To:Director of Portfolio Management, Probity Investment

To:Director of Portfolio Management, Probity Investment

From:Student XX

RE:Submission of Shareholder Proposal

Date:November 26, XXXX

I recommend that Probity Investments submit the following Shareholder Proposal to the Board of Directors of Kraft Foods, Inc. for inclusion in proxy materials for the XXXX Annual Meeting.Pursuant to thebylawsof Kraft Foods, Inc., a timely submission must be made either in person or byUnited Statescertified mail not less than 120 daysnormore than 150 days beforeMarch 7, XXXX.

SHAREHOLDER PROPOSAL

We request that the Board of Directors of Kraft Foods Inc. review the Company's use oftransfat in Oreo cookies and report to shareholders safer alternatives to trans fat by January 2005.It is further requested that in the interim, the Company undertake the task of labeling Oreo cookies as containingtransfat.

STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL

Kraft Foods, Inc. is the largest food company inNorth Americawith global revenues of nearly $50 billion last year. The Companyproduces, markets, and sells Oreo brand cookies. Oreo cookiescontaintransfat, which is known by the Food and Drug Administration (FDA) to raise blood cholesterol. Highlevels of blood cholesterol are known by the FDA to increase the risk of developing potentially fatal coronary heart disease. For these reasons,the shareholders

Recently, Oreo brand cookies have received negative publicity for containing partially hydrogenated soybean oil, which is a type oftransfat.Transfat is known by the FDA to pose a greater health risk than other types of fats, such as saturated and unsaturated fat.Like saturated fat,transfat raises levels of low density lipoprotein (LDL or bad) cholesterol in the blood.However, unlike saturated fat,transfat lowers high density lipoprotein (HDL or good) cholesterol in the blood.These are contributing factors to an increased risk of developing coronary heart disease.

Due to threats of litigation against Kraft concerning its use oftransfat, we recommend that the Board undertake a more responsible approach in evaluating the overall health impact associated with the consumption of Oreo cookies.As such, we request that the Company engage in an independent study regarding Oreo cookies with an ultimate goal of finding a safer substitute for partially hydrogenated oils (trans fat) and that Kraft report all findings to shareholders by January 1, XXXX.Although the FDA doesnt require manufacturers to list the amount oftransfat in their products untilJanuary 1, XXXX, we recommend that Kraft take the interim proactive measure of disclosing on product labels the amount of trans fat contained in Oreo cookies.See

We are confident that these measures will restore Krafts reputation as a responsible corporate citizen.We urge your support in this important matter.

MEMORANDUM

Reason for Shareholder Proposal

As articulated in the supporting statement, it is known to the medical community and the FDA thattransfat poses a significant health risk due to the negative impact on human cholesterol levels.In an effort to decrease corporate liability and increase corporate goodwill, submission of this proposal is recommended.

Possible Procedural and Substantive Issues Associated with Said Proposal

From a procedural standpoint, Probity Investments is in position to properly propose such a resolution.According to Rule14a-8(b)(1)of the Security Exchange Act, shareholders eligible to submit a proposal must hold at least $2000 in market value of the corporations securities for at least one year by the date of the proposal and must continue to hold the securities through the date of the meeting.Probity satisfies these eligibility criteria.

There are substantive issues related to this shareholder proposal of which Probity Investments should be aware.Pursuant toRule 14a-8, there are a variety of conditions under which a corporation can exclude shareholder proposals from proxy materials.See14a-8(i)(1)-(13).It is reasonably anticipated that Kraft will raise two of these disqualifying factors to exclude the proposal from proxy materials.

Rule 14a-8(i)(7)

Kraft will likely claim that this proposal should be excluded from proxy materials because the resolution is offensive to Rule14a-8(i)(7)which asserts that proposals are subject to exclusion if they deal with a matter relating to the companys ordinary business purpose.The exception to this ordinary business rule as articulated inRel. 34-40018, however, is that proposals may not be excludable if they relate to such ordinary business matters but focus on significant social policy issues.

An examination of prior no-action letters reveals that the SEC has previously rendered decisions on proposals similar to the current proposal.Perhaps most analogous to the present proposal is a line of proposals related to genetically-engineered food products.Because there is competent evidence to suggest that genetically-engineered products pose a substantial health risk, shareholders of PepsiCo, Quaker Oats, and Philip Morris proposed that their respective corporations adopt a policy of removing such items from their food products.PepsiCo, Inc.;Quaker Oats Company;Philip Morris Companies, Inc.In all three cases, the corporations argued that such a resolution infringed on the ordinary business purpose rule.In light of these arguments, the SEC ultimately decided that there was a prevailing social policy issue that warranted inclusion in proxy materials.

The current proposal should survive SEC scrutiny under this social policy theory.While it is true that Krafts choice of ingredients in Oreo cookies is an ordinary business decision, there is ample scientific research to indicate that some of the chosen ingredients are unsafe for human consumption.This argument is consistent with prior SEC no-action letters and is consistent with the spirit of the social policy exception of Rule14a-8(i)(7).As a result, the SEC will likely defer to Krafts shareholders on this policy issue and hold that Kraft cannot exclude the resolution from its proxy materials.

Rule 14a-8(i)(6)

Regarding product labeling, Kraft may argue that they are compliant with FDA requirements of labelingtransfat and they are in no position to effectuate FDA policy change.Under Rule14a-8(i)(6), a corporation may exclude a proposal which the corporation lacks the power to implement.A similar argument was raised by Philip Morris regarding product labeling of genetically-engineered food products.SeePhilip Morris Companies, Inc..

This argument would be as misguided in this instance as it was inPhilip Morris Companies, Inc.Thebasis for this labeling proposal lies not in changing FDA policy, but in establishing Kraft as taking a proactive position in informing the consuming public to the presence of trans fat in Oreo cookies.Although the FDA has set a compliance deadline ofJanuary 1, 2006, it is clearly acceptable for manufacturers to come into compliance with this standard prior to the deadline.According to the FDA website, many labels already contain information regarding trans fat.See this rationale, the SEC should not find that the labeling proposal is offensive to Rule14a-8(i)(6)in that shareholders are not seeking a policy change that Kraft is not in position to effectuate.

Pursuant to the foregoing reasons, this proposal should be included in Kraft Foods proxy materials.

For more information about Kraft Foods, Inc., seeArticles of IncorporationandBylaws.