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First Chicago Trust Com pany of N ew York • s Charies D. Keryc Vice President March 30, 1990 Ms. Patricia Malzacher Assistant Secretary Philip Morris Companies, Inc. 120 Park Avenue New York, New York 10017 RE: 1990 PROXY MAILING Dear Pat, 30 West Broadway New York, New York 10007-2192 (212) 587-6436 I am writing to follow-up on our conversations regarding the recent mailing of Philip Morris proxies and annual reports and some of the problems encountered this year. Let me begin by summarizing the chain of events chronologically: February 6 - Proxy planning meeting between Philip Morris and FCT. Decision was made to combine employee plan records with registered stockholder file(s) to produce one common proxy card. February 21 - FCT ran list of Philip Morris NY employees who matched on registered stockholder file. Late February - FCT worked with various Employee Plan record through early keepers to obtain employee files on magnetic March tape in FCT format. March 15 - Proxy Record Date March 16 - FCT continued to receive Transfer sheets from through Out-of-Town agent, backdated to Record Date, March 21 even after FCT had been told that all sheets were in. March 17 - FCT began running proxies after Friday night update, but encountered problems with employee tapes. ~ ...Continued... ~ ~ 00 A subsidiary of ~ O FIRST CHICAGO ~ CORPORATION ~ ~

First Chicago Trust Com pany of N ew York Ms. Patricia Mai,zacher March 30, 1990 Philip Morris Companies, Inc. Page Two March 20 - Tape problems resolved, re-commenced with running proxies. Began enclosing and mailing proxies. (NOTE: No Annual Reports were enclosed for proxies which included employee plan holdings. March 21 - Continued to enclose and mail proxies. March 22 - Completed proxy mailing. March 26 - Discovered that New York employees had not received Annual Reports neither with proxy nor from Company mailing. March 26 - FCT remedied by mailing Annual Reports via First Class mail to group of 467 New York employees. • ISSUES/PROBLEMS: While combining files is operationally sound and cost-effective: FCT should have requested test tapes from the record keepers of the employee files in February before live tapes were run in March. Result: lost two days in proxy mailing which should have begun on March 19th. Co-Agent should have notified FCT of additional transfer sheets and faxed transfer sheets to FCT. In efforts to eliminate redundant annual report mailings, FCT overlooked NY employees previously matched to common file who should have received Annual Reports with proxies. z1z O ~ On • ... Conti nued... 1°-41 0a ~ ~ ~ ~

First Chicago Trust Company of New York 0 Ms. Patricia Malzacher March 30, 1990 Philip Morris Companies, Inc. Page Three I realize your concern that combining the employee plan files was the cause of all the problems. I guess I have a slightly different view. We successfully do these matches for hundreds of tapes each year. I think the key here was a lack of proper testing up front and a failure to communicate any problems back to you in a timely fashion. I can assure you we have reviewed the process and have reinforced the need to keep an open line of communication between FCT and Philip Morris. I hope this satisfactorily explains what happened, but feel free to call either me or Celia Rodee if you have any further questions. Best regards, 0 cc: Michael J. Foley Celia E. Rodee Alice Dean First Chicago Trust Company of New York ~ Lionel Knight O ~ First National Bank of Chicago ~ ~ 00 ~ PM0330.DOC(0) F-~