under a debt warrant
agreement (the "Debt Warrant Agreement"), between the Company and a bank or
trust company, as Debt Warrant Agent, specified in the Terms Agreement referred
to in Section 3 and the Currency Warrants will be issued under a currency
warrant agreement (the "Currency Warrant Agreement"), between the Company and a
bank or trust company, as Currency Warrant Agent, specified in the applicable
Terms Agreement, in one or more series or issues, which may vary as to interest
rates, maturities, redemption provisions, exercise prices, expiration dates,
selling prices, currency or currency units and other terms, with in each case
all such terms for any particular Registered Securities being determined at the
time of sale. Particular Purchased Securities will be sold pursuant to a Terms
Agreement and for resale in accordance with terms of offering determined at the
time of sale.
The firm or firms which agree to purchase the Purchased Securities are
hereinafter referred to as the "Underwriters" of such Purchased Securities, and
the representative or representatives of the Underwriters, if any, specified in
a Terms Agreement referred to in Section 3 are hereinafter referred to as the
"Representatives"; provided, however, that if the Terms Agreement does not
specify any representative of the Underwriters, the term "Representatives", as
used in this Agreement (other than in Sections 2(b), 6 and 7 and the second
sentence of Section 3), shall mean the Underwriters.
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) A registration statement (No. 33-49195), including a prospectus,
relating to the Registered Securities has been filed with the Securities
and Exchange Commission ("Commission") and has become effective. Such
registration statement, as amended at the time of any Terms Agreement
referred to in Section 3, is hereinafter referred to as the "Registration
Statement", and the prospectus included in such Registration Statement, as
supplemented as contemplated by Section 3 to reflect the terms of the
Securities and the terms of offering thereof, including all material
incorporated by reference therein, is hereinafter referred to as the
"Prospectus".
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(b) On the effective date of the registration statement relating to the
Registered Securities, such registration statement conformed in all
respects to the requirements of the Securities Act of 1933 ("Act"), the
Trust Indenture Act of 1939 ("Trust Indenture Act") and the rules and
regulations of the Commission ("Rules and Regulations") and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and, on the date of each Terms Agreement referred to in
Section 3 and on each Closing Date as defined in Section 3, the
Registration Statement and the Prospectus will conform in all respects to
the requirements of the Act, the Trust Indenture Act and the Rules and
Regulations, and neither of such documents will include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the Representatives, if
any, specifically for use therein.
3. Purchase and Offering of Securities. The obligation of the Underwriters to
purchase the Purchased Securities will be evidenced by an exchange of
telegraphic or other written communications ("Terms Agreement") at the time the
Company determines to sell the Purchased Securities. The Terms Agreement will
incorporate by reference the provisions of this Agreement, except as otherwise
provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the principal amount of
Purchased Debt Securities, the number of Debt Warrants and the number of
Currency Warrants to be purchased by each Underwriter, the purchase price to be
paid by the Underwriters and the terms of the Purchased Securities not already
specified in the Indenture, the Debt Warrant Agreement or the Currency Warrant
Agreement, as the case may be, including, but not limited to, interest rate,
maturity, any redemption provisions and any sinking fund requirements, the
exercise price of the Debt Warrants to be purchased, the principal amount of
Warrant Debt Securities issuable upon exercise of one such Debt Warrant, the
date after which such Debt Warrants are exercisable, the expiration date
thereof and the date, if any, such Debt Warrants are detachable and whether any
of the Purchased Debt Securities or Debt Warrants may be sold to institutional
investors pursuant to Delayed Delivery Contracts (as defined below), and in the
event any Currency Warrants are to be sold, the conditions and procedures
relating to exercise, expiration date, Base Currency, Base Currency Amount and
formula for determining Cash Settlement Value (as defined in the Currency
Warrant Agreement). The Terms Agreement will also specify the time and date of
delivery and payment (such time and date, or such other time not later than
seven full business days thereafter as the Representatives and the Company
agree as the time for payment and delivery, being herein and in the Terms
Agreement referred to as the "Closing Date"), the place of delivery and payment
and any details of the terms of offering that should be reflected in the
prospectus supplement relating to the offering of the Securities. The
obligations of the Underwriters to purchase the Purchased Securities will be
several and not joint. It is understood that the Underwriters propose to offer
the Purchased Securities for sale as set forth in the Prospectus. The Purchased
Securities delivered to the Underwriters on the Closing Date will be in fully
registered or bearer form with respect to any Debt Securities, and in fully
registered form with respect to Debt Warrants, in each case in such
denominations and numbers and registered in such names as the Underwriters may
request, and will be represented by a single global Currency Warrant in the
case of Currency Warrants.
If the Terms Agreement provides for sales of Purchased Debt Securities or
Debt Warrants pursuant to delayed delivery contracts, the Company authorizes
the Underwriters to solicit offers to purchase Purchased Debt Securities or
Debt Warrants pursuant to delayed delivery contracts substantially in the form
of Annex I attached hereto ("Delayed Delivery Contracts") with such changes
therein as the Company may authorize or approve. Delayed Delivery Contracts are
to be with institutional investors, including commercial and savings banks,
insurance companies, pension funds, investment companies and educational and
charitable institutions. On the Closing Date the Company will pay, as
compensation, to the Representatives for the accounts of the Underwriters, the
fee set forth in such Terms Agreement in respect of the principal amount of
Purchased Debt Securities and number of Debt Warrants to be sold pursuant to
Delayed Delivery Contracts ("Contract Securities"). The Underwriters will not
have any responsibility in respect of the validity or the performance of
Delayed Delivery Contracts. If the Company executes and delivers Delayed
Delivery
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Contracts, the Contract Securities will be deducted from the Securities to be
purchased by the several Underwriters and the aggregate principal amount of
Purchased Debt Securities and number of Debt Warrants, as the case may be, to
be purchased by each Underwriter will be reduced pro rata in proportion to the
principal amount of Purchased Debt Securities or number of Debt Warrants set
forth opposite each Underwriter's name in such Terms Agreement, except to the
extent that the Representatives determine that such reduction shall be
otherwise than pro rata and so advise the Company. The Company will advise the
Representatives not later than the business day prior to the Closing Date of
the Purchased Debt Securities and Debt Warrants that are the Contract
Securities.
4. Certain Agreements of the Company. The Company agrees with the several
Underwriters that it will furnish to Simpson Thacher & Bartlett, counsel for
the Underwriters, one signed copy of the registration statement relating to the
Registered Securities, including all exhibits, in the form it became effective
and of all amendments thereto and that, in connection with each offering of
Securities:
(a) The Company will advise the Representatives promptly of any proposal
to amend or supplement the Registration Statement or the Prospectus and
will afford the Representatives a reasonable opportunity to comment on any
such proposed amendment or supplement; and the Company will also advise the
Representatives promptly of the filing of any such amendment or supplement
and of the institution by the Commission of any stop order proceedings in
respect of the Registration Statement or of any part thereof and will use
its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Act, the Company promptly
will prepare and file with the Commission an amendment or supplement which
will correct such statement or omission or an amendment which will effect
such compliance.
(c) As soon as practicable, but not later than 18 months, after the date
of each Terms Agreement, the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the later of (i) the most recent effective date of
the registration statement relating to the Registered Securities, (ii) the
effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such Terms
Agreement and (iii) the date of the Company's most recent Annual Report on
Form 10-K filed with the Commission prior to the date of such Terms
Agreement, which will satisfy the provisions of Section 11(a) of the Act
(including, at the option of the Company, Rule 158 of the Rules and
Regulations under the Act).
(d) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement and all
amendments and supplements to such documents, in each case as soon as
available, and copies of the Prospectus and all amendments and supplements
to the Prospectus not later than 10:00 A.M., New York City time, on the day
following the date thereof. The Company will furnish each of such documents
in such quantities as are reasonably requested.
(e) The Company will arrange for the qualification of the Securities for
sale and the determination of their eligibility for investment under the
laws of such jurisdictions as the Representatives designate and will
continue such qualifications in effect so long as required for the
distribution; provided that the Company will not be required to qualify to
do business in any jurisdiction where it is not now qualified or to take
any action which would subject it to general or unlimited service of
process in any jurisdiction where it is not now subject.
(f) During the period of five years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as practicable
after the end of each fiscal year, a copy of its annual report to
stockholders for such year; and the Company will furnish to the
Representatives (i) as soon as available, a copy of each Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K and
definitive proxy
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statement of the Company filed with the Commission under the Securities
Exchange Act of 1934 (the "Exchange Act") or mailed to stockholders, and
(ii) from time to time, such other information concerning the Company as
the Representatives may reasonably request.
(g) The Company will pay all expenses incident to the performance of its
obligations under this Agreement and will reimburse the Underwriters for
any expenses (including fees and disbursements of counsel) incurred by them
in connection with qualification of the Registered Securities for sale and
determination of their eligibility for investment under the laws of such
jurisdictions as the Representatives may designate and the printing of
memoranda relating thereto, for any fees charged by investment rating
agencies for the rating of the Securities, for the filing fee of the
National Association of Securities Dealers, Inc. relating to the Registered
Securities and for expenses incurred in distributing the Prospectus, any
preliminary prospectuses and any preliminary prospectus supplements to
Underwriters.
(h) For a period beginning at the time of execution of the Terms
Agreement and ending on the Closing Date, if any Debt Securities are being
issued, without the prior consent of the Representatives, the Company will
not offer or contract to sell or, except pursuant to a commitment entered
into prior to the date of the Terms Agreement, sell or otherwise dispose of
any debt securities denominated in the currency or currency unit in which
the Securities are denominated and issued or guaranteed by the Company and
having a maturity of more than one year from the date of issue, or, if any
Currency Warrants are being issued, any currency warrants having the same
Base Currency as any such Currency Warrants.
5. Conditions to the Obligations of the Company and the Underwriters With
Respect to Currency Warrants. If any Currency Warrants are to be purchased
hereunder, the obligations of the Company and the obligations of the
Underwriters hereunder are subject to the conditions that (i) not later than
the date of the applicable Terms Agreement, a United States national securities
exchange (the "Exchange") shall have approved such Currency Warrants for
listing, subject to official notice of issuance, and (ii) as of the date of the
applicable Terms Agreement, the Company's registration statement on Form 8-A
relating to the Securities (the "Form 8-A") shall have become effective under
the Exchange Act.
6. Conditions of the Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Purchased Securities will be
subject to the accuracy of the representations and warranties on the part of
the Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the Representatives,
or counsel for the Underwriters, shall have received a letter of Coopers &
Lybrand L.L.P., confirming that they are independent certified public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating in effect that:
(i) in their opinion, the financial statements and schedules of the
Company audited by them and included in the prospectus contained in the
registration statement relating to the Registered Securities, as
amended at the date of such letter, comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(ii) on the basis of performing the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement on Auditing
Standards No. 71, Interim Financial Information ("SAS No. 71") on any
unaudited interim condensed consolidated financial statements of the
Company included in such prospectus, inquiries of officials of the
Company who have responsibility for financial and accounting matters
and other specified procedures, nothing came to their attention that
caused them to believe that (A) the unaudited interim condensed
consolidated financial statements, if any, of the Company included in
such prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Exchange Act as it
applies to Quarterly Reports on Form 10-Q and the related published
Rules and Regulations or (B) that any material modifications should be
made for them to be in conformity with generally accepted accounting
principles;
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(iii) on the basis of a reading of any unaudited pro forma condensed
combined financial statements of the Company included in such
prospectus, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe
that the unaudited pro forma condensed combined financial statements
included in such prospectus do not comply in form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X and that the pro forma adjustments, if any, have not
been properly applied to the historical amounts in the compilation of
those statements; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in such prospectus (in each case to the extent that such
dollar amounts, percentages and other financial information are
obtained from accounting records that are subject to the internal
control structure, policies and procedures of the Company's accounting
system or are derived directly from such accounting records by analysis
or computation) with the results obtained from procedures specified in
such letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results, except as
otherwise specified in such letter.
All financial statements and schedules included in material incorporated by
reference into such prospectus shall be deemed included in such prospectus
for purposes of this subsection.
(b) No stop order suspending the effectiveness of the Registration
Statement or, if any Currency Warrants are being issued, the Form 8-A, or
of any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or
any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall not
have occurred (i) any change in the capital stock or long-term debt of the
Company and its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which is, in the judgment of the Representatives,
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in the Prospectus; (ii) any
downgrading in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), and no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of such debt securities; (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange or, if any Currency Warrants are being issued, the Exchange,
or any setting of minimum prices for trading on the New York Stock Exchange
or, if applicable, the Exchange, or any suspension of trading of any
securities of the Company on any United States exchange or in the over-the-
counter market; (iv) any banking moratorium declared by Federal or New York
authorities, or the authorities of any country which is the issuer of a
Base Currency or in whose currency any Purchased Debt Securities or Debt
Warrants are denominated under the applicable Terms Agreement; (v) any
outbreak or escalation of major hostilities in which the United States or
any country which is the issuer of a Base Currency or in whose currency any
Purchased Debt Securities or Debt Warrants are denominated under the
applicable Terms Agreement is involved, any declaration of war by Congress
or any other substantial national or international calamity or emergency
if, in the judgment of the Representatives, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and
payment for the Securities; or (vi) any action by any governmental
authority or any change, or any development involving a prospective change,
involving currency exchange rates or exchange controls, which makes it
impracticable or inadvisable in the reasonable judgment of the
Representatives to proceed with the public offering or delivery of the
Securities on the terms and in the manner contemplated in the Prospectus.
(d) The Representatives shall have received an opinion, dated the Closing
Date, of Hunton & Williams, counsel for the Company, to the effect that:
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(i) the Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Virginia, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification and in which the failure to so qualify would have a
material adverse effect on the Company;
(ii) Philip Morris Incorporated, Philip Morris International Inc. and
Kraft Foods, Inc. have been duly incorporated and are existing
corporations in good standing under the laws of their respective
jurisdictions of incorporation, with corporate power and authority to
own their respective properties and conduct their respective businesses
as described in the Prospectus; all outstanding shares of capital stock
of Philip Morris Incorporated, Philip Morris International Inc. and
Kraft Foods, Inc. are owned by the Company, free and clear of any lien,
pledge and encumbrance or claim of any third party;
(iii) the Indenture, any Debt Warrant Agreement and any Currency
Warrant Agreement have been duly authorized, executed and delivered by
the Company; the Indenture has been duly qualified under the Trust
Indenture Act; the Securities have been duly authorized; the Purchased
Securities other than any Contract Securities have been duly executed,
authenticated, issued and delivered; the Indenture, any Debt Warrant
Agreement, any Currency Warrant Agreement and the Securities other than
any Warrant Debt Securities and any Contract Securities constitute, and
any Warrant Debt Securities, when executed, authenticated, issued and
delivered in the manner provided in the Indenture and sold pursuant to
any Debt Warrant Agreement, and any Contract Securities, when executed,
authenticated, issued and delivered in the manner provided in the
Indenture and sold pursuant to Delayed Delivery Contracts, will
constitute, valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, to general equity principles and an implied covenant
of good faith and fair dealing; and the Securities other than any
Warrant Debt Securities and any Contract Securities conform, and any
Warrant Debt Securities and any Contract Securities, when so issued and
delivered and sold, will conform, to the description thereof contained
in the Prospectus;
(iv) no consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance or sale of the Purchased Securities by the Company, except
such as have been obtained and made under the Act and the Trust
Indenture Act and such as may be required under state securities laws;
(v) the execution, delivery and performance of the Indenture, the
Terms Agreement (including the provisions of this Agreement), any Debt
Warrant Agreement, any Currency Warrant Agreement and any Delayed
Delivery Contracts and the issuance and sale of the Securities and
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, the charter or by-laws of the Company,
Philip Morris Incorporated, Philip Morris International Inc. or Kraft
Foods, Inc., or, to the best of the knowledge of such counsel, the
charter or by-laws of any other subsidiary of the Company, any statute,
any rule, regulation or order of any governmental agency or body or any
court having jurisdiction over the Company or any subsidiary of the
Company or any of their properties or any agreement or instrument to
which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, and the
Company has full power and authority to authorize, issue and sell the
Securities as contemplated by the Terms Agreement (including the
provisions of this Agreement);
(vi) the Registration Statement has become effective under the Act,
and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or of any
part thereof has been issued and no proceedings for that purpose have
been instituted or
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are pending or contemplated under the Act, and the registration
statement relating to the Registered Securities, as of its effective
date, the Registration Statement and the Prospectus, as of the date of
the Terms Agreement, and any amendment or supplement thereto, as of its
date, complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the Rules and
Regulations; such counsel have no reason to believe that such
registration statement, as of its effective date, or any amendment or
supplement thereto, as of its date, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus or any amendment or supplement
thereto contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; the descriptions in the Registration Statement and
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel do not know of any
legal or governmental proceedings required to be described in the
Prospectus which are not described as required or of any contracts or
documents of a character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus or any such amendment or
supplement; and
(vii) the Terms Agreement (including the provisions of this
Agreement) and any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company.
In rendering such opinion, Hunton & Williams may state that (1) in clause (iii)
with respect to the validity and enforceability of the Indenture, any Debt
Warrant Agreement, any Currency Warrant Agreement and the Securities, and in
clause (iv) and in clause (v) with respect to any statute, rule, regulation or
order of any governmental agency, body or court and the power and authority of
the Company to authorize, issue and sell the Securities, such counsel has
assumed that under the laws of any country in whose currency (or whose currency
is a component currency of a currency unit in which) any Securities are
denominated or payable, if other than in U.S. dollars, or of any other
governmental authority having jurisdiction over any such currency unit, that no
consent, approval, authorization, or order of, or filing with any governmental
agency, body or court is required for the consummation of the transactions
contemplated hereunder in connection with the issuance and sale of the
Securities and compliance with the terms and provisions thereof will not result
in any breach or violation of any of the terms and provisions in any statute,
rule, regulation or order of any governmental agency or body or any court, and
(2) in clause (iii) with respect to the enforceability of the Indenture, no
opinion is expressed with respect to Section 516 thereof. Such counsel may note
that (a) a New York statute provides that with respect to a foreign currency
obligation a court of the State of New York shall render a judgment or decree
in such foreign currency and such judgment or decree shall be converted into
currency of the United States at the rate of exchange prevailing on the date of
entry of such judgment or decree and (b) with respect to a foreign currency
obligation a United States Federal court in New York may award judgment in
United States dollars, provided that such counsel expresses no opinion as to
the rate of exchange such court would apply.
(e) The Representatives shall have received from Simpson Thacher &
Bartlett, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Securities, the Registration Statement, the Prospectus and
other related matters as they may require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, Simpson
Thacher & Bartlett may rely as to the incorporation of the Company and all
other matters governed by Virginia law upon the opinion of Hunton &
Williams referred to above.
(f) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, that no stop order suspending the
effectiveness of the Registration Statement
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or of any part thereof has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission and that,
subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change in the financial
position or results of operation of the Company and its subsidiaries except
as set forth in or contemplated by the Prospectus or as described in such
certificate.
(g) The Representatives shall have received a letter, dated the Closing
Date, of Coopers & Lybrand L.L.P., which reconfirms the matters set forth
in their letter delivered pursuant to subsection (a) of this Section and
states in effect that:
(i) in their opinion, any financial statements or schedules examined
by them and included in the Prospectus and not covered by their letter
delivered pursuant to subsection (a) of this Section comply in form in
all material respects with the applicable accounting requirements of
the Act and the related published Rules and Regulations;
(ii) on the basis of performing the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, on any
unaudited interim condensed consolidated financial statements of the
Company included in the Prospectus and not covered by their letter
delivered pursuant to subsection (a) of this Section, reading the
latest available interim financial statements of the Company, inquiries
of officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that:
(A) the unaudited interim condensed consolidated financial
statements of the Company, if any, included in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published Rules
and Regulations or require any material modifications to be made for
them to be in conformity with generally accepted accounting
principles;
(B) at the date of the latest available consolidated balance sheet
of the Company read by such accountants, and at a subsequent
specified date not more than five business days prior to the Closing
Date, there was any decrease in the outstanding common stock, or
consolidated earnings reinvested in the business of the Company
other than any decrease resulting from the declaration of regular
quarterly cash dividends, or any issuance or assumption of long-term
debt by the Company, Philip Morris Incorporated, Philip Morris
International Inc., Kraft Foods, Inc. or Philip Morris Capital
Corporation (exclusive of any short-term borrowings reclassified as
long-term based upon the Company's ability and intention to
refinance these short-term borrowings on a long-term basis), and, at
the date of the latest available consolidated balance sheet of the
Company read by such accountants, there was any decrease in
consolidated net current assets or net assets, all as compared with
amounts shown on or included in the latest balance sheet of the
Company included in the Prospectus; or
(C) for the period from the date of the latest consolidated
statement of earnings of the Company included in the Prospectus to
the date of the latest available consolidated statement of earnings
of the Company read by such accountants there were any decreases, as
compared with the corresponding period of the previous year, in
consolidated operating revenues, operating income, net earnings or
the historical ratio of earnings to fixed charges of the Company and
consolidated subsidiaries;
except in all cases set forth in clauses (B) and (C) above for
issuances or assumptions or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter;
(iii) with respect to the unaudited capsule information of the
Company, if any, included in the Prospectus:
(A) on the basis of performing the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71 on the
unaudited interim condensed consolidated financial statements of the
Company from which such unaudited capsule information was derived,
reading such unaudited capsule information, inquiries of officials of the
Company who have responsibility for financial and
8
accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that:
(1) the amounts contained in the unaudited capsule information
included in the Prospectus do not agree with the amounts set
forth in the unaudited interim condensed consolidated financial
statements of the Company from which such amounts were derived;
and
(2) the amounts contained in the unaudited capsule information
included in the Prospectus were not determined on a basis
substantially consistent with that of the corresponding
financial information in the latest audited financial statements
of the Company included in the Prospectus; or
(B) if the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71 have not been performed on
the unaudited interim condensed consolidated financial statements of
the Company from which such unaudited capsule information was
derived, they have:
(1) read the unaudited capsule information and agreed the
amounts contained therein with the Company's accounting records
from which it was derived; and
(2) inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited capsule information was determined on a basis
substantially consistent with that of the corresponding
financial information in the latest audited financial statements
of the Company included in the Prospectus; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
included in the Prospectus and not covered by their letter delivered
pursuant to subsection (a) of this Section (in each case to the extent
that such dollar amounts, percentages and other financial information
are obtained from accounting records that are subject to the internal
control structure, policies and procedures of the Company's accounting
system or are derived directly from such accounting records by analysis
or computation) with the results obtained from procedures specified in
such letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results, except as
otherwise specified in such letter.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus
for the purposes of this subsection.
(h) The Representatives shall have received, so long as financial
statements audited by any independent accountants for or with respect to
any entity acquired by the Company are included in the Prospectus, a
letter, dated the Closing Date, of such accountants confirming that as of a
specified date immediately prior to such acquisition and during the period
covered by the financial statements on which they reported, they were
independent accountants with respect to such entity within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating in effect that:
(i) in their opinion, the consolidated financial statements audited
by them and included in the Prospectus comply in form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published Rules and Regulations, with
respect to Registration Statements on Form S-3; and
(ii) on the basis of performing the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, inquiries of
officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that the unaudited
financial statements of such entity at any date and for any period
ending on or prior to the date of the latest unaudited balance sheet of
such entity included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act
9
and the related published Rules and Regulations or any material
modifications should be made for them to be in conformity with
generally accepted accounting principles.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus
for purposes of this subsection.
(i) The Representatives shall have received from counsel, satisfactory to
the Representatives, such opinion or opinions, dated the Closing Date, with
respect to compliance with the laws of any country, other than the United
States, in whose currency Purchased Debt Securities or Debt Warrants are
denominated or which is the issuer of a Base Currency, the validity of the
Securities, the Prospectus and other related matters as they may require,
and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(j) If any Currency Warrants are to be purchased, no order suspending
trading or striking or withdrawing such Currency Warrants from listing and
registration under the Exchange Act shall be in effect, and no proceedings
for such purpose shall be pending before or threatened by the Commission or
by the Exchange.
(k) If applicable to the offering of any Securities, the Representatives
shall have received an opinion from Sutherland, Asbill & Brennan, special
tax counsel for the Company, dated the Closing Date, confirming their
opinion as to United States tax matters set forth in the Prospectus.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as they reasonably request.
7. Indemnification and Contribution. (a) The Company will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus or preliminary prospectus supplement, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives, if any, specifically
for use therein; and provided further that as to any preliminary prospectus
this indemnity agreement shall not inure to the benefit of any Underwriter or
any person controlling that Underwriter on account of any loss, claim, damage
or liability arising from the sale of Purchased Securities to any person by
that Underwriter if that Underwriter failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to that person within
the time required by the Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such preliminary prospectus was corrected in the Prospectus,
unless such failure resulted from non-compliance by the Company with Section
4(d). For purposes of the second proviso to the immediately preceding sentence,
the term Prospectus shall not be deemed to include the documents incorporated
therein by reference, and no Underwriter shall be obligated to send or give any
supplement or amendment to any document incorporated by reference in a
preliminary prospectus or the Prospectus to any person other than a person to
whom such Underwriter has delivered such incorporated documents in response to
a written request therefor.
(b) Each Underwriter will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement,
10
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representatives, if any,
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding, or (ii) be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably withheld),
but if settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this
11
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition to
any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Purchased Securities under the Terms Agreement
and the aggregate amount of the Purchased Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the aggregate amount of the Purchased Securities, the Representatives may
make arrangements satisfactory to the Company for the purchase of such
Purchased Securities by other persons, including any of the Underwriters, but
if no such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments under this Agreement and the Terms Agreement, to purchase the
Purchased Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate
amount of the Purchased Securities with respect to which such default or
defaults occur exceeds 10% of the aggregate amount of the Purchased Securities
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Purchased Securities by other persons are not made within 36
hours after such default, such Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as
provided in Section 9. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. As used
in this Section only, the "aggregate amount" of Purchased Securities shall mean
the aggregate principal amount of any Purchased Debt Securities plus the public
offering price of any Debt Warrants or Currency Warrants included in the
relevant offering of Purchased Securities. Nothing herein will relieve a
defaulting Underwriter from liability for its default. The respective
commitments of the several Underwriters for the purposes of this Section shall
be determined without regard to reduction in the respective Underwriters'
obligations to purchase the amount of Purchased Debt Securities set forth
opposite their names in the Terms Agreement as a result of Delayed Delivery
Contracts entered into by the Company.
The foregoing obligations and agreements set forth in this Section will not
apply if the Terms Agreement specifies that such obligations and agreements
will not apply.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers and of the several Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made
by or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person and will
survive delivery of and payment for the Purchased Securities. If the
obligations of the Underwriters with respect to any offering of Securities are
terminated pursuant to Section 8 or if for any reason the purchase of the
Purchased Securities by the Underwriters under a Terms Agreement is not
consummated, the Company shall remain responsible for the expenses to be paid
or reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 7 shall remain in effect. If
for any reason the purchase of the Purchased Securities by the Underwriters is
not consummated other than because of the termination of this Agreement
pursuant to Section 8 or a failure to satisfy the conditions set
12
forth in Section 6(c), the Company shall reimburse the Underwriters, severally,
for all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Securities.
10. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to
them at their addresses furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at 120 Park Avenue, New York, New York
10017, Attention: Dede Thompson Bartlett, Vice President and Secretary.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the Company and such Underwriters as are identified in Terms Agreements
and their respective successors and the officers and directors and controlling
persons referred to in Section 6, and no other person will have any right or
obligation hereunder.
12. Applicable Law. This Agreement and the Terms Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
13
ANNEX I
(Three copies of this Delayed Delivery Contract should be signed and returned
to the address shown below so as to arrive not later than 9:00 A.M.,
New York time, on .......... ........, 19....*.)
DELAYED DELIVERY CONTRACT
-------------------------
[Insert date of initial public offering]
Philip Morris Companies Inc.
c/o [Insert name and address of lead Underwriter]
Attention:
Gentlemen:
The undersigned hereby agrees to purchase from Philip Morris Companies Inc.,
a Virginia corporation ("Company"), and the Company agrees to sell to the
undersigned, [If one delayed closing, insert--as of the date hereof, for
delivery on , 19 ("Delivery Date"),]
$........................................
principal amount of the Company's [Insert title of debt securities] ("Debt
Securities") and
........................................
of the Company's [Insert title of warrants] ("Debt Warrants") (collectively,
the "Securities"), offered by the Company's Prospectus dated , 19 and a
Prospectus Supplement dated , 19 relating thereto, receipt of copies of
which is hereby acknowledged, at % of the principal amount of the Debt
Securities plus accrued interest, if any, and on the further terms and
conditions set forth in this Delayed Delivery Contract ("Contract").
[If two or more delayed closings, insert the following:
The undersigned will purchase from the Company as of the date hereof, for
delivery on the dates set forth below, Debt Securities and Debt Warrants in the
principal amounts and number, respectively, set forth below:
PRINCIPAL AMOUNT NUMBER
OF DEBT OF DEBT
DELIVERY DATE SECURITIES WARRANTS
------------- ---------------- --------
........................ .... ....
........................ .... ....
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to purchase for
delivery on [the] [each] Delivery Date shall be made to the Company or its
order by certified or official bank check in New York Clearing House (next day)
funds at the office of at .M. on [the] [such] Delivery
Date upon delivery to the undersigned of the Securities to be purchased by the
undersigned [for delivery on such Delivery Date] in definitive fully registered
form and in such denominations or numbers and registered in such names as the
undersigned may designate by written or telegraphic communication addressed to
the Company not less than five full business days prior to [the] [such]
Delivery Date.
- --------
* Insert date which is third full business day prior to Closing Date under
the Terms Agreement.
14
It is expressly agreed that the provisions for delayed delivery and payment
are for the sole convenience of the undersigned; that the purchase hereunder of
Securities is to be regarded in all respects as a purchase as of the date of
this Contract; that the obligation of the Company to make delivery of and
accept payment for, and the obligation of the undersigned to take delivery of
and make payment for, Securities on [the] [each] Delivery Date shall be subject
only to the conditions that (1) investment in the Securities shall not at [the]
[such] Delivery Date be prohibited under the laws of any jurisdiction in the
United States to which the undersigned is subject and (2) the Company shall
have sold to the Underwriters the total principal amount of the Debt Securities
less the principal amount thereof covered by this and other similar Contracts.
The undersigned represents that its investment in the Securities is not, as of
the date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and which governs such investment.
Promptly after completion of the sale to the Underwriters the Company will
mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that the acceptance of any such Contract is in the Company's
sole discretion and, without limiting the foregoing, need not be on a first-
come, first-served basis. If this Contract is acceptable to the Company, it is
requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered.
Yours very truly,
..........................................
(Name of Purchaser)
By .......................................
.......................................
(Title of Signatory)
.......................................
.......................................
(Address of Purchaser)
Accepted, as of the above date.
Philip Morris Companies Inc.
By ..................................
(Insert Title)
15
PHILIP MORRIS COMPANIES INC.
("COMPANY")
DEBT SECURITIES, WARRANTS TO PURCHASE
DEBT SECURITIES AND CURRENCY WARRANTS
TERMS AGREEMENT
---------------
, 199
Philip Morris Companies Inc.
120 Park Avenue
New York, New York 10017
Attention: Hans G. Storr,
Executive Vice President and Chief Financial Officer
Dear Sirs:
On behalf of the several Underwriters named in Schedule A hereto and for
their respective accounts, we offer to purchase, on and subject to the terms
and conditions of the Underwriting Agreement relating to Debt Securities,
Warrants to Purchase Debt Securities and Currency Warrants dated as of February
1, 1996 ("Underwriting Agreement"), the following securities ("Securities") on
the following terms:
DEBT SECURITIES
Title:
Principal Amount: $
Interest Rate: % from , 199 , payable:
Maturity:
Currency of Denomination:
Currency of Payment:
Form and Denomination:
Overseas Paying Agents:
Optional Redemption:
Sinking Fund:
Delayed Delivery Contracts: [authorized] [not authorized]
Delivery Date:
Minimum Contract:
Maximum aggregate principal amount:
Fee: %
Purchase Price: %, plus accrued interest, or amortized original issue
discount, if any, from 19 .
Expected Reoffering Price:
DEBT WARRANTS
Number of Debt Warrants to be issued:
Debt Warrant Agreement:
Form of Debt Warrants: Registered
Issuable jointly with Debt Securities: [Yes] [No]
[Number of Debt Warrants issued with each $ principal amount of Debt
Securities:]
[Detachable Date:]
Date from which Debt Warrants are exercisable:
Date on which Debt Warrants expire:
Exercise price of Debt Warrants:
Expected Reoffering price: $
Purchase price: $
Title of Warrant Debt Securities:
Principal amount of Warrant Debt Securities purchaseable upon exercise of one
Debt Warrant:
Interest Rate: % from , 199 , payable:
Maturity:
Currency of Denomination:
Currency of Payment:
Form and Denomination:
Overseas Paying Agents:
Optional Redemption:
Sinking Fund:
CURRENCY WARRANTS
Title of Currency Warrants:
Type of Currency Warrant:
Number of Currency Warrants to be issued:
Base Currency:
Currency Warrant Agreement:
Number of Warrants issued with each $ principal amount of Debt Securities:
Date from which Currency Warrants are exercisable:
Date on which Currency Warrants expire:
Circumstances causing automatic exercise:
Minimum exercise amount:
Base Currency Amount:
Cash Settlement Value Formula:
Strike price(s) of Currency Warrants:
Expected Reoffering price: $
Purchase price: $
----------------
Names and Addresses of Representatives:
The respective principal amounts of the Debt Securities and number of Debt
Warrants and or Currency Warrants to be purchased by each of the Underwriters
are set forth opposite their names in Schedule A hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Closing will take place at A.M., New York City time, on , 199 ,
at the offices of Philip Morris Companies Inc., 120 Park Avenue, New York, New
York.
The Securities will be made available for checking and packaging at the
office of Chemical Bank at least 24 hours prior to the Closing Date.
Please signify your acceptance by signing the enclosed response to us in the
space provided and returning it to us.
Very truly yours,
SCHEDULE A
DEBT SECURITIES
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
DEBT WARRANTS
NUMBER OF DEBT
UNDERWRITER WARRANTS
----------- --------------
CURRENCY WARRANTS
NUMBER OF CURRENCY
UNDERWRITER WARRANTS
----------- ------------------